Adams AmyHon AMY ADAMS (National—Selwyn): Thank you Madam Chair. Look I do want to take a call—at least a couple of calls—on Part 2 of this Taxation (Annual Rates for 2017-18 Employment and Investment Income and Remedial Matters) Bill. I had the opportunity earlier in moving a procedural motion to start to canvass some of my concerns. I took the opportunity in the debate on Part 1 to go through my views and my position on the bill more broadly so I do want to focus my contribution in this call on the Minister's Supplementary Order Paper (SOP) 13. Just for the sake of clarity reconfirming that SOP 16 we see as largely technical and have no issue with but SOP 13 is a significant change.Now for those listening at home a Supplementary Order Paper is something that is tabled in the House in front of us often at the last minute. We've had this one for a little while—I acknowledge that's the case from the Minister. But it is intended to be something that corrects errors adjusts drafting and picks up little tidy-ups that haven't been picked up through the course of the legislation. What it's not intended to be is a significant change in the taxation settings that affect New Zealanders. There's one thing I learnt very early in my study of legislation and the processes of this House and that is that tax law above everything else must be very clear; very concise; if in doubt in favour of the taxpayer; and really must go through the rigours of a proper select committee examination—a proper opportunity for the experts and those affected to feed into itIn fact I'm fairly sure that I sat on the Finance and Expenditure Committee with the now Minister in our first term when we had the opportunity to test a number of pieces of tax legislation. I'm sure he would agree that actually that select committee rigour creates a great deal of value in finding issues with legislation—irrespective of the political party differences around particular settings but simply operational issues. My colleague Lawrence Yule in the last moments of his contribution talked about a very good example of that which is the very real concern that's been raised by Habitat for Humanity about the fact that the very nature of what they do in using sweat equity and volunteers and social capital to build those properties—their very model would be disrupted by this requirement that any transfer within a five-year period of taking the acquisition of the site would be caught and have an automatic capital gains tax imposed on it.That I think goes to the heart of what it is the Government is seeking to achieve through this legislation and what they're actually achieving. The Minister will talk I'm sure from his perspective but as I've understood the Government's comments the Government's objective here is to try and help housing affordability. It's a laudable goal—no one has any issue with the goal—but having a laudable goal doesn't mean that everything you do in pursuit of it makes sense. I would seriously question whether this five-year brightline test is going to do anything for housing affordability.In fact the very regulatory impact statement that goes through and looks at the legislation and looks at this proposal says there is a lack of any clear data that tells us whether this will help housing affordability. So what we have is this knee-jerk reaction from the Government desperate to be seen to do something anything just to have something to say that they've done without any clear evidence that it makes a difference.Let's be a little bit more clinical about what they've said. They've said this is about helping housing affordability by attacking those nasty property speculators. Well fair enough—but actually there's a couple of things to get very very clear about. First of all property speculation is already taxable under the Income Tax Act. So a property speculator—someone who buys property for the very purpose of selling it again and making a capital profit—is already subject to taxation.When National was in Government we brought in the two-year brightline test because we recognised actually that the balance of likelihood is that someone buying and selling a residential property within two years—more likely than not they had bought it with the intention of selling it on and making a profit. So there is a natural alignment between likely outcomes and the period of time. You can't simply extend it to five years and say the same holds true. A five-year window of transaction dealing is far more likely to catch property investors.Now investors are a good thing actually. We're in a market where we need people to want to invest in the property market. We need people who are prepared to invest and grow housing stock. If we seriously want to make a difference—and I take the Government at their word that they do—about housing affordability you don't do it by constraining demand; you do it Madam Chair—Madam Chair?CHAIRPERSON (Hon Anne Tolley): Ah beg your pardon. I call the Hon Amy Adams.Hon AMY ADAMS: I got ahead of you Madam Chair.CHAIRPERSON (Hon Anne Tolley): There's a lot happening here at the moment.Hon AMY ADAMS: That's all right Madam Chair. I've got your