Parmar ParmjeetDr PARMJEET PARMAR (National): Thank you Madam Assistant Speaker for the opportunity to take this call on the Taxation (Research and Development Tax Credits) Bill. I'm actually really grateful to have this opportunity to speak on this bill because based on my observation of how this bill was dealt with in the select committee process I thought there wouldn't be any opportunity for the Opposition to contribute. So I am really grateful. This is because during the select committee process when we were deliberating on this bill we had a minority view and Government members voted against inclusion of our minority view in the report back. I have been in several meetings where bills have been deliberated and I cannot remember any time when we were in Government when we voted against a minority view to be included in the report back. So this in my view was just suppressing National's view—suppressing National's view—and so I want to take this opportunity to read out the minority view so that it is on the record. The National Party supported the bill in the first reading as we see merit in exploring the potential for taxation to incentivise greater investment into R & D and to have the opportunity to explore where the framework proposed by the Government would be the best way to do that. It's now clear that this legislation will not work well for many. Moreover this bill gives no real visibility of what additional R & D spending will occur as a result of a significant item of expenditure. It's essential that businesses have certainty over the details. The Government is determined to roll this policy out in 2019 and those that are pre-profit for now will be covered by temporary arrangements subject to review down the track because as per the Government's own officials the issues were too complex to resolve now. The National Party is disappointed in that the Government has followed the process that is creating uncertainty for businesses and investors investing in R & D. That's the reality yes. The Government officials have also accepted that only a small number of companies that receive growth grants will be eligible for R & D tax credits which indicates that this Government has failed to understand the nature of businesses in New Zealand. The difference in R & D definition in various policies will create further complications—for example the ability for Statistics New Zealand to measure business spending on R & D. The bill also creates a significant fiscal risk to the Crown as it's very difficult to estimate what the policy will cost as uptake is uncertain and can fluctuate substantially year to year. Small and unprofitable firms were able to find support under National's innovation ecosystem. We understood that the big companies of tomorrow emerge from the risk-taking entrepreneurs of today. This policy needs a thorough consideration and should be part of the full package to support all companies that are invested in R & D and hence the bill should be delayed until that time." So that was our minority report. Very clearly we wanted to state that we are not satisfied with this legislation after it has been through the select committee process and we are opposing this legislation. It's actually quite disappointing because we supported this legislation in the first reading. We supported this legislation in the first reading because we wanted to work with Government during the select committee process to make this bill a better bill. But that opportunity wasn't there but I'm not surprised that the Government tried to suppress the Opposition's voice. But if you look at what businesses had to say about this legislation—this is legislation which this Government claims is their biggest policy. How many submissions did we receive on this bill? Thirty-two—32 submissions. And how many businesses do we have in New Zealand—how many businesses do we have in New Zealand? Around 550000 businesses in New Zealand. Out of around 550000 businesses this bill received just 32 submissions. That is 0.005 percent. Businesses didn't care about this policy so businesses didn't see this policy to be relevant to them. They didn't want to waste their time coming to the select committee. [Interruption] Yeah I know I know—Government members are getting agitated. That is what happened during the select committee process and that is why we were denied having a minority view included in the report back.ASSISTANT SPEAKER (Poto Williams): Order! We will not have discussion across the Chamber. Thank you.Dr PARMJEET PARMAR: Thank you Madam Assistant Speaker. Out of those 32 submitters 13 appeared before the Finance and Expenditure Committee. So you can see how relevant this legislation is to businesses the type of businesses that we have in New Zealand—not relevant at all. Most of those businesses think that it's not going to deliver any benefit for them so they didn't want to waste their time coming before the select committee to talk about this legislation.What we saw during the select committee process was that submitters raised some points and officials accepted that yes for some submissions the intention was exactly what the submitter was saying so the wording was changed to reflect that intention. That clearly shows that there were several flaws in this legislation and this is not the first time because we had an initial draft that was put out for consultation and yes it was fixed after that and then the bill was introduced; it went to the select committee. During the select committee process again several changes were made because the legislation didn't reflect what actually the intention was.So looking at those changes we don't have any confidence that this bill is actually going to deliver what the Government is thinking it's going to. I think we will be again in the state like we just heard with the bill before the Social Security (Winter Energy Payment) Amendment Bill where the Government was fixing mistakes in that legislation and I think this bill will be back again in a few months' time or maybe a couple of years' time to fix mistakes in this legislation.Another thing on the minority view—it would be actually really good to see Government members defending their position or maybe they don't want to defend it and will come out in a very arrogant manner saying that they had the numbers. So it was their decision not to allow a minority view included in the report and that would be interesting too.One point that one of the Government members raised was about how there's only a small number of companies that are receiving growth grants that will qualify to receive the R & D tax credit because this bill is to phase out growth grants and bring in the R & D tax credit. So the facts were put forward to that member because that member didn't know exactly that it is actually a small number of companies that are receiving growth grants that will qualify for the R & D tax credit. The next thing we realised was that actually some members didn't understand the difference between the R & D tax credit and the refundability provision in this legislation. So if Government members were trying to pretend that that is the same thing then there is seriously something wrong—something wrong. There is a different criteria for R & D tax credit and refundability provisions in this bill. It's not the same thing—it's not the same thing.So the refundability provisions in this bill are temporary provisions and we really wanted the Government to fix that because companies that are in pre-profit stages should be able to have some certainty. For the Government to put something in this that is temporary and say "We will be reviewing our policies to support pre-profits in 2020." which also includes the R & D loss tax credit policy that was put in place by the previous National Government started in 2015 delivering some really good results—that is creating a lot of uncertainty for companies that are in pre-profit stages. We wanted to work with the Government in the select committee process to ensure that this uncertainty is removed and that there is something concrete for companies that are in that pre-profit stage. But the select committee process appeared like it was just a stamping exercise because it was about just getting the legislation through the select committee and brought back to the House for the second reading committee of the whole House and third reading.Now another interesting thing is that we're debating the second reading of this bill but the policy has already come into effect from 1 April—so the policy has already come into effect. We saw that this legislation has been lagging behind from the start. During the select committee process I didn't see any leadership from the select committee to go out and connect with businesses that have or are receiving growth grants because it's those businesses that are going to be hugely impacted by this policy. We have done that. We have gone out and spoken to those businesses and we have their responses here and we can clearly see that they're saying that MPs should be going out and engaging with companies to understand their R & D plan and then the funding should be provided accordingly. The select committee—in my experience in the past we have gone out and connected with sectors if we thought that sector was important to connect with for any particular legislation but the select committee didn't bother because they didn't want to hear from them.So I think this is going to be another failed policy just like their KiwiBuild and light rail policy. We oppose this bill."