Cunliffe David: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
Cunliffe David: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
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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—