Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
[Volume:669;Page:16085] 
Taxation (GST and Remedial Matters) Bill 
In Committee 
Part 1 Amendments to Goods and Services Tax Act 1985 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Oftentimes when members begin their speeches they say that they rise to do so and so or they rise to support the bill. This morning I just say that I rise because with the kind of cold I have I feel like that is an achievement in itself. I am assisted I must say by Sudafed which means I probably would not be on my feet had the Government’s next bunch of legislation already been passed.  
In all seriousness I say that I am particularly happy to take a call because we are witnessing today a most grievous abuse of the parliamentary process. The Taxation (GST and Remedial Matters) Bill was an innocuous little remedial bill that was agreed by unanimous consent at the first reading and by all parties around the table at the Finance and Expenditure Committee. It tidied up a few tax glitches. The only thing that was strange about it was that there was so little in it which seemed like a bit of a mystery. Zero rating some farm transactions was about as far as it went.  
Now the truth is revealed. The whole point of this bill was the 70-page Supplementary Order Paper dropped on the House last night which is a fundamental change to an area of tax law that involves $2.3 billion a year of tax write-offs.  
The Minister of Revenue once stood for the sensible decent middle. He should be ashamed that he is presiding over an abuse of Parliament like we are witnessing today. For mum and dad out there I say that the Government is introducing most of this bill after it has had its only chance to go to a select committee and after the public have had their chance to have a say on the bill which affects over $2 billion a year of their taxes. Over $2 billion a year of their taxes is affected yet this Government would not let them see the bill before steamrollering it through with midnight sittings just before Christmas.  
What is the Government ashamed of? I will tell the Committee what the Government is ashamed of. It is the sham that is the look-through company.  
I will tell people a little story—a true story. I once looked at renting a boat. I went to a company in downtown Auckland at Westhaven and I was shown around some nice boats I could rent. They were nice but they were expensive on a per day rate. The salesman said it was easy; I just had to form an LAQC and put it through that. I asked him what an LAQC was. He said it was a loss attributing qualifying company. I said that that could not be legal. He said it was. He said I had to take a client out on the boat only once and I could write off the whole cost as a tax loss against my personal income. I told him he had to be kidding; it was a pleasure craft. He said it did not matter. With a loss attributing qualifying company I could run a loss on the company and write it off against my personal income.  
There might have been some good reasons for starting that tax incentive—to be fair it started under the previous Labour Government—but it has mushroomed and in 2008 $2.3 billion of tax loss was written off against loss attributing qualifying companies. The tax losses include a massive stock of rental property. Rental property was the main reason the global financial crisis bubble came to New Zealand. The main reason small businesses cannot borrow enough capital is that we have a national private debt equal to 90 percent of our gross domestic product most of which went through the banking system into rental property. Why did that happen? It was partly because there was a tax incentive. What was the tax incentive? One could run a loss on a loss attributing qualifying company and write off that loss meaning not only that no tax was paid in the company but that no personal tax was paid either because it was written off against one’s personal income. No wonder we had a property bubble.  
That problem has been unmasked in the 2 years that this Government has been in office. What has it done about it? It has replaced effectively the loss attributing qualifying companies with new creatures sanitised by the fancy-pants lawyers and accountants who serve their clients and donors called look-through companies. Those new things still allow people to write off company losses against their personal income because they look through their personal income tax rate.  
How is the Government doing this travesty—this $2.3 billion of tax loss? It is doing it in the dead of night in a Supplementary Order Paper that has not gone to a select committee that no accountant— 
The CHAIRPERSON (Lindsay Tisch) 
: I remind the member that Part 1 is about the goods and services tax; it is not about loss attributing qualifying companies. I remind the member to come back to the substance of Part 1. 
Hon DAVID CUNLIFFE 
: Mr Chairman you will forgive me I hope for my genuine outrage about the process that has been employed here.  
The first part of the bill is about goods and services tax and we all know that National—in a terrible regressive tax move—has been putting up that tax from 12.5 percent to 15 percent. We also know from statistics released by Statistics New Zealand and confirmed this very week by Treasury that as a result of the tax changes in the last year the average household is now $28 a week worse off and the average individual is $17 a week worse off. That is the average; the median is worse than that. But I will save some of my comments about GST of which there will be many for some subsequent calls.  
I will mainly in this opening call ram home that a terrible travesty of parliamentary process is happening today with this GST bill. It was a train that left the station innocuously and received unanimous support at the select committee until the main carriages were attached last night in the dead of night in a 70-page Supplementary Order Paper that does something that is completely irrelevant to the first half of the bill. That Supplementary Order Paper will not go to a select committee. It will not receive public submissions. It affects $2.3 billion of tax income. It has the potential to perpetuate the distortions of the tax system that led to the property bubble and that have absolutely euchred this economy.  
National once thought it was the party of business. Well it does not represent real business because real business is being screwed over by property magnates in this bill—that is what is happening. The fact that it is happening without proper parliamentary scrutiny is an absolute travesty. I imagine that officials in their heart of hearts are deeply ashamed. They know that tax bills go through this House every couple of months and there is no reason on God’s green earth why these look-through company changes could not have been attached to the next train leaving the station and have had proper select committee scrutiny.  
This is a very very serious matter. This avoidance problem is at the absolute heart of what is wrong with New Zealand’s tax system. It is at the absolute heart of the perverse incentives that mean we spend too much bidding up each other’s house prices— 
David Bennett 
: Talk about GST. 
Hon DAVID CUNLIFFE 
: —and adding David Bennett’s 2.5c extra to the GST rate. We have an absolute travesty in this bill: a travesty of process a travesty of substance and a missed opportunity.  
The best that can be said of this bill is that it is a missed opportunity. I say in this opening call that Labour will now oppose the entire bill on the basis of this travesty of process because what is in this illegitimate Supplementary Order Paper is far more important than the minor technical amendments that were in the so-called main bill. The Supplementary Order Paper changes the whole point of this legislation from decent remedial tidy-up to the perpetuation of a fundamental structural flaw in the tax system. That is wrong. It is wrong in substance and it is wrong in process and it is a goddamn shame that the otherwise worthy work which we all drew attention to in the first reading speeches has been washed down the toilet by a Government that not only does not care about democracy but is deliberately abusing the democratic process. Why?  
We can only ask who was not prepared to be subject to the scrutiny of the profession and the public by a select committee process. Whose interests are being protected? It looks like it is the interests of property investors. It looks like it is the interests of finance companies—the ones that have not yet been charged by the Serious Fraud Office. It looks like it is the interests of the same old corporate elite that cleans up every time and has holidays in Hawaii while ordinary working people get shafted. It is happening again.  
GST has gone up to 15 percent and ordinary Kiwi families cannot afford the cost. In most of this bill now there is a gold-plated let-off for people to write off property losses against their income through a thing called a look-through company. It is the same old same old. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I know it is tempting at this stage of the year particularly when one has a raspy voice to try to raise a whole lot of indignation about nothing but that is not acceptable. 
Hon David Cunliffe 
: No it is genuine. 
Hon PETER DUNNE 
: Well let me go through— 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. I take offence at the Minister’s remarks because by implying that I have manufactured a sense of indignation he is effectively questioning my integrity. 
The CHAIRPERSON (Lindsay Tisch) 
: Yes and I am sure we all appreciate that. But that is not necessarily a point of order. I ask the Minister to continue. 
Hon PETER DUNNE 
: I will put the facts before the Committee. The Committee and the public can judge what is actually going on here. This situation was foreshadowed in the Budget in May when we announced a series of— 
Hon David Cunliffe 
: This Supplementary Order Paper wasn’t foreshadowed until yesterday—yesterday. 
Hon PETER DUNNE 
: If the member gives me time I will come to his points systematically. We announced in May that there would be an issues paper released on the issue of qualifying companies and the future of the loss attributing qualifying company regime. That was done. It was widely consulted upon. We announced in October and released in draft legislation at that time the decisions that we made in respect of that consultation process. We released it publicly so that there could be comment and there was and then we offered the Opposition a briefing—which it originally wanted to have next week! We approached the Opposition earlier this week or late last week to say given that this legislation was coming into the House that we thought it needed to bring forward its time to be briefed. The Supplementary Order Paper was actually released on Tuesday; it was not released last night. It was released before Labour was briefed on Tuesday afternoon. To come in here now and say that it was released late last night is simply not true. Officials had briefed that member and his colleagues on Tuesday at my request because they originally wanted to be briefed next week when this bill would have been passed. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. I fear it necessary to correct for the record a misinterpretation. 
The CHAIRPERSON (Lindsay Tisch) 
: No. That is a debating point. 
Hon PETER DUNNE 
: The member is alleging that Labour members were not briefed on the Supplementary Order Paper. I know from the report I received from my officials that there was a substantial discussion at that meeting about the loss attributing qualifying company regime. So the reality is and I stand by my original comment that there is a huge amount of indignation here being raised over very little. We have a large number of interests in the accounting and legal worlds and in the tax world generally that need these matters resolved now so that the new regime can take place on 1 April next year.  
We have been punctilious in our consultation. We foreshadowed it in the Budget. We released the draft legislation over a month ago and I have just this to say to the Opposition: with all of the mock indignation now being expressed I ask whether in the time since the issues paper and the draft legislation were released we have heard any comment from the members opposite. Absolutely not! They come in here at the last minute and start to raise all sorts of concerns when they have had the opportunity to be briefed and when everything has been in the public arena. Their attitude is a complete and utter sham. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I accept the member’s word that briefings were offered. I am assured by people on my left that Supplementary Order Paper 187 in the name of the Hon Peter Dunne was not given to people at that briefing and that the draft legislation vehicle was not supplied a month ago as was indicated by the Minister in the chair the Minister of Revenue. In fact it was put on the Table of the House or was first seen by me late last night. I say to that Minister who of all people should know better than others that this is not the way to do taxation legislation that the key point is that we should get such legislation to a select committee and have hearings on it there. Otherwise if we take this sort of approach legislation that might otherwise get support from Labour will be rejected and fought over on matters of process and detail right to the end because of the approach that has been taken.  
Part by part and if necessary clause by clause this Taxation (GST and Remedial Matters) Bill will be fought against because National and its stooge Minister will not send the bill to a select committee. National members will not stand up have hearings and follow the process. I would have thought that the Minister who used to be very very close to Sir Geoffrey Palmer in his approach to legislation would feel absolutely ashamed about this. This is the fastest lawmaking in the West. I say to Mr Dunne that Sir Geoffrey Palmer would have assumed even then that this sort of legislation would go to a committee because that is the way we do it in New Zealand. We do not bring in Supplementary Order Papers in the middle of the night and under urgency expect them to be pushed through with this sort of approach. Maybe this is part of a play for Washington on the part of Mr Dunne. [ 
Interruption 
] Oh he wants London. I am sorry; I apologise. He wants London not Washington. I do not know what possesses the Hon Peter Dunne who over the years has generally worked with both National and Labour Governments with integrity on tax matters. He was someone who pushed process on both Governments and did things in the appropriate way. He slowed people down but now he is fronting an approach that is wrong.  
Taxation is not an area of absolute expertise of mine but I have looked at it pretty carefully in the area of policy development because it is an important area. Getting it right is very important and much of the stuff in this bill might otherwise have got support. In fact some of us are of the opinion that the Minister is not going far enough in terms of the things he is doing. Some areas could have been added to this bill and the Minister might have been able to get broader support for Part 1 and the amendments. But through his approach he has lost the support of Parliament and legislation that could possibly have gone through the Committee in half an hour after a select committee hearing has turned into a debate that will I am sure take the rest of the normal sitting time today to work through.  
I will now go back to the very beginning of the Supplementary Order Paper. I will be critical. I do not want to reflect at all on the people who are drafting the bill but I will be somewhat critical of the Minister. 
The CHAIRPERSON (Lindsay Tisch) 
: I just remind you that we are now on clauses 3 to 20. 
Hon TREVOR MALLARD 
: That is what I want to focus on and in particular on new clause 10B which is set out on the Supplementary Order Paper. I want to check Mr Chairman that we are talking to the Supplementary Order Paper—the relevant parts of it. And can I check that we are talking about in this particular case new subclause (7B) through to new clauses 19B and 19C? Can I check that those are the particular parts of the Supplementary Order Paper that we are talking to at the moment? Can I confirm that is the case? 
The CHAIRPERSON (Lindsay Tisch) 
: We are on new clause 10B and new clauses 19B and 19C. 
Hon TREVOR MALLARD 
: So not new subclause (7B)? 
The CHAIRPERSON (Lindsay Tisch) 
: We are on new clauses 19B and 19C—because those are within clauses 3 to 20. 
Hon TREVOR MALLARD 
: But can I check going to the front of the Supplementary Order Paper that we are not talking about— 
The CHAIRPERSON (Lindsay Tisch) 
: No that amends clause 2.  
Hon TREVOR MALLARD 
: I am sorry; I apologise. That is one of the problems I think when we take this sort of approach. I am obliged to the Chair. I was looking at the subclauses rather than at the clause. I am obliged to the Chair because that means that when we get back to clause 2 I can make the points I was going to make on it but I am sure that that will be at some stage later in the evening.  
I would have thought that having a clause on the zero rating question as part of a non-controversial Supplementary Order Paper would be a little stupid and could be described in that way. It gives an opportunity to my colleagues who I know are very very concerned that other matters should be zero-rated. Some of my colleagues are very very concerned about what should be zero-rated and what should not be zero-rated. I am sure that by the time I have finished my speech my colleague Stuart Nash will have put his name on and signed a Supplementary Order Paper that will be tabled to add to the question of what should be zero-rated if in fact we are to consider the zero rating of services. In new clause 10B we get to the question of what should be zero-rated and what should not be zero-rated. The member will table a Supplementary Order Paper and I am sure that over the next hour or so as we discuss the other parts of Part 1 we will be able to have a debate on the question of zero rating.  
The fact is that this matter has been brought into the bill and I presume that the Chair has ruled that it is within scope. Can I check that there has been a ruling from the Chair on the Supplementary Order Paper bringing in zero rating? 
I raise a point of order Mr Chairperson. I want to check that the Supplementary Order Paper has been ruled to be within scope and that the zero rating question has been ruled to be within the scope of the bill. 
The CHAIRPERSON (Lindsay Tisch) 
: It is in scope. I ask the member to continue. 
Hon TREVOR MALLARD 
: Thank you. Now that it has been ruled that having the zero rating of items is within the scope of the bill it opens up the question of zero rating for other items. I know there are colleagues on my side of the House who are fiercely keen on having other items zero-rated and will be very keen to move Supplementary Order Papers in order to extend this opening which the Minister has clearly opened up in the bill. 
STUART NASH (Labour) 
: 
 This is a very interesting bill as my colleague Trevor Mallard said. Ever single tax bill except the increases in GST and the drop in income tax that has come before the Finance and Expenditure Committee has been approved and supported by the Labour Party. Let me run through the process that happens. We get a bill and it is normally non-controversial like the original bill was. We did not oppose it at all and it was referred to the Finance and Expenditure Committee. At the select committee we called for submissions and we allowed about 6 or 7 weeks for submissions to come in. We ended up with about 27 submissions—I ask Amy Adams to correct me if I am wrong—and we heard from a whole range of experts. These were tax consultants legal eagles and ordinary New Zealanders who wanted to have a say on tax legislation. As we know tax legislation affects a whole lot of people.  
We have our own technical adviser on the Finance and Expenditure Committee because no one on the committee is a tax expert. No one on the committee comes from a legal or a tax consultancy background. So we have our own tax expert and this is par for the course. We do this for every single tax bill that comes before the Finance and Expenditure Committee. Our adviser’s name is Therese Turner and she is acknowledged as one of New Zealand’s pre-eminent tax experts. So what happens is that the Inland Revenue Department officials sit down and give us briefings on the bill. We go through it clause by clause bit by bit and change by change. Then Therese has a look at it. We ask a whole lot of questions and there are questions from all members.  
National members have a lot of questions and Labour members have a lot of questions. Roger Douglas is on the committee and he asks a lot of questions and Russel Norman is on the committee and he asks a lot of questions. It is a very very robust process. Then we all start to support this stuff. After this process Therese comes in and says that she does or does not agree or that she has been talking to officials and they suggest this or that and she agrees or she puts a proposal to officials and they agree with her point of view. We end up with very robust legislation that we all agree with. It is a great process because everyone has their say.  
That is what happened with the original bill. It was a technical bill but it had some very important provisions in it. It got rid of something called phoenix fraud. It was leeching revenue out of the Government accounts and we needed to close it down. Everyone agreed that this was important legislation. There were other bits remedial matters in the bill and we all agreed they were good provisions but they needed tweaking. There has not been a remedial matters bill that has come before the select committee that all parties have not agreed on. However they have been made better by the select committee process. Every single bit of tax legislation that has come before the select committee has been improved by the process. There is not an example outside of this.  
Labour members agreed with this tax legislation through the first reading and the second reading because it was good legislation. The select committee made it even better. Then Supplementary Order Paper 187 was put in front of us. It was tabled last night. We had a briefing but we talked about only loss attributing qualifying companies in that briefing. There was a general discussion organised by David Cunliffe’s office on changes to loss attributing qualifying companies. We did not know that this Supplementary Order Paper was going to be put on the Table.  
When I look at this Supplementary Order Paper I think that there are some not bad ideas in it. In fact there are some very common-sense ideas that would get the support of the Labour Party and probably the vast majority of New Zealanders. But I cannot say that without listening to Ms Turner listening to officials and listening to a whole lot of New Zealanders out there whom this affects. There are 130000 active loss attributing qualifying companies. This affects Maori trusts and a whole lot of stuff. I think New Zealanders deserve the right to have their say on this. The bill would have got support from the select committee. I have no doubt about that. However we needed to make sure that it was very robust legislation. That is what the select committee would have done and a great piece of tax legislation would have been brought before the House and we would have agreed on it.  
As my colleague the Hon Trevor Mallard mentioned the bill probably would have been passed if necessary even under urgency—after the select committee process—within an hour. 
Hon Trevor Mallard 
: Not under urgency. 
STUART NASH 
: Urgency is not a good way to pass tax legislation but the bill would have been passed within the hour. I know that the Minister wants to get this out there for 1 April 2011 and it would not have been a problem if we had followed a robust process. But this process is not robust.  
As Labour’s revenue spokesperson I cannot comment on the 70-page Supplementary Order Paper because I have not time to read through it. I have been at a prize-giving at Napier Girls High School. It was a fantastic prize-giving last night at the high school and I congratulate the headmistress Mary Dixon and the rest of the crew there. But I cannot say that I support this Supplementary Order Paper. 
Hon Trevor Mallard 
: Was Chris Tremain there? 
STUART NASH 
: No Chris Tremain was not there. He does not care about the people of Napier.  
I come now to the issue of zero rating. As my colleague Trevor Mallard mentioned this bill proposes to zero-rate land transactions between two parties that are registered for GST. But now that we have this Supplementary Order Paper it has opened the door for a whole lot of other amendments.  
The amendment I have tabled recommends zero-rating fresh fruit and vegetables. The Minister of Revenue and members of Parliament cannot say that they did not know this was coming. We have discussed this in open forum for a number of months. We have spoken to tax experts and we have spoken to supermarkets. This is a very robust provision. New Zealand is the third fattest nation in the OECD and this measure will address that. We have to do something; we have to send a signal. We have to say to the people of New Zealand that we care about their health and welfare. This is not hard to do. It is a very easy amendment. It is not 70 pages; it is not even 70 words. But if it becomes part of this bill it will make a difference to New Zealanders.  
There are over 130000 active loss attributing qualifying companies and the amendment that has been introduced will affect more than 130000 people. But my amendment will affect 4 million people and I urge the Minister to take it on board and support it. It is a very good provision. It will allow all New Zealanders to buy fresh fruit and vegetables cheaper. Our calculations show that people on the median wage will get more in their back pockets from this amendment than they did from the Government’s tax cuts. This amendment is fair.  
Minister Dunne used to be a Labour member of Parliament. He was elected as a Labour member of Parliament so deep down somewhere there still must bubble the philosophies and the principles of social democracy which are about working for all New Zealanders working for everyone— 
Iain Lees-Galloway 
: I wouldn’t be so sure. 
STUART NASH 
: Well I have my doubts as well. But I am hoping that somewhere there might be the flicker of social democracy. I urge the Minister to take heed of what New Zealanders have said. Our polling shows that about 80 percent of New Zealanders think this is a great idea. Eighty percent of New Zealanders want to be able to buy apples pears and bananas.  
Let me give members an example of good policy: Fruit in Schools. That Labour policy allowed all decile 1 and decile 2 schools to have fresh fruit and if members talk to some of the teachers and the headmasters about the impact of fresh fruit on children they will see that it is amazing. One principal said to me: “I can’t quantify this but I can see the difference in the skin colour of the children.” That was from children eating one or two pieces of fruit a day.  
Another school said it had to roll the bananas in icing sugar for the first week so the kids actually liked them. Now the children are going home and telling mum not to buy chips but to buy fresh fruit. But how can they afford to buy fresh fruit when chips are cheaper? This amendment allows parents to act on their children’s advice. This allows parents to go to the supermarket and buy fruit instead of chips. They can buy apples bananas and pears. They can buy any fresh fruit and vegetables. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I have a few questions to put to the Minister of Revenue regarding process. The reason that I will concentrate on process is straightforward. I think I am entitled to say that I have worked enough with the Minster over the years on enough legislation to know that he has a certain style when it comes to the development and promulgation of policy and legislation and as far as I can tell that style is not at play today. I could however be wrong. It seems to me that the Minister who has already given an explanation to the Committee about how these things have come about may like to rise and give us some further detail.  
I wonder whether the Minister would tell us why it is that when the changes were announced in May there was not time for a select committee process to be put in place for legislation that comes into being on 1 April the following year—so about 10 or 11 months later. Why was that not possible? That is the first question. I would be grateful if the Minister would take us through the consultation processes to see how the time got eaten up to see whether a select committee process was possible to see what could have been done in parallel to ensure a select committee process and to ask the question why if it was able to be done in parallel it was not done—all of those sorts of things.  
The second question I have for the Minister is whether anyone knew. I do not have the revenue spokespersonship in this party so I could not be expected to know but those who do or who have finance or other interests in select committees that might have dealt with this—my own colleagues—seem to have been caught short. So they did not know and that makes me wonder who did. Who did know that this would not go to a select committee? Who knew that we would have a large Supplementary Order Paper that was not subject to the ordinary scrutiny of the parliamentary process? Did the various experts who were contributing to the discussion paper and did the people who were responding to the draft legislation that was put out into the public arena know that that was instead of a select committee process? I ask whether the Minister would be good enough to give us some indication on that—I think I see some body language to suggest the Minister will get to his feet in which case I happily yield. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I am happy to respond to what I think was a very considered set of questions from the member Pete Hodgson who has just resumed his seat. Let me go through the process very clearly and very calmly. In the May Budget certain announcements were made about the future of loss attributing qualifying companies. In the attached Budget papers we announced that an issues paper would be released canvassing various legislative proposals to address the concern that had been raised in the Budget. That happened within a day or two of the May Budget being released. I can recall having a series of public meetings mainly with tax-related audiences in the month after the Budget—give or take—where the issue regarding the future of the loss attributing qualifying company regime was constantly raised. They were large meetings up and down the country. I know that others such as the Minister of Finance and officials had similar discussions. 
At the conclusion of the consultation period—and the date by which the issues paper process ended escapes me for the moment—the usual Cabinet process followed papers were developed and a proposition was put to Cabinet which was accepted. It was announced and we released draft legislation at about the same time roughly at about the beginning of October. The timing of that was important because a major tax policy conference sponsored by the Institute of Chartered Accountants was coming up at the end of October. That is the normal venue at which these things are canvassed. It was clearly understood by all parties that the Government would pass legislation before the end of the year to implement those decisions and the draft legislation because the implementation date for the new regime was 1 April 2011. That point was understood—[ 
Interruption 
] I tell the member David Cunliffe who is interjecting that the criticism I have received from those in the tax community has been not about how quick the process has been but about how slow it has been. They wanted certainty earlier on. That is why we went through the quite deliberate step of releasing the draft legislation. Comments were invited upon that; some were made. Essentially the changes in Supplementary Order Paper 187 reflect the outcome of that. 
I will draw one other point to the Committee’s attention. Opposition speakers—not the previous speaker but other Opposition speakers—have run the line that when they were briefed by officials on Wednesday they were unaware of the Supplementary Order Paper’s existence. I will make two comments in respect of that. First the Supplementary Order Paper was released to the public including this House at 1 o’clock on Tuesday—some 24 hours in advance—so the question I have to put to the Opposition— 
Hon David Cunliffe 
: As if that’s good enough. 
Hon PETER DUNNE 
: The member opposite says that is not good enough. What am I supposed to do—come to him on bended knee proffering him the document? It is in the public arena. It is on the Table of the House. That member of the Opposition—I very Freudianly nearly referred to him as the Leader of the Opposition—says that is not good enough. The document was in the public arena. 
But I can go one better. I have checked the content of the discussion that took place at the briefing meeting on the Wednesday. The Opposition now says that it was unaware of the existence of a Supplementary Order Paper but I am assured that at that meeting both the MPs present and officials talked about the Supplementary Order Paper. Those members cannot have it both ways. They cannot say they were not told when actually the document was in public existence and its very existence had been foreshadowed since 20 May and they cannot go to a meeting where they talk about it then say afterwards that they were not aware of it and had got it only the night before 24 hours after the briefing meeting had occurred. 
I accept that the Opposition may not like some of the provisions in this measure—that is its prerogative; that is what we are debating this morning. But let us debate on the basis of the facts of what happened. I have been quite deliberate in ensuring that every step of this process in terms of the need to make decisions by a certain time and to engage the professional community has in fact occurred. As I said to the member the criticism that I am subject to from the profession is that the measure has taken as long as it has and that is the balance one has to strike in these matters. We indicated an implementation date certain details need to be put in place we need to pass the legislation about now to achieve the 1 April date we have been absolutely public all the way through and we have had no indication until this morning that the Opposition had a different view. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I raise a point of order Mr Chairperson. This is a serious point of order and I would not have expected to have to make it in regard to the Minister in the chair the Minister of Revenue. Under Standing Order 106 “Misrepresentation” paragraph (1) states: “A member who has spoken to a question may speak again to explain some material part of the member’s speech …” but paragraph (2) requires that to occur after the member has completed the speech. I am now taking the first possible opportunity to say that I am sorry but the Minister has misled the Committee. I have been misrepresented— 
The CHAIRPERSON (Lindsay Tisch) 
: No. The member brought up a point of order earlier on and I ruled on it at that stage much earlier on in the proceedings— 
Hon David Cunliffe 
: Before the Minister had spoken. 
The CHAIRPERSON (Lindsay Tisch) 
: The Minister had spoken. After the Minister spoke first you brought up a point of order and I ruled it out of order at that time. The Minister has now spoken again and my question to the member is whether this is a new point of order related to what the Minister has said just now. 
Hon David Cunliffe 
: Yes. 
The CHAIRPERSON (Lindsay Tisch) 
: OK and we are looking at Standing Order 106. Give me time; I will just see what the Standing Order says. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I apologise if I did not make myself clear: this is a new point of order on a new matter of substance with regard to what the Minister has just referred to. It is subsidiary to the general point that he made earlier. It is absolutely true that the Minister was generous enough to provide to Opposition members of the Finance and Expenditure Committee access to his tax officials in respect of the issue of look-through companies. The meeting occurred at the request of the Opposition and the Minister was kind enough to assent to it. 
The CHAIRPERSON (Lindsay Tisch) 
: I am sorry I have misread the relevant Standing Order. Misrepresentation does not apply during the Committee stage. The member can take a call so I will give the member the call.  
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I seek leave to make a personal explanation.  
The CHAIRPERSON (Lindsay Tisch) 
: Leave is sought to make a personal explanation. Is there any objection? There is no objection.  
Hon DAVID CUNLIFFE 
: In his previous submission the Minister said that members of the Finance and Expenditure Committee including me were briefed by his officials on the existence of a Supplementary Order Paper. That is not the case. We had a general discussion with officials on the issue of look-through companies which are the subject matter of Supplementary Order Paper 187 but at no stage was the Supplementary Order Paper presented discussed or referred to. I have in my possession a copy of the briefing note that was the substance of that meeting. I have re-checked it and there is no mention of the Supplementary Order Paper nor any reference to it. The Minister has unfortunately been ill-advised. This matter was not raised with us in the terms that he suggests and I feel compelled to clarify that misrepresentation.  
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I thank the Minister of Revenue for getting to his feet a second time and for giving the House further information and a better understanding of the issues that he faced the process he went through and the timing of it.  
Hon Paula Bennett 
: Think about misusing the personal explanation.  
Hon PETE HODGSON 
: I am not sure what the Minister for Social Development and Employment who is running a rapid commentary across the Chamber has to add to the debate but I thank the Minister of Revenue for that.  
A couple of things arise. The first is that I recall a tax committee coming up with the need to make progress on loss attributing qualifying companies and I think I remember the Government stating in the Budget that it would not make such progress. I wonder whether what has happened—and it would be no big deal if it had—is that the meetings the Minister attended in the month immediately after the Budget were where he and his officials were convinced that revisiting loss attributing qualifying companies would not be a bad idea. I welcome any comment the Minister might want to make on policy as opposed to process and if he does not want to make any comment that is fine.  
On the narrower issue of process however I do not want to put my point as a statement so I will put it as a question. Was the relevant select committee aware of the fact when it was looking at the primary legislation that a significant Supplementary Order Paper was in the wind or was it led to believe that it was not in the wind? I must say that that becomes rather an important question.  
Hon David Cunliffe 
: No idea.  
Hon PETE HODGSON 
: I have my own colleague saying that the committee had no idea and of course every colleague is to be taken at his or her word. What does the Minister say? If the Minister’s answer to me is that the select committee was not apprised of the fact that there would be a significant Supplementary Order Paper I think that matters.  
I also on the Minister’s behalf acknowledge his comment that there is a bit of a trade-off between timeliness and process. The folk in the tax world were saying to him time and again that they needed him to move faster not slower. I acknowledge that. I am sure that that was the case and I am sure the Minister was feeling constrained by it. That might be how this process conundrum has come about but I want the Minister if he would be good enough to let me know whether my colleagues are correct in saying that they on the select committee had no idea that a Supplementary Order Paper of this size was coming. The Minister might like to assist by getting to his feet for probably the third and last time to tell us how that might have come to be. That is not the way that this particular Minister would ordinarily operate I would think.  
Hon PETER DUNNE (Minister of Revenue) 
: 
 On the assumption that the member who has just resumed his seat the Hon Pete Hodgson is trying to be helpful I am happy to respond. I cannot comment on what was in the minds of his colleagues in terms of their expectations of what would come by way of the changes that have been announced.  
I refer the Committee to a statement I made on Tuesday 7 December. It states: “Proposed new tax rules released today … Mr Dunne today released a Supplementary Order Paper (SOP) that will introduce several Budget 2010 tax measures to the Taxation (GST and Remedial Matters) Bill which is nearing its final stages in Parliament.” That is the bill we are debating right now.  
I go back one point and say that there is a certain language that people in the tax community and this includes politicians talk and understand. We talk of bills not necessarily in terms of their titles but by the month in which they are introduced. It was always the assumption and I think it was broadly accepted that a number of the changes that were foreshadowed in the Budget—to loss attributing qualifying companies to the definition of “income” for social assistance purposes and to some aspects relating to depreciation—would be passed by the end of this year. When we looked at the available vehicles to achieve those changes we saw that there was the August bill which is this bill and the November bill which is the one I introduced last week or earlier this week. That was it.  
I come back to the point the member made. Because these things need to be in place in time for the new tax year on 1 April next year and allow for the lead time for that any reasonable assessment by people who knew about how these things work would lead to the conclusion that legislation to give effect to the changes would be passed in November. It was obvious I think—certainly it was the intention—that a Supplementary Order Paper would be attached to this bill. That is why the process that I described earlier was open and transparent to those communities. I accept it was not a process that the general public was widely engaged in because the general public is not interested in the intricacies of fit-out regimes loss attributing qualifying companies or the point at which full flow-through treatment is provided for. But the relevant tax communities in the legal accounting and broader business professions were well aware of what was intended.  
We have hidden absolutely nothing. There was an opportunity to make submissions on the issues paper. We have attempted to consult as widely as we can and bring those submissions into play in terms of the final amendment that was adopted.  
I released the Supplementary Order Paper earlier than would have normally been the case for the release of Supplementary Order Papers—again in that same spirit of openness. Members would I think concede that major Supplementary Order Papers often are released hours before the bill comes to the House because they are probably still being drafted. In this case we have gone through a very deliberate process. The drafting was out there in October; we are now into December. 
Although I hear the criticisms that are being made I do not accept them because we have been very deliberative over the last 6 months in ensuring that all of the changes we are making have been widely consulted upon and fully understood. Where change has been proposed it has been accommodated. I observe the fact that at no point until now have we heard anything from the Opposition. 
The CHAIRPERSON (Lindsay Tisch) 
: Before we proceed I want to say that members have spent quite some time talking about process and I have allowed that to continue but I remind members that loss attributing qualifying companies are covered in Part 2 and we will deal with them at that stage. We are on Part 1 clauses 3 to 20 and any amendments on Supplementary Order Paper 187. I ask members to concentrate on Part 1 from now on. I have given a fair range in terms of process but we are on Part 1. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I raise a point of order Mr Chairperson. There are two parts to my point of order. The first is in respect of the ruling you have just given. Respectful as we are we draw your attention to the fact that Part 1 includes clauses 2 10 and 19 and those clauses are all amended by the Supplementary Order Paper. 
The CHAIRPERSON (Lindsay Tisch) 
: No clause 2 is not in Part 1. Clause 2 is clause 2. It is not part of Part 1. Part 1 starts with clause 3. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Further to my point of order Mr Chairperson. I apologise for that slip but clauses 10 and 19 surely are in Part 1 and therefore are within the ambit of the Supplementary Order Paper which the matter of process goes to. The second part of my point of order is to note that the Minister of Revenue has very generously given further information in his most recent call about the process that he believes was employed. In doing so he has raised further questions of process that it is incumbent on members of the Labour Opposition to address. Mr Chairperson I am sure you will bear that in mind. 
The CHAIRPERSON (Lindsay Tisch) 
: I will judge the merits of that during the course of the debate. But we have been going for over 45 minutes now on Part 1 and there has been very little debate on Part 1. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I take your comments in the spirit intended Mr Chairperson. I first say however that the Minister of Revenue talked about a spirit of openness attached to the Taxation (GST and Remedial Matters) Bill yet here we are considering a Supplementary Order Paper that is bigger than the primary bill that the Finance and Expenditure Committee spent considerable time discussing. There was no signal to the select committee of which colleagues and I are members that a Supplementary Order Paper of this scale and consequence was coming; there was no such signal. If that is an indication of the spirit of openness I hate to think what the Minister would do if he wanted to put through a bill without any openness attached to it.  
This process is absolutely contrary I suggest to the way the Minister has operated for more than 25 years in this Parliament. He has been known as “Mr Common Sense” but this is not common sense. Supplementary Order Paper 187 is bigger than the original bill. It includes dozens and dozens of complex technical changes that will inevitably involve some issues that will have to come back to the Finance and Expenditure Committee. The history of rushed tax legislation is always that we make legislation in haste and repeal it at leisure. That will inevitably be the consequence when a Supplementary Order Paper is 13 pages longer—13 pages longer—than the original bill that was referred to the select committee in August.  
We have given patient consideration to the bill. Labour supported the bill and worked in the select committee to see it through. But without any reference to the select committee or any indication to us out of nowhere in the supposed spirit of openness comes this Supplementary Order Paper which is bigger than the bill that we initially considered.  
I also refer to the fact that the amendment tabled in the name of my colleague Stuart Nash supports zero-rating GST on fresh fruit and vegetables. I note that this amendment would go some way to taking some of the impacts of the most recent increases in GST off those hard hit New Zealanders such as retired New Zealanders of whom one in two—or more—are already saying they are worse off as a result of the GST changes and tax changes that were introduced in October. They are worse off as a result of those changes. Zero-rating the GST on fresh fruit and vegetables would be a very great assistance.  
I note also that food inflation in the year to date is around 8 percent; there has been 8 percent food inflation. That is why New Zealanders are saying they are no better off as a result of the increase in GST. Zero-rating fresh fruit and vegetables a very sound policy initiated by Labour would go some way to taking that pressure off. I also note that the projections for food inflation next year are even higher than this year’s 8 percent increase. I think they are nudging into double figures and my colleague Stuart Nash will confirm that for me. That is why I very strongly support this amendment in the name of Stuart Nash to take GST off fresh fruit and vegetables.  
I noted last night on television that the Minister of Health Tony Ryall wearing a typically florid shirt and tie combination was at a supermarket. One of the supermarket chains is introducing a healthy food regime and the Minister was there for the photo opportunity. Of course he is the same Minister the very same Minister who has allowed unhealthy food and Coca-Cola back into tuck shops so kids are now able to eat pies and sweets and drink Coca-Cola by the litre. He has also cut the healthy food in schools programme but he wants to be associated with a programme promoted by one of the major supermarket chains to try to offset some of the damage that he has done in terms of healthy eating for kids. I hope the Minister of Health will come to the Chamber and support the amendment in the name of my colleague Stuart Nash which would zero-rate GST for fresh fruit and vegetables. It is a very sensible initiative with a whole range of health benefits for children.  
I will look more broadly at the Supplementary Order Paper introduced by the Minister as it relates to various clauses in Part 1. I think it relates to clauses 10 and 19 if my memory serves me right in terms of zero rating. Labour supports the idea of some changes across zero rating. We supported the original bill in terms of zero-rating land transactions; that was sensible. But Labour’s support has been lost because of the way this Supplementary Order Paper has been introduced.  
The Supplementary Order Paper goes into other clauses around Working for Families and changes there. We have some suspicion I have to say in respect of some of the Government’s statements on that programme. We recall the Prime Minister’s view that the Working for Families programme was “communism by stealth”; I think that was the phrase he used. That is why we say that this Supplementary Order Paper needs to go back to the select committee for scrutiny.  
With all due respect to the Minister and to his officials in the Inland Revenue Department with all of this host of technical complex changes they are not likely to have picked up all of the fish-hooks that emerge when we pass under urgency sitting on a Friday a complex Supplementary Order Paper that is bigger than the original bill. More important we want to make sure that we get it right. Working for Families is a very important component. It is one of the wonderful policies implemented by the Labour Government. After the Prime Minister described it as “communism by stealth”—that is how he described it—he seemed to come to the view that it was helping ordinary New Zealanders to get through life much better than they would without it.  
We want to know what changes are proposed. Sure there will be some sensible changes and there is the odd person who pushes the boundaries. As happens with any programme there are always those who try to take advantage. But we need the scrutiny of the select committee. We need the process of input. It is all very well for the Minister to suggest that he has been working with the tax industry and they want these changes. But the tax industry does not necessarily always have the best interests of the taxpayers at heart. Some people in the tax community are obviously there to try to ensure that their clients are able to minimise shall we say their tax obligations. That is why it is important we have the scrutiny of the Finance and Expenditure Committee the watchdog committee of Parliament which is in charge of revenue on behalf of taxpayers.  
I would like to know what some of the other parties will do in respect of this Supplementary Order Paper. I know that Sir Roger Douglas has always been concerned about the complexity of tax law—the complexity of tax law. Here we have a 70-page Supplementary Order Paper with dozens and dozens of complex technical amendments which the Government is proposing to push through under urgency without any real scrutiny whatsoever.  
I ask Sir Roger and ACT—and the Maori Party; I put it into the same category—whether they felt they were briefed appropriately in respect of this huge complex Supplementary Order Paper as it relates to Part 1 of this bill clauses 3 to 20. I would like to know whether they felt they were given the appropriate briefing whether they knew that a 70-page Supplementary Order Paper was coming and whether they are comfortable with the fact that Parliament under urgency on a Friday is going to push through this complex technical Supplementary Order Paper without any real scrutiny without any reference to the Finance and Expenditure Committee and without any capacity for tax practitioners ordinary members of the public academics and others to take part in the usual sort of scrutiny that has been a hallmark of this Minister.  
We have to ask what on earth is going on when this legislation is pushed through in a most unusual fashion for this Minister. I have to say that across two different Governments he has been in coalition with he has been exemplary in the way he has put through tax legislation. Until today he has been exemplary in the way he has acted and we have to ask what is behind this. Often as we know there can be issues behind an action and we want to know why the Government wants to push through this legislation.  
I ask the Minister to respond to that question but also I really hope that the ACT Party and Maori Party will take a call—I am sure our colleagues the Greens will have a view—because I would like to know how they feel. The Minister has asserted—and we have rejected his assertion—that there was a signal that the Finance and Expenditure Committee was consulted and that a briefing was available on these issues. We did not get that briefing and I would like to know whether other members of the Finance and Expenditure Committee including Government members felt they got the appropriate briefing. 
SIMON BRIDGES (National—Tauranga) 
: 
 I move  
That the question be now put 
. 
MOANA MACKEY (Labour) 
: 
 I will talk about a different topic in Part 1 of the Taxation (GST and Remedial Matters) Bill. I will talk about the provisions in relation to accommodation and will seek some clarity from the Minister in the chair the Minister of Revenue. 
I understand that clause 4 amends the definitions of “commercial dwelling” and “dwelling”. I believe there has been some expansion of what the term “dwelling” was originally meant to apply to and that it now includes more than was originally intended so the definitions of “commercial dwelling” and “dwelling” have been clarified to better determine which types of accommodation fall within the ambit of them. Of course the importance of doing this is that we do not want to create too much disparity between people who own their own homes and people who rent their homes. I note that the definition of “commercial dwelling” has been amended to mean “a hotel motel homestay farmstay bed and breakfast establishment inn hostel or boardinghouse:”. I understand that it would apply to student accommodation; I am not sure whether it does. I imagine it would in which case the cost of GST being payable on that service would be passed down to the students in that accommodation. The definition also applies to a serviced apartment nursing home rest home hospice and camping ground but excludes a hospital without a residential component and retirement villages in certain circumstances. 
