Seymour David; Parker DavidDAVID SEYMOUR (Leader—ACT): Well thank you Mr Chair. I think a lot of members in the House are looking forward to a thorough examination of this legislation such is our duty and particularly given we've got the extraordinary circumstance of tax legislation being pushed through under urgency for no apparent reason other than that the Government is a political party that campaigned for it and would like to do it quickly. Some people would say that's not particularly good use of urgency and others would go further and say it's a constitutional outrage—people can pick their own level of concern—but certainly the facts are that this is not the reason that urgency is available in the Standing Orders. It is to deal with things that are practically urgent not things that a political party thinks are politically urgent.CHAIRPERSON (Adrian Rurawhe): On the other hand the House did agree to it.DAVID SEYMOUR: Be that as it may we still have the opportunity to ask questions—CHAIRPERSON (Adrian Rurawhe): The House did agree to it. The member should address the bill.DAVID SEYMOUR: Well that's certainly true Mr Chair but that doesn't mean that we're not able to debate the position that members have taken on the House agreeing to a particular course of action particularly when it impacts on the nature and urgency or importance of investigation through the committee stage which as it happens is precisely what I was about to get to. In particular I'm very interested in the purpose of Part 1 which of course is to give effect to the new tax rate of 39 percent on income above $180000. Now it states the purpose is to raise revenue for the Government but then we turn to the departmental disclosure statement—which I think is a very handy thing to look at—and it seems to outline a very high level of uncertainty over the projections for revenue. In the tradition of these new Standing Orders that we have around the committee stage I'm interested in whether or not the Minister has actually got any guidance for the committee about what he thinks the sensitivity will be to behavioural change. In other words: where does the Minister really think this is going to land? We say $550 million if there's no behavioural change but of course we know that once people see that they could save perhaps tens of thousands of dollars by changing the way they structure their affairs or their income over $180000—as one wag on the National Party benches put it another way to avoid tax is to stop working. Does the Minister have any conclusive sense over what levels of behavioural change there will be in response and how much revenue will come from this? Of course this is a question the Minister should be very careful about answering because of course we're going to know the answer. One thing the IRD does is it publishes very good statistics about the amount of revenue that emerges. So I guess it would be helpful for the Minister to just tell the committee now: does he think that they're going to get the $550 million which is what we hope will be raised if there's no behavioural change or does he think that actually the amount of money raised will be quite a lot less? He's asking the officials now—that's a good sign. Do we think it will be less than that or do we think actually there could somehow magically be more? Because one of the things that we heard in the second reading—from I think it was Greg O'Connor—is that actually there are people who are begging to pay more tax. So is it possible that the advice the Minister has received doesn't capture the full amount of tax that might be paid? Because actually if we take some of the Labour members who spoke earlier seriously this might be seen by taxpayers as an opportunity to pay even more tax than expected.So perhaps the Minister might care to rise to his feet and just give the committee some sense of what he's concluded given the advice he's received. Does he believe that it'll be about half a billion dollars? Does he think it could be more because of the exuberance of people who Greg O'Connor's talked to who apparently want to pay more tax? Or is it possible that in actual fact there's going to be significantly less than $550 million worth of revenue? If so how much revenue does the Minister think will be brought in over each year over the next four years based on his expert judgment and assessment of the advice he's received?Hon DAVID PARKER (Minister of Revenue): Thank you Madam Chair. If I could respond to the questions that have been raised by David Seymour the best estimate of the Commissioner of Inland Revenue is as set out in the statement that the member has already quoted. That includes an allowance for tax avoidance. The tax avoidance may be less; it may be more. But it is the best estimate of the commissioner as to the likely outcome; so the figures that are there include some allowance. Why it's a little bit difficult to be more accurate is that the—David Seymour: More precise.Hon DAVID PARKER: —more precise—jurisprudence on the income shifting that occurred under the prior iteration of the 39c in the dollar tax developed pretty late in the piece during the period when that higher rate applied. The case concerned was called Penny and Hooper. In Penny and Hooper a professional taxpayer diverted quite a bit of his income through an alternative structure in order to minimise his own income and put income through another taxpaying entity. That was found to be tax avoidance and we are confident that some of the behaviour that was effective at avoiding tax would now be determined to be tax evasion as a consequence of the Penny and Hooper decision which will still have authority in respect of these changes. However there remains uncertainty as to how much trusts will be used as a way in which to divert income in other ways and that's one of the reasons why we've got these information-gathering powers which other members have already spoken about.