McKelvie IanIAN McKELVIE (National—Rangitīkei): You won't get quite the academic argument from me that you got from Alastair Scott the last speaker. But you know it's a funny thing in life that small things in life sometimes amuse small minds. In the course of this I was interested in the title of the bill: Taxation (Annual Rates for 2019–20 GST Offshore Supplier Registration and Remedial Matters) Bill. When I was considering the ring-fencing of rental properties I had a great deal of difficulty figuring out whether it entered into the annual rates—obviously they'll remit annual rates for rental and as a result of the annual rates for the tax on this there's no doubt going to be a review of the annual rate of the rentals as well as my colleague the Rt Hon David Carter pointed out—or whether it fitted into the remedial matters part of this bill where I'm pretty sure that it will appear again next year as the Government realises the error of their ways and withdraws it because I think that this piece of legislation from my view is flawed and it will cause distortions in the market. It's not designed to cause distortions in the market but it will. The reason for that in my view—and I think again it's been touched on already tonight—is that there's no question of if for example 40-odd percent of the rental properties are owned by what we might term family investors or mum and dad—I don't like that term much—investors then they are going to be put off the market but before they're put off the market they're going to probably find a way of overcoming the shortfall in their income as a result of not being able to offset the tax and they will put the rentals up. It's a big enough block of the market to put the rental up in my view. So they'll put the rental up. The ironic thing is that the bigger property investors who follow along behind won't be concerned about this piece of legislation because effectively they run self-contained businesses that can manage themselves and they will then reap the benefit of those increased rentals. So it's an anomaly in my view. It's an enigma I suppose you'd call it—Andrew Bayly: Another one? IAN McKELVIE: Another one Mr Bayly—another one. They're frequent tonight. It's a word I've learnt along with rapacious" and "capricious" which I don't really know the meaning of but it could apply to this as well. So I am learning quite a lot of things—Andrew Bayly: That means the Labour and New Zealand First Government. IAN McKELVIE: Oh is that what it means? Thank you—thank you for that bit of information. I want to comment on a piece of information that Minister Parker gave us when he was in the chair—we've cleaned out a couple of Ministers already tonight; we're up to our third. But he talked about diverting investment from the property market to other markets. This is an issue that I think is very interesting because it's a challenge for New Zealand. You see we're a small comparatively well-off country miles from the world market with a very small alternative market ourselves. So our sharemarket is very small and our secondary markets on the whole are extremely small and if you go back to the global financial crisis and you look at the amount of money that New Zealanders—and usually I guess the same type of investor we're talking about here—had invested in the financial markets and particularly in the finance companies we saw the danger of this alternative investment. It chased people straight back to the property market because frankly they didn't trust any other market. We saw it in 1987. I think someone commented the other day that not many of you were here in 1987 but we saw it in 1987 with the sharemarket and we'll see it again. So because we're such a small market in New Zealand it's very difficult for people to find suitable alternatives to invest their money in. That's why in my view we see this unusual trait we have in New Zealand where a very large percentage of our investors invest in the property market because they can see it they can touch it and they know it's there and they know it won't go away unless they do something with it. That is the difference in this country. The other thing that is intimidating for people in this country is that a large percentage of a balanced portfolio investment approach needs to be held offshore just because again our market is so small in New Zealand and small changes can make a massive difference to people's capacity to invest and the capacity to get a return on it. So that's why we have this unusual property situation in New Zealand. The criticism of this piece of legislation—or my criticism of it—is that it only attacks the people who use their income tax as an offset. In effect they pay income tax and they then have the ability to offset that against the piece of property that they buy. That is a massive bonus for people. It enables them to save money and get to their retirement and they'll often sell that. Fortunately they don't have a capital gains tax on that because that would have got rid of the rest of the profit they've made out of it. So there's some unusual circumstances in New Zealand which we need to consider differently and I don't support this piece of the bill. Thank you."