Tabuteau Fletcher: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — Third ReadingText is incorporated into the Bound VolumeTabuteau Fletcher: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — Third Reading[Sitting date: 16 February 2016. Volume:711;Page:9044. Text is incorporated into the Bound Volume.]FLETCHER TABUTEAU (NZ First): Thank you for the opportunity—and I would like to take the opportunity—to welcome the Minister of Revenue Michael Woodhouse to his new role. His speech left something to the imagination though. It left a lot to be desired really and truly. It has kind of said to us on this side of the House: “What happened Minister? Did the legislation come up too quick and all your staff had gone home?”. It was a 2½ minute contribution where he talked in inanities and lovely political rhetoric. It was lovely to listen to. But what he did say was that in the consultation process in the Finance and Expenditure Committee the National Party members very much listened to the submissions from industry. I have made much of that in my contribution for this evening which I will get to very shortly but I do again welcome the Minister to the role and I look forward to supporting efforts such as this one where there are fixes made as dismal and arguably ineffective as they can possibly be.I would point out to the Minister that the Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill is a large piece of unwieldy legislation evidenced by the fact that since the select committee we have had alterations—I am not going to grab the piece of paper—almost as large as the original bill itself. The Supplementary Order Papers have been huge they have been vast they have been highly technical and they have not necessarily been in response to all of the submissions from those who took time out to provide clarity around what could work and what is not going to work with this legislation. There has been a big amount of change and it has not really gone back to industry for consultation and so it sits heavily on this side of the House to work through those changes to work through the permutations and try to reconcile them with the stated objectives of making it easier for business around tax and encouraging research and development through those credits.We get there. New Zealand First acknowledges that we get there with this legislation but it certainly does not go anywhere near far enough. What we have also been saying is that from the very beginning of the process we have in the main supported what the Government is trying to achieve but the reality is that what we have been seeing from these post select committee submissions is so much alternation. In support and in conjunction with that at the same time we saw industry say to the select committee: “Actually what you need to do is get this draft legislation out a lot quicker to industry. Actually get it out before it is even going into the first reading process and before it even comes to the House. Put out drafts of what you are thinking.”This piece of legislation which the submitter was specifically speaking to at the time is a great example of how the legislation process could benefit from that kind of submission because what we would see then is the experts go through like I said the permutations of this incredibly complicated legislation. They are working with it every day and they are willing to come back to the Government and say: “You have not thought this part through. This may work. This will work only so far.” You know they were willing to come back with real contributions in terms of making legislation meaningful and doing what it intended to do from the outset. So we have these stated objectives in terms of what the legislation is trying to achieve. We get there in some part with this but the reality is that all too frequently the fix-ups in these remedial bills will require fix-ups in the not too distant future. What we have seen and I know it will happen is that this particular piece of legislation has gone through the House quite quickly and the process has been there but as I have said twice already there have been substantive changes to the legislation post select committee. There has been no public review of those changes and so we are here now and I still ask the question “Is it possible now to go back and say ‘Well you have had all these changes. They need the public to submit on them. Where do we go to from here?’.”What we suggest—and I think it is fair and reasonable; examples from tax experts are being borne out all too often—is more of a comprehensive analysis from the Government in terms of the unintended consequences. There were some submissions on this. Although they were positive in the main some of the submissions pointed out that actually what we will find if these fixes are not doing what they are supposed to do will actually be counter-productive add to the level of complexity and actually create the complete opposite of the intended consequence of the objectives stated. That was submitted on this piece of legislation. What I would further suggest is that it is really not unreasonable to ask for the Inland Revenue Department to go back and reflect post implementation and to review what has been undertaken in say 5 years’ time—for the Inland Revenue Department itself to go back and do a review so that we can actually measure the effectiveness of this legislation. Submitters highlighted this in their submissions and made sensible calls highlighting the level of complexity as I have said and I agree with them. This possibility would help flatten out and minimise those complications. Tax should not be complex. New Zealand First says—and would insist in fact—that it needs to be as simple as it can possibly be. The reason for that is basically for compliance.Clayton Mitchell: And so David Bennett can understand it.FLETCHER TABUTEAU: And so the chairman of the Finance and Expenditure Committee can understand it. But if it is simple compliance is high and businesses will struggle to either avoid or evade their tax obligations. We know for a fact that some big businesses out there are running rings around our legislation and are avoiding their tax obligations. This bill does not even begin to address some of those bigger issues.I do want to point out that in some parts this is not even a remedial bill. New Zealand First is highly concerned that this Government and this Minister have taken the opportunity to make substantive changes to the child support reform. For those in our community looking for cues as to how they can talk to legislation the title of this bill certainly gives nothing away as to suggest that this Government is making not just fixes but quite substantive changes. I want to point out for Kiwi businesses—it has been said on this side of the House quite emphatically so I will add New Zealand First’s voice to that—that the research and development tax losses section fails. It does actually fail to achieve its objective. It does not go far enough for Kiwi businesses. They are looking at high upfront costs in terms of trying to comply in order to gain those credits. In terms of timeliness and making the claims so that they benefit from the credits there is a big lag there. It is incredibly complex it is costly and there is a huge disincentive to not even bother.New Zealand First supports the stated intent of this bill and as I said at the start actually we agree that it does go some way to achieving what it says it intends to do. We do not think it goes far enough. It sounds like the entire side of the House does not think it goes far enough but it does go some way. New Zealand First does support this legislation but we hope that the Minister will take on our earnest suggestions in terms of reflection and working through complex tax legislation. Thank you.