Tremain Chris: Taxation (Depreciation Payment Dates Alignment FBT and Miscellaneous Provisions) Bill — Instruction to Committee In Committee 
Tremain Chris: Taxation (Depreciation Payment Dates Alignment FBT and Miscellaneous Provisions) Bill — Instruction to Committee In Committee 
[Volume:630;Page:2019] 
CHRIS TREMAIN (National—Napier) 
: 
 Firstly I acknowledge our friends from the Inland Revenue Department. It is great to see Robin Oliver and his team here. 
Secondly I go back to the point made by the Rt Hon Sir Winston Peters— 
Rt Hon Winston Peters 
: You’re almost there! 
CHRIS TREMAIN 
: That is where we got confused in the first place over Sir Patrick Hogan. I had to check during the break who the heck Frank Hogan was. I got confused as to whether he was Frank Hogan the car salesman Frank Hogan the broadcast pioneer or Frank Hogan the playwright. Obviously it was none of them and it was indeed Sir Patrick Hogan whom we were dealing with. So I apologise to Sir Patrick Hogan who is up there with the greats like Colin Meads Sir Brian Lochore and Sir Ed Hillary. I apologise on behalf of Parliament to Sir Patrick and Lady Justine Hogan. 
I rise tonight to speak on the Taxation (Depreciation Payment Dates Alignment FBT and Miscellaneous Provisions) Bill and particularly on Part 2. This is the first legislation we have seen in this House for some time that goes some way to improving business conditions in this country. From that point of view I am extremely in favour of this bill. If we look at the current statistics just from our library we see economic growth in 2004-05 down from 4.3 percent to 2.7 percent inflation up from 2.7 percent to 3.2 percent the current account deficit up from $8.7 billion to $12.9 billion and interest rates up from 6.83 percent to 7.53 percent. So it is great to see legislation like this coming into the House—legislation that will actually have a positive impact on business and will help to turn round some of the factors that are affecting the country right now. 
I will talk about Part 2 and particularly about clause 56. I want to focus on the tax depreciation rules that the Minister has brought into this bill. The bill in clauses 53 to 80 including Supplementary Order Paper 382 introduces a number of changes to the tax depreciation rules intended to align depreciation rates more closely with the commercial reality of an asset’s economic life. Now that to me is sensible legislation. For people out there in the business community investing in assets it is only sensible to set depreciation rates that match the commercial and realistic life of those assets. 
In addition an increase of the low-value asset threshold is proposed which will allow taxpayers to write off the value of an asset immediately by lifting the level from $200 to $500. Submitters to the Finance and Expenditure Committee generally supported the changes to increase tax depreciation rates but they criticised the changes seeking to reduce depreciation rates and considered that changes to the low-value asset thresholds did not go far enough. That was interesting. 
I want to focus on the lower depreciation rates for buildings. This is something that the Minister might like to comment on. On one hand we are taking assets such as computers and other investment assets of a business and applying depreciation rates that are more closely aligned with how those assets will be written off over the period of their useful life in the business yet on the other hand we are changing depreciation rates for buildings in the other direction. 
The reality is that most submitters to the select committee—in fact just about everyone who submitted on this particular matter—supported a reduction in depreciation rates for buildings. They reasoned that the pace of change and particularly in technology in terms of consumers’ preferences means that the useful life of some buildings is shorter than the 50 years proposed in the legislation. I think that if we are aiming to use this bill to help improve the productivity of the nation and to allow better investment in capital assets then we should make sure depreciation of buildings in particular closely reflects the exact duration of their useful life. Lifting the rate is the wrong way to go. 
The next thing I want to focus on is the changes in clause 56 to low-value asset thresholds. The bill proposes to change the low-value asset thresholds with an immediate deduction for capital expenditure of less than $500. This is indeed a sensible solution. It certainly does not go as far as many submitters to the select committee wanted—they would have liked to see the threshold up around the $1000 or $1500 level—but it is certainly a big improvement.