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McKee NicoleCRIMINAL ACTIVITY INTERVENTION LEGISLATION BILLIn CommitteeDebate resumed.Parts 1 to 5 and clauses 1 and 2 (continued)NICOLE McKEE (ACT): Thank you Madam Chair and thank you Minister. If I may just indulge you for a couple of seconds to reiterate what my colleague Mark Mitchell has said about the officials and the work and advice that they have given us for this bill. We were hearing this bill at the same time as hearing the Criminal Proceeds (Recovery) Amendment Bill and at times it got quite confusing so I'd just like to acknowledge and thank the officials for the work and advice that they gave.Minister I too would like to ask a question about clause 5 which inserts new section 308A. The amendments made to this section relate to threatening acts in relation to dwellinghouses and persons in dwellinghouses. We introduced new section 308A Discharging a firearm to intimidate" and I have to ask Minister why is this clause here? If the Minister's answer is that it introduces intimidation and harsher penalties then again I ask: why introduce this and tell the country that you're doing something about the drive-by shootings when in actual fact you already have legislation in place that will take care of that and that is under section 48 of the Arms Act "Discharging firearm airgun pistol or restricted weapon in or near dwellinghouse or public place" which reads "A person commits an offence and is liable [for] conviction [of] imprisonment for a term [of] not exceeding 6 months or … a fine not exceeding $10000 if the person without reasonable excuse discharges a firearm airgun pistol or restricted weapon in or near a dwellinghouse or a public place so as to (a) endanger property; or (b) endanger annoy or frighten any person." The only difference here is that we don't have the word "intimidate" and we have just as per section 198 a difference in the tariffs or the consequences.This Government has shown that we've got no qualms in introducing harsher penalties into the Arms Act so adding intimidation to section 48 and adjusting the penalties could have been a simple fix. Instead we have a clause that is lesser than the clause in the Arms Act because it doesn't address endangering property annoying or frightening people nor does it address drive-by shootings away from a dwellinghouse—those that are attacked say in a park for example unless we're using section 198 which has different penalties which my colleague Emily Henderson spoke to. So Minister can you explain whether a drive-by shooting not near a dwellinghouse is captured by this clause or would that type of incident revert to section 48 of the Arms Act or section 198 of the Crimes Act where a much lesser penalty for a drive-by shooting would apply? And is this an attempt to signal to the community that the Arms Act as amended by the Government and New Zealand First doesn't work or is it virtue signalling to the community that the Government is on top of drive-by shootings by creating more unnecessary legislation where legislation already exists?"
SpeechVOTINGCorrection—Criminal Proceeds (Recovery) Amendment BillCHAIRPERSON (Hon Poto Williams): Members just before we move forward we have a correction to a vote. When we were considering the Criminal Proceeds (Recovery) Amendment Bill the result of the vote on Part 1 closure motion was incorrectly announced as Ayes 76 Noes 44. The correct result is Ayes 74 Noes 46. The record will be corrected accordingly.
SpeechHARETE HIPANGO (National): Thank you Madam Chair and I acknowledge Minister Little in the chair beside you this evening. Minister I'm cognisant—and we will be all the more so cognisant—that tomorrow is the anniversary of the Christchurch mosque shootings where 49 people were killed. Minister speaking to and in responding to my colleague across the Chamber in relation to clause 5 but also the proposed amendment section 308 around threatening acts this is essentially to do with what could be deemed to be drive-by shootings. I reflect on back in Whanganui a number of years ago a little girl who was a family member Jhia Te Tua a baby who was killed as a result of a drive-by gang shooting.Minister I didn't sit on the select committee. My colleagues the Hon Mark Mitchell; I believe Simon O'Connor; and also the Hon Paul Goldsmith did; and my colleague Christopher Penk and I are tasked with the duty to address some matters here in the committee of the whole House. Following on from my colleague in relation to section 308 Threatening acts" I'm particularly interested in the discussion around section 198 and the difference in the tariff—the sentence to be imposed—and the determination to be made by the court in relation to that upon sentencing. But this section 308 "Threatening acts in relation to dwellinghouses and persons in dwellinghouses" to be replaced by section 308(b) with "by threatening behaviour alarms or attempts to alarm any person in a dwellinghouse."Minister would you please be able to give context in terms of the following section to be inserted around the discharging of firearm to intimidate—what that threatening act or behaviour or alarm in relation to dwellinghouses and persons in dwellinghouses would be which would be different to matters such as assaults or other such criminal impositions on the persons in the dwellinghouse.Debate interrupted."
