Cosgrove ClaytonHon CLAYTON COSGROVE (Labour): I thank the Minister Alfred Ngaro for reading those notes from the Hon Judith Collins. I am sure she may be sending some amendments down as we speak.Can I touch on a couple of things—the brightline test. I have got to say Minister the brightline test is a cracker. You will recall in the days before you assumed the lofty heights of Cabinet—the most exclusive club in New Zealand—that the recommendation from Treasury was that the brightline test be 5 years. The argument that Treasury put forward and I think that the Labour Party and other parties put forward was 2 years too short"—not referring to "Barnum & Bailey" over there who will take a call very soon—because at the time the brightline test was being put in the average return for an Auckland property was I think in the 20-point range. So if you were going to buy a property and get 20 points a year which Mr Bayly will know is probably the best investment in New Zealand you would have to be the local village idiot not to hold it for 2 years and then consider flicking it right? But oh no 2 years will do the trick. That was the argument that was put forward by the Government; it was window dressing.In terms of the register the Minister said: "No no. The register is OK. It's fine." So here is the detail about the register that other colleagues have talked about. The register is accessible by the Police the Department of Internal Affairs and the IRD. No one else can do it—no member of this Parliament not even the Minister for IRD. If a foreign Government—say the Mexican Government or Seychelles or some other like the Cayman Islands Government perhaps—wanted to look at it to penetrate it to look after tax affairs or see whether there was evasion or corruption it could not do it.The argument the Minister has put forward is transparency cut asunder—there is no need for transparency. Foreign governments would not know to look at the register. Foreign governments could not get penetration to the register so how is a lack of transparency aiding the process? Where is the solid argument against a publicly available register? Where is the negative impact on the beneficiaries or trustees of a foreign trust if it is a publicly available register? That is something that no Minister of Revenue has ever to my knowledge on the committee—of course that great genius of our time when it comes to matters of tax the former chairman of the Finance and Expenditure Committee (FEC) David Bennett.David Bennett presided over the most inadequate process I have ever seen in terms of a tax bill—completely shambolic. For his great deeds he was promoted to the outer ministry. I have to say for those of us who are retained on the FEC we are extremely grateful and indebted to Bill English for that promotion and that removal to the sort of outer reaches the extraterrestrial areas of the outer Cabinet. It has freed us up as parliamentarians on the FEC to actually do our job unhindered and unabated. I know Mr Robertson particularly is gratified for that because he was challenged and his questions pre-Christmas were cauterised because the chair did not like "his tone"—not the questions his tone. In another place I would ask the Chairman of the Committee to give me advice on where in the Standing Orders it is covered if there is some difficulty in one's tone. I might be in jeopardy myself if Mr Bennett were ever to take the Chair God help us.I also want to ask the Minister about the failure of one of the core recommendations that his own Government inquiry put forward in respect of foreign trust disclosure rules to immediately implement phase two of the anti – money- laundering law changes. I remember when some of these came in because I implemented them. I was Associate Minister of Justice at the time. Why is it that you would not include in the reporting requirements lawyers—no disrespect to the Attorney-General—accountants and real estate agents? That was a core recommendation of the Government's own inquiry. So I would not mind an answer to that.I have got to say the doozy from the Minister was this corruption—what was it? Which index? What was the name of it?Grant Robertson: Perceptions index.Hon CLAYTON COSGROVE: The Corruption Perceptions Index which he quoted. So now we have a track record of the Government—Dr David Clark: Also known as the "Oravida index".Hon CLAYTON COSGROVE: Indeed. So now we have a Government that said there was no problem. Then it said as the opinion polls went south that it had better appoint Mr Shewan and others to have a look at it and it said there might be a problem. As the opinion polls on the issue went south again the then Prime Minister and the then finance Minister said: "Hey we'd better do a bit of window dressing. There is a problem." Then we have the Minister who got up tonight and said that because of this index that placed us at No. 2 that somehow there is not really a problem. So my question would be: what is it? What are we doing here if there is not a problem if the index is saying we are so rosy and we are not a tax haven? Grant Robertson: A focus group Clayton.Hon CLAYTON COSGROVE: It is called as Mr Robertson put it—well I want to be a bit more subtle in the spirit of collegiality that the Minister showed me but hey to hell with that. It is called a focus group. It is an opinion poll done lightly brought to you by the National Party et al. to say: "Hey feet put to the fire we'd better try to do something about it." That was the origin of the brightline test. That was the origin of the brightline test. For years and years and years National would not use the "c" word: crisis. It still refuses to use the "c" word: crisis. But it took some opinion polls—it is all right relax—and the public said: "Actually we believe there is a housing crisis. We believe we want a Government—we definitely want a Government—who will do something about that."So Steven Joyce got together with the cronies with the pointy heads and said: "Right we actually don't want to do anything because it'll affect some of our mates but we need to make it look good. We need to do a bit of window dressing. So hey presto we come up with a brightline test that will actually do absolutely nothing." You are still making—what 10 or 15 points a year I think in respect of Auckland values. So again if you buy a property today you are making 10 or 15 points in year one and year two. Of course you are going to hold on to that property and flick it after year two. Treasury worked that out when it said 5 years. The other point I want to make is about Mr Scott's point about the "Come to Jesus" moment—the road to Damascus—after 7 years in office. He is an eminent business person. He runs a large enterprise as I understand it. He challenged a few of us to say how many small-business people are over here. Well I will put my hand up. Mr Nash Mr O'Connor others—Mr Parker—have all run businesses in our time. We have all—unlike Mr Bayly—had to pay our taxes and we have done it on time. But to say after 7½ years: "Oh my goodness we ought to do something." The question again is: why was that? I will tell you why it was. When we announced our flexible tax policy—plagiarism is the greatest compliment you could pay somebody—I know this for a fact because I know somebody who was in the room the then Minister for Economic Development Steven Joyce called his officials in and literally said to them: "How the hell do we deal with this? Do something." So all the IRD officials scuttled away in rapid fire desperately trying to put together a policy. Because we nailed it. I will tell you why we nailed it: because we got the former Deputy Commissioner of the IRD Robin Oliver to go through it. He vetted it and he said it was world class. Suddenly after 7½ years of doing nothing—I remember John Banks and Banksie the Younger Mr Seymour get up every week talking about small business how they were going to assist it how they were going to help it. They did absolutely nothing about one of the critical things that small business has to deal with—Mr Scott is right—and that is provisional tax in conjunction with cash flow.Lots of words lots of hot air and then the Labour Party wheels out you know it puts the fast ball a seamer straight down—the old yorker—through the wickets and nails it in the policy. The former Deputy Commissioner of the IRD says it is world class and suddenly they have a concern for small business and flexible tax. Well I have to say as a mate of mine used to say often: "A day late and a dollar short." You know arrive at the battle when the war is won.But I am glad for those small-business folk out there that the Government has had a focus group they have run a few opinion polls and they have got the message that the small-business folk need help and they want some practical measures in respect of tax so they can manage their cash flow and make the system work for them.Dr David Clark: They just need to say: "Thank you Clayton."Hon CLAYTON COSGROVE: Yes—well no. They want the tax system to work for them rather than being a slave to it.So I just say: "Congratulations on being fast followers. Well done." But let us get real about it guys. Mr Scott and as I say Mr "Barnum and Bailey" over there when you get up and have a crack—you know it is too late. After 7½ years leading into an election year suddenly we are going to crow about what we do for small business. Give us a break. The one thing I know about small-business people is that they are not fools. They smell bull they see bull: they know bull."