Taxation (GST and Remedial Matters) Bill

If I might begin by expressing deep regret at the undue haste with which the debate on the previous part was concluded. I think it is a matter of great disappointment that members on this side of the Chamber have not had the opportunity to address legitimate amendments that we had been planning to address on the basis of our having multiple calls—

💬 Tim Macindoe: I raise a point of order, Mr Chairperson. The member is trifling with your ruling. You have made it very clear, you have explained it in a way that is fair, and he should be required to get on with discussing the matter under consideration at this moment.

Speaking to the point of order, I say the member would be quite right if I had taken a point of order. But as I did not, and was using my time in my speech, the member is out of order.

The CHAIRPERSON (Eric Roy): It is inappropriate for members at any point to refer to a Speaker’s ruling, either in a point of order or in their speech. I think the matter having now been dealt with, we should proceed.

Mr Chairman, you may detect a degree of frustration on the part of members on this side of the Chamber, who do not want to be unreasonable but find themselves in the very difficult position of having to do the job of, essentially, first and second reading speeches and a series of Committee stage speeches under extraordinary time pressure. There are major issues of principle at stake in this part in terms of the interrelationship of portfolio investment entities, look-through companies, and loss attributing qualifying companies. Those are vehicles that hold hundreds of millions of dollars of assets, which are essential to the country’s savings regime and for which potential tax losses could also reach the hundreds of millions of dollars. We are having to condense a first-principles discussion on whether loss attributing qualifying companies should be replaced by look-through companies alongside detailed discussion covering some 70 pages of cross-referenced amendments. We need to go back to the primary bill to try to understand, on the hoof, how the material in the amendment changes the sense of the underlying clauses. We are trying to do both of those things at the same time, and are witnessing an extraordinary abuse, a very risky abuse, and a very sad abuse by a Minister who erstwhile had a strong reputation for process. I really do want to put on record my personal disappointment at the circumstances that the Committee finds itself in.

I have previously raised at the level of first principles, and I will cover off in a couple of the points in this part, the question of the magnitude of the tax loss, which is not being stemmed through what my colleague Mr Mallard called the “see-through” company regime, which is probably a pretty good description. It is actually called the look-through company regime, but “see-through” is probably about right because the whole thing is pretty see-through. It is pretty flimsy—a kind of “tax negligée” if you like—and the revenue consequences are likely to be negligible.

We asked how much of the $2.2 billion of avoidance was going to be dealt with. The best advice that we had received earlier was that it would be only $130 million. We think that is inadequate. We think it is a step in the right direction, but by no means far enough. We would like to have had access, through the select committee process, to the option development.

Let me now raise a very important point, which has not been raised yet in the debate. There is no regulatory impact statement, and I call on the Minister of Revenue, if he is listening, to confirm to the Committee whether the matters contained in Supplementary Order Paper 187 that relate to Part 3 were referred to Treasury’s regulatory impact assessment unit, and if they were, as they are required to be, whether they received a regulatory impact statement, where that regulatory impact statement appears, and why it has not been tabled in the House. If there is a good reason why it was not required, let us hear it, because these are matters of millions of dollars of revenue.

One of the key things that we need to decide, in terms of this part, is how the change from loss attributing qualifying companies to look-through companies will affect the relative attractiveness of property investment versus other forms of savings investment. I think it is common knowledge around New Zealand that this is a hugely important issue at this time. The whole country is suffering because of the effects of the global financial crisis, and locally in the New Zealand markets, which have been crippled by that event, the severest impact was because our property bubble was over-inflated. One of the principal reasons for that was unduly favourable tax treatment, and, hey presto, part of that was the matter under consideration in this bill. What had happened was too much resource went through loss attributing qualifying companies to property, and not enough through portfolio investment entities.

