Jones Shane: Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill — Second Reading In Committee 
Jones Shane: Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill — Second Reading In Committee 
[Volume:636;Page:7102] 
SHANE JONES (Labour) 
: 
 Kia ora anotatou. Firstly I acknowledge the efforts of my committee members on this marathon task of dealing with the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill. However I must say that when we prepared to break into a subcommittee and hear from the four winds what the various submitters had to say no one was more vocal than John Key about insisting that we spend the time and give concentration and effort to the people from Auckland particularly the submitters because they are high-quality very influential and likely to offer very coherent views that might influence the Government’s policy. It came as a great disappointment but not as a surprise to Doug Woolerton and others that the very person who never showed up to any of the hearings was John Key. 
I give full marks to the deputy chairperson of the Finance and Expenditure Committee—my fellow Northlander—who when we became bored of talking about tax compared notes about bulls. Before I talk about anyone else in the committee I pay a vote of thanks to Robin Oliver and his team. We were served up an array of problems and the committee went through a series of permutations but I must say to Mr Oliver and his team that they attended to our every need answered all of the questions and followed us from Auckland Wellington and down to Christchurch. So I pay a vote of thanks to them. Irrespective of who the Minister might be or perish the thought who the party might be we are well served by Robin Oliver and his team. 
Let us move to the lame very vacuous assertions that have been made by Mr English and others that we abandoned process. Let us get a few facts on the table. Fact number one is that no one less than Sir Roger Douglas recently commented to me when I saw him at a social occasion that this problem has bedevilled many Governments. It caused him some consternation and it defeated Ruth Richardson. Indeed we have employed and seen a host of experts come through the process and offer us their views such as my good friend Rob McLeod and Mr Stobo and it fell to this committee to craft a suitable and reasonable solution to a longstanding problem. 
In crafting this solution I remind everyone that there have been about eight policy documents over the last year or slightly longer so anyone who is suggesting to the public—who no doubt are riveted listening to these speeches at the end of the year—that due process was destroyed is not dealing with the facts. At the end of our process we provided an opportunity for nigh on 15 to 20 of New Zealand’s experts to give us their view about the fair dividend rate model. Of course there are a host of other aspects to this bill but the fair dividend rate model worked most people into a lather and it was all based on misinformation. 
I cannot say with any authority that that misinformation was fed by the Opposition but there was gross misinformation that was no doubt aided by the accountants whose capacity to add value is inversely related to the costs they charge. However absolute opportunity was created for the experts throughout the commercial community. Prior to that we heard from all members of the submitter community who wanted an opportunity to put forward their submissions or to speak to their submissions. 
It became apparent to the long-serving highly productive and industrious committee members aided by Mr Woolerton and our friends from the minority parties that this bill in the context of MMP politics aided with great advice from the officials could be improved upon. That is the essence of parliamentary democracy. One is served up legislation on a select committee and nothing is incapable of being improved upon. We heard from the submitters that the model we dubbed the 85 percent model was certainly capable of being enhanced. We had the opportunity to hear from Mr John Shewan from PricewaterhouseCoopers. He promoted the model of a deemed rate. Initially that model gained some favour. However he himself lost his enthusiasm to advocate for it presumably because some of his own clients did not like the idea—they wanted to pay zero tax. 
From out of the atmosphere that comprises parliamentary democracy we received a letter from the Minister of Finance the Minister of Revenue who invited us to study the fair dividend rate model. This particular part of the bill generated most of the submissions and we concentrated on it—some might say disproportionately but we gave it a suitable amount of effort and time—and we have delivered what I think is a reasonable compromise at this point in time. 
There have been earlier references to the importance of simplicity. The 5 percent model for the funds industry is a paragon of simplicity. To take into consideration the anxieties of the direct investors we have maintained the de minimis. We have also given them the opportunity to pay on that which they actually earn. 
Throughout the entire process Mr Woolerton myself and—indeed—Mr Copeland asked individual submitters what they were actually earning when they put their dough into international equities and why were they content to continue leaving their investments marooned at a 1.5 percent to 2 percent return. Of course we never got a satisfactory answer. In many cases we were led to believe that the full return on that investment was actually wrapped up in a capital receipt rammed back home to escape the tax net. How if we let that happen are we going to meet the cost of hospitals roads and a whole variety of other public-good investments? 
There has been some loose and very ill-informed language about this being a capital gains tax. Nothing—nothing—in this legislation suggests to me that it is a capital gains tax. It is a tax on the dividend and on that portion of the dividend that sits in the growing equity and it takes an approximation of what a reasonable person is going to earn. Who on earth is putting millions of dollars overseas for anything less than 5 percent? As no one less august than Winston Peters has said people may as well leave their money in the Kiwibank. Those are words that obviously reflect many years of wisdom as a long-term parliamentarian. 
However I would like to say in wrapping up that the select committee worked together well. We had our differences and part of the bill is supported and part is not supported by our friends from National. But we were there as legislators and agreed to park the adversarialism in the House and endeavour to do the best that we could with the hordes of submitters writing to us and wanting to speak to us. In levels of interest—some I hope as a parliamentarian never to see again—Bruce Sheppard looms very large on that list. No doubt in what passes for my career we will see a lot more of him. But we have a great deal of support out there amongst the professional advisers and the investment industry especially those coming from the funds industry because they have certainty they have simplicity and I think in time they will come to love what they have been served up.