Mark RonRON MARK (Deputy Leader—NZ First): I rise to take a call on clause 2 particularly Supplementary Order Paper (SOP) 260 in my name. This is an issue that has been brought to my attention time and time again not just by commercial property owners in rural provincial New Zealand but by mayors and councillors—and local government in general—who are very worried about the implications of earthquake strengthening. We have tried on a couple of occasions in the House to get an SOP like this through in other pieces of the legislation. Once it was vetoed by the Government using the financial veto and we are hoping that this time given the Minister of Revenue's experience in taxation law this Minister will be able to persuade the rest of her Cabinet to take a more business-friendly approach on this piece of legislation on this particular matter. The SOP is very short and very simple. It makes a couple of amendments. One inserts subclause (30B) in clause 2 and the other one amends new clause 37B. Essentially the guts of the legislation is in section DA 2(1) of the Income Tax Act where we would insert in new clause 37B after the words of a capital nature" the words " unless they are seismic works where an EPB"—which is an earthquake-prone building notice—"has been issued for the building under section 133AK of the Building Act 2004". In our explanatory note we talk about a couple of things. Firstly this has been an issue that has been raised on occasion by major chartered accountants such as KPMG and others and in fact the Property Council of New Zealand has noted this in an April 2014 submission. We agree with them that this amendment will redress and correct what we see they see and commercial property owners see as an anomaly in the inland revenue Act where the Inland Revenue Department (IRD) is required to classify earthquake strengthening as capital works. The argument we put is that it is absolutely baffling that if a building in Wellington is ripped apart the repair work to put that building back together is classed as repairs and maintenance but if in doing that work the owner of the building has to strengthen other parts of the building to bring it up to code as well then that work is not considered to be repairs and maintenance. It is considered to be capital works. Our proposition is this. If a building sitting in the middle of Waipawa is declared through a letter from the council to be earthquake-prone and therefore has to undergo strengthening and if that strengthening work does nothing more than strengthen the building—it does not alter its shape does not alter its capacity does not alter its utility; it simply makes the building the same as it was but makes it fit the new code—where is the capital gain? In fact the moment that letter is issued the value on that building plummets. Unfortunately the insurance premiums skyrocket. Unfortunately tenants who are looking at the new occupational safety and health laws and at their commitment to their staff exit and the landlord is now left with a building that is seriously devalued and of questionable economic worth as an investment. Undertaking the strengthening work simply restores the building back to its previous utility prior to it receiving a letter deeming it to be unsafe. We would say that that in itself is a strong argument for the Government accepting our view KPMG's view and the Property Council's view that this work should be tax deductible. Here is the next point. We are looking throughout New Zealand right now and there are a lot of commercial properties—in rural New Zealand in particular—that run the serious risk of being left empty. Most of these owners are looking for an incentive or a bit of leverage to assist them in their ability to conduct this work. Being able to claim tax deductibility for that work and in some cases the remediation of their buildings—[Bell rung] Mr Chair. The CHAIRPERSON (Hon Trevor Mallard): Ron Mark but start narrowing it up now please. RON MARK: We will. In some cases for these little buildings—wooden buildings—the work could be $65000. It could lead to fire protection work which under the new Building Act is required to be done when substantive work such as earthquake strengthening is done. It can blow those costs out to 100 grand. Being able to get a tax write-off legally with assistance from the Government and assistance from the IRD would incentivise and alleviate the pain that many of these commercial property owners are going through right now and it would go some way to preventing the gutting out or the creation of ghost towns in provincial New Zealand. We implore the Government to look strongly and favourably at this SOP and give some alleviation to many many commercial property owners throughout rural New Zealand—well throughout the whole of New Zealand. But of course—being one who lives in rural New Zealand—in New Zealand First we are particularly worried about the possibility of us having ghost towns right throughout the country. That is something that would not be good for the economy as a whole."