The part I question is the inclusion of boarding houses in the definition of “commercial dwelling”. I have read this bill I am taking it at face value and I just want some clarification. I may be finding some mischief that is not there but my concern is that as a member of the Social Services Committee that worked on residential tenancies legislation I know that the issue of boarding houses was very very complicated with regard to where they fell within even that legislation. So when it comes to whether such an establishment would attract GST I question the propriety of including boarding houses as commercial dwellings. We know that people who live in boarding houses are basically in a rental situation. They are by and large the most vulnerable rental tenants we have in this country. I know that the housing Minister who is in the Chamber agrees that there are a lot of issues in relation to boarding houses. The select committee that worked on residential tenancies legislation worked very hard to try to find out how we could protect those tenants. The understanding of that select committee in looking at tenancy legislation was that those people are in a rental situation. They probably need more protection than the average tenant who rents because they often live in substandard accommodation they tend to be people who have significant mental health issues or drug and alcohol issues and they are not the kinds of people who will speak up or speak out if they believe they are being unfairly treated or the law is not being applied. So the inclusion of boarding houses in the definition of “commercial dwelling” worries me. It may not be a big deal at all it may not be an issue but when I saw that boarding houses were included in that definition it really jumped out at me given the extraordinary amount of work that went on this year in terms of the definition of a boarding house. 
Added to this is that I also note that throughout the bill it references definitions “as defined in section X”—or Y or Z—“of the Residential Tenancies Act 1986”. Well this year Parliament passed the Residential Tenancies Amendment Act 2010. I seek some kind of assurance that despite the fact Part 1 references tenancy law from the 1980s it is still appropriate because we have actually made significant changes to residential tenancy law. A lot of those changes relate to boarding houses and boarding-house tenants. The definition of a boarding house under the 1986 Act and how it was treated in tenancy law changed significantly in the Residential Tenancies Amendment Act 2010. I know that this might not seem like the kind of issue people would expect to be discussing when debating what started out as a technical tax bill but has now become a more substantial one but whenever I see the issue of boarding houses as the housing spokesperson for Labour I am concerned. I want to make sure that costs will not be passed down to boarding-house tenants because that particular type of dwelling attracts GST when in another rental situation that would not be the case. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take a specific call on new clause 10B on Supplementary Order Paper 187 which inserts after clause 10 in Part 1 the opportunity for zero rating of services. It replaces section 11A(1)(u) with the following: “(u) the services are supplied to or by the Crown as consideration for a supply—(i) for which there is no payment of a price; and (ii) that is chargeable at the rate of 0% …”. The Minister of Revenue earlier deemed that matters of zero rating are in scope and therefore the amendment proposed in the name of my colleague Stuart Nash regarding zero rating the supply of fresh fruit and vegetables is in scope and we appreciate that. I think it is important for the Committee to take some time to discuss that issue. 
There has also been a lot of debate so far about process issues. What is accepted now I think on all sides of the Committee is that this 71-page Supplementary Order Paper did not go to the Finance and Expenditure Committee and there was no notice given to the Finance and Expenditure Committee that it was coming. It was presented the Minister says on Tuesday. I did not see the actual Supplementary Order Paper until yesterday and I was out of town for part of yesterday so my statement that I saw it last night was true. Although there was a discussion which we appreciated with officials on look-through companies that discussion did not turn to the substance of the Supplementary Order Paper itself nor were copies presented to the Opposition in that meeting. 
So the question raised by my colleague Brendon Burns and by my colleague the Hon Pete Hodgson remains. The Minister in the chair is a Minister who perhaps more than some others is regarded by all sides of the House as being an honourable member and a stickler for process. It is a surprise to us that this Minister of all Ministers would bring such a substantial Supplementary Order Paper to the Committee in such a shoddy fashion bypassing the best part of the generic tax policy process bypassing scrutiny by the Finance and Expenditure Committee bypassing the opportunity for independent tax advice and bypassing the opportunity for members of the public or the profession to have their say on record through the submission process. 
New clause 10B explains in part why that exceptional action has been taken by the Minister because clearly the Government did not want to debate in the select committee zero rating GST. That must be one part of the reasoning because when one starts that debate and opens submissions on a matter that as Mr Chairman has ruled is within scope the public can submit on other things that they want to see zero rated. The Labour Opposition has taken a fairly fine point on that debate. We have acknowledged the issue of definitional overhead—[ 
Interruption 
]—and we have focused on something that is very easy to know. Everyone knows what a fresh fruit or vegetable is—even Tau Henare probably could guess. It is for that reason that we are able to deliver relief through our policy which is a gold-plated election promise costing $270 million of forgone revenue a year. Labour will deliver $6 or $7 a week to hard-working New Zealand families—that is for a family of four or five. That promise has been extremely well received by New Zealanders up and down the country. 
The reason that it is important and it goes to new clause 10B is that New Zealanders are doing it extremely tough in the recession. I say “in the recession” advisedly because we are still in one. The small-business people in my electorate of New Lynn are telling me that this year is tougher than last year. This year is tougher than last year for small-business people. They have been hanging on by their fingernails mortgaging their homes and just trying to keep the staff paid and the businesses ticking over. This year is tougher than last year because they are running out of equity with which to do that. The interesting thing is that talking to the big end of town—and Labour members have been out and about talking to the corporate sector quite a bit lately—the message we are getting to quote one chief executive officer last week is never has so much popularity been used by so many for so little. “What is this Government doing?” they ask; “What were they thinking during 10 years in Opposition that they have so little new to contribute to public debate?”. Those questions are relevant to this bill because one of the key areas of economic structural reform that are needed is the rebalancing of the tax system to avoid the blowout in property investment. 
Mr Chairman I see your finger poised on the button and I remind you that I have one call still to take.  
The CHAIRPERSON (Lindsay Tisch) 
: The Hon David Cunliffe. 
Hon DAVID CUNLIFFE 
: Thank you Mr Chairman. This will be my final call on Part 1—but it is going to be a long day—which would include new clause 10B “Zero-rating of services” and I have offered a short call in support of Labour’s amendment to zero-rate fresh fruit and vegetables and I thank colleagues for that amendment. I bring the Committee back to the issue of process. Whatever the merits of that amendment the select committee should have had the opportunity to discuss it alongside the issue of whether it was propitious to zero-rate other services. 
The economic context into which this Supplementary Order Paper falls as I have said before is particularly important because the rebalancing of the tax system has been said by the Government to be one of its most core objectives. The Government set up the Tax Working Group which it lauded and hailed but then it refused to implement most of its recommendations. If we thought about the recommendations in terms of a menu in a restaurant the entrée would be things like building depreciation and the main would be things like a land tax the risk-free return rate or some variant on a capital gains regime that rebalanced the capital income boundary—in particular in relation to the property sector which is the subject of this matter. But the Government refused to make the structural changes. It is very very interesting that this Supplementary Order Paper which is a very timid step forward in respect of reform of loss attributing qualifying companies which are the main legal vehicle for holding property assets—this timid step forward small as it is capturing only around $100 million of revenue as it does—could have gone through a select committee process and we could have checked whether the definitions could be broadened or the scope could be broadened or look-through companies could be made more effective. And it would have been in the context of a bill that up until this point has had the unanimous support of all parties—all parties. This Minister has single-handedly torpedoed the consensus of the House which could have smoothed this bill through by not putting the most important amendments which are contained in this Supplementary Order Paper before the select committee. 
It really is a surprise to see that coming from that Minister whom we have had a high degree of respect for across successive Governments because forgetting the politics he has always had a detailed and fair handle on revenue issues.  
Moana Mackey 
: He needs to answer my question about boarding houses too.  
Hon DAVID CUNLIFFE 
: He needs to answer the question about boarding houses. I hope he will take a call. I apologise to my colleague for interceding as I did but I felt it was very important to come back to the issue of zero rating before we lost the opportunity of the debate on Part 1 to commend the amendment that I believe the Hon Trevor Mallard had a hand in— 
Hon Trevor Mallard 
: I had no hand in this—maybe a finger.  
Hon DAVID CUNLIFFE 
: —with my colleague Mr Nash. So it was a team effort on the Labour side of the Chamber as always because we do operate as a collective. 
Zero rating of goods and services is important. One of the reasons it is important is that it will provide relief to hard-working Kiwi families. The other reason is that it gives us an opportunity if we look specifically at the property sector to rebalance some of those bubbles at the income capital boundary. The fact is they are pumping air into the property balloon which has popped. The thing about bubbles is they pop lots of people go broke and lots of people get hurt. Strangely enough it is always the poor who get hurt the most. They socialise the losses while the rich privatise the profits most often. Then about 7 to 10 years later we come back and have another bubble. How long will it be before the next property bubble occurs because this Government at this point in history did not have the fortitude to take the structural steps that were needed to prevent it from recurring? 
It would have been good for the select committee to be able to address itself to those concerns by the Supplementary Order Paper having been tabled in the normal way. It could have been done. The Minister says he was consulting the profession. I find it reprehensible then that members of the profession were told things that members of the Opposition and other parties were not because the bill was not put before the select committee. There is no way of changing that. I invite the Minister to take a brief call to explain again why the Supplementary Order Paper did not go to the select committee and to address the concerns raised by my colleague Moana Mackey in respect of particular technical question around the GST consequences in respect of boarding houses.  
AARON GILMORE (National) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Lindsay Tisch) 
: I will take two more calls. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I would like the Minister in the chair the Hon Peter Dunne to focus on clauses 15B and 16 in Part 1 of the Taxation (GST and Remedial Matters) Bill as opposed to Supplementary Order Paper 187 in his name. If it is all right with you Mr Chair I will take one of the calls and my colleague will use the next one. I am not sure whether he will speak on this issue as well.  
I just go to clause 16 “Deduction of tax from payment due to defaulters” and I will focus on the arrangements where money is held in a joint bank account. It occurs to me that a number of people have joint bank accounts or arrangements—for example trust lawyers. There are a number of circumstances where individuals are signatories of a bank account and money is paid into it which theoretically as a trustee they can draw out and it might be that only their signature is required. According to new subsection (1B)(b) of section 43 in clause 16 money can be withdrawn on their signature. But what happens if that money despite being in a joint bank account is actually the property of the other signatory of the bank account?  
The Minister proposes that notwithstanding the money belonging to someone else the Inland Revenue Department is able to go into a bank account—an account that does not contain money that the department has put in but contains money that is absolutely independently there. I am looking at some of my colleagues and slightly blaming them here. How come there was a proposal that we would support legislation to allow the Inland Revenue Department to go into an account and take out money that does not belong to the tax defaulter?  
I want to know why Sir Roger Douglas is supporting legislation that would allow the Inland Revenue Department to take money that belongs to a third party out of an account to satisfy the debt of a defaulter whose money it is not. The Inland Revenue Department goes into an account which is not solely in the name of the defaulter—it is in two names; the money held in it belongs to a third party—and Roger Douglas is supporting legislation that allows the Inland Revenue Department to go into that account with no notice to anyone with no pleases and no thankyous and confiscate that cash. [ 
Interruption 
] The member says “rubbish”. The member has not read the bill because that is exactly what clause 16 of this bill does. That is exactly what clause 16 of this bill does. I want to know whether Roger Douglas who is meant to stand for freedoms for the integrity of bank accounts and for not having State involvement thinks that is an appropriate thing to do.  
I do not want to say there are an excessive number of tax-defaulting lawyers but there are a few lawyers around who are signatories as trustees to bank accounts. Like Chris Finlayson they are not currently operating them. The accounts are nothing to do with them but there is money in those accounts that does not belong to them. I just ask why the Inland Revenue Department should have the remedy of going into those accounts which might not have been used for 20 years by the tax defaulter and take money from those accounts. What can be right about that? What are the ethics of that situation whereby we are giving an enormous power to the State to confiscate money to satisfy a tax debt by taking money from someone who is not the defaulter? Confiscating money from someone who is not the defaulter is something that I think needs to be looked at.  
Another area which I am not sure whether my colleague will pick up on as he takes a call in 5 seconds’ time is the question of clause 15B on credit and debit notes. 
STUART NASH (Labour) 
: 
 My colleague Trevor Mallard brings up a very good point and I will tell members why I think it is such a good point. It is because the bill as originally put forward was quite wide. It was quite wide and we had major concerns about that. Sir Roger Douglas spoke at length about it. I did David Cunliffe did Brendon Burns did—everyone expressed outrage that this could actually occur. In fact it was quite a long and robust debate. Roger Douglas became animated the tax officials were sent scurrying and they came back with a suggestion that was not good enough for the select committee. They went away again and came back with a whole lot of assurances. But the point that the Hon Trevor Mallard has brought up is very relevant. What happened with this bill is that it went to the select committee and members sitting on that committee had a whole lot of questions about it. So the members presented those questions to the tax officials and the tax officials said: “We hear what you are saying let’s go out and consult and come back with suggestions.” And do members know what? The changes were made. The changes were made to this legislation because Sir Roger Douglas the Hon David Cunliffe Brendon Burns I and the National members of the Finance and Expenditure Committee scrutinised this very robustly. We said that we had the same concerns that Trevor Mallard has brought up. We had exactly these same concerns so it was altered. That is what the select committee process allows. It allows bills to be scrutinised with other eyes with different eyes and the necessary changes to be made.  
One thing I would like to talk about is the amendment to insert new clause 10(2) that I tabled with regard to zero-rating the supply of fresh fruit and vegetables. Mr Cunliffe asked Tau Henare a very interesting question as to whether he was a fruit or vegetable. Some say he is a fruit I suspect he is a vegetable but that does not really matter. The bottom line is that this is quite easy to ring-fence and clarify. People asked about the lettuce in a McDonald’s hamburger. That is pretty obviously not covered because it has been processed in some way shape or form. One cannot put a huge big fresh lettuce between two buns and not call that processed. It is a very easy distinction to make. When a member or any New Zealander goes into a supermarket if they can see a fresh apple in an unprocessed form sitting there it has not been processed. If they go in and see a can that has apple quarters in syrup that has been processed. It is pretty simple. That is why we have drafted the subclause like this because it is very much common-sense legislation. It is very much a common-sense amendment that we are asking the Minister to include. I would like to ask the Minister first to let us know whether he will support this because it is common sense. It is very much common-sense legislation that will help all New Zealanders from the cradle to the grave—from the cradle to the grave. It is about providing them with cheap options to allow them to live a healthy lifestyle and we all want that. 
At the moment the only group leading the healthy lifestyle charge is the private sector. As my colleague Brendon Burns mentioned the Hon Tony Ryall turned up at a supermarket that is promoting healthy lifestyles. Why cannot the Government be seen to be promoting healthy lifestyles? Is not one of our roles to send signals out to the public about what we believe is right? Is it not part of our role to actually do what is right for the people of New Zealand? Well this is right for the people of New Zealand. It is right for the people of Christchurch and it is right for the people of Waikato. My friend on the Finance and Expenditure Committee the honourable David Bennett says that the people of Waikato are suffering because of a drought up there. I heard a man last night say that people there want some special assistance. All they want to do is provide fruit and vegetables on the family table. That is what that south Waikato farmer said. This amendment will help that south Waikato farmer. 
Hon TAU HENARE (National) 
: 
 Mr Chairman I move  
That the question be now put 
. 
The CHAIRPERSON (Lindsay Tisch) 
: The member has to actually quote exactly what the closure motion is. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I apologise to my colleagues who did not recognise the fact that Tau Henare made yet another error— 
Hon Tau Henare 
: I raise a point of order Mr Chairperson. I want to quote to you what I said. 
The CHAIRPERSON (Lindsay Tisch) 
: I have already ruled. 
Hon Tau Henare 
: It was “I move That the question be now put.” 
The CHAIRPERSON (Lindsay Tisch) 
: I have ruled. I have ruled. Sit down. Sit down or you are out. 
Hon TREVOR MALLARD 
: I think we had a chocolate-covered banana did we not? That is what we got for Tau Henare in the end. We could not get something that was brown on the outside and yellow in the middle other than a chocolate-covered banana—and a chocolate-covered banana with very poor literacy skills. That is the party of national standards. That is the party of national standards and Tau Henare cannot even read out a simple bit of paper. No to be fair Aaron Gilmore might have written it down for him and he read it accurately. Aaron Gilmore wrote it down for him and he read it accurately. I apologise to Tau Henare. His literacy skills might not be a problem for him; he might have read exactly what Aaron Gilmore wrote. But then Aaron Gilmore is perfect. He tells us all the time. Aaron Gilmore drafted this Supplementary Order Paper in his sleep. 
Rahui Katene 
: I raise a point of order Mr Chairperson. This speaker has been going for about 1 minute and I have yet to hear anything on the bill. 
The CHAIRPERSON (Lindsay Tisch) 
: I am the judge of that. I ask the member to speak on Part 1. 
Hon TREVOR MALLARD 
: The discussion that Tau Henare had on Part 1 was pathetic. It was absolutely pathetic. He tried to say “I move the question be now put.” but he did not even get it right. That was his sole contribution. Did Aaron Gilmore make a speech? He is the expert! No he did not make a speech. He got the closure motion right to be fair. He got it right but I do not know whether he misread what he wrote down and got it right that way or whether he read it accurately. His contribution on the bill was—[ 
Interruption 
]—I agree Aaron Gilmore’s contribution was very limited. There was a very limited contribution from Aaron Gilmore on this particular bill. [ 
Interruption 
] No I think it is fair to say it was one of his better contributions. It was one of the biggest contributions that he has made in Parliament.  
I say to my colleague Stuart Nash that I was not convinced by his speech. There was one point that was absolutely valid and that was that clause 16 of the bill was improved by the select committee. There is no doubt. One only has to look at the addition of “or other authorisation”—although that probably modernises it slightly—and more so new subsection (1C) which states that subsection (1B): “does not apply when the joint bank account is an account of a partnership that files a return …”. But that does not cover a trust arrangement. A trust is not a joint partnership. 
Stuart Nash 
: A loan trust. The taxpayer does not own the trust. 
Hon TREVOR MALLARD 
: That is absolutely right; it does not stop the money coming out of it because it is a bank account. A trust has a bank account. The person does not have to own it. The person does not have to own the money according to this bill; all he or she has to do is be a signatory or a name on a bank account. There is no question of the ownership of the money being in the person. This can take money out of trust accounts of defaulting lawyers that actually belongs to third parties just because a lawyer happens to be a signatory on the bank account—just because a lawyer happens to be a signatory. That is an absolute outrage. I do not know why Stuart Nash is defending the Government. I do not know why Stuart Nash and my other colleagues are supporting the Government in this— 
Hon Members 
: We’re not; we’re voting against it. 
Hon TREVOR MALLARD 
: We are voting against it now but probably for the wrong reasons. I do not know why he was going to support it. I wonder about the whole economic team on this side frankly. I wonder whether they have been duped by Peter Dunne and this legislation into allowing a sneaky way for the Inland Revenue Department to go into lawyers’ trusts accounts and take money out that does not belong to the defaulting lawyers but to third parties only because the person—the lawyer the defaulter—is a signatory on the account. That is all that is required. Clearly there is an exception under new subsection (1C) but that is a relatively minor exception.  
COLIN KING (National—Kaikoura) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 45 
New Zealand Labour 36; Green Party 8; Progressive 1. 
Motion agreed to. 
The result corrected after originally being announced as Ayes 69 Noes 51. 
KEITH LOCKE (Green) 
: 
 I seek leave to adjust the Green total from 9 votes to 8 votes. 
The CHAIRPERSON (Lindsay Tisch) 
: Leave is sought to change the vote of the Green Party from 9 votes to 8 votes. Is there any objection to that course of action? There is no objection. The new vote results are Ayes 69 Noes 51. 
The CHAIRPERSON (Lindsay Tisch) 
: Stuart Nash’s typescript amendment to clause 10 is ruled out of order as it does not meet the 24-hour rule under Standing Order 320. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairperson. Can we have an assurance that the Minister’s Supplementary Order Paper was on the Table 24 hours before. If our amendment is ruled out then his Supplementary Order Paper should be ruled out as well. 
The CHAIRPERSON (Lindsay Tisch) 
: The Supplementary Order Paper was released on Tuesday. This ruling is about an amendment from Stuart Nash. The 24-hour rule under Standing Order 320 applies. I am ruling on that basis not on any other criteria. It is ruled out of order under Standing Order 320. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairperson. Although I reserve the position to recall the Speaker on that question the assurance I was looking for was not the time of public release but the time of the tabling of the Minister’s Supplementary Order Paper and whether it was in fact tabled 24 hours ago. I first noticed the Supplementary Order Paper late last night. 
The CHAIRPERSON (Lindsay Tisch) 
: I am advised that Standing Order 296 is the relevant Standing Order. The Supplementary Order Paper was lodged in the public domain on Tuesday. That is the operative date so it meets the question that the member is seeking. 
Hon Trevor Mallard 
: Sorry which Standing Order was that Mr Chairperson? 
The CHAIRPERSON (Lindsay Tisch) 
: Standing Order 296. An amendment has to be lodged on the Table only if it has not been in the format of a Supplementary Order Paper. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairperson. Can you please relate Standing Order 296 to the 24-hour rule. That Standing Order appears to be a rule about how one lodges not how notice is given. I think all of us know that there is a difference between lodging and releasing. As a former Minister I know well that there is a big difference between lodging and releasing. It is the releasing that counts as far as the notice and not the lodging. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 There are two issues. With respect to the large Supplementary Order Paper it was tabled and released at about 1 o’clock on Tuesday which is well outside the 24-hour rule. There is a drafting change which is the second amendment but that is covered by the provisions of Standing Order 320(1) in that it is a technical drafting change that does not have an impact on the Government’s fiscal passages. My submission to you Mr Chairperson is that not only is the Supplementary Order Paper well and truly in order but also the amendment is in order. 
The CHAIRPERSON (Lindsay Tisch) 
: I take on board the Minister’s comments. The Supplementary Order Paper was lodged and released on Tuesday. The bill was on the Order Paper on Tuesday ready for the Committee stage. That is the operative time line concerning the question that the member asked. 
The question was put that the amendments set out on Supplementary Order Paper 187 in the name of the Hon Peter Dunne to Part 1 and the following amendment in his name to clause 4 be agreed to: 
to omit from subclause (5) “21G(2) and (5)” and substitute “21G(2B)”. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 1 as amended be agreed to. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 45 
New Zealand Labour 36; Green Party 8; Progressive 1. 
Part 1 as amended agreed to. 
The result corrected after originally being announced as Ayes 69 Noes 51. 
Part 2 Amendments to Income Tax Act 2007 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take the first of a series of calls on Part 2. Part 2 as the Chair has rightly described essentially covers pages 3 to 61 of the Supplementary Order Paper concluding at the amendment to insert new clause 75B. It therefore covers the bulk of the matters under consideration on the Supplementary Order Paper. 
Hon Trevor Mallard 
: No there is some really bulky stuff further on. 
Hon DAVID CUNLIFFE 
: There are some substantial matters that come into Part 3 as well. 
Hon Trevor Mallard 
: It is bigger than the last part but there is more substantive stuff to come. 
Hon DAVID CUNLIFFE 
: This will be a long day Mr Chairman. This will be a long day. The opportunity presents itself to repeat that the Labour Opposition along with others I understand has been forced to change its vote on the bill as a whole because of the nature of this Supplementary Order Paper. This Supplementary Order Paper introduces fundamental changes to tax law that affect billions and billions of dollars of Crown revenue. For people who may be just tuning in the changes were not introduced at the select committee they have not gone through the proper tax policy process they have not had the opportunity for public submissions and they have not had the opportunity for submissions by members of the profession. The changes have not had the benefit of advice from the independent tax policy adviser who assists the Finance and Expenditure Committee.  
In so doing the Minister of Revenue has torpedoed what was a consensus on this bill. He had all parties in the House agreeing to the technical parts of this bill which alone were in the bill up until today’s debate. By introducing under the cover of urgency this massive Supplementary Order Paper which is by far the most far-reaching part of the bill—and indeed I would argue that this part of it in particular is the most far-reaching part of the bill—the Government is introducing a fundamental change to our tax law.  
I want to take a moment and I may need to spread it across a couple of calls just to set out for the public the essence of the change that is proposed in this part to the loss attributing qualifying company regime and its replacement by the look-through company regime. I will start by summarising the importance of loss attributing qualifying companies. They were first introduced in 2003 under the previous Government when there were only 63000 of them and the total loss attributing qualifying company losses claimed according to the Parliamentary Library using Inland Revenue Department statistics were $709.8 million. By 2008—that is leaving out the last 2 years of rapid growth—the number of loss attributing qualifying companies had already more than doubled in number to 129900 reporting total loss attributing qualifying company losses claimed of $2.258 billion per annum. That is an extraordinary amount. We should just remember that the total corporate tax take is only about from memory $9 billion a year. This is losses avoided of a bit over $2.25 billion. So over a quarter of the corporate tax take is the subject of flows through the loss attributing qualifying company structure. That is extraordinary. A quarter of all corporate tax goes through loss attributing qualifying companies.  
In urgency without bothering to go to a select committee or the public the Government is undertaking fundamental changes to this process. Not only is that surprising but in so doing the Government has ignored the recommendations of its own Tax Working Group. The Tax Working Group did not say that we should fine-tune loss attributing qualifying companies around the margins call them something different and allow 95 percent of the deductions to continue. The Tax Working Group told the Government that it had a fundamental problem because the existence of those structures is allowing an enormous amount of losses to be claimed. We were told that losses on residential property investment alone which is a subset of this total were in the order of magnitude of half a billion dollars of tax avoided per annum.  
It is absolutely necessary to step the public through why this matters and why the travesty of process that Parliament is enduring today also matters as a consequence. The Government’s changes by its own admission account for around a quarter of the property avoidance alone or—taken across the whole loss attributing qualifying company avoidance of 2 years ago which has been growing rapidly but let us use the 2008 figure—$2.25 billion which is about 5 percent of the total. It is extraordinarily weak. Why is it weak? Because the look-through companies that are set up in this part still allow property losses to flow through past the company boundary to the personal income of the investor. So although it is a small step forward and it means that we cannot write off a company loss at 30 percent or 28 percent we can write it off at the marginal tax rate of the investor which is slightly less of a free shot to the corporate and property community but not much of one.  
The fundamental question that was never able to be debated in the select committee because the Government sneakily avoided putting it to the select committee—this fundamental change affecting billions of dollars—is why company losses should flow through to the personal income tax statements of an investor at all. Parliament has not had that first principles debate. There will be some reasons for that; I do not deny that. And I do not deny that to remove all of them—sometimes loosely called ring-fencing—would be a major step but I have to say that Labour has not been convinced that those reasons are sufficient in these tough times to justify the loss of billions of dollars of hard-needed tax revenue. The erosion of the tax base is just too great and it is compounded by the $14 billion of tax revenue given away by this Government over the planning period in Budget 2010. Is it any surprise that Bill English just this week had to admit that the Government now faces a fiscal deficit of $11 billion this year? Eleven billion dollars! And the Government is not cracking down on $2.5 billion of tax avoidance. It is legitimising it by changing the name of the vehicle and creating a new industry in restructuring for tax lawyers. 
David Bennett 
: Can’t hear him. 
Hon DAVID CUNLIFFE 
: Well I will keep talking until Mr Bennett does. He will be here for a very very long time because we think this matters. 
Hon Tau Henare 
: No one can hear and no one wants to hear. 
Hon DAVID CUNLIFFE 
: I will take the advice of Tau Henare the well-known chocolate-covered banana—I do not know why Trevor Mallard thinks he is chocolate-covered. I personally like the word “butternut”—you know brown on the outside and yellow in the middle. I thought that was a good one but Trevor liked chocolate banana. Either will do me. I will take the member’s advice and lean into the microphone.  
The point is that an enormous amount of pain will be borne by ordinary New Zealanders who will witness what the Minister of Finance has already described as another effort at fiscal consolidation in the New Year—that is another razor gang. He will have to prune hundreds of millions of dollars out of the three-quarters of the Budget baseline—hundreds of millions—that goes into health education and welfare and the only reason he needs to prune it is that the Government is not cracking down on tax avoidance. Here was its opportunity to do that. Here was the opportunity to say that companies should be able to carry forward company losses—there is no argument about that. The intertemporal transfer of company losses is absolutely legitimate but writing off company losses against personal income has to be questioned in these tough times—it has got to be questioned. Parliament was entitled to that debate and it was entitled to the full McCoy; it was entitled to the debate at the select committee. The public was entitled to submit on whether they wanted property companies writing off $500 million of tax losses when we cannot afford teachers in our schools when we cannot afford to pay for a rest home in Taihape and when we could not afford home care for the elderly in the Manawatu. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 At the outset of this debate on Part 2 of the Taxation (GST and Remedial Matters) Bill I thought it might be useful to put on the table the context in which the debate is occurring to help shape future contributions.  
The member who just resumed his seat David Cunliffe made reference to the work of the Tax Working Group. I guess the seminal figures from its report were the $200 billion investment in rental housing that was generating net rental losses of about half a billion dollars and approximately $150 million in tax revenue losses in 2008. The Tax Working Group recommended a series of changes including a capital gains tax the ring-fencing of losses and a land tax which the Government announced in February of this year that it was not proceeding with though it said it would look at other measures. In the Budget the changes to the loss attributing qualifying companies regime were foreshadowed. As I indicated in the debate on Part 1 a process was then entered into that led to the changes that are coming before the Committee today.  
I think it is important to make the following point as well. We have about 130000 loss attributing qualifying companies in New Zealand. Parenthetically I observed that their growth exploded during the term of the previous Government principally as a consequence of people using them for vehicles to avoid paying the 39 percent top tax rate. Be that as it may it is a fallacy to assume that all of those companies are property related. In fact only approximately one-half of them are in the property sector. There are somewhere in the order of 80000 loss attributing qualifying companies with a property bent to them.  
The member who spoke earlier talked about $2.3 billion in tax losses by implication in the property area. In fact the actual loss is estimated at about $800 million in the rental property sector. The issue then becomes how much of that can be recouped and how much of it is an appropriate target if you like bearing in mind the fact that there are a number of other activities for which the loss attributing qualifying companies model is a perfectly legitimate and proper vehicle to operate within.  
It is not correct to say—whether it be the $2.3 billion total tax take or even just the $800 million in respect of property-related loss attributing qualifying companies—that moving to standard company treatment automatically recoups all of that revenue because of the loss offset provisions and the fact that losses can be carried forward for a period of time. It is correct to say that those losses would be deductible at a lower rate than deductions from the shareholders’ personal incomes and that the move to a partnership regime with full flow-through could then be transferred on to an individual shareholder.  
The point is that the changes that are being made here were driven by the Tax Working Group’s initial recommendations. The Government’s initial thinking related to the whole sweep of the qualifying company regime which has been modified through the process that we embarked upon which I referred to earlier. The modified regime is introduced in the provisions of Part 2 and those provisions will be better targeted at the audience at which they are aimed. Also the fact that in 2012 we will review the dividend regime which we have announced will mean that the capacity to make the complete conversion to full company status will be much easier. 
Hon David Cunliffe 
: Why no urgency for that? 
Hon PETER DUNNE 
: The simple reason is that moving at that point in time is about as urgent as one can get given the fact that we want to make other changes to move out the ability to attribute loss from 1 April next year. It is quite a staged process. 
As the member rightly pointed out in his opening comments loss attributing qualifying companies have exploded in number. One can argue the reasons for that. I think it is perfectly clear that the escalation of the top tax rate to 39c had a lot to do with it. There is also the fact that the tax losses attributable through the loss attributing qualifying companies regime grew something like 400 percent during the previous decade.  
This issue has been worked through very carefully indeed. We have sought to obtain a reasonable balance between dealing with the issues that the Tax Working Group set out as requiring attention and not adversely affecting a number of loss attributing qualifying companies and qualifying company - related activities that take place over forestry agriculture fishing tourism and a whole range of other activities. 
STUART NASH (Labour) 
: 
 The interesting thing is that there is general agreement across the Chamber that the loss attributing qualifying company regime has probably been abused a bit. The substantial part of Supplementary Order Paper 187 in the name of the Hon Peter Dunne as has been mentioned by my colleague the Hon David Cunliffe and by Minister Dunne deals with loss attributing qualifying companies. It is a large part of the Supplementary Order Paper. The Minister talked about the fact that change in this area was signalled in the Budget. We know that and we accept that. He said he had consulted widely—and we know that too; we understand and accept that—and this Supplementary Order Paper is the result of that consultation.  
I suppose that where we have great difficulty is with the fact that that is the way all tax bills come to their genesis. A proposal is announced somewhere. A Minister comes up with a working group or a suggestion or it is flagged somewhere that change needs to occur. So there is consultation with the Inland Revenue Department and papers are written—and Mr Chair knows the process better than I do. A paper goes out and it comes back and as a result of that a bill is drafted. We totally accept that the Minister has followed the right process right up to that point. However the process is only about half-completed when it gets to that. We now have a massive Supplementary Order Paper which is actually larger than the bill itself. At 71 pages this Supplementary Order Paper is larger that the bill. In fact it is larger than all but two of the nine tax bills that have come before the House in this term. So it is quite a massive Supplementary Order Paper and there is a lot of detail in it.  
This sort of Supplementary Order Paper goes out for consultation to tax experts which is all very well but what about the ordinary New Zealanders who will be affected by this change? That is my concern. As the Minister pointed out there are about 130000 active loss attributing qualifying companies and my understanding is—I think we got this from the officials—that a lot more than 50 percent of them are used to shelter rental properties. But that does not matter—the bottom line is that there are a lot of these companies. Their numbers have exploded and they are used so that people can minimise their tax. This bill makes changes but I suppose where I and my colleagues are coming from is the view that we need to complete the rest of the process in order to allow us to have robust legislation.  
When I look at the amendments to clause 74 on the Supplementary Order Paper I see new subclause (6C) which states: “The definition of LAQC is repealed.” So immediately 130000 companies are affected. I do not know how many shareholders are in them but a lot of New Zealanders are affected by this measure. An incredible number of New Zealanders are affected by it. The Supplementary Order Paper then goes on state in new subclause (6D): “The following is inserted in its appropriate alphabetical order: ‘look-through company …’ ”. So this is not a small Supplementary Order Paper that will affect about 10 people. It makes huge changes to tax legislation and that is our point. It would have been preferable for the Supplementary Order Paper to be referred to the Finance and Expenditure Committee for our independent adviser to be available and for us to be able to question officials—and we have a lot of questions about this. We are not necessarily saying the measures in the Supplementary Order Paper are wrong. But we are aware for example that the officials put forward two proposals to the Minister about how to deal with loss attributing qualifying companies. This is only one of them. The other one was to actually remove loss attributing qualifying companies from the legislation altogether. We would like to know why that was not considered.  
Those are the sorts of questions that we as members of Parliament elected by New Zealanders to represent them could have put to the Finance and Expenditure Committee and to the officials. We could have asked to be advised by our independent tax expert because as I mentioned no one on the Finance and Expenditure Committee is a tax expert. We acknowledge that. That is why we have Ms Turner in there representing us and helping us out. We could have asked a number of questions with regard to this measure. That is where our concern comes in.  
I talked about a number of the questions that we asked and the Minister said about $800 million is lost from the rental property market by the use of loss attributing qualifying companies. I know that loss attributing qualifying companies in general in 2008 took about $2.2 billion out of the tax receipts. That is a substantial amount of money. Even if maybe only half of the loss attributing qualifying companies operate to shelter rental properties and it was only $1.1 billion it is a substantial amount of money by anyone’s reckoning. When we talk about making cuts of $13 million from night classes we can see it is a substantial amount of money.  
The Minister said these changes were signalled in the Budget and I accept that. I think that clawing back depreciation will make a big change and we supported that. However one of the questions that I really would have liked to ask in the select committee—and I would like to ask the Minister this—is why the Government did not simply ring-fence losses to do with rental properties as opposed to providing for a look-through company where people can still offset against their income losses made when they were loss attributing qualifying companies. I know that the structure takes away any sort of arbitrage between the loss attributing qualifying company rate and the marginal tax rate and that is where all the losses came through. That is not a bad thing. But I am not a tax expert and I would have loved to hear the reasons and the rationale behind that. We get briefing papers from the Inland Revenue Department like you would not believe. They arrive in forests. It allows us to get our heads around the rationale behind tax legislation.  
I want to know why people were using loss attributing qualifying companies to hold their rental properties and why they were not using other types of entities. Why did they not just hold those properties themselves? Fundamentally we are talking about losses. We understand that look-through companies mean that people have to attribute profits from those companies to their marginal tax rate but why were they using loss attributing qualifying companies for losses? Surely the company structure would have allowed that; surely just holding properties as an individual would have allowed that. I know about the arguments around liability but those are questions that I would have liked to ask.  
What are the practical impacts of the changes to the loss attributing qualifying company regime? Will they affect the amount of rental housing out there? We know the market is very very soft at the moment; any real estate agent will tell us that. I was talking to a lawyer last night who deals in property and he said it has just dried up. He said one of the reasons is the changes that have been made. We talked about loss attributing qualifying companies and he said changes probably needed to be made but when I asked him what sorts of changes were needed he was sort of umming and ahing. This person is a lawyer who deals with this legislation as part of his job every day. That is why I say the Minister took the Supplementary Order Paper to a certain point in the process but he needed to take it further.  
The Minister said the bill was made available to the public on Tuesday. I would like to ask any member or anyone who is watching—I know we cannot refer to people watching on the TV—what is meant by a look-through company. Was anyone aware of this proposal? Was it published as a half-page ad in the  
New Zealand Herald 
 that loss attributing qualifying companies would no longer exist and would become look-through companies? I wonder whether any of the experts that the Minister consulted published in their newsletters that a Supplementary Order Paper would come before the House before Christmas that would get rid of loss attributing qualifying companies. I very much doubt it. If the usual process had been followed submitters would have had the opportunity to comment. We normally allow a 5-week lead time for tax bills that are referred to the Finance and Expenditure Committee. Notice goes out in a whole lot of ads so that people can look at an ad and make a conscious decision on whether they want to have a say on a bill. I doubt whether many people knew about this measure. Let us remember there are 130000 loss attributing qualifying companies and a larger number of shareholders. I very much doubt whether even a small fraction of that 130000 would know what a look-through company is.  
This is what a select committee process would have been able to bring out into the open. It could have provided consultation and released documents. There have been documents out there and changes have been signalled but this Supplementary Order Paper was not signalled. I think it is the reasonable expectation of the vast majority of New Zealanders that any form of tax legislation that with a drop of a hammer wipes out 130000 legal entities should be open to public consultation. I doubt whether any member in this House would not agree that if Parliament suddenly does away with 130000 of anything there should be some level of public as well as expert input. This Supplementary Order Paper is bigger than the bill. We have a major concern about that. No one can get their heads around this. We understand what look-through companies are now because we had a briefing from the officials. We have a sort of a feel of the consequences but we do not know what they all are at all. I am keen to know whether the Government looked at any other changes. Did the Minister consider or take any other changes out to consultation? Did the Minister ask the experts? 
SANDRA GOUDIE (National—Coromandel) 
: 
 I move  
That the question be now put 
. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I want to speak on clause 28 of the Taxation (GST and Remedial Matters) Bill. I note Supplementary Order Paper 187 which refers to some changes to clause 28 in respect of Government grants to business most particularly payments in the nature of a grant or subsidy to a business a grant-related suspensory loan advances and the tax treatment of those Government grants.  
I want to speak in support of Government grants to businesses and the tax treatment of them because it is a very timely issue. As all members of this House well know my city of Christchurch was knocked around very badly by the 4 September earthquake. There is a very strong need at this point in time for businesses in my electorate particularly in my central business district and across Christchurch and Canterbury— 
David Bennett 
: It’s not your CBD. 
BRENDON BURNS 
: The central business district is in my electorate of Christchurch Central. [ 
Interruption 
] Yes it is and we are seeing hundreds and hundreds of businesses that are struggling to survive. They were coming through the recession and now through no fault of their own they are struggling. We have experienced a once-in-750-year disaster and the case for Government grants and assistance is extraordinarily strong.  
There is no precedent for what happened in Christchurch. It is acknowledged from the Prime Minister down that this was a once-in-750-year event. The commentary from the Prime Minister and from other Ministers in the Key-led Cabinet was that whatever it took to assist Canterbury to get back on its feet would be done. Yet on Monday of last week the Minister for Canterbury Earthquake Recovery in the face of a number of approaches to him from business organisations for assistance for Canterbury business announced a derisory package that provided— 
The CHAIRPERSON (Eric Roy) 
: Can the member show me the relevance of his comments to Part 2.  
BRENDON BURNS 
: I am relating them to clause 28 which—as amended by the Supplementary Order Paper—provides for the tax treatment of Government grants to businesses. I say that there is a very strong case for businesses in Christchurch to be provided with grants and with the tax treatment inherent in this Supplementary Order Paper so they can survive and start paying tax again.  
Those businesses at the moment have suffered a turnover loss of as much as 80 percent since the 4 September quake—80 percent. They need the assistance that this clause envisages. We are not seeing any assistance. The announcement that came provided a sum of $100000 to promote Canterbury businesses shared with the good folk of Kaiapoi and $80000 for Christchurch when they are needing suspensory loans grants and tax assistance as envisaged by this clause. So we have the tax treatment provided for under this clause but we are not getting and we will not see assistance for businesses. According to the Minister when he was in the House yesterday this is because there are thousands of businesses in Canterbury that are thriving. I would like to see a Canterbury member opposite stand up and recite a list of thousands of Canterbury businesses that are thriving and do not need the Government support and the tax treatment provided in clause 28.  
