Street Maryan: Limited Partnerships Bill — First Reading 
Street Maryan: Limited Partnerships Bill — First Reading 
[Volume:641;Page:11314] 
MARYAN STREET (Labour) 
: 
 It gives me great pleasure to rise to speak to the Limited Partnerships Bill. I would like to speak in particular about its purpose and the impetus for it. Clearly one of the key concerns the Minister the Hon Lianne Dalziel had in introducing this bill was to enable easier access to investment capital. What that means is that there would be more opportunities for New Zealand businesses to expand and develop. 
Venture capital as a subset of investment capital is a valuable source of funding for new businesses and is a valuable source of early stage expansion capital for businesses in New Zealand. It is part of a programme that I wish to draw the House’s attention to and it is a programme that the Minister of Commerce has been engaged in for some time—that is the improvement of the business environment by the improvement of regulation and in this case of tax treatment for businesses. This has its origins in the Growth and Innovation Advisory Board launched in 2002 and in fact comes out of that board’s work. It is substantially welcomed by business in New Zealand and I will move on to that in a moment. It is important to recognise that this bill is the latest contribution of many to modernising the regulatory environment within which New Zealand business operates. That has been a key concern of the Minister of Commerce. As we have heard already it is clear that limited partnerships are commonly used in many other countries as a vehicle for venture capital investment. So it makes sense to have New Zealand tax rules that facilitate a similar kind of investment here. 
The bill can be largely characterised I suppose as having the following key regulatory features: firstly general partners who are liable for debts and obligations of the partnership; secondly limited partners whose liability is limited to the amount of their investment as long as they do not take part in the management of the partnership; thirdly provision for safe harbour activities so that limited partners are able to participate in strategic activities without this affecting their liability; and fourthly provision for a separate legal personality or identity for limited partnerships. These changes which are promoted and outlined in this bill should really pave the way for New Zealand to have access to the same kind of venture capital markets that overseas businesses have. Essentially the tax rules proposed which are one particular component of this bill are investment friendly and will enable New Zealand to be more competitive in attracting venture capital. Specifically limited partnerships will not be taxed at the partnership level as the Minister who moved the first reading itemised. Instead each partner will be taxed individually in proportion to his or her share of the partnership income in the same way that income from general partnerships is taxed. The limited partners’ tax losses in any given year will be restricted to the level of their economic loss in that year. 
There have been a number of very favourable responses to the introduction of this bill and I would just like to quote from a couple of those. Firstly a press release which is advice from a law firm states: “Regime would position New Zealand as one of the best countries in the world to do business”. It is a modernising instrument. The press release also notes that where New Zealand was ranked 19th out of 55 countries evaluated in the 2007  
World Competitiveness Yearbook 
 the improvements that are needed to increase that ranking are contained in this respect in this bill. In other words this bill will go a substantial way to improving New Zealand’s competitiveness despite our distance and isolation from some markets and it will go a considerable way to improving our competitiveness in accessing venture capital. I could quote from other publications. The New Zealand Venture Capital Association believes that this bill and the regime contained in it is one of the most important current policy initiatives for New Zealand’s private equity and venture capital industries. Now that is no mean feat. 
 What we are keen to do in the Labour-led Government is to continue the process of modernising the rules and regulations surrounding businesses by not only adjusting the tax treatment of limited partnerships but providing sufficiently competitive regulation around them to enable New Zealand businesses to profit by having greater access to venture capital so that they can invest in new ventures and in developments in business that may be at the higher end of risk in the market. With the kinds of accolades that this bill has been receiving in the marketplace from people who have an interest in this area it is clear that we are going in the right direction. I am pleased that the previous speaker has indicated the National Party’s support for this. New Zealand should indeed continue in the trend of making our legal framework our institutions and our approach commercial balanced and world leading. This legislation is a further contribution to that.