Mark RonRON MARK (Deputy Leader—NZ First): I appreciate the opportunity just to once again address my Supplementary Order Paper (SOP) 260 and in particular some of the comments that the Minister has made in defence of the Government's not accepting it. I think the one I want to pick up on—and I will probably leave it to my colleague Fletcher Tabuteau to talk about the depreciation argument—is the heritage buildings. We are not convinced that that argument stacks up because what the Minister probably has not realised is that many of these buildings are not declared as being heritage. They are not listed as heritage buildings but they are buildings that hold the character of the province and the district. So in that sense they have high aesthetic value and add high character value to those provincial towns. It does not matter whether you go to Twizel Eltham Stratford or up to Waipukurau there are buildings there that speak volumes to the history but have not been listed as heritage buildings. The CHAIRPERSON (Hon Trevor Mallard): The time is very close to my leaving the Chair for the dinner break but before I do that I am going to give a warning that the member is now repeating things that he said earlier and others have said since. So after dinner there is going to be a requirement to be much tighter. Sitting suspended from 6 p.m. to 7.30 p.m.RON MARK: I just wanted to address that comment from IRD and New Zealand First has to make this point. For IRD to argue that the Minister should reject our SOP 260 with one of the arguments being that there is heritage funding available for old buildings—whether it is $12 million or what; it does not really matter—is ridiculous because the overwhelming majority of the affected buildings that we are discussing do not have heritage orders and therefore they are not eligible to apply for that funding assistance. So we are back to square one where we are facing an issue. We are being told this by such people as Ross McKinley KPMG's National Managing Partner for Taxation who noted last year: Many building owners may be considering demolishing or abandoning earthquake-prone buildings if an anomaly in tax treatment is not remedied." That is what this SOP aims to do. Without it Mr McKinley added: "IRD's stance creates a contradiction. … In other words … owners can claim a tax loss if a building collapses but no tax relief for trying to ensure it does not collapse in the first place." Well that is just nonsensical and provides perversely a disincentive for those challenged property owners to undertake the work and not abandon the building. I do not think people are possibly grasping the size and the magnitude of the problem. There are estimates out there saying that seismic works across New Zealand range from $4 billion—that is according to the Government's own Ministry of Business Innovation and Employment—to the figure estimated by Tailrisk Economics. It estimates the figure could be $5 billion to $7 billion worth of work. That is not to improve the quality of the building the usability of the building the functionality of the building or the capability of the building and I want to draw actually the Government's attention to its own piece of legislation. If you are going into clause 42 which inserts new sections DW 5 and DW 6 into the Income Tax Act it is really interesting because there is a lot of stuff here shaded about aircraft maintenance engine overhaul. Just briefly perusing through that I as a former mechanical engineer in my earlier days look at that clause with interest and does it not strike one as strange that if one is carrying out repair and maintenance work on an aircraft engine that does not change the performance of the engine but it simply returns it to the required aviation standards to permit it to be used in the air it is tax deductible. We could argue that many of these buildings that are affected were not even damaged in the last earthquake which destroyed modern buildings in this city. They are functional but because of a little sticker that is going to be put on the window they will be deemed by legislation to be unsafe. It has nothing to do with the building and nothing to do with its design at all actually because it has withstood the 1854 earthquake. Take the Thistle Inn just down the road here. The Thistle has withstood every major earthquake and not popped a screw. But if that building is deemed by the council under the new legislation to require strengthening that work will have to be done at a cost. It does not change the Thistle. It does not alter its characteristics or its usability. It does not add an extra—it will still have the same number of toilets the same bar space the same conference room space. It will just be brought up to meet the Government's specifications and therefore will return its value to what it was before it got a letter saying it was non-compliant with the legislation. We just ask what has often been touted as a Government that is pro-business and business smart a Government that aims to reduce compliance costs and a Government that wants to promote productive expenditure and not cause undue unnecessary costs to reflect on the IRD advice and challenge it because we do not think that making this adjustment is going to be helpful to the economy and we do not think that it is going to be helpful to provincial New Zealand or to anywhere in New Zealand actually. For the IRD to tell the Minister "Oh but they've got access to heritage funding." knowing full well that overwhelmingly most of the affected buildings—be they in Napier Waipawa Dipton or on the West Coast—are not going to have heritage status is simply naughty. It is quite naughty actually. So we would say to the Minister reject IRD's advice. Tell it to go away and do its homework. Sit down and have a talk to KPMG sit down with Ross McKinley and talk to the Property Council and do a quick analysis of the costs of not doing this. Let me just reiterate finally—before I sit down—that the cost of not giving something of a tax break by recognising this work as repairs and maintenance will be that many buildings throughout New Zealand stand to be abandoned and left. And many buildings will stand to be demolished because it is going to be quicker and easier to knock an old building down despite its character and put up one of these new flat-roof things which are dead boring and ugly quite frankly."