Cunliffe David: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
Cunliffe David: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
[Volume:656;Page:5983] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 In a rare show of unity in the Chamber it is common ground that it is my turn. I forget who it was who said something like: “I would have written a short article if I’d had the time but I didn’t so I wrote a long one.” 
Hon Members 
: Winston Churchill. 
Hon DAVID CUNLIFFE 
: Thank you. Someone had a better private school education than me I fear. 
This is it: the longest and no doubt densest legislation in the tax area since the rewrite. Yes that excludes the rewrite—the Minister of Revenue is nodding. This legislation is the product of a process where we did not have time to write a short bill so we wrote a long one. Every page of this bill is complex technical tax legislation. But in my 10 years in this Parliament I regret to say that I have never seen a worse process for bringing a bill to this House—never in 10 years. That is not to say that the substance is not in general worthwhile and with the exception of Supplementary Order Paper 34 Labour will be supporting this bill. We do so because the bill had its gestation in the previous Labour Government and has been brought to fruition by the same officials under this Government. 
There is broad consensus on the aims and purposes of the bill: to modernise our international taxation and our associated persons rule and to put through some consequential amendments and clarifications. But we have been unduly reliant upon the professional advice to the Finance and Expenditure Committee and I think it is a fair comment to say that all members of the select committee share a certain sense of consternation that in this “phone book” there lurk dangers of which we are not yet fully apprised. I have to say that the rush was compounded by the Government in setting before this House an unduly fast report-back date for the select committee and that put immense pressure on officials. It meant that on the day of a meeting the select committee was receiving reports that members had not had the opportunity to read the night before which frankly is not good practice for this House especially on a matter as technical as this. 
To add insult to injury we have come to two substantive Supplementary Order Papers which have been tabled in this House since the bill was brought forward. We will be voting against Supplementary Order Paper 34 dated Tuesday 4 August. There are a number of substantive matters in there including in particular the use of mortgage-backed securities and their tax consequences information about which the select committee never received. These things are not developed in a vacuum nor are they developed in the few weeks between the deliberation on the main bill and the presentation of the Supplementary Order Paper. I warrant that officials had these matters under consideration while they were briefing the select committee on the rest of the bill but no mention was made that a 52-page Supplementary Order Paper would be forthcoming. When the main bill is an incredibly truncated and complex process that is simply inappropriate. We will be voting against this Supplementary Order Paper not primarily because of its substance but because of this terrible terrible process. 
I would recommend that the Supplementary Order Paper be sent back to the Finance and Expenditure Committee for proper consideration in the normal way. Whether or not the Government will agree to that—and I invite the Minister to take a call—let me say that the risk that is borne from the detail in this “phone book” being wrong is risk that is borne by the National Government because it is the National Government that is rushing the bill through the House. As the effective dates of this bill have been changed by recommendation of the select committee because it was already apparent that the bill could not possibly meet the start of the tax year deadline I ask why we did not push the dates out far enough so that the select committee could give proper and due consideration to these matters. That is the key question. The point is that we are changing the effective implementation dates anyway. 
My colleagues on the Finance and Expenditure Committee are going to be taking a number of calls on the substantive issues that are raised in the bill. I will mention just three very briefly. The first is the associated persons rule. It is a longstanding part of our tax law that parties associated with a company must be co-liable for certain aspects of its tax liability. That rule has by consensus been too broad so this legislation by consensus narrows the associated persons rule. It does so having had detailed feedback from officials and on that point the committee did spend sufficient time to reach a good point. 
The second aspect I will mention concerns the international tax rules. For many years now the “grey list” has been an archaic convention based upon the idea that there were certain countries whose tax laws were similar to our own and could be treated in a much more equivalent way and other countries for whom we needed different and specific provisions. This bill updates a great deal of the complex tax law around our international taxation and the use of the “grey list” and within that a number of issues cropped up. I will mention one around the tax treatment of petroleum mining—an issue I understand that the Minister has given substantial thought to and around which there was some discussion at the select committee table—which is the need to ensure that there are not any unintended consequences should it prove in the fullness of time under the common law that there are pre-existing contracts that predate 4 March 2008. I think it was a commonly held view of committee members that we would not want any established pre-existing contracts to be caught by that rule to the detriment particularly of New Zealand companies. I invite the Minister of Revenue to confirm in his remarks whether indeed a contract that does exist before that date is a matter of common law and is not a matter for the particular deliberation of this House. 
I say in summary that this bill is a “phone book” full of important detail. Upon the interpretation of this detail rests the age-old game of poacher and gamekeeper where companies pay high-priced tax lawyers to find a way around what is written in this document and we pay officials to ensure that the integrity of the tax base is maintained and that the equity of the treatment of taxpayers is maintained with it. The point is that it is unfortunate at the least to say that the largest tax bill in New Zealand history outside of the rewrite has been rushed through this House to the detriment of the quality of the consideration of the Finance and Expenditure Committee. This process has been a low point of legislative practice and as a token thereof we will vote against Supplementary Order Paper 34 although we support the intent of the bill.