In the new clause 78B on the Supplementary Order Paper we see notification requirements for multi-rate portfolio investment entities set out. They are a little hard to understand, because they have to be cross-referenced against clause 78. The difficulty is the whole concept of multi-rate portfolio investment entities, when lined up—

I am happy to take a call to respond to the points that the member has raised. I appreciate that the issue of process is one that the Opposition feels very strongly about, but I want to repeat what I said at the commencement of each of the two previous parts of this bill. This process has been transparent, robust, and clear, and dates from the presentation of the Tax Working Group’s report in January of this year. As part of the Budget process, and indeed part of the work of the Tax Working Group, all of the documentation has been released publicly. It has been out there, on websites, and it has been in the public arena right from the beginning. The Budget contained regulatory impact statements relating to the changes that are contained in the Supplementary Order Paper. We have been absolutely clear, right from the beginning, about having an open process.

As I said earlier, following the Budget an issues paper was released, on 24 May, and we received 24 submissions on it. Draft legislation, which forms the basis of the Supplementary Order Paper, was released in October, and a further 10 submissions and comments were received on that. In addition, discussion took place with the New Zealand Institute of Chartered Accountants, the Law Society, and all the usual suspects, about detail over that time, and I acknowledge their contribution and their input. Changes continued to be made up until the time that the Supplementary Order Paper was signed off and released publicly on Tuesday. It has been a very considered and deliberate process.

The issues contained within the Supplementary Order Paper are significant. The member keeps talking about $2.3 billion of tax losses emanating out of the loss attributing qualifying companies sector. That is certainly true. I remind him that it grew by 400 percent during the term of his Government. The explosion in loss attributing qualifying companies rapidly increased, under the term of the previous Government. The major driver was the avoidance opportunity created by that Government shifting the top personal tax rate to 39c. We have dealt with that, not only by reducing the rate but also by aligning it to the trust rate. That escalation will not continue in the future.

But even if we take the total swag of loss attributing qualifying companies, estimated to be somewhere in the order of 130,000, approximately half of them—in fact, the figure I have seen is 49.8 percent, to be precise—relate to property. As I said at an earlier stage of the debate, of the $2.3 billion in tax losses, approximately $800 million is attributable to property-related losses. The member talks about the net not being cast widely enough, but we are doing a couple of things with these changes. Firstly, we are restructuring the broad qualifying company regime. We will be moving to a full look-through process. I have indicated earlier the changes to be made to the dividend regime in due course. Secondly, we are seeking to prevent the worst of the abuses that were occurring in the property-related area, and to address that essential conundrum, which the Tax Working Group pointed out, that some $200 billion of investment in property produced losses of $500 million per annum and a revenue loss to the Crown of $150 million per annum. We are addressing that through the changes being made in this bill.

I come back to the point that I have made at every stage of this debate. The reason for it having to be done in the way that it has been done, given that we have given virtually a year’s notice of our intention, is that these changes take effect from 1 April next year. I think Mr Burns or Mr Mallard may have referred to this earlier, but a number of loss attributing qualifying companies and the entities that are associated with them will need to change. They need time to make that transition. The Inland Revenue Department needs time to gear up for that transition. This legislation has to be passed at this point in order to enable the goal of 1 April—which I heard the Opposition say they do not disagree with—to be met.

I said earlier, and I stand by it, that we have been punctilious in terms of the consultation process. We have been very clear to ensure that at every stage all of the points that have been raised have been considered, right from the time of the Tax Working Group last year. The outcome has been one in which we have legislation that is credible, is workable, and will address the abuses that were being raised as part of the Tax Working Group report, which everyone knew were occurring and were seeking action upon. I think this is good legislation, and I think it will stand the test of time.

The Minister’s comments deserve a direct reply. Let us be fair: the Minister is quite correct that the general intent of the policy was made known in the Budget. He is also quite correct that an early draft form of legislation was made available to the industry—

💬 Hon Peter Dunne: Publicly.

—and publicly—and that is not in dispute. What is equally not in dispute, and the Minister would not disagree with this either, is that the matters that resulted from that process were not presented to a select committee, were not subject to parliamentary scrutiny, and did not have access to the independent tax advice of the Finance and Expenditure Committee’s independent adviser.

I think the Minister is in grave danger here of setting a precedent that could undermine the generic tax policy process more generally, because he seems to be inferring to the Committee that it is somehow OK, it is somehow acceptable, if the Government announces a policy intent—

💬 Hon Peter Dunne: I think the member is inferring; I might have been implying.