Criminal Activity Intervention Legislation Bill — In Committee —Parts 1 to 5 and Clauses 1 and 2
Little AndrewHon ANDREW LITTLE (Minister of Defence): I'm very happy to respond to the discursive comments by my colleague Dr Emily Henderson just now and I think I can reassure the member and indeed I can reassure the whole House that as Cabinet very carefully considered these provisions we considered that the current provisions of the law the Crimes Act and the Arms Act. Indeed—so the Arms Act has a provision that if somebody basically uses a firearm in an improper sort of way discharges the firearm without reasonable excuse in or near a dwelling house then there is a penalty for that as a crime associated with it and it focuses on the misuse of the firearm. The penalty for that is up to six months' imprisonment or a fine not exceeding $10000. Obviously we also considered section 308 of the Crimes Act as the member has adumbrated in her comments as well. Section 308 focuses on discharging a firearm in a dwelling and then there's other crimes that relate to a clear intent to cause harm to somebody or if somebody driving by and recklessly firing without aiming at anybody in particular and doing so in a public place—that is not covered by the law as it is at the moment. So we needed a law that meant that if one of these goons carries on in their vendetta or whatever is motivating them to drive around shooting a firearm they are in a public place and they're firing aimlessly or directionlessly but with an obvious intention to cause fear or some intimidation then we have a law that captures that. And using a firearm in that way—and for some of these people of course they don't wish to cause injury; they just wish to cause a sense of fear. That is arguably a lesser moral wrong than somebody who is using a firearm to deliberately try to cause injury or death or cause harm to or within a household or a dwelling. So it's for that reason that having gone through that iterative process and that deductive process and that very close analysis of existing law—the circumstances in which this law might be used—we settled on a penalty that is less than the penalty for discharging a firearm with a view to causing harm but is more than discharging a firearm without reasonable excuse in a dwelling. That falls at the low end of the moral opprobrium spectrum and we need the penalties in the law to reflect the appropriate point on the moral opprobrium spectrum which leads us to this particular penalty here.We know that as the member has indicated—she wonders whether I think that this will be used. I am confident that it will be. I think our colleague Mr Mitchell alluded in his earlier comments to the number of antisocial behaviours and drive-by shootings that are happening involving firearms. There's a level of incidence now that is a cause for concern ought to have the attention of this House and ought to lead to appropriate adjustments in our criminal legislation. This does that and I think will have a very meaningful effect to both disincentivise that behaviour but if the behaviour happens then there is a recourse for it.
Mitchell MarkHon MARK MITCHELL (National—Whangaparāoa): Thank you Madam Chair. Look it's our pleasure to stand and take a call on this Criminal Activity Intervention Legislation Bill and support the bill. I think that one of the things that there's been quite a bit of discussion in this Chamber about is the ability for police to be able to execute those search warrants on a home that they think may be associated with gang activity particularly those that are involving firearms. It sort of goes back to if I can use the example in South Auckland where we had 23 drive-by shootings that were generated over a dispute over a gang patch and one gang taking offence at the way this gang patch was procured or treated by another gang which led to a totally unacceptable situation where we had 23 drive-by shootings. How we avoided a tragedy of a member of the public being seriously hurt or killed—I don't know how we did that; we obviously had the luck of the Irish on our side there but it was luck that we all strongly felt was going to run out. So a big part of this bill is being able to give our police officers the tools that they need to be able to take action and address that.I see that we have our officials in the Chamber. Can I please acknowledge all of you for the work that you have done. There were some very robust discussions had and some tricky questions put by the Justice Committee. The way that you responded to that and the work that you did was first class. So I want to thank and acknowledge all of you for your work.I know that my colleague across the Chamber has already raised an issue that he'd like the Minister to respond to. But I guess if I was going to ask the Minister in the chair to address anything it would quite simply be to go over the safeguards that we believe are strong enough in this bill to ensure that we don't have an outcome that we don't want—that is quite simply armed police officers entering a home of an innocent family or homeowner because having armed police officers enter a home in itself can be quite traumatic especially in a home where they actually aren't involved in any illegal gang activity drive-by shootings or the procurement or possession of firearms. So if the Minister can take a call and maybe talk to those safeguards. Thank you.
Utikere TangiTANGI UTIKERE (Labour—Palmerston North): Thank you Madam Chair. Can I also just acknowledge your extension to the role for this week as well—congratulations kia orana kia manuia to you Madam Chair.CHAIRPERSON (Hon Poto Williams): Kia orana.TANGI UTIKERE: I just have a couple of questions for the Minister that he may wish to respond to when he gets a chance. They relate to two components: the first is around the expansion of police power to seize and impound vehicles and as I understand it the bill amends the Land Transport Act (LTA) to include some new offences of dangerous and reckless driving and that the mandatory 28-day impoundment power exists. So my question to the Minister is: I assume that that is consistent with other provisions of like offending within the LTA so a response around whether there are levels of comfort around that. And the other is I guess more of a wholesale definition of the word cash" when there is the introduction of a new "cash seizure power" for police where they can seize and hold cash where it's found in suspicious circumstances. My question for the Minister is around the importance of defining "cash" within the legislation so that it's captured alongside other assets. So I'd be interested when he gets an opportunity to perhaps provide a response to those two questions."
