Robertson Grant: Taxation (Land Information and Offshore Persons Information) Bill — Second ReadingText is incorporated into the Bound VolumeRobertson Grant: Taxation (Land Information and Offshore Persons Information) Bill — Second Reading[Sitting date: 08 September 2015. Volume:708;Page:6309. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): Well that contribution from the Minister of Revenue kind of sums things up really. He could not find his notes he did not know what to say and he sat down after 2 or 3 minutes. That is the Government’s commitment—its rock-solid commitment—to getting to the bottom of who it is who is buying houses in New Zealand. It says it all about this bill and this piece of legislation which is all about being seen to do something. It is about the fact that public pressure has built up on the Government and so it knows it has to act in some form or other. So it puts up a half-hearted confused piece of legislation designed to make it look as if it is dealing with the question of speculators look as if it is going to provide some decent information for us to be able to assess what is happening in the New Zealand property market but when in reality it has completely failed to do so.The Minister told us that he was going to take some notice of the submissions of the New Zealand Law Society. I welcome that and I hope that when we see those amendments we will be able to support them. What I would ask is that the Minister take notice of some of the other submissions that he received on this bill—or even in fact whether he would take notice of some of the advice that he received from the Inland Revenue Department because we found ourselves as Opposition members during the progress of this bill in the Finance and Expenditure Committee being the advocates for the Minister’s own department. The Inland Revenue Department in its regulatory impact statement gave a number of pieces of advice to the Minister about how this bill could be improved and the Minister decided not to go there. Actually my understanding is that the Minister himself probably quite wanted to go there and quite wanted to accept the advice of his officials but other members of Cabinet overruled him told him that he could not do that and watered the bill down.When we look at the Inland Revenue Department’s statement the first issue that it had is one that all of us on the select committee had which is that time constraints meant that the Inland Revenue Department was not able to consult with potentially affected parties or estimate the compliance costs for this piece of legislation. So let us just stop and think about that for a minute. Here we are imposing a new regime on buyers of property in New Zealand and the Inland Revenue Department tells its Minister that it has not had time to consult with the people who are affected and it does not know what level of compliance costs are going to be imposed. That is the standard of legislation that this Government is bringing back to the House today. We on the committee felt that we were under a time pressuretoo. We did not get all of the information that we needed I believe to make this piece of legislation into what it should be. I say this: I believe that we will be back in this House within months correcting elements of this legislation because we have not had the time as a Parliament to get this right. The Minister is coming up with Supplementary Order Papers that he wants to put through in the Committee stage on the hoof and there will be more in the future.The other concern that the Inland Revenue Department raised—and it was raised by a large number of the submitters to the bill and is also in the minority report of the Labour Party and the Green Party—is around the definition of “main home”. The Government tries to explain away its desire to exempt the main home in its comments in the report. But what the Inland Revenue Department said was that it did not believe that exempting the purchasers of a main home would reduce compliance costs as almost all those people purchasing a main home here in New Zealand would have an IRD number anyway. That is the bottom line point. If you are going to be buying a main home you are going to have it anyway.But rather than accept that advice from the Inland Revenue Department the Government said: “No no we know best and we are going to exclude that.” Therefore the quality of information is fundamentally compromised from the get-goby doing that in this piece of legislation. The excuse that somehow or other this was going to place this outrageous burden upon New Zealanders that they would have to actually have an IRD number and a New Zealand bank account is completely ridiculous. It is not justifiable at all. The Inland Revenue Department in its advice to the Minister said that—because obviously this is linked to the next piece of legislation. I know we are not supposed to talk about an upcoming piece of legislation but the next piece of legislation—Hon Ruth Dyson: Just in passing.GRANT ROBERTSON: Oh is that right? In passing—right OK. The brightline test—the Government tried to link it up and say that it was important for that reason. The Inland Revenue Department has told it that that is not the case. We believe that the exemption for the main home is actually going to increase compliance costs. It is certainly going to create loopholes in terms of the kinds of data that can be collected.We also believe that the definition of “main home” within this piece of legislation is fundamentally flawed too. It is vague and it is open to interpretation. The Government has come up with the idea that a person’s main home should be the place of residence with which they feel the greatest connection. The problem with this is twofold. The first is that that phrase “with the greatest connection” has never been used in New Zealand tax law before. Nobody actually knows exactly what it means and there will be wholesale interpretation issues over the next few years. If somewhere is your “principal place of residence” that is I believe a clear and readily used phrase.The inconsistencies that arise from someone having a “greatest connection” may be that they do not necessarily live there full-time. Certainly if they live in other parts of New Zealand and travel from time to time to a place that they regard as their main home is that the place that they have the greatest connection to? Is it where their children go to school? Or is it where they work? We teased out some of these ideas with officials and quite frankly the officials were not able to answer because this has never been used before because the Government has come up with a brand new definition that we believe is subject to considerable loopholes.The Inland Revenue Department also told the Minister that the requirement to have a New Zealand bank account to obtain a New Zealand IRD number is unnecessary for individuals and of limited benefit as the department already has the power to require relevant identification verification upon application for an IRD number. The bottom line here is that the IRD number is what is the useful thing—the thing that will actually be able to be tracked. Opening a New Zealand bank account? Well yes it might be interesting but it really does not tell you very much at all in terms of where somebody is resident.We had a range of issues given to us by submitters during the select committee process. Some submitters said to us that the requirement for a New Zealand bank account for an offshore party to obtain an IRD number is unnecessary and will provide no net benefit whatsoever. We also agreed with the Inland Revenue Department which advised in the regulatory impact statement that it is unlikely that any anti - money-laundering checks carried out by a New Zealand financial institution would have any greater impact or give any greater information than the department would already get from the provision of an IRD number. So this is the worst of both worlds. On one hand we have got a series of unnecessary compliance and on the other hand we are not actually assessing the full range of information in terms of people who purchase their main home. So what started out sounding to most members of Parliament as being a good idea turns out to be an idea full of holes and one that does not give the right information that New Zealanders would expect to see coming from the Government.On balance the Labour Party members of the committee have agreed to support this bill. It at least begins the process of identifying a major gap in our information about the way that housing is purchased in New Zealand. It is inadequate. It fails the test of good legislation by being rushed through the House. The Minister has failed to take the advice of his own officials about how to take the strongest and best approach to getting this information.As a Parliament we have a responsibility to New Zealanders I believe to get the best possible information about who is purchasing homes and what rate of purchases is being undertaken by foreign speculators. Looking at the Quotable Value New Zealand data we know that speculators were responsible for around 41 percent of the purchases of homes in the Auckland area in the last year or so. That is an interesting piece of information but David Bennett will probably stand up and say to me: “Well that’s inadequate.” I agree but this bill should have been the piece of legislation that brought to the House a comprehensive register of home purchasing in New Zealand that we could all use to understand the origin of those purchases and what impact that is having on the housing market in New Zealand. Instead what we have is a half measure a confused bill which we will no doubt have to improve very soon.