I am not aware of thousands of Canterbury businesses that are thriving. I am aware of hundreds and hundreds of Canterbury businesses that are on their knees and have asked for Government support and assistance as envisaged under clause 28. It is envisaged that we would see suspensory loans provided or a provision of a grant to a business to assist it most particularly through the Christmas and New Year period which is the time when those businesses are trying to hang on to staff and pay their holiday pay in the face of a business environment where they may be getting only $1 in $2 of the income that they were getting on 4 September or worse. That is why the Government in the legislation provides for suspensory loans for grants to assist businesses and for assistance as envisaged by this clause which provides for the tax treatment of those businesses.  
So the Government is acknowledging that it has a role to play and therefore it needs to have the appropriate tax treatment when there is the provision of assistance to businesses. Yet we are not seeing the assistance to those businesses under the Government. We are providing for the tax treatment of assistance but we are not seeing the assistance. The outcome for the Minister of Revenue as hundreds and hundreds of businesses go to the wall will be less revenue. If there is no assistance provided—with the appropriate tax treatment as provided for in clause 28—the Minister will have less revenue.  
There is another consequence. There is a sucking sound going on in Canterbury at the moment particularly in my electorate of Christchurch Central which is home to the central business district. The sucking sound is the sound of jobs disappearing. Every person who is displaced by a business that can no longer afford him or her—because of the turnover and lack of assistance as envisaged under clause 28 and the tax treatment provided—and every person who goes home with their final pay cheque if they get it is one more person who is not spending money not buying their lunch not buying a coffee not buying a cup of tea not buying a glass of beer after work not buying a pair of shoes and not shopping in the central business district. That further impacts on the viability of those very businesses that are attempting to survive.  
Those businesses quite rightly look to the Government. They know that the Government has provided for suspensory loans for grants for assistance and for appropriate tax treatment. They are not asking for inappropriate tax treatment; they are asking for an assistance package that will give them the chance to remain viable and continue employing people. I ask the question of members opposite some of whom represent regions like the Waikato which is suffering at the moment from another drought. My heart goes out to the farmers of the Waikato. I saw a chap on TV last night in tears and my heart goes out to him. But it has to be said that farming comes in cycles and droughts hit farming on a regular basis. Farmers obviously have to do their best to try to provide for those droughts—it is part of the cycle.  
An event that happens once in 750 years is not part of a cycle and business cannot provide for it. They cannot predict it. That is why Governments through the ages in New Zealand have been there to assist New Zealanders and assist New Zealand businesses with the appropriate tax treatment as provided for under clause 28. But those businesses are not getting that assistance and I want to know from members opposite why they are not.  
I noted the Minister for Earthquake Recovery in the House yesterday talking about thousands of thriving businesses and suggesting that people were getting perfectly adequate information from the Earthquake Commission. That is not what I am hearing as the member representing Christchurch Central from the central business district. I am hearing from businesses that are looking to the Government for some support and assistance—the Government that they in most instances probably voted for. Small and medium sized enterprises—like the cobbler who has a shop in the City Mall and is the brother of Aaron Gilmore—probably voted for the National-led Government believing that they would get a fair deal. I would like to know whether Aaron Gilmore would like to see some support and assistance for his brother in that enterprise. I do not know what his turnover downturn is but I would like to know. I would like to know whether Aaron Gilmore’s brother is being affected and whether he would like to see through clause 28 and its tax treatment some support and assistance for his business along with many hundreds and hundreds of others. I met his father in another cobbler’s shop where I was getting my shoes repaired and I believe that he holds similar sentiments—that it is the role of the Government at times of crisis and times of need to provide assistance.  
Those businesses will get appropriate tax treatment under clause 28 of this bill and I wholly support that. But there cannot be appropriate tax treatment if the assistance is not provided and that assistance is not coming. There is a deafening silence from the National members from Canterbury. They are not standing up for their constituents and telling Minister Brownlee: “It is not good enough.” We are seeing viable businesses shed staff and close their doors when all they need is some support reassurance and assistance with the appropriate tax treatment provided under clause 28 in this bill. We have seen none of those members stand up. They are silent and they should be standing up for their constituents. 
COLIN KING (National—Kaikoura) 
: 
 I move  
That the question be now put 
. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Without commenting on your judgment Mr Chairman which I will strongly support I say to members opposite that Part 2 of the Taxation (GST and Remedial Matters) Bill which are amendments to the Income Tax Act 2007 is already without the Supplementary Order Paper a very substantial part. But coming into the bill by way of a Supplementary Order Paper a massive change in taxation policy for New Zealand has been brought. It is a most inappropriate way of doing it and because it has not gone to a select committee the precedent has always been that there will be an extended debate on those matters. The Speaker’s rulings have regularly been over many years that when legislation has not gone to a select committee the Committee of the whole House stage is extended. 
David Bennett 
: When did you become the Speaker? 
Hon TREVOR MALLARD 
: The ignorant upstart from Hamilton who knows nothing about the way Parliament runs should know that when bills do not go to a select committee there is an extended hearing at the Committee stage. I say to members that I thought we were cruelly cut off after 2.5 hours on Part 1 and Part 2 is much more substantive especially because this part imports the loss attributing qualifying companies in. As I indicated to the Minister in the chair earlier I noticed an issue very late last night. I have been focusing on it only this morning and there are a lot of questions and without wanting to bring the Chair into the debate at all there are some interesting questions on the handling of livestock in the bill. I want to know whether—I see a look on the face of the Chairman who has no idea— 
The CHAIRPERSON (Eric Roy) 
: The member must not bring the Chair into the debate or his speech will be terminated. This is an important part of the bill. I will not tolerate that. 
Hon TREVOR MALLARD 
: It is an extremely important part of the bill and one of the reasons it is important is the effect it will have on farmers and on sharemilkers as their loss attributing qualifying companies are unwound. To be fair to the Minister it is mentioned in the bill but we do not know how it is to be applied because the House has not had the benefit of a select committee hearing. 
I do not know—and the Minister in the chair the Minister of Revenue may want to give me a nod or a wink if he wishes—whether Federated Farmers were consulted on the effect on livestock of the unwinding of the loss attributing qualifying companies. The Minister is finding out; the officials are not sure. I would be surprised if they were and I would be surprised if Federated Farmers had got their heads around this important taxation change for them. Normally of course a bill goes off to a select committee. I am looking at Damien O’Connor; I will wise him up and I am sure he will want to take a couple of calls now that we have identified the qualifying area. The Minister may like to tell us whether Federated Farmers have been apprised of the changes that will affect their members as a result of the undoing of the taxation arrangements for loss attributing qualifying companies and the new arrangements. I ask what the implications are for sharemilkers of the exit exemptions for example. What happens when there is a date difference between the taxation year for the sharemilker and the dates that apply in this bill as far as the unwinding of the loss attributing qualifying companies is concerned?  
Dates for sharemilkers are particularly important. Their years are different years for reasons that those of us who have lived in rural areas understand. They have their changeover and their years are quite properly lined up in that way. But there is no sign that that has been taken into account in the large section of amendments that are sitting in Supplementary Order Paper 187.  
There are a number of formulae in this part of the legislation. Under the heading “Deduction” in new section DB 65(2) which is to be inserted in the Income Tax Act 2007 by new clause 30BA on the Supplementary Order Paper there is a calculation involving a starting pool where a figure of 0.02 is used. It is then multiplied by the number of whole months over 12 which obviously works out the proportion of the year. I ask the Minister where that figure of 0.02 has come from. I have been looking for the definition of the starting pool and I have been unable to find it defined within the legislation. I am happy for the Minister to point it out. I have worked my way around taxation legislation in the past but I have not yet been able to find in this Supplementary Order Paper a definition of starting pool and I have not been able to find it in the substantive amending legislation either.  
There is a figure of 0.02 which I presume is 20 percent—I presume it is a 20 percent depreciation factor. But if deductions are no longer available for depreciation then I am not sure of the relevance of that figure or of the figure of 0.15 that is used later in the legislation as well. I think these are relatively reasonable questions and I am sure members on my side—although having said that I think that earlier on they have had the wool pulled over their eyes once or twice as they have been dealing with this legislation—would have been able to work their way through the legislation and gain some understanding of the answers to them. But when looking at this Supplementary Order Paper as I have done I do not think we have got it right. The proposed new clause 41D which is proposed to be inserted in the bill by Supplementary Order Paper 187 relates to the attribution rules calculation for amalgamated companies. For amalgamated companies involved in loss attributing qualifying companies that are moving to the see-through arrangements we have some calculation rules for attribution. If we as a Parliament are to be passing these attribution rules then it is important that we understand them and know that they are right. I am not saying they are enormously complex but it would be good—and it certainly would happen at a select committee—if people were able to work their way through them fully understand them and make sure that we are doing the right thing.  
We have to decide what we are doing as a Committee of the whole House. We are meant to be approving the detail of this bill. Until quite recently we would have been going through it on a clause by clause basis or even as we did when I was first here on a line-by-line basis working through and making sure we were satisfied that we understood what we were passing into law. It is fair to say that often there would have been a smaller group of people looking at it—people who had the technical expertise—but they would have almost certainly done it on the basis that it had been to a select committee and that has not happened here. If we look at the proposed new clause 41H which is to be inserted in the Income Tax Act 2007 as part of the proposed new clauses 41B to 41N on the Supplementary Order Paper it inserts new section HA 7B “Grandparenting requirement” after section HA 7 of that Act. It states: “A qualifying company must have been a qualifying company at the end of the income year before the first income year that starts on or after 1 April 2011.” I ask how that affects people who are sharemilkers. Which year is it as far as sharemilkers are concerned? 
PAUL QUINN (National) 
: 
 I move  
That the question be now put 
. 
CAROL BEAUMONT (Labour) 
: 
 I will follow on from some of the points made by my colleague the Hon Trevor Mallard. I start by asking David Bennett one of my colleagues across the Chamber whether he might get up to talk to us about some of the implications of the Taxation (GST and Remedial Matters) Bill for sharemilkers. I understand that being an MP from the Waikato he has some knowledge on the matter of sharemilkers. I am sure that he will want to stand up and try to deal with some of those very important questions about these tax changes and the implications they may have for sharemilkers.  
I rise to talk on Part 2. As Trevor Mallard has said this is a huge part with a whole range of provisions that traverse some quite wide territory including matters relating to emissions units superannuation and the treatment of various superannuation matters and the calculation of tax credits of multi-rate portfolio investment entities and exceptions for foreign portfolio investment entity equivalents. A whole range of quite substantive matters is amended in this very large part of the bill.  
Members on this side of the Chamber are concerned that despite all the good work despite the consideration by a select committee—my colleague Stuart Nash has referred to some of this concern—and despite the ability to deal with those matters collaboratively as a Committee we have instead found that we have ended up opposing this bill because of the substantial Supplementary Order Paper 187 which has raised a whole range of very significant matters in addition to what was already a very significant bill without the select committee having had the ability to consider it. We consider that to be a serious abuse of process.  
Of course it probably is not a surprise to see that that is happening because time after time with this Government we have seen an abuse of process and a lack of commitment to our democratic process and to the proper use of select committees. It has fast tracked significant legislation through shortened select committee process or through the use of urgency. Here we are in urgency again and it is an abuse of process.  
This Supplementary Order Paper was introduced at the eleventh hour and MPs have had very little time to consider it in detail. At 70 pages it is actually larger than the original bill which at its first reading was 57 pages long. The provisions of the Supplementary Order Paper should have gone to a select committee. This is the first opportunity this Parliament has had to consider the provisions of the Supplementary Order Paper. The complexity of tax legislation—and I am certainly no expert on tax legislation—means that it benefits more than most legislation from full select committee processes. We need people to consider it and we need to get expert advice on it.  
I turn to the provisions of the Supplementary Order Paper. A number of my colleagues have already looked at the changes to loss attributing qualifying companies. On first appearance we would probably have had very little problem with a number of areas and were likely to want to support them. We do not want to see people abusing the system to minimise or limit their tax liabilities.  
I will also talk specifically about the provisions relating to the broader definition of “income” for social assistance. On the face of it it sounds like a very sensible provision to include income from family trusts fringe benefits in certain circumstances income from a cash portfolio investment entity that is not locked in and income from a spouse living overseas. People are structuring their affairs to inflate their entitlements and we have concerns clearly if that structuring is being used to abuse things such as Working for Families which is designed to assist people who genuinely need it not people who can structure their income in certain ways to get assistance that they are not in need of.  
I note that wage earners and salary earners generally end up paying the tax they have to pay. Their affairs are generally simple and they end up paying the tax they are liable to pay. On this side of the Chamber we do not see it as appropriate that those who can structure sources of income to minimise their tax liabilities should be able to access entitlements that they do not need. To that extent there are probably some very sensible provisions in this Supplementary Order Paper.  
Talking of wage earners and salary earners I also note the fact that this Government has made it more difficult for people who rely primarily on wages and salaries to make ends meet. Those people are struggling at the moment. They pay their full tax liabilities and they are struggling. A number of the changes that the Government has made in employment relations legislation mean they will struggle more. Those changes will potentially reduce their income. People who are dismissed without reason or right of redress of course lose income. People who cannot access assistance from their union organiser to organise themselves to collectively bargain and improve their income will also effectively suffer on wages that are lower than what they need. That has tax implications too. We all should be aspiring to the completely opposite situation where we lift wages and have employment relations legislation that makes it easier for people to organise and improve their wages.  
Going back to the provisions of Part 2 I reiterate that this is already a very complicated bill. It has already had a lot of work done on it and has had a degree of support across the House. I think it is incredibly silly for the Government to have done what it has done in abusing the process by tabling this Supplementary Order Paper which means that we will end up voting against the bill. The Government could have done what it was trying to do particularly make changes to loss attributing qualifying companies and the definition of “income” for social assistance and we may well still have supported it. The Government could have done that using a different mechanism. With that comment I repeat that Labour will not be supporting this bill.  
TIM MACINDOE (National—Hamilton West) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Eric Roy) 
: The question is— 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. We respect your right to rule on the point at which closure motions can be taken. However you will recall that earlier in the debate on this part the debate drew attention to the fact that this is the most substantial part relating to the new Supplementary Order Paper. It covers some 60 pages of the Supplementary Order Paper. There are complex interrelationships between the amended clauses and this bill which we are having to cross-check against the base reference clauses in the main bill. I submit to you Mr Chairperson that this is an opportunity for you to show your excellent judgment and consider in light of the absence of any select committee process whether there has in fact been full due and proper time for the Committee to consider the implications of this part of the bill which affects billions of dollars of tax loss.  
The CHAIRPERSON (Eric Roy) 
: I take very seriously the issue of calls and I apply a number of measures on each occasion. I have given a very considered opinion. I will put the question. If members deem that decision to be unsatisfactory they should vote against the closure motion.  
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 44 
New Zealand Labour 35; Green Party 8; Progressive 1. 
Motion agreed to. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I raise a point of order Mr Chairperson. I hesitate to interrupt you but as you will be aware you will shortly put some amendments. I wish to draw the Committee’s attention to the fact that my colleague Mr Burns has not yet had the opportunity of a call to discuss the amendment in his name which you are shortly to put to the Committee. I appeal again to your sense of good judgment. Less than an hour has been spent on debate on this part. You are about to put before the Committee amendments that have not had the opportunity for discussion even by the member who has put them. 
The CHAIRPERSON (Eric Roy) 
: The closure has been put and the Committee has voted and expressed its will. In respect of the first question which is the typescript amendment in the name of Brendon Burns it is ruled out of order because it does not meet the fiscal aggregate rule as laid out in Standing Order 320(1).  
The question was put that the following amendment in the name of the Hon Peter Dunne to the amendment set out on Supplementary Order Paper 187 in his name to insert new clauses 62B and 62C be agreed to: 
to omit new section ME 13(3) other than the heading and substitute the following subsection: 
“(3)If in the absence of this subsection the total value of payments that would be included under subsection (1) in the family scheme income for the year of the person and the person’s spouse civil union partner or de facto partner is less than or equal to $5000 then the payments paid or provided to the person are not included in the person’s family scheme income for the income year.” 
A party vote was called for on the question  
That the amendment to the amendment be agreed to. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 44 
New Zealand Labour 35; Green Party 8; Progressive 1. 
Amendment to the amendment agreed to. 
The question was put that the amendments as amended set out on Supplementary Order Paper 187 in the name of the Hon Peter Dunne to Part 2 be agreed to. 
A party vote was called for on the question  
That the amendments as amended be agreed to. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 44 
New Zealand Labour 35; Green Party 8; Progressive 1. 
Amendments as amended agreed to. 
A party vote was called for on the question  
That Part 2 as amended be agreed to. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 44 
New Zealand Labour 35; Green Party 8; Progressive 1. 
Part 2 as amended agreed to. 
Part 3 Amendments to Tax Administration Act 1994 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 If I might begin by expressing deep regret at the undue haste with which the debate on the previous part was concluded. I think it is a matter of great disappointment that members on this side of the Chamber have not had the opportunity to address legitimate amendments that we had been planning to address on the basis of our having multiple calls— 
Tim Macindoe 
: I raise a point of order Mr Chairperson. The member is trifling with your ruling. You have made it very clear you have explained it in a way that is fair and he should be required to get on with discussing the matter under consideration at this moment. 
Hon DAVID CUNLIFFE 
: Speaking to the point of order I say the member would be quite right if I had taken a point of order. But as I did not and was using my time in my speech the member is out of order. 
The CHAIRPERSON (Eric Roy) 
: It is inappropriate for members at any point to refer to a Speaker’s ruling either in a point of order or in their speech. I think the matter having now been dealt with we should proceed. 
Hon DAVID CUNLIFFE 
: Mr Chairman you may detect a degree of frustration on the part of members on this side of the Chamber who do not want to be unreasonable but find themselves in the very difficult position of having to do the job of essentially first and second reading speeches and a series of Committee stage speeches under extraordinary time pressure. There are major issues of principle at stake in this part in terms of the interrelationship of portfolio investment entities look-through companies and loss attributing qualifying companies. Those are vehicles that hold hundreds of millions of dollars of assets which are essential to the country’s savings regime and for which potential tax losses could also reach the hundreds of millions of dollars. We are having to condense a first-principles discussion on whether loss attributing qualifying companies should be replaced by look-through companies alongside detailed discussion covering some 70 pages of cross-referenced amendments. We need to go back to the primary bill to try to understand on the hoof how the material in the amendment changes the sense of the underlying clauses. We are trying to do both of those things at the same time and are witnessing an extraordinary abuse a very risky abuse and a very sad abuse by a Minister who erstwhile had a strong reputation for process. I really do want to put on record my personal disappointment at the circumstances that the Committee finds itself in. 
I have previously raised at the level of first principles and I will cover off in a couple of the points in this part the question of the magnitude of the tax loss which is not being stemmed through what my colleague Mr Mallard called the “see-through” company regime which is probably a pretty good description. It is actually called the look-through company regime but “see-through” is probably about right because the whole thing is pretty see-through. It is pretty flimsy—a kind of “tax negligée” if you like—and the revenue consequences are likely to be negligible. 
We asked how much of the $2.2 billion of avoidance was going to be dealt with. The best advice that we had received earlier was that it would be only $130 million. We think that is inadequate. We think it is a step in the right direction but by no means far enough. We would like to have had access through the select committee process to the option development. 
Let me now raise a very important point which has not been raised yet in the debate. There is no regulatory impact statement and I call on the Minister of Revenue if he is listening to confirm to the Committee whether the matters contained in Supplementary Order Paper 187 that relate to Part 3 were referred to Treasury’s regulatory impact assessment unit and if they were as they are required to be whether they received a regulatory impact statement where that regulatory impact statement appears and why it has not been tabled in the House. If there is a good reason why it was not required let us hear it because these are matters of millions of dollars of revenue. 
One of the key things that we need to decide in terms of this part is how the change from loss attributing qualifying companies to look-through companies will affect the relative attractiveness of property investment versus other forms of savings investment. I think it is common knowledge around New Zealand that this is a hugely important issue at this time. The whole country is suffering because of the effects of the global financial crisis and locally in the New Zealand markets which have been crippled by that event the severest impact was because our property bubble was over-inflated. One of the principal reasons for that was unduly favourable tax treatment and hey presto part of that was the matter under consideration in this bill. What had happened was too much resource went through loss attributing qualifying companies to property and not enough through portfolio investment entities. 
In the new clause 78B on the Supplementary Order Paper we see notification requirements for multi-rate portfolio investment entities set out. They are a little hard to understand because they have to be cross-referenced against clause 78. The difficulty is the whole concept of multi-rate portfolio investment entities when lined up— 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I am happy to take a call to respond to the points that the member has raised. I appreciate that the issue of process is one that the Opposition feels very strongly about but I want to repeat what I said at the commencement of each of the two previous parts of this bill. This process has been transparent robust and clear and dates from the presentation of the Tax Working Group’s report in January of this year. As part of the Budget process and indeed part of the work of the Tax Working Group all of the documentation has been released publicly. It has been out there on websites and it has been in the public arena right from the beginning. The Budget contained regulatory impact statements relating to the changes that are contained in the Supplementary Order Paper. We have been absolutely clear right from the beginning about having an open process.  
As I said earlier following the Budget an issues paper was released on 24 May and we received 24 submissions on it. Draft legislation which forms the basis of the Supplementary Order Paper was released in October and a further 10 submissions and comments were received on that. In addition discussion took place with the New Zealand Institute of Chartered Accountants the Law Society and all the usual suspects about detail over that time and I acknowledge their contribution and their input. Changes continued to be made up until the time that the Supplementary Order Paper was signed off and released publicly on Tuesday. It has been a very considered and deliberate process.  
The issues contained within the Supplementary Order Paper are significant. The member keeps talking about $2.3 billion of tax losses emanating out of the loss attributing qualifying companies sector. That is certainly true. I remind him that it grew by 400 percent during the term of his Government. The explosion in loss attributing qualifying companies rapidly increased under the term of the previous Government. The major driver was the avoidance opportunity created by that Government shifting the top personal tax rate to 39c. We have dealt with that not only by reducing the rate but also by aligning it to the trust rate. That escalation will not continue in the future.  
But even if we take the total swag of loss attributing qualifying companies estimated to be somewhere in the order of 130000 approximately half of them—in fact the figure I have seen is 49.8 percent to be precise—relate to property. As I said at an earlier stage of the debate of the $2.3 billion in tax losses approximately $800 million is attributable to property-related losses. The member talks about the net not being cast widely enough but we are doing a couple of things with these changes. Firstly we are restructuring the broad qualifying company regime. We will be moving to a full look-through process. I have indicated earlier the changes to be made to the dividend regime in due course. Secondly we are seeking to prevent the worst of the abuses that were occurring in the property-related area and to address that essential conundrum which the Tax Working Group pointed out that some $200 billion of investment in property produced losses of $500 million per annum and a revenue loss to the Crown of $150 million per annum. We are addressing that through the changes being made in this bill.  
I come back to the point that I have made at every stage of this debate. The reason for it having to be done in the way that it has been done given that we have given virtually a year’s notice of our intention is that these changes take effect from 1 April next year. I think Mr Burns or Mr Mallard may have referred to this earlier but a number of loss attributing qualifying companies and the entities that are associated with them will need to change. They need time to make that transition. The Inland Revenue Department needs time to gear up for that transition. This legislation has to be passed at this point in order to enable the goal of 1 April—which I heard the Opposition say they do not disagree with—to be met.  
I said earlier and I stand by it that we have been punctilious in terms of the consultation process. We have been very clear to ensure that at every stage all of the points that have been raised have been considered right from the time of the Tax Working Group last year. The outcome has been one in which we have legislation that is credible is workable and will address the abuses that were being raised as part of the Tax Working Group report which everyone knew were occurring and were seeking action upon. I think this is good legislation and I think it will stand the test of time. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The Minister’s comments deserve a direct reply. Let us be fair: the Minister is quite correct that the general intent of the policy was made known in the Budget. He is also quite correct that an early draft form of legislation was made available to the industry— 
Hon Peter Dunne 
: Publicly. 
Hon DAVID CUNLIFFE 
: —and publicly—and that is not in dispute. What is equally not in dispute and the Minister would not disagree with this either is that the matters that resulted from that process were not presented to a select committee were not subject to parliamentary scrutiny and did not have access to the independent tax advice of the Finance and Expenditure Committee’s independent adviser.  
I think the Minister is in grave danger here of setting a precedent that could undermine the generic tax policy process more generally because he seems to be inferring to the Committee that it is somehow OK it is somehow acceptable if the Government announces a policy intent— 
Hon Peter Dunne 
: I think the member is inferring; I might have been implying. 
Hon DAVID CUNLIFFE 
: —thank you; “might be implying”—and somehow consults with the industry it gets a form of leave pass and can bypass the select committee. That of course is not acceptable. It is not acceptable to the public first because the select committee is the opportunity for the public to make submissions and be heard. This is more frankly something that smells rather of a kind of smoke-filled room—a closed-room dialogue between a number of parties that have deeply vested interests. That is not acceptable in the New Zealand constitution. It is not acceptable in good parliamentary practice. This is a change of practice for this Minister and it is not OK for the House. We have made that point repeatedly.  
I need to raise several issues specifically about clauses in Part 3 of the Taxation (GST and Remedial Matters) Bill. Again I say it is not easy for members of the Committee to cross-check the provisions on Supplementary Order Paper 187—recently received—in the name of the Hon Peter Dunne with the underlying provisions of the bill to which they cross-refer. The interface with the portfolio investment entity regime such as in new clauses 78B 79B and 80B through to 82E is a matter of some interest. There have been allegations that portfolio investment entities had been subject to similar abuse to that of loss attributing qualifying companies. Where is the analysis I ask the Minister that shows how consideration has been given to managing that boundary? Going forward I ask whether similar issues might occur under look-through companies and whether the removal of some of the arbitrage from loss attributing qualifying companies has removed the possibility of arbitrage between portfolio investment entities and look-through companies.  
Those are the sorts of matters we would expect to see addressed in a regulatory impact statement or an options analysis. But we do not have one because the Government that championed the Regulatory Responsibility Bill has followed its own procedures in less than 50 percent of the legislation that it has put through the House. Perhaps that is not surprising because the Government set a 5-year record this week for the highest proportion of legislation going through under urgency in at least the last 5 years. I have not been able to go back and check earlier than that. We have rushed legislation that violates the Government’s own regulatory— 
Hon Judith Collins 
: Good hard-working Government! 
Hon DAVID CUNLIFFE 
: “Crusher” has become a tax policy expert. That worries me deeply; it worries me as deeply as the process. Without good scrutiny as my colleague Brendon Burns said before we will pass this in haste and revise it at leisure.  
The Minister has made the point that he has dividend amendments coming through. There will be tax bills—at least two—next year. What would have been wrong with putting these matters to the select committee in such a way that it could subject them to the proper process?  
Hon Judith Collins 
: What’s he got? He’s got poetry! Ha ha! 
Hon DAVID CUNLIFFE 
: The Minister of Police who is also the Minister of Corrections may not care about the tax loss but the tax loss that is being addressed through this bill is larger than Vote Police—larger than Vote Police. That might explain why she has put only 30 new cops on the beat rather than the 1000 she promised. So there is a big gap between that Minister’s rhetoric and her reality and there is a big gap between the Government’s rhetoric about regulatory responsibility and the actual practice in which less than half the bills it has passed this year have been through a proper process. That should shock New Zealanders—it should shock New Zealanders.  
The return requirements for multi-rate portfolio investment entities appear in clause 80C and they are deemed to occur at a 31 May date—31 May of the year after the end of the tax year. We are worried about arbitrage opportunities. 
JACINDA ARDERN (Labour) 
: 
 I seek leave to correct the vote on the closure motion on Part 1 of the Taxation (GST and Remedial Matters) Bill. The vote for Labour should have been 36 votes opposed. I seek leave to have the vote corrected. 
The CHAIRPERSON (Hon Rick Barker) 
: Leave is sought to amend that vote. Is there any objection? There is no objection. The record will be so amended. 
JACINDA ARDERN (Labour) 
: 
 I seek leave to correct the vote on the question that Part 1 of the Taxation (GST and Remedial Matters) Bill as amended be agreed to. The vote for Labour should have been 36 votes opposed. I seek leave to have the vote corrected. 
The CHAIRPERSON (Hon Rick Barker) 
: Leave is sought for that purpose. Is there any objection? There is no objection. The record will be so amended. 
STUART NASH (Labour) 
: 
 It is interesting that the Minister Peter Dunne has stood up and told us a couple of times about the process the Taxation (GST and Remedial Matters) Bill has been through to get to this stage. There are just a couple of things I will say with regard to the process Mr Dunne has outlined. 
The first is that this is the standard sort of practice Labour members expect any tax bill to go through and that I think New Zealanders would expect any tax bill to go through: it is signalled it goes out for consultation consultation comes back in a bill is drafted it goes through the first reading it goes to a select committee and in the select committee we have a robust debate. Mr Dunne has said that the bill has gone out to all the tax consultants and he talked about chartered accountants the Law Society etc. Well those esteemed experts in this area have had about 5 or 6 months to look at this bill to make changes to add suggestions to delete things and to have quite a lot of input. If that is the case then why should Labour MPs have only 2 days—6 months versus 2 days? The reason I am a little bit upset about this time period and the reason we are so opposed to it is that we are representing New Zealanders in a democratic Parliament in a democratic country. If the people of New Zealand are not given an opportunity to have a say about how legislation is drafted then that breeds a level of mistrust. That is what it does. 
When did the Budget come out? The Budget was out in May. The Tax Working Group concluded its work in January. Mr Dunne is right: these changes were signalled they were out there. So why was the bill not drafted beforehand? This bill could have gone to a select committee in November it could have been referred back and it could have been passed by now if the Minister had put a little bit of oomph into it. This is symptomatic of the Minister’s handling of this portfolio. We have seen it time and time again and it is just not good enough. We see it with regard to the supposed review of child support. That review was going to be done in the first 4 months of the Government’s term. Now 2 years later the report has only just been released. I tell Minister Dunne that this is sloppy. He could have had something drafted. The Minister mentioned that this matter was out there in January. It was signalled in May. Labour knew about it. As I mentioned we do not necessarily oppose all of this; we just would have liked time to consider it. We would have liked time for our independent tax expert to sit down and brief Labour members of Parliament. 
I turn to new clause 78B on Supplementary Order Paper 187 which deals with notification requirements for multi-rate portfolio investment entities or PIEs. They were set up post-KiwiSaver but the Act that brought them in had provisions that were open to abuse. Portfolio investment entities are used a lot by people who are saving for their retirement. I wonder whether Grey Power was consulted about this measure. I will read out subsection (3) of section 31C that is inserted by new clause 78B: “For an investor … who invests in a PIE that calculates and pays tax using the provisional tax calculation option under section HM 44 of that Act the PIE must notify the investor—(a) by 31 May after the end of the tax year if the PIE is not a superannuation fund or retirement savings scheme and has an income year ending before 31 May; or (b) by 30 June after the end of the tax year if the PIE is a superannuation fund or retirement savings scheme and has an income year ending before 30 June; or (c) within 2 months after the end of the PIE’s income year”. 
There are tax implications around this and we are struggling to get our head around them. My colleague the Hon David Cunliffe said that we are having to cross-reference the bill with Supplementary Order Paper 187—which is larger than the bill—to find out the actual effect of these changes. It is very difficult to do that on the hoof. It is difficult to do that with any legislation let alone tax legislation—more so with tax legislation. That is why for example we were very disappointed when the debate on the substantive part of the Supplementary Order Paper was closed down after only three-quarters of an hour. We did not have the ability to debate it and in our own minds understand the implications of it. Mr Chairman you will be well aware as will many members of Parliament that after tax legislation is passed we always get a number of emails from normally concerned constituents who wonder whether the change has implications for them and why it was done. If legislation goes through the select committee process we have the ability to reply to those emails and concerns in a very timely manner. That is the way in which Labour members like to conduct their constituent relations. 
As my colleague the Hon Trevor Mallard noted Supplementary Order Paper 187 was tabled on Tuesday. A 70-page Supplementary Order Paper which as mentioned is larger than seven of the nine pieces of tax legislation to go through the House during this term of Parliament was tabled on Tuesday. Members of other parties have not had the ability to sit down as a group to discuss it because this is the time of year when we are off attending school prize-givings and a whole raft of functions in our electorate. In fact that is what we should be doing at the moment. We should not be sitting here under urgency near Christmas. We should be out there dealing with our constituents. 
Paul Quinn 
: Do you have an electorate? 
STUART NASH 
: Wait till 2011; Mr Tremain knows about that! The bottom line is that the difference between Labour list MPs and National list MPs is we continue to work very hard for our constituents. We work extremely hard whereas Mr Quinn apparently according to some publication I read should not even be here. 
I go back to the tax legislation. I know what will happen about this change to portfolio investment entities. Members of my caucus will send me the Opposition spokesperson on revenue—probably tomorrow being Saturday or on Sunday because we all work Saturdays and Sundays and maybe even on Monday—emails to tell me that they have had emails from constituents who are really concerned about the changes to the tax legislation around portfolio investment entities that are outlined in section 31C(3) in new clause 78B. In fact I think the changes go through to new clause 80C. It will have been reported in the business press that there is a change to the tax law around portfolio investment entities. That is all they would have heard. If there had been a select committee hearing process I could respond straight away to my colleagues and explain the reason for the new clause. I could say that it was discussed at the Finance and Expenditure Committee it had gone through the whole robust process and we had accepted it in order to improve the integrity of the tax system or to make it easier and more transparent for taxpayers or whatever. If an amendment has gone through the select committee process there is always a good reason for it. 
As has been commented on earlier Labour supported the original bill through the select committee. It was a fantastic atmosphere because we all agreed that we wanted to do the right thing. We asked a whole lot of questions. We worked well. There was not one provision in Part 2 that I can remember that we argued against or took a political line on. We all agreed with it. I put to the Minister that he had time his officials had time to draft legislation after this issue was signalled to get it out to the appropriate consultants and the appropriate experts to get it drafted in another bill—not a Supplementary Order Paper—and to get it before the select committee instead of rushing it through under urgency on a Supplementary Order Paper. All we ask is that tax legislation is not rushed through in this manner because it gives us no confidence. 
Not only does it give us no confidence but it gives the people of New Zealand no confidence. They will read that tax legislation has been rushed through the House. They will read that a 71-page Supplementary Order Paper that contains a whole lot of amendments to a 57-page bill has been rushed through the House. Those who engage in these matters—the sorts of people who would have submitted to the select committee—will ask why it was rushed through under urgency and why they did not have the ability to comment on it. My colleague Trevor Mallard alluded to the fact that Federated Farmers had not been asked about it. As I asked earlier was Grey Power consulted over it? I suspect that it was not. A lot of people who would have presented to the select committee were not consulted about the portfolio investment entities changes or any of the changes.  
Hon PETER DUNNE (Minister of Revenue) 
: 
 I will ignore most of Mr Nash’s comments because they do not deserve a response. I come to Mr Cunliffe’s points which were more substantial.  
Stuart Nash 
: Play the ball not the man. 
Hon PETER DUNNE 
: The member makes an interjection. He should try to demonstrate some credibility before he starts to comment on process which is something he understands nothing about. His colleague Mr Cunliffe on the other hand— 
Stuart Nash 
: When you start playing the ball and not the person then you will get credibility.  
Hon PETER DUNNE 
: Oh Mr Nash is hurt! Mr Nash stands here and trumpets his knowledge which actually fills a thimble and then becomes concerned when he is drawn to account. Mr Cunliffe I think made a worthy effort which I will seek to respond to.  
Stuart Nash 
: We could hold you to account because you were a Labour MP who sold out. 
Hon PETER DUNNE 
: Oh dear! Now we get into personal prejudice.  
Paul Quinn 
: I raise a point of order Mr Chairperson. Stuart Nash has regularly referred to you Mr Chairperson in the last 30 seconds. I think that is against the Standing Orders.  
The CHAIRPERSON (Hon Rick Barker) 
: I will deal with the matter of “you” hopefully finally. The word “you” in itself is not proscribed in the House. When people say “you” it does not necessarily always apply to the Chair. Mr Nash was interjecting towards Mr Dunne the Minister in the chair and was making reference to him. So I took the “you” in that context to refer to Mr Dunne. However although Mr Nash has not shifted his seat for the purposes of interjecting he is interjecting continuously from that position. I want to get on with the debate so can we just taihoa draw a breath and move forward.  
Hon PETER DUNNE 
: I am happy to do that. I will respond to two points that were made by Mr Cunliffe. The first one related to the issue of regulatory impact statements. I made a comment earlier in respect of regulatory impact statements. I have had some more inquiry made about process and I can inform him as follows: as I said in my earlier comments the provisions relating to loss attributing qualifying companies were part of the post-Budget regulatory impact material. When Supplementary Order Paper 187 which is the subject of the debate today was released on Tuesday so too were regulatory impact statements regarding the social assistance provisions the changes to non-resident seasonal workers and the Maori authority changes. That material is all out in the public arena. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. I thank the Minister very much for his so far partial explanation but— 
The CHAIRPERSON (Hon Rick Barker) 
: If the member is going to take a point of order the member should make a point of order. The member does not get up and start issuing thankyous and all sorts of other things. The Standing Orders are quite to the point: they talk about points of order being terse. Thankyous and salutations to anyone are irrelevant. If the member wants to make a point of order the member stands asks for a point of order and delivers the point of order. 
Hon David Cunliffe 
: The point of order is this. If a regulatory impact statement was issued as the Minister now contends I take it that you as the Chairperson would be responsible for ensuring that it was attached to the draft bill and the Supplementary Order Paper. It does not so appear. Can the Chair explain why the regulatory impact statement is not available to members? 
The CHAIRPERSON (Hon Rick Barker) 
: I say to the member that that is not a point of order. It is not a point of process. The member is seeking information. If the member wishes to seek information then he does so by way of debate. The member can stand take a call and make the point by way of a call. The member does not make that point by way of a point of order. It has nothing to do with the order of the Committee. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. I thought it proper to address a matter of Committee order and procedure to you as the Chair and not to the Minister responsible because it is you who presides over the Committee. The Minister is saying that he has issued a regulatory impact statement. It has not been tabled in the House. I take it that as the Chair you are responsible for the Parliamentary Service and the Office of the Clerk. I take it that it would have been the responsibility of the Office of the Clerk to ensure that the regulatory impact statement appeared before the House which it has not.  
The CHAIRPERSON (Hon Rick Barker) 
: I make the point again that the member is not able to distinguish between a matter of the order of the proceedings of the Committee and a matter that is a material fact on what a member has or has not done. If the member has a question about that it is for him to address to the Minister because the Minister is responsible for those matters and as the Chair of the Committee I am not. I am responsible for the organisation of the debate the structure of the debate and making sure that the Standing Orders are complied with. Those are matters for the Chair. I have now answered that question twice for the member. I hope we have it clear at this point. 
Hon PETER DUNNE 
: I will respond to the point that Mr Cunliffe has made. The regulatory impact statements to which I referred have been issued publicly. They are available via the Inland Revenue Department policy website; they are freely available in that regard.  
I come back to the point that he raised regarding the portfolio investment entity regime. He and I recall from a previous existence that a lot of the issues that led to the introduction of the portfolio investment entity regime were not as Mr Nash contended to do with KiwiSaver; they were a consequence of changes relating to offshore investments that I think he initiated when he was holding the revenue portfolio. A number of the changes occurred around that regime in 2007 from memory. He will recall that we had subsequently a lot of discussion about what became known as cash portfolio investment entities land portfolio investment entities or various iterations of the portfolio investment entity regime.  
The issue has been one of how this new vehicle is adapted for the future if you like. In many senses the jury is still out on that issue because the Savings Working Group which is due to report early next year will also be focusing its attention on it in terms of the broader canvas.  
In terms of the specific provisions in this part of the bill they are consequential on the changes being made to the definition of “income” for social assistance purposes. Those provisions do not relate to individual contributors; they relate to the funds themselves. So in answer to the question that he was raising about the impact on contributors I say that it is lessened. The impact is on the funds. The funds have been fully consulted throughout the development of these proposals and are broadly supportive of them. I think that deals with the question that he was raising. This is a very specific and narrow area; it is not a major area of policy. It is an administrative change consequential upon some other changes that are being made which one of his colleagues indicated his party was broadly supportive of.  
I thought that I should put that on the record at this point. I have no intention of interfering with or delaying the debate but I put those facts on the record because they may be of assistance. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I thank the Minister in the chair the Minister of Revenue for that explanation which is particularly helpful in relation to the distinction between individual contributors and the portfolio investment entities at fund level. The clarification is appreciated.  
I think Newton’s law of holes applies to the Minister at the moment: when in one stop digging. The Minister previously justified the absence of a select committee process on the basis that the draft bill was consulted on with the industry. Were that to set a precedent the entire generic tax policy process would be down the chute as they say. For all we know the Minister is also saying that because a partial regulatory impact analysis may have been undertaken by the department on some aspect of this and it might be available on the website then there is no need to table it for the House or attach it to the bill. That is the inference because the Minister was saying that due process had been followed—unless he is now admitting that due process has not been followed in which case I would be happy to concur.  
I go back to Part 3. I raise another issue of substance that I would be grateful for the Minister’s advice on and a response from his officials on since we have not had the opportunity to ask this question in select committee. It relates to the notices of proposed adjustment in new clauses 82B 82C and 82D and the challenge provisions in new clause 82E set out in Supplementary Order Paper 187. What is somewhat confusing is the scope of the adjustment process in respect of several other exception and modification processes that cross-refer back to Part 2. My personal favourite by nomenclature is new subclause (2BAD) which is appropriately named in relation to company definitions. Beyond that there are the grandparenting provisions and the provisions in relation to adjustments for family scheme income from amounts derived by dependent children in new section MB11 and family scheme income from non-residents’ foreign sourced income in new section MB12. Officials may be able to assist us through the Minister.  
The substantive concern not a drafting concern is that we wish to be clear—and the Minister may be able to provide subsequent assurance to the Committee—that the adjustment process brought in in Part 3 through clauses 82B to 82E is not able to be used to double arbitrage if you like or make fine-tuning adjustments to what otherwise could be quite generous provisions around family scheme income or foreign-sourced income. The family scheme income is particularly important because it would be possible at least in theory to allocate through the ownership of look-through companies income from the company to pertain to the taxable income of individuals who might be at a lower tax rate than the principal owner.  