SpeechParts 1 to 5 and clauses 1 and 2CHAIRPERSON (Hon Poto Williams): The question is that Parts 1 to 5 and clauses 1 and 2 stand part.
Criminal Activity Intervention Legislation Bill — In Committee—Part 1
Utikere TangiTANGI UTIKERE (Chief Whip—Labour): Thank you Madam Chair. I seek leave for all provisions to be taken as one question.CHAIRPERSON (Hon Poto Williams): Leave is sought for that is there any objection? There is appears to be none. That will be so.
SpeechCRIMINAL ACTIVITY INTERVENTION LEGISLATION BILLIn CommitteePart 1 Discharging firearm with intent to intimidateCHAIRPERSON (Hon Poto Williams): Members we come now to the Criminal Activity Intervention Legislation Bill. We come first to Part 1 of the debate on clauses 3 to 14 Discharging firearm with intent to intimidate". The question is that Part 1 stand part."
Mitchell MarkHon MARK MITCHELL (National—Whangaparāoa): Thank you Madam Chair. Look just to carry on from my friend and colleague Chris Penk the Criminal Proceeds (Recovery) Amendment Bill yes it probably would have been clearer if retention had been captured in that but I think that the criminal proceeds recovery is really the guts of the bill. We've talked about it—it's been well-canvassed and well-spoken about through the committee stage in terms of having legislation that actually allows our responsible agencies to be able to identify take action and recover criminal proceeds of crime. I think that it was important especially around KiwiSaver accounts that we really litigated criminal proceeds because there was a risk through the select committee process that you could capture people that quite legitimately had savings inside their KiwiSaver accounts that weren't criminal proceeds that didn't come from criminal proceeds but in fact could have been mixed with cash that was laundered and put into those accounts that were from criminal proceeds. So again I think that has been well discussed through the committee of the whole House stage and also there's the work that select committee did.I'd like to acknowledge the officials also and just say that although yes I agree with my colleague Christopher Penk who always puts a very legalistic lens across this legislation as our shadow Attorney-General and it would have been nice to have seen retention included in there at the end of the day we support this bill because we recognise that it is going to be useful in terms of giving our agencies the additional powers that they need to be able to recover criminal proceeds with this bill. Thank you Madam Chair.Clause 1 agreed to.Clause 2 agreed to.Bill to be reported with amendment.
Criminal Proceeds (Recovery) Amendment Bill — In Committee—Clauses 1 and 2
Penk ChrisCHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much Madam Chair. Just a brief one from me on the title and commencement if I may. We had a good discussion before the dinner break with the Minister and we have another Minister in the chair and no doubt he'll engage in good faith as need be. But in fact the point that I'll make is really just more in the nature of a comment rather than a question which is that in the name of this bill obviously we're amending existing legislation that already provides a regime for the proceeds of crime roughly speaking or property that's not legitimate to use that language in the bill. But it does occur to me that we're using that word recovery" and of course that's ultimately the intent of the legislation: that property that has been obtained in a way that can't be justified as legitimate in certain circumstances will be recovered by the State. But I also think that the word "retention" in there might have been helpful just to give an indication that there is provision in this legislation for property to be retained or obtained I suppose but held in any case in a sort of a limbo kind of state literally a holding pattern whereby the State might say that it's impossible to determine one way or the other if the property is legitimate or not and the person from whom that property has been seized has the opportunity for a period of time to demonstrate that they do in fact have it legitimately. So perhaps just as to the title if we were to have said "Criminal Proceeds (Retention and Recovery) Amendment Bill" that might have perhaps given a fuller picture but I'm not going to be so churlish as to suggest that there's anything wrong with the title as it is more just the fact that reflecting the whole way that the law operates would have given a fuller picture."
SpeechCHAIRPERSON (Hon Poto Williams): Members the House is in committee for consideration of the Criminal Proceeds (Recovery) Amendment Bill and the Criminal Activity Intervention Legislation Bill. The committee is considering clauses 1 and 2 of the Criminal Proceeds (Recovery) Amendment Bill.
