Clark David: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeClark David: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In Committee[Sitting date: 03 November 2015. Volume:709;Page:7675. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North):In rising to speak to Part 3 of the bill I acknowledge that it is the substantive part where all these changes are made. I join my colleague Grant Robertson in challenging Government members and Ministers to speak on this bill. I too find it odd that there was not great competition for calls to speak about these changes.The Income Tax Act is a very important Act we are amending. It is the Act that provides us as a country with the resources to afford the assets that we hold in common—the hospitals the schools the roads and the courthouses.Without a robust tax system that promotes enterprise and ensures people pay their fair share of tax from the profits of those enterprises towards the common good we as a country will not go forward we will not grow and we will not maintain the level of services that we have come to expect as a country and the growing level of services we will look forward to in the future.For example in the health sector where the cost of health care goes up and up every year due to new technologies that enable better quality of life in old age—we on this side of the Chamber want a robust tax system that can support those standards of living that we all want.The Government has acknowledged that it has not funded the health system to meet inflationary pressures.The $1.7 billion estimate that Infometrics has put on the underfunding of the health system has a very real consequence for New Zealanders.So I would challenge those members opposite to get up and say why it is that they want to make these changes why they do not want to make the bill more robust still why they do not want to promote enterprise more and why they do not want to have research and development tax credits in here in a way that is readily available to all businesses so that we can actually grow the economy.The current situation where we pick winners and have in this piece of legislation and in this part of the Act clauses that promote a very narrow type of research and development that may benefit the Minister when he wants photo opportunities but does not actually benefit the country in the way that it should is something that needs to be debated. The Government members opposite should justify why it is that we have these narrow research and development provisions in the law and not much broader ones. I expect that the Minister in the chair Nicky Wagner will have some thoughts on that. I look forward to the Minister speaking a little bit about the vision for research and development that she has that we all should buy into because at the moment it is not obvious why it should be so narrow and this is a very important part of the bill.In this contribution I want to speak about some very specific points and the first of those is the exception for overseas accommodation and the second is the exception around accommodation provided to ministers of religion.I think that both of these things are worthy and should be supported for very different reasons.The overseas accommodation exemptions aim to include in calculations at a reasonable level the benefit derived from allowances or payments. I refer members to clause 69B of the bill. These changes are an attempt to ensure that overseas accommodation is supported. So when enterprises are moving out overseas and are expanding their businesses they will have the support necessary to do that in a manner that ensures that they can go about their business in a reasonable way without a great big payment exemption or luxuries being carved out that would stop us getting our fair share of tax from companies and that actually promotes enterprise.I think that one of the basic principles of tax policy is to ensure that it is fair but also to ensure that it promotes economic development in a way that certainly I care about and members on this side of the Chamber care about. Of course we know that Labour Governments historically have had much higher growth rates than National-led Governments.Since World War II National-led Governments have grown the economy on average by 2.9 percent—not bad in itself—but Labour Governments have grown it by 3.7 percent. So we need provisions like this in the law that ensure that enterprise is promoted.The second area I want to speak about specifically is the exception for accommodation provided to ministers of religion. This has been a little bit contentious. I think though that the contentious aspects of this seem to have gone away in the way that it has been resolved in clause 70 as we have here in the bill.We eventually amended the laws around this if memory serves me correctly in the last annual rates and remedial matters legislation that went through for the 2014-15 year in order to ensure that remuneration for accommodation was not calculated in the tax—and the Minister will correct me if I am wrong I hope or the members opposite may rise to their feet and take a call.The attempt was being made to ensure that the remuneration given to ministers for their accommodation—recognising that they are sent places that it is a calling and that it is not necessarily a benefit of a luxury nature—not be counted in their salary.Effectively at one level you could say it is a kind of perk and at another level it is an attempt by the State to support the work that traditional ministers of religions do in small communities around the country.In many small communities particularly those struggling to get new enterprises off the ground—those that were once thriving communities and industries that have struggled in recent years for which we could lay some blame at the foot of the Government for its lack of regional development policies but let us talk about the principle here—those communities often have as the last remaining professional member in them a minister of religion. This is somebody who has a level of education and has been trained in critical thinking in a way that enables them to act in those communities as counsellors or as peacemakers.Often they are the people who will sign official documentation because there is no other professional person in town to witness documents. These are simple everyday matters. They of course bury people and they marry people and so on. The “hatch match and dispatch”—I have people heard people talk of that in those regional communities. That is part of the role of those ministers of religion.But recognising that they are those people who do those duties in those towns and that they actually provide a valuable service and that the State wants in some way to recognise that through trying to ensure that the tax system does not overly penalise them for that accommodation that they have was the intention of the changes last year.The amendments here—I assume having not been a part of that particular debate on the Finance and Expenditure Committee—are aimed at ensuring that the principle that sat behind the amendments we made last year are effective in this law. I refer members to clause 70(3B)  where it says: “For the purposes of subsection (3)(a) the calculation of the amount of the item remuneration excludes the value of accommodation described in subsection (1) that is provided to the person.” That to me as I read it is a clarifying statement to make that absolutely clear. We can only assume that there had been some disputes as a result of the annual rates and remedial matters legislation last year and that therefore the officials have come back in order to make that abundantly clear. I hope my memory of that is correct.I see many officials here who will be available to brief Government members should they have questions or the Minister in the chair if she is not clear on the issue. I think it would be good to clarify for the Committee whether this clause is designed as a clarifying aspect or if indeed it does in some way alter the purpose which I have not captured. I am interested to hear that. I think it is a principle that this Committee should understand so I expect the Minister in the chair may wish to address that—certainly if I have misunderstood it.The other matter I wish to address in this contribution—sorry I am just finding my page. It was around the research and development tax credits—there is a specific paragraph. I have taken my finger off the page. I got so wound up in my exposition around overseas accommodation and the exemption of property provided to ministers of religion that I have lost my place. I might wait for that contribution to be made in another section of the bill because I have lost the page and I do not wish to delay the matters progressing in the Committee.