An example is if a principal owner owned shares in a company alongside the owner’s children who were on a lower tax rate or a spouse—and I wonder whether this is the Minister having another go at income splitting by another name. He was not able to get National to agree to income splitting. I would be really grateful for his guidance—he may not wish to give his guidance in light of that assertion—on whether any provisions are inbuilt in the bill that prevent the sort of arbitrage where the ownership of the look-through company could be flexed to reflect the tax rates of the underlying shareholders. We would not want the look-through company regime to operate like an income-splitting system. It would have been better although we opposed it for the income-splitting bill the Minister proposed to be agreed transparently than to have it done—if indeed that is the case and it may not be—by the back door in relation to this provision.  
Finally it is incumbent on me in respect of new section MB12 to say that the whole interface between the domestic savings regime and the international tax regime is devilishly complicated. I confess to finding myself in the uncomfortable position when I held the Minister’s current role of being in an ongoing reliance position in relation to technical advice on that matter. 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I would like to take a moment in this Part 3 debate to ask a question about the regulatory impact statement and clarify exactly what the Minister in the chair the Hon Peter Dunne was referring to. My understanding is that he would have been referring in his comments to the regulatory impact statement as it relates to the bill as introduced. 
Sitting suspended from 1 p.m. to 2 p.m. 
BRENDON BURNS 
: I remind the Committee that before we broke for the lunch break we were discussing Part 3 of the Taxation (GST and Remedial Matters) Bill. I asked the Minister of Revenue to clarify comments that he made in his introductory remarks about the regulatory impact statement—in his spirit of openness I think he called it—and whether in fact his reference to the regulatory impact statement refers to the bill as introduced to this House in August a bill of some 57 pages or whether his reference to the regulatory impact statement refers to the 70-page Supplementary Order Paper that was released by the Minister in the last 48 hours a document that is some 13 pages longer than the bill itself. If we are not to have a select committee process to inquire into the details of the Supplementary Order Paper if urgency is to be applied in this House a fortnight before Christmas as we try to see this bill and the Supplementary Order Paper through and if there will not be any opportunity for others to have input into the bill through the select committee process then I would have thought that a regulatory impact statement on the Supplementary Order Paper to try to get some sense of dispassionate analysis on the raft of changes it introduces would make absolute sense because that Supplementary Order Paper is detailed and complex and New Zealanders have a right to know what is being passed. This Committee cannot give the scrutiny to it that a complex piece of tax legislation truly demands.  
I also note that the last time this Minister featured in the House in respect of tax issues of any note was when he supplied the wrong speech notes to another Minister Jonathan Coleman. The speech notes were for a different bill to that which the Minister was speaking on. 
Hon David Cunliffe 
: “Coleman-itis”. 
BRENDON BURNS 
: I think that the Minister himself quite rightly claimed culpability for that error because it was his office that supplied the notes. I suggest to the Committee that he has gone from bad to worse because here we have a situation where we do not have just the wrong speech notes for a bill that has already passed but the Minister giving speech after speech to the House defending a Supplementary Order Paper that is bigger than the bill itself.  
Hon David Cunliffe 
: Is this Supplementary Order Paper a plot? 
BRENDON BURNS 
: That is a comment that others might make. I am not drawn to conspiracy theories. In my past life as a journalist sometimes people came to me with things that suggested there was a conspiracy and I usually went for the other option which is the stuff-up.  
Hon David Cunliffe 
: The con job. 
BRENDON BURNS 
: No normally it is a stuff-up rather than a conspiracy. But this one has different hallmarks because as we have noted there was a process in which the Labour Party supported the bill’s introduction worked through the issues in the Finance and Expenditure Committee to ensure that the legislation was valid and made a number of changes to the legislation. Our colleague Trevor Mallard highlighted one of the particular concerns earlier and I think it is repeated in another part of the bill about the issue of Inland Revenue Department access to jointly held bank accounts for the tax debts of a particular person. It was a very astute observation from my learned colleague the Hon Trevor Mallard. 
Hon Trevor Mallard 
: I’m not learned. I’m not a lawyer. 
BRENDON BURNS 
: He is not learned? No. The point is that the Finance and Expenditure Committee scrutinised the bill to ensure that there were not things within it that would not be good law for New Zealanders. But we have had no opportunity whatsoever for that scrutiny on the Supplementary Order Paper and it really is a recipe for disaster because inevitably there will be things that come through from the bill that do not help New Zealanders and we are very likely as a Parliament to have to revisit it.  
Again I note that of the nine tax bills introduced to Parliament by this Minister who is generally highly regarded as a good competent Minister— 
The CHAIRPERSON (Lindsay Tisch) 
: I remind the member that we are on Part 3 of the Taxation (GST and Remedial Matters) Bill and during the course of his speech Part 3 was not mentioned. We are debating Part 3. 
BRENDON BURNS 
: I suggest Mr Chair that in fact I did introduce Part 3 of the bill but I will take your steer on that point. The Chairperson is quite right; this debate is on Part 3 of the bill and it relates to clauses 77 to 86.  
One of the parts of the bill that I would like the Minister to give some clarification on is clause 82 which is the clause titled “Disclosure of information for verification of government screen production payment entitlement”. I want to know whether this clause will relate to the  
Hobbit 
 deal. It was a deal done in a flash under urgency in effect by the Prime Minister at Premier House with the Hollywood moguls to ensure  
The Hobbit 
 was filmed here in New Zealand. In fact  
The Hobbit 
 was always coming to New Zealand. But I would like to know whether the clause will have any relationship to the funding that will be provided by the Government in that secret deal which was done under urgency. It had some of the hallmarks of this legislation that we are going through. Clause 82 as provided for in the bill is around replacing the phrase “large budget screen production grant” with “government screen production payment”. I would like to know whether the 
 Hobbit 
 productions will be beneficiaries of this change and whether we should read anything into it.  
The good thing about it is that this particular clause has come through in the bill as it was introduced so the Finance and Expenditure Committee has had some opportunity for consideration and could take account of the wide range of issues that one must consider in the select committee process. That is not true of the Supplementary Order Paper which of course has a huge number of changes incorporated in it. The fact that we are here under urgency with the Government’s wish and intent to see the bill passed today gives no opportunity for us as members of the House to consider the changes. So I would like the Minister to take a call and give some clarity as to whether clause 82 will indeed allow for the provision of financial support to  
The Hobbit 
. Is that the particular clause that will allow the taxpayer to fund to the tune of I think tens of millions of dollars the 
 Hobbit  
series—the two films? Was that clause drafted ahead of the Government’s intention to provide support at that level to that particular bill?  
The other thing I will say is around the issue of the complexity of the legislation. As a new member of this House and of the Finance and Expenditure Committee I must say that when we see tax legislation come through it is eye-watering in detail and it is obviously a task indeed for members of the Finance and Expenditure Committee to stay on top of the legislation in order to ensure it gets the sort of scrutiny that Parliament and the New Zealand taxpayers would demand because they understand the importance of tax legislation. Everybody in New Zealand is affected by tax legislation whether or not they are an earner because if someone is not earning they are supported by someone who is earning and is therefore subject to the Inland Revenue Department’s regime. I would really like to say that we have a situation where given the opportunities that we as a select committee have to scrutinise tax legislation still stuff goes through. I referred to nine different tax bills in just 2 years in this Parliament which whistled through at a fair rate of knots. That involves hundreds and hundreds and hundreds of pages of complex detail in total which is entrusted to the select committee members to give due regard to—to listen to submissions to make sure that the legislation is doing what the Government intends it to do and to look for the fish-hooks in it. I think we do a pretty good job in a bipartisan manner across that select committee and that relates as much to Part 3 of the bill as to any other part of the bill.  
But of course it does not apply in respect of the Supplementary Order Paper tabled by the Minister just 48 hours ago. It is a 70-page document which makes it extraordinarily hard for anybody to follow what is being introduced. I challenge the members opposite to take a call and to use the value of the call process to give some real substance to their contributions to this debate in order to let Parliament and the people of New Zealand know that members are scrutinising legislation carefully and making sure that this bill will deliver what the Minister originally intended before he introduced the Supplementary Order Paper. 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 Parliament is the shop window of democracy and since this morning the Opposition has been parading its distress at the process by which we are passing taxation legislation. If anyone is listening to this debate they may well be confused as to why we are resistant to the process. The answer lies in the complexity of the legislation. No legislation—except in exceptional circumstances—should bypass a select committee but taxation legislation in particular is astonishingly difficult. It is famously difficult. Parliamentarians are ordinary people. There are no tax experts amongst us so we seek to give tax legislation the scrutiny that is needed with the assistance of experts. That is how taxation law is made and how it has always been made.  
For those folk who are listening I will give some indication of the complexity. We are looking at Part 3 of the Taxation (GST and Remedial Matters) Bill. There is a large Supplementary Order Paper that is as large as the bill itself—in fact slightly larger. It has been put into the mix without going through a select committee so the bulk of the legislation has not been subject to a select committee. I will quote from the bulk—the Supplementary Order Paper—which contains bits of amendments. Almost randomly I will quote from new clause 80B in the Supplementary Order Paper in reference to new section 42B in the principal legislation. This is the chapeau: “Returns by look-through companies and owners of interests”. Let us read the English that follows: “This section applies to persons who have effective look-through interests for a look-through company and to their look-through company.”  
Now let us see what an owner of a look-through company looks like. I will briefly go back to Part 2; I am sure the Chairman will allow me to do so. Here is what an owner of a look-through company is: “A person who has an effective look-through interest for a look-through company has a deduction to the extent to which a deduction results from the application of subpart HB (Look-through companies) to them and the look-through company.” I will read that again. Here is what the owner of a look-through company is: “A person who has an effective look-through interest for a look-through company has a deduction to the extent to which a deduction results from the application of subpart HB (Look-through companies) to them and the look-through company.” 
Hon Trevor Mallard 
: It is more a mirror than a look-through. 
Hon PETE HODGSON 
: My non - learned accountant colleague Trevor Mallard suggests that it is more a mirror than a look-through. I think that is a prescient remark.  
We must take that prescient remark and return to Part 3 where new clause 80B inserts new section 42B(1). I will read to the Committee another bit of English; we have read it out before but we will have it again. It states: “This section applies to persons who have effective look-through interests for a look-through company and to their look-through company.” We can see—I am not sure what we can see. That is really the point. I could go to any other part of this legislation and take it out of context. That is what I am doing; I know it is unfair but that is what we are invited to do. We are presented with the amendments not with the parent legislation or the amendments in the original amendment bill. That is the whole point. Supplementary Order Papers are out of context. That is how they are designed.  
The explanatory note of a Supplementary Order Paper is non-explanatory. It is a codified English of what is going on clause by clause. I will give the Committee a random example of the explanatory note but only briefly because it is not part of the bill: “New clause 42BAB amends section HG 12 of the Income Tax Act 2007 consequential to the introduction of look-through companies.” Members get the point. 
STUART NASH (Labour) 
: 
 There are a couple more clauses in the Taxation (GST and Remedial Matters) Bill that I would like to talk about. Clause 84 is more of an explanatory clause dealing with shortfall penalties. If the Committee will allow me I will give a brief summary of the proposed amendment. I refer to section 141JAA of the Tax Administration Act 1994. That provision is probably more easily referred to as “the TAA” because if I have to say Tax Administration Act 1994 a number of times I will use up my 10 minutes without actually saying anything. 
Hon Trevor Mallard 
: TAA—isn’t that an airline? 
STUART NASH 
: Yes. What happened to that one? As I was saying section 141JAA of the Tax Administration Act caps some of the shortfall penalties being clarified. It does not apply if the taxpayer makes a disclosure at the time the tax position is taken. This is under section 141H of the Tax Administration Act 1994. This is a bit of background to clause 84. If the cap applied to the disclosures made at the time of filing taxpayers can actually take positions—or they could take positions before this bill—that could not meet the standard of being about as likely as not to be correct knowing the maximum penalty they would face is $50000.  
Obviously this amendment will apply after the bill comes into force but I will give a little bit of background on clause 84. Shortfall penalties can be reduced for a number of reasons. Under section 141 of the Tax Administration Act the shortfall penalty is reduced by between 40 percent and 100 percent if the mistake is voluntarily disclosed before the beginning of an audit. So the tax department allows the taxpayer a little bit of leeway. It recognises that people do make mistakes. This bill is a classic one. This Supplementary Order Paper is a classic one. But taxpayers do make mistakes. 
Sue Moroney 
: What kinds of mistakes? 
STUART NASH 
: Well occasionally they put in an incorrect tax return. But if they voluntarily say to the Inland Revenue Department that they have made a mistake and have put in the wrong tax return then the Inland Revenue Department if it is in a benevolent mood can actually reduce the shortfall penalty by 100 percent. But if it is not feeling that benevolent and it was honest it could reduce the shortfall penalty by only 40 percent if it wanted to. But the bottom line is that if the mistake was voluntarily disclosed then the Inland Revenue Department did have the ability to make a reduction there. 
Hon David Cunliffe 
: But now it is capped. 
STUART NASH 
: Yes. Well under section 141H of the Tax Administration Act a shortfall penalty for an unacceptable tax position or an abusive tax position is reduced by 75 percent if the taxpayer makes an adequate disclosure of their tax position at the time they take the tax position.  
There are two types of mistakes that are made. Well there are probably more than that but there are people who deliberately try to rort the tax system. I do not think there is any member on any side of the Chamber who thinks that is a good idea. In fact we fight very hard to stamp down hard on the people who rort the tax system. There is no doubt about that. [ 
Interruption 
] Accountant? I have no comment to make on that I say to Mr Cunliffe. But with regard to accountants I say that I have a very good accountant. He is a very good guy. 
Hon Darren Hughes 
: Why does the member need an accountant? 
STUART NASH 
: Well that is another story as well. But having said that there is another type of person who tries to rort the system. When I say “rort the system” I mean that they hand in incorrect tax returns. As I said they are the bad ones. But others may have just made a mistake. That can happen. A bill might fall on the floor and be found under a desk and as a consequence a mistake is made.  
This bill caps the penalty at $50000. In the past the Inland Revenue Department could be benevolent about it. Under section 141JAA (1) of the Tax Administration Act the shortfall penalty for not taking reasonable care—and I suppose we use the reasonable care test—or for taking an unacceptable tax position can be limited to $50000 if the taxpayer voluntarily discloses their tax position or the commissioner determines the shortfall “no later than the date that is the later of—(a) the date that is 3 months after the due date of the return to which the shortfall relates; and (b) the date that follows the due date of the return to which the shortfall relates by the lesser of—(i) 1 return period; and (ii) 6 months. It is not clear that the limit in section 141JAA of the Tax Administration Act 1994 applies only to voluntary disclosures under section 141G. It is also not clear whether it applies to disclosures made under section 141H. 
AMY ADAMS (National—Selwyn) 
: 
 I move  
That the question be now put 
. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I will start off with a relatively unusual contribution one that might sometimes be ruled out of order at a Committee stage. I want to refer to a clause that is not here. I ask the Minister in the chair the Minister of Revenue what happened to new clause 78A. If we look carefully at the top of page 58 running over from page 57 we see clause 78. Then if we look at the Supplementary Order Paper we see clause 77 as amended at the bottom of page 61. But at the top of page 62 of the Supplementary Order Paper we have new clause 78B. I am wondering what happened to clause 78A. I want some sort of assurance that there is not a printing mistake and that we have not jumped over from one area to another area by accident. I would appreciate that assurance even if it is only a nod and a wink from the Minister. I know the way these things are fixed up. When there is a drafting or a numeration mistake in a bill then the Clerk’s Office—working no doubt with the Inland Revenue Department—will be able to sort it out later on if in fact it was just a mistake and there was never meant to be a clause 78A. If there is meant to be a 78A then I want an assurance from the Minister that it is not a vital clause. It is not a vital clause? 
The CHAIRPERSON (Lindsay Tisch) 
: Well— 
Hon TREVOR MALLARD 
: It is the Committee stage. You are always allowed to go back and forth. 
Hon Peter Dunne 
: It is a drafting style issue. Nothing was deleted. 
Hon TREVOR MALLARD 
: So it is a drafting style issue. So they do not have As any more they have Bs—I apologise it might be the case. So we go now from nothing to B and then to C rather than from nothing to A. Well I say that if one were working one’s way down the street trying to find a flat and “A” was always missing I would submit that that is a drafting lack of style. My colleague the Hon Pete Hodgson has pointed out something that I would have got to on my second third or fourth call on this particular area. In fact we have two areas to note in clause 79B. I tell the member—and I will get back to it—that what clause 79B in the Supplementary Order Paper does is amend clause 79B in the bill itself.  
Hon Pete Hodgson 
: I don’t think so. 
Hon TREVOR MALLARD 
: The member might not think so but that was my interpretation. But I will rely on my colleagues who have looked at this bill more carefully than I have.  
The second question I ask the Minister is why there are different arrangements for superannuation funds and retirement savings schemes vis-á-vis portfolio investment entities that are such versus portfolio investment entities that are not. I cannot think of a good reason for having a different reporting system for the notification of investors. Some people invest through superannuation schemes—some of the portfolio investment entities are superannuation funds or retirement savings schemes and some of them are not. There appears to be special treatment being given—delayed reporting treatment—to the portfolio investment entities that are in fact themselves superannuation funds or retirement savings schemes. I ask the Minister to indicate why there is a delay in those extra advantages in place for that particular type of scheme.  
I will now talk about issuer status and ask what the system is that the Inland Revenue Department uses when it is making decisions after someone has notified under new section 32M(2B) in clause 79(1)—I have already pleaded guilty to having trouble with the modern style that has been used within this bill—where it says “to become an approved issuer the person must notify the Commissioner that they wish to have approved issuer status.” The legislation pretty well sets out the sorts of people who have that approved issuer status but the question I have is whether that will flow pretty much automatically and whether they will get the approved issuer status. 
This does not appear—again I am subject to correction from my colleagues; I am talking about the bill as it was reported back from the select committee—to replace any other legislation. So my question asks whether this is necessary or whether people in the past had the ability to have issuer status without there being the necessity for legislation and whether there was discretion on the part of the Commissioner of Inland Revenue or whether it was just assumed. I suppose the question about whether we are adding unnecessary detail in the legislation could go to Sir Roger Douglas and others. I do not think we have ever indicated before that one had to write a letter in order to make an application. I wonder whether that complicates it.  
The next question concerns the type of notification. I am looking at new subsection (2B) of section 32M in clause 79. Is there a requirement for the notification to be in writing? Does a facsimile count? Is there a form on the Inland Revenue Department website? Can it be done by email? Is there a Facebook way of notifying the commissioner that one wants to have approved issuer status? I have been unable—again I am subject to correction by the Minister—to find notification in this part of the legislation. I accept that the Minister will probably berate me by saying that this is not the new bit of the legislation but the bit that has been to the select committee. If I had been on the committee I would have spent some time trying to work out at that stage what notification is but seeing— 
Hon David Cunliffe 
: We’ll take you on for the next one. 
Hon TREVOR MALLARD 
: I thank the member. I think the Opposition spokesperson on finance wants to pass his role on but I do not think that that is totally his decision. I go back to the bill and I want to check that new clauses 80B and 80C are still within this part of the legislation. I would not at this late stage want to miss them out. I see that yes they are still within Part 3. In fact they must be part of it because my colleague the Hon Pete Hodgson was referring to them before. I think he was making the point that I would have made. I use the word “mirror” because although there is the expression “look-through” in fact it appears that some sort of mirror arrangement is being set up. I know we should not always expect tax legislation to be in pure English because my former colleagues who are accountants and more especially those who are lawyers would not make any money if it were in pure English. But generally it should be and this sort of mirror arrangement is quite hard for a layperson to understand. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Firstly it is appropriate in relation to the portfolio investment entity issues in Part 3 to note the serious concern on the matter that was expressed by the Government’s senior whip Mr Tremain on 18 May 2007. He called for a substantial review of the way that portfolio investment entities were treated. I invite the member to take a substantive call to tell the Committee whether he is satisfied that this legislation addresses the issues he raised. Of course because he is the Government whip I would assume that the Minister has consulted with him but I think it is incumbent upon him to explain to the Committee whether he is now happy.  
One of the sad things about this bill is that there were elements of the bill as introduced that members on this side of the House were comfortable with. One of my colleagues Mr Burns mentioned the issue of the so-called  
Hobbit 
 clause clause 82 titled “Disclosure of information for verification of government screen production payment entitlement”. How useful would that have been if it had been passed before the skulduggery that went on in the politicisation of the process around  
The Hobbit 
. This would have been a very useful clause. So too as Mr Nash said is clause 84 regarding shortfall penalties although we ask how the cap will be applied. So is subsection (12) inserted by clause 86 about the issue of joint accounts which we raised earlier in the debate about this part and about the potential for income-splitting arbitrage by using look-through companies. On all of these issues and on the matters raised in the amendments to insert new clauses 82B to 82E—about the relationship between the proposed adjustments in taxpayer assessment in relation to the children’s provisions in MB 11 the offshore taxpayers the grandparenting provisions and in HB 7 the depreciation provisions—the Minister in the chair the Hon Peter Dunne has yet to take a call.  
We would like to propose a way forward on this despite the apparently shocking abuse of process that has gone on in bringing to the Committee this complex set of amendments this mammoth Supplementary Order Paper that dwarfs the original bill. It is like having a train that dwarfs the locomotive. That is what this is like. The Minister should have in front of him an indexed briefing folder from his officials that explains all these matters. If he is not prepared to take a call and respond in a reasonable and decent way to the substantive questions that have been raised by the Opposition I call upon him to table that briefing folder so that the Opposition might be able to satisfy itself in due diligence whether these matters have been appropriately handled.  
I invite Chris Tremain to satisfy himself whether he thinks his deep concerns about his own Government’s handling of portfolio investment entities have been satisfied. I suspect that firstly they have not and secondly who would know? We have had this just dropped on us instead of it going through the normal select committee process.  
The Minister has been squirming on this. I do not think he is an evil bloke; he is a pretty decent bloke but this is not his characteristic style. Someone said he is angling for London. Personally I think it is Ottawa. I think he is an Ottawa-type guy. He has obviously had Ottawa in his head or on his head. He is clearly angling for something because this is not his normal style. I think that because he has been squirming he has been at risk of digging himself in a bit deeper here. He has told the Committee that this can be excused because the intent was in the Budget because there is an internal assessment of regulatory impact on the website and because there has been consultation between officials and the department. If all of those things were so great why would any tax bill go near a select committee? Why would it subject itself to having to be looked over by members of other parties if there were simply a trilateral process between Ministers officials and members of the business community? Or is that perhaps a sign of things to come? Is that what the new corporatist State under National looks like? There is a triangular relationship an iron triangle between Bowen House the Wellington Club and the Beehive. 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Lindsay Tisch) 
: The question is— 
Hon Trevor Mallard 
: I raise a point of order Mr Chairperson. The member’s colleague was going for the call. Is he allowed to do that? 
The CHAIRPERSON (Lindsay Tisch) 
: I decide who gets the call. There is a closure motion which I have accepted. The question is that the question be now put. Those of that—[ 
Interruption 
] The question is that the question be now put.  
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. I am not trifling with your ruling. 
The CHAIRPERSON (Lindsay Tisch) 
: Well you are. I am putting the question. 
Hon David Cunliffe 
: I have not yet begun to trifle. 
The CHAIRPERSON (Lindsay Tisch) 
: I am on my feet. Sit down. I have accepted the closure motion and I am putting it. The question is that the question be now put. Those of that opinion will say Aye— 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. It is a new point of order and the new point of order is that I was not able to make the last substantive point of order and the last substantive point of order was one of genuine confusion. Your ruling was not yet made at the point at which my colleague Mr Mallard interrupted you then when you rose to your feet you said that you had ruled—in the past tense. 
The CHAIRPERSON (Lindsay Tisch) 
: Sit down. I will deal with it. He asked whether a colleague on the Government side was seeking the call. That is what he asked. I said that I am the sole judge of who gets the call. I gave the call to the senior Government whip he moved a closure motion and that is what I am putting. 
A party vote was called for on the question that the question be now put. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairperson. I sincerely apologise for this but it might save our getting the Speaker back in. It is my understanding that when a member who has already had a call and someone who has not had a call go for the call then a closure motion cannot be moved by the member who has already had a call. 
The CHAIRPERSON (Lindsay Tisch) 
: Thank you for bringing that to my attention. It is not in the Standing Orders. The Chair of the Committee is the sole judge of who gets the call. I gave the call to the senior Government whip and that is the end of the matter. That is where we are at. We have a vote in progress. 
Hon Trevor Mallard 
: Point of order Mr Chairman. 
The CHAIRPERSON (Lindsay Tisch) 
: The member is trifling with me. I am halfway through a vote. We have actually started the vote. I will ask the Clerk to please start the party vote again. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Motion agreed to. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I move  
That the Chairperson report progress to obtain the Speaker’s ruling on the giving of a call by the Chairperson. 
 I want to ask the Speaker to return in order to have a considered ruling on whether you have the discretion to give a second call to a member and accept a closure motion when another member who is a colleague of his was seeking the call. 
Motion agreed to. 
House resumed. 
Speaker Recalled 
The CHAIRPERSON (Lindsay Tisch) 
: Mr Assistant Speaker Roy you have been recalled in regard to whether I as the Chair of the Committee had the authority to accept a closure motion from a member when other members of the Government backbench were seeking the call to speak. I believed that I was the sole judge of who got the call. I accepted the call from the senior Government Whip who then moved a closure motion. I subsequently put the closure motion and it was voted on. The question was that Part 3 would stand part. At that stage the Hon Trevor Mallard asked to recall the Speaker. On that basis Mr Assistant Speaker you are asked to adjudicate. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Mr Assistant Speaker the facts as the Chair of the Committee has put them are entirely accurate. I would like to start off by referring you to the Waring case in 1984. I think the Speaker’s ruling in that case is still the current ruling—certainly it is the one that I can remember—as to the precedence for calling members. There is no doubt that there have been some changes in the rules since that time but the rule that was set out quite clearly then was that within a particular side someone who had not had a call on a particular question had precedence over someone who had already had a call on it. 
It is my understanding and I have checked with colleagues that Mr Tremain had previously moved a closure motion. I know that in the past members have been allowed to move such a motion only once but there is now no doubt that members can move it more than once—that rule has changed. If Mr Tremain had been the only person calling from the National Party side then of course this discussion would not be happening but another National member Cam Calder was also calling as loudly as Mr Tremain and very clearly for the call at that time. It is my understanding that he has not had a call. The question then is not so much the acceptability of the Chair accepting the closure motion from Chris Tremain because if he properly had the call there would not be a problem; the question is whether the rules have changed. Clearly it is different for a Minister in the chair; if a Minister is in the chair it has always been the case that that person has precedence and can take multiple calls. 
I accept it is a general question and there have been multiple Speakers’ rulings that the Speaker or the Chair has the discretion as to who gets a call but that has always been within a particular context. The context has changed over a period of time—clearly since MMP and there have been some more—[ 
Interruption 
] Sorry? 
Hon Gerry Brownlee 
: I was talking to my colleagues. 
Hon TREVOR MALLARD 
: All right. [ 
Interruption 
] 
The ASSISTANT SPEAKER (Eric Roy) 
: A point of order is being heard. There should be silence. 
Hon TREVOR MALLARD 
: Clearly there have been some changes and some reordering of the way that things work. Certainly Mr Dunne will remember because the event probably led to our coming to Parliament very soon after the question of the exclusion of the ability of Marilyn Waring to speak on nuclear legislation. The system of putting up a senior colleague was used to stop her but in the Committee stage it had to be a separate senior colleague on each occasion. As Mr Dunne will remember as it happened in the end I think the Hon Richard Prebble gave her— 
Hon Darren Hughes 
: Yielded. 
Hon TREVOR MALLARD 
: —he yielded and she managed to take a call that way. 
The last point I want to make is that I do not want to make any reflection on the Chair of the Committee. He was acting in good faith. Clearly this is an unusual point of order. I have never seen when a closure motion is being sought two members standing together to compete for the call. 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 Given the quality of the debate this afternoon I am not surprised that two members were competing to close it down. But let me suggest that Standing Order 132 in its various provisions makes it abundantly clear that any member can move a closure motion. Further the issue of yielding has not been a factor in the Standing Orders since the beginning of the MMP Parliament which was some 14-odd years ago. My third point is that it is not unusual for the Speaker to look to the more senior MP and give him or her the opportunity to speak and in this case that was the senior whip. It is hard to imagine who in Parliament at the time might have been more senior. There is no breach of the Standing Orders here nor is there any breach of convention here. The closure motion was properly put according to the prescribed words that are required to be used. The Chairman of the Committee—or I should say the Acting Speaker—has done totally the right thing in accepting that closure motion putting to the vote the question whether the debate should be closed and now being in a position to put the question. 
The ASSISTANT SPEAKER (Eric Roy) 
: Thank you members for your contributions. I think an interesting point has been raised. I have had some time to scrutinise various Speakers’ rulings and Standing Orders. I am guided pretty much by Standing Order 102. It states the factors to take into account when the Speaker is calling a member. Of course the Speaker in this case is the Chair to whom the same rules apply. Who gets that call is entirely the prerogative of the Chair or the Speaker. There is no obligation for the Chair or the Speaker to give a call to a member who has not taken a call more so in Committee where members do have multiple calls. I also make the observation that the Chair in accepting a call in the Committee of the whole House has no knowledge of what the nature of the call might be—whether it is to make a contribution to the debate or to seek a closure. The Chair simply has no knowledge of the nature of the call. 
I also make this observation which I think obliquely relates to the matter of when or how the closure might have occurred. The Chair does not decide that it is time for the closure; the Chair decides that it is time for the Committee of the whole House to determine whether it wants to seek the closure. There is a pertinent difference on that matter. 
So let me affirm that the Chair is under no obligation to give a call to a member who has not spoken. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. I do not want to seem to be trifling at all with your ruling Mr Assistant Speaker Roy but I think there is a very basic point that you have misunderstood in making your ruling and that is the difference between the role of the Speaker and the role of the Chair. You have gone to factors to be taken into account by the Speaker under Standing Order 102. That of course is subject to Standing Order 105 which is about members being able to speak only once except where otherwise provided to any question before the House. Of course there is no occasion when the Speaker is in the Chair where there is an ability for a member to speak other than in reply and I do not think anyone is suggesting that this is the case. There are very few occasions these days when there are motions before the House where there is a reply; it used to be something that was more frequent. I do not think anyone would suggest that in this case Mr Tremain was speaking in reply because he was not the Minister in the chair and he was not moving the motion. 
Standing Order 102 works on the assumption that people do not have multiple calls. In fact it does recognise the seniority of members and the interests and expertise of members who want to speak—that is clear. It recognises that there is a system of priority. But that is the system that is used by the Speaker and it does not take into account the exception in Standing Order 105 the first clause of which states: “Except as otherwise provided”. We know that it is otherwise provided that there are multiple calls on a Committee stage. Clearly a number of us have had them and we know that Mr Tremain is entitled to have a second call in order to seek the closure. 
Can I just put in brackets that although some of us might be unhappy with the closure being granted none of us is arguing about the Chairman’s right to put the question to the House. That is not in contention as part of this point of order which Mr Assistant Speaker you seemed to indicate in your earlier ruling. My submission to you is that although you were absolutely accurate as far as Standing Order 102 is concerned you failed to take into account the additional factor that has come through on a regular basis in rulings from Chairs—certainly in all the time that I have been here—which is that in the Committee stage they tend to give the call to those members who have not had the call previously. You may want to refer this matter to the Standing Orders Committee which might find it appropriate to add a paragraph (e) to Standing Order 102 that states that in the Committee stage the Chairman should take into account whether a member has had the call previously. 
The ASSISTANT SPEAKER (Eric Roy) 
: As to whether the Standing Orders Committee should look at this matter any member can raise that issue and I advise the member that if he believes it to be a significant issue he should actually do that. I refer the member to Standing Order 169 “Conduct of proceedings” which expressly states that the same rules apply for the conduct of proceedings in a Committee of the whole House as apply in the House. That affirms Standing Order 102. Members might also like to look at Speaker’s ruling 26/3 which again affirms the issues around seniority. So I am upholding the ruling that I have made and I declare the House in Committee. 
In Committee 
Debate resumed. 
Part 3 Amendments to Tax Administration Act 1994 ( 
continued 
)  
The question was put that the amendments set out on Supplementary Order Paper 187 in the name of the Hon Peter Dunne to Part 3 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 3 as amended be agreed to. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Part 3 as amended agreed to. 
Part 4 Amendments to Income Tax Act 2004 
STUART NASH (Labour) 
: 
 I am delighted to say that I think this is the only part of this tax bill that is not subject to any amendments through Supplementary Order Paper 187 which was tabled on Wednesday or was it Tuesday—it was tabled this week. Part 4 involves amendments to the Income Tax Act 2004 and I must admit that I think every member knows that the Income Tax Act has taken a bit of a hammering in this term. What this part does not do is give a $1000 tax cut to someone who is earning $1 million and give very little to those on the medium wage but what it does do for example is talk about the portfolio investment entity impairment provisions which have been talked about before but are also covered by this bill. This bill adds new section HM 35B to the Income Tax Act and also new section HL 19B which is the one I will talk a little bit about. The reason these changes are being made is that they will clarify that multi-rate portfolio investment entities can claim deductions for expenses and pay tax for income at the point that they are reflected in the portfolio investment entity’s unit price or its financial statements even if this is before the portfolio investment entity has legally incurred or derived any expenditure or income. The purpose of this timing rule is to maintain investor equity over the timing by ensuring that investors who are exiting a portfolio investment entity are attributed their local share of the portfolio investment entity’s tax.  
The changes in the Income Tax Act with regard to portfolio investment entities were debated in the Finance and Expenditure Committee and that is one of the advantages of taking these sorts of bills to a select committee. It gives us the ability to question officials to question our tax advisers and to question submitters on the changes and on how these changes may impact upon their business. Quite a number of submitters wanted to make representations to the committee about the portfolio investment entity provisions. I must admit our technical adviser our tax expert Ms Turner did a very good job in providing the committee with a non-technical layman’s or layperson’s—can we say “layman’s” these days without— 
Hon Trevor Mallard 
: If I were you I wouldn’t use the word “layman”. 
STUART NASH 
: —layperson’s perspective and view of what the portfolio investment entity changes involved under the new timing rule. I will outline these a little bit because they are important and they make up by far the largest section of Part 4 of the amendments to the Income Tax Act in this bill. Under the new timing rule any future change expense or income that has already been deducted or taxed will also be picked up for tax purposes at the point when the change is reflected in the portfolio investment entity unit price or financial statements. There is quite a chunk here in the legislation that determines future amounts. New section HL 19B(2) in clause 91(1) states: “For the purposes of determining an amount for a portfolio allocation period under section HL 19(3) a portfolio tax rate entity may take account of an amount of future income or future expenditure or loss that is—(a) for future income an amount that when derived would be class assessable income under section HL 19(4)(a):”.  
This provides a high degree of equity across investment classes so that is the sort of thing we want to see. As mentioned Labour cannot go with this bill because there are so many changes that have not gone before a select committee and it makes it very very difficult to have a good robust debate on the changes when ordinary New Zealanders have not been consulted.  
The new sections in the Income Tax Act ensure that multi-rate portfolio investment entities are able to claim deductions for credit-impairment provisions when they are reflected in the portfolio investment entity’s unit price or its financial statements. Credit-impairment provisions are created to reflect the decline in the financial assets due to past events. The reason this is necessary is reasonably obvious; it is because a lot of portfolio investment entities have suffered substantial losses due to the current financial crisis that the world has been experiencing for a couple of years. As a consequence there needs to be a way to reflect this in legislation as there is in other parts of legislation and that is why—in relation to clause 91—these amendments are necessary. I think members would agree that investor equity is an admirable goal for any tax legislation.  
Under this legislation a portfolio investment entity will be able to claim deductions for credit-impairment provisions only if it has objective evidence of a loss of an asset’s value because of the events that have already occurred. I am not too sure what objective evidence is. I assume that the managers of the portfolio investment entity can go out and look at stock markets analyse data and talk to a whole range of people on the NZX and overseas depending on where they have invested and they can gather quantitative and qualitative evidence that there has in fact been a loss.  
These amendments apply retrospectively from 1 October 2007. As members will be well aware it is very rare that tax legislation is allowed to apply retrospectively. I would like to digress ever so slightly. There were retrospective provisions in this bill and as a committee we discussed at great length whether this bill should contain retrospective provisions. We had much debate which Sir Roger Douglas had a very active part in. For those who do not believe that Sir Roger is still alive he took an active part in this debate as did my colleagues Mr Burns and Mr Cunliffe. The Taxation (GST and Remedial Matters) Bill is contentious legislation and in the end we decided that it would be in the best interests of all taxpayers if the courts made a ruling around the one clause of retrospective legislation that was contentious in the bill which we think was probably the right outcome. As a consequence of that—as a consequence of going through the select committee process—the retrospective provision was withdrawn.  
This part in regard to portfolio investment entities is retrospective but it includes transitional measures to confirm the tax positions already taken by multi-rate portfolio investment entities on the timing of income and expenses as well as credit-impairment provisions. These transitional measures prevent portfolio investment entities from making retrospective adjustments to their tax returns following these clarifications. By that I mean that we do not want to have portfolio investment entities or any sort of legal entities that have already made representations to the Inland Revenue Department had a ruling and provided a tax return then coming back and saying: “Oh goodness me with this new legislation we can claw back a whole lot of money.” It actually works both ways. The portfolio investment entities themselves would not want to be taxed at a greater rate which they would not do if we are talking about losses anyway. But it is good piece of legislation. It is just a pity that the Supplementary Order Paper has not gone to a select committee because we could have amended it as we amended the legislation through expert advice and liaising with the Inland Revenue Department officials.  
What do we mean when we talk about reasonable estimation? New section HL 19B(3) in clause 91(1) talks about reasonable estimation. It states: “For the purposes of subsection (2) the entity must make a reasonable estimate of the amount and must be able to demonstrate if required the reasonableness of the estimation by—(a) explaining why and when the income is likely to be derived or the expense is likely to be incurred as applicable; and (b) providing the calculation method and actual calculations used to determine the amount with details showing why the method is appropriate.” Again that is saying that a portfolio investment entity manager or whoever is looking after the entity cannot just turn up to the Inland Revenue Department and say: “We believe that we have incurred losses outside of this and we would like to make a representation.” They have to have the evidence in front of them. It is very transparent which all tax legislation should be.  
I come back to the point that this is why we are so against this legislation. There is no transparency. Labour members have not been able to interrogate this legislation and talk to our officials or the Inland Revenue Department officials about it. But this does provide a level of transparency which is most important and it is welcome. I am pleased it is in here. There is something right in this.  
We can also talk about credit-impairment provisions. We are debating Part 4 “Amendments to Income Tax Act 2004” and clause 91(4) which deals with credit-impairment provisions states: “A portfolio tax entity may take account of a credit impairment provision under this section but only if the provision is counted as a credit impairment provision under NZIAS 39.” However a time limit is set in place. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I want to speak in particular on clause 88 which includes some of the amendments to the Income Tax Act 2004 although having looked at that Act I find that those sections of the 2004 Act have already been repealed and replaced in the 2007 legislation. It might be one of these numbering questions because in clause 88 the Minister is asked to repeal section CE 1(1)(c) but there is no 1(1)(c) in the legislation. There is CE (1)(c); there is no 1(1)(c) whatsoever. To be fair I checked back to the 2004 legislation and there was no—[ 
Interruption 
] What are we repealing here if that particular section is not there? That is the question I have.  
I think it is fair to say that the fact that it is not there is recognised with its replacement subsection (1B). So if there is no CE 1(1)(c) after CE 1(1) there is a recognition that there is a numbering problem. Last time I identified one of these issues the Minister told us that we had restarted the English language at B rather than at A and that that was the system being used. But that does not appear to be the case here. Again it might be one of those technical errors that can be tidied up in the Clerk’s Office but I think it would be useful in order to have it work properly.  
The primary purpose of my taking a call and tabling an amendment is to be of assistance to the Government. My amendment relates to subclause (3) of clause 88 with the suggestion that subclauses (1) and (2) instead of applying to the 2005-06 year and later income years would apply to the 2000-01 year. The reason for this is relatively simple and I think it will be known in the future as the “Bill English (Pay Your Tax) clause”. If we look carefully at new subsection (1B) in clause 88 we can see that this focuses on the proper taxation of the market value of the benefits of accommodation. It makes it clear that tax should be paid on the benefits of accommodation which are part of the perks of the job.  
I think it has been made very very clear over a period of time that Mr English has had substantial benefits. I am not saying they have all been through accommodation—I think there have been some other benefits as well—but they have been in the region of $500000 as a result of suggesting that he lived in Dipton when in fact he lived in Wellington. Why should he pay back taxes on those benefits only back to 2005-06 when the situation has been in place since at least 2000-01? I think the general feeling is that there is a lot of evidence that it has been in place for that length of time.  
I turn to new subsection (1B) in clause 88 which states: “The market value of the following benefits provided to a person is income of the person if the benefit is provided in relation to an office or position held by them: (a) the provision of accommodation:”. It might be convoluted it might have gone through a trust or two it might have had one name on the trust earlier and other names on the trust later it might have been the most expensive State house in the country—on recent leasehold arrangements it is certainly the most expensive State house in the country—but it is clear that the provision of accommodation is taxable.  
I am not sure whether all of my colleagues are here. It might be that fringe benefit tax has been paid on this on our behalf but I doubt it. Some of my colleagues who are not Wellington-based are now looking at me slightly askance. Subsection (1B)(b) refers to the market value of “the provision of an accommodation allowance instead of accommodation.” and states that it is in fact taxable—and taxable back to 2005-06. I know that the Minister is a Wellington Minister and that like me he is not interested in this. If we take into account the interest that some people might have in this question and if only Wellington members could vote on this particular issue we could get an interesting result. I think we started the year talking about accommodation and in fact I think we finished last year talking about accommodation.  