SpeechHon KIRITAPU ALLAN (Minister of Justice): I just want to respond briefly to my friend Nicole McKee who at the outset asked an interesting question just on the range of different commencement clauses that we have in the bill. She rightly notes that there are a series—sorry I'm just flicking my way there—of commencement dates. These are listed in clause 2: one is that it's on a date set by Order in Council; there's another to the extent not brought into force earlier than 12 months after Royal assent; and then there's sections 7 32 34 38 39A and 42 and Subpart 1 of Part 2 that come into force on the day after the Royal assent; and then an Order in Council made under this section the secondary legislation; and then that has all of the particular provisions that relate to this. A good question and as I understand the commencement clause brings different provisions into effect at different times—and there's a delay for some of the provisions because those relate to the need to have regulations prescribing the forms of orders and applications. I hope that makes sense. Thank you Madam Chair. CHAIRPERSON (Hon Jacqui Dean): Members the time has come for me to leave the Chair for the dinner break and the House will resume at 7 p.m.Sitting suspended from 6 p.m. to 7 p.m.
SpeechClauses 1 and 2CHAIRPERSON (Hon Jacqui Dean): Members we come now to our final debate the debate on clauses 1 and 2 Title" and "Commencement"."
SpeechPart 2 Amendments to other ActsCHAIRPERSON (Hon Jacqui Dean): Members we come now to Part 2. This the debate on clauses 43 to 52 and Schedule 2 Amendments to other Acts". The question is that Part 2 stand part."
McKee NicoleNICOLE McKEE (ACT): Thank you Madam Chair. Minister we're inserting a new section 24A which is about making restraining orders relating to specific properties of associates. And at section (2A) of that clause it talks to formal valuations of property. The Commissioner of Police is not required to provide the court with any formal valuation and may provide estimates as evidence in regard to property values. And we actually delete section (2B) in the original bill because we've got these amendments in at (2A). What is the expectation of the police here Minister? What are the number of valuations that should be presented? And if they're not formal valuations who actually does do the valuations? And then what is the expectation of how property will be valued if it is not done formally especially when we're likely to see quite high valuable assets like homes and motorbikes—some in the hundreds of thousands of dollars—being seized?If we are not to give a formal valuation then who is giving the valuations? How many of them are to be required? And because we say within that clause that the police may provide estimates" will they actually provide estimates or could they just stand up and say "Well no we decided not to today."? Could you just explain how that clause is actually going to work in regard to the valuations in regard to the provision of estimates who gives those estimates especially for the high value of some of those seizures that we'll be expecting to make?Hon KIRITAPU ALLAN (Minister of Justice): Thank you to the member. In consultation with my officials I understand that essentially it's a bit of a pragmatic test that's required to be satisfied. So let's say that the police have seized a nice Harley-Davidson—one like my father drives or something: you know a good one. What they are required to do is basically provide the court or provide evidence of that value so from a reputable you know just go online would be sufficient enough. It needs to be "reasonable." There just needs to be reasonable evidence to support the valuations that are provided for the determination to be valued."
SpeechHARETE HIPANGO (National): Thank you Madam Chair. I heard someone else take a call and thought it might go that way so I appreciate being called. Minister I'd like to pick up on some points that are raised by my colleague and friend Chris Penk in relation to the use of the term restraining order" under new section 24A proposed as an amendment in clause 15. Not having sat on the select committee at the time that there were these discussions and considerations "restraining order" for those of us who have worked in the Family Court—and bearing in mind that this is likely to be in the jurisdiction of the District Court criminal court dealing with some aspects of civil proceedings as well. Has it been considered Minister that rather than referring to the term "restraining order" which in the Family Court is associated with a protection order and the safety and protection of an individual as opposed to property which is what new section 24A is specifically about; so that there is the absence of confusion has consideration been given to the terminology as a property restraining order so that there is that clear delineation in terms of jurisdiction but an understanding by the public as to what this relates to and means?Hon KIRITAPU ALLAN (Minister of Justice): I thank the member Harete Hipango for the question. Section 5 in the primary Act defines a "restraining order" so these have been in operation for the proceeds of crime regime since 2009. I'm not sure of its whakapapa prior to then but the operational provisions are in sections 24 to 27 and there it's defined or how these are made. So the court hears an application for a restraining order related to specific property where that court is satisfied on reasonable grounds to believe that property is tainted property and they then may make an order that that property—"(restrained property)"—is not to be disposed of. There's a range of other provisions there and then it walks through the way in which the court must treat those restraining orders. So what we've sought to do in this amendment bill is to add no undue—or further disrupt if you will the current existing regime but add in essence to what is already there."
