Donald Rod: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — First Reading 
Donald Rod: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — First Reading 
[Volume:616;Page:12498] 
ROD DONALD (Co-Leader—Green) 
: 
 There are some very good features in this bill that are certainly worthy of support. I would like to run through some of those. The first one of course is on provisional taxation. The 6.7 percent tax discount that is being offered to encourage individuals to pay tax voluntarily in the year before they begin to pay provisional tax is an excellent idea and one that will help the self-employed and those in partnership to get on their feet and to get over that often difficult hurdle of having to pay 2 years’ worth of provisional tax in one hit. I am sure all small-business people and all entrepreneurs who are setting up in business will look forward to that measure coming into effect. 
There is also an excellent initiative to end the scam that was initiated by a number of companies to try to rort the tax system by selling intangible assets then leasing them back in order to avoid paying tax. It is good to see that the Government is closing that loophole and that it is very keen to protect the tax base. We applaud that initiative. 
It is also good to see the disputes procedure being improved. I thought Rodney Hide might have been a little gracious and also might have taken a bit of a pat on the back for the role he played in trying to improve the customer relationship of the Inland Revenue Department. Under David Butler it has improved even further and with this new disputes procedure the department will be as popular as an inland revenue department could ever become. 
But the Green Party cannot support this bill. We cannot support this bill because of one key feature it contains and that is the proposal to exempt offshore venture capitalists from paying tax on the profits of their New Zealand share sales. It is ironic that in this bill on the one hand the Government is talking about closing a loophole on the sale and lease-back of assets in order to protect its tax base and on the other hand it is deliberately undermining the tax base by exempting venture capitalists from paying their fair share of tax. 
The Government says it needs to do that because New Zealand is not attracting enough venture capital. It also says it needs to do it because Australia has that rule and New Zealand does not. Well excuse me but why should we be letting foreign investors make tax-free capital gains in New Zealand especially when the Government is determined to throw our hard-earned taxes at the global sharemarket through its New Zealand Superannuation Fund? Is it not amazing that we supposedly have a shortage of venture capital in this country when at the same time the Government is putting at least $2 billion a year in the Superannuation Fund which in turn tosses most of that money at the global sharemarket and at other overseas investments? The remedy for the venture capital shortage is clearly in the Government’s own hands. All that it needs to do is to use some of the $2 billion it puts into the Superannuation Fund to set up a venture capital fund in New Zealand. 
Despite what Rodney Hide says the Greens are actually very keen on venture capital. Our own superannuation fund has money invested in wind power and that is still very much a venture capital exercise at this stage. We have money invested in organic food products. We are currently scoping other investment opportunities such as solar power. All the investments we make are designed to help the New Zealand economy become sustainable and self-reliant and we will continue to do that despite the tax exemption that this bill proposes to offer foreign investors and despite the fact that that incentive that tax break will not be available to New Zealand investors. 
But I have to say that other superannuation funds will not be so understanding. Already there is a strong push from New Zealand superannuation funds and other New Zealand investment vehicles to be exempt from capital gains tax. We have the opposite view. We think that capital gains tax should be investigated on all but the family home because we want to shift this economy from being a speculative economy to being a productive economy. So we would not support getting rid of capital gains tax on share sales and on other capital gains such as from property. 
But with this Government opening the gates for foreign investors not to have to pay tax on the capital gains of some of their share sales in New Zealand the pressure will really come on the Government to deliver some tax breaks to the New Zealand superannuation funds; otherwise they will justifiably claim that they are being treated unfairly. I cannot put a price on what is at risk because the officials are still working that out but I predict it will be tens of millions of dollars. So the Government is deliberately undermining its tax base by putting up this proposal for venture capitalists to get a tax break. 
 The worst thing about this proposal is that it will be retrospective and most members of this House do not like retrospective legislation. I would like to draw attention to the fact that this legislation is to take effect from 1 April just passed. So by the time this bill is passed assuming other parties support it and assuming the Government does not recognise its folly and withdraw this particular section of the bill there will already be overseas venture capitalists coming here to make hay while the sun shines and New Zealand businesses will be increasingly upset that those foreign investors have an advantage that is not available to them. 
So I would like to invite the Minister of Finance and also the Government members on the Finance and Expenditure Committee to reflect on the implications of what they are doing with the venture capital section of this bill. If it were not for that section I am sure the Greens would be able to support this legislation but I am afraid that putting in a tax break for venture capitalists is simply unacceptable to us and therefore we feel obliged to vote against this legislation. I look forward to hearing Government members put up some substantive arguments in this debate as to why our position is wrong why it is OK to let foreign investors come here and have an advantage over New Zealand investors and why it is OK for the Government to be exporting our funds—taxpayers’ funds—through the New Zealand Superannuation Fund and gambling those on the overseas sharemarket instead of using that money to strengthen our own economy by investing in sustainability and self-reliance within New Zealand.