The fact that we are finishing up the year dealing with subsection (1B) which relates to the benefits of accommodation and what is part of someone’s taxable income shows just how much Gerry Brownlee who we know is right across the details of this taxation legislation—Mr Brownlee is a details man—still dislikes Bill English for taking his job.  
If we look at section CE (1)(c) referred to in clause 88(1) we see that it did not go to the question of accommodation; it went to the question of the market value of the board that someone receives. My understanding is that there is a difference between a boarding arrangement which normally involves living with someone else in a boarding house and the supply of accommodation which might more logically be the entire house. So this is quite a big change. I say to the Minister in charge of the bill the Hon Peter Dunne that this is an old bit of the bill. It is the bit that has been to the select committee. I ask him whether Bill English made any personal submissions on this— 
Hon Darren Hughes 
: He’s bound to have. 
Hon TREVOR MALLARD 
: No—to the select committee. I am not asking him to reveal whether Mr English pleaded at the Cabinet committee not to have to pay the extra tax because I think it would be inappropriate for Mr Dunne to say that. However I ask my colleagues whether there was ever any request from Mr English not to pay the taxation on the massive accommodation benefits that he received over a period of time. It was roughly half a million dollars of accommodation over the 10 years. 
Hon Darren Hughes 
: How do you work that out? 
Hon TREVOR MALLARD 
: I do not want to go into a lot of detail. I am happy to talk about his accommodation but clearly there is another set of benefits which the member received as a result of pretending to live in Dipton that go beyond that. I think to go further would be entering an area that I would be slightly uncomfortable to head down. But I think many members will be aware of what makes up the balance of the half million dollars over and above the accommodation allowances. 
Hon Darren Hughes 
: That would be taxable. 
Hon TREVOR MALLARD 
: It is taxable. It is clear if one looks at subsection (1B) in clause 88(2) that it is taxable. There is no doubt that that is part of someone’s income.  
I am certain the Commissioner of Inland Revenue will be having a look at this question. I think it is probably especially the case where the benefit is being paid when it should not be being paid—when someone is not shifting from somewhere that they are normally resident. One of the questions I have is whether the Commissioner of Inland Revenue uses the same definition as the Speaker as to where someone is normally resident. I think the Speaker has been exceptionally liberal in that area and I think that generally the Commissioner of Inland Revenue has been more factual. 
Dr CAM CALDER (National) 
: 
 I move  
That the question be now put 
. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I rise reluctantly to disagree with my colleague the Hon Trevor Mallard. Before I do however I would like to take to task the comments made by my colleague Stuart Nash that somehow or another the retrospectivity of these matters would be determined by the courts. The next speaker my colleague the Hon Trevor Mallard pointed out that at least one aspect of this legislation goes back to 2005-06 and he mounted a particularly good argument as to why it needs to go back further. That seems to me to be yet to be resolved in the Committee stage. 
Hon Trevor Mallard 
: Why do you disagree with me? 
Hon PETE HODGSON 
: I will disagree with my colleague the Hon Trevor Mallard in a minute. But before I do that I would like to ask Stuart Nash to take another call and explain to me why he thinks that retrospectivity does not apply in this legislation. It appears to me that it does. Of course if the Minister would be able to help that would be fine but we are not anticipating so much assistance from that quarter.  
As to the remarks of the Hon Trevor Mallard I agree in part with them and hesitantly because he is an accountant and I am a simple country veterinarian— 
Hon David Carter 
: Very simple. 
Hon PETE HODGSON 
: I am a very simple country veterinarian. I simply hold the view that in the case of members of Parliament because that is where he was directing a lot of his comments I do not think these provisions would apply because the member of Parliament has a principal place of residence that is not here. Of course if assistance were given for that principal place of residence then of course we would expect it to apply as we would expect for any other form of fringe benefit. But a member of Parliament like a sort of travelling salesman will have a principal place of residence but will have accommodation costs as part of his or her weekly circuit or whatever it is to be. That surely cannot be subject to taxation as much as real and actual reimbursement of costs can be.  
If one looks at it a bit more carefully however one will see there is an exception and the only exception is the one my colleague drew attention to which is where we have a point of agreement. The point of agreement is that the Hon Bill English is caught by this. The reason he is caught by it is that he has had two principal places of residence for a number of years. One of them is the real actual principal place of residence which is Wellington because that is where he lives. That is where his family lives it is where his kids go to school and on it goes. The other one is back in Dipton which is where he said his principal place of residence was so he could get a deal on the other house. That is where the term “double Dipton” came from. I cannot remember who first coined that—oh that is right; the term “double Dipton” came from the Hon Trevor Mallard.  
I think the member for Clutha-Southland is uniquely vulnerable to these clauses so then the question arises that if the legislation is good enough to be retrospective to the years 2005 and 2006 why should it not be retrospective beyond that? There is no 7-year rule here; it is about a 4 or 5-year rule. We know that the member in question has lived in Wellington since the year 2000—in fact from a little earlier than that I would like to advise the Hon Trevor Mallard. So I strongly support the idea— 
Hon Trevor Mallard 
: But didn’t he have a State house then too? 
Hon PETE HODGSON 
: Well there was a period of time I think where he boarded or rented but then he purchased. I am trying to remember all of those years too so perhaps I should just say that my gentle recollection is that it was a little before the turn of the century. I agree with my colleague that in the case of the Hon Bill English this legislation on its face appears to make him vulnerable to the paying back of a whole bunch of money and not before time although it is still not enough because of that whole period before 2005. However long it is he still gets away scot-free. So it is good that there might be some more money coming into the Government’s coffers from that member of Parliament but it is not OK that he still manages to max out his benefit at the expense of the taxpayer more than any other MP I have ever come across.  
The CHAIRPERSON (Eric Roy) 
: I will accept the Hon Maryan Street.  
Hon Trevor Mallard 
: Why? Because she hasn’t had a call? 
Hon MARYAN STREET (Labour) 
: 
 That is right. 
Hon Members 
: Ha ha! 
Hon MARYAN STREET 
: Excellent. 
The CHAIRPERSON (Eric Roy) 
: I like her. 
Hon MARYAN STREET 
: Thank you Mr Chairman; for whatever reason thank you for the call. I will accept any of those reasons. I wish to speak to clause 88 also in relation to Part 4 of the Taxation (GST and Remedial Matters) Bill which is before us under urgency. The first point I make is one that has been made by my colleagues previously and that is about the process of urgency. Perhaps a taxation measure is one of the few pieces of legislation that could have the word “urgency” applied to it simply in order to get everything processed and in place in time for 1 April in the following year. 
Chris Tremain 
: I raise a point of order Mr Chairperson. This debate is about Part 4. We have had wide-ranging debates earlier. This debate is specifically about Part 4. It is not about the process of urgency; we have moved beyond that. I just ask the Chair to draw the attention of the speaker to Part 4 and to focus on that part of the topic. 
The CHAIRPERSON (Eric Roy) 
: I uphold the point of order. The member will speak about Part 4.  
Hon MARYAN STREET 
: Thank you Mr Chairman; I was on my way to that. Clause 88 could be an example of one of two things and I would invite the Minister in the chair the Hon Peter Dunne to explain to this Committee which of those two things it demonstrates. It could demonstrate a shambles of consultation amongst Ministers. That is apparent in clause 88 in the first instance given that it talks about the “Benefit of accommodation” and that subsection (1B) inserted by subclause (2) in clause 88 states: “(1B) The market value of the following benefits provided to a person is income of the person if the benefit is provided in relation to an office or position held by them: (a) the provision of accommodation: (b) the provision of an accommodation allowance instead of accommodation.” This could be called the “Bill English’s revenge” clause because now he has been shamed out of claiming any accommodation allowance—notwithstanding the fact that the accommodation allowance has been increased by at least 100 percent by this current Government so Ministers can now claim more than twice as much as Ministers previously could claim; certainly that is true. 
Chris Tremain 
: No it’s not. 
Hon MARYAN STREET 
: It is absolutely true and I can demonstrate it from the amounts I was able to claim as a Minister. It is completely true; I believe Ministers are able to claim something in the vicinity of $37500 or something of that sort.  
Hon Pete Hodgson 
: Precisely that. 
Hon MARYAN STREET 
: Precisely $37500. In fact $24000 was the amount previously; that is exactly right and I invite those members who have not been Ministers previously to go back and have a look at the rules that applied earlier. But let us have a look because now this amount is to be taxable. Bill English may well have consulted with the Minister over this clause and said: “All right I am not getting this I have been shamed out of claiming this so everybody else who is getting it is now going to be taxed on it.” He may well have consulted with the Minister over that provision.  
Then what follows is the backdating. Why would the Minister of Finance work against his own interests and suggest that this legislation should be backdated to 2005-06 notwithstanding the fact that my colleague pointed out earlier that it could have been backdated much further? In the case of Mr English it would have scored the Inland Revenue Department a considerably greater amount in taxation. Or was the other reason the fact that the Minister in the chair might have to answer to the fact that that clause the backdating clause was simply inserted to throw us off the track to distract us from the purpose which was to make these accommodation benefits taxable? Bill English clearly wanted to exact revenge for the fact that he was shamed because of his own duplicity and manoeuvring into not claiming the accommodation allowance previously. So I ask the Minister which it is. Which of these two reasons is it? Is it that consultation amongst Ministers is shambolic as we always suspect is the case—that the right hand does not know what the other right hand is doing in this National Government? Or is it to throw us off the track? 
CHRIS AUCHINVOLE (National—West Coast - Tasman) 
: 
 I move  
That the question be now put 
. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairperson. Can I just get the attention of the Minister in the chair the Hon Peter Dunne because what we now regard as a possible real question has come up. I seek leave for the debate on Part 4 to be dealt with subsequent to the last part of the bill—Part 7. I would just like— 
The CHAIRPERSON (Eric Roy) 
: I think the member is asking that the debate be postponed to become the last debate in the Committee of the— 
Hon TREVOR MALLARD 
: The last part of the debate. 
The CHAIRPERSON (Eric Roy) 
: —the last part to be debated so we would move to Part 5 now then revert to Part 4. The member is asking for that because he believes he has discovered something that needs some consideration. 
Hon TREVOR MALLARD 
: That is right. To make it beyond all doubt the leave would not interfere with the urgency motion. It would just give an opportunity for some advice to be sought. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 Mr Chairman can I speak to this? 
The CHAIRPERSON (Eric Roy) 
: It is a point of order. Normally we would not do that but it might be helpful if we do. 
Hon PETER DUNNE 
: I am not persuaded by the course of action the member is proposing but I do concede there are some issues we need to work through. Maybe with the indulgence of the Committee if this debate were to proceed for not an interminable amount longer but for a little longer during the course of it we might be able to resolve the issues more rapidly. So I am not in favour of leave being granted but I would allow the indulgence to perhaps run for another couple of speakers while we just sort this particular issue out. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Mr Chairman I am— 
The CHAIRPERSON (Eric Roy) 
: I have given the call to the Hon Trevor Mallard. 
Hon TREVOR MALLARD 
: I wanted to speak exactly on the matter concerned but if another member is prepared to take the call I think it might— 
The CHAIRPERSON (Eric Roy) 
: You are yielding then? 
Hon TREVOR MALLARD 
: I am finishing this call. I have one left I am sure. 
The CHAIRPERSON (Eric Roy) 
: Is some other member seeking the call? 
Chris Tremain 
: Mr Chairman— 
Hon Pete Hodgson 
: I certainly am. 
The CHAIRPERSON (Eric Roy) 
: I call Chris Tremain. 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I move  
That the question be now put 
. [ 
Interruption 
]  
The CHAIRPERSON (Eric Roy) 
: There is no need for indignation to the Chair. The Chair is well aware of what is occurring in the Chamber. I will take the call from the Hon Pete Hodgson. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I think it is time to return to clause 88 of the Taxation (GST and Remedial Matters) Bill and get a few things said. My colleague Maryan Street mentioned that ministerial accommodation is now provided at the rate of $37500 per Minister and that is the case. There are two exceptions however. The first is where the Minister lives in Wellington as does the Minister of Revenue the Hon Peter Dunne. He is eligible for no such— 
Hon Peter Dunne 
: And he has never sought anything.  
Hon PETE HODGSON 
: Indeed he has not I am sure because he goes home when he goes home which is not something I was able to do or am able to do because I do not live in Wellington; I live in Dunedin. Any Minister who lives in Wellington is not eligible for that $37500. Therefore any possibility of the provision of an accommodation allowance instead of accommodation as stated in new subsection (1B)(b) in clause 88(2) cannot apply to a Wellington-based Minister. But there is another category of Minister who does not receive $37500 and those Ministers are the ones who had a house here when they were in Opposition and who live during the week in that same house now that they are Ministers in Government. Their allowance is not $37500. I cannot remember what it is; it is a little bit less than that. Let us call it $27500—I have actually forgotten the amount. 
The point is that the $37500 is payable to Ministers—and most Ministers fall into the $37500 category—irrespective of how much money they spend on Wellington accommodation. It is a gift. It goes into their bank account fortnightly or monthly or whenever it is for them to spend on accommodation as they see fit. They are of course entitled to spend more than $37500 a year on Wellington accommodation. Maybe some of them do. But if one thinks of $37500 as being a reasonably large amount of money compared with the amount of money that backbenchers get to spend on Wellington accommodation—somewhere less than two-thirds of that—then one can come to the conclusion that some Ministers are able to live in Wellington rather cheaply indeed. In fact once we say to anyone that they do not need to provide receipts for this expenditure that they can just take the money and use it as they see fit it is logical that there is an incentive to stay with a cousin. I do not know whether any Minister does that but the point I am making— 
Hon Tariana Turia 
: Oh dear! You’re pathetic. 
Hon PETE HODGSON 
: The Hon Tariana Turia thinks it is funny. I do not. I think if we are looking for greater transparency in our systems including the taxation treatment of these things—as in clause 88—then giving people $37500 and saying they can have it no matter how much they spend on their Wellington accommodation is not transparent. 
The House got into a bit of a lather about a year ago concerning the Deputy Prime Minister who is also the Minister of Finance. He was double-dipping living in Dipton and in Wellington. As a result of that the Prime Minister John Key said not to worry that he would fix it that we would have a new system that the old system was too complicated. Well it was not complicated for every other member of the National-Maori-ACT Government Cabinet. It certainly was not complicated when I was in Cabinet but it seems to be too complicated now as even poor old Bill English got it all confused. So we changed the system. The new system the Prime Minister told us would be cheaper. He said: “Just you wait! I’m going to be really tough on my Ministers. They will get only $37500.” Guess what? The price of ministerial expenditure has gone up. 
To recap there is no taxation as mentioned in clause 88 on ministerial expenditure and I think that is proper. We have moved from actual and reasonable expenses—the actual costs—to some guesswork costs for every Minister. The guesswork has come in at $37500. Of course every Minister—reasonably—has maxed it out. They are all saying: “Yep sure I’m going to take all of that.” In fact it is given to them. They have no option. When we tot it all up we find that the Prime Minister who promised New Zealand cheaper ministerial accommodation has given New Zealand more expensive ministerial accommodation. Although I do not aim this argument at Ministers that means that a bunch of taxpayer money that used not to go into ministerial pockets now does go into ministerial pockets at a time when we are all supposed to be having a nil wage increase. 
So we can see that there is an issue around ministerial accommodation and it is not fixed by clause 88. It is not fixed and the only way to fix it is to go back to actual and reasonable expenses by one method or another. I think an honest and transparent Government or an honest and transparent bunch at Ministerial Services or an honest and transparent Minister responsible for Ministerial Services would take us back to that form of payment which served New Zealand rather well for a rather long time and was applied to any former Minister on this side of the Chamber and for their first couple of years all the Ministers on the other side of the Chamber as well. So I think clause 88 is worth reflecting on for what it does not do. I am pretty sure it will not cover that $37500 of expenditure. I am pretty sure it will not make it taxable. I do not think it should be taxable but I think the way in which we have managed to get ourselves an increase in ministerial expenses needs to be addressed. 
Dr CAM CALDER (National) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Eric Roy) 
: The question is that the question be now put. Those of that opinion will say Aye the contrary No— 
Hon Pete Hodgson 
: I raise a point of order Mr Chairman. I do apologise but I was given to understand that we were going to talk this through until such time as it did not need to be talked through any more. Nobody has advised the Committee that the need has now gone. 
Hon Peter Dunne 
: Can I speak briefly— 
The CHAIRPERSON (Eric Roy) 
: Let me just consider what I am going to do. I had commenced putting the vote and we now have I think an expression that some kind of explanation from the Minister might be in order. I think I should seek leave for the Minister to give a brief explanation and then I will put the vote which I had commenced. Leave is sought for that purpose. Is there anyone opposed? There being not I call the Hon Peter Dunne. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I will not abuse the leave of the Committee so I will be very brief. This is quite technical stuff but essentially Mr Mallard officials and I have gone away and looked at the relevant statutes and the interpretation of them and have come to a position where we are satisfied that the concerns that he was expressing relating to the application to particular members are not in fact valid concerns. This legislation is essentially remedial in terms of the 2007 legislation but the depth of the definition relating to accommodation actually covers the situation he was expressing concern about. Essentially we are satisfied. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Trevor Mallard to clause 88 be agreed to: 
to omit from subclause (3) “2005-06” and substitute “2000-01”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Noes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 4 be agreed to. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Part 4 agreed to. 
Part 5 Amendments to KiwiSaver Act 2006 
STUART NASH (Labour) 
: 
 I was hoping that you Mr Chairman would call me in the debate on the last part but that is OK.  
The CHAIRPERSON (Eric Roy) 
: You’re getting a very fair deal. 
STUART NASH 
: It is a very fair deal I agree. You are a very fair Chairman.  
We are back once again to amendments made in this 70-page Supplementary Order Paper which was tabled on Wednesday. I wonder whether there is a little dissent between the honourable Minister in the chair the Minister of Revenue and his National colleagues. I say that because of what happened about 10 minutes ago before the Hon Pete Hodgson took a call. The Minister stood up and said he thought we could deal with this if we had a couple more calls on the part. We could deal with it here and now.  
That was sort of agreed. Labour members understood that that was what would happen: there would be a couple of calls and we would deal with it because it was quite an important matter dealing with members’ out-of-town expenses. As soon as that was agreed upon—and I thought it was agreed upon—the Minister in the chair went outside— 
Chris Tremain 
: I raise a point of order Mr Chairperson. This has nothing to do with Part 5 of the bill. Again this is a tight part and he is talking about what might have happened historically. Can you ask him to focus on Part 5 please. 
The CHAIRPERSON (Eric Roy) 
: Yes I think we should debate Part 5. 
STUART NASH 
: I agree. I suppose I was just very surprised that National tried to call a closure motion before the Minister returned to the chair. That is why I was a bit surprised.  
Part 5 basically deals with amendments to the KiwiSaver Act 2006. There is a summary of proposed amendments in the Supplementary Order Paper. First of all there is a consequential amendment that relates to the introduction of look-through companies. We have talked about these at length and no doubt we will be talking about them a lot more. The amendment gets rid of loss attributing qualifying companies and brings in look-through companies without any proper consultation at all. The Supplementary Order Paper has not gone to a select committee. Mr Brendon Burns who is a very valuable member of the Finance and Expenditure Committee the Hon Shane Jones who is a very important member of the select committee and the Hon David Cunliffe have not been allowed to look at this amendment and understand the implications of the changes to the KiwiSaver Act and look-through companies. If it had gone to the select committee we would have been able to question tax officials and we would have been able to question our expert adviser and come up with a reasonable debate and a good line on how it will work. We would have been able to satisfy ourselves that in fact this is good sound legislation.  
The irony is that when I look in the Supplementary Order Paper at new clause 94B which talks about look-through companies I see that we would not necessarily disagree with some of this legislation if we had had the opportunity to analyse it in the way that members of Parliament should and the way that the people of New Zealand expect. That is the concern we have about this legislation. I am not too sure whether we have made that clear but that is the concern we have about it.  
I will talk about clauses 94 to 99. A summary of the proposed amendments states: “If a KiwiSaver scheme provider winds up their operation and ceases to exist Inland Revenue manages the transfer of members to a new scheme”—that sounds good; it is a great idea—“following notification by the scheme trustees or the Government Actuary. Several remedial amendments to the scheme wind-up provisions within the KiwiSaver Act 2006 will fine-tune the current provisions ensuring they give full effect to the scheme wind-up policy intent. These amendments clarify the date a member is allocated to a new scheme add a requirement for scheme providers to supply the IRD number (tax file number) they hold for transferring members and remove the requirement to send additional information packs to existing members.” It is one of those common-sense amendments—if we take out the Supplementary Order Paper and put it to one side—that actually makes it easier for people to become involved and to stay involved within the KiwiSaver provision and within the tax regime.  
As either the Hon Trevor Mallard or the Hon Pete Hodgson—someone on the Labour side—mentioned tax legislation is probably too big at the moment. I was talking to a Queen’s Counsel about 6 months ago and he said that Singaporean tax legislation is about one-tenth the size of New Zealand tax legislation and there are no problems with the Singaporean regime in terms of the level of avoidance we have here. It may be of course that tax avoiders in Singapore get whipped—I am not too sure whether that is the case—which might act as a deterrent. But the point is that we have a lot of tax legislation it is very complex and it is quite hard to understand.  
My colleague Pete Hodgson outlined that point before. As a very senior member of Parliament and as a former Cabinet Minister who knows legislation like the back of his hand—and he knows his hand very well; he was a vet—if he finds this legislation hard to understand how will New Zealanders who are concerned about the complexity of legislation find it? Pete Hodgson knows legislation he knows how to read it and he knows how to cross-reference it yet even he is having difficulty. That is no disrespect to my colleague’s intelligence because we all know that “vetenariany” school—I cannot even say it properly can I? Vet school is one of the hardest to get into. Well it is now; it might not have been when Pete Hodgson got in but I suspect it was probably even harder.  
I come back to KiwiSaver. KiwiSaver is a hugely successful scheme— 
Brendon Burns 
: A great Labour scheme. 
STUART NASH 
: —put together of course by Labour. But we do not need to go on about all successful schemes being put together by Labour! We absolutely need to make it easy and as simple as possible for people to remain in schemes for whatever reason they decide even if for example a provider winds up. If a provider winds up and the person putting money into that scheme wishes to remain in KiwiSaver—and why would they not—this amendment makes it easy for them to do so. 
Basically once KiwiSaver scheme trustees resolve to wind up their scheme and nominate an effective date of closure they have 14 days to lodge a copy of notice with both the Government Actuary and the Commissioner of Inland Revenue. Currently section 50 of the KiwiSaver Act 2006 determines that when the Commissioner receives notice from a provider of the impending wind-up of a scheme the member must be allocated by default to another scheme as soon as is practicable. Section 51(4)(b) of the Act determines that the final date for allocating the member to a new scheme should be 3 months after the date on which the notice has been received.  
The problem we had and the problem that the Finance and Expenditure Committee dealt with is that these sections do not take into account the effective date of closure nominated in the notice by the scheme that is being wound up. This is what clauses 94 to 99 deal with. It is likely to be the date that transfer of membership has been arranged for. These clauses just tie it up clarify it and make it a lot simpler. It makes it easier for Kiwis who are in KiwiSaver to make sure they do not miss out in any way.  
To have the final allocation date set at 3 months after the date that notification was received can cause an early transfer of members. Again it is one of those unintentional consequences that we need to mitigate. This affects the scheme providers’ obligations to continue to meet the provision of their trustee until the scheme is wound up.  
We have here a Supplementary Order Paper that changes some of the provisions of the Act. Of course Labour members cannot support it because we have only just seen it. A lot of us were out we had planned days in our electorates we were at school prize-givings and we were doing all the things that good constituency and list MPs—and list MPs who are going to be constituency MPs—do so we did not have a good opportunity to analyse new clause 94B which is about the automatic enrolment rules that will not be applied. We have in clauses 94 to 99 of the bill the sort of common-sense tax legislation that Labour has always supported in the past because it has gone through the right process.  
To be a little more detailed clauses 95 and 96 talk about the allocation of certain people to default KiwiSaver schemes and the sending of investment statements. They do not take into account as mentioned the effective date of closure nominated by the scheme that is being wound up. It is likely to be the date that it has been arranged for. We have not talked about it at length but we gave it due consideration in the select committee as we would have given due consideration to new clause 94B if that Supplementary Order Paper had been its own bill. One could make a very strong argument that a Supplementary Order Paper that is larger than the bill should perhaps be the bill itself and the bill should be the Supplementary Order Paper. Having said that I say that that is not a good way to do things. All tax legislation should be in a bill that goes through the proper process; I do not think anyone would doubt that at all.  
Clause 98 deals with the issuing of information packs. Currently section 59(a) of the KiwiSaver Act provides that KiwiSaver information packs should be sent to members when their scheme is winding up. Again this makes sense because we do not want people to be operating in the dark. The lack of financial literacy in this country has led to massive losses. I know the Retirement Commissioner is working very hard to address the issue of financial literacy and I say that it is about time. It is a wonderful initiative that I think we all support—I know the Ministry of Education has got behind it—because the level of financial literacy is dreadful. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 Here we are debating Part 5 clauses 94 to 100 of the Taxation (GST and Remedial Matters) Bill. Again I note with some disdain the fact that part of the Minister of Revenue’s 70-page Supplementary Order Paper 187 relates to clause 94 of Part 5. The comment I will make relates to the need for very great care to be taken with matters involving superannuation. We deal with issues that traverse generations when we make changes to superannuation. Of course KiwiSaver is the basis for saving introduced by the last Labour Government and this legislation amends the original 2006 Act. The signals are that this is probably a technical amendment but the Government does need to tread very carefully in respect of superannuation given its track record which is poor to say the very least. It dates back to Sir Robert Muldoon’s change to superannuation in 1975 changing from a contributing scheme to a “pay as you go” scheme for national superannuation. This was a retrograde step that ended a contributing scheme that would have seen New Zealand as a much wealthier nation today if it were still in place. It continued through to Jim Bolger’s “no ifs no buts no maybes” on the surcharge which was rapidly overturned as soon as National got into Government. It was followed in 1995-1996 by the Shipley administration taking national superannuation from 65 percent of the average wage back to 60 percent of the average wage. That was also regarded by New Zealanders as wholly inappropriate and that Government was judged in large part in 1999 on the basis of that leading to a change in Government.  
So this Government needs to tread very warily when it comes to making changes to superannuation. That is why when debating Part 5 of the bill and noting that we have a Supplementary Order Paper introducing new clause 94B without any consideration other than this rapid debate in the Chamber under urgency 2 weeks before Christmas Labour members have to express very real concern because superannuation is something that stretches from teenagers—in fact even further than that. We have a number of children who have been enrolled in KiwiSaver with parents starting a saving regime obviously encouraged and sparked by the Government contribution. I say that is fine if it gets the saving habit established. The Government contribution was introduced in the KiwiSaver Act 2006 which is amended by the Part 5 of the bill most of which I acknowledge came through the select committee in the appropriate process but we do have the 70-page Supplementary Order Paper from the Minister which has come out of nowhere as far as Labour is concerned in the last 48 hours. It has a new clause that is making changes without any opportunity for input or consideration other than the very narrow window of opportunity provided here in the Committee stage and in the third reading of the bill. We have to note considerable concern about that.  
Supplementary Order Paper 187 makes changes in respect of those receiving payments such as accident compensation or parental leave payments who are not deemed to be in new employment. This may well be a technical change but as experience has shown over the years when it comes to tax legislation and most especially when we see tax legislation that affects superannuation we need to proceed with great caution. Obviously this debate is ongoing. We received the report of the Retirement Commissioner just this week which suggested changes to the age of eligibility for superannuation. Obviously those are issues that Parliament may have to consider at some point. But at the moment what we as a Parliament have in front of us in this Committee is a change introduced by Supplementary Order Paper to the legislation.  
I note that there are always good ideas about superannuation. When we were debating KiwiSaver back in 2006 there were a host of things. It is appropriate that good ideas are given consideration by Parliament. It may be that Supplementary Order Paper 187 is introducing a change that is well considered worthy and makes the appropriate changes but it does need to be aired properly through the parliamentary structure and through the select committee process. 
Hon SHANE JONES (Labour) 
: 
 Kia ora ano tatou. To ensure that members on the other side of the Chamber realise the particular legislation we are dealing with I say that we are on Part 5 of the Taxation (GST and Remedial Matters) Bill which contains the amendments to the KiwiSaver Act 2006. I fear the quality of the debate is about to change as the Minister of Revenue Mr Dunne leaves. That comment is neither positive nor negative; I just leave it for members to dwell upon.  
I draw our attention to clause 220B “Information sharing”. During the course of the deliberations at the Finance and Expenditure Committee I was one of the members who expressed concern in relation to an earlier discussion document in which officials contemplated the provision of information to credit agencies in the private sector about the indebtedness of citizens and what obligations or disputes they might have such as the liabilities of parents who have fled to Aussie while their kids are still here or the filing of late tax returns and residual obligations that are being worked through. Fortunately this portion does not bring legislative life to that suggestion in the discussion document. But for the purposes of the KiwiSaver scheme it says it is possible—and I should imagine that it is absolute common sense—that there be the sharing and provision of information.  
It is always timely—and it is an important part of the role of the parliamentarian—to point out the danger of creep. The danger is that what seems to be an innocuous change or a modest regulatory amendment develops a momentum and life of its own. I guess I want to repeat to the Minister in the chair the Minister of Education and our colleagues on the other side of the Chamber that whenever we are dealing with information we must ensure that the procedures and parameters around who manages that information and the purposes for which the information is being sent or dedicated are tightly constrained.  
We all know as public figures that information when misused or information that might fall into the wrong hands can have a destructive impact on how fellow New Zealanders or the community may view our suitability for a role. Indeed it can be used for a host of improper purposes. The Minister and the officials need to be extremely sensitive to that. A number of parliamentarians by and large do not want to obfuscate or worsen the pathway ahead for the officials working on tax legislation but members should know that a host of us are regularly petitioned by garden-variety Kiwis about their dealings with the State agencies about whether information being provided to them is both accurate and completely comprehensive and about whether all the information that is being held is actually necessary.  
There is a reference here to initial steps to winding up the KiwiSaver scheme. I do not want to repeat what earlier speakers have said; my colleagues have made our point. A small forest has been cut down and transformed into the Supplementary Order Paper. Mr Cunliffe and others have highlighted that. But without a doubt these technical amendments presage a deeper more savage set of changes that are on the way. I am sure my senior colleagues will address that matter in more detail than I will but I cannot let my small contribution at this stage end without making the observation that I think there is a great deal of potency in the term “winding up of KiwiSaver scheme”. The attenuation and the weakening of KiwiSaver started from the moment that the last election was held and—unfortunately for us—lost.  
I believe we will hear a great deal more from other speakers as to whether these technical changes actually reflect a deeper agenda—that is the winding up of the KiwiSaver scheme as we know it. 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take my first call on Part 5 on the especially important topic of KiwiSaver. The proof of the pudding as they say is in the eating and KiwiSaver has been eaten by almost one out of every two adult New Zealanders. There are 1.5 million - odd members in the KiwiSaver scheme so I think people have voted with their feet and joined it. It has been a remarkably successful scheme evidenced by the fact that it has grown so strongly.  
Unfortunately in the last 2 years the rate of growth of the value of savings in the scheme has not kept pace with its earlier growth and that I would suggest is a direct reflection of the way the current Government has cheapened the scheme giving its employer buddies a free ride by reducing the employer contributions and thereby strangely putting relatively more of the weight of contribution on to the Crown and the taxpayer and that is potentially threatening the scheme.  
It is very interesting that the Government has chosen a back-door Supplementary Order Paper to begin the next wave of tinkering with the KiwiSaver scheme. The KiwiSaver concept is up for discussion at the moment alongside other savings instruments in the context of the Savings Working Group which is an academic group that has been brought together with heavily circumscribed terms of reference by the Minister of Finance who says that it cannot look at compulsory savings or other things but it can look at the opportunity costs of various ways of increasing the savings rate.  
Before going into that and the impact this part will have on that in a bit more detail I just have one definitional comment about the word “savings”. It has been overused at the moment by the Government. It contends that our recovery is not happening because New Zealand households and families are saving so much. Actually that is a bit of a stretch of the definition. People are not consuming so much because their real incomes are going down and they do not have as much to spend. Now being broke is not the same as having stuff left over and putting it in the piggy bank. The piggy bank is dry. In fact sometimes there is not food on the table. I just ducked out to go to the doctor for my throat infection and do members know how much it was? It was $91. That is $91 for a general practitioner consultation. When Kiwi families are paying $91 to go to the general practitioner I tell members there will not be much left over for KiwiSaver or anything else. Who was it took caps off general practitioner fees? The current Government. So things are going to hell in a handbasket all around the country.  
Our worry in short is that the amendments in this part to KiwiSaver are the thin end of a bigger wedge. We are worried that this Government will take the hatchet to KiwiSaver in the same the way it has undermined the New Zealand Superannuation Fund by suspending pre-funding for a decade. We are very very cautious about what will come out of the Savings Working Group and why. I hold in my hand the report of the Tax Working Group that lay behind some of the rest of this gargantuan Supplementary Order Paper. The Government first set very tight terms of reference and then it proceeded to ignore most of the recommendations picking and choosing the few it wanted. Of course the burden of most of the Supplementary Order Paper was in relation to replacing the loss attributing qualifying company regime with new look-through companies which are a slightly more tepid version of loss attributing qualifying companies but which still allow people to write off income from a company against personal income. We question in these tough times whether the country can afford those kinds of avoidance opportunities.  
Part 5 has a range of clauses like new clause 94B on the Supplementary Order Paper which make technical amendments to the way KiwiSaver operates so that automatic entry rules will not apply. Well automatic entry has been perhaps the single most important reason why so many people are in the KiwiSaver scheme because once they start and pick up their Government contribution then they get into a good savings habit. That is what real savings is; it is not just failing to consume because someone is short of money—it is actual savings habits that build the wealth of the family and the nation going forward. We are very concerned and we oppose new clause 94B which starts to undermine those automatic enrolment rules. 
Dr JACKIE BLUE (National) 
: 
 I move  
That the question be now put 
. 
CAROL BEAUMONT (Labour) 
: 
 I rise to speak to Part 5 of the Taxation (GST and Remedial Matters) Bill. Part 5 as the Hon David Cunliffe was saying relates to amendments to the KiwiSaver Act 2006. The amendments in the bill have been scrutinised by the Finance and Expenditure Committee which is something. The amendments—clauses 94 to 100C which is “Schedule 1—KiwiSaver scheme rules”—relate to various provisions around the commissioner provisionally allocating people to default schemes the completion of allocation to default schemes if a person does not choose his or her own KiwiSaver scheme involuntary transfers the sending of information initial steps in winding up KiwiSaver schemes and the like. That is what is in Part 5. Those amendments include allowing information to be shared between the Inland Revenue Department and a person’s scheme provider wind-up provisions that ensure full effect is given to that to clarify the date on which the member is allocated to a new scheme a requirement for the scheme providers to supply the tax file number and so on.  
I was not on the Finance and Expenditure Committee but at least this bill was dealt with at the select committee. The Supplementary Order Paper makes changes to this part as well. Again for the record like my colleagues I add my concerns that we have not had the ability to scrutinise the provisions of the Supplementary Order Paper. Taxation legislation is complicated issues around superannuation are complicated and these things need to be done properly. This is the sort of area where mistakes can be made and unintended consequences can occur and we need to know the full implications of what is being proposed.  
It is fair to say that we do not trust the Government in relation to KiwiSaver and on good grounds. We do not trust the Government in relation to KiwiSaver because the experience to date has shown that this Government does not have a commitment to KiwiSaver. Basically the record so far in terms of KiwiSaver has been to gut it. That was one of the very early acts of this Government.  
KiwiSaver as we should all recall was an important attempt by the last Government to lift private saving lift household saving and assist individuals to save for their superannuation. More than that it was an attempt to provide a pool of private savings that would then be available for investment including investment in this country which is something that is very very lacking. It is one of the structural weaknesses in this economy and in our country that we do not have a pool of money available for investment into our own businesses to ensure that we create quality jobs and provide the goods and services that we want as a nation. We have recently seen commentator Standard and Poor’s for example talk about our problem with saving and our level of overseas indebtedness particularly in the private sector.  
We need to deal with this weakness. It has taken a long time but the Government seems to have finally latched onto that. What has it done? It has set up a Savings Working Group but of course it did so after gutting KiwiSaver which was a real attempt to do something about individual saving household saving and the pre-funding of New Zealand superannuation. These things are serious.  
As it happens yesterday I went to a briefing by Dr Judith Davey about our ageing population which adds another dimension to the importance of saving for superannuation. The Retirement Commissioner has just released a report on the issue of superannuation; this is a huge debate for us. The demographics are absolutely compelling in terms of our ageing population and the implications for the country in terms of the provision of superannuation. KiwiSaver was a very important part of the mix which Labour feels very proud about and we do not trust this Government in relation to KiwiSaver.  
I go back to Part 5 and the amendment to it in the rather large Supplementary Order Paper which was dumped on this Committee and is now being dealt with in a very poor manner. We do not want to see the Government deal with this legislation under urgency. 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Hon Rick Barker) 
: I will hear one more but I just say to members that this is the Committee stage. It is about the nuts and bolts of the bill. The presentations so far have been very wide ranging and they should not include historical recounting of KiwiSaver or political positions. 
Hon DARREN HUGHES (Labour) 
: 
 I will do my best to comply with your observation Mr Chair. Of course one of the difficulties we have had is that with this bill going through under urgency and with an Supplementary Order Paper that is larger than the bill itself being dropped on the Committee members of Parliament who have not sat on the Finance and Expenditure Committee have not had the chance to go through it quite as thoroughly and forensically as they would like to. So we would dearly love to comply entirely with the— 
Sandra Goudie 
: So what’s in the bill then? We’ve had enough of that so what’s in the bill then? 
Hon DARREN HUGHES 
: Sandra Goudie pipes up from over there and it is a great pleasure to hear her because she has done nothing—I was going to say all day but in fact I think it is all year. I think she has not had anything to do all year. Now she squawks at the last minute on a Friday— 
Sandra Goudie 
: I raise a point of order Mr Chairperson. In spite of the comments that you have just made in regard to speaking to the perimeters of the bill the member has clearly flouted that advice. 
The CHAIRPERSON (Hon Rick Barker) 
: Firstly that is not a point of order. I am in the Chair and I will judge relevancy. Secondly the member interjected and invited a response. If the member wishes for the Hon Darren Hughes to keep on task then let him keep on task. As we know he is prone to a few distractions. 
Hon DARREN HUGHES 
: Thank you Mr Chair. The principle of cause and effect is well and truly alive in the Committee of the whole House today. I want to keep my comments limited almost exclusively to clause 100B which I say to Sandra Goudie is on page 66 of the bill. The clause has the word “contribution” in it which is not normally a word associated with her. But none the less there it is at the top of the page: clause 100B “Crown contribution”. This goes to quite a technical aspect of the KiwiSaver scheme which is the inability of a member of the public who is in the workforce and paying PAYE to join the KiwiSaver scheme. I would like the Minister in the chair the Minister for Courts to make a contribution and clarify the amendment to clause 100B—and this is not part of the Supplementary Order Paper; it is part of the bill as reported back from the Finance and Expenditure Committee—to substitute the words “a member” with “a member before they reach the New Zealand superannuation qualification age”. For the benefit of the Minister in the chair I point out that this is at the top of page 66 of the bill.  
I think that goes to quite an interesting point about the scheme as it is in operation. At a time of enormous unemployment in New Zealand when prices are rising faster than wages the only economic sign of a glimmer of hope is in the numbers of people aged over 65 in the workforce. That group of workers is growing every time Statistics New Zealand that very fine agency reports on the make-up of the labour market. It is an interesting point. So where this connects right into clause 100B is that we have an increasing number of workers over the age of 65 but this clause prevents their membership of KiwiSaver even though they are taxpayers.  
I would like the Minister to make a comment about that. Clearly the Government has looked at that issue again. It was not part of the original KiwiSaver scheme. We know this Government has made a lot of changes to the original KiwiSaver Act. Part 5 sets out some additional changes to the 2006 legislation of the previous Labour Government but this is another change on the issue of whether a member can remain in KiwiSaver as they turn 65 or whether they can decide to join when they are over the age of 65. So there has now been an overt policy decision from the Government which has now worked its way through the process into clause 100B and I would be very interested to know whether the Government ordered extra work to be done and made a decision to exclude those people from KiwiSaver. If clause 100B was not there there would be alternative wording in respect of those who are eligible for the qualification age for New Zealand superannuation. But the insertion of clause 100B shows that there has been a decision not to extend the scheme. So if the Minister could perhaps go over that for us it would be a very useful piece of information.  
People do say to us: “Look I’m working 40 hours I’m paying tax and yes I’m claiming New Zealand superannuation. But I have paid taxes over 45 working years for that entitlement.” In New Zealand we have a universal entitlement for superannuation. KiwiSaver is of course 8 percent of that person’s wages so they would be forfeiting by choice that money from their own salary or wages whatever it might be in order to be able to pay it into the scheme and the tax credit that comes with it arguably is funded by the current PAYE that that person is paying on their income. So that Crown contribution through the tax credit includes I presume the $1000 kick-start for people who join KiwiSaver. One of the attractions of the scheme is that people receive $1000 immediately. That is a different form of Crown contribution. I think we want some clarification around clause 100B. In respect of a person over 65 who joins the scheme and pays in the 8 percent they do not get the tax credit but I am not sure whether they get the $1000 kick-start. That could be an alternative approach for the Crown contribution that is made at that time. 
Dr JACKIE BLUE (National) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Motion agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 187 in the name of the Hon Peter Dunne to Part 5 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 5 as amended be agreed to. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Part 5 as amended agreed to. 