McKee NicoleNICOLE McKEE (ACT): Thank you Madam Chair. Minister I was looking at new section 5B(1)—inserted by clause 5—followed by 5B(1)(a) followed by 5B(1)(b). When I looked at 5B(1)(b) I got quite confused so much so I had to stop looking at the screen for a while because I thought I was interpreting (b) incorrectly. What it states in the bill is that legitimate property—at 5B(1)—means all property regardless of whether it's been gifted whether it's been loaned even if you've got it by way of credit it's something purchased by another for another but also for the benefit of the respondent. But new paragraph (b) then says it does not include property acquired as a result of activity that's engaged in by the respondent or any other person and is an offence." I had to keep looking at that because I thought "and is an offence."? Well maybe it should be "is not an offence". But I looked at it in a different way thinking there's a double negative that we've got going on there. Maybe I'm reading it incorrectly so I just want clarification again Minister: is this new section saying that if you're a criminal identified as being part of an organised criminal group and you've acquired property through crime and that property isn't legit we're going to take it—meaning the Government will take it if it's not legit—but if that property that perhaps a criminal has put in someone else's name was paid for from legitimate income earned by that criminal and this can actually be proved then the house is safe? Is that what it's saying?Hon KIRITAPU ALLAN (Minister of Justice): Thank you Madam Chair. Let's just go to and fro and see if I've got you right and then if I haven't feel free to ask me again. So as I understand it the way that those two provisions are separated out (1)(a) where the resource has been gained in a legitimate way: I a person that is also involved in an organised criminal group go to work every single day I pay tax on that money; I'm a builder who knows—you know I'm doing something every single day that is all as a consequence of legitimately obtained funds. The rule is that the State can't reach into those legitimately acquired funds. Where however through my organised criminal activities I have then gotten ill-gotten gains and I have put those into the same pool whatever that may be that's where that subsection 1(b) applies."
McKee NicoleNICOLE McKEE (ACT): Just further to that—thank you Madam Chair—if we look at the example of where this situation occurred and it was a public servant how does that fit into this regime of significant criminal activity based on gangs and the work that they and those in organised crime groups undertake? Will this clause actually allow for instances where public servants do commit crimes like this to also have forfeiture orders placed upon them?Hon KIRITAPU ALLAN (Minister of Justice): Thank you Madam Chair and I thank the member for the question; again one very similar to the one I asked at the outset. Yes so the primary purpose for the introduction of the amendments is the seizure of cash that we can identify from organised criminal groups. Assets that they hold whether those be motorcycles or large quantities of cash that just simply cannot be identified—that's the primary focus. But there were a number of other I guess areas which had been identified by the police as being problematic and that could be tidied up as a part of this bill as well because it amends the overarching criminal proceeds scheme. So that's where you see that particular circumstance of the KiwiSaver being a virtuous hiding hole. We don't think that's appropriate and this bill through this provision will seek to circumvent that.
SpeechCRIMINAL PROCEEDS (RECOVERY) AMENDMENT BILLIn CommitteePart 1 Amendments to Criminal Proceeds (Recovery) Act 2009CHAIRPERSON (Hon Jacqui Dean): Members the House is in committee for consideration of the Criminal Proceeds (Recovery) Amendment Bill and the Criminal Activity Intervention Legislation Bill. We come first to the Criminal Proceeds (Recovery) Amendment Bill and we begin with a debate on Part 1. This is the debate on clauses 3 to 42 and Schedule 1 Amendments to Criminal Proceeds (Recovery) Act 2009". The question is that Part 1 stand part."
Kuriger BarbaraHOUSE IN COMMITTEEASSISTANT SPEAKER (Barbara Kuriger): I declare the House in committee for consideration of the Criminal Proceeds (Recovery) Amendment Bill and the Criminal Activity Intervention Legislation Bill.
SpeechClauses 1 and 2CHAIRPERSON (Hon Jacqui Dean): Members we come now to Clauses 1 and 2. This is the debate on the title and commencement.
Kuriger BarbaraNAISI CHEN (Labour): I move That the question be now put.CHAIRPERSON (Barbara Kuriger): The question is—no actually I'm going to go to Brooke van Velden because Brooke's just arrived in fairness.
