Clark David: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeClark David: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In Committee[Sitting date: 18 February 2014. Volume:696;Page:16003. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): I want to speak about Supplementary Order Paper 413 to start my contribution the amendments to the Child Support Act 1991—Paul Goldsmith: That’s Part 3.Dr DAVID CLARK: —but my colleagues opposite tell me that is Part 3 so I shall despite my eagerness save that for my debate on Part 3. It is something that I do look forward to discussing. It is one of the more embarrassing parts for the Government where it is delaying again child support changes because it is not able to implement them because it has a computer system that is out of date.Within Part 2 though there is plenty to debate here in this Chamber because Part 2 covers a number of elements of amending our tax system that Labour supports. Indeed Labour will support the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill through the House as my colleague Andrew Little alluded to in his recent contribution—because we do need to have some rates set and we need the system to carry on—but we actually also want to ensure that these things are properly debated and that we get to a fairer society in the future. We are not conceding the point that this could be a much fairer bill that this bill could be directed to driving New Zealand’s economy forward and that a future Labour Government will indeed do that. Mr Little quite rightly makes that point and hopefully that will come sooner rather than later. Mr Key’s threat of bringing the election forward to a month away would be good news for New Zealanders because they are getting sick and tired of this arrogant out of touch Government and they are ready to see a new Government with big ideas willing to tackle the real problems that New Zealand has by implementing measures such as pro-growth tax reform in the kind of capital gains tax that would see money shift from the speculative sector into the productive sector and decent KiwiSaver policies. I could go on but I am going to come back to those things that we are supporting in this bill.The reason that Labour is supporting the bill is that there are some sensible things in this bill. Although it may pain me to say that it does have some sensible content in the middle of it: the disposal of emissions units the way in which foreign superannuation withdrawals are treated albeit that we see some difficulty with the anomalies between Australian treatment and the rest of the world. If we say that a set of twins goes on their OE and one goes to England and one goes to Australia the twin who goes to Australia will get much more favourable treatment as they bring their savings back to New Zealand. We see the anomaly in that treatment. But we also see in this bill some definitions around mineral mining that are designed and were debated extensively at the Finance and Expenditure Committee under Mr Goldsmith’s guidance from his position as chair. We looked at the ways in which mining would be treated so that it set the right incentives that massive profits were not raked that the system was fair and that it would work from an industry perspective.We also set some rates to do with damage from the Canterbury earthquakes and we also debated those points in the committee. It is one of those situations where across the Chamber we can have a really constructive discussion to make the law better and fitting for all New Zealanders. It is always a pleasure to be a part of those discussions in selectcommittee and a part of making law better through detailed investigation and through the contributions of many people who came into the select committee gave of their own expertise and advice in order to make the law better and more applicable in the national interest in the best sense of that term. We amended things in terms of the calculation of family credits parental tax and so on—definitions that were changed in the bill in relation to the Canterbury earthquake situation.We looked also at International Financial Reporting Standards financial reporting methods. There were a number of technical aspects that we worked on considered the submissions on and made our own decisions on and agreed as a group that the law could be improved on. So I want to offer my commendations to those I work with on that committee for their efforts in making that part of the law better.But I want to turn to foreign superannuation changes because changes are needed. The proposals do have the merit of simplicity which should eliminate uncertain treatment which has been a problem since it was first identified in 2006 but there are a number of things with which people will be uncomfortable. We have seen in recent days the Minister move a further amendment that pushes out a date so that the legislation does not become retrospective on the basis of those who have already lodged a complaint. Because this legislation is obviously moving slowing through the House it could capture another group who were not intended to be collected on the way through.Withdrawals in the first 4 years after a person becomes a resident will not be taxable in future and this is designed to ensure that things are translated from the Australian system to the New Zealand system in a way that is fair. I have alluded to the double standards where we have different countries adopting different rules and we know that we inch towards fairness. It is good to see the Government making changes based on a principle of fairness in this part of the bill in sharp contrast to the first part where we reaffirmed rates of taxation which we on this side certainly see as unfair—where the wealthiest have benefited and middle New Zealand struggles to get ahead because of that 2010 tax swindle which took so much out of the pockets of ordinary New Zealanders to pay for the wealthiest.I welcome the Minister in the chair Michael Woodhouse and look forward to his contributions on this debate because it is a debate about fairness in our tax system. He was answering questions on fairness in terms of the lot of veterans earlier in question time. I heard a question raised about the RSA in Mosgiel and whether Mr Woodhouse knew that members there were going without meals as a consequence of an unfair system which brings me back to the point about fairness in this bill. That is why I look forward to the member Michael Woodhouse’s contribution on the fairness—or lack thereof—of the overall bill. If you will Mr Chair please allow him that breadth of discussion as we certainly on this side will be prepared to do because we are interested in what he has to say in that particular instance. It is not good to hear that our veterans are going hungry in New Zealand because of an unfair system and particularly in Dunedin a place that I care deeply about.There are problems that do exist with the superannuation changes. The first issue is that it will apply to all transfers even those made into a locked-in scheme such as a KiwiSaver fund. In this case it is proposed to allow the taxpayer to withdraw an amount up to the value of the tax due from the KiwiSaver scheme. It sounds good but it ignores the fact that where the transfer is made from a UK pension fund withdrawing funds could possibly either invalidate the transfer or trigger a 55 percent tax charge in the UK. We know there are ways around this and we know that it is going to be very important that there is a clear education campaign put forward by the Inland Revenue Department and we trust that it will do that in a manner that is comprehensive and competent because largely it is a competent department. Unfortunately it has not always beenguided by competent Ministers and that is probably why it is struggling to keep up in terms of its computer system and in terms of implementing changes that would make a fairer tax system. But we know that the officials who appeared before the Finance and Expenditure Committee have great integrity take away our questions and supply us with full and helpful answers on the committee. I take my hat off to them in passing as we debate these changes put forward in this bill.So I draw my comments on this debate on Part 2 to a conclusion with Labour’s support for the sensible changes it contains to ensure that the taxation of mineral mining is done fairly in a way that does not allow exploitation of the rules and with some reserved support for changes to taxation of foreign superannuation and support for the Canterbury earthquake tax measures. We worked constructively at the select committee across the House and it is a pleasure to be able to support those aspects of the bill that make a difference to our tax law and that make it fairer. We are just disappointed that in terms of the overall picture of our tax system we do not have a system currently where middle New Zealand has the opportunity to get ahead. Those who are struggling and working hard do not have a system that enables them the opportunities to get ahead where cost of living is rising and those at the wealthiest end of the spectrum are reaping the real gains of any economic recovery. Thank you.