Dunne Peter: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
Dunne Peter: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
[Volume:669;Page:16122] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I am happy to take a call to respond to the points that the member has raised. I appreciate that the issue of process is one that the Opposition feels very strongly about but I want to repeat what I said at the commencement of each of the two previous parts of this bill. This process has been transparent robust and clear and dates from the presentation of the Tax Working Group’s report in January of this year. As part of the Budget process and indeed part of the work of the Tax Working Group all of the documentation has been released publicly. It has been out there on websites and it has been in the public arena right from the beginning. The Budget contained regulatory impact statements relating to the changes that are contained in the Supplementary Order Paper. We have been absolutely clear right from the beginning about having an open process.  
As I said earlier following the Budget an issues paper was released on 24 May and we received 24 submissions on it. Draft legislation which forms the basis of the Supplementary Order Paper was released in October and a further 10 submissions and comments were received on that. In addition discussion took place with the New Zealand Institute of Chartered Accountants the Law Society and all the usual suspects about detail over that time and I acknowledge their contribution and their input. Changes continued to be made up until the time that the Supplementary Order Paper was signed off and released publicly on Tuesday. It has been a very considered and deliberate process.  
The issues contained within the Supplementary Order Paper are significant. The member keeps talking about $2.3 billion of tax losses emanating out of the loss attributing qualifying companies sector. That is certainly true. I remind him that it grew by 400 percent during the term of his Government. The explosion in loss attributing qualifying companies rapidly increased under the term of the previous Government. The major driver was the avoidance opportunity created by that Government shifting the top personal tax rate to 39c. We have dealt with that not only by reducing the rate but also by aligning it to the trust rate. That escalation will not continue in the future.  
But even if we take the total swag of loss attributing qualifying companies estimated to be somewhere in the order of 130000 approximately half of them—in fact the figure I have seen is 49.8 percent to be precise—relate to property. As I said at an earlier stage of the debate of the $2.3 billion in tax losses approximately $800 million is attributable to property-related losses. The member talks about the net not being cast widely enough but we are doing a couple of things with these changes. Firstly we are restructuring the broad qualifying company regime. We will be moving to a full look-through process. I have indicated earlier the changes to be made to the dividend regime in due course. Secondly we are seeking to prevent the worst of the abuses that were occurring in the property-related area and to address that essential conundrum which the Tax Working Group pointed out that some $200 billion of investment in property produced losses of $500 million per annum and a revenue loss to the Crown of $150 million per annum. We are addressing that through the changes being made in this bill.  
I come back to the point that I have made at every stage of this debate. The reason for it having to be done in the way that it has been done given that we have given virtually a year’s notice of our intention is that these changes take effect from 1 April next year. I think Mr Burns or Mr Mallard may have referred to this earlier but a number of loss attributing qualifying companies and the entities that are associated with them will need to change. They need time to make that transition. The Inland Revenue Department needs time to gear up for that transition. This legislation has to be passed at this point in order to enable the goal of 1 April—which I heard the Opposition say they do not disagree with—to be met.  
I said earlier and I stand by it that we have been punctilious in terms of the consultation process. We have been very clear to ensure that at every stage all of the points that have been raised have been considered right from the time of the Tax Working Group last year. The outcome has been one in which we have legislation that is credible is workable and will address the abuses that were being raised as part of the Tax Working Group report which everyone knew were occurring and were seeking action upon. I think this is good legislation and I think it will stand the test of time.