Nash StuartSTUART NASH (Labour—Napier): Labour will support this bill but with reservations. Let me first make a couple of comments. It is sad to see the Minister speaking on this bill because I thought she was a particularly good police Minister who understood what was going on in the regions and then put forward a package to Cabinet that I think was really going to make a difference and was going to trump us right across it. Unfortunately for some reason unbeknownst to any of us over here she lost the portfolio and was replaced by someone—Grant Robertson: No I do think I know the reason!STUART NASH: —who really has absolutely no idea. We do know the reason do we not Mr Robertson? But she was a good Minister who understood the issues and has been replaced by someone who really does not. As a consequence we have the Minister who has taken over this bill. We cannot blame the Minister for this bill because she was not the Minister when this was introduced.The Finance and Expenditure Committee has heard—what Mr Robertson? Eight nine bills this term?Grant Robertson: Yep.STUART NASH: At least eight or nine bills. It has got to the stage where submitters who spend an incredible amount of time and money and energy on writing submissions have said officially that this is not the way to craft tax legislation; it is not the way to do it; there was too much before the committee; and it is not good policy. Even the experts who used to work for the IRD are sort of saying that this is not the way it should be done.I will give you an example of this. The reason I say this is that tax legislation by its very nature has to be robust. It has to have a wide level of consultation so that when it goes out and is signed off by the Governor-General and becomes law it is difficult to avoid. There are always people with huge brains who spend an inordinate amount of time trying to find loopholes and that is the nature of it but within this piece of legislation as an example we are amending a tax bill that passed before this House not 6 months ago. That is not good law. Just to really show what a farce this is we had members of the public submitting on a bill that in fact we were not hearing. They got confused with what bill it was and came in and submitted on the wrong bill. That just shows how poorly this Government is treating tax legislation.Let me anticipate what Mr Scott and Mr Bishop are going to do. They are going to stand up and say: We are the business of Government and this AIM method the accounting income methodology is great for business because it is going to simplify the tax system for the small to medium size business owner." Well it will simplify the system—of that there is no doubt. It is quite similar to even though not quite as good as the one that Labour released in Opposition about 12 months ago but the thing is it has taken National 8 years. The party of business—it has taken it 8 years to introduce a piece of legislation that makes it easier for business. That is not what the party of business does. In fact the vast majority of my friends—and I have told this story before but I just smile every time I hear it—say "Do you know what? Philosophically I suppose I should be National but my business always does better under Labour. Labour always passes the sort of legislation that helps my business." and that is the case.Eight years—and I know Mr Scott and Mr Bishop and a whole lot of National MPs will have been lobbied by different businessmen and businesswomen who have told them: "Provisional tax is a real bummer. It's hard on cash flows. It's hard to make ends meet. When we have a great year it's fantastic but the next year when we have to pay our provisional tax it's really difficult. Can't you do something about that?". The reason I know these gentlemen will have been lobbied on it is that we have been lobbied on it numerous times. It is probably the main bugbear of small to medium sized business owners. The tax is hard to comply with and it is hard to pay—it buggers up cash flows. So National has come up with a solution but it has taken it only 400 weeks. What does that say about the so-called party that stands up for business? Those members have been asleep at the wheel.I suspect this bill will get the Royal assent before the election but only just so it is going to be 9 years that their constituents—who in fact are probably our constituents from what we are hearing more and more—have had to deal with provisional tax. We could not clarify this at all or quantify it but I wonder how many businesses actually ended up going under because they ended up with a massive tax bill. I mean I know what it is like. I am one of these people who when I was running my own business—just a small one—thought that I was dedicated to this. I would put aside a certain amount of money for my GST and my tax and then something would happen with the car. I would think "Oh no no. I have got to pay for it out of this account but I will put it back." and then I would get a GST bill for provisional tax and I was like: "Oh my God! That's right I had to put the money back in." Provisional tax was difficult.It made it difficult and we cannot expect our small to medium sized business owners to be financial gurus. What we can expect them to do—and in fact what we want them to do—is be really good at running the business that they have core competencies in. That is why the tax package that Labour introduced for small to medium sized businesses was so good because it took a lot of this worry a lot of this planning and a lot of this cash flow management out of the hands of the small-business owner if they wanted to do that and it allowed them to concentrate on the issues that were important to their business.This bill does that to a certain extent—not to the same level but to a certain extent. That is why we are supporting this because quite frankly anything that makes it easy for businesses to operate of course we are going to support. It just could have been done better. I wonder aloud—I wonder whether in fact those members saw our proposal and said: "Shivers! This is pretty good." But of course politics being politics they said "We can't adopt this. We'd better come up with one of our own." so they came up with one that was not too bad. It was not very good; it just was not too bad and it will make a bit of a difference. It does not come in for a while—in fact it does not come in until after the election. But it just could have been so much better and it should have been so much earlier—and it could have been so much earlier. You know that is the thing about this.The other thing I want to talk about briefly—and I am assuming that Mr Robertson is probably going to talk about this at length—is the foreign trusts rule. I had to smile to myself when I heard Minister Woodhouse talking about a certain candidate doing a flip-flop. The reason that made me smile was that I distinctly remember the Minister of Revenue saying on the television and on the radio—and I know this because I followed him in an interview—"We do not have a problem. There is no problem with the foreign trusts regime in New Zealand. Move on nothing to see here." Well about—was it a week later or was it a couple of days later?Grant Robertson: As long as it took for a focus group.STUART NASH: That is right yes. So a couple of days later he came back and said "Well we might have a problem." and then of course it got escalated to the Prime Minister John Key who knew there was a problem. He had just sort of hoped that his Minister would cope with it a little bit more competently than he had. And the Minister came out and said: "Well they're not really doing anything illegal but it might be immoral."Well in my book we have got a problem. When the Prime Minister says that the tax laws do not work we have got a problem. And the interesting thing is that when we have a look at the regulatory impact statement for this bill the IRD itself said that there was a problem with this regime. It said: "Whether it is real or perceived it doesn't matter. There is a problem." So we have got to fix this problem—there is no doubt about that.What happened was the IRD considered three different options. The first option was the status quo the second option is what we are going with at the moment and the third option was to actually remove any ability to have these foreign trusts. The interesting thing is it acknowledged that "Option 1 … Main objective … The status quo does not meet the objective of reducing the potential for perceived misuse of foreign trusts in New Zealand …". So the IRD knew there was a problem—in fact I understood that they knew there was a problem 2 years ago but did not do anything about it.But the interesting thing is that option 2 which we are going for—which is what is in this bill that we are debating at the moment—actually says: "More disclosure in relation to foreign trusts and access to the information by relevant agencies would make it difficult for these vehicles to be used to avoid foreign tax."—"would make it difficult for these vehicles to avoid foreign tax." That is not what we are trying to do here. What I thought we were trying to do was maintain New Zealand's reputation for integrity.One thing we know for certain is that there are some very intelligent tax lawyers whose role is to find the loopholes and when there is something that is difficult to do all that does is just create a greater challenge. They love this sort of stuff. Option 3 would have removed any ability whatsoever to do this and the regulatory impact statement admitted that. But we have gone for something that—you know is it the right thing to do? In my gut I do not think it is actually.If we are serious about "Brand New Zealand" about maintaining our global integrity I think what we should have done was say: "Hey let's leave this right behind. If you want to do a foreign trust or if you want to hide money even if it is difficult go to the Bahamas. Go somewhere else but don't do it here." I think that would have been the right thing to do. So we do support this bill but with serious reservations. Thank you very much."