Bayly AndrewANDREW BAYLY (National—Hunua): Thank you Madam Speaker. It is a pleasure to be talking on the third reading of this bill. We have indicated that we are going to support this bill because it's a series of changes to the taxation system. As many of us have noted before the system that New Zealand has in place in terms of managing our tax system is the envy of the world but it does require vigilance around how we administer it and make sure that it is working to its full potential.This bill actually has a lot of very good elements to it. I'm just going to pick up on a few of those. But the first one is around the application date for KiwiSaver members. Clause 14(1) would allow KiwiSaver members to change their contribution rate by giving notice to both their employer which is the current situation and under this bill to the Inland Revenue Department (IRD).This just gives a great deal of flexibility around people who want to change and make sure that they're on the correct rate of tax that they're paying in respect of their portfolio investment entity (PIE) income which normally are types of investment that would include KiwiSaver. There was a little bit of concern about the compliance costs on employers in terms of the IRD which would then notify them and they'd have to action it. So the date for the commencement of that was pushed out to 1 April 2022 or an earlier date as set under an Order in Council. The other one is the requirement for employers to provide information to IRD. The big issue here is the requirement and the objective to make sure that people are paying their appropriate employer superannuation contribution tax and this is something that takes place at the employer level when tax deductions are made. Under the new system that the IRD are implementing the Business Transformation system there is greater ability to make sure that people are paying their right tax and for the IRD to work out whether in fact they are and to amend the situation on an almost real-time basis as opposed to waiting until the end of the year and having to make a subsequent adjustment. I think again this is a good practical measure to make sure that people are paying no more tax than they ought to but are paying the sufficient amount of tax that they should be. The other aspect relates to the custodian issues. Now custodian activities take place in New Zealand. They are basically entities—and Public Trust is one of those—that act as a sort of intermediary between an investor and in many cases those are foreign investors and the entity that invests money. It might be a sharebroking firm or a fund manager or whatever. These financial institutions have a great deal of responsibility and obligation but the issue gives rise particularly where you've got foreign companies involved in investing into New Zealand and it could be that they're buying Government stock as a typical example. They use a custodian service to help them manage their affairs in New Zealand and they're all legitimate and there's nothing to be untoward in terms of their activities. But for the requirements for the New Zealand custodian where they don't actually have a lot of knowledge about the foreign investor this bill tries to cut a pragmatic course through that and the fact is it says that the New Zealand custodian institution would only need to report that a return has been made to a foreign entity or a foreign custodian service and not need to report the details of the actual payments or the end investor. Now it sounds a little bit strange but what it does do is it then highlights to the IRD that a payment has been made and for them to be able to pursue that and be able to track down what the ultimate beneficiary of that payment is and what the nature of that relationship and transaction was. The other issue I want to raise is around R & D tax credits. Unfortunately one of my colleagues will not be able to speak on this matter and she's had a great deal to do with that. I'm not highlighting that she's not here but I just highlight the fact that she has made a contribution around that and she's asked that I speak to this in terms of the issue around the research and development. There are two courses under this bill. One is around people who traditionally do a lot of R & D and they are called a significant performer. Then there's a class of people who do research and development who don't normally do it in the ordinary course of events. The issue we're worried about is the compliance cost to get this general approval if you don't do more than $2 million worth of research and development every year and we believe that in some cases that might actually outweigh the value of the tax credit received. A regime known as the criteria and methodologies approval was created for businesses in the significant performer regime to make sure that there was also the ability for that portion to be able to get approval quicker and easier because one of the issues around this is making sure that we get research and development and funding into those entities who need it and to get that funding very quickly and appropriately and in the right framework. But the last thing I wanted to turn my attention to is the issue around the non-refunding of money from people who have overpaid tax on their PIE investment funds. There are approximately 950000 people in that category in New Zealand. They have paid as at the end of the financial year just gone last year about $50 million and that figure will be accumulating even in this current financial year. So we were very very concerned that these people should receive a refund. We spent a lot of time in the committee of the whole House talking about this and I actually put up a Supplementary Order Paper. When we originally took up this issue and I took this issue up with the Minister in question the first reason given as to why the Government would not refund this $50 million or so back to the lower-paid members of our society who have overpaid their tax on their PIE investment income was that there was a systems issue and it couldn't be done. However when I spoke to the Commissioner of Inland Revenue she made it clear to me that that was not the case and the system could cater for that. So the next time we took this issue up with the Minister the excuse was Well it requires a legislative framework." and that's why I went to the extent of writing the legislative change. It's literally two clauses which would have meant that this could have occurred very quickly. So the excuse around there being a need to determine and prepare a legislative change I actually solved for the Minister so that defence fell away. Last week when we were talking about this in the committee of the whole House we heard a new argument from the Minister which was around saying that it was an administration issue and it was a captain's call for the commissioner—and it was essentially one around prioritisation. I do not believe that the Government could not have directed the commissioner or there is an inability to make this payment. What this bill now caters for is that it is going to take place but not until the 2021/22 financial year and by a stroke of a pen and this bill today we could have changed the commencement date and backdated it to the 2018/19 year. It is literally that simple. The thing I find most disturbing is that through that whole debate where we were talking about making a tax refund to those earners on less than $48000—because only they are the ones who have overpaid not people in the top tax bracket like us; those poorer members of New Zealand society—I did not see one speech given by the Labour Party members during that debate nor the Green members nor New Zealand First. They were absolutely silent on this issue. This is about protecting the rights of the lowest-paid people in New Zealand."