Foss Craig: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
Foss Craig: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
[Volume:644;Page:13699] 
CRAIG FOSS (National—Tukituki) 
: 
 I think it is polite first of all before we enter the Committee stage to thank those who have been involved in the formulation of this bill those who sat around the Finance and Expenditure Committee table and the officials who helped us wade through it. I have a problem though in that since the bill first arrived at the select committee there has been a change in the chair of the committee; also the bill has changed radically from the one the select committee first considered. We had submissions on it and changes from officials etc. but the bill that has arrived here today has parts to it that are substantially different from the bill that the select committee spent probably over 6 months on in consideration deliberation and taking submissions. That is totally unacceptable. 
I could talk about clause 3 of Part 1 which is the bit that deals with income tax rates and addresses the $20 billion extra per annum in personal tax that has been taken by the Government every year since 1999—$55 billion - odd. Over $1 billion a week now is taken in personal tax. I could compare the tax rates in New Zealand with the Australian tax rates and their thresholds that have been changed to the benefit of the taxpayer every year for last 5 years. I could talk about the 14 percent of taxpayers who are now in the 39c tax rate bracket rather than the 33c tax rate bracket—the 5 percent that Labour said would be on the high rate in 1999. I could talk about all those who have been dragged up through fiscal drag—the pumping of inflation from this current Government to drag them into higher tax brackets. I could talk about all those things but I will not; I will leave that to colleagues. 
What I would like to do is particularly look at the amendments to Part 1 on Supplementary Order Paper 167 which deal with amendments to the Income Tax Act 2004. Supplementary Order Paper 167 in the name of the Minister the Hon Peter Dunne is interesting in that we have 22 pages of last-minute amendments that arrived at lunchtime today. That replaces three pages of amendments on Supplementary Order Paper 119 dated earlier this year dealing with finance leases. Supplementary Order Paper 119 had a kick-off date of 20 June 2007. We note here that the dates affecting finance leases on the new Supplementary Order Paper are backdated to and include 20 June 2007. That is actually significant. Many submitters—many learned professionals—submitted on Supplementary Order Paper 119. The Finance and Expenditure Committee had many discussions and was very concerned about the retrospective nature the catch-all drift nature of the original Supplementary Order Paper to the point where the Minister agreed and pulled the Supplementary Order Paper. 
I point out that in the commentary on the bill one entire page is given to the select committee’s reasons on why the finance lease rules in the original Supplementary Order Paper were pulled. Then just a few hours ago this new Supplementary Order Paper 167 was launched on members of the House. That is absolutely outrageous. There has been no consultation no discussion and no discussion paper. All and sundry believed there was further work to be done around finance leases. I just do not understand quite why this Government is trying to bulldoze through legislation such as this which confronts Sir Ivor Richardson’s taxation accord process of 1992 where there was open consultation and open discussion and where we get buy-in from those who participate in and need to enforce taxation law. 
My colleague Dr the Hon Lockwood Smith referred to new section 78BB. In my second reading speech I also raised issues about this part in relation to Supplementary Order Paper 119. It is a drift-net because it seems to be law written for discovery. Many questions were asked of officials and advisers. We asked what the problem was who the problem was what the quantum was and what the risk was. Basically those questions were met with blank stares. We constantly asked for further quantifiable information but very little was forthcoming. Thus the original Supplementary Order Paper was pulled in order to discover more information. I do appreciate that discussions were made outside of the select committee between various officials from the Inland Revenue Department Treasury and so on but the Finance and Expenditure Committee was totally blind to the changes that were made. 
Some of the original problems with Supplementary Order Paper 119 and Supplementary Order Paper 167 were their retrospective nature. The public relations from the Minister responsible for Treasury and the Minister of Revenue today started to push away that this measure is still retrospective in its nature. It will still be subject to litigation. At the end of the day the parties caught in the crossfire as I read this will actually be New Zealand entities—New Zealand financial institutions—which will be sued at both ends from an offshore party and an onshore party because the terms of the original leases have changed. 
I have a few questions to ask of the Minister in the chair the Hon Peter Dunne that I will go through over the night but one question I would like to ask him is what the fiscal risk is here. It was explained to us that the future value of all lease payments is unchanged. It is only the present value that is at risk here. It is the time value of money. I recall that someone mentioned that about $200 million was at risk but we were not told whether it was per annum over 5 years or over 10 years. If it is over 5 years that is about a $3 billion notional problem. What is it? How can we be putting it into legislation of a retrospective nature like this when the quantums are not given? 
I would argue that Supplementary Order Paper 167 is actually punishing those New Zealand companies that are trying to minimise the impact to New Zealand of the high interest rates that are a result of this current Government. These are mostly capital-intensive large notional infrastructure projects I believe but again we were never told. I look forward to the Minister describing some of the leases if he could. Under the Fiscal Responsibility Act I presume—and I am open to be corrected—there should be some costings around the Supplementary Order Paper. What are the costs? What are the benefits? Under this new Supplementary Order Paper the parties involved have to pay back one-sixth or read another way 16.666 percent—call it 17 percent—of the depreciation claimed over the life of the asset. So why should these companies in New Zealand be singled out like that? There are some assets at 48c depreciation. Essentially the depreciation for them is now 31c in the dollar. I ask the Minister to clarify that point further. 
The Finance and Expenditure Committee spent much time and expressed much concern particularly about the retrospective nature of this legislation. I am sure that we have not heard the end of it. Quite frankly I am sick and tired of the fact that every time I get up to talk about a KiwiSaver bill or a bill in relation to these taxation issues we have yet another Supplementary Order Paper thrown at us at the last minute. I find that embarrassing for this House and I think a lot of explaining needs to be done. Thank you Madam Chairperson.