Leary IngridINGRID LEARY (Labour—Taieri): Mr Speaker if you'll indulge me I'd like to acknowledge the previous speaker David MacLeod and seeing him enjoy WOMAD in his rohe yesterday. It was great to see such a great arts event. Congratulations to you as the local MP and to the organisers and I do hope that he goes into bat for the artists when the inevitable cuts come around the 6.5 to 7.5 percent because we do know they're a vulnerable group.But Mr Speaker you will be happy to know that I plan today to talk about the Taxation (Annual Rates for 2023-24 Multinational Tax and Remedial Matters) Bill and I would like to focus my comments on the brightline test. I do so because of the report on page 11 around the Nelson floods and the brightline test alluded to by my colleague Rachel Boyack. What this bill does—we know that there is unanimous support for it across the House—one of the really good things it does is it proposes section CZ 26B of the Income Tax Act to be inserted by new clause 18C to ensure that the brightline and other time-related tests do not apply to a property that's been affected by North Island adverse weather events and subsequently bought out by the Crown or a local authority. As Rachel Boyack said: in Nelson there are actually about 14 properties that the local council is looking to buy out and without this proposed amendment that was suggested by the Finance and Expenditure Committee it would mean that the brightline test would have applied.Now would that be a good idea if a local council was purchasing a property in those situations? Let me unpack that a little bit. First of all for those who are following along a brightline test is basically a way to tax the financial gains that people make when they buy or sell a house for income. We know that the brightline test currently is at five years and other members have alluded to a tabled—but not moved—amendment that proposes to move that to two years. Now if we did not have the suggestion in the report by the select committee and the change to the bill those 14 houses would be subject to the current brightline test of five years which would seem terribly unfair to tax the owners of those houses; to say even though these weather events mean they are forced to sell their houses effectively to the Nelson Council—it would seem very unfair to tax them. So the fairness principle does seem to apply here.That also raises the question of when is it fair to tax properties in those circumstances. Now as other speakers have said if we had retained the taxation principles Act we might have had a better barometer in my view because that did have six criteria—universally accepted criteria—by which to say very clearly we could measure vertical and horizontal equity and so on. We no longer have that Act so the idea about when it is or isn't fair becomes effectively a political judgment. And that then for me raises the question Well if we're looking at brightline tests"—which is brought into this debate under the Nelson changes and recommendations. I'd just like to make a few comments about that because there are assumptions about brightline tests and interest deductibility that have been made about increasing housing supply and they've been made in this debate. But actually that only applies in a competitive market. And the issue we have here as everybody knows across the House is that New Zealand does not have enough houses being built.I'd like to add that there's also $2 billion going each year to landlords for an accommodation supplement. So it starts to create perverse drivers where a brightline test and interest deductibility are a way of allowing people to double dip. They don't pay tax on their capital gain if they are selling the house outside of the brightline and yet they are able to claim interest deductibility. That will encourage more landlords to purchase large numbers of houses which is what we have seen previously which makes the market tighter. They're incentivised by the accommodation allowance—$2 billion a year—and ultimately rents go up. And I would say that the justification of a kind of trickle-down economics in this kind of scenario doesn't work especially in an environment where councils are adding significantly to rates bills because they have repealed the affordable water reforms that the previous Government brought in and therefore there are incentives for landlords to actually use any surplus that they generate or any profit to try and offset those increased costs.As I say I raise this because there is an amendment that's been referred to and I'm not going to go into the provisions of that amendment; I know under Standing Orders 122(3) and 123(1) that wouldn't be appropriate but I do note that I can refer to the subject matter and that subject matter has certainly been traversed by speakers on both sides of the House. So I would just ask those who are listening in—this is a little bit of my view on why we are signalling that although we support this bill as it currently stands there is a tabled amendment yet to be moved which raises these very issues that are also raised by the Nelson scenario which we will be vehemently opposing.The other element to that is that it's very cynical in my view to introduce that amendment after the select committee process. So the debate has been confined. The debate that we had on this very issue—about the brightline and interest deductibility and what's fair and how markets may or may not move—will not be able to take place now. I understand that; it has to happen at the committee of the whole House stage. But I would urge people to be watching at the committee stage because that is when we will have licence to do so.So in summary I just want to say that it's very useful having this reference to the Nelson situation to the 14 houses. It gives us an example of where the brightline does have a direct impact and where we can see that it would be very unfair to apply that test or only let North Island flood-affected houses have the benefit of that where Nelson wouldn't have been able to. And I also think it's really important to acknowledge Therese Turner. As a former chair of the Finance and Expenditure Committee I also had the benefit of her very pragmatic and sound and solid tax advice as we worked through similar complex bills in the committee.Finally just also to endorse—and thank actually—the chair of the select committee and the comments that have been made about making sure that taxation on lump-sum payments under the Ministry of Social Development in particular are now fairer through the amendments of this bill. I remember when I was at the Brighton fair a couple of years ago and one of my constituents came up to me. I do hope he is still with us. He had stage 4 terminal cancer. He had been able to get a lump-sum payment on the basis of medical misadventure associated with treatment for that but because the lump sum had come in at the end of a very late period he was due to pay a lot of tax on it. He had been fighting for many years to get equity around that issue. So this is a great day if he's still with us; if he's not I want to salute the work that he did and his advocacy for this. It is only fair that lump sums are paid at the equitable rate of when the tax payment would have been due not a lump sum at the end which is likely to increase people's income and therefore lead to a higher tax rate.So in the dying moments of this debate while we do support the bill it has had many mothers and fathers as the Hon Barbara Edmonds has said. I look forward to some fireworks at the committee stage when these very important questions about tax fairness about the brightline test about interest deductibility and about what is appropriate and what is the true impact for renters in the market will come to the fore. It will feel truncated because it hasn't been to select committee and therefore we will certainly make our views known and we invite viewers out there to follow the debate closely because there is something about the logic of the National-led Government that doesn't add up. It's trickle-down economics. So I'll reserve my comments for then and commend this bill currently as it is to the House."