Nash StuartHon STUART NASH (Minister of Revenue): Thank you very much Madam Deputy Speaker. I am so confused about what that member Parmjeet Parmar was talking about. I think that member's confused. First of all she raged that this is politics—This is the wrong thing to do. This is politics."—and then she said we should have taken more time to develop it because the Opposition would have supported it. Then she said her Government got rid of it. Well I'll tell you what happened: the last Labour Government did bring this in and the National Government did get rid of it against Treasury advice.Treasury said you should keep it but the Government got rid of it. And what happened? What happened to New Zealand's R & D spend? We have one of the lowest R & D spends in the OECD. It is why this Government in research and development under Dr Megan Woods has said we need to do something different. We need to do it differently if we want to increase our R & D and be as good as we possibly can be.What we've also said is we're not going to pick winners. It's not about picking winners. What we want is we want companies to take control of their own future and we're going to give them the ability to do this. I think the innovative way that Megan Woods has approached this is absolutely fantastic and it is going to make a difference.When the member talked about 2000 or 3000 companies—heaven forbid! Imagine 2000 or 3000 companies undertaking research and development. I would have thought that would be a really good thing. A billion dollars we're putting into this—a billion dollars. This is not about politics; this is about driving productivity driving research and development and growing our economy in a way that the previous Government never allowed the economy to grow. I'm very proud of this.This bill provides the kind of support that businesses have been asking for—that businesses have been asking for. We want businesses to feel supported to take more risks and to think a little bit more radically and this scheme will be a valuable one for New Zealand and for our economy. This is less about the Government picking winners and more about enabling companies to take control of their own destinies. There's no doubt about this.The R & D tax credit scheme this bill introduces will be a real asset for New Zealand as long as—and I reiterate this: as long as—the scheme remains sustainable. That's why we are building in safeguards. We are ensuring there is rigour to the rules to protect the benefits that this regime will bring about to ensure that the scheme can continue to provide support to progressive thinking and help build a dynamic economy.We are ever mindful of the need—DEPUTY SPEAKER: I do hope the Minister isn't reading his speech.Hon STUART NASH: Not at all. I've got notes here that I'm referring to but I'm not reading it in any way shape or form.DEPUTY SPEAKER: That's good.Hon Member: He can't read; he hasn't got his glasses on.Hon STUART NASH: That's the problem—I'm going blind. Ha ha!We are mindful of the need for fiscal prudence. As the Minister of Revenue I think it is important that I make some key points so they're understood—hence the reason why I have a few notes here that will just prompt me around the tax implications of this piece of legislation.For the benefit of members I will give a quick rundown of the safeguards and the integrity measures of the bill. Firstly the bill proposes that claimants must satisfy certain criteria to be eligible for these R & D tax credits. It's a fundamental requirement but the bill goes deeper. It also contains criteria that we provide support for R & D—DEPUTY SPEAKER: It looks very much like the member is reading those notes. I hope the member is being honest—all members in this House are honest and the rules are very clear—but I've asked the member not to read his speech.Hon STUART NASH: OK. Well what I will say about this is that inland revenue—are you requesting to me Madam Deputy Speaker that I look at you the whole time I speak?DEPUTY SPEAKER: No. Not at all.Hon STUART NASH: Can I look down or—Kieran McAnulty: Give it here. I'll hold the notes up!Hon STUART NASH: I can't read these on the page!All I want to say is that this is a very robust piece of legislation. It's a very robust scheme. We've had officials from inland revenue and the Ministry of Business Innovation and Employment (MBIE) travel to jurisdictions that have an R & D regime in place and learn what has worked but also learn from their mistakes. They've travelled to the UK. They've been to Scandinavia. We've looked at the Israeli model. They've met with Australian tax officials and they've asked them what we should do. The Australians have given us the benefit of their insight and their wisdom and said "If we were setting this scheme up again this is exactly what we would do." We've taken the British model and what we've said is "You know what we're going to do?"—I'm going to put those notes away; blank pages—"What we're going to do is we're going to review the scheme after five years. We're going to review the scheme after five years just to make sure it works."The other thing we're going to do to ensure that companies don't embark on what they believe is an R & D journey get to the end of it and then be told "Goodness me! That's just business as usual." is have a pre-approval scheme which I think is really valuable. So companies can go to the officials and say "This is what we are proposing. This is what we want to do." And officials have given assurance that in very quick time they will actually approve the spend or the scheme that is part of the businesses R & D plan so businesses can progress with confidence. It is the right thing to do.The other thing we've said is that the majority of this R & D must be undertaken in New Zealand. There is no point in having an R & D tax scheme for the vast majority of it to occur overseas. So I think we're allowing 10 percent to occur overseas but the vast majority must take place in this country which is the right thing to do. There's no doubt about that.There are a lot of safeguards in this bill. We've got the best inland revenue officials working really closely on this. They've developed a scheme but I do want to come back to that important point: because research and development is dynamic because it is changing because the definitions can change and because there's a whole lot of stuff that is going on—it's a bit of a cliché; you don't know what will happen tomorrow today—we have said we are going to review this in five years just to make sure it is meeting the objectives of the Government and is actually increasing the R & D spend in this country.The key thing for me—and the reason why I really like the scheme—is it is not about the Government picking winners. In the past I think we had a little bit too much of that where if a company has been very good at filling in forms and they've engaged in a way which has been meaningful—and I will acknowledge Callaghan Innovation has done a great job a very good job—Andrew Bayly: Well keep it.Hon STUART NASH: We are. Callaghan Innovation are reinventing themselves and they were going to work with IRD to make sure this works. But instead of the Government saying "You're worthy." what we're actually doing is letting businesses take control of their own destiny—letting them be innovative and say "Hey you know we've got a really good idea. We think we can make this happen." All they have to do to be eligible for the R & D tax credit is meet the criteria. There is no list ticking there is no panel it has to go through and there's no assessment around whether this fits or it doesn't etc.; it is just about meeting a key set of criteria which the business will understand before they even put their application in or before they even seek approval.So I think this is a great way forward. We did need to do things differently because our R & D spend in this country is one of the lowest in the OECD. I'm very proud of the work that IRD has done in conjunction with MBIE to come up with a scheme that I think is really going to drive growth and productivity and make a difference in this country. Thank you very much."