Uffindell Sam; Parker DavidSAM UFFINDELL (National—Tauranga): Thank you Madam Chair. Thank you for your comments there Minister. I'm not sure the question that I put forward though was addressed because it was around what the Government has done around interest deductibility and any inequities or distortions that has caused by denying want-to-be homeowners—aspiring homeowners—from entering the market given that most of those costs have been passed on from the landlord to the tenant. And partially as a result of that we have seen rents go up $175 a week and a lot of those aspiring people they won't be living at home. Some of them maybe live with their parents which is very fortunate if they are but a lot of them will be renting and bearing $8000-$9000 additional a year in rent that they won't be able to save up for their deposit.I'd also note some of the Minister's comments that were made there around planning. And we do have two new planning bills currently. We spoke on the first reading late last year and there'll be another one coming up soon from this Minister I would assume. And some of the commentary around those has been that that will make it more difficult to get consents and to get things done. If the Minister has any opinions to the contrary on that I would be very keen to hear them about how that will speed up the consenting and the delivery of more affordable housing. And I'm sure we can both agree on both sides of this House that we do have a real housing crisis. We do have what could end up being a generational divide where we have people—you know probably a lot of people in this House are fortunate and they have been able to get on that ladder but for a lot of people coming up to 20 30 years and below unless they've got the bank of mum and dad behind them they are going to really struggle. So I would like to see how those planning rules are going to further that.I did also note the Minister talked around what the housing Minister had done with building products. And the Minister is correct in that some of the upward pressure on that has come from building suppliers. I believe our colleague Andrew Bayly did suggest at some point last year that we look at approving what the Australians have approved. We have a pretty closed-up system here in New Zealand and if we have a comparable jurisdiction like Australia approving building products then why not Minister just allow those to be brought into the New Zealand market? As in the case with Gib that would certainly make life a lot easier. It would enable the supply it would help reduce some of that upward price pressure and I'm sure there's many other aspects of building materials where that could be extended to as well.Hon DAVID PARKER (Minister of Revenue): I can confirm that nothing in this part of the bill either affects the public house build or the private house build which is going very well in New Zealand but this legislation doesn't impact upon it.
Parker DavidDAMIEN SMITH (ACT): Did any consideration—going into Cabinet—discuss the benefit to the renters who will bear this cost and with this exemption and distortion in the market from the industry-adopted building limitations why is building around residential properties the Government's focus solely?Hon DAVID PARKER (Minister of Revenue): I'm not sure I caught the gist of that question. Could I ask the member to repeat that.DAMIEN SMITH (ACT): Yes. Did anybody in the Cabinet consider the benefits and costs to renters who will bear this cost of this distortion?Hon DAVID PARKER (Minister of Revenue): Well there is no direct correlation between landlords' costs and rents charged to tenants as was proven by the fact that during the period when interest rates were—and interest is one of the biggest if not the biggest costs to landlords. In the five or 10 years post the global financial crisis when interest rates were consistently coming down rents didn't follow. So it proved the point that there is no direct correlation between those costs and rents—which is not to say that those costs don't influence rents; of course they do. We believe that the changes that we have made to tax rules in the last few years have improved the outcomes in New Zealand. They've improved the ability of an owner-occupier to compete against a landlord for the purchase of an existing property—that's undoubtedly true it's arithmetically easily proven—and it seems to be also shown by the correlation with the proportion of homes that are being purchased by occupiers rather than landlords. Since we've introduced this rule the percentage of existing homes that have been sold to people who actually live in them rather than own them to rent them out—that percentage going to owner-occupiers has increased. We see that as evidence that what we have done has worked there.In respect of the point that the member made—that this is distortionary—well I can see the member's argument in that regard but property is a very unusual asset class and because banks love the security of a first mortgage over land it's much easier to leverage a property transaction than it is any other business transaction. Indeed many other business transactions are leveraged over property. Does that create a distortion? Well we think that the status quo ante created a distortion whereby there are increasing proportions of existing homes that've been purchased by landlords relative to owner-occupiers compared with earlier years in New Zealand. So you could argue that that set of events was distortionary. Does it create other distortions in the economy? Not in a meaningful way I don't think. The ability to deduct interest for example if you're a small business or if you're a person who borrows money to buy a small business or to expand a small business or a medium-sized business or a large business—that borrowing is secured over land and that interest remains fully tax deductible.
Brooking Rachel; Parker DavidRACHEL BROOKING (Labour): Thank you Madam Chair. Sorry for hiding behind the Minister here. On that point about wanting to increase the bill to rent land and the rental market for those long-term durations leases and also these bigger developers can you comment on what will be the new section 58A of the Residential Tenancies Act—which is found almost at the back of the bill on the second to last page—whereby this applies to a tenancy of at least 10 years in respect to having build-to-rent land and why the decision is there for 10 years. Thank you.Hon DAVID PARKER (Minister of Revenue): Madam Chair thank you. For the reason that we're trying to create a long-term rental market where people who—and there are people in society who will always need to rent; we want them to have security of tenure so that they can put down roots they can become involved in their local communities they can have assurance that their kids can go to the local school and so that we can encourage security amongst that group of people. Now one of the ways we can do that is to confer this additional tax advantage to the investors who are backing that sort of relationship with their tenant where they have a long-term lease that gives them security to live there as their kids go through primary school for example. And we thought that was a reasonable quid pro quo. The cost of it to the Crown is actually not very high because the difference between the existing 10-year period for which deductions are—is it 10 or 20 years before? [Interruption.] Twenty years sorry. So already the law allowed a 20-year interest deductibility period for a landlord. The net present value to a landlord of the extra deductibility and interests in years 21 and beyond when discounted to the value today 20 years earlier is actually not very high. So in dollar terms the cost to the Crown of this move is not high. And in dollar terms the benefit to the long-term landlord is not very high. But it does signal an interest in us that we are trying to create this long-term rental class for the benefit of society by enabling people to have a 10-year-plus lease.Now this is very common in a lot of overseas jurisdictions. Indeed in a lot of overseas jurisdictions you essentially—so long as you pay your rent and you don't knock the property around if you get a long-term rental you can essentially stay there for life. And indeed in some countries you can keep it in your family so long as you're still paying the rent. Now we're not going that far in this legislation but you can see that we're trying to weight the market for existing homes in favour of owner-occupiers including first-home buyers but in respect of rental stock we're trying to create a longer-term opportunity for renters and investors alike.
