Foss Craig: Budget Measures (Miscellaneous Fiscal Matters) Bill — First Reading Second Reading In CommitteeText is incorporated into the Bound VolumeFoss Craig: Budget Measures (Miscellaneous Fiscal Matters) Bill — First Reading Second Reading In Committee[Sitting date: 15 May 2014. Volume:698;Page:18017. Text is incorporated into the Bound Volume.]Hon CRAIG FOSS (Minister of Commerce) on behalf of theMinister of Finance: I moveThat the Budget Measures (Miscellaneous Fiscal Matters) Bill be now read a first time. The bill is an omnibus bill covering fiscal measures. Part 1 of this bill will repeal cheque duty from 1 July 2014. Cheque duty applies at the rate of 5c per cheque. It is an outmoded tax and is New Zealand’s last remaining transaction duty. Since no equivalent duty applies to alternative methods of payment such as cash eftpos internet banking and credit card transactions cheque duty is a distortionary and easily avoided tax. Although the popularity of cheques has declined they are still common enough for cheque duty to be a cost for a significant number of people and businesses. Removing this cost by repealing cheque duty will benefit those who use cheques. Abolishingcheque duty will also reduce compliance costs particularly for banks and printers of cheques. Reducing compliance costs wherever possible is an ongoing focus of this Government.Part 2 of this bill corrects an unintended consequence in the operation of the New Zealand emissions trading scheme. It stops reregistration arbitrage which arises from the price difference between international Kyoto units and New Zealand Units. Urgent intervention is required to prevent the significant reputational and integrity risks and fiscal cost to the Crown that this may create. Post-1989 foresters are voluntary participants in New Zealand’s emissions trading scheme which means they are able to register and deregister the same area of land multiple times. These participants receive New Zealand Units for forest carbon growth while registered and then are able to surrender cheaper international units to meet their emissions liability. This bill limits participants to surrendering only New Zealand Units when they are deregistering an area of forest from the emissions trading scheme.Part 3 of the bill suspends for 3 years the application of anti-dumping duties to residential construction materials. This includes the anti-dumping duties currently in place on standard plasterboard from Thailand reinforcing steel bar and coil from Thailand and wire nails from China. Removing these duties will increase competition for building materials and reduce the cost of constructing new houses. The suspension of anti-dumping duties follows a market study that found they are having a chilling effect on competition in the building materials market. Anti-dumping duties are a legitimate form of protection for a domestic industry and are provided for under World Trade Organization rules.However contrary to some misconceptions dumping does not mean flooding the market with large quantities of low-quality goods at low prices. Dumping simply refers to a situation where goods are imported at a lower price than if they were sold in their country of origin. This is not necessarily unfair trade. It is normal to charge different prices in different markets.Bearing this in mind the Government has decided that in the case of residential construction materials there should be a temporary suspension of these duties to provide an immediate benefit to the Christchurch rebuild and also to the increased residential construction in other areas of the country particularly Auckland. The decision to suspend these anti-dumping duties was not made lightly and comes from the work of the Productivity Commission into housing affordability and from the Ministry of Business Innovation and Employment’sResidential Construction Market Study. It has been made in conjunction with the Government’s decision to suspend tariffs on a broad range of residential building materials. Reducing the cost of building materials is an important although only one part of the Government’s ongoing programme to increase and improve housing affordability.The removal of import barriers is expected to reduce the cost of building a standard New Zealand house by around $3500. The cost savings from the suspension of anti-dumping duties are expected to make up the bulk of this amount at around $2600 per house. The total savings from suspending these anti-dumping duties could be over $55 million per year. Taken together with the savings from introducing the tariff concession scheme direct savings are in the order of $75 million per annum nationwide. I expect that these measures will result in a more competitive market for residential building materials resulting in further reductions in the costs of constructing homes.As part of this package of measures to improve import barriers the Government has also directed officials to develop a bounded public interest test to be applied to all decisions to impose or extend the duration of anti-dumping and countervailing duties. At the moment there is no ability to consider the wider public interest in decisions toimpose or extend the duration of anti-dumping and countervailing duties or to consider significant events that affect an industry or the public such as an earthquake or other natural disasters. The details of a bounded public interest test will be developed through a public consultation process with a view to considering amending the Dumping and Countervailing Duties Act at a later date. It is the Government’s intention that any public interest test is to be put in place before the end of the 3-year suspension period so that building materials will be subject to a public interest assessment when the suspension ends. It will allow the wider public interest test to be considered not only in relation to duties on building materials but also in relation to other types of goods.The Government appreciates that the suspension of current duties on plasterboard reinforcing bar and nails will have some impact on those New Zealand manufacturers that these duties are designed to protect. However I do not consider it likely that the suspension of these duties will threaten the viability of those businesses given the strong domestic residential construction market which is likely to remain strong over the 3 years that the duties will be suspended. I am confident that our building product manufacturers can adapt and innovate to match up to the international competition.The suspension of anti-dumping duties on residential building materials is implemented by this bill as part of the Government’s wider programme to improve housing affordability. This includes work being done on standards and regulations to increase competition to reduce the price of New Zealand building materials and to free up new land for development improving sector productivity and reducing compliance costs. In conclusion the combined effect of these measures will make a lasting difference to housing affordability and will see more New Zealanders realise the dream of owning their own home. I commend the bill to the House and move that it now be read a first time.