Willis NicolaNICOLA WILLIS (National): Here we are in Part 2 and this is the part of the income tax bill that highlights quite how extraordinary the debate in this House is today because here in one hand I have the bill we thought we'd be debating this afternoon and here in the other hand I have Supplementary Order Paper (SOP) 23 which clashes with this bill introduces an array of new changes and primarily introduces a capital gains tax that New Zealanders were promised this Government would not introduce. In this contribution I want to highlight a couple of matters that are very significant.The first is for us to understand the circumstances in which advice has been given on how this part of the Act will operate. We have a regulatory impact statement that has been released in relation to the SOP affecting this part. Throughout that regulatory impact statement officials are at pains to again and again highlight the urgency under which they are having to formulate advice. My question for the Minister about this part of the bill is: at what point did the Minister consider that the bill as it sits before us in Part 2 required dramatic changes? And at what point did he seek advice on those changes? The reason I ask is because we do have some traditions in this House in terms of select committee and the way that things are advised on. And one of those is that actually we do properly examine things. In this case it's very clear that officials have had to give advice in challenging circumstances. Did they even get asked for advice before Christmas? Because it's very clear that the Government was considering changes to this section before Christmas but it's not clear that officials were given any runway to properly analyse the impacts here.What we can see is that there is massive concern about changing Part 2. Treasury were not even prepared to take a view on what the impact of a 10-year capital gains tax would be because they had so little evidence and so little ability for analysis. But what we do know is that there was specific concern about lock-in effects; that is that because of the way that Part 2 will operate in interaction with SOP 23 people wouldn't put their properties in the market that there would be upward pressure on rents and that the exemption for new builds would create all sorts of administrative problems. And I highlight that because Part 2 does really detail how tax matters are to be interpreted how they are to be applied and the specific rules that will apply. Again I note quote: significant time constraints" "no opportunity for consultation."There are in Part 2 two new provisions being proposed which clash that I want to highlight. And one is around the way the main home exclusion operates. In Part 2 as it is set out the main home exclusion is that main homes aren't subject to a capital gains tax the brightline test of five years as it was to be in Part 2 does not apply to them. But what we learnt today is now actually the SOP will interact with this to erode that exclusion. It's my understanding that the changes being proposed by the Government today will mean that if for example a public servant who owns a home in Auckland decides to take a secondment at one of our public agencies in Wellington for three years and during that time they wish to keep their family home in Auckland then what will actually happen if they are renting in Wellington is that they will then be subject to the brightline test if they sell that home in Auckland at a subsequent date because they haven't been living in it. Now the reason this is relevant is that Part 2 specifically details the way the main home exclusion is to operate. And we now understand that as it's set out in this part it is to be amended by SOP 23 and I think it's important that the Minister highlight why this change has been made because it has been very significant to New Zealanders the way their main home is excluded from capital gains tax. It seems to me that this could be a capital gains tax by stealth on the family home.The second area of amendment I will have to come to in another contribution and that relates to the way that short-stay accommodation is treated. Again something that in this part is detailed but which there appears to have been a 180 reversal on in the SOPs we're debating this evening."