Webb DuncanDr DUNCAN WEBB (Labour—Christchurch Central): Thank you Madam Assistant Speaker. What a pleasure it is to rise to speak to this excellent piece of legislation.Kieran McAnulty: Oh no it's a socialist!Dr DUNCAN WEBB: Well it is a socialist piece of legislation because tax is fundamentally socialist. It is about a fair system. Can I also say what a pleasure it was to work on the select committee on this piece of legislation particularly with Dr Deborah Russell who is an expert in tax much unlike the former speaker David Bennett who of course had to try and clean up member Collins' mess when she suggested that there was a relationship property issue here. What's worse is when he tried to clean up that mess by referring to the investment property in the beach house he just made a dog's breakfast of it. If people are going to have investment properties then of course they should be caught by the brightline rule and what's more the very rule he's complaining about is a rule put in place by the National Party to address this. So it's his own carve-out—how ridiculous.Kieran McAnulty: You can't tell me he doesn't know what he's saying surely?Dr DUNCAN WEBB: Oh look—astounding as it may seem it's no surprise they're on that side of the House—tax law is difficult it's onerous and we do need to strike a balance. As we all know tax law is complicated and the balance between fairness clarity simplicity and brevity is hard to strike but I think we're working hard on it here because good tax includes not just good tax policy and good tax settings but good tax administration.While we've been talking about the brightline well I actually want to talk about some of the other things that are going on here. The Inland Revenue Department is working on its transformation its business transformation and this is part of that transformation. This legislation largely instituted by the former Government is about progressing that business transformation. I do want to say however that there will be some pain in that transformation. Some of the amendments made in select committee are about evening that pain out. I also want to identify that the change within IRD will be hard on its people and indeed in its annual review this was made clear. I would implore the revenue to be very careful as it transforms its business to look after those hard workers within IRD who do such valuable work.But really what this is about is about reforming the administration of the tax system to make it much much more workable. So if we look for example even at some things that might appear technical like the payroll subsidy—a subsidy that is paid to tax intermediaries to assist smaller businesses. Now the original bill had this being abolished in one fell swoop but after listening to advice—and I must say the independent advice given to the committee was extremely useful—it became readily apparent that a rapid cutting off of this would cause considerable chaos particularly amongst small businesses. So whilst the subsidy properly ought to go it's going to be phased out over time so that there can be that additional period of time for businesses to get used to it to let those wider changes bed in. It really is those smaller employers in particular that we need to look out for.Payday reporting was the other thing that really cropped up. This is the idea that employers need to report in as timely a manner as possible their PAYE obligations. Of course the better reporting occurs the more efficient tax collection is. So what we're really aiming towards is getting the most timely and accurate reporting we can so that the tax paid most accurately reflects the employee's actual obligations. That's got to be a good thing as we move hopefully towards a system where there is as little adjustment as possible in those end-of-year tax returns.However we again have to remember that there are businesses very small businesses—and in fact on the other side of the House they did a good job in pointing out that many rural businesses actually have considerable difficulty in using for example online returns simply because of the lack of internet access. The committee listened carefully to submitters and took that on board so when we come to payday reporting there were substantial changes made that will affect small businesses so that they don't have to report quite as frequently. In fact twice a month is satisfactory on a routine payment not necessarily in perfect sync with payroll but at the 15th of the month and at the end of the month particularly when they're still using paper. We've got to recognise that indeed some people still will use paper whether that be because they're really—believe it or not—not quite up to using web-based applications or also because of that internet access in very remote areas. So you know that is a really useful amendment made by the committee and I commend the committee for the hard work it did and also for the submitters and the advice given.The other important aspect—technical but important—was resident withholding tax. There were useful discussions around the fact that interest payments are frequently made sometimes substantially even between family members. Now when there's for example a family loan what a lot of people perhaps wouldn't realise is that the person who is being paid that interest needs to report that as well as the payer of that interest. So this is the resident withholding tax framework. Of course we know that we have to give our IRD numbers to the bank so that they can report the interest they're paying us but we don't realise that in many transactions—even amongst family members small businesses friends and colleagues—those transactions also ought to be reported and that interest actually sits in there as income. Obviously in some of those situations the compliance of that reporting would be unduly onerous and so the select committee imposed a $5000 threshold on the interest payments there. So a lot of those smaller family loans and the like now won't be captured.So look what this really is about is about getting our tax settings right getting a system that doesn't catch people by surprise a system where people's tax obligations are as easy as possible to comply with but also modernising our tax system so that the tax system can be administered in as real time as possible using the best technology available. We've got to bring a whole lot of people along with us to do that and I know the IRD itself and the commissioner are working hard on that the employees of the IRD are working hard on that. And it is the place for us in this House to really support that through getting these settings as right as we can to make the transition as easy as possible so that we don't unduly burden small businesses in particular—rural businesses in particular—and those hard-working New Zealanders who really are trying their very hardest to earn a living so that the administration costs there are reasonable they're not flying through the paperwork and not doing the jobs that they're actually being paid for. That's what this bill does.So what we have here is a very thoughtful tweaking—admittedly it is administration legislation but it is good that we come back to this House regularly to readjust these settings and to think carefully every time about our tax policy and our tax settings and the administration of our tax Act to say Let's make it as workable as we possibly can." because when we do that what we will get is greater compliance more timely payment of tax and what we will get indeed is a responsive revenue.So look what we have here is a vastly improved—and I can't conclude without saying that the brightline five-year test is also a significant improvement. The National Party recognised that steps were needed here the step they took was not enough the property market remained rampant and so we—as we should and must; as every good socialist would—changed it so that it worked properly. We extended that period to five years because that will make a significant difference. This Government has said time and again—and I'll say it again—it is committed to bringing the housing market under control so that ordinary New Zealanders can afford their own home and they can buy their own home and this is just yet another plank of this Government's aim to do exactly that. So not only is this a great improvement to the system of tax administration; it's another step forward by this Government to making housing affordable in New Zealand. Thank you Mr Assistant Speaker.Bill read a second time."