Woolerton R Doug: Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill — Second Reading In Committee 
Woolerton R Doug: Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill — Second Reading In Committee 
[Volume:636;Page:7096] 
R DOUG WOOLERTON (NZ First) 
: 
 New Zealand First supports the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill and we do so because it is a genuine attempt to make investment fairer across the board. Members will know that we have not had complete agreement in our caucus. I think members can take from that that we in New Zealand First have had a very very robust debate on this issue have not come to our conclusions lightly and have not given the bill just a once-over-lightly. We have gone into it in depth. 
It has always been iniquitous that what I like to call managed funds in New Zealand have been taxed at a rate of 33 percent whereas other investments have been taxed at the taxation level of the investor. Under this bill there will be a flow-through effect for those people who are on a lower tax rate and who invest largely in managed funds because they either do not have the expertise to invest for themselves or do not want to be bothered with it. I have said in earlier speeches that when the current leader of the National Party John Key was on our Finance and Expenditure Committee he seemed to come from the angle—and I do not blame him for it because this is his area of expertise—that every person who invests is an expert every person who invests comes from a background of expertise but that is way beyond the actual case in New Zealand. This bill for the first time makes an attempt to look after the mum and dad investors. We have to do that because there is a flow-through effect for KiwiSaver. The bill recognises even then that there are some small differences and at the end of the day we have had to accept a few compromises in this bill which we knew we would have to do—that was always recognised. 
It is pretty rich for Dr Lockwood Smith—who has been a valuable member of the select committee I might say—to say that there was an unprecedented number of submitters on the original bill and that not much diligence was shown in producing the modified bill as set out by the Minister of Revenue at the beginning of this debate. I would suggest most strongly that that is the proper response of a proper democratic select committee. If there is a whole bunch of submitters—and on this bill there were close to 3000—and there is significant opposition to a bill surely the right thing to do is to change that bill and to change it substantially in line with what the submitters require. That is exactly and precisely what has been done in this case yet Dr Lockwood Smith criticises that. 
We know that National members are not absolutely staunch in their criticism of this bill because they too recognise that although it is in some ways a compromise it is a huge step forward. We know that because those members have said that if they were to come to power some years hence they would not change it they would not kick this bill out and that is politics-speak for saying that they actually agree with it. 
Rather than criticise the select committee and the Government for changing the bill I applaud the select committee of which I am a proud member. I applaud the chairman of that select committee the officials and the Minister for listening to submitters. It would be a very barren Parliament I suggest that did not listen to close to 3000 people on an issue such as this one. 
Something that I certainly can take away from the select committee process is an insight into the issues that surround financial investment. I was impressed by the level of investment that people in this country make and the level of care and foresight that they put into looking after themselves in their old age looking after their families and in fact looking after their grandchildren by way of investment. It was quite touching actually to see people come to talk to the select committee not only on their own behalf—although most did that I must say—but also on behalf of others. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
R DOUG WOOLERTON 
: In the 4 minutes and 30 seconds I have remaining I would like to speak about the fair dividend rate which is something the select committee settled on to take care of the conundrum of taxing equally everybody in the investment market. Dr Lockwood Smith has criticised the fair dividend rate of 5 percent saying that it is not fair and is too high. I point out to him that in actual fact the deemed dividend rate which he and his party would have supported—and I know this because of conversations in the select committee—would have worked out at about 3.4 percent in normal circumstances. I am sure the Minister will nod at me if I am correct. So the fair dividend rate of 5 percent is not too far away from the 3 percent deemed dividend rate that National would favour. But the fair dividend rate does not tax an investor in the year of a loss whereas the National Party’s proposed 3 percent deemed dividend rate would tax the investment even in years of a loss. Dr Lockwood Smith fails to mention that National would support a regime that taxed people when they made a loss. We in New Zealand First—dare I say it we on this side of the House—would never agree to such a situation because tax not only has to be fair but also has to be seen to be fair for people to participate in a voluntary tax regime that we run in New Zealand. 
Just before I run out of time I want to endorse this time a statement made by Dr Lockwood Smith but I want to endorse it from a different perspective. We believe that most people instead of going through all of the calculations required to pay this tax on their investment will just forget about doing that. They will not bother with accountants they will not bother mucking around and they will not worry about the infinite detail; they will simply pay the 5 percent on a regular basis at the beginning of each year. What does that tell us and why do I mention it? If people really thought this fair dividend rate at 5 percent was unfair—as they are proposing tongue-in-cheek—they would not do such a thing. They would hire accountants and go to the end of the earth to do whatever calculations it took to avoid paying that amount. But they see it as fair and I suggest—and it is certainly the view of the Government members on the select committee and those of us who support the Government—that by and large it will be paid straight up by most people. They will pay the 5 percent rather than muck around working out the calculations. 
It is true to say that most submitters would have favoured no change at all. Most people who presented to the select committee were direct investors who get tax rates that are not available to what I call the ordinary Kiwi. That is what this bill sets out to redress and it is no wonder in that case that most people who submitted were opposed to the bill. Given that and given that the select committee made the changes that most people would have wished us to make it is fair to say that New Zealand First members are pretty confident in supporting this bill.