Yule Lawrence; Williams PotoLAWRENCE YULE (National—Tukituki): Most parts of this bill we think are fantastic. That's because the genesis of it came from the honourable members in front of me. It seeks to modernise the taxation system. I agree with the previous speaker Greg O'Connor who said that nobody likes paying tax and they don't. But actually to run a nation you need to pay tax to fund the public good. We need to make sure that it's more modern and that's actually the fundamental part of this piece of legislation. So I congratulate the Minister for bringing the bill forward and adopting the good work of the Hon Judith Collins and other people. [Interruption] Sorry only you; my apologies for spreading the credit.I also support the Business Transformation model and sitting in the select committee there's more work to be done and I congratulate IRD for that. What we have to make sure though is that how we collect tax is done fairly. How we collect it needs to be fair to all parties in the taxation system so everybody pays their share. We also need to make sure—and I think this bill goes a long way towards that—that we have on-time information for the Government of the day to be able to understand what's happening to taxation revenues.But I do want to come to the Supplementary Order Paper (SOP) and you might be surprised at this Minister Nash.Andrew Bayly: Which one?LAWRENCE YULE: It's the one that talks about the brightline test. I've talked about making things fair and I actually think there will be some unintended consequences that may not have been thought out which is why I supported a direction to give four weeks to the select committee. It hasn't happened and I accept that that's democracy. But I do think there could be some unintended consequences for mum and dad investors.If I look at the regulatory impact report it talks about over-reach and it talks about lock-in. Actually the significant concern that Treasury and IRD had was around over-reach. All of this is a balance. If you choose two years you might not get quite enough people. If you go for five years you run the risk of getting some of the wrong people. So that is a judgment call that's made.But actually I'm more concerned about the lock-in clause. The lock-in clause says that if people think that after two years and one day they can flick it you now transfer that out to five years. So people make a conscious decision to hold on to investment and property for that time when actually for a whole lot of non-capital reasons it may make sense to them to release that property—and they'll get caught. That actually does have an impact on the flow of sales of property and the economic market as it operates. That's in this document.The Hon Stuart Nash—I wonder if you've actually read the regulatory impact report. Some of it is actually counter to what you've just told us and on balance you're making a different direction. But I want you to reflect on the things that are being said in here The Treasury notes that the risks relating to over-reach and lock-in are unable to be quantified and therefore it is difficult to assess their significance in relation to the Government's objectives".I come back to what I said previously. In the SOP when it talks about targeting foreign owners—that's what it says in the explanatory note as to one of the things that it wishes to do. I think that's an error. Actually you're going to target everybody. But if you read the SOP as written and the explanatory note they talk about foreign investors. I think that something probably needs to be fixed.But I come back to this point. There will be unintended consequences. If somebody has a family illness or a requirement for a restructuring for a whole lot of reasons then actually they are caught—CHAIRPERSON (Poto Williams): I apologise for interrupting the member. The time has come for me to leave the Chair for the dinner break. The committee will resume at 7.30 p.m.Sitting suspended from 6 p.m. to 7.30 p.m.LAWRENCE YULE: The issue I wish to bring is unintended consequences and I'm pleased the Hon David Parker's in the Chamber because actually we found this in the Overseas Investment Act legislation as it's gone through the select committee as well. What I worry about is some unintended consequences here.I'm told for instance the Hon Stuart Nash that Habitat for Humanity would be one of the entities that gets caught up in this brightline test. The very same group who are trying to help people get into homes and transfer them into proper homeownership will actually get caught in this test. It's the type of unintended consequence that was the reason why we supported it going to the select committee for a month.I think this is a fine balance between two and five years. We had it right as two years before. The taxation working party should be looking at this and in closing I think this is another form of capital gains tax by stealth."