Huo Raymond: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee Third Reading 
Huo Raymond: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee Third Reading 
[Volume:657;Page:6658] 
RAYMOND HUO (Labour) 
: 
 In my previous speeches on the Taxation (International Taxation Life Insurance and Remedial Matters) Bill during the Committee stage I might have cited inappropriately a catchphrase invented by the oratorically gifted US President Barack Obama. That catchphrase was “wee-wee’d up”. The media worldwide was puzzled until 2 or 3 days later when White House spokesman Robert Gibbs shed some light on it and gave the definition that “wee-wee’d up” is when people get nervous for no particular reason. He added that “Bed-wetting would be probably the more consumer-friendly term.” A bright side of my using that phrase inappropriately in this honourable House was that it may help us to appreciate how important it is for us to have a consumer-friendly version of the bill and to get the basics right. I thank the officials and other independent specialist advisers for their excellent work in helping to transfer lots of heavy loaded terminology into a user-friendly version when dealing with this huge and complex bill. 
The bill was originally introduced on 2 July 2008 by the Labour-led Government. The bill represented the first stage of the Labour Government’s review of our international tax rules and it has been greatly influenced by extensive consultation with businesses and their advisers. This is a huge and complex bill nicknamed the “September Bill”. As the Finance and Expenditure Committee noted in its commentary on the bill “The size of the bill and the depth and breadth of the material it covers have made our consideration more difficult than it might have been otherwise.” As pointed out by some of my colleagues there was a general lack of sufficient time for members to fully consider the immense detail of the bill. The situation was made worse by the introduction of the large Supplementary Order Papers that had not been referred to the select committee and will not be scrutinised before they are passed into law in this honourable House which is sitting under urgency. 
However Labour supported the bill and it is appropriate for me to reiterate some major points in its third reading. Firstly the bill provides for the reform of international tax rules with the intention of allowing New Zealand residents with active businesses in overseas markets to compete on an equal footing with their competitors. Secondly and what interests me the most is the underlining philosophy behind the bill which replaces the current legislation that was put in place in 1991 and 1992. To some extent the important part of the active-passive distinction is whether our country will have an outward-looking taxation system or an inward-looking taxation system. Therefore the real issue is whether we want New Zealand companies to internationalise compete grow and enhance our export-oriented economy. 
Having said that we cannot talk about our taxation law without addressing some related issues. The major issue relates to the concerns expressed strongly by our export sectors. Banks have grown faster than the surrounding economy indicating wealth transfers from the traded economy to the non-traded economy. As the chief executive of the New Zealand Manufacturers and Exporters Association John Walley pointed out we have a whole range of policy settings that shelter the internal economy at the expense of the traded economy. As a result our economy is on a simplification trajectory that reduces the potential for leverage of creativity innovation and value-adding. The opposite trajectory is increased elaboration and sophistication of products and services. The basic upgrade process amplifies and liberates innovation and creativity. As the Hon David Parker said earlier in this House research and development tax credits are not fixed in this bill. The shocking statistics show that our business expenditure on research and development is one-third of the OECD average. The main disparity between New Zealand and other countries is in the low research and development spending from businesses. Unless we do something about it it will fail us—the export sector competitiveness and other levels of productivity will fail. We urge the Government to reinstate the research and development tax credit. 
To conclude Labour supports the bill. As I said it represented the first stage of the Labour Government’s review of our international tax rules. The focus of several of the reforms is on reducing tax costs for businesses. The bill will also bring tax law up to date with today’s commercial environment ensure legislation is working as effectively as possible and protect New Zealand’s revenue base. I commend the bill to the House. Thank you.