Mallard Trevor: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeMallard Trevor: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In Committee[Sitting date: 18 February 2014. Volume:696;Page:16010. Text is incorporated into the Bound Volume.]Hon TREVOR MALLARD (Labour—Hutt South): I too want to make a few comments on Part 2 of the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill. I would like to preface my comments by expressing my disappointment that I am yet to hear a call from either the Minister who introduced the legislation the Hon Peter Dunne or the Minister who is currently in charge of the bill the Hon Todd McClay. This is a matter that is highly technical and with all due respect to the Minister in the chair the Hon Michael Woodhouse I have heard nothing from him either to indicate that he is across what is very important detail in this legislation.Of course if the Minister who introduced the bill had been in the Chamber he would be the subject of interrogation as to the holding of information the importance of the integrity of the taxation system and the way that that relies on people who are involved in it including the Minister not sharing information—obviously except with the Commissioner of Inland Revenue—that they come across when case matters are referred to them. I should say that it is a matter of a lot of concern to the House. Maybe in the end when the backdated inquiry occurs into the comments that Mr Dunne has made and into his making available otherwise confidential information it could well be that we want to ask the question about whether any taxpayers’ information as well as Government Communications Security Bureau (GCSB) information was made available. Of course I am sure that the GST that was due on the GCSB information would have been paid but it is a question of what was made available and whether there was any consideration involved in that. What was the price that Mr Dunne paid other than his ministerial post for a relatively short time? And what has the effect of that been on the revenue? Although I do note that the effect on the revenue through the changes seems to have been positive because there are now more Ministers than there were previously. But the Government’s fiscal position is negative because we are paying extra. We are paying an additional Minister. So the net effect of the change led by Mr Dunne’s forced resignation is in fact something that is negative.I would now like to go to something that is pretty specific and it is around the clauses in Part 2 of the bill that go to classification of mining expenditure and in particular the timing of the deductibility of various aspects. The first point that I would like to focus on is the acquisition of land and the timing of the deductibility of that acquisition. In fact without drawing you into the debate at all Mr Chair I know that those who are well versed in Southland mining issues know that there has been massive acquisition of land in Southland for the purposes of lignite mining. After the mineral rights have been stripped from those titles that land has then been onsold in some cases—not in all cases; in some cases it is a long-term lease. That is clearly an interest in the land and that interest is recognised within this.If one looks at the net position of Solid Energy which is almost certainly the organisation that has done most of it my question is whether that is the type—I do not want the Minister to answer questions about a specific taxpayer even if it is a State-owned enterprise. “Enterprise” is probably the wrong word; “State-owned liability” might be a better expression for Solid Energy the way that it is now.Dr David Clark: It wasn’t under Labour.Hon TREVOR MALLARD: Well under Labour it had a damn good Minister. The question I want to ask the Minister to address is whether it is appropriate to give a deduction to a loss-making mineral organisation—for exploration prospecting and prospectively mining—for the loss of the interest in the land as a result of stripping the mining rights away from the land. Clearly land is bought at one price and is sold at another price which is almost certainly lower than the original price. This recognises the difference in value to the organisation that strips the mineral rights. The question I have is whether the value of the stripped mineral rights is taken into account in deciding the value of the land once it has been sold or whether if a piece of land has been sold minus the rights then the full loss that the organisation makes is deductible. My next question is whether that is fair.I acknowledge that if it is a State-owned enterprise that is doing it then actually the net position of the Crown is unchanged. The core Government position is different but the total position of the Crown is unchanged. What we are preparing here is law for all parties and we are preparing it in a context where organisations may not always be State-owned enterprises. So the relatively simple question that I have for the Minister is about the loss on the acquisition of the land—which is really a loss of disposal that difference between the disposal price and the acquisition price which we know is something that is deductible in the year that it occurs. Even if mining is not going to occur for another 30 or 