Part 6 Amendments to Stamp and Cheque Duties Act 1971 
STUART NASH (Labour) 
: 
 Part 6 is quite a narrow part. I would like to correct a mistake I made earlier when we were talking about Part 4. I said that it was the only part in this 57-page bill not to be touched by the 70-page Supplementary Order Paper but I stand corrected. Part 6 is also not touched by the Supplementary Order Paper. I wonder whether the Minister has something to table because he has made considerable amendments to the rest of this bill and I suspect that perhaps he wants to make amendments to this part. It does not seem right that one or two clauses sit outside this Supplementary Order Paper so that people have had the ability to debate them! I am being facetious; I apologise for that. I must admit that this process borders on the ridiculous a little bit. As a New Zealander let alone as a member of Parliament I find it a little insulting that again we are standing here debating a tax bill that has gone through a very rigorous process only to have a 70-page Supplementary Order Paper lumped before us. I do not think that is how New Zealanders want tax legislation passed in this Parliament—in fact I know it is not what they expect.  
I come back to clauses 102 and 103. These are basically technical amendments concerning the approved issuer levy. I will give a little bit of background. Recently concluded tax treaties with Australia and New Zealand include a new exemption from source country tax for interest derived by banks. For interest derived from New Zealand the availability of this exemption depends on the borrower paying the approved issuer levy unless the borrower is not eligible to elect to pay the levy there is no such levy or the rate of the levy exceeds 2 percent of gross payments.  
I know this sounds rather technical and it is rather technical. It is a technical amendment but I think it is very important because it concerns banks and tax treaties. New Zealanders need to know about anything that concerns banks. It needs to be out there. Anything that concerns tax treaties is most important as well. As we know under this Government a lot of New Zealanders are deciding to up and leave. The details of tax treaties between New Zealand and other nations need to be available. If they decide to read the treaties that go on between our wonderful country and the country they are travelling to they should be able to do so.  
The proposed amendments in clauses 102 and 103 clarify the circumstances in which a person is eligible to pay the approved issuer levy. They make it clear that a borrower can pay the approved issuer levy in order to qualify for an exemption under a double tax agreement. I must admit that the Finance and Expenditure Committee has seen a lot of double tax agreements come before it recently. My colleague the Hon David Cunliffe will have something to say about this bit. He has put a lot of work and effort in with the Inland Revenue Department to make sure that the information before the select committee with regard to double tax agreements is robust. I know he has had some concerns and I am sure he will talk about them when he takes a call on this part.  
These amendments will address uncertainty around the treatment of interest paid to foreign banks operating through a branch in New Zealand. We know that apart from Kiwibank the major banks are foreign-owned. I have a mortgage with a foreign-owned bank. I should have had it with Kiwibank but I must admit that the Westpac guys who came up to Wairoa did an absolutely fantastic job in dealing with workers there and getting stuff out of KiwiSaver. I take my hat off to them. Their community relations were very very good and I just put that out there.  
As I mentioned these amendments will address uncertainty. There is no doubt about it: if there is one thing that should not exist in tax law it is uncertainty. Tax law needs to be certain. Taxpayers need to know the difference between right and wrong and I am sure the commissioner will agree with that. The last thing he wants to do is put out a whole lot of rulings. We know what happens when there is uncertainty in tax legislation. We saw it recently. The banks ended up paying about $2 billion I think when they believed they knew the tax law while the commissioner believed that the tax law said something else. It went through various courts in this land and the commissioner was right. It shows what happens when we have ambiguity in tax legislation. Clauses 102 and 103 remove that level of ambiguity which is great.  
The interest that I was talking about is not subject to non-resident withholding tax so the approved issuer levy mechanism is not relevant domestically which is good to know. It is not relevant domestically. But the new treaty exemption could still apply if the loan was made from offshore instead of through a New Zealand branch. I suspect that in these tough economic times a lot of the big companies are looking for finance outside of the New Zealand domestic market. The reason I say that is that if members look at our interest rates they will see that they are quite high compared with those of a lot of our competitors. A lot of businesses are sourcing funds offshore at much lower interest rates—that is if they have the ability to do so; a lot of small to medium enterprises do not have the ability to do so but a lot of big companies do. Again these amendments clarify tax legislation around this area.  
More generally the amendments ensure a better fit between terminology used in relevant tax treaties and arrangements whereby a borrower chooses to pay the approved issuer levy under domestic law. The new treaty provisions ask specifically whether the borrower is eligible to elect to pay the approved issuer levy; this bill ensures that domestic law directly addresses this question. Again the changes come back to the whole point of clarity but also they come back to the point of responsibility. Every taxpayer—whether an actual person a small company a trust a portfolio investment entity or a huge corporate—must act in a responsible way when it comes to paying their tax. This puts the responsibility back on them. The Inland Revenue Department asks whether an entity is eligible to pay the approved issuer levy. As has been mentioned the amendments will ensure that domestic law directly addresses this question which is most important.  
The amendments are also intended to make the existing law more transparent and I suppose that is the reason why we are still debating this bill in the Committee stage at this point. We need a level of transparency in tax legislation. Transparency is vital if we are to get our tax legislation passed in a way that is robust and that really adds to the overall legislative programme. The reason I say this and the reason I have concerns about this is we have seen with this Supplementary Order Paper—in my view and I think the view of my colleagues and the Greens—that this is not a transparent process. We cannot have a 57-page bill go through an intensive select committee process and then suddenly have a 70-page Supplementary Order Paper rapped on the Table. That is not transparent. In this bill clauses 102 and 103 which are technical amendments on the approved issuer levy provide a level of transparency.  
Clauses 102 and 103 went through the Finance and Expenditure Committee and we debated them. Our expert adviser Ms Turner provided notes to us on them and we queried the Inland Revenue Department officials on the implications of the approved issuer levy. It got to a point where we understood it and we were very clear about it from a layperson’s perspective and from a technical perspective so we can stand up with a working knowledge of the approved issuer levy. Those clauses went through a very robust process so we are happy that they get passed with this bill. It is just such a shame that a Supplementary Order Paper larger than this bill has not been through that transparent process.  
As has been mentioned clauses 102 and 103 are intended to make the existing law more transparent rather than substantially alter its effect. Not much has changed. These amendments are technical so not much has changed except a level of transparency and we all demand that. I think it is very reasonable for taxpayers to expect a level of transparency. I do not think there would be any question doubt or argument about the necessity for transparency in any sort of legislation let alone tax legislation.  
It is not considered necessary for the amendments to apply retrospectively because they do not alter the law substantially. We talked at the select committee for a moment about whether those amendments should apply retrospectively. It was decided that we should probably not apply clauses 102 or 103 retrospectively because they are only technical. We are not changing the substance; we are creating a level of transparency. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take a call or two on clauses 102 and 103 in Part 6 of the Taxation (GST and Remedial Matters) Bill. 
Hon Trevor Mallard 
: What about 101? 
Hon DAVID CUNLIFFE 
: Well I am not sure it is in Part 6 but I am particularly focused on clauses 102 and 103 if it is all right with my colleague. I say it is my right to be focused on whatever clauses I jolly well want. I think Mr Mallard is angling for a job as a whip. But he is doing his job pretty well. 
Chris Hipkins 
: He wants Gerry’s job! 
Hon DAVID CUNLIFFE 
: Well that brings to mind the question that has fascinated philosophers for many many years. If Gerry Brownlee is the third-smartest guy in the National Party—I need not finish the sentence. In fact the reason we are all here enjoying our time together in the Chamber is twofold: firstly the abhorrent Supplementary Order Paper amending the bill and secondly the organisational genius of said Gerry Brownlee who has completely mishandled the Order Paper by dumping a huge huge collection of bills on it and this is only No 2. This is only the second bill up. Members opposite will be here all weekend I fear.  
But anyway back to clauses 102 and 103. What is interesting about these clauses which amend sections 86I and 86L of the Stamp and Cheques Duties Act 1971 is that they are amended to introduce references to an exemption under a double tax agreement. Those relate to the non-resident withholding tax rules of the Income Tax Act 2007. The context is that we have recently concluded double tax treaties with Australia and the United States which include a new exemption from source company tax for interest derived by banks. Together with clause 79 those clauses clarify the circumstances in which a person is eligible to pay the approved issuer levy as my colleague Mr Nash has just said. They make it clear that the borrower can pay approved issuer levies in order to qualify for an exemption under a double tax agreement even if paying the levy makes no difference to the way the transaction is dealt with under domestic law. That clarifies an uncertainty that existed when the double tax agreement was written and that brings us right to a very very important point. The process by which the underlying double tax agreements have been negotiated and brought through the House is itself deeply flawed and I will explain why in a minute.  
There is a huge irony in having to introduce by stealth a massive amendment part of which by Supplementary Order Paper that has not gone to the Finance and Expenditure Committee is to correct mistakes or ambiguities in double tax agreements that supposedly had them. Our Labour team argued consistently in the Finance and Expenditure Committee that the process of examination of double tax agreements is fundamentally flawed. It is flawed because there is an oxymoron called a national interest analysis. Why do I say it is an oxymoron? It is neither national nor a good definition of interests nor is there much analytical content. These tend to be once-over-lightly narrative descriptions of the treaty that has been under negotiation. They are brought to the committee late in the process after the negotiation has concluded and before the agreement is ratified by the House. But when members of Parliament in a select committee ask difficult and searching questions about the balance of interest in the double tax agreement we receive a stock of standard responses. The first one is not to bother our pretty little heads about it because it has already been done and dusted and it would be improper to intervene. Well I am sorry but that is not what the Standing Orders prescribe. The Standing Orders very explicitly prescribe for a detailed and rigorous select committee examination under about a dozen different subclauses— 
Chris Tremain 
: What has this got to do with 102 and 103? 
Hon DAVID CUNLIFFE 
: These clauses are amending ambiguities that arose in the Australian and United States double tax treaties which went through the same committee this should have gone through but which did not receive thorough enough examination for exactly the reasons I am about to go on and describe. Now what were those reasons? What are the flaws? The member opposite has asked for more detail and he is a senior member he is the senior Government whip and I try my best to obey whips. We are just getting to the interesting part now that Chris Tremain has requested more detail.  
The first of I think four key structural defects in the process of consideration of double tax agreements is that there are supposedly network effects. That is we are told by our officials that it makes no sense to consider one double tax agreement in isolation from a whole spectrum of double tax agreements of neighbouring or related countries. Yet they are brought to the committee often one at a time. How could the committee and how could Parliament possibly offer proper scrutiny of one double tax agreement when it supposedly makes sense only as part of a network? There is supposedly some separate headline negotiation or analysis that covers the whole system. It is just that it is not visible to Parliament and it does not come to the select committee. 
The second point is that there is a lack of data. Let me give a very good example not in relation to the double tax agreement covered by this clause but by one very similar—the New Zealand - Singapore closer economic partnership agreement. That agreement was described by officials as being likely to reduce New Zealand’s trade in goods but to expand its trade in services and its investment opportunities. Well that is a perfectly reasonable trade-off to make but guess what? The New Zealand department of statistics does not record data for trade in services or investment flows in sufficient detail to answer the question in the rear-view mirror of whether we have come out ahead. So 3 or 4 years after this Parliament passed the New Zealand - Singapore closer economic partnership agreement it cannot even now undertake the analysis to find out whether the New Zealand taxpayer the New Zealand economy is better off or worse off because the New Zealand Government does not collect the statistics that would enable that analysis to occur. I find that absolutely amazing.  
However it gets better—or worse. Even if we had the data we should not expect anybody in officialdom to have crunched it because the national interest analyses are an analysis-free zone—an analysis-free zone. They are narrative descriptions of “We trade this bit for that bit. We think we might be better off.” OK “Tell us why you think that.” You know there are no numbers typically in a national interest analysis on a double tax agreement such as those covered by clauses 102 and 103. Well that is ridiculous. How can it be an analysis if it is qualitative on a tax treaty? Or in one that I recall it was an upfront loss of tax of $20 million. That was the cost side. On the benefit side there was supposedly a qualitative compliance cost reduction. “Well how big is it?” we asked. “Can’t tell you.” said the officials. “Well is it bigger than or less than $20 million?” we asked. “Can’t tell you.” said the officials. “Why can’t you tell us?” asked the members of Parliament “Is it a secret?”. “Well” they said “there are two problems with that”—and that brings us to the fourth of the four reasons why these clauses are an embarrassment for the Government. Not only is there a network effect a lack of data and a lack of analysis but also hey presto there is a lack of process too.  
The lack of process is that there is no point in the chain of the negotiation where the essence of the negotiation is able to be subject to sufficient public scrutiny because the Government negotiators go in secret to negotiate with the negotiators of the other party. They do not bring the bill to Parliament until after it is negotiated which is fair enough but no tracking analysis is brought to the select committee. It is brought to the select committee for analysis only after the negotiations are completed. When on one occasion we found a clear example where the negotiation had come out badly for New Zealand we were told: “You can’t say that.” “Why couldn’t we say it?” we asked. “Because we don’t want the other side to know they won.” In another example where it came out very well for New Zealand and the public would have wanted to know we were told: “You can’t say that.” “Why not?” we asked. “Because we don’t want the other side to know they lost.” “Then why are we doing this?” we asked. We were told: “Because you have to.” and we said: “Well shouldn’t it be meaningful?”. And here we are today in Parliament under urgency on Christmas Eve now re-correcting clauses 102 and 103 because they were not done properly the first time. 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I rise to talk to Part 6 of the Taxation (GST and Remedial Matters) Bill which is clauses 101 102 and 103. The biggest part of it is clause 102 and it is likely that there will be a reasonable amount of focus on that clause. These are amendments to the Stamp and Cheque Duties Act 1971. Stamp and cheque duty was much more important in 1971 than it is currently because it was both a method of revenue collection and a policy tool. It was used as an intervention to head the economy in particular directions and I think it is fair to say that continued through until about 1984. Since 1971 there have been a number of changes. For example there has been a lot of work in the area of double tax agreements.  
The focus in clause 102 is on the approved issuer levy and the effect on what is liable for stamp and cheque duty in regard to it. The new section 86I which is to be substituted in the Stamp and Cheque Duties Act by clause 102 indicates in subsection (2) that despite the non-residential withholding tax rules a payment of interest under a registered security is treated as having been paid by an approved issuer only to the extent to which the approved issuer levy in relation to the security is paid by or on behalf of the approved issuer. I ask the Minister in the chair the Hon Georgina te Heuheu why that is the case. I would have thought there was an obligation to have it paid in full. I know that this Minister is not the primary Minister in charge of stamp duty and related matters but I wonder about the question of liability for the part that has not been paid. Where an issuer levy should have been paid but has not been paid I ask whether there is still an obligation for stamp and cheque duty to be paid in that case. I do not mind if there is a nod or a wink from the Minister in the chair to indicate what the particular approach is. Of course I would prefer it if she took a call on this matter.  
This is a serious question. If an issuer levy that should have been paid has not been paid I ask whether there is still a liability for taxation on it. If someone has income that has not yet been received under our accrual system I ask whether the tax is payable on it. We have moved away from the days when the Chair was involved in some of these matters and we do not work entirely on a receipts and payments basis now. We have an accrual system and we work on the basis of income and expenditure. But it appears that there is some reversion to a receipts and payments approach rather than having an accrual system and an income and expenditure basis in this particular case. I want to know whether that is an accurate characterisation of what is occurring here. Is this something that is new or is it something that has been there? I ask this because we cannot tell by looking at the amendment and by looking back at the legislation as to whether that is the case.  
I then go to clause 102 which inserts new section 86I. I might need to correct myself as I think I might have said “section 86(1)” earlier. But it is section 86I so I think I need to put my glasses on. Subsection (2)(b) of that section states: “the amount of the levy based on the leviable value of the registered security at the time of the payment of the interest is paid—(i) at the rate set out in section 86J; and”— 
MICHAEL WOODHOUSE (National) 
: 
 I move  
That the question be now put 
. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am very pleased to take a call on Part 6 of the Taxation (GST and Remedial Matters) Bill which concerns amendments to stamp and cheque duties. The first thing I will do is commend the Minister in the chair the Minister for Courts for the fact that this part has no relationship to the onerous 70-page Supplementary Order Paper 187 which was made available to us parliamentarians in only the last 48 to 50 hours. What this part relates to has at least been through the appropriate process in terms of consideration by the Finance and Expenditure Committee of all the changes that the Government was seeking to make. 
These changes relate to the Stamp and Cheque Duties Act 1971 which is a period not familiar to some members and reference an exemption under a double tax agreement. The history of that as some members will know is that the recently concluded tax treaties with Australia and also with the United States include a new exemption from source-country tax for interest derived by banks so together with clause 79 in this bill clauses 102 and 103 clarify the circumstances in which someone is eligible to pay an approved issuer levy. The approved issuer levies make it clear that a borrower can pay the levy in order to qualify for the exemptions under the double tax agreement even if paying the levy makes no difference to the way in which the transaction is dealt with under domestic law. 
So this measure addresses some uncertainty that exists around the treatment of interest paid to foreign banks operating through a branch here in New Zealand. It is an appropriate move but I ask the Minister in the chair to take a call to relate to us the difference between the stamp duty regime here and those in other parts of the world. I am particularly interested to know about Australia’s. I understand that stamp duty still applies to property there and at quite a high level. I believe that it is up to about 2 percent or more in some Australian states. It will be interesting to know whether the Government has ever given any consideration to that issue in terms of any of the tax changes it is bringing through in the course of this Parliament. 
The approved issuer levy is a domestic law mechanism that can provide relief from the non-resident withholding tax on interest paid. The non-resident withholding tax on interest paid to an unrelated foreign member can be reduced to nil if the borrower agrees to pay a 2 percent levy. Borrowers agree to do this where the lender would simply demand more interest to cover the non-resident withholding tax. 
We have those newish treaties in place now—tax treaties with Australia and the United States. They are a good thing. They make it easier for businesses to operate across the Tasman and across the Pacific through to the United States. Goodness knows we need businesses to be better able to operate in what has been the most difficult business environment in living memory. We want to see the tax treaties with Australia and with the United States operate at the best possible level to ensure that businesses are able to operate efficiently and effectively without any extra costs attached. So what this measure does is include an exemption from source-country tax for interest derived by banks. For interest derived from New Zealand the availability of the exemption depends on the borrower paying the approved issuer levy unless the borrower is not eligible to pay the levy or there is no such levy or the rate exceeds 2 percent of gross payments. 
These proposed amendments attempt to clarify the circumstances in which someone is able to pay the approved issuer levy. They make them clear and the Finance and Expenditure Committee considered these issues in some detail. That is how the process should be. When we are dealing with issues as complex as these we need to focus on them in the select committee rather than their being passed by way of a Supplementary Order Paper. These are complex matters. They can relate to large sums of money in which New Zealand has a very keen interest. Obviously we want to make sure that when we introduce technical amendments of this type we do so in the most appropriate fashion. That is done here in Part 6 where clauses 101 102 and 103 introduce amendments in relation to the Stamp and Cheque Duties Act 1971. That is the appropriate place. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 I move  
That the question be now put 
. 
Hon DAMIEN O’CONNOR (Labour) 
: 
 I have not participated in this debate but after coming down to the Chamber listening to the discussion and looking at the bill—and I acknowledge the good work my colleagues are doing here—I will take a call on Part 6. The bill states that its intentions are to remove tax avoidance opportunities to have better alignment to maintain the integrity and fairness of the goods and services tax and obviously here in Part 6 to make some amendments to the Stamp and Cheque Duties Act 1971.  
I was recently in Victoria in Australia. A previous speaker in this debate said that he understood that stamp duties in Australia are quite significant but he was not sure of the amount. My understanding is that if one sells a house in Victoria the stamp duty is either 4 or 5 percent and it is paid directly to the state Government. That is in the land of opportunity the wonderful country that this Government has chosen to compare us to. The Prime Minister has said on many many occasions that we have to step up and match Australia. Well here is an opportunity to align with Australia. I do not think that anyone and certainly not the Labour Party would advocate the introduction of a 5 percent stamp duty on the sale of property.  
I have a question and it is one that the Finance and Expenditure Committee could have teased out if it had had the time to go through this bill. How can Victoria in Australia the country we have to aspire to match have stamp duty of 5 percent and still maintain a high level of income and a high level of economic activity and indeed to choose the Prime Minister’s words be a better place to live? That is what the Prime Minister has said on many occasions. He has said that that is what we should be looking for.  
In relation to non-resident withholding tax and the alignment with Australia my colleagues have said that we must align with Australia as much as possible so that we remove the distortions and I think that most of us have accepted that that is a good direction in which to move. What then is the issue of stamp duty in terms of its impact on the relative prosperity of either country? Is it a good thing or a bad thing? We have been told that less tax is always good except that this Government has put up taxes in a whole lot of areas. It has not just increased GST but also it has put up taxes on petrol and charges for vehicle registration.  
I ask the Minister in the chair the Hon Georgina te Heuheu—should she choose to take a call—to tell us how the amendments to the Stamp and Cheque Duties Act will bring about an alignment between Australia and New Zealand. How is it that Australia can have such high stamp duties as well as GST and a whole lot of other things and still be better off than New Zealand? Will the changes we are making in this legislation and in the rushed Supplementary Order Paper make a significant improvement to the tax regime or to the way we operate the system in this country?  
I will not say any more than that other than to say that it is a question I asked a few weeks ago in Australia. I have now had the opportunity to ask the Minister. Perhaps she could take a call and tell us. Maybe she does not know or maybe she might acknowledge that the select committee might have found out. But of course we are rushing this legislation through unnecessarily. I am sure that the changes in Part 6 will be amended in the very near future because we are not going through this in a thorough way. Thank you Mr Chairperson. 
MICHAEL WOODHOUSE (National) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Motion agreed to. 
A party vote was called for on the question  
That Part 6 be agreed to. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Part 6 agreed to. 
Part 7 Amendments to other legislation 
The CHAIRPERSON (Hon Rick Barker) 
: The debate on this part includes the schedule. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Thank you— 
Hon Trevor Mallard 
: This is one of the biggest parts of the bill. 
Hon DAVID CUNLIFFE 
: It is. Part 7 is a particularly important part of the bill. It is particularly important because it reflects the process that has gone on so far. This is a grab bag. It is entitled “Amendments to other legislation”. How non-specific can we possibly get as to the title of a part—“Amendments to other legislation”? That reflects the shambles of a process that is embodied in this bill. The Government could have done the normal generic tax policy process but it chose not to. It could have given the bill the benefit of a standard select committee consideration but it chose not to. It could have allowed practitioners in the industry such as the lawyers and the accountants to make formal public submissions along with affected businesses and members of the public but it chose not to. Government members could have subjected themselves to the cross-examination of members on this side of the Chamber but they chose not to. Instead they have chosen to bring to the Chamber a Supplementary Order Paper that dwarfs the original bill.  
Part 7 is contained in the original bill not in the Supplementary Order Paper but it is a grab bag of miscellaneous clauses that reflect the general state of disarray of this legislative process. The first one is clause 105 which covers deductions from joint bank accounts under the amendment to the Gaming Duties Act. This clause together with clauses 16 and 86 allows deductions of tax from payments due to a defaulting taxpayer. They are amended to allow the Commissioner of Inland Revenue to make deductions of tax from joint bank accounts. The amendments will allow deductions from a joint bank account if the defaulting taxpayer can make withdrawals from that account without the signature of the other person. What that means in plain language is that if someone has a joint account and one member has defaulted then the commissioner can allow deductions to occur without the consent of the other party. That is certainly improving the reach of the tax department. It does raise the odd issue about whether the privacy of another person is involved but I guess that is the price of having a joint account.  
Clause 106 which covers provisional tax relief for the super-city transition is a matter of some considerable importance because this is the tax implication of the new structure of the super-city. It is specifically designed to accommodate the fact that most of the business of the super-city is not going on at council level; it is going on at the council-controlled organisation level. That has required entirely new tax provisions between the council-controlled organisation and the parent council. This clause amends section 83 of the Local Government (Auckland Transitional Provisions) Act 2010 which provides transitional tax relief on the amalgamation of the local authorities into one council. It provides for the purposes of the financial arrangement rules in the Income Tax Act 2007 that where the new Auckland Council enters into an acknowledgment of debt with a council-controlled organisation without paying the principal to the council-controlled organisation the council is deemed to have advanced the amount of the principal to the council-controlled organisation. That is it is deemed to have advanced the amount even if it does not actually make a new loan because it is inheriting a debit from a previous structure. It is probably one of the more sensible provisions in the bill.  
As part of the super-city restructuring certain assets owned by existing local authorities will vest in council-controlled organisations owned by the Auckland Council. There is no problem with that. It is sensible enough. The issue at stake is the balance—of course this is old territory—of authority and oversight between the parent council and the plethora of council-controlled organisations into which most of the activities of the new council have been devolved. It is of great cheer to this side of the Chamber to see that the new mayor “Auck-Len” has ensured good transparency at the council-controlled organisation board level by insisting on the publication of board papers. The  
New Zealand Herald  
yesterday of course revealed a very good summary of the first round of board meetings the notable exception being the transport council-controlled organisation which saw fit to have its first meeting entirely in secret and not publish any of its papers. So we have the paradox that the largest most important council-controlled organisation has been hitherto conducting its arrangements in secret. That is not acceptable and I am very very pleased that the new Mayor of Auckland Len Brown has been able to gently persuade the transport council-controlled organisation board that the expectations of the public of Auckland are for a maximum degree of transparency. So that is excellent.  
There are some debt implications that are tidied up in these clauses. In clause 106 the debt relating to the assets owned by local authorities vested in council-controlled organisations will not be transferred to the council-controlled organisations but will be assumed by the Auckland Council. In turn the council-controlled organisations will then enter into an acknowledgment of debt to the council for the amount of debt attributable to the assets. That is interesting. In fact despite the locus of control being vested in the board of the council-controlled organisation the debt is vested in the council. To members on this side of the Chamber this just smells slightly familiar—the old right-wing tendency to socialise the losses and the risks and to privatise the profits. That is exactly what has happened in the global financial crisis. 
Hon Darren Hughes 
: Seen that before. 
Hon DAVID CUNLIFFE 
: That is right. The taxpayer around the world has had to underwrite the huge bonuses made by the crocodile shoe brigade on Wall Street. It is an outrage. 
Hon Darren Hughes 
: Don’t call the Prime Minister that. 
Hon DAVID CUNLIFFE 
: That is right. 
Dr Paul Hutchison 
: What would have happened otherwise? 
Hon DAVID CUNLIFFE 
: Well if there had been a decent regulatory framework we would never have had the level of bonuses paid. 
Dr Paul Hutchison 
: No what would Governments have done otherwise? 
Hon DAVID CUNLIFFE 
: I think it is bipartisan that we have had retail—[ 
Interruption 
] If the member has asked a question he should have the courtesy to listen to the response. There was bipartisan support for having a retail and wholesale deposit guarantee scheme before the current Government blew it and extended the retail scheme without sufficient clarity of oversight as—I have a good bottle of wine resting on this one—it is now going to blow the budget for the underwrite. It is going to blow the budget for the underwrite because not only has it turned down a really good recapitalisation proposal on South Canterbury Finance—and it is going to end up paying a whole lot more by the time it has brought the asset sales to book—but it has had Equitable Mortgages another $180 million - odd which has been deliberately put into receivership by the owners before it is anywhere near insolvent. When asked why they did it they said: “We don’t want to take the risk.” It was the closest thing I have ever seen to an admission by a private board that it suited their shareholders for the taxpayer to bear the risk. It was extraordinary. Yet the Government did not bat an eyelid. It did not even ask the question of whether that was ultra vires to the purposes of the retail deposit guarantee scheme. If Dr Hutchison would like me to go on I could probably spend two or three calls examining the details of the scheme a little more fully but I think he probably wants to get home some time tomorrow.  
Hon Darren Hughes 
: No on Monday! 
Hon DAVID CUNLIFFE 
: It could be Monday. Let me move on to section EW 3(2). In this provision— 
Hon Trevor Mallard 
: Bring on the detail! 
Hon DAVID CUNLIFFE 
: Well is it not interesting that Mr Brownlee the Leader of the House has not taken a call? We could argue about whether he is in the Chamber; I could not possibly comment. 
The CHAIRPERSON (Lindsay Tisch) 
: Members cannot refer to the absence of a member. The member should know that. 
Hon DAVID CUNLIFFE 
: In which case I will not refer to it Mr Chairman; you are quite right. The general definition of financial arrangements in section EW 3(2) does not apply to the acknowledgment of debt because no consideration is paid by the council to the council-controlled organisation and therefore there is no consideration violating standard practice contract law that a contract is not a contract until consideration has been exchanged and that an agreement to agree is not an agreement in law until such consideration has vested. So here we are in the dead of the afternoon the week before Christmas under urgency doing what? We are overriding a bill making perfectly sensible but necessary tidy-up amendments that was agreed by consensus in the Finance and Expenditure Committee by every party in the House. We had consensus on those points until the Minister brought into the House an 80-page Supplementary Order Paper which is far more important than the main bill. The main bill was just a tractor put on the trailer. All the hay is in the trailer; it is in the Supplementary Order Paper. The committee did not have the opportunity to investigate. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairperson. I would like for you to rule please as to whether clause 109 in Part 7 of the original legislation as reported by the Finance and Expenditure Committee is in fact within the vires. It is headed “Consequential amendments to Inland Revenue Acts: ACC change”.  
My point is that I have searched back through the bill—I have not to be fair searched through the Supplementary Order Paper but I think that is probably not relevant—and the clause states: “The provisions in the enactments listed in the schedule are amended by replacing ‘Injury Prevention Rehabilitation and Compensation Act 2001’ by ‘Accident Compensation Act 2001’.” There is no doubt that that Act has changed but the point I am making is that this is not a consequential amendment on the legislation we are dealing with and therefore it cannot be a consequential amendment flowing out of it. I ask you to rule that clause 109 be struck from the bill. 
The CHAIRPERSON (Lindsay Tisch) 
: That is an interesting question from the member. The Parliamentary Counsel Office has drafted this clause into the bill as “Consequential amendments to the Inland Revenue Acts: ACC Change”. If the Committee is not of a mind to support that clause it can vote it down when we come to vote on this particular part. That is the opportunity to vote accordingly if one does not agree with it. The Parliamentary Counsel Office has included it which can happen. It is up to members whether to support it and they will vote accordingly. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I apologise in part for disagreeing with your ruling and certainly the rationale behind it. The fact that the Parliamentary Counsel Office has included something in a bill probably in fact should not be referred to by members in the Committee. The responsibility for the bill is the Minister’s—currently that of the Minister in the chair the Minister for Courts—and the Government has to take responsibility for it. It is not a question of whether the Committee agrees with it; the question is whether it is within the vires of the bill. My clear submission to you is that this provision cannot be consequential. 
The CHAIRPERSON (Lindsay Tisch) 
: The provision is in the bill as presented. It has been through a select committee and it has been deliberated on. It is not an amendment; it is actually in Part 7 of the original bill. 
Hon Trevor Mallard 
: I understand that. 
The CHAIRPERSON (Lindsay Tisch) 
: My point is that it has been in the bill from day one. It has been accepted in a first reading a second reading and the select committee process and it is contained here. As I said if the member is not happy with it or if a party is not happy with it they have the opportunity to vote the provision down. I made the point about the consequential amendment earlier on: it is a consequential amendment to other particular Acts and they are actually mentioned here. It is in order; it is just like the other amendments throughout the bill. It is within the scope of the bill. That is my ruling. 
Hon DARREN HUGHES (Senior Whip—Labour) 
: 
 I think Mr Mallard is not pointing to a policy disagreement in which your ruling would be correct. Members of the Committee vote things up or down depending on their political view about the policy merits of a clause. I think Mr Mallard is trying in a dispassionate way to make the point that there has been an error in the technicality of the way the bill has been prepared. That is not a policy matter. The fact is that this error has just been discovered in a very big bill and tax bills are very technical. He has pointed out the fact that that error has been discovered only now. Just because it received a first and second reading and select committee consideration and was not discovered at that point does not change the fact that the structure of the bill before us now is not in a technically correct form.  
When it is technically correct then we will return to our policy debate. In fact that is the whole point of the Committee of the whole House which often finds something that is lost during this part of the process. This is the detail. You will recall that up until a few years ago the Committee of the whole House took a bill clause by clause. It went through it clause by clause in order to make sure that proper consideration be given and any errors found. We now take bills part by part and perhaps Mr Mallard has shown that by taking it part by part there is the opportunity for these things to be missed which did not happen when it was a clause by clause assessment.  
The purpose of the Committee of the whole House is to scrutinise a bill in detail. Ninety-nine percent of the time there will be policy differences and we have seen those argued out today. He is not making a policy point; he is pointing out a technical problem with the construct of the actual legislation. I think it would be wrong for us to continue until we have that problem corrected so we can return to the policy debates we need to have.  
Hon Dr WAYNE MAPP (Minister of Defence) 
: 
 I have to say that the points of order which are hardly points of order are actually incorrect in substance. This bill of itself amends a particular Inland Revenue Act the Goods and Services Tax Act and indeed other Acts as well. The schedule relates to the Inland Revenue Acts per se and thus it is appropriate that clause 109 amends Inland Revenue Acts—or more accurately amends schedules to Inland Revenue Acts which is entirely within the scope of the bill. Frankly I think we know what we are seeing with these particular points of order. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 It might be something that can be fixed up relatively easily because I think most of us are aware that the headers in fact do not end up in the legislation going forward. Clause 109 deals with “Consequential amendments to Inland Revenue Acts: ACC change” and when the Inland Revenue Acts listed in the schedule—the Income Tax Act 2007 the Tax Administration Act the Goods and Services Tax Act and KiwiSaver Act—are amended these headings will not flow into the Acts. I do not think anything would be lost if by the leave of the Committee we just took out the inaccurate part of the headers.  
The CHAIRPERSON (Lindsay Tisch) 
: This is a committed clause and this is an omnibus bill. It makes amendments across all Inland Revenue Acts as has been identified. I said earlier that it was within the scope of the bill. If it was outside the scope it would have been ruled out of order at a first reading or subsequently at a second reading. The Speaker would have ruled it out as being outside the scope and not being part of the bill. The title that we have here the way it is presented— 
Hon Member 
: It can’t be ruled out? 
The CHAIRPERSON (Lindsay Tisch) 
: It can be ruled out at an earlier stage. As I mentioned it has been through a first reading it has been to the select committee it has had a second reading— 
Hon Trevor Mallard 
: Has the Speaker ruled on it? 
The CHAIRPERSON (Lindsay Tisch) 
: It is in order and I am ruling that it is in order as presented. We will continue on that basis.  
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I will talk for a moment about clause 106 of the Taxation (GST and Remedial Matters) Bill which effectively relates to providing some provisional tax relief in the super-city transition in Auckland. I have a question that arises from it which perhaps the Minister in the chair the Hon Georgina te Heuheu or her learned colleague the Minister of Defence may be able to assist me with.  
I do not think any member would have any difficulty about transitional tax relief being provided in the amalgamation of local authorities in Auckland into one council when we are seeing an arrangement whereby an acknowledgment of debt is entered into by the council in relation to assets held by effectively another arm of the council. That is a wholly appropriate thing. But just a couple of weeks ago the House passed the Local Government Act 2002 Amendment Bill which contained within it a provision that allows any council should it wish to enter into a new arrangement I think from 2012 or 2014 for the provision of services such as water on a contractual basis for a period of up to 35 years. Members on this side of the Chamber view that as effectively constituting privatisation given the length of time involved. There is the ability for those assets to go into private hands with a return yes to ratepayers’ ownership at the end of the 35-year period. But 35 years is a long long time between drinks so we regard that as being effectively privatisation.  
Clause 106 relates to allowing arrangements around the acknowledgment of debt for the new Auckland Council in respect of taking up assets and I think this relates mostly particularly to Watercare Services Ltd and acknowledging the debts created and providing for tax relief in respect of that. But I want to ask about what would happen if in 2 or 4 years’ time a council in Auckland—I am sure this would not take place under the current council led by Mayor Len Brown—wants to effect a change in the ownership structure. What would that mean in respect of clause 106 and the provisional tax relief that is being provided? Would we see a similar arrangement being entered into? What are the consequences for the past forgiveness of debt by the council? Are we creating a precedent here that has some unintended consequences if a council goes down the track of making a new arrangement for the provision of water services for instance in Auckland and putting it into private ownership for a period of 35 years?  
The background is that this legislation provides for provisional tax relief and arrangements that are entirely appropriate when we are talking about wholly publicly owned assets and the tax arrangements between them. But when we start to talk about a privately owned company taking over those assets we should turn to the officials in the Chamber for advice. Obviously the Committee stage is the point at which to do this; this is our last chance to ask questions and gain assurances on behalf of taxpayers. The future management of assets has been a very very crucial issue certainly in terms of the other legislation that allows for assets to go into effectively private ownership for 35-year periods. So there is an important question in respect of whether clause 106 sets up a precedent with unintended consequences. Should we see a change under a future Auckland Council and a decision be made to move into private control some of the assets for which under this provision provisional tax relief is provided—which Parliament is pleased to support given that we are talking about wholly publicly owned enterprises? What is the situation? I ask the Minister in the chair to please invite the officials to give her a brief on this or the Minister from the North Shore who has a keen interest in Auckland issues to seek advice from the officials so that we have an answer.  
I think this is a very important point as we go through the final stages of this bill coming into law. This is the last chance to get some clarity around whether unintended consequences will come from this legislation. We obviously have a lot of occasions when we go from having a council that operates with just publicly owned entities to having one that does deals with people outside the ambit of ratepayer-held assets. I am thinking of my own city of Christchurch where a couple of years ago the Christchurch City Council provided a $17 million loan to a property developer called Dave Henderson. Just in recent weeks that property developer went bust. Obviously the council was using ratepayer funds to bail out a property developer and that raised a great deal of concern in Christchurch. I can tell members that without any qualms whatsoever.  
Dave Henderson is a close friend of the Minister of Local Government Rodney Hide. He is a very close friend. They have publicly described each other as being close friends. Obviously concerns arise when a council is able to provide a sweetheart deal to the private sector using ratepayers’ money. I understand that not only did Mr Henderson receive $17 million in ratepayers’ money but he did not pay back the GST on the deal to the taxpayer. So the ratepayers of Christchurch subsidised a personal friend of the Minister of Local Government and then that person did not pay to the Inland Revenue Department the revenue that was due. Perhaps the officials might clarify that matter for us as well. What revenue was due to the department from the GST on that deal? In effect there has been a double whammy to ratepayers and taxpayers in respect of that issue.  
That is why we do not want to see such arrangements being entered into under clause 106. We want to see the Auckland Council enter into sensible tax arrangements in respect of the super-city transition. That is wholly appropriate; it is wholly appropriate to see that happen. We want to see those sorts of arrangements be effected between wholly publicly held and accountable ratepayer-owned organisations and institutions. That is wholly appropriate. But when we go down the track as the Local Government Act 2002 Amendment Bill did of providing for entry into contracts that effectively privatise such important assets and utilities as water supplies for 35 years I think the Committee demands to know whether this clause has any ramifications for those kinds of long-term actually intergenerational arrangements—35 years is across generations. The people of New Zealand would like to know whether we are setting ourselves any precedent here.  
Allied to that issue is the question of whether we have seen in my city of Christchurch a deal whereby ratepayer funds were used to bail out a property developer. I would really like to know in that instance whether any revenue went back to the Inland Revenue Department. The very clear understanding I have is that not only did the ratepayers of Christchurch fund a property developer’s bail-out in the wake of the crash—that property developer has now gone bust—to the tune of $17 million but the Inland Revenue Department base has not received the GST owed to it on the $17 million paid by the ratepayers of Christchurch to Dave Henderson. I think we deserve to be given some clarity on that important issue as we progress through the final stages of this bill.  
Clause 106 provides for provisional tax relief in the super-city transition. We have a very good Mayor of Auckland in Len Brown and I cannot see any possibility that we would see the currently publicly held assets vested in Watercare Services going into private hands which is the issue at the heart of my concern about this clause. But the Committee deserves to receive some assurance from the officials to the Minister that no precedent is set by this measure. If those assets are later transferred into private ownership what tax ramifications are we creating in clause 106 this afternoon? Clause 106 obviously provides for tax arrangements that are basically neutral in respect of the debt that is being on-passed and picked up by the new Auckland Council as it absorbs the assets of Watercare Services. It is a wholly appropriate arrangement but I think the Committee deserves to know the answers to the questions that I have posed here in the final stages of the Committee stage of this important bill. This is a very important clause. It may have some ramifications that are truly long term and I think that the Committee deserves to have an answer to those questions this afternoon. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 It might be slightly unusual but I would like to work backwards through the clauses in Part 7. Starting off with clause 109 I say that on its own we probably would not vote against it but there is a mis-description in the header. It is all very well to blame parliamentary counsel but I do not think that that is very fair; the Minister in charge of the bill should take responsibility for that. Otherwise it is clear that it is tidying up things that should have been cleaned up years ago when the primary Act was amended. It is consequential on that rather than on this. 
Sandra Goudie 
: They had 9 long years and did nothing. 
Hon TREVOR MALLARD 
: I am sorry. Did the woman with the brain of Paul Quinn and the voice of Judy Keall just comment? Working backwards I am seeking from the Minister an assurance on clause 108 with regard to the Health Entitlement Cards Regulations 1993 and it is an assurance in two parts. First of all I seek an assurance that this regulation needs to be changed by primary legislation and cannot be changed within the regulation itself; normally when we change a regulation that is the case. Normally if we go back to primary legislation then there is something serious going on and that gets to the second question I have. I am very concerned about clause 108(2) which makes the change to the health entitlement cards regulations retrospective. Again I do not mind whether the Minister nods or winks at me to indicate whether there is an actual change here. She winked and nodded at me. I wonder what the implication of that is. 
Hon Darren Hughes 
: It’s Friday night. 