—thank you; “might be implying”—and somehow consults with the industry, it gets a form of leave pass and can bypass the select committee. That, of course, is not acceptable. It is not acceptable to the public, first, because the select committee is the opportunity for the public to make submissions and be heard. This is, more frankly, something that smells rather of a kind of smoke-filled room—a closed-room dialogue between a number of parties that have deeply vested interests. That is not acceptable in the New Zealand constitution. It is not acceptable in good parliamentary practice. This is a change of practice for this Minister, and it is not OK for the House. We have made that point repeatedly.

I need to raise several issues, specifically about clauses in Part 3 of the Taxation (GST and Remedial Matters) Bill. Again, I say it is not easy for members of the Committee to cross-check the provisions on Supplementary Order Paper 187—recently received—in the name of the Hon Peter Dunne with the underlying provisions of the bill to which they cross-refer. The interface with the portfolio investment entity regime, such as in new clauses 78B, 79B, and 80B through to 82E, is a matter of some interest. There have been allegations that portfolio investment entities had been subject to similar abuse to that of loss attributing qualifying companies. Where is the analysis, I ask the Minister, that shows how consideration has been given to managing that boundary? Going forward, I ask whether similar issues might occur under look-through companies, and whether the removal of some of the arbitrage from loss attributing qualifying companies has removed the possibility of arbitrage between portfolio investment entities and look-through companies.

Those are the sorts of matters we would expect to see addressed in a regulatory impact statement or an options analysis. But we do not have one, because the Government that championed the Regulatory Responsibility Bill has followed its own procedures in less than 50 percent of the legislation that it has put through the House. Perhaps that is not surprising, because the Government set a 5-year record this week for the highest proportion of legislation going through under urgency, in at least the last 5 years. I have not been able to go back and check earlier than that. We have rushed legislation that violates the Government’s own regulatory—

💬 Hon Judith Collins: Good hard-working Government!

“Crusher” has become a tax policy expert. That worries me deeply; it worries me as deeply as the process. Without good scrutiny, as my colleague Brendon Burns said before, we will pass this in haste and revise it at leisure.

The Minister has made the point that he has dividend amendments coming through. There will be tax bills—at least two—next year. What would have been wrong with putting these matters to the select committee in such a way that it could subject them to the proper process?

💬 Hon Judith Collins: What’s he got? He’s got poetry! Ha, ha!

The Minister of Police, who is also the Minister of Corrections, may not care about the tax loss, but the tax loss that is being addressed through this bill is larger than Vote Police—larger than Vote Police. That might explain why she has put only 30 new cops on the beat, rather than the 1,000 she promised. So there is a big gap between that Minister’s rhetoric and her reality, and there is a big gap between the Government’s rhetoric about regulatory responsibility and the actual practice, in which less than half the bills it has passed this year have been through a proper process. That should shock New Zealanders—it should shock New Zealanders.

The return requirements for multi-rate portfolio investment entities appear in clause 80C, and they are deemed to occur at a 31 May date—31 May of the year after the end of the tax year. We are worried about arbitrage opportunities.

I seek leave to correct the vote on the closure motion on Part 1 of the Taxation (GST and Remedial Matters) Bill. The vote for Labour should have been 36 votes opposed. I seek leave to have the vote corrected.

The CHAIRPERSON (Hon Rick Barker): Leave is sought to amend that vote. Is there any objection? There is no objection. The record will be so amended.

I seek leave to correct the vote on the question that Part 1 of the Taxation (GST and Remedial Matters) Bill as amended be agreed to. The vote for Labour should have been 36 votes opposed. I seek leave to have the vote corrected.

The CHAIRPERSON (Hon Rick Barker): Leave is sought for that purpose. Is there any objection? There is no objection. The record will be so amended.

It is interesting that the Minister Peter Dunne has stood up and told us a couple of times about the process the Taxation (GST and Remedial Matters) Bill has been through to get to this stage. There are just a couple of things I will say with regard to the process Mr Dunne has outlined.