back.CHAIRPERSON (Hon Anne Tolley): Women can multitask.Hon AMY ADAMS: That's right. They do it not by constraining demand not by stopping people wanting houses. You affect and impact positively home affordability housing affordability by increasing supply. So here we've got an attempt by the Government to stop people wanting to buy houses to stop people wanting to own houses. Well I would suggest that that is entirely the wrong approach. The right approach would be to say We want people to invest in the housing market. We want people to want to own properties and grow the housing stock." What we need to do is increase the number of houses being built not make it unattractive to hold them.So here you have this knee-jerk non - evidence-based approach to say "Let's just tax everyone who buys and sells a house within five years whether or not they're a genuine investor. We'll call them all speculators and somehow we kind of hope in the wash that will help housing affordability." Well it won't. It's misguided; it hits exactly the wrong part of the market. If the Government had been big enough to be prepared to actually hear some open and honest debate about whether this was a good idea we would have seen the SOP go to select committee and we would have seen discussion about it.Interestingly enough the Inland Revenue Department—who are not a department who are known for wanting to constrain their own powers and reach—have said themselves that they think a two-year brightline test is a better period. They are not in favour of extending it to five years. They've said that because of the very risk of overreach that I've talked about where you actually risk taxing a whole lot of people undertaking legitimate and proper investment activity; two years is the better period. And yet the Government doesn't want to hear that—doesn't want to hear from the actual people who will end up paying this tax whether or not it's a good idea; doesn't want to wait for analysis of whether this will have any impact at all on home affordability. Nope they want to chuck it in as an SOP—a total abuse in my view of the processes of this House—and not have it go to select committee.I asked earlier this evening that we take a mere four weeks for the public to have a chance to have a say on this for the practitioners to have a say on it to test whether there are unintended consequences—and I have no doubt the Minister's about to jump up and tell me that his officials have assured him not to worry it'll all be fine. Well frankly we shouldn't have to rely on that. We should have the right to hear from the individuals themselves whether they're affected and from the tax practitioners themselves how they see it playing out. But instead we've got a Government so desperate to be seen to do something that they will abuse the processes of this House they will cut out the right for New Zealanders to have a say on a proposition that is opposed by the IRD as not being the better framework; that has not got any evidence that it will help affordability; that doesn't address the core issue which is about supply.Actually even worse or certainly just as bad what there is clear evidence of is that proposals like this have the opposite effect because as you drive investors out of the property market you get a reduction in the number of rental properties available and as rental stock becomes unavailable and rental rates go up—and I know this as a previous Minister of Social Housing—it makes it that much harder for people to transition from social housing back into the rental market and then through hopefully in the long term to homeownership. If you take out or make unaffordable that rental step by reducing supply you're making it harder for those in the housing market and you're increasing the housing costs on real New Zealanders.This is an SOP to this bill that is outrageous. It is a total abuse of the process of this House. It is being rushed through for no good reason—there is nothing that a four-week time frame would have hurt the Government. They don't want to hear whether or not it's a good idea; they just want to be able to point to it and say they've done it. The Government don't appear to care whether it'll make any difference at all and in fact despite clear evidence that it will tax people who should not be taxed it will push up rental pricing and it will create inefficient use of the housing stock that we have the Government is still intent on ramming it through. For that reason not only will National continue to oppose this capital gains tax by stealth clearly designed to be an interim measure before Sir Michael Cullen and Grant Robertson manage to impose their full capital gains tax that they absolutely appear to want and have set up the Tax Working Group to deliver—we will oppose not only this SOP but if this SOP is included in this tax bill even though it is a bill that our Government put together that our Ministers introduced and that we would otherwise have supported the nature of this SOP makes it so egregious that we will oppose it. We will oppose it strongly and we'll make it clear to the people of New Zealand what an abusive arrogant process this is."