Wood Michael; Rurawhe AdrianMICHAEL WOOD (Labour—Mt Roskill): I'm going to take a novel approach following on from the previous address from Judith Collins and focus most of my speech on the contents of the bill that's before us and that of course is the Taxation (Annual Rates for 2017-18 Employment and Investment Income and Remedial Matters) Bill. I will at some stage a bit later on in my address get to Supplementary Order Paper 13 which addresses the issue of the brightline test. That's a relevant matter in the course of this debate. But of course it is not the only matter.This is an important bill. One of the reasons it's an important bill is that it validates the income tax rates for the previous year and makes the activities of the State since 1 April 2017 legal. I have to say on behalf of the Government we support that. Actually the National Party in deciding that they are at this point of the bill's passage through the House not going to support that would in fact potentially create not an $11.5 billion fiscal hole in the Government's accounts but a $30 billion hole in the Government's accounts over the past year during which time they were in fact the Government for most of that time.Moving on from that I just do actually want to note the very good work of the Finance and Expenditure Committee on working on this bill. I do actually want to note the contribution of the Hon Steven Joyce on his last day in the House. He was the ranking member of the National Party on the select committee as it considered this bill. It is a bill that is in fact rather complex because in addition to confirming the income tax rates for the year it did deal with a range of fairly complicated and technical matters relating to investment and employee income relating to employee share schemes and relating to a whole range of matters in terms of local government taxation relating to demergers of Australian-listed companies and relating to oil exploration taxation matters. And actually the select committee made up of members from around this Chamber worked together extremely well and extremely constructively with officials—and I acknowledge them here as well—to deal with those complex matters to respond to the range of very good submissions that came before us around this bill and to produce a bill that's come back to this House that I believe is considerably improved on the bill that came into the select committee. So just my acknowledgments to Mr Joyce but also to all of the other members of the select committee who did that work.In addition to the setting of the annual rates for the 2017-18 year the bill as Mrs Collins mentioned deals with a range of measures to improve the efficiency and the fairness of the New Zealand taxation system. This is something that is really just in the ordinary business of any competent Government. Because technology is moving so quickly and tax practice is moving so quickly we consistently need to be reviewing the rules to make sure that our system works efficiently and fairly. One of the key drivers of that in this case is of course the Inland Revenue Department's Business Transformation project—a project that started under the previous Government and continues under this Government and is an investment of several billion dollars to ensure that we have a modern fit for purpose 21st century tax system. It enables us to take advantage of the benefits of technology to make things easier for those at the coalface—whether they're employees whether they're employers whether they're investors—to make sure that they can communicate with the revenue efficiently and in a timely fashion. By getting that information to Government to the Inland Revenue Department in a more reliable and a more timely and a more accurate fashion it enables us to make better decisions—better political decisions better social policy decisions—with the information that we receive.Some of the key provisions of the bill relate to pay-day reporting of employee information. One of the main areas of submission that the select committee received just related to how we could make sure that that increased onus on employers to be reporting that information didn't overreach and didn't create such a degree of burden on those businesses that that effectively was more significant than the benefits that we received.So the select committee did quite a lot of work in this area to make sure that those employers particularly those who didn't reach the threshold for mandatory electronic reporting had the ability to continue reporting in a way that was reasonably efficient without having to consistently be caught in an endless cycle of reporting. So there are a number of quite important changes that were instituted here—for example around shadow payrolls where information might come in after an employer has done the previous pay-day reporting. Under the original provisions of the bill there'd have to be a whole separate reporting occur there. What the select committee said is Well actually let's not be over the top. Let's wait until the next round of reporting and just make things a little bit simpler."But probably the change that I'm most happy about that was made at the select committee stage related to the question of the payroll subsidy. The payroll subsidy has been in place for a number of years and effectively it's a subsidy which means that employers who are using a payroll intermediary who assists those employers in making sure they are meeting their obligations—it was a little subsidy that just helped to cover the cost of that. And particularly for smaller employers who sometimes do struggle with the complexities of the tax system that just made things a little bit easier.The original bill in my view on a fairly hard and ideological ground abolished that payroll subsidy. What the select committee did by listening to submitters particularly those submitters who were submitting on behalf of small businesses was to say "Let's retain the payroll subsidy at least for the next couple of years as we're going through this period of significant change with employee reporting and let's target it a bit more so that small employers in particular can have that payroll subsidy to deal with the additional costs that may be created by some of the complexities in this bill." I think that is a change made through the select committee process that is going to be appreciated by many of the small businesses out there.I do now want to turn to the Supplementary Order Paper and the question of the extension of the brightline test from two years to five years. We've heard a great deal of hyperbole about it in the House today including this gem from the Hon Judith Collins who talked rather worryingly about the amount of adulterating that might be occurring in this House. I hope there's not too much of that.But what Mrs Collins said is that the extension of the brightline test from two years to five years was attacking those who own property. Quite frankly hearing that coming from a former Government that oversaw the greatest decline in the number of New Zealanders able to own a property is chutzpah in the extreme. What the Government's reforms in the area of housing and the taxation of investment properties are about is in fact unlocking the Kiwi Dream of more people being able to own their own homes. Under the watch of that previous Government the homeownership rate of Kiwis fell to its lowest level since 1951 and so this Government is not going to stand here and be lectured and told that these changes which target those who flip properties for significant profit are somehow going to make it less likely that ordinary Kiwis can own their own homes.We heard a lot from the Hon Amy Adams using the word "overreach"—pulling out the word "overreach" from the regulatory impact statement. Well I in fact want to comment on the under-reach of that previous National Government in doing anything about the housing crisis that unfolded on their watch. In fact if we turn to the regulatory impact statement that the Hon Amy Adams referred to what does it tell us? It weighs up a range of things but it tells us that the five-year option as compared to the two-year option had similar economic fairness and in fact overall better administration than the two-year rule. It goes on to say that in fact prospective first-home buyers could benefit from the proposal to extend the brightline test to five years. That is because in doing so we reduce the incentives on investors to hold and flip properties in the short term and therefore increase the supply of housing for those people who are legitimately buying housing as first-home buyers for their families.In concluding this is a bill which is about building a more fair and a more efficient tax system. It does that by confirming the personal tax rates rather than cutting them plus allowing the Government to invest in the social and physical infrastructure that our country needs. It does so by modernising New Zealand's tax system by bringing in provisions that allow us to take advantage of the Business Transformation project to make things easier for taxpayers and to get better information to Government to make good decisions. Through the Supplementary Order Paper we have a small brick in the wall of this Government's programme to once again make housing affordable for all New Zealanders. I commend this bill to the House.ASSISTANT SPEAKER (Adrian Rurawhe): Before I call the next speaker can I ask for people coming into the gallery to take their seats quickly and can we reduce the noise level coming from the gallery and inside the Chamber while the members are speaking."