Wood MichaelMICHAEL WOOD (Labour—Mt Roskill): I'm delighted to rise in support of the bill and the Supplementary Order Paper. I want to thank the previous speaker the Hon Steven Joyce for his detailed exploration of the 197 pages of detail that emerged from the Finance and Expenditure Committee on this important tax bill that covers a wide wide range of areas. But actually of course he spoke about the three-page Supplementary Order Paper.I understand it's been a long long difficult day for the National Party and I want to fill in a few of the gaps—a few of the things that he missed in his comments about this piece of legislation that's been in the works for about nine months and on which the select committee across the House has engaged very constructively. But before I do that I think I would be remiss if I didn't provide a little bit of additional commentary on the Supplementary Order Paper that we do have before us here today.What I want to start with is an example that was provided by CoreLogic the public policy organisation who's done a lot of work about the housing crisis and probably understands the state of the New Zealand housing market more than most other organisations who are out there. Here's an example that they raised in recent public debate about the brightline test. As it happens it relates to my own beautiful electorate of Mount Roskill where a property on Raurenga Avenue sold for $1.95 million on 30 August 2016. It was then settled in November. In June of the next year it was flipped for $2.8 million—in nine months a huge big capital gain of $836000.The changes that this Government is going to implement in the housing market inclusive of this capital gains tax are about moving towards a fairer and more reasonable regime that says to New Zealanders Yes we're going to treat you fairly." If you go out there and you work hard in your job you get paid your salary you get taxed on it. If you have a whole range of other investments you get taxed on it. But in cases like this one people who are making huge capital gains are not necessarily being taxed on them and that absolutely is one of the factors that is contributing to a property market that is absolutely out of control. Every single member of this House if they care to ask around will find people in areas that they represent who have simply been driven out of the property market.I've got to reflect on Mr Joyce's comments and his passionate plea for more time to look at this issue. Well after nine years of utter inaction in the housing crisis nine years in which hundreds of thousands of people have been driven away from the dream of homeownership nine years in which homeownership rates have slipped to their lowest level since the early 1950s when Sidney Holland was the Prime Minister in this House this Labour-led Government says "We're not going to sit on our hands any more. We're actually going to do something." We are going to implement those commitments that we made at the time of the election when people said "We want a new Government that will actually take action on the housing crisis."What did we have from Mr Joyce? We had him deferring to the Government departments. Well of course we take advice; of course we listen to our Government departments to consider what they have to say. But leadership in Government means knowing what your policy is it means knowing what the problems are and it means marching towards some solutions with some determination.It doesn't mean you always simply say "Yes sir; yes madam. We're going to listen to what Treasury or the IRD say." We'll listen to what they say but this Government will actually take action on the issues. One of the reasons that we have properties like Raurenga Avenue with a capital gain of $800000 over nine months is because for nine years that previous Government did absolutely nothing about this issue. So I have to say that I'm absolutely in support of this Supplementary Order Paper.I've got to also mention the sort of emotive point that Mr Joyce came back to—that somehow this is going to impact your honest hard-working mum and dad investor looking for a nest egg. Well those kinds of investors aren't flipping properties within five years. Those kinds of investors are setting up a long-term investment for their retirement. It is simply scaremongering it is simply inaccurate to say that a five-year brightline test—Brett Hudson: Ask Inland Revenue. Inland Revenue have a different point of view to you Mr Wood. Try asking Inland Revenue or Treasury.MICHAEL WOOD: —which is aimed at cracking down on those speculators is going to have any impact on those long-term investors. That is simply not the nature of it. Let's also just respond to the high dudgeon that we hear on the other side of the House. What that previous Government did after the last election when they were forced into doing something to look like they had any solution to the housing crisis is pretty quickly they introduced the brightline test. It was a two-year brightline test.But let's be realistic about this. There's no great point of principle here. We're talking about making it a longer brightline test to make it more effective. That is what we are talking about and that is what this Government—Brett Hudson: The officials don't agree with you Mr Wood.MICHAEL WOOD: That's right. Well you keep backing the officials. You keep pretending Mr Hudson that there is nothing wrong.What I would say to the new National Party Opposition with their new leadership is that if they keep putting their heads in the sand and saying "There is absolutely nothing wrong with the housing market."—if that Opposition continues pretending that all is fine and dandy with the housing market with the lowest rates of homeownership since the 1950s after nine years of their watch then please go ahead. New Zealanders know that there is something wrong. This Government knows that there is something wrong and we are quite happy to be the ones who do something about the matter.Having dealt with that little issue I want to return to some of the other aspects that come through in the bar 2 version of the bill that has been reported back from the select committee. Notwithstanding my previous comments I actually do want to pay tribute to members of the House from all different parties who are part of the Finance and Expenditure Committee who worked through what was a pretty complex piece of legislation. I think they've come to a really good outcome. I want to acknowledge the former Minister Judith Collins who's in the House who put the bill before the select committee prior to the last election and the current Minister Stuart Nash who's shown a willingness to engage around the issues and come back with an improved piece of legislation.The bill that is before us does a few key things. One is that it confirms the tax rates for the current tax year. That is of course rather important. We want to make sure that the money that we appropriate from the good residents of New Zealand is done so lawfully. But it also has a number of measures within it that modernise and improve the tax system and these to a large extent relate to the Business Transformation project—quite a lot of changes relating to pay day the frequency of reporting moving to a pay-day reporting system and investment income reporting.The benefit of these changes is that they allow the Inland Revenue Department and the broader apparatus of Government to have better and more timely information and in doing so we are more likely to ensure that we're actually taxing individuals at the correct amount. So while there are potentially some small burdens that fall on those who have to file in terms of more regular filing—and I'll address some of the changes made at the select committee here—the benefits for taxpayers across the board are actually quite significant in my view.The third key purpose of the bill at the outset was improving the settings to ensure that we retain that broad based - low rate tax system that has pretty wide support in the New Zealand tax community and in this Parliament. You do that by making sure that you're taxing fairly across all areas of economic activity. The key one that this bill looked to address was the area of employment share schemes where after quite a lot of dialogue over a number of years Inland Revenue Department the past Government and this Government have arrived at the conclusion that we do need some improvements to ensure that earnings that are received as a result of employee share schemes are effectively taxed in more or less the same way as earnings that people receive in other ways. There was a concern that our previous regime didn't achieve that.In the time I have left I just want to touch on one or two of the key changes that the select committee made. One of the ones that I really want to focus on which I think was a good change that we got agreement on across the committee is what's called the payroll subsidy. This is a small amount that is paid to ensure that largely small employers have the ability have a bit of support to go through a payroll intermediary to make sure that their tax has been filed electronically and in the right way.This is quite a useful innovation that was introduced a number of years ago. It gives those quite small employers mainly just a little bit of extra support to make sure that they're paying their tax in the right way. The original proposal of the bill was to do away with that payroll subsidy. In the view of the committee that was a bit hard line a bit arbitrary and a bit ideological. In our view it is entirely appropriate particularly when this bill puts a number of new obligations in terms of the frequency of filing on employers to provide just a little bit of support to those small employers.So the payroll subsidy has been reformed under the bill that has emerged from the select committee. We're keeping it in place for two more years to allow people to transition into the new requirements. It will now be more targeted so it will apply just to those employers who file under $50000 of tax each year. But those employers as a result of the select committee's work will still have access to that payroll subsidy. I think that was a very good change indeed.So overall this is an important bill. It modernises our tax system. I commend it to the House along with the Supplementary Order Paper. It will bring back a little bit of fairness to our property market. Thank you Mr Assistant Speaker."