Kuriger BarbaraPart 5 CHAIRPERSON (Barbara Kuriger): Members we now come to Part 5. This is the debate on clauses 184 to 198 Amendments to other enactments". The question is that Part 5 stand part."
Kuriger BarbaraPart 4 Amendments to the Tax Administration Act 1994CHAIRPERSON (Barbara Kuriger): Members we now come to Part 4. This is the debate on clauses 138 to 183 Amendments to the Tax Administration Act 1994". The question is that Part 4 stand part.The question is that the Minister's amendments to Part 4 set out on Supplementary Order Paper (SOP) 319 be agreed to.Amendments agreed to.CHAIRPERSON (Barbara Kuriger): Brooke van Velden's amendment to clause 183 set out on SOP 321 is out of order as it was not lodged with 24 hours' notice."
Parker DavidDAMIEN SMITH (ACT): The Minister of Revenue mentioned that Inland Revenue will get only 6.5 percent of each dollar spent on stays and rides by way of the sales tax. In practice the law of supply and demand meant that 6.5 percent tax burden was likely to be split in some proportion between hosts and drivers on the one hand and the customers on the other. So the price of stays and Uber rides is likely to rise but not by the full 6.5 percent. Do you agree with that Minister and what do you think the figure is?Hon DAVID PARKER (Minister of Revenue): I agree.
McClay ToddHon TODD McCLAY (National—Rotorua): Thank you Minister. I did make reference to what Nicola Willis said. I said that they should be treated equally and they should be treated fairly and in this case they are not. If we take the example the Minister has given of a taxi driver versus an Uber driver that taxi driver gets to claim back the full amount of GST on their purchases in the case of their work vehicle; an Uber driver does not get to do that—number one.Number two: Minister I assume what you're saying in as far as the only reason that this Government the Labour Government is not making people who earn $60000 or less register for GST and collect GST and pass it on is because it's too difficult. What that suggests is if this Minister can find a way to make it easier and less costly administratively for smaller businesses to have to collect and pass on GST and the Government will decide what their off-put on that should be that he's in favour of that.In effect the taxi driver and the Uber driver are not being treated the same. Where a taxi driver will earn $20000 in a year he does not have to register for GST but may choose to; an Uber driver who will only earn $20000 a year will have GST collected on his or her behalf. That's not equal and that's not fair as our finance spokesman said the system should be. If this is just around how easily money can be collected then New Zealanders all over the place should be very very worried because it sends a signal that the Government if it can find ways to collect tax from you will be coming to do that.The final thing is: fine about this Minister finding an easier way to collect money from very very many New Zealanders from those that have baches and they rent them out from time to time to those that want to supplement their income through driving a car or riding a pushbike to deliver food and so on who must pay tax on that earning. What he's actually saying is that he does not believe that there will be an extra cost to the New Zealand consumer and that is manifestly not correct. This isn't a fair and equal service. It burdens New Zealand consumers because they will have to pay more and at the same time it is actually un-levelling the playing field saying there are a group of New Zealanders who earn less than $60000 for whom now the GST regime will be applied to but they won't get the same benefits of getting GST back depending upon what their outgoings are. Secondly another New Zealander that doesn't work online with a New Zealand company overseas will not have to register and pay GST for the same amount of earnings.That isn't fair that isn't equitable and it's actually just this Government after more tax to spend on things they want rather than trusting New Zealanders to have their own money and get on with their lives.
Kuriger BarbaraPart 3 Amendments to Goods and Services Tax Act 1985CHAIRPERSON (Barbara Kuriger): Members we now come to Part 3. This is the debate on clauses 102 to 137 and the Schedule Amendments to Goods and Services Tax Act 1985". The question is that Part 3 stand part."
SpeechSARAH PALLETT (Labour—Ilam): I move That the question be now put.