Hon TREVOR MALLARD 
: We will be here Saturday night as well! The point I am making—and it is a serious point—is to ask whether there is a reduction in the entitlement as a result of the redefinition of income that has occurred in this clause and if there is a reduction in entitlement whether it should be backdated to 2008-09. If people have their community service cards and they have their entitlements is it on for them now to be getting bills for health care that occurred in July 2008? If there are changes people who took their community service card to the doctor and used it then are now losing their entitlements for that time. We are told that this applies for that year and the later income years and we want to know what the revenue effect of this is—what the change is that flows from that. That is question No. 1 to do with that.  
Working backwards I would like to ask Mr Flavell whether he has any comments on clause 107 because it has to do with the renaming of Volunteer Service Abroad and that is changing within the regulations. The organisation has adopted a new name a named based on te reo and it is a question of whether that is appropriate. Again I ask whether he thinks it is a suitable name because he will no doubt be able to give his view on that. But more important I ask whether primary legislation should be used for this. All we are doing is changing the student loan scheme regulations. People who are offshore doing what my generation knows as volunteer service abroad have some special student loan arrangements and as this change of name occurs I want to ensure that we have to use the primary legislation as opposed to the Minister using the other legislation.  
I have two more clauses to which I would like to refer. Unlike my colleagues I have a relatively simple question on clause 106. I am certainly not an expert on the Auckland local government legislation particularly the taxation parts of it but if one looks at new subsections (19) and (20) of section 83 which go in the transitional provisions part of the legislation after section 83(18) section 83(19) states that if “Watercare Services Limited is liable for a debt to the Auckland Council … for the purposes of the financial arrangements rules as defined in section YA 1 of the Income Tax Act 2007 the Auckland Council is treated as paying to Watercare Services Limited … consideration equal to the debt.” The question I have is whether that is the right way round. If the money is owned by Watercare Services to the council might we have that the wrong way round? I am sure the Minister in charge of the legislation currently Georgina te Heuheu is right on top that; I am pleased that she is seeking answers.  
Similarly and I think it is fair to say that this is one of those clauses put together by a word processor there is section 83(20) which relates not to Watercare Services but to council-controlled organisations. It is not quite the same but I have a similar question as to whether the debt is the right way round. The money is owned by a council-controlled organisation to the council but the council is treated as paying an amount equal to the debt to the organisation. I am not sure. I am happy to defer to my colleagues if they tell me that they have carefully examined this part of Part 7 of the bill and that they are satisfied it is not as it appears at first glance. I would not want to describe complicated tax legislation as arse about face but it looks as though it has the debits and the credits mixed up and who owes whom and which way it is being paid. I know very well as a Minister who sat on committees in the office of the Minister of Finance far too often that every now and again in taxation legislation things are got wrong and we end up coming back to correct them. I am just trying to save the Government a bit of time by checking to see whether this one is the right way round.  
I do not want to make any comment about clause 104 but I want to talk about the Gaming Duties Act 1971 and the deduction of duty from payments due to defaulters. I cannot remember whether you Mr Chairman Tisch were in the Chair at the time I raised concern over a parallel arrangement to do with the Taxation (Tax Administration and Remedial Matters) Bill but I am very concerned at the idea that the Inland Revenue Department can dip into a bank account just because it has someone’s name on it and they are a signatory of it. They might not have dealt with the account for 20 years. The money in it might belong to someone else completely. It has nothing to do with gaming money. Just because someone has their name on a bank account and is a signatory as I am for a few of my relatives and which has worked and was there for purposes in the past—maybe I was a guarantor or some other similar arrangement; for example it might have been used as a trust arrangement but is not any longer—it does not mean that they own the money in the account.  
The idea is that the Inland Revenue Department can go to what is effectively a third party and take the third party’s money out of a bank account in settlement of a debt. I do not want to show any sympathy at all to people involved in the gaming industry who do not pay their debts to the Inland Revenue Department but that we should go to the point of saying that if they happen to have an arrangement with someone else where the debtor’s name happens to be on the bank account holding money that is not theirs and that the Inland Revenue Department can take that third party’s money out of the account without any notice whatsoever—no pleases no thankyous—I think is something that is not right. 
TODD McCLAY (National—Rotorua) 
: 
 I move  
That the question be now put 
. 
STUART NASH (Labour) 
: 
 I will talk about a couple of clauses in Part 7. They include clause 105 which my learned colleague—sorry not my learned colleague because he does not like the title “learned”. Does it really apply only to lawyers? 
Hon Trevor Mallard 
: Someone is learned if they are a lawyer.  
STUART NASH 
: Is that right? How can they say lawyers are learned? 
Hon Trevor Mallard 
: It’s part of the British tradition. 
STUART NASH 
: I did not realise that. I will talk on clauses 105 and 106. I will start with clause 105 and I will take the Committee through the process the Finance and Expenditure Committee went through when deliberating on this clause because it caused quite a bit of debate. Mr Norman and Mr Cunliffe will remember this clause and Sir Roger Douglas will certainly remember it because it created a lot of debate within the select committee around how we should do this and whether we should be able to do it.  
I remember bringing up a case that is very close to me. I have a very good friend who married someone she thought was a very nice gentleman. He was an osteopath and was very respectable and very charming. She did not know at the time of the marriage that he had problems. He had gambling and drinking problems he certainly had a problem with lying and she suspects he might have had drug problems. But that does not matter; the bottom line is that he had problems.  
She entered into the relationship pretty much owning a house—not all of the house because she had a small mortgage—and some investments. The gentleman whom she married—I should not call him a gentleman because he was not—entered the marriage with not much at all. She was a little naive but in love and often when we are in love we can be a little naive and tricked by the lies told by partners— 
Hon David Cunliffe 
: It’s a chemical thing. 
STUART NASH 
: It is a chemical thing. It is irrational. He ended up— 
Hon Trevor Mallard 
: It’s actually hormonal. 
STUART NASH 
: Hormonal chemical—whatever love is it is a wonderful thing at times but it can cloud the judgment. He ended up taking her to the cleaners. She did not know that he was signing away guarantees against the house going to the bank and taking money out of the joint account. He left and then the bank said to my friend that it was foreclosing on her loans. She said: “What loans? I don’t have any loans.” The bank said that she did and that there was a guarantor against the joint bank account who was her husband. She threw up her hands in dismay and said that she did not know anything about it. The bank said that there was nothing at all that it could do about it. At that stage she had no assets. She either declared herself bankrupt or went through a no-asset procedure because this guy ripped her off and told her a whole lot of sweet nothings when she was in love with him.  
I brought this case up with the Inland Revenue Department and asked whether this sort of thing could happen. The Inland Revenue Department said that it could not because it was talking about the Inland Revenue Department not banks. I will clarify this matter. Mr Burns also brought up a case in which one of his constituents had been ripped off in this manner. The Inland Revenue Department explained what was happening under current law—that is people who owed tax were simply transferring tax to a joint bank account and there was no way the Inland Revenue Department could get hold of this money.  
I am not talking about the average New Zealander who owes $1000. I am talking about people who according to the Inland Revenue Department owe significant amounts of money. This was a loophole. These people were simply transferring money into the account of Mr and Mrs John Smith and it was completely untouchable. There was nothing the Inland Revenue Department could do. The people who owed significant amounts of money were sitting there and saying it was not their money so the department could not touch it. They had no assets that the department could touch. The Inland Revenue Department said that all it was doing with clause 105 was bringing it in line with other tax legislation. 
Hon Trevor Mallard 
: But this doesn’t show that the money has actually gone into that account. Nothing in here requires the money to be followed from the defaulter into the account. It could be someone else’s money completely and it could have been there for 20 years. 
STUART NASH 
: Yes it could be. This is the point that the select committee brought up: how can we make sure that this person has control of this money? It said that there needs to be an element of control of that money. The Inland Revenue Department made a couple of assurances. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Motion agreed to. 
A party vote was called for on the question  
That Part 7 be agreed to. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Part 7 agreed to. 
Schedule 
A party vote was called for on the question  
That the schedule be agreed to. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
Schedule agreed to. 
New schedule 2 
The question was put that the amendment set out on Supplementary Order Paper 187 in the name of the Hon Peter Dunne to add new schedule 2 be agreed to. 
A party vote was called for on the question  
That new schedule 2 be agreed to. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 43 
New Zealand Labour 36; Green Party 6; Progressive 1. 
New schedule 2 agreed to. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 It is 10 to 6. We have made enormous progress this afternoon. I seek leave for us to start the dinner break now and resume the Committee at 7 o’clock. 
The CHAIRPERSON (Lindsay Tisch) 
: Leave is sought for that purpose. Is there any objection? There is objection.  
Clauses 1 and 2 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 It is obvious which members have been here and which have not. Normally a debate on a title and commencement date would be relatively short but on this particular occasion it is likely to be much much longer because I do not think I have ever seen a bill with such a dog’s breakfast of a Supplementary Order Paper to do with the commencement date. I will start off by reading it to members.  
Normally a commencement clause has just a date but clause 2(6) will replace sections 40 and 41—this is on line 16 of page 6. If we look at the bill as it stands we see that the commencement date runs from line 4 on page 6 through to line 14 on page 7. I have never seen such a complex commencement date—and if that was not enough it is subject to 15 separate amendments on the Supplementary Order Paper. Members can expect members of the Opposition to be debating every single one of those amendments to the commencement dates because we think it is important that the Government is held to account and we think it is important to ensure that it works well.  
I will refer first of all to subclause (2) of clause 2 and I will be fair to the Minister in the chair the Minister for Courts. I am not sure whether she will be the Minister in the chair after dinner. I reckon the Government will give her the sack over the dinner break because of the way this has been handled. Subclause (2) is not affected by Supplementary Order Paper 187. Most of the subclauses in clause 2 are affected by the Supplementary Order Paper but subclause (2) is not. Section 104 in subclause (2) is treated as coming into force on 1 January 2005.  
I want to ask the Government what sort of retrospective approach it is taking to legislation. Section 104 is in Part 7 which I did not get to when we were working our way through the bill. I was cruelly interrupted and I got only two calls on it. Section 104 which relates to goods and services tax amends section ED 4(3) of the Income Tax Act and the changes are treated as coming into force in January 2005. I seek an assurance from the Minister that these changes are beneficial to taxpayers and are not negative.  
It is one of the principles of retrospectivity in taxation legislation that one can be aggressive in a prospective sense but when one is dealing with legislation retrospectively as we are in this case it should be to the benefit of taxpayers only. The assurance that I am seeking is that because of this date—[ 
Interruption 
] No it is not a hard question to answer because it is not one of the more complicated questions that we will be getting to soon—the subclauses that are affected by the Supplementary Order Paper. But under clause 2(2) section 104 is treated as coming into force on 1 January 2005.  
In a similar way I want to now refer to subclause (3) of clause 2 the commencement clause. In doing a cross reference I can confirm that subclause (3) is not affected by Supplementary Order Paper 187 which is very big and will of course be the main focus of the debate on the commencement clause. Clause 2(3) relates to sections 88 89 90 92 and 93. These matters relate to a matter that we had quite a lot of discussion on. We had an interesting discussion with the Hon Peter Dunne on the question of allowances. The Opposition moved an amendment to backdate that particular taxation arrangement. It was not successful but of course if we had been successful we would have had to shift the commencement date as well.  
But again I wanted to check and make sure that these arrangements are beneficial to taxpayers because my interpretation is that they are not and that there is a widening from board to allowances which means that some people will be treated adversely. If we are treating them retrospectively back to 2005-06 and have a commencement date of 1 April 2005 in section 88—it is clause 88 of the bill but it will be section 88 of the Act—than that is a real question.  
The next question I have relates to section 89. My eyes cannot quite see so I ask the Chair whether section 89 is struck out. There may be a line there that is not well printed. Clause 89 of the bill was struck out of the bill at the select committee. I want to check that we are not giving a commencement date to clause that— 
Hon Lianne Dalziel 
: I was going to ask exactly that question. 
Hon TREVOR MALLARD 
: I am pleased someone else is awake. Most of the strikeouts are very clear. It looks like there is a bit of a dirty mark on the page and I cannot quite tell whether section 89 is struck out. It is struck out—I thank the Minister for her assurance on that. I move now to clause 90. That is one of the areas where I do not think there has been a lot of debate. Therefore I will not focus on it especially not in the debate on the commencement date.  
But employment-related loans—this is in clause 92—are very important. Clearly we have already made a decision that it applies to the 2005-06 year and later income years but here we are bringing it into force at an earlier date back at 1 April 2005 which is appropriate for the 2005-06 tax year. But again—and I am interested to hear from my colleagues who have more legal experience than I do—I am very concerned about clause 92 “Employment-related loans: repayment” and the changes that are occurring there. If we are in fact bringing in this legislation as being “treated as” then it is deemed. Geoffrey Palmer would hate this—a deeming provision of this sort. 
Hon Darren Hughes 
: Ever since he left the Law Commission things have gone downhill. 
Hon TREVOR MALLARD 
: Well no. I think that ever since Geoffrey became Attorney-General things have been going downhill for him. We had a few “deemings”. But effectively “treated as coming into force” I think means the same as “deeming” in this context. 
Hon Lianne Dalziel 
: Is that in the SOP? 
Hon TREVOR MALLARD 
: No this is actually in the bill. I am up to only clause 2(3) of the commencement provisions. 
Sitting suspended from 6 p.m. to 7 p.m. 
Hon TREVOR MALLARD 
: I am sure I was referring before dinner to clause 2(3) and I think I dealt with the commencement date of section 92 which of course in the bill is clause 92. I was about to move on to clause 93. Clause 93 “Schedule 22A—Identified policy changes” is a pretty substantial area. The policy changes are within the block at line 27 on page 63.  
The identified policy changes in schedule 22A are treated as coming into force on 1 April 2005. I ask the Minister in the chair—we now have a new Minister in the chair; it is Paula Bennett—for an assurance that these changes are advantageous to shareholders because this is retrospective legislation going back to 1 April 2005. I cannot quite tell whether the Minister is bored already whether she is being caring and pretending to listen or whether she is giving me the nod. She is giving me the nod. [ 
Interruption 
] No she is listening to me and she is giving me an assurance I think.  
I move now to clause 2(4) which deals with when sections 90B and 91 are treated as coming into force. I would like to ask a similar question. These are of course part of the bill as reported back by the select committee. It is not until we get to clause 2(6) that we start to focus on the Supplementary Order Paper. I am sure the Minister is well-briefed on that and we thank her. She will be able to answer the question. Of course there will be a lot more questions when we get down to that part of the Supplementary Order Paper. But in this case I am focusing on sections 90B and 91—which are of course still clauses 90B and 91.  
Clause 90B deals with the investor interest size requirement. It is a new clause that was added by the select committee and it states: “An entity with an investor holding of more than 20% of the total portfolio investor interests in a class does not breach the investor interest size requirement if the investor is listed in subsection (4).” I ask the Minister—because this is being brought in now and it appears to be backdated to 1 October 2007—whether this already exists in legislation at any other point. There is nothing in the bill that indicates that this list which will come into force from 1 October 2007 actually exists now or whether it will be a new list that will be developed by the commissioner. It is listed in subsection (4) of the Act—it is a question of whether as part of subsection (4) it is part of the 2007 or the 2004 amendments to the Act or whether subsection (4) refers to the regulations that flow from this section of the Act.  
I move now to clause 11. Subclause (5) of clause 2 states that “Section 11 is treated as coming into force on 30 November 2007.” The issue in clause 11 is that of special returns. If there is a requirement to furnish a special return under section 17(1B) of the Act can one retrospectively require someone to furnish a return before the current date when it came into force previously? Frankly I do not understand how one makes someone furnish a return now or previously. One has either furnished a return before now and the requirement to furnish a return should come into force now or not—and my colleagues to my left might be able to explain it to me because it is part of the legislation. How can one retrospectively furnish a return? This is a requirement to furnish a return. How could it possibly be retrospective? People have either furnished it or not. If they have furnished it that is fine but they cannot go back and furnish something now. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I will begin by continuing the theme that my colleague Trevor Mallard picked up. That is to say that it looks like a random number generator has wandered its way through the pages of this Supplementary Order Paper so incoherent are the commencement dates of the various clauses. To give just a few examples the amendment to insert new clause 2(7B) covers sections 74(7G) 79B(1A) 79B(1D) and 79B(3) which are treated as coming into force on 1 April 2009 whereas sections 74(7BAB) and 82 inserted by new clause 2(8) are treated as coming into force on 6 October 2009 and sections 34B and 34C inserted by new clause 2(9B) come into force on 20 May 2010. These are not even the same dates of subsequent years. They appear to be randomly distributed. Sections 19B 28B 30C 36B(1) 36B(3) 64C 67B to 67F 73B and 83B all come into force on 1 October 2010. Section 74G however comes into force on 1 November 2010. Why single out one section to come into force 1 month later? Then there is a whole swag. I will spare members opposite the experience of reading through all the provisions but they start at section 21B and proceed through sections 51B(1) 57BA 69(1B) 74(1B) and a bunch of subsections of section 74 right on through to section 75(1)(b) and down to section 94B. There are about 24 of those provisions that enter into force on 1 April 2013. That is just in the head note—just in the head note. When one goes through the bill what is interesting is that the random number generator appears to have gone amok because interspersed through the bill are a range of starting dates some of which appear to be covered although others are not.  
If we turn to page 6 of the Supplementary Order Paper we see the date is 1 April 2011. Flicking through the date in subsection (2) of section CX 63 on page 8 is again 1 April 2011. Running through we get the amendment to insert new clauses 34B to 34F with dates of 20 May 2010. Moving over to the amendment to insert new clauses 38B to 38D the date is 1 April 2011 including the amendment to insert new section FB 10B. The date is 1 April 2011 for new clause 41B. This is really interesting: within the same clause new clause 41G “Elections to become qualifying company” we have a range of different starting dates. There are different commencement dates within the same clause. That is hard to credit. New sections HA 5(1B) and HA 5(5) inserted by new clauses 41G(2) and 41G(3) respectively have 1 April 2011 but new clauses 41G(4) and 41G(5) which follow are not specified. The next clause new clause 41H which inserts new section HA 7B “Grandparenting requirement” from the grandparenting Act has the date of 1 April 2011. Sections HA 10 HA 11(4) and HA 20 have the date of 1 April 2011. But in the next clause new clause 41J the date is 1 April 2010.  
The point is that there is no transparent logic as to why these different dates would have been selected. I can go on. New section HZ 4D inserted by new clause 57BA which runs from page 42 to page 44 has the date 1 April 2011 and so on and so forth. These apparently random numbers carry on throughout the Supplementary Order Paper. There may be some logic to this. I am sure officials have thought about it I am sure they have their reasons and the Minister Peter Dunne is an experienced Minister. I am sure that if it was purely random he would have noticed. But the point is that the Supplementary Order Paper is not transparent to the Committee. These questions could have been asked in a select committee if the Supplementary Order Paper had gone to a select committee but of course it did not. Where we are left as a Parliament is having to make observations. There may be logical answers but the Minister seems unprepared to reply to them and thereby—just like the Opposition—the public the industry and any listeners to this debate have no idea why an assortment of apparently randomly selected commencement dates have been sprinkled through the bill like confetti or hundreds and thousands. I have seen more order on a child’s sandwich. That is an example of the sort of thing the Committee has been wrestling with since 9.30 this morning. This is very very bad lawmaking.  
That brings us of course to the title of the bill. It should have been called the “Taxation (GST and Minor Matters Unanimously Agreed by the Select Committee) Bill” because every party in the House was going to agree to it. 
Hon Trevor Mallard 
: Clearly the work wasn’t thorough enough in select committee. 
Hon DAVID CUNLIFFE 
: Well my colleague has been doing a bit of late revisionism and he has found a few hairs that he wants to split—and good on him. It is great to have his laser-like focus at this stage in the proceedings. Of course as in any bill I say to Mr Mallard there are things one would change—but we pick our targets. Suffice it to say that there was sufficient agreement on this bill for all colleagues around the House to feel that it did more good than harm. Hello! We now get a 70 page Supplementary Order Paper dropped on the Committee almost without notice bigger than the original bill and filled with very very substantive provisions and the consensus is destroyed. The Minister has single-handedly shot the process in the foot and with it the parliamentary consensus that it would have enjoyed.  
So we could call it the “Bad Process Bill”. We could call it the “Pulling Division from the Jaws of Unity Bill”. We could call it the “Newton’s Law of Holes (What Ministers Should Always Avoid) Bill” because the Minister fell into the trap of keeping on digging when in earlier parts of the debate he was confronted with the process choices he has made. Instead of saying: “OK you guys have got a point. We didn’t provide it earlier and it hasn’t had all the scrutiny it could have had but it should still be passed.” no the Minister ran the following line: “Well we announced our intention in general terms in the Budget.” Fine. “We consulted with the industry on some matters contained in the bill.” Fine. “We therefore didn’t need to put it to a select committee.” Not fine because by the very same logic no tax bill would ever go to a select committee as almost all tax matters are highlighted in the Budget and almost all tax matters have been consulted on at some point with the industry. That is exactly why we have a generic tax policy process that involves public submissions because—let’s face it—many of those in the industry represent vested interests. They do not represent Kiwi mums and dads and Kiwi mums and dads are entitled to know at the very least why this bill affects them.  
Why does it affect them? Well here is the next possible title: the “Big Bottom Line Bill”. There is $2.2 billion of tax revenue at stake in the loss attributing qualifying company avoidance stakes which is governed by this Supplementary Order Paper. There is $2.25 billion as opposed to a total corporate tax take of only $9 billion. That is over a quarter yet it is supposedly amenable to discussion by a late amendment in the Committee of the whole House without public scrutiny through a select committee. That is why this bill should be called the “Newton Law of Holes (Please Stop Digging Minister) Bill”.  
Perhaps it could be called the “Green Light to Avoidance Bill”—or at least a very soft amber light because although it is true as the Minister said that the look-through company regime is just marginally tighter than the loss attributing qualifying company regime “marginally” is the operative word. Out of the $2.3 billion - odd of potentially avoided tax this regime recovers only $130 million for the Crown. That is $0.13 billion not $2.3 billion. So the question has to be asked—and it is probably the primary substantive question in this bill—as to whether the Government could not have done better. Could officials not have been asked to go further to work harder and to be provided with more resourcing so they could get that $130 million up at the time of the public’s greatest need to something closer to a shut-down of those much maligned exemptions?  
Finally we just might call this bill the “Weak Excuse For Weak Law Bill”. The excuse was that it was so urgent that we just had to bring it in before Christmas. But it was not urgent enough to take the amendments to the select committee a month ago. That has got to be the weakest excuse of all given the magnitude of tax flows at stake in the substance of this bill. Well it is at times like this that one is confronted with the age-old choice: was this a stuff-up or was it a conspiracy? 
STUART NASH (Labour) 
: 
 I would like to reiterate some of the comments my colleagues have made on the Taxation (GST and Remedial Matters) Bill. 
My colleague David Cunliffe looked at the 71-page Supplementary Order Paper 187 which was tabled on Tuesday and went through some of the commencement dates there. If we have a look at the actual bill itself we see that clause 2(1) states that “This Act comes into force on the day after the date on which it receives the Royal assent except as provided in this section.” Section 104 is treated as coming into force on 1 January 2005 and sections 88 89 90 92 and 93 are treated as coming into force on 1 April 2005. Those dates have passed so it is obviously retrospective legislation. Section 92B is treated as coming into force on 1 April 2006. Sections 90B and 91 are treated as coming into force on 1 October 2007. Section 11 is treated as coming into force on 30 November 2007. A whole lot of sections from section 23—in the 20s the 30s and the 40s section 58 in the 60s the 70s and 80s and section 108—are treated as coming into force on 1 April 2008. Section 64 is treated as coming into force on 1 October 2008. Section 82 is treated as coming into force on 6 October 2009. A whole lot of sections are treated as coming into force on 1 April 2010 more on 1 July 2010 a few more on 1 August 2010 one section on 5 August 2010 one section on 31 October 2010 and a whole lot more sections on 1 April 2011. Then as Mr Cunliffe mentioned the Supplementary Order Paper runs out the commencement date as far as April 2013. I think it would have been easier to list the sections that did receive the Royal assent rather than the ones that did not. There are so many dates here that it is confusing. 
To tell the truth I do not think a date is needed. I do not think the Minister of Revenue cares. The only reason there is a date is he has to have one by law. But he does not care. If he did care then he would not throw down a 71-page Supplementary Order Paper a day before the bill was debated in the Chamber a week before we break for Christmas and tell Labour members to go for it. In fact the Minister said to us that his officials had given Labour members a briefing. He gave us a briefing on Wednesday at our request for about 40 minutes on one small part of the bill. We had no idea the Supplementary Order Paper was coming. So the commencement date is a bit of a mystery. 
As my colleague the Hon David Cunliffe mentioned there is no transparency and no accountability. The problem I have with that is that as a member of the Finance and Expenditure Committee as well as a member of Parliament I am accountable for this bill. This bill will go through the House and it will be stated that it went through the Finance and Expenditure Committee. Well the truth is that less than half the bill as it will end up went through the Finance and Expenditure Committee. The majority of the bill did not go through the Finance and Expenditure Committee and it should have. We have made that point and I think it is a very valid point. I have had a couple of emails saying: “Good on you guys because this isn’t right.” One of them was from a tax lawyer. I can tell members that he will be rubbing his hands all the way to the bank. 
But there is another point to make. This legislation will come before the Finance and Expenditure Committee—I know that it will. Do members know how it will come there? It will come as a remedial matters bill and we will have to go through and make a whole lot of changes that the select committee would have made anyway. 
Let us look at the title. The bill could be called the “Taxation (Been Dunne Over) Bill.” The reason I say that is the initial bill was introduced on 5 August and it received its first reading on I think 19 August. Minister Dunne told us that he needed a Supplementary Order Paper because there was not enough time to introduce a proper bill. But Mr Dunne also told us that these changes were signalled in January when the Tax Working Group came back and outlined what it wanted to do. These changes were signalled when the Inland Revenue Department the Minister’s ministry put out a consultation document. These changes were signalled in the Budget. The changes were signalled three times about 6 months ago. The Budget came out on 20 May. Since then there has been June July August September October November and we are in December. 
The Minister said that the bill had to be taken for consultation. Well he had 6 months. In fact he could have done that in 3 months. He has asked Labour MPs to look at it in just 2 days. Why could he not have asked high-paid consultants to look at it in 2 months? How about 10 weeks of consultation? That is enough time. We ask people who are submitting to the Finance and Expenditure Committee to have their submissions in within 5 weeks—that is what we ask them—but we now suggest 10 weeks. That is enough time for highly paid tax consultants. That would have meant the bill was brought back in June or July. The Minister could have had something drafted with all their recommendations in it and given it to the Finance and Expenditure Committee in August when the initial bill was introduced. 
Hon David Cunliffe 
: Democracy is paying the price for his incompetence. 
STUART NASH 
: It very much is. I wonder what the Minister has been doing. Is he a lazy Minister? I have heard from my colleagues who know Peter Dunne a lot better than I do because they have worked with him that he was a stickler for process. This is not a bill from a Minister who is a stickler for process. Let us talk about this. If the consultants had had 3 months to look at it that would have given the select committee another 3 months to look at it. But of course as I mentioned we asked for submissions. We could have given the submissioners 4 weeks. They would have given their submissions changes would have been made to the bill and 2 months later the bill could have been reported back to the House—about 6 weeks ago. That is why I call this bill the “Taxation (Been Dunne Over) Bill”. It could be called the “Taxation by SOP Bill” because this is taxation legislation by Supplementary Order Paper. That means that this— 
Hon David Cunliffe 
: No taxation without representation. 
STUART NASH 
: No taxation without representation. What this means is that the Minister has put a huge substantial part of tax legislation on the Table with just 2 days for us to look at it. I personally do not think that is right and it certainly does not show any measure of accountability nor any measure of transparency. 
It could be called the “Taxation (Law Society Appreciation) Bill” because a lot of this legislation will be decided in the courts. I will say why: because it has not gone through due process which would have really tightened it up. I can say as a member of the Finance and Expenditure Committee that the drafters do a fantastic job. They draft some very good bills and I am sure the Supplementary Order Paper was well drafted. But the select committee process allows us to go through legislation almost line by line which Mr Mallard said used to happen in the Committee stage. The select committee does that these days clause by clause. The drafters sit down and say they think they have made a mistake. They cross-reference everything. Even on the third report back they say they have some changes to make. That could have happened this time. There is no excuse in my mind for this legislation to be passed under urgency through a Supplementary Order Paper. It is not good process. There will be lawyers and tax consultants who make a lot of money out of this. 
We have a small problem the problem being that the banks—and I am not bringing the banks into this—had to pay back about $2 billion in tax. They had to do that because they had interpreted tax legislation one way and the Commissioner of Inland Revenue had interpreted tax legislation another way. There was confusion and this is what happens when there is confusion: taxpayers do not get it right and the liability can be huge. Knowing the lawyers that the banks used I can image their bill was huge. 
There are a number of names that this bill could have been called that are so much more appropriate than the Taxation (GST and Remedial Matters) Bill. Let us be honest: “Remedial Matters” suggests that it is a tweaking a tidy-up or a correction—not substantial legislation that wipes away 130000 legal entities. This legislation removes loss attributing qualifying companies and that is done in a Supplementary Order Paper. There is no transparency there. That is why I have real concerns about this bill and that is why the name of the bill does not accurately reflect the substantive quantity of it. 
With “GST” in the title we get the inference that there is something to do with GST in the bill. It is a headline act and it was. 
JO GOODHEW (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am pleased to follow my colleague Stuart Nash. I think he was picking up on a very important point as we debate the title and commencement clauses of the Taxation (GST and Remedial Matters) Bill. In fact when we consider the title it gives us a signal that this was to be a non-controversial bill. It is inherent in the title that it would not create any divisions in Parliament. Indeed until this morning at 9.30 or thereabouts it had not done so. It had proceeded quite amicably through the process of the Finance and Expenditure Committee. It had been done in a bipartisan fashion and some good sensible amendments had been brought through the select committee process. We had had submissions and heard other people’s view on the bill to make sure it implemented the measures that the Government wanted to see implemented.  
Then effectively out of nowhere came the 70-page Supplementary Order Paper. I think it complicates the process and makes it very difficult for a rational decision-making process to take place. It came out of nowhere. The Minister of Revenue asserted that there were indications of it; we certainly did not see those through the select committee. To see a Supplementary Order Paper of that magnitude—70 pages of complex detail—tabled in Parliament on Tuesday is not appropriate given the title of what should be a non-controversial bill proceeding through Parliament. It is a wash-up bill that creates no issue between parties that simply want to resolve technical tax adjustments of an annual basis and similar adjustments. Yet here we are at 7.30 2 weeks out from Christmas on a Friday evening debating a bill that has attached to it a major Supplementary Order Paper that sees the title needing to be changed to reflect the enormous addition that the Supplementary Order Paper brings.  
There is major substance in the Supplementary Order Paper. Major changes are introduced to the bill and the Parliament has no opportunity other than this very constrained chance through the Committee stage and the third reading of the bill to consider what ramifications are brought by the bill under the current title. It brings quite considerable risks of error and we may need to revisit it as a Parliament. That is certainly the history. Anybody who follows the legislative process will know that rushed legislation is bad legislation. There are occasional needs for it to be rushed and we as a party have not stood in the way of those changes. I think back to the Canterbury Earthquake Response and Recovery Bill. Not a single member of this House opposed that legislation. But when we have a technical tax bill as reflected in the title of this bill it is incumbent on the Minister that he does not introduce controversial late changes of the scale and order that he has which skew the original purpose of the bill and are not truly reflected in the title of the bill before the Committee.  
This brings a risk for the Inland Revenue Department. Let us face it: no one particularly likes paying tax. The department has a difficult task. Its job is to be fair—I think that is the phrase—and to collect the revenue and we uphold the department in its duty and acknowledge the work that it does. But when a bill with a Supplementary Order Paper of this size under the bill’s title as introduced comes through Parliament at a great rate of knots bringing with it very high risks of error that have not been picked up by the usual process then inevitably two parties wear those risks—probably three in fact. The first is the Government but technical tax bills are not likely to create enormous public disorder. They also create issues for the taxpayers which is the second party. They will find a venue for their wrath and that wrath will likely be deposited I suggest with the Inland Revenue Department.  
I have some sympathy for the Inland Revenue Department officials. I am sure if they were able to speak out they would not be favouring this process. I am sure they would want the comfort that the select committee process provides by way of scrutiny and by way of public submission. When a bill is introduced with a Supplementary Order Paper of this scale that is not truly reflective of the title that it came into this House with in August then there have to be some very serious concerns.  
The bill could be re-titled with alternative names. One that comes to the mind is the “Jonathan Coleman Mark 2 Bill” reflecting the last time the Minister of Revenue had a major piece of legislation in the House and entrusted it to another Minister. The Minister in the chair the Minister for Social Development and Employment had better be a bit wary and check her speech notes. If she has any notes tonight to speak from she should double-check that they are reflective of the Taxation (GST and Remedial Matters) Bill and not another piece of tax legislation.  
Although Mr Dunne apologised profusely for that error and accepted that it was his office’s error I think Jonathan Coleman copped the flak for that and his reputation suffered. So I suggest to the Minister for Social Development and Employment sitting in the chair tonight in place of the Minister of Revenue that she watch very carefully if she has speech notes to check that they are the right speech notes. Then she will not be given the sort of moniker that Jonathan Coleman earned in respect of reading speech notes for another tax bill.  
Another name for the bill could be the “Here I Come Ottawa Bill”. The word is that Mr Dunne may be in his last term in Parliament and that he might be looking for a posting overseas and Ottawa is a posting that tends to go to middle-level politicians finishing their career. I am sure he would make a very good High Commissioner for New Zealand in Ottawa; I am sure he would serve us faithfully. But I have to say— 
Hon Trevor Mallard 
: You get the Caribbean at the same time. 
BRENDON BURNS 
: Gee it must be really nice in December to escape from Ottawa to the Caribbean because the winters are fairly bleak.  
The Minister is a competent Minister. That is why this bill has been surprising because the hallmark of this man through 25-plus years—a quarter of a century—in this Parliament has been sober habits. He is a man who brought through legislation when he was a Minister that generally was well structured was introduced in the appropriate time frames and was given the right amount of time for scrutiny by select committees and by Parliament. So it is a surprise to us that we are dealing with a bill with the title of Taxation (GST and Remedial Matters) Bill. The locomotive is the bill as reflected by the title but behind it is this train of many carriages reflected by the Supplementary Order Paper. Perhaps we could pick a locomotive title for the bill.  
Another possibility might be the “Mantle of Gerry Brownlee Bill” because in terms of competence he is another Minister who vies for the title of not having the best command of the House’s practices. By bringing in this bill in this fashion with this huge collected train of a 70-page Supplementary Order Paper which is bigger by 13 pages than the original bill Peter Dunne is bringing the House into considerable risk of disrepute as those tax changes unfold and the implications of them come through for us as a Parliament.  
I expect as a member of the Finance and Expenditure Committee that this may not be the last we see of the Taxation (GST and Remedial Matters) Bill soon to be an Act. I believe we will be revisiting this issue or at least the content of the Supplementary Order Paper that is attached.  
In terms of the commencement dates I note—and my colleague Stuart Nash touched upon this—the varying commencement dates for the various clauses of the bill. They date right back to 2005-06 in the changes to the taxation treatment of accommodation issues. So there is an issue of retrospectivity with this bill as introduced and we always have to be very cautious with that as a House. Obviously a whole range of issues unfold when we start trying to pass legislation that deals with past issues and validates issues that have been in play for sometimes a number of years. 
We have several varying commencement dates. Clause 104 comes into force on 1 January 2005 so we are stepping back nearly 6 years in terms of retrospectivity in respect of the bill. Clauses 88 90 92 and 93 come into force on 1 April 2005 so again there is that 5-year - plus time frame. Clause 92B comes into force on 1 April 2006. Clauses 90B and 91 come into force on 1 October 2007. Clause 11 comes into force on 30 November 2007. Then we come up to more recent times with clauses 64 and 82 coming into force in October 2008 and 2009 respectively and clause 31 and whole range of others which I will not bore the Committee with reading coming into force on 1 April 2010. We are into this year coming into the home straight in respect of the retrospectivity of the measures. But it is an issue of concern that we are passing this legislation under urgency. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 This is a serious question for the Minister. It is one of these issues of “Find the subclause.” I challenge someone to find subclause (7B) of clause 74 in the Taxation (GST and Remedial Matters) Bill. I have been looking for it and I cannot find it. It has been brought into force according to the Supplementary Order Paper and to be fair it has been brought into force by the amendment. In fact (7B) is something that came in apparently as a result of the Finance and Expenditure Committee but if one goes to clause 74 one will see there is no subclause (7B) or one that I can find at least on the relevant page page 56 of the bill. If we go to page 58 of the Supplementary Order Paper we can find subclauses (7BA) and (7BAB). We can find subclause (7BB). We can find subclause(7BC) but we do not appear to be able to find subclause (7B). If there is a separate Supplementary Order Paper from the Minister that I have not got and it is clicked in there somewhere then that is something I would be interested in but I am trying to work it out. I do have an interest in the Recognised Seasonal Employer scheme. I have had something to do with setting it up and in fact worked with a group of its people recently.  
But it is a bit like the game “Pin the Tail on the Donkey”. I am trying to find where subclause (7B) of clause 74 is. I would be obliged to any member opposite who can point out a page of the Supplementary Order Paper—or presumably it should be in the bill as reported back. It is referred to in the bill as reported back but we seem to have clause 74B(1) and (2) but do not seem to have clause 74(7) although I am now working my way backwards. Clause 74—oh is it the definition clause? That is where it is. I am obliged to officials for giving me a nod there and in fact for members who have been searching. I do not know whether it involves a chocolate fish. It appears slightly out of place in the numbering and I am obliged to people because I think we found it at about the same time. For those who are at home searching through the bill it is on page 55 and it is on lines 11 12 and 13 for those people interested. I think it is one of the problems that this late at night the difference between clause 74B(7) and in this case clause 74(7B) is something that can be a little bit confusing. 
I apologise to the Committee on that particular point. But it does go to what I think is a pretty important factor when one has a Supplementary Order Paper with so many changes. I will just check again because we have “74(9)” as well and it is a matter of checking whether that is also in the right place. That has to do with the definition of “transfer of value” in which the phrase “paragraph (b)(ii)” in paragraph (a) is substituted by “subparagraph” and then—what do they call that little “i” with the brackets around it? One of my friends who can remember Latin might be able to tell me. No it is all right; it is a long time since they have done Latin. But we count it as a one or an “i” with— 
The CHAIRPERSON (Eric Roy) 
: Roman. 
Hon TREVOR MALLARD 
: It is a roman one I suppose. But there is a word for it. [ 
Interruption 
] No my colleague from Southland does not have a good memory for Latin either and it was a long time ago. I think I can remember amo amas amat and amo was the one that I mainly went for during my career. 
JACQUI DEAN (National—Waitaki) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 66 
New Zealand National 58; ACT New Zealand 4; Maori Party 3; United Future 1. 
Noes 47 
New Zealand Labour 40; Green Party 6; Progressive 1. 
Motion agreed to. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 66 
New Zealand National 58; ACT New Zealand 4; Maori Party 3; United Future 1. 
Noes 47 
New Zealand Labour 40; Green Party 6; Progressive 1. 
Clause 1 agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 187 in the name of the Hon Peter Dunne to clause 2 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 66 
New Zealand National 58; ACT New Zealand 4; Maori Party 3; United Future 1. 
Noes 47 
New Zealand Labour 40; Green Party 6; Progressive 1. 
Amendments agreed to. 
A party vote was called for on the question  
That clause 2 as amended be agreed to. 
Ayes 66 
New Zealand National 58; ACT New Zealand 4; Maori Party 3; United Future 1. 
Noes 47 
New Zealand Labour 40; Green Party 6; Progressive 1. 
Clause 2 as amended agreed to. 
House resumed. 
Bill reported with amendment. 
The CHAIRPERSON (Eric Roy) 
: I move  
That the report be adopted 
. 
A party vote was called for on the question  
That the report be adopted. 
Ayes 66 
New Zealand National 58; ACT New Zealand 4; Maori Party 3; United Future 1. 
Noes 47 
New Zealand Labour 40; Green Party 6; Progressive 1. 
Report adopted. 
Procedure 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Under Standing Order 71 I move  
That the Government order of the day for the third reading of the Taxation (GST and Remedial Matters) Bill be postponed 
. The reasons for this are obvious. This bill has been rushed—it has been rushed enormously. It has had a Supplementary Order Paper that is double the size of the bill. It has brought in a whole new area that has not gone to a select committee and members— 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: As I understand it a procedural motion of this nature is not a debatable point. 
Hon Trevor Mallard 
: I have not finished moving it yet. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I considered the member had finished moving it. The member was on to an explanation and no doubt it would have been a lengthy one if he was given the opportunity. We now have a procedural motion. I have been advised by the Clerk that the member’s motion is out of order because it is not an order of the day. We now come to the third reading. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. My understanding is that there is a requirement for the Clerk to call the third reading at which point it becomes an order of the day and we proceed from that point. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: The member is incorrect in that assumption. The Clerk is not required to call a third reading when the matter is being dealt with in urgency. 
Hon Trevor Mallard 
: Point of order Mr Speaker— 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I am finishing my comments. From the moment I have said the bill is set down for its third reading forthwith the next thing is for the Minister to take the call. There is no Clerk involved.  
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. I move  
That the third reading of the Taxation (GST and Remedial Matters) Bill be discharged 
. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: That motion fails for the same reason as the member’s motion to have the matter deferred because it is not an order of the day. 
Hon Trevor Mallard 
: I didn’t say it was an order of the day. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: No the member is trying to amend the sheet that we have agreed to. We have agreed in urgency that the order is set and it has been agreed to by the House. We simply go on to the third reading. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. I think you will be aware that it is within the ability of the House to postpone matters even under urgency or to discharge matters under urgency. The fact that we have agreed to consider them does not mean that we have to. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I suggest to the member that if it was the will of the House to alter the House’s resolution passed by majority by notice from the Government regarding the order of urgency the only method that the member has to do that is by leave. 
