Russell DeborahDr DEBORAH RUSSELL (Labour—New Lynn): I'm delighted to take the final call on this excellent bill which is before the House now the Taxation (Research and Development Tax Credits) Bill. I want to address a small number of the issues that have been raised by the Opposition as concerns—which I think actually have been addressed—just to reassure those who are watching.There have been some issues as to what happens for a business that is in loss as to whether or not they can get the benefit of a tax credit—because necessarily to get a tax credit you must pay some tax in the first place. It's interesting to note that the bill does include some refundability in year one for a start-up. For taxpaying firms that are in loss and nevertheless have R & D expenditure they will be able to cash out their tax credit. So there is a way for them to get some cash in hand even though they aren't in a taxpaying situation.So this is a serious attempt to develop a way of addressing tax losses and still allowing R & D tax credits—that's because we do want to support firms that are in start-ups. The Opposition have raised concerns about the re-characterisation of expenditure about whether some expenditure that is business as usual will suddenly be re-characterised as R & D expenditure in order to get the tax credit. Again the bill does address this: there is a set of criteria to ensure that business as usual does not suddenly get called R & D. It is one of the areas that have been addressed in depth in the bill and IRD will be looking at it. The speaker immediately before me Mr Ian McKelvie raised some issues about the approval process. I think this goes to a little bit of the difference between a grants process and a tax credits process. When you go through a grants process you must meet a set of approvals but then it's still not clear that you will get the grant. You may not get it because someone else might just be slightly better or there may not be enough grants to go around. A tax credit operates slightly differently; if you meet the criteria then you do get the credit. There is no further approval. The approval process that Mr McKelvie was talking about was one where firms can apply to inland revenue in advance to get some certainty around whether their expenditure will fit the criteria for the research and development tax credit. Then if it fits they get the credit. It's not about a yes or no go-no-go decision; it's not about whether one firm is better than another. It's simply about giving certainty to taxpayers. As such it's an excellent addition to the tax credit process. Now finally we had one of the speakers from the Opposition worrying about whether her skateboard and her hair dryer she was using in the production company would have in fact been eligible for the tax credit and was this going to be an issue. Well the skateboard I think would have cost about $80 and the hairdryer maybe about $40—that's $120. Actually in order to be eligible for the tax credit you need to spend at least $50000 on R & D. There's a good reason for that; that's to make sure that it is serious research and development. It's not just the backyard stuff; it's actually genuinely serious research and development activity. Fifty thousand dollars is a lot for a small firm but actually when someone is engaged in research and development you'll go through that fairly quickly; so it's a pretty sensible criteria a pretty sensible lower threshold. Finally in terms of issues raised by the Opposition I want to just have a final word on that minority view. I would note that two of the people who've spoken about it this afternoon were not in the room—were not in the room—and did not see the members' own colleagues pleading with the member to change one sentence so that the member was not implying that officials had said things that officials were not comfortable with—the implication that they'd said them. That was it; one sentence a few words. That was it. It was a real shame that that happened and it was very interesting to see that the members of the Opposition who were in that room have not actually particularly spoken to that minority view issue. This bill addresses a fundamental problem in our economy: that we do not spend enough on research and development. The question is whether it is best to address that through grants or through a tax credit. If we look at our actual total expenditure on research and development it's low and it continued to be low while the Callaghan grants scheme was in place. The grants were not working well enough; that is why we are moving to a tax credit. The great thing about a credit as opposed to a grant is that anyone who meets the criteria gets it—anyone. As long as you meet the criteria the person who meets those criteria will get the tax credit. There is no picking and choosing there is no grace and favour there is no sense that anyone is sitting in judgment. All it is is if a firm meets the criteria then they will get the tax credit. On this side of the House we believe that that change from a grants scheme to a tax credit scheme will spur investment in research and development and will make a difference in our economy. That is why we are promoting this bill. That is why we are supporting it. That is why this bill is an excellent bill. I commend this bill to the House.