The first is that this is the standard sort of practice Labour members expect any tax bill to go through, and that I think New Zealanders would expect any tax bill to go through: it is signalled, it goes out for consultation, consultation comes back in, a bill is drafted, it goes through the first reading, it goes to a select committee, and in the select committee we have a robust debate. Mr Dunne has said that the bill has gone out to all the tax consultants, and he talked about chartered accountants, the Law Society, etc. Well, those esteemed experts in this area have had about 5 or 6 months to look at this bill, to make changes, to add suggestions, to delete things, and to have quite a lot of input. If that is the case, then why should Labour MPs have only 2 days—6 months versus 2 days? The reason I am a little bit upset about this time period, and the reason we are so opposed to it, is that we are representing New Zealanders in a democratic Parliament in a democratic country. If the people of New Zealand are not given an opportunity to have a say about how legislation is drafted, then that breeds a level of mistrust. That is what it does.

When did the Budget come out? The Budget was out in May. The Tax Working Group concluded its work in January. Mr Dunne is right: these changes were signalled, they were out there. So why was the bill not drafted beforehand? This bill could have gone to a select committee in November, it could have been referred back, and it could have been passed by now, if the Minister had put a little bit of oomph into it. This is symptomatic of the Minister’s handling of this portfolio. We have seen it time and time again, and it is just not good enough. We see it with regard to the supposed review of child support. That review was going to be done in the first 4 months of the Government’s term. Now, 2 years later, the report has only just been released. I tell Minister Dunne that this is sloppy. He could have had something drafted. The Minister mentioned that this matter was out there in January. It was signalled in May. Labour knew about it. As I mentioned, we do not necessarily oppose all of this; we just would have liked time to consider it. We would have liked time for our independent tax expert to sit down and brief Labour members of Parliament.

I turn to new clause 78B on Supplementary Order Paper 187, which deals with notification requirements for multi-rate portfolio investment entities, or PIEs. They were set up post-KiwiSaver, but the Act that brought them in had provisions that were open to abuse. Portfolio investment entities are used a lot by people who are saving for their retirement. I wonder whether Grey Power was consulted about this measure. I will read out subsection (3) of section 31C that is inserted by new clause 78B: “For an investor … who invests in a PIE that calculates and pays tax using the provisional tax calculation option under section HM 44 of that Act, the PIE must notify the investor—(a) by 31 May after the end of the tax year, if the PIE is not a superannuation fund or retirement savings scheme and has an income year ending before 31 May; or (b) by 30 June after the end of the tax year, if the PIE is a superannuation fund or retirement savings scheme and has an income year ending before 30 June; or (c) within 2 months after the end of the PIE’s income year,”.

There are tax implications around this, and we are struggling to get our head around them. My colleague the Hon David Cunliffe said that we are having to cross-reference the bill with Supplementary Order Paper 187—which is larger than the bill—to find out the actual effect of these changes. It is very difficult to do that on the hoof. It is difficult to do that with any legislation, let alone tax legislation—more so with tax legislation. That is why, for example, we were very disappointed when the debate on the substantive part of the Supplementary Order Paper was closed down after only three-quarters of an hour. We did not have the ability to debate it and, in our own minds, understand the implications of it. Mr Chairman, you will be well aware, as will many members of Parliament, that after tax legislation is passed we always get a number of emails from, normally, concerned constituents who wonder whether the change has implications for them and why it was done. If legislation goes through the select committee process, we have the ability to reply to those emails and concerns in a very timely manner. That is the way in which Labour members like to conduct their constituent relations.

As my colleague the Hon Trevor Mallard noted, Supplementary Order Paper 187 was tabled on Tuesday. A 70-page Supplementary Order Paper, which as mentioned is larger than seven of the nine pieces of tax legislation to go through the House during this term of Parliament, was tabled on Tuesday. Members of other parties have not had the ability to sit down as a group to discuss it, because this is the time of year when we are off attending school prize-givings and a whole raft of functions in our electorate. In fact, that is what we should be doing at the moment. We should not be sitting here under urgency, near Christmas. We should be out there dealing with our constituents.

💬 Paul Quinn: Do you have an electorate?

Wait till 2011; Mr Tremain knows about that! The bottom line is that the difference between Labour list MPs and National list MPs is we continue to work very hard for our constituents. We work extremely hard, whereas Mr Quinn apparently, according to some publication I read, should not even be here.

