Graham Kennedy: Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — First Reading 
Text is incorporated into the Bound Volume 
Graham Kennedy: Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — First Reading 
[Sitting date: 29 November 2012. Volume:686;Page:6986. Text is incorporated into the Bound Volume.] 
Dr KENNEDY GRAHAM (Green) 
: 
 I take a short call just to reaffirm the Green Party’s support for this Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill but also to remind the House that our support is contingent only. It is support through to the select committee and it is contingent on clarification of a number of issues. 
In brief to review what this bill is aiming to do it is to tighten the rules for deducting the costs of assets such as holiday homes and so on; obviously to change the way livestock is valued which has been discussed here a little; make changes to GST especially on the way non-resident companies can claim credits; make changes to the tax treatment of foreign currency hedging; make a reduction to 4 years instead of 8 years for retroactive tax refund claiming; make changes to the way some farm capital expenditure is accounted for; clarify the term “dividend”; and remove historic tax concessions to Tiwai Point and one or two other companies. 
It is a complex bill. There are nine regulatory impact statements. It is arguably as New Zealand First said tinkering at the margin but its intent is sound—basically to improve the New Zealand tax base. Yet it potentially puts tax revenue at risk to the tune of perhaps up to $15 million which is not insignificant. So we do need to be confident as a House that what we are doing here is worth it in terms of improvement to the tax law. 
We have specific issues of concern. We think that the changes to the tax treatment of foreign currency hedging could open up further opportunities for tax avoidance unless the Inland Revenue Department commits more resources to monitoring and compliance. We think the Inland Revenue Department is perhaps passing the cost of foreign companies claiming GST refunds back to those companies requiring them to register for GST rather than offering a more transparent and simple refund scheme such as for example the British VAT scheme. 
We are concerned that participants in the Government’s Voluntary Bonding Scheme may have through oversight gained a financial advantage if enrolled in a KiwiSaver scheme. Government departments are required to match contributions and this match may not have been budgeted for. We are concerned about the reduction as I mentioned down to the 4 years for claiming refunds. I recall David Parker’s concerns about what he called the “rorting of the system” for superyachts being taxed which is an issue that should never have arisen in the first place. So there are a number of complex issues and each one is not simple and needs to be considered in the select committee in some depth. 
Just to round off—it is a broader issue. I think there have been various comments from the Opposition both Labour and New Zealand First that this bill in a sense holds up a mirror to the current Government’s overall economic policy and you might say world view. I think it was David Clark who lamented that this New Zealand Government lacks a real vision of getting the economy back on top. I think that is fair comment. The answer was Paul Goldsmith’s mercifully short defence of the bill to the effect that it was building a more competitive economy—building a more competitive economy—and it was going to do this by improving the tax system. 
How are we going to do that? How are we going to improve and make a more competitive economy by just tinkering at the margin with this bill? Andrew Williams noted that the balance of payments is in a mess that the manufacturing sector is in crisis and here we are tinkering at the margin with the tax improvement system. 
What we need to do if we want to make our economy properly competitive is to look to the underlying drivers that the Government is claiming—six main drivers to improve the economy. It has omitted the fundamental drivers which is that we are an inefficient fossil fuel - driven economy and we need to bring in adequate climate change policies that allow us to convert to a low-carbon green economy. That is the main problem not this bill.