40 years that is a deduction that occurs in the year of disposal. My question is whether that net loss takes into account the matters that I referred to earlier.Clearly what we do know is that under new Subpart DU 12(3) inserted by clause 35 “Mining development expenditure does not include—(a) the cost of land:”. But what is also clear later on—Paul Goldsmith: It’s not clear at all.Hon TREVOR MALLARD: Sorry?Paul Goldsmith: It’s not clear at all.Hon TREVOR MALLARD: Well no no it is. It is clear. It is on the face of the bill. It says in new Subpart DU 12(3): “Mining development expenditure does not include—(a) the cost of land:”. Was Paul Goldsmith on the committee that considered this bill?Dr David Clark: Yes he was.Hon TREVOR MALLARD: Did he chair it?Hon Shane Jones: Yes.Hon TREVOR MALLARD: Well have we seriously got interjecting now in this Chamber the person who was in charge of the bill through the select committee process and he is not aware of the question of the deductibility of land acquired for mining? I accept that it is not an insubstantial bill but the deductibility of mining expenditure is something that is very important when one is considering the bill. I am just going to toss back at the member that if he has not read the bill well enough either in its introduced form or in the report back then that is shameful. It is absolutely shameful that the National Party has as the Prime Minister’s nominee to chair the Finance and Expenditure Committee someone who cannot be—Paul Goldsmith. Just make sure. We will put a name on him. I do not want to generally slur the members of the Finance and Expenditure Committee because there have been some good ones. But Paul Goldsmith has made it clear in this Committee that he has not read a major part of the bill—really one of the main operative clauses on mining expenditure. We have a chair of a select committee who is so damn lazy. He is working hard to lose an electorate seat. He is working hard to lose an electorate seat.The next question I want to ask goes to the question of mining rehabilitation expenditure and the deductibility of that and what is effectively it appears to me a double deductibility. With due respect to the comments that my colleague Shane Jones has made and even those of David Clark earlier who seemed to indicate that there is a relatively fair regime I wonder whether we are heading into an arrangement now where we have a Crown subsidy for mineral explorers whose projects fail. So again it is an area of relatively simple change and this is one of the areas of amendments made to the legislation by the select committee. The rehabilitation expenditure “means expenditure that a mineral miner incurs … directly in relation to the rehabilitation of land that is the permit area of their mining operations or associated mining operations carried out as a result of”—I am summarising—the permits the Crown Minerals Act access arrangements the Resource Management Act conservation or authority under the Historic Places Act.So what we are saying is that miners get a set of obligations. There is no doubt. The question I have got is whether if they are foolish enough to do prospecting and exploration and make a mess of an area it is really the job of the taxpayer to subsidise their clean-up and rehabilitation costs through what is effectively double deductibility. Is that a good use of taxpayers’ funds to say that miners can destroy a monument and then rebuild it as part of the exercise? I will be interested in the comments of my Green Party colleagues in this area because I have heard the explanations from two of my own colleagues and frankly those and the contribution by Maggie Barry are a little bit wanting. The explanations are a little bit wanting.You know we have the Prime Minister saying in this House today that we are short of funds for paid parental leave but somehow we have money to subsidise miners in their rehabilitation costs. Why is it? Why is it? What are the priorities? What are the priorities of this Government? What are its priorities if it is not prepared to say that it is important for parents—especially mothers—to bond with their kids for 6 months as part of paid parental leave but if you are an overseas miner we will subsidise you through additional deductibility in order to do rehabilitation which is what you have got to do in accordance with the law anyway? Again I am not saying that I will vote against it but I am just asking a question about where this Government’s priorities are as far as particular actions of that sort are concerned.I will be interested in the explanation from the Minister in the chair the Minister of Revenue on the new “Mineral mining” section section EJ 20B(2) inserted by clause 37G(1) which is the spreading rule. I think this is an important part of the legislation. It has come in again as a result of the select committee. There is a question that the Minister has to ask about the establishment of the “ratex value” formula that is in there. I know that unlike Paul Goldsmith Todd McClay will be right across the detail of the legislation and will be able to go to the rate questions and tell us about either the straight line or the diminishing value approaches which are available in new section EJ 20B(4)(a) and (b). The question I have got is—