Hon Trevor Mallard 
: No not at all. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I will just consult the Clerk. 
Hon Trevor Mallard 
: I can give you some help while you are doing that if you like. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: If the member is going to be helpful the member can be helpful—the normal definition of helpful by the way. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I am trying to be helpful. Quite often when business is being done under urgency the Government and the House—because in the end it is the House that makes the decision normally on the initiation of the Government but possibly on the initiation of this sort of motion—decide that it will pull out. I think you will remember on a number of occasions in the past when a Government has had a long list of bills that it has chosen to vary the order of business.  
Even with motions or legislation that has been agreed and set down there is no obligation for us to proceed in that particular order. That was essentially the choice that was being given to the House with the two motions. One was that it be postponed. Of course if it is an urgency motion and it is postponed then we come back to it with an urgency motion. But of course if the bill is discharged it means that it goes away completely. I put it to you that there have been many occasions when the House has made that choice. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I draw the member to Speaker’s ruling 13/5 a decision by Speaker Kidd a very learned Speaker and one whose decision we should follow: “A motion to discharge an order of the day and refer a bill to a select committee was ruled out of order where the House had accorded urgency to the passing of the bill.” It seems to me that that is very clear. 
Hon Trevor Mallard 
: We’re not sending it to the select committee. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: The point that I am making to the member is simply this. When the House has decided on urgency and a list of bills to be considered those bills are then on the Order Paper. The member cannot move a motion to discharge or alter the order of the Order Paper in that manner. The motion is out of order. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. There then arises a very real question of how it is ever possible for the House having accorded urgency to a set of matters not to proceed or to review the order. It is something that has been regularly done over a period and I accept it is much more often done on the motion of the Government. In fact I think you set the bill down for third reading forthwith and on occasions bills are set down for third reading presently and that is often done on a nod or a wink from the Government but there has always been flexibility. The Leader of the House can choose to pull out before we are finished. That is a choice. The House can choose to vary the order. It can choose not to proceed with particular pieces of legislation. I accept that a bill cannot go back to a select committee. There was never a suggestion that this bill would go to a select committee. I can remember the ruling; I think I might have been involved in having the ruling set up. 
Hon Gerry Brownlee 
: Mr Kidd. 
Hon TREVOR MALLARD 
: It was Mr Kidd yes. I was probably standing about here at the time. The point I am making is that especially around the postponement motion I do not think you can argue that this is not an order of the day. It is an order of the day that has been set up by the urgency motion. I can accept that it is not a debatable motion. It is fair to say that I might have taken the liberty in my support of the motion. You might just rule out the discharge motion on the basis of the urgency motion but postponement within an urgency motion does not contradict the urgency motion. It is consistent with it. It is a matter of order not a matter of discharge. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I draw the member’s attention to Speaker’s ruling 12/4 which states: “An urgency motion does not set out a binding order of business in the sequence named. It is indicative. It is open to the Government to vary the order.” The Speaker has ruled that it is up to the Government to set the order. The matters on the list are complete. It is not open to the member by way of motion to have the bill discharged. 
Hon Trevor Mallard 
: Where does it say that? 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: Speaker Kidd said that it is up to the Government to decide. I have been advised by the Clerk just to reconfirm what I said before that the motion to discharge is out of order because it has been agreed to pass the legislation in urgency. 
Hon Trevor Mallard 
: I have sort of accepted that. It is the postponement one that I am concerned about. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: In my opinion postponement is in the same nature. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. This is absolutely serious. My understanding is that the House is the master of its own destiny with regard to these matters. You are absolutely right; the Government can decide the order. That has been well ruled on and well used by Governments during urgency in the past at those times. What is not clear is that there is no ability for the House itself to take the decision either by way of leave or by way of non-debatable motion in order to reorder business. I think it is fair to say that from the research I did in preparing for this motion I thought the discharge was in contradiction to an already agreed position of the House. I could find nothing to indicate that a postponement was such. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: If the member is asking me to make a ruling I will make a ruling. My ruling is that if the member wishes to have a bill postponed then the only avenue the member has for that is by way of leave. The member does not have available to him a motion of the House to postpone the bill. That is the only avenue. The House has decided that this is the business to be done and having made that decision the House’s decision stands. If the member wanted to put that amendment he should have done it at the time the urgency motion was put forward. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. That is wonderful advice but I think you know that the urgency motion is not an amendable motion; therefore that option is not one that is available to members at the time. 
Hon Gerry Brownlee 
: It backs up the point. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I take the interjection from the Hon Gerry Brownlee that that simply reinforces the point. If the motion is put it is either carried or not carried. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I seek leave to have the bill deferred. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: Leave is sought for that purpose. Is there any objection? There is objection. 
Third Reading 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
 on behalf of the  
Minister of Revenue 
: I move  
That the Taxation (GST and Remedial Matters) Bill be now read a third time 
. Improving the integrity and fairness of the tax system was well signalled by the Government as part of the package of tax reforms announced in Budget 2010. Those reforms give New Zealanders greater choices in working saving and investing by putting more money into their pockets through lower tax rates.  
The measures contained in this bill further deliver on that promise of a fairer more transparent tax system by strengthening parts of the GST rules to prevent so-called phoenix schemes while clarifying other areas where time and the complexities of business have resulted in uncertainty about how the rules should be applied.  
In reporting back to the House the Finance and Expenditure Committee recommended a number of very worthwhile technical changes to the bill to further clarify the scope definitions and timing of certain issues under the proposed new rules. Further to these changes the bill now incorporates a number of significant new measures introduced by way of Supplementary Order Paper 187. The bill we see today is the result of very constructive public and private sector collaboration forged during open consultation.  
I would like to express on behalf of the Minister my thanks to all those involved in bringing this bill to its third reading. Now with great pleasure I commend the bill to the House. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Who would have thought that shortly after 9 this morning when we commenced debate on this bill we would be here at about 9 tonight still debating the same bill? That is occurring for two very simple reasons. One of the very simple reasons is the Leader of the House. The other very simple reason is that this bill is a blatant abuse of process. It is an abuse of the House because the speech the Minister read but did not understand is a speech about the bill as introduced. That was a speech about the bill that was considered by the Finance and Expenditure Committee. That was a speech about the bill that was put out for public submissions. It had nothing to do with the 60 or 70 percent of this bill that was introduced under urgency at the eleventh-hour by Supplementary Order Paper. Not only was it 70 percent of the content but it was about 95 percent of the value by tax revenue. It is the Supplementary Order Paper that introduces fundamental structural amendments that impact over $2 billion a year of tax loss which is currently funnelled through loss attributing qualifying companies.  
It is the amendments and not the bill that take the current loss attributing qualifying company rules and introduces an entirely new class of company called the look-through company which represents a very timid step in the direction of making it less easy for corporate arbitrage to write off company tax losses on personal income. It possibly would have been a measure that one day could have been supported by other parties had it been through proper scrutiny. But the reason we are opposing this bill tooth and nail in the House today is that the Government by malice and intent has denied the public of New Zealand the opportunity to participate in that debate. It has denied the public of New Zealand the opportunity to participate in that debate.  
This is a totally inappropriate misuse of parliamentary process and in my view it was made worse not better by the lame excuse of the Minister of Revenue who said that just because it had been announced in the Budget and a discussion paper had been put out it was legitimate somehow to bring provisions to the House by Supplementary Order Paper. I am afraid that that is not so. As a matter of simple logic to do that for this bill would entitle any Government to do that for any tax bill because very few affect more revenue than this amendment does at $2 billion. If that is the case then we could kiss goodbye the generic tax policy process that is one of the most valuable institutions of our fiscal tradition. It has been respected across both sides of the House and across multiple bills for many years but this Supplementary Order Paper undermines that process.  
The loss attributing qualifying company issue of course has dominated the substance of the debate and it dominates three parts—over 70 pages—of the amendments.  
Hon Gerry Brownlee 
: Has the member got an LAQC? 
Hon DAVID CUNLIFFE 
: No the member does not have a loss attributing qualifying company. Has that member got one?  
Hon Gerry Brownlee 
: No. 
Hon DAVID CUNLIFFE 
: Oh jolly good! Well enough Kiwis do I tell Mr Brownlee to avoid $2.5 billion worth of tax and that is why we care about it because his Government is running a $13 billion per year deficit and the Government could do with some of that if it could bother to clamp down on the avoidance. But because the Government has not done so and because it has not given the public or the business community the opportunity for a fair say Government members will be here all weekend with their paltry list of pre-Christmas rushed legislation—all weekend because the Leader of the House has screwed up the process. He has overloaded the urgency motion and he has allowed his Minister of Revenue to introduce a totally inappropriate Supplementary Order Paper. It is one thing for the Minister to make that mistake; it is entirely another for the Leader of the House to fall for the pressure no doubt from officials through the Minister that that just had to be done. Well it did not have to be done and it will not be done easily because members of the Labour Opposition will fight this bill—and have fought the bill—clause by clause part by part and line by line to the utter limits of parliamentary process.  
The bill also deals with the matter of GST and the opportunity for zero-rating some transactions. That has allowed—and the Speaker has ruled in terms of scope—debate about the zero-rating of other forms of goods and services most notably fresh fruit and vegetables. New Zealanders in their homes and in their workplaces know that these are tough times these are tough years. Household budgets are under pressure and it is just this week that we have learnt some important new facts: the average household is $30 a week worse off than it was last year by $18 per average income earner. We know now that for seven straight quarters annualised GDP per capita has gone backwards—that is real income—which means that average Kiwis are worse off today than they were when this National Government was elected. They are worse off today than when this National Government was elected.  
That is why the polls overwhelmingly show that nobody buys the public relations spin from the Beehive about the tax that has made them better off. They do not buy it because it is not true. They do not buy it because they know that they might have 10 bucks in the wallet but the groceries are costing 30 bucks the power bill is costing 5 bucks and so on and so forth. There is no relief in this bill; even though it empowers the zero-rating of GST it contains no help for hard-working Kiwi families and that is why Labour is going to bring that help. That is why Labour will deliver GST zero-rated fresh fruit and vegetables.  
The bill talks about KiwiSaver but it takes no opportunity to restore the cuts this Government has so short-sightedly made to the single most successful savings scheme in New Zealand’s history. It was the single most successful scheme and was undermined by this Government when it cut employer contributions and Government incentives in half. For that reason the rate of growth of the stock of savings has been reduced and that is a very serious problem. Standard and Poor’s is about to drop our credit rating because we have an appalling savings gap.  
That brings us full circle because Standard and Poor’s told us that we are not only bad savers but we are very bad investors. Because such savings that we did have instead of being put into productive businesses that would create jobs and incomes—things people say National once used to represent—were put into housing. We effectively borrowed internationally to bid each others’ house prices up. Why? One key reason was that there was a tax incentive to do it and it is embedded in this bill and is still now perpetuated by this bill. There is a tax incentive that one could run a loss on a rental property and write it off not only against the future earnings of the property which would be fine but against the personal income of the owner or the shareholder. There is no logic and there is certainly no economic rationale for that to be continued.  
So this bill in summary is a sham. It is a sham and it is a wasted opportunity. There was a good process at the Finance and Expenditure Committee. There was a good process in dealing with the original bill that made some amendments made some improvements and—I give credit to the chairman of the committee Craig Foss—brought the committee to consensus. That consensus was shattered on Tuesday when this enormous Supplementary Order Paper was introduced. The Government introduced this enormous short-sighted wasteful and redundant Supplementary Order Paper.  
Why is it redundant? I tell members that when Labour returns to the Treasury benches in 2011 one of our first acts will be to crack down on tax avoidance because to us in tough times personal responsibility means that everybody pays their fair share. That is the Kiwi way—a fair suck of the sav and a fair day’s pay for a fair day’s work. We all put our shoulders to the wheel in hard times to keep the truck moving forward. That means fewer outlets and fewer loopholes for fancy-pants corporate tax advisers and lawyers. We need to make those loopholes dramatically smaller. This bill had the opportunity to do that and it failed.  
It is a matter of deep regret to the Labour Opposition that although we have used every opportunity in this debate we know in our heart of hearts that the scrutiny we have been able to give to the detailed technical content of areas of this Supplementary Order Paper has not been anywhere near adequate relative to the importance of the subject matter. The reason for that is of course that they cross-reference back to four principal Acts. They have multiple connections and it would take an expert many many weeks to follow their way through the chain.  
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 It is a pleasure to follow the member who has just spoken David Cunliffe on the Taxation (GST and Remedial Matters) Bill. I say to him that maybe he should have saved his energy and his speech for a barbecue at St Marys Bay this summer. When Labour members find out the result of the  
3 News 
 poll this Sunday they will be organising barbecues in St Marys Bay in Christchurch or wherever they think they will find their next leader. 
To come back to the bill as it has already been stated on this side of the House this bill will transform the taxation system in this country. Much has been made of the so-called phoenix fraud schemes that this bill is designed to address and much has been said by members opposite about the Supplementary Order Paper. We all know that these measures were announced in Budget 2010. We know that they are being put forward in the Committee stage. Chief amongst those measures is the clarification of depreciation for non-residential building fit-outs the grandparenting of depreciation loading and the improvement of fairness of access to social assistance programmes. We know that and members opposite do not disagree with what this bill says. This bill is about streamlining the tax system creating jobs and making a fair and equitable tax system. I commend this bill to the House. 
STUART NASH (Labour) 
: 
 I move  
That the motion be amended be inserting the words “this day 6 months” after the word “time”. 
 This bill is called the Taxation (GST and Remedial Matters) Bill. That implies that the bill is a taxation bill primarily concerned with GST and remedial matters. It makes sense. It is the title of the bill it is what it is about it is what was sent to the Finance and Expenditure Committee it is what we talked about at that select committee it is what we heard submissions on at that select committee and it is what the last speaker heard and deliberated on at that select committee.  
Government members spoke on the first and second readings of this bill. They gave full speeches and they spoke in support of it. However in the time between the second reading and the deliberation in the Committee stage a Supplementary Order Paper of 70 pages was introduced. The bill is 57 pages long. The Supplementary Order Paper is larger than the bill itself—in fact this Supplementary Order Paper is larger than seven of the nine tax bills that have come before the House this term.  
Hon Ruth Dyson 
: How many? 
STUART NASH 
: It is larger than seven of those nine tax bills. Even more amazing is the fact that not one member opposite not one National member of the Finance and Expenditure Committee and not one National former member of that committee has taken a call in the Committee stage. We have been debating the Committee stage for nearly 12 hours— 
Hon Ruth Dyson 
: Is that right? 
STUART NASH 
: We have been debating in the Committee stage for nearly 12 hours— 
Aaron Gilmore 
: Twelve hours of nothing.  
STUART NASH 
: —and not one Government member has spoken except now Mr Gilmore. He has something to say. Let us hope that Mr Gilmore has something to say for longer than 2 minutes because this bill and the amendments in the Supplementary Order Paper deserve that. They deserve more than the practice of members opposite standing up saying: “I support the bill.” and sitting down again. Mr Gilmore knows better than that. He has financial qualifications and he knows about the tax system. He knows that 130000 legal entities are being rubbed out because of this Supplementary Order Paper.  
I want to make two further points in my third reading speech. The first is that Labour might well have supported this bill if the Minister had undertaken proper process. The second point is that this is no way to pass tax legislation. The GST component in this bill related to zero-rating land purchases between GST registered parties so it was quite a change. We are talking about zero rating and therefore the bill probably deserved its title: the Taxation (GST and Remedial Matters) Bill. The zero-rating provisions remove the possibility of rogue taxpayers undertaking phoenix fraud. Labour supported those amendments. We supported this bill in its first reading second reading and during the select committee process. Everyone in this House supported that.  
Part 2 concerns amendments to the Income Tax Act and we supported that part in the first and second readings and at the select committee. Part 3 amends the Tax Administration Act 1994 and we supported that as well. Part 4 makes amendments to the Income Tax Act and yes we supported that. Part 5 makes amendments to the KiwiSaver Act. Part 6 makes amendments to the Stamp and Cheque Duties Act and Part 7 makes amendments to other legislation. We also supported those amendments. Do members get the picture?  
This is a pretty simple bill; it is a technical bill. As I said in my speeches in the first and second readings and as my colleague David Cunliffe mentioned in his second reading speech it is a technical bill—one of those necessary bills that Labour supports. Labour members support good common-sense robust and transparent legislation. That is what we are about. We support legislation that allows taxpayers ease in paying tax. We support legislation that simplifies tax legislation and adds a level of transparency. This is what we support.  
We supported the bill at the first and second readings and through the select committee process. That is what we did and we did so in good faith. Then what happened? On Wednesday evening when we were sitting in this Chamber we saw a 70-page Supplementary Order Paper dumped on the Table—a 70-page Supplementary Order Paper to the Taxation (GST and Remedial Matters) Bill. What has this Minister been doing?  
The Minister told us that these changes had been signalled and we knew that. We knew that the changes had been signalled by the Tax Working Group as the Minister pointed out. A discussion document outlined these changes as the Minister pointed out and the Budget also outlined these changes. Even within the Labour tax team we believed there should have been changes to the rules around loss attributing qualifying companies. We were not against working with the Government on changes to that tax regime. But what the Labour Party demands is transparency consultancy and accountability in tax legislation and this is not what this bill has become. That is why we do not support it.  
The original bill—I was going to say the substantive part of this bill but it is only 57 pages compared to 70 pages—was introduced on 17 August. As I have pointed out there has been plenty of time for the Minister to undertake consultation with his officials and with experts—behind closed doors because it did not happen in the select committee process. There has been plenty of time for the drafters to come up with a bill that the Minister could present to the House and to the select committee and we could be debating it now.  
The thing about this bill is that if it had stayed in its original form—57 pages—then the debate instead of starting at 9 a.m. and finishing at 9 p.m. could probably have started at 9 a.m. and finished at 11 a.m. The debate would have taken 2 hours not 12 hours. The reason it has taken 12 hours is that Labour rejects outright any tax bill that has not gone through the proper process.  
The Minister followed the proper process to the drafting stage. He drafted a bill—and a Supplementary Order Paper that could have been a bill because as I said it was larger than seven out of the nine tax bills that we have seen before this House—and then the bill was referred to the Finance and Expenditure Committee. Then at the select committee Labour members Green members ACT members Maori Party members and National members got an opportunity to look at the bill talk to their experts talk to officials and call for submissions from those who had not been originally consulted. So the Minister went halfway though the process and then stopped. He said that that was enough consultation. I contend that that is not enough and the Labour team contends that that is not enough.  
When it comes to taxation it is only fair that the people of New Zealand have their say. The select committee will put ads in every major newspaper and it will tell New Zealanders their rights under due process. It will say that New Zealand citizens have the right to appear before a parliamentary select committee and give it their views on the legislation. What then happens is that members of that select committee. from all sides every single party in this House will take on board their recommendations and their submissions. We talk to officials we talk to our expert tax consultant and then we come up with considered opinions—that is the process.  
I contend that if that process had been followed then this bill would have been passed more quickly. The Supplementary Order Paper which would have been another bill probably would have passed but it would have passed with amendments because there always are amendments. In every single remedial matters bill there are changes because we always make changes and we always make sure that the bill is a lot more robust.  
The tax officials do a brilliant job. They hear what we say they liaise with our consultant and they say: “Yes we hear what you say; this is good.” This Supplementary Order Paper would have been a good bill if it had gone through the proper process but it has not and the people of New Zealand should be outraged. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I want to deal with a motion moved by Stuart Nash. The motion to amend the question that the bill be read a third time is not in order. It is ruled out of order as it is inconsistent with the decision of the House to accord urgency to the passing of the bill. This is also consistent with my previous ruling that a motion to postpone the debate is out of order as it is inconsistent with the decision of the House to accord urgency to the passing of the bill. I draw members’ attention to Speaker’s ruling 12/2 by Speaker Jack in 1976: “When urgency is taken for the “passing” of a bill this means passing through all stages.” 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak on the third reading of the Taxation (GST and Remedial Matters) Bill. This has been a pretty ugly day for Parliament if the truth be told. It has been pretty ugly for two reasons. Firstly Parliament has basically been bumped. Secondly someone has dumped a 70-page Supplementary Order Paper into Parliament this week. It is bigger than the bill that we are actually supposed to be addressing. They dumped it on Parliament.  
We are not dealing with just the regular kind of bill. Anyone who has been on a Finance and Expenditure Committee for tax bills knows how complicated tax bills are and how much we rely on our expert advisers whether from the Inland Revenue Department or the independent expert adviser in order to understand tax bills. They are really really complicated law. People probably do not know that generally it is the Parliamentary Counsel Office that writes law. The tax office has its own ability to write law; tax law is so complicated that there have to be people in the Inland Revenue Department who can write tax law.  
The problem for Parliament is that we are supposed to be voting on this giant amendment and the truth is that hardly anyone in Parliament understands it. We may have a rough idea about what it means but given that we have only just got this 70-page Supplementary Order Paper I doubt that anyone on the Government side of the House actually understands it because they have just had it dumped on them. I think it is fair enough to say that most people in this House would struggle in the very short time that we have had this amendment to understand what it actually does.  
Parliament is being asked to vote on a very complicated law that it has only just received and has really had very little opportunity to understand. That is where we are today. That has resulted of course in Labour stringing the debate out no end. To those who have been listening—goodness knows how they could bear it—I say that Labour has strung it out as a protest essentially against the process. I think it has been pretty ugly but I totally understand why Labour has done that.  
The Government has made a terrible abuse of process with this bill. I think of all the times when National was in Opposition and complained about process. This is a disgraceful process for making law in our country. It is actually shocking that at 8.30 on a Friday night we are sitting in this House dealing with a law that almost nobody in this room understands yet a majority are about to vote in favour of. They have no idea what the bill will do because they have never seen it before. The Supplementary Order Paper got dumped on them just now.  
In some ways it reminds me of making trade deals. Trade deals are a little like this. When trade deals are negotiated they are basically dumped on the public of New Zealand and the supposedly elected democrats have to rubber-stamp trade deals before they have any idea what they mean. It seems that the governing parties have learnt something from trade deal negotiations and have now applied it to tax law.  
The other thing is that apparently the big accounting firms have been consulted about this tax law. The public’s representatives have not been consulted about this tax law and therefore the people of New Zealand have not but National’s favoured friends perhaps Chapman Tripp and perhaps some of the other big accounting firms have been consulted about this— 
Aaron Gilmore 
: Chapman Tripp’s a law firm. 
Dr RUSSEL NORMAN 
: My apologies to Mr Gilmore. Some of the big accounting firms like Deloitte have been consulted about this legislation. Possibly Chapman Tripp has been consulted; the law firms have probably been consulted as well. National is very close to the big accounting firms the big law firms and basically anyone who has a lot of money and might give it to National. Those big firms have been consulted no doubt about the content of this bill. The people who have not been consulted are the publicly elected representatives who have to vote on this bill tonight. They are the ones who have not had a chance to read what is in it and fully comprehend it.  
I find it most peculiar when we think about the coercive powers that the State exercises. One of the coercive powers is the police power to detain people and so forth. But the other coercive power is to take people’s money off them. That is one of the things that this Parliament has the power to do: it has the power through taxation to take people’s money off them. One would think that the laws governing the taking of people’s money would deserve special scrutiny. One would think that even for someone on the right-wing side of politics the process of taking people’s money off them through taxation—a highly coercive process; if one does not give over the money one gets thrown in jail—would be especially deserving of close attention. 
We have seen the depth of the cynicism in the National Party the ACT Party and presumably the Maori Party although I do not know if the Maori Party will vote for the terrible legislation that is being hammered through the House tonight. It is disgraceful that the right-wing side of politics would vote for tax legislation that was dumped on Parliament and is being hammered through Parliament at 8.30 p.m. on a Friday before pretty much everyone in the House has had a chance to really get their heads around the whole thing.  
I see Mr Boscawen from the ACT Party sitting there. He has complained bitterly and at some length about parliamentary process the Electoral Finance Act and all sorts of stuff. Presumably he will vote tonight for a change to tax legislation that will coercively take people’s money off them in a bill that he himself will have hardly understood or had a chance to read but that has just been dumped on Parliament. How on earth is this good democratic process? It cannot be proper process for this Parliament to agree to vote for this bill tonight when almost nobody in the House understands what it means. Minister Paula Bennett claims she know what it means but very few people have had a proper chance to have a good look at this legislation because it was dumped on the House.  
The Green Party will not vote for the Taxation (GST and Remedial Matters) Bill. Had we had a chance to look at it further we may have but it is being hammered through the House. I will also say that one of the great things about MMP is that the select committee process became much better than it used to be. That was one of the advantages of MMP. The Finance and Expenditure Committee has gone nowhere near the substantial contents of the bill as inserted by the Supplementary Order Paper because it was not allowed to look at it. It was kept secret by the Government and now the bill is being hammered through the House tonight before anyone in the Finance and Expenditure Committee has had a chance to look at the Supplementary Order Paper. Perhaps some Government members of the Finance and Expenditure Committee will look at it but the select committee as a whole has had absolutely no chance to see this giant Supplementary Order Paper.  
I strongly urge anyone on the political right who has any concern about the way tax law is made to vote against a bill that is being hammered through the House in the middle of the night to make tax law. 
Hon JOHN BOSCAWEN (Deputy Leader—ACT) 
: 
 Dr Norman is right: the ACT Party will support the Taxation (GST and Remedial Matters) Bill. I commend it to the House. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Assistant Speaker. Me penei rawa te korero he poto noa iho taku ki te Whare. Na runga i te aha? Na runga i te mea tuatahi i wahi ke au mo te roanga o nga korero. Kare au i konei ka tahi. Ka rua ehara au i te tangata mohio ki nga mea kaute nei. Ka toru ko ta matou tangata wahine matatau ki tenei ahuatanga a Rahui Katene ko ia tera i ata titiro ki te hohonutanga o tenei o nga take. Kua puta ia mo te wa engari ko tana i te mea ko ia te mea i noho nei i runga i te komiti tikanga; i ata rongo ia i nga piki me nga heke te whanui te wharoa o nga korero ana ka riro mana matou e arahi. Ko tana me tautoko i tenei wa a i nga korero katoa ka mutu ka riro mana e whakatau i te huarahi hei whainga ma te Pati Maori. Koi nei matau e tu ake nei ki te tautoko i tona korero. 
[ 
Greetings to you Mr Assistant Speaker. I should state that this contribution of mine to the House will be only a short one. Why is that? Firstly I was somewhere else for much of the contributions. I was not here. That is one reason. Secondly I am one of those who is lacking when it comes to matters dealing with accountancy. Thirdly our person who is an expert in matters relating to taxation Rahui Katene the one who delves into matters like this on our behalf and at great depth is not available at the moment. She is out on another matter. She leads us in matters like this sits on the committee hears and listens intently to the ups and downs and the width and scope of talks. She advocates that we support the Taxation (GST and Remedial Matters) Bill at this stage and all contributions to it. In the end it will be for her to resolve what path the Maori Party will pursue. That is why we rise in support of what she wants us to do 
.]  
AARON GILMORE (National) 
: 
 It gives me enormous pleasure to stand for a very short intense period to commend and support the Taxation (GST and Remedial Matters) Bill. It is a wonderful bill. It is a great day for the Government and a great day for democracy. Many good people will be very happy with the results of the bill. Thank you very much. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 Here we are on the third reading of the Taxation (GST and Remedial Matters) Bill. The debate on the bill before us has descended into farce. The last three speakers typified the Government’s view of the bill and showed why we are debating at 8.30 p.m. on a Friday legislation that has been effectively superseded by a 71-page Supplementary Order Paper in the last 48 hours. The last three contributions really underscored the contempt that the Government is showing for Parliament the process and the people. 
Mr Boscawen that well-known warrior for the rights of the people provided in 12 words the entire contribution of the ACT Party in the Committee stage and the third reading debate. His contribution consisted of 12 words. He was followed by the Maori Party member. I regret I did not pick up the earpiece to listen to exactly what was contributed by the Maori Party’s whip but I would suggest that it was less than 100 words in respect of this most important legislation and the accompanying 71-page Supplementary Order Paper. 
The tour de force the cream on the cake came from Aaron Gilmore the list MP from Christchurch the know-it-all of the National Party. He contributed about 15 words on the bill. This debate would have been a great opportunity for Aaron Gilmore to stand up while the Minister for Canterbury Earthquake Recovery was in the House—he may still be in the precincts—because the bill as I recall from earlier discussion in the Chamber has a new clause in it clause 28B on Supplementary Order Paper 187 regarding taxation treatment of government grants to businesses. I would have thought that was a very good opportunity for Aaron Gilmore to stand up. He would like to be a constituency MP in Christchurch. He hankers for it. 
Hon Trevor Mallard 
: No he doesn’t. He’s waiting for Eric to resign because he’s got fond memories of Bluff. 
BRENDON BURNS 
: He might have his eyes on constituencies further south but in the interim at least he would like to be regarded as a potential electorate MP for Christchurch. 
I would have thought Aaron Gilmore’s best opportunity would be to stand up take a call and say what the Government had done in respect of government grants to businesses in Christchurch that have been hit very hard as a result of the 4 September earthquake. Some support could have been provided under the bill because the new clause 28B introduced on the just-seen 71-page Supplementary Order Paper provides for the tax treatment of government grants to businesses including payments in the nature of a grant or a subsidy to a business grant-related suspensory loans and payments not in the nature of an advance or loan other than a grant-related suspensory loan. That mechanism on the Supplementary Order Paper provides somebody like Aaron Keown—no not him; he is the more widely known new member of the Christchurch City Council—somebody like Aaron Gilmore who would like to be a constituency MP in Christchurch with his best opportunity to stand up and take a call on behalf of his family who own and operate small and medium sized enterprises of the kind that have been knocked around by the quake in Christchurch. If a scan was taken now I can tell members that small and medium sized enterprises across Christchurch would be seen to be reeling from the earthquake. They were looking for a mechanism to receive assistance and it is there in black and white in the new clause 28B on Supplementary Order Paper 187. It is a mechanism for government grants to businesses and it could have been picked up. 
My colleagues are absolutely right: I think Gerry Brownlee will put that blue-ribbon seat in peril at the election because he is failing. I am hoping that the Minister of Agriculture another Christchurch MP will take a call in this debate and tell us as a member of Cabinet how hard he fought to get some relief like the tax measures provided under the new clause 28B for his would-be constituents the people he grew up with the people in the Canterbury region whom he stood to represent. That clause provides for the taxation treatment of government grants to businesses be they grants subsidies suspensory loans or advances. There are four different mechanisms that could have been used to provide interim relief to the hundreds and hundreds of Christchurch and Canterbury businesses that are feeling absolutely abandoned by this Government a Government that in most instances they probably voted for and that they would have expected to give them some decent opportunities to make their businesses viable and keep them going in the interim. 
They would have looked to the Government in the same way that farmers look to the Government. The next bill to be debated in the House relates to the kiwifruit industry and $25 million of relief is being provided to the kiwifruit industry. I applaud the Government and the Minister for Biosecurity for doing that. Here we have a Supplementary Order Paper which provides a mechanism for the tax treatment of government grants to businesses and that is exactly the sort of mechanism needed in Christchurch right now—right now. If I had an indication from members opposite that they would ensure that there would be support for Christchurch businesses I would be tempted to support them on this bill but we will not hear it. I will bet $1 that we will not be hearing from any members opposite because they are lions when it comes to issues at times and they are lambs at other times. This is very much a lamb time for members opposite. 
They should be standing up and demanding that the Government support at the very least the very modest Canterbury Employers’ Chamber of Commerce package which could have benefited from clause 28B on Supplementary Order Paper 187. Those employers were envisaging some interim modest support. They were going to work in concert with Enterprise North Canterbury which was seeking about $950000. In total Cabinet was being asked to tick off around $4 million worth of support the kind of support that is envisaged by clause 28B. Instead we got a derisory $100000 to be shared with Kaiapoi to promote Canterbury businesses. 
I wish the Ministers in the House tonight would take a call and tell us why we are not seeing that support despite the mechanism in clause 28B. It is about time Ministers explained to the House why they will not stand up to support their constituency of small and medium enterprises. That constituency provides the jobs in Canterbury. Most of the employment comes from small and medium enterprises. They are asking for the sort of relief and support that is envisaged by clause 28B. The Government has the opportunity to put in place and use the tax treatment provided on the Supplementary Order Paper but we are hearing nothing from members opposite. They are not taking calls they are treating the House with contempt they are treating Canterbury with contempt and they will rue the day. They will rue the day because people will not forget that at their time of need when there was a mechanism of tax treatment available the Government abandoned them. The Government abandoned the people of Canterbury at their time of need. 
The Prime Minister came down after the earthquake and said: “We will do whatever it takes to help you Canterbury.” That is on the record; that is what he said. I commend the Government for its early response. Peter Townsend from the Canterbury Employers’ Chamber of Commerce came to the Government and within 5 days it was able to put in place a wage subsidy. I commend the Government for that; I acknowledge that it was very useful. But $15 million was budgeted for that and do members know how much of that $15 million was spent? $12.5 million! It did not spend all of the money that was allocated. Here under clause 28B on the Supplementary Order Paper to this taxation bill is a mechanism that would allow the Government to support Canterbury’s small and medium enterprises that are bleeding jobs for lack of cash flow which is down by half or more. They need assistance and support to get them through. The Christmas period is usually their bumper time but people are not coming into the city and shopping. The cordons around the city are discouraging people and they are staying away. More than that every job that is lost in the central business district is compounding the impact— 
Aaron Gilmore 
: Through the cordons of battle according to “Bad Brendon”! I agree. 
BRENDON BURNS 
: The member opposite’s family businesses will not get the benefit of people being in the central business district and buying their shoes and their shoe linings and having their shoes repaired. Those businesses are not able to get that support any more. They were looking to the Government and the mechanism is there under clause 28B but this Government has abandoned Canterbury at its time of need after a once-in-750-year earthquake. The mechanism is in the bill it is there for the Government to use but the Government has gone deaf on Canterbury. It has gone absolutely deaf and I think it is despicable that as we head into Christmas we have a Government that has effectively abandoned the people of Canterbury and told them they are on their own. 
Hon JOHN CARTER (Minister of Civil Defence) 
: 
 I support the Taxation (GST and Remedial Matters) Bill. 
Hon SHANE JONES (Labour) 
: 
 Tena koe Mr Speaker. I have to acknowledge the grand old man of Northland politics Mr John Carter. The shortness of his speech is paving the way for him to go to Rarotonga next year where members of the Golden Oldies rugby team may prevail upon him from time to time. I have to say that other characters who have washed up on those shores have not enjoyed a long and fruitful life so I say kia tupato to Mr Carter.  
Aaron Gilmore 
: What about size? 
Hon SHANE JONES 
: Of course there is Mr Gilmore the man who wanders around Parliament humming: “I’ve been there man; I’ve been everywhere man.” That is his whole approach to his political contributions in this House but I can tell members when he never does that: when Amy Adams gives him that withering look. She gives him that withering look after she has suffered the bumbling of the chair of the Finance and Expenditure Committee Mr Foss; then the member freezes. She tried that look with Parekura Horomia’s cousin Hekia Parata and came off second-best. That is why the latter is on the benches of Treasury and Amy has gone back to give more of those heartfelt speeches about Christchurch. There is a level of emotion where there are almost tears from the wreaths around this room but she did nothing—absolutely nothing—in the context of her contributions to this bill to improve the prospects of the garden-variety families down there in Te Wai Pounamu and around Otautahi to receive any meaningful benefit just before Christmas.  
Every time we hear from Mr Aaron Gilmore he gives everyone a DNA-based reminder that National should not ditch him and jettison him along with the ACT Party members who during the time that we on this side of the House have been debating this bill have wandered around the country continuing to drive a racial wedge between God-fearing friendly New Zealanders. Those members mistakenly think that while we are working on this arid topic doing the job of the Government they can wander around because they are either too ill-informed or uninterested in earning their pay to make meaningful parliamentary contributions. Perversely enough the newest member of the ACT Party will wake up and realise that she is occupying a similar sleeping space as Hone Harawira. With the level of extremism that they both bring they deserve each other on that particular issue. But that is another matter.  
The Taxation (GST and Remedial Matters) Bill continues a host of issues that the select committee considered and regarding our contribution to it we were quite relaxed in terms of support. We got sterling service from the members of the policy unit out of the tax department. If memory serves me correctly once or even thrice we had the oracle Mr Robin Oliver—please spell that word in the right manner—who generally knows everything about tax law. 
Hon David Cunliffe 
: About everything. 
Hon SHANE JONES 
: Well I recall Helen Clark saying that Robin Oliver not only knew everything but also was a great contributor when the Government realised that as a consequence of entering into tax innovations it needed a solution to rationalise them. Mr Oliver probably did his greatest work in relation to Mr Tony Gibbs’ innovation.  
A number of measures in this bill were designed as a contribution to simplify the administration of the GST system. I will not repeat the fact that there was an opportunity to lessen the burden of GST on our Kiwi families in their day-to-day toil. That was rejected. In addition there was an opportunity to explain to New Zealanders as a consequence of a sudden burst of enthusiasm through a Supplementary Order Paper why the additional changes were needed. So it fell to this side of the House. As someone who grew up on a farm and has owned a bit of land from time to time there is some sense in what is proposed in relation to the zero rating. However what has blighted the discussions is there was an unwillingness on that side of the House to stand and gradually take us as a full House through why a number of these changes were dropped on the floor of the House in a virtual ambush fashion just before Christmas.  
This bill picks up and papers over the mistakes of the Minister of Maori Affairs. Several months ago when other tax changes were made there was an egregious omission reflective of the fact that there is great inattention and sleepiness on that side of the House. The Government ended up changing tax rates but forgot all about some of the neediest New Zealanders—that is those Maori families who have rights and interests in Maori trusts. Their tax rates should have been calibrated at that point in time. It was fixed up in the time that Labour was in power. It was a late contribution but nevertheless a useful contribution. It is a shame that Te Ururoa Flavell made a decent rationalisation as to why he felt compelled to support this bill given that Rahui Katene has provided most of the verbal leadership on the bill. She is now back on the seabed and foreshore issue where we understand she is preparing to abandon her party and vote with our side of the House. Meetings are being held from Te Tau Ihu right through to Te Wai Pounamu. She is under intense pressure this evening because she now realises that she will lose that seat. That is why she is not here this evening to fulfil her responsibilities in respect of tax policy. Goodness knows what it is she could say that would make much sense in relation to filling the vacuum that has been evident on that side of the House.  
But never mind I and my colleagues particularly Mr Mallard—that stubborn campaigner—have ensured that not a single measure or level of vacuum goes unattended in this House and in this debate. However the Maori Party needs to take a lesson from the omission on their part that was fixed up by us: pay attention to the bread-and-butter issues because that is what tax impacts on. It impacts on the lives of not only the corporate merchants but also the daily people. Do they have enough buns at the end of the week? Do they have the ability to live within their budget? Many people as a consequence of failed tax policy extended in many respects by that rather rushed job of a Supplementary Order Paper will have a Christmas where they will be the casualties of a flawed tax policy. They will have a very meagre range of goods in the tokena in the stocking of Father Christmas.  
As we go beyond this point in our debates about tax we cannot wait until we move into the new year and continually remind New Zealanders—not as a consequence of Gerry Brownlee’s foolish management of the House that we are stuck here on a Friday evening; members on the other side of the House are giving frightfully short speeches because they are angry that Gerry Brownlee has trapped them here—that they will suffer because there has been a very impoverished view given by the Government as to how fiscal policy ought to be used to improve the lives of New Zealanders. Nowhere was that seen more lucidly than by the Governor of the Reserve Bank Dr Alan Bollard recently. He said to not place all the pressure on him as the architect of monetary policy but blame those who hold the levers of fiscal policy. Fiscal policy is tax policy. Fiscal policy is revenue policy. When one shrinks one’s revenue when it is frittered away and enjoyed by a narrow economic caste who are already able to pay their way and one removes from the pockets and wallets of needy New Zealanders those precious cents and dollars one only makes their Christmas their summer break and indeed the year coming towards us a worse experience.  
I tell New Zealanders to wait as help is on the way. We have a host of very innovative and impressive policies that will address the ongoing failures of tax policy in particular the perpetuation of privilege through nefarious structuring of property and other assets including as I was told today by Mr Cunliffe recreational boats. I am very confident that the senior members of our team are bringing forward a set of policies that will enable New Zealanders to see that there will be a demonstrable change and a new trajectory. As a consequence of that New Zealanders will be more secure the country will be more prosperous and those members will be held responsible for the poverty they are bringing through failed legislation such as this. Kia ora tatou katoa. 
CHRIS TREMAIN (National—Napier) 
: 
 An excellent point to pick up from the Opposition member Shane Jones is the nefarious idea that Labour actually has some new policies. Let me back up the truck to just 3 or 4 days ago when the Leader of the Opposition delivered a much-hyped speech to Chapman Tripp which was an unmitigated disaster. Not only was it a copy of Ed Miliband’s speech not only did Chris Carter’s crew come out and make it an absolute disaster not only did it take the mickey out of David Caygill alias David Cunliffe and not only did it include voodoo economics but also the central part of the speech was about increasing the level of work that is done to bring about change to loss attributing qualifying companies and trusts. What are we doing in this bill which the Opposition is voting against today? The Taxation (GST and Remedial Matters) Bill focuses totally on upper income New Zealanders on Working for Families on student allowances on the community services card and on people who structure their income to reduce their tax obligation. This legislation closes loopholes and increases the obligation of high-income taxpayers to pay tax yet members opposite are voting against it. They came out with a policy on Monday; they are voting against it on Friday. I commend this bill to the House. 
A party vote was called for on the question  
That the Taxation (GST and Remedial Matters) Bill be now read a third time. 
Ayes 66 
New Zealand National 58; ACT New Zealand 4; Maori Party 3; United Future 1. 
Noes 47 
New Zealand Labour 40; Green Party 6; Progressive 1. 
Bill read a third time.