Robertson Grant: Taxation (Land Information and Offshore Persons Information) Bill — In CommitteeText is incorporated into the Bound VolumeRobertson Grant: Taxation (Land Information and Offshore Persons Information) Bill — In Committee[Sitting date: 09 September 2015. Volume:708;Page:6437. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): It is a pleasure to take a call on Part 1 of the Taxation (Land Information and Offshore Persons Information) Bill. I mainly want to focus in this first call on this part on the definition of “main home”.But before I do come to that it is important to note that the purpose of this bill the huge Government initiative that lay behind this bill was to respond to public concern about the lack of information about who was buying and selling homes in our country. I have to say that ultimately when we look at Part 1 of this bill which amends the Land Transfer Act it is a seriously underwhelming piece of legislation in terms of achieving the goals that the Government has set for itself in trying to address this issue of the lack of information. The shorthand for this bill for people has been the “Foreign Buyers Register Bill”. That is the thing people say when you talk about this legislation in the communities and cafes and halls of New Zealand as they no doubt will be discussing this bill. It fails utterly to live up to that anecdotal name. There are so many loopholes. There is such a lack of clarity about the definitions within the bill.Ultimately I believe we will be back before very long possibly under a new Government changing this because we have failed to do the rhetorical thing that the Government said it would do which is create that register give New Zealanders the confidence and the information to know who it is who is purchasing homes get past the anecdotal issues about who it is and actually get down to the nitty-gritty of making policy based on evidence about how we can ensure New Zealanders can live the Kiwi dream of being able to buy their own home. For New Zealanders of long standing or New Zealanders who have recently arrived whoever they are that ideal of being able to buy their own home is being compromised at the moment in our view. This piece of legislation could have been the vehicle by which we gave New Zealanders that confidence and that information but unfortunately it fails on many counts.The first of those counts that I want to come to is the definition of “main home” that is contained in clause 4 of the bill—the redrafted section 156A of the Land Transfer Act. The Finance and Expenditure Committee has made some changes to the definition of “main home”. It did this in part in response to submissions raised by a number of people. I think particularly the New Zealand Law Society submission was influential on members of the committee in terms of where the definition should go. It would be fair to say that we are in uncharted territory here. This is not a definition that we will find apart from the Act that we passed yesterday anywhere else in New Zealand law and that was of concern to the select committee. I think it is worth noting—Dr David Clark: So many changes.GRANT ROBERTSON: I know. I think it is worth noting that the changes that have been made in the definition of “main home” drew the attention of the select committee. There is a minority view from the Labour Party and from the Green Party as well but even the Government’s own members in their responses in the report back noted just how difficult and interesting this definition would be.I just want to quote briefly from the committee’s report just the final sentence. So this is National members on the committee: “We recognise that there could be some confusion about the rules and have been assured that guidance material would be provided for buyers sellers and conveyancers in addition to more detailed explanatory material provided in IRD’s tax information bulletins.” That is as good as it gets from the Government in trying to create a register of foreign buyers. It puts in place an exemption for the main home—and I will come back to why I am concerned about that exemption—and its own members in the select committee report say: “We recognise that there could be some confusion about the rules”.Why on earth is the Government bringing to this Parliament law that it is confused about? That is not what we are here to do. We are here to create clear lines for people to follow. This is an area where we want accurate information. The problem here is that the definition of “main home” is the creation of an exemption within this law that effectively can turn into a loophole. The confusion as it has been stated for us by Government members of the select committee comes in this part of the bill.The definition of “main home” within the bill has been changed. One of the key elements that was removed after the Law Society’s intervention was a reference within the definition to members of a person’s family. The original definition of main home was “for a person the 1 home—(a) that is mainly used as a residence by the person and any member of the person’s family living with the person;”. So the Law Society among others came to the select committee and said: “Well that’s going to cause some trouble isn’t it?”.Members of Parliament will be very family with this scenario. Potentially if somebody spends a lot of time away from their home but their family stays in the home that is the main family home. If an MP as an example were to own a home in Wellington and a home in Dunedin as Dr Clark does which would be the main home depending how much time they spent there? If an MP comes—as many MPs in this House do—from far away from Wellington and moves their family to Wellington in order for children for instance to go to school but they keep the home in their home electorate which most wise MPs would do if they want to be re-elected which is the main home? That is just an example from MPs but you could take that to a lot of other jobs that require people to be in two cities or in more than one city at a time.So the select committee looked at that and quite rightly decided to deal with that issue by removing the reference to a person’s family living with them. So the new definition of main home is “main home means for a person the 1 dwelling”—dwelling rather than home; we will return to that issue in a moment—“(a) that is mainly used as a residence by the person (a ‘home’); and (b) with which the person has the greatest connection if they have more than 1 home”. This is the nub of the problem with this clause. The phrase “greatest connection” is an invention. It is an invention of this piece of legislation. It has got no case law that lies behind it. It has not been tested and I venture to suggest it will be interpreted wildly differently by different people as they go through this process.Again what we are trying to establish here is a register that can let New Zealanders know who is buying and selling houses in our country. By creating an exemption for the main home in that register the Government opens a loophole. Then in the definition of “main home” it creates a further loophole by putting in place a definition that says “the 1 dwelling … with which the person has the greatest connection” I would venture to suggest that this is going to be a significant problem and I would ask perhaps the Minister in the chair the Hon Louise Upston—and I feel a bit reluctant to ask the Minister to take a call or get to her feet but I would ask Government members or the Minister to actually help explain to Parliament and to New Zealanders why they need to exempt the main home at all.My colleague Julie Anne Genter has Supplementary Order Paper 121 to in fact delete the definition of “main home” because this is not a question of whom a tax applies to or anything like that. That is a different piece of legislation we have dealt with. This is simply about creating a register. There is no great encumbrance upon people having to register the fact that they have a main home. I would say 99 percent of the people who have a main home in New Zealand will already have an IRD number and already have a bank account which are the two tests that come in Part 2 of the bill in terms of being on the register. So there is no great compliance issue. In fact all we are doing is creating a gap in the information that we are trying to create—the information database we are trying to create. So from our point of view and we say this in our minority view there is no reason to create a main home exemption and in fact by creating such a loose definition within “main home” we have a significant problem.When we look at the question of greatest connection this does offer an element of subjectivity which is the reason why Government members on the committee have described the potential for confusion in what happens. I do need to say this. The officials who came to the committee did say to us that it will not be subjective; it will be an objective test. I simply do not believe that.