Adams AmyHon AMY ADAMS (National—Selwyn): Thank you Madam Assistant Speaker. I rise of course to take a call on the Taxation (Annual Rates for 2017-18 Employment and Investment Income and Remedial Matters) Bill. I do so with some regret because this is a bill that the National Party led the development of when we were in Government this is a bill that my colleague Judith Collins introduced to the House and this is a bill that in the normal course of events we very much would have been supporting in the normal way. But on this side of the House we cannot support this bill because of the egregious and I think in fact duplicitous way in which a stealth capital gains tax is being imposed on New Zealanders through this piece of legislation.The now Government when in Opposition when campaigning to be Government realised how badly they had got their tax plans wrong and made it clear to the public at that stage that they would not introduce a capital gains tax without taking it to the electors at the next election. They made a big song and dance because they realised what an allergic reaction New Zealanders were having to their tax and spend tax-grab plans and so they promised—they promised—the voters We will not bring in a capital gains tax unless we take it back to the voters in 2020." This bill is a stealth capital gains tax by any other name.You just heard the Minister of Revenue the Hon Stuart Nash in that last contribution twice reference the fact people are making capital gains and they are not paying tax on it as his justification for this Supplementary Order Paper (SOP). Now it's bad enough that they have broken their promise to not take a capital gains tax to the electors at the election—that's bad enough. But not only that they didn't even allow the public the decency the basic right of being able to submit on it through a select committee. Why? Well there was no urgency. There was no urgency because they had been talking about this for some months but absolutely duplicitously they waited until the day the bill was reported to the House to slip in an SOP deliberately ensuring that no one could comment on their plans and point out the issues.Now why would they do that? Well for two reasons: one they know how unpopular this will be and two because even their own officials were saying to them two years is a much better period for capturing speculators than five years.Fletcher Tabuteau: No they were not.Hon AMY ADAMS: I refer you Mr Tabuteau to the regulatory impact statement by the IRD which says exactly that. It says the IRD are of the view that a two-year period for the brightline test is a far better period and avoids overreach. Now why is that? We've heard a lot from the other side of the House that there's a two-year brightline test anyway so why not just make it five? Well that just smacks to me of a failure to understand the very nature of this test. At two years there is a body of evidence that suggests the likelihood that people buying and selling within two years are more likely than not to be speculating. After two years there is a far less likelihood that that is the case and you are capturing—deliberately it seems—genuine investment behaviour.Now if the argument is "Well they're making a capital gain so they should just pay tax on it." as the Minister said twice in his contribution be upfront tell us you're introducing a capital gains tax and take it back to the voters as you promised. But they're not doing that. They claim that this is just about capturing speculators. Well two things: first of all speculators are already liable to pay tax under our income tax rules and we heard the Minister go on a number of times about how good the IRD are at capturing people who are due to pay tax. He said "They will find you. Don't think you can't pay tax. They will get you."Speculating and buying a property for the purpose of flicking it on and making a capital gain is already taxable. Now we introduced the two-year test because we know as I said that within that period of time there is far more likelihood than not that that was likely the intention. We stopped it at two years on very good advice—and by the way after testing this with the public after inviting submissions after announcing it in the Budget in fact before the Budget and then taking it to select committee. We in the National Party are not afraid of public discussion. Two years is the period of time where you are most likely to capture that speculation behaviour. When you go beyond that to five years you are fundamentally changing the nature of this test and the fact that the Minister of Revenue doesn't understand that is deeply concerning.You read the regulatory impact statement of this bill—which I have done and it's clear that members opposite haven't—there are a number of very serious risks raised. The first is this one of overreach. This tax on the face of it is not designed to capture capital gains; it's designed to capture speculators. In fact the only thing it will do is bring in a de facto capital gains tax in breach of the promise that the now Labour Government made to the electors and in breach of their basic human decency of allowing those interested and those who'll actually be paying for this tax to have a say on it.It also highlights the risk of what's called lock-in and that's creating economic conditions and rules where you don't see the efficient use of assets in the system. If we want to see New Zealand grow it's important that our assets are used in an economically rational way and again the official advice is that this creates the opposite incentive.Then the third risk from this extension of the brightline test all of which the public never got a chance to feed in to because they were denied that by this arrogant Government who thinks they know everything and don't have to let the public have a say is that it will have—and this is not just my view; this again is the view of the officials from the regulatory impact statement—an impact on our rental market. So much like the foreign investment changes that the Government is pushing through the Finance and Expenditure Committee at the moment while they talk about helping the property market it will have the opposite effect because you will disincentivise New Zealanders from investing in property. You will decrease the incentive for people to want to grow the housing stock and to buy and hold properties for people to rent. Now what does that do? Well very simply it pushes up the cost of rentals.Now I've had a period of time as the Minister for Social Housing and I can tell you the one thing that drives social housing demand—Jamie Strange: Scaremongering.Hon AMY ADAMS: —is when the price of rentals in that lower quartile continues to move up and those on housing pressure can't afford the rental market. They're forced into State housing. So this is a bill that we know—that isn't scaremongering. That is what the official advice is telling the Government that they wanted to sweep under the carpet.This is a bill that will tax people who shouldn't be taxed it will deliberately impose a tax on those who shouldn't have to pay it and it will push up the cost of rentals to those who can least afford it. It is an outrage to suggest that this bill will help home affordability. It will have the exact opposite effect as will the foreign investment changes that this Government is putting through. It is outrageous that they didn't allow a select committee to have its say on increasing taxes on New Zealanders and it is outrageous that they're imposing a capital gains tax after promising the country that they would not do that without taking it to the election.This bill has become an outrage it has become an abuse of process and it has become absolutely what we have come to expect from this Government. On this side of the House we oppose it."