Tremain Chris: Taxation (Depreciation Payment Dates Alignment FBT and Miscellaneous Provisions) Bill — Third Reading 
Tremain Chris: Taxation (Depreciation Payment Dates Alignment FBT and Miscellaneous Provisions) Bill — Third Reading 
[Volume:630;Page:2103] 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to support the third reading of the Taxation (Depreciation Payment Dates Alignment FBT—[ 
Interruption 
]—it is a mouthful—and Miscellaneous Provisions) Bill. In my opinion this is the first piece of legislation from the Labour - New Zealand First Government that goes some way to helping this country take a step forward and lift itself up the OECD rankings. It is the first piece of legislation in over 6 years to do so. Despite our having had the best set of economic circumstances in a generation only now do we finally see a business-friendly piece of legislation enter this House at the death knell of this Labour Government. As we are sitting in 21st place out of 30 OECD countries one would think that a focus on policy likely to push up our standard of living would be welcomed. But no over the last 6 years we have seen a focus on income redistribution social engineering and increased bureaucracy. Yes this is the first piece of legislation in over 6 years that will provide genuine benefits to business people and flow-on effects to employees. 
Let us be clear about this: business drives the economy. Without businesses we have no economy—we have no ability to drive social services or to redistribute wealth. Yet what are business surveys currently saying? The New Zealand Institute of Economic Research quarterly survey shows that firms are the most pessimistic they have been since 1986. Seasonally adjusted the result is worse—firms are more despondent than they have been for 35 years since 1970. 
Business pessimism is not alone in condemning the current economic climate. We need to consider a few more hard facts and a few more warning signals. Interest rates have increased. In 2004-05 they were 6.83 percent; now they are 7.53 percent. The current account deficit back in 2004-05 was $8.7 billion; now it is $12.9 billion. Inflation has increased. In 2004-05 it was 2.7 percent; now it is 3.2 percent. Of most concern is the fact that the rate of economic growth is falling and falling like a stone. Economic growth in 2004-05 was 4.3 percent; now it is just 2.7 percent. Next Friday the fourth-quarter growth statistics will be released. In the September quarter growth was just 0.2 percent and indications are that growth in the December quarter will be even worse. It could be zero or even negative. That means that the New Zealand economy has stalled for 6 months—not a good sign for the months ahead. Economic growth has not only fallen like a stone; it has hit rock bottom. 
So this taxation legislation is long overdue. It is but one part of the recipe needed to put the economy back on the path towards higher achievement—towards a place in the top half of the OECD rankings. The problem as I see it is that this legislation stands alone. As Mr Key pointed out it is a breadcrumb. I see little other legislation waiting in the wings to help grow the economic position of this country. We urgently need clear direction in the areas of review of the Resource Management Act investment in transmission and energy transport infrastructure research and development further emphasis on taxation and employment flexibility. 
Fortunately the country has some allies in the National Party. Already despite being in Opposition we have been able to place on the agenda legislation that will address some of this country’s employment-related issues. Wayne Mapp’s Employment Relations (Probationary Employment) Amendment Bill was successful in getting through the first reading stage which is excellent. That legislation will give more people the opportunity to enter the workforce will allow employers to take a risk and will improve the productivity of this country—so long may that continue! 
Returning to the bill before us I will focus on two areas: firstly depreciation and secondly tax exemptions for new migrants. While the bill deals with many other amendments to a variety of Acts I believe that those are the two sets of measures that will contribute most to furthering the prosperity of this nation and helping us to move up the OECD ladder. 
A number of changes to the tax depreciation rules have been introduced. Firstly depreciation rates will be more closely aligned with the commercial reality of an asset’s useful life. That is sensible and will further encourage investment in assets that help to make team members more productive to increase efficiency and output per employee and to lead to economic growth. Secondly the low-value asset threshold will be changed from $200 to $500. That will allow companies to write off assets in the year of purchase up to the level of $500 which is a significant improvement on $200. Once again this is a positive move that encourages investment in assets in order to make businesses more productive—to increase the output per employee and to increase efficiency and productivity. Both of those items are moves forward and businesses will welcome them. 
However there is a surprise in waiting. That surprise is for building owners. While depreciation rates for many assets have been increased depreciation rates for buildings have been reduced. Most submitters to the select committee did not support that move. They reasoned that the pace of change in technology and in consumer preferences means that the useful life of many buildings is in fact shorter than the 50 years on the table. I say that they are right. National members voiced their opposition in the select committee to that adjustment but unfortunately it fell on deaf ears. This is an opportunity lost. Investment in buildings is one of the key drivers of the economy and of economic growth. Buildings house businesses; businesses drive economic growth. Any decision to discourage investment in that key resource sends the wrong signal and to some extent counteracts the positive signals sent by the changes to depreciation in the first part of the bill. 
There is also a missed opportunity—the opportunity to add a provision that allows depreciated assets to be fully and finally written off written out of the asset register once they reach a minimum threshold level. Under diminishing value the asset can effectively remain on the books for years. Small-business owners do not have time to run around their businesses or resources to check every asset that is on their registers. So once that value goes below a certain level they need to be able to write the asset off and to write it off legally. 
Last night Dr Lockwood Smith put forward an amendment to introduce a $10 threshold. That was considered by the Minister of Revenue at the time but was rejected at that point. Interestingly the Rt Hon Winston Peters in the House last night across the floor accused us of being frugal with that request by asking whether we were from Bosnia. We were in fact being fiscally responsible in our request hoping to place on the table a realistic amendment to the legislation and one that we could list in future years. It actually showed that we had thought about the fact. The Minister—listen to this one—went on to say that business owners should instead just write “lost” beside the asset in question. [ 
Interruption 
] I suggest to Mr Woolerton that that is a dangerous recommendation to make— 
Chris Auchinvole 
: From a Minister. 
CHRIS TREMAIN 
: Yes from a Minister. I am sure that other parties in the House will not be recommending to business owners to write “lost” against items on their asset register. We would do better to write sensible law that prevents people from having to break the law because the current law is just not practical in that respect. 
It was almost as bad as the faux pas Mr Peters made in referring to long-time New Zealand First supporter Sir Patrick Hogan as Frank Hogan—not once but on four separate occasions. I extend apologies to Sir Patrick. At least Mr Peters has picked up on the National Party racing policy and implemented it via the bill. I am satisfied that that was an excellent step forward for the racing fraternity. Rather than making policy on the hoof I suggest that having a threshold write-off position for small businesses is a very good idea and one that should demand further attention from the Minister. 
The second matter I would like to address tonight is the positive steps the bill has made towards new migrants and the encouragement for New Zealanders to come back to these fair shores. God only knows we need to implement stronger policies to bring people back to New Zealand. We all know that the net outflow from this country has doubled in the last 3 years. For the year ended January 2004 10221 people left New Zealand; in 2005 15547 people left; and in the last 12 months 21439 people exited the country. Last night I thought Opposition members including Mr Shane Jones and given his extensive business background would have known better. He shouted out that the answer to bringing people back to New Zealand was to lift the minimum wage.