Parker DavidDAMIEN SMITH (ACT): I'd like to refer to clause 31D proposed section CZ 29B (Accommodation expenditure: North Island flooding events)" in Supplementary Order Paper 319. CZ 29B(3) requires employees to be hired and working on site within six months of the flood in order to benefit from the extended five-year exemption for employee-provided accommodation. While the legislation at CZ 29B(4) provides that the Minister of Revenue can extend this state by Order in Council it is clear that this time period is unworkable and should be extended to four years at the outset like with the earthquake-equivalent rules. Noting that the base tax rule is that all accommodation provided by an employer to an employee is taxable income to the employee. However there are some exemptions including when an employee is provided accommodation because they are working on a big out-of-town project. In many cases there's no benefits to the employees; they may be maintaining a home elsewhere they're away from their family etc. The base time for this rule is three years. However it's proposed to extend this to five years which could realistically be how long some infrastructure projects or repair projects may take. A five-year exemption was provided for workers on the earthquake rebuild. However that was more generous than what has been suggested here which is that an employee needs to be engaged and working on a project by July this year. This just isn't realistic and things aren't organised that quickly and we'd like the Minister's opinion on that.Hon DAVID PARKER (Minister of Revenue): Well with respect I disagree. It's not yet clear that that longer period will be necessary. If the member is proven right by events as they actually unfold then we could look at the issue again."
Parker DavidDAMIEN SMITH (ACT): Just referring to proposed clause 31B inserting new section CZ 23B (Employee benefits for North Island flooding events: exempt income)" in Supplementary Order Paper 319: new subsection (1)(g) provides that in order for a payment to be tax exempt it needs to have been treated as being exempt income by the employer. This raises a practical issue for employers who have conservatively paid tax on any payments to employees while waiting for action from the Government. Inland Revenue need to make it clear that employers are able to rectify past payday findings to correct prior taxable amounts.I'd like to note that this rule allows an employer to give up $5k to employees who were impacted by flooding without tax. There are lots of businesses who will have made emergency payments to help employees.Hon DAVID PARKER (Minister of Revenue): I'm advised that the answer is yes."
Parker DavidDAMIEN SMITH (ACT): The fringe benefit tax on public transport exemption ignores the fact that the ability for employers to provide such a benefit is severely constrained by practicalities. For example an employer would need a process agreed with Auckland Transport for Auckland Transport to identify the employees and for Auckland Transport to invoice the employer directly. That seems to me very impractical. If the Government wants to encourage public transport use why hasn't it preferred to allow employers to reimburse employees for the costs without tax?Hon DAVID PARKER (Minister of Revenue): That's a fair point that the member makes. These rules do need to be practical. They are designed with a view to minimising avoidance but you can go too far in your precautions. If I understand the member's point correctly he could be referring to the situation where an employer rather than giving someone $10 a week to cover their bus fares is required to purchase the bus fares on behalf of the employee directly from Auckland Transport for example. That's an issue that has been raised by others in addition to the member. We are concerned to look at that and make sure that we're not creating another problem by being too loose there. But we will have a look at that issue again and if it's not working in as practical a way as was hoped we will address that in a future tax bill—perhaps in the May remedial tax bill.
Watts Simon; Parker DavidSIMON WATTS (National—North Shore): Thank you very much Madam Chair. Minister I want to take a look if I may at clause 17 which is in regards to Treatment of amounts derived by cross-border employees". For those of you watching at home and enjoying this debate on tax legislation just keep up to play with this because this is a good clause. So what I'm interested in particularly around new section CE 1F(2) inserted by clause 17 Minister which is a reference there to "Amounts treated as derived 20 days after payment". The question is quite simply whether the Minister believes that there is adequate flexibility in regards to that 20-day aspect acknowledging that there's a number of differences and complications that come with individuals that are deriving income particularly when working on a cross-border mechanism—whether he believes that that 20-day period which is obviously quite specific is appropriate and is flexible enough in regards to what is required and whether any other consideration was given to that point. I do note that it was something that was canvassed at the select committee phase and I'm interested in the Minister's comments in regards to it.Hon DAVID PARKER (Minister of Revenue): Thank you for that question. Clause 17 which inserts new section CE 1F into the Income Tax Act on the treatment of amounts derived by cross-border employees at subsection 2 does have a 20-day period which says that "the PAYE income payment is treated as derived by them on the 20th day after payment when the employer chooses to deliver their employment income information". But then it needs to be also read in light of clause 18 of the bill which inserts a new section CE 1F(3C) which says that there's a 60-day grace period. That grace period addresses perhaps some of the issues that the member's concerned about because it recognises the difficulties in complying with New Zealand's tax system when you're a non-resident. Because many breaches of our rules are inadvertent we're trying to reduce compliance costs and administrative costs both for the taxpayer but also for the revenue department by allowing people to correct these things promptly if a mistake is made."