Tisch Lindsay: Limited Partnerships Bill Taxation (Limited Partnerships) Bill — Third Readings 
Tisch Lindsay: Limited Partnerships Bill Taxation (Limited Partnerships) Bill — Third Readings 
[Volume:645;Page:14772] 
LINDSAY TISCH (National—Piako) 
: 
 The Limited Partnerships Bill and the Taxation (Limited Partnerships) Bill are of a technical nature. I was fortunate enough to be able to sit on the select committee where we heard the submissions that came forward on this legislation and very comprehensive submissions they were. I was also able to speak in the first and second readings of this legislation. National has supported this legislation right through and will continue to do so. 
The Minister made some interesting points that we subscribe to as well. The legislation frees up the market and allows for investment to give confidence in the market and I focus my debate primarily on the New Zealand Venture Investment Fund which was established in 2002 as an investment vehicle but at an arm’s length from political interference or political involvement. It is an arrangement that is allowing co-investors with the private sector and that is something National supports. 
It was reported to the select committee that in 2004 the total investment value in New Zealand equity and venture capital investments was $158 million. This is a very small percentage; in fact it is only 0.11 percent of our GDP. So New Zealand is lagging very much behind our other competitors in other countries who have been able to attract investment—venture capital—and we are well behind the OECD countries. In fact we need a 5 percent increase in funds just to compete with Ireland the United Kingdom and Singapore. So there is a lot of work to be done in that area and this legislation helps and facilitates that sort of investment. 
Also back in 2004 the fund surveyed 15 offshore investment funds representing in excess of $50 billion. They said they would consider investing in New Zealand if we had a world-class investment structure in the form of a limited partnership and flow-through taxation regime. Well that is exactly what these two bills provide; they facilitate that and that is very good news because it may now allow us to attract that important investment. 
A number of other issues were canvassed during the course of the debate and I will mention just some of them; the Minister mentioned many. They were issues primarily that the select committee was able to consider and make some changes to. The extent of safe harbours was one and the activities that a limited partner can be involved in without contravening the no-management rule was a significant improvement in the safe harbours position. The trigger point for when someone becomes a limited partner and can avail himself or herself of the protection of limited partner status was another. There was the extent of power in an insolvency to claw back distributions made to limited partners—the current test applies if the limited partner knew that the limited partnership would not satisfy the solvency test after the distribution and applies for 3 years. 
Written partnership agreements are compulsory for limited partnerships and there is continued confidentiality of names and investments of limited partners including where that information is contained in annual returns and the pass-through of all losses to investments. The question that probably needs to be asked—and it came up during the Committee stage—was whether these bills are really just a catch-up or whether we have learnt from overseas practice and in particular whether we have learnt from the experiences of our competitors for venture capital; namely Australia and the UK. 
With those points I say that National has been supporting this legislation right through we are happy to support it now for its third readings and we believe that it moves in the right direction to allow overseas investment through capital funds.