Genter Julie AnneJULIE ANNE GENTER (Green): I feel I will have to respond to the previous speaker Alastair Scott's contribution to some extent to say that I think that he is mistaken about the nature of the policies proposed by both the Green Party and the Labour Party because the Green Party is as always a party that is very focused on living within our means and so a Green Government would of course be entirely fiscally responsible but better than that would take into account the things that New Zealanders actually want.I would say that New Zealanders know that you get what you pay for and that if we do not make contributions to Government services then with a National Government they will see increasingly eroding public services and squeezed health services because—as that member accurately pointed out—his party is ideologically committed to reducing taxes particularly on those who are earning the most money and those who own the most wealth. So the rich will get richer under the National Government and the rest of the country will suffer and not receive the services that they want—the social and physical infrastructure that they know will build a long-term healthy economy and society. This is what a Green and Labour Government would absolutely prioritise—a long-term healthy society—because we know we can have that.So when it comes to tax law it is riveting and I am sure people at home would love me to go through the detail of this particular bill. Unfortunately I was not on the Finance and Expenditure Committee for the entirety of the submissions on the bill though I was there for the beginning. People at home can see this is the bill this is the commentary on the bill and this is the disclosure statement and the regulatory impact statement all for just one bill. So tax law—as always it is very interesting to delve into the detail of it.I will start by saying there are a couple of principles and one is that tax law needs constant monitoring and improvements to make sure it is working the way that it is intended to work. So I congratulate the work of the officials on this and all of the officials at IRD who are hopefully working very hard and are properly resourced to ensure that our tax law is being complied with and is working as intended because as ever there will be people who are seeking to exploit loopholes in the tax law to avoid paying their fair share of tax and there will be things that are not working as intended that actually send the wrong signals to households and businesses and create problems for them in achieving what they want to achieve.One of the major parts of this bill—the one that we heard the most submissions on in Part 2—related to closely held companies and particularly look-through companies which was the replacement structure introduced in 2010-11 when we lost the loss attributing qualifying company category. What a look-through company does or was intended to do is enable the owners of the company the shareholders to pay the tax directly on the earnings or to offset the losses of that company against their own personal income. So it is not the company that pays the tax or absorbs the losses; it goes straight through the company to the owners of the company and that enables them to offset at times losses against their personal income. There have been some difficulties with this identified by IRD over the last few years. There was not quite the same uptake that it expected and so there are changes that have been proposed.Hopefully this will enable the tax law to be more transparent but also to work as intended because I think one of the unintentional consequences of the look-through companies combined with our very unusual foreign trust law was that a number of people offshore who are non-resident in New Zealand were able to set up foreign trusts in New Zealand with look-through companies and effectively use these structures in a way to avoid paying tax in their home country. That is something that we certainly—I do not think most New Zealanders would be in favour of our tax law and foreign trusts law being used to that extent. There has been another bill already passed into legislation in this House recently that does address some of the problems with foreign trust law. This one had already been initiated and makes changes to the eligibility of having a look-through company and to the way in which dividends were treated and of course the select committee made the decision to add some transitional provisions for those who were affected by the changes to the eligibility to be a look-through company. So you can find that in clause 118B in this bill.Another change is to non-resident withholding tax and the approved issuer levy—or AIL for those who really follow the acronyms of tax law. All of that is part of our ongoing work through the OECD on BEPS—that is base erosion and profit shifting. This is incredibly important work. It is incredibly important that we address this global challenge because companies and individuals globally have been incentivised to some extent to minimise their tax liability. You can understand why companies and individuals and households would try to minimise their tax liability but we actually need tax in order to invest in the physical and social infrastructure that makes society possible and makes business possible. Most of the great innovations that have been incredibly profitable—whether it is Apple or Facebook or a variety of different innovations—are almost always supported by some sort of Government investment. Whether that is the simple physical infrastructure of something like the internet or whether it is Government grants or investment in research and education that enables those businesses to create good ideas and then run with them we need to have businesses and individuals giving back to society so that we can maintain the level of investment in the infrastructure that makes our society possible and makes ongoing prosperity possible.So I think globally there really needs to be a movement. It is important that New Zealand continues to contribute to this and I am happy to say that it seems to me that the changes in this bill will go some way to assisting with a bit of a crackdown on multinationals that are trying to exploit our tax laws and trying to avoid paying their fair share of tax here in New Zealand. Of course that ends up hurting the people of New Zealand and ultimately it is going to hurt us all in the long run because we are all in this together and it is a really important job for the Government to protect and empower people to ensure that the rules are fair and to ensure that the rules are complied with.The global challenge we have right now is because of the interconnectedness of communications and the global scale of trade and all of that makes it more likely that companies can play countries off against each other. They can threaten to pull their particular investment in a country on the basis of tax preference. Companies—multinationals—are actually in the position of playing countries off against each other so that countries are in a race to the bottom to make their tax laws the most favourable for the companies which is going to be worse for each society. Globally we have to work together to stop this sort of behaviour so that society can flourish in the long run.I will just end by talking about—going back to Part 1 of this bill which of course sets the income tax rates for the coming year. I actually thought the observation my colleague Michael Wood made in his contribution to this reading of the bill was really important which is that the income tax rates set for the coming year effectively reflect a redistribution away from the poorest New Zealanders and middle-class New Zealanders to high-income earners. They were instituted by this National Government with its tax changes now 7 years ago.There is an ongoing cost to that and that ongoing cost can be seen in the increasing pressure on mental health services and health services in general. It can be seen in education in the ongoing need for schools to rely more and more now on contributions from parents for programmes and the sorts of technologies that students need to be learning at school. It can be seen in the ongoing deficit in infrastructure investment in Auckland which is going to result in an absolute catastrophe in a few years' time with the ongoing population growth. We simply are not seeing the level of investment in public transport infrastructure that we need. A lot of this comes back to the choices that were made by this National Government to prioritise tax cuts for high-income earners over the future of the country.