I go back to the tax legislation. I know what will happen about this change to portfolio investment entities. Members of my caucus will send me, the Opposition spokesperson on revenue—probably tomorrow, being Saturday, or on Sunday, because we all work Saturdays and Sundays, and maybe even on Monday—emails to tell me that they have had emails from constituents who are really concerned about the changes to the tax legislation around portfolio investment entities that are outlined in section 31C(3) in new clause 78B. In fact, I think the changes go through to new clause 80C. It will have been reported in the business press that there is a change to the tax law around portfolio investment entities. That is all they would have heard. If there had been a select committee hearing process, I could respond straight away to my colleagues and explain the reason for the new clause. I could say that it was discussed at the Finance and Expenditure Committee, it had gone through the whole robust process, and we had accepted it in order to improve the integrity of the tax system, or to make it easier and more transparent for taxpayers, or whatever. If an amendment has gone through the select committee process, there is always a good reason for it.

As has been commented on earlier, Labour supported the original bill through the select committee. It was a fantastic atmosphere, because we all agreed that we wanted to do the right thing. We asked a whole lot of questions. We worked well. There was not one provision in Part 2 that I can remember that we argued against or took a political line on. We all agreed with it. I put to the Minister that he had time, his officials had time, to draft legislation after this issue was signalled, to get it out to the appropriate consultants and the appropriate experts, to get it drafted in another bill—not a Supplementary Order Paper—and to get it before the select committee, instead of rushing it through under urgency on a Supplementary Order Paper. All we ask is that tax legislation is not rushed through in this manner, because it gives us no confidence.

Not only does it give us no confidence but it gives the people of New Zealand no confidence. They will read that tax legislation has been rushed through the House. They will read that a 71-page Supplementary Order Paper that contains a whole lot of amendments to a 57-page bill has been rushed through the House. Those who engage in these matters—the sorts of people who would have submitted to the select committee—will ask why it was rushed through under urgency and why they did not have the ability to comment on it. My colleague Trevor Mallard alluded to the fact that Federated Farmers had not been asked about it. As I asked earlier, was Grey Power consulted over it? I suspect that it was not. A lot of people who would have presented to the select committee were not consulted about the portfolio investment entities changes or any of the changes.

I will ignore most of Mr Nash’s comments, because they do not deserve a response. I come to Mr Cunliffe’s points, which were more substantial.

💬 Stuart Nash: Play the ball, not the man.

The member makes an interjection. He should try to demonstrate some credibility before he starts to comment on process, which is something he understands nothing about. His colleague Mr Cunliffe, on the other hand—

💬 Stuart Nash: When you start playing the ball and not the person, then you will get credibility.

Oh, Mr Nash is hurt! Mr Nash stands here and trumpets his knowledge, which actually fills a thimble, and then becomes concerned when he is drawn to account. Mr Cunliffe, I think, made a worthy effort, which I will seek to respond to.

💬 Stuart Nash: We could hold you to account, because you were a Labour MP who sold out.

Oh, dear! Now we get into personal prejudice.

💬 Paul Quinn: I raise a point of order, Mr Chairperson. Stuart Nash has regularly referred to you, Mr Chairperson, in the last 30 seconds. I think that is against the Standing Orders.

The CHAIRPERSON (Hon Rick Barker): I will deal with the matter of “you”, hopefully finally. The word “you” in itself is not proscribed in the House. When people say “you” it does not necessarily always apply to the Chair. Mr Nash was interjecting towards Mr Dunne, the Minister in the chair, and was making reference to him. So I took the “you” in that context to refer to Mr Dunne. However, although Mr Nash has not shifted his seat for the purposes of interjecting, he is interjecting continuously from that position. I want to get on with the debate, so can we just taihoa, draw a breath, and move forward.

I am happy to do that. I will respond to two points that were made by Mr Cunliffe. The first one related to the issue of regulatory impact statements. I made a comment earlier in respect of regulatory impact statements. I have had some more inquiry made about process and I can inform him as follows: as I said in my earlier comments, the provisions relating to loss attributing qualifying companies were part of the post-Budget regulatory impact material. When Supplementary Order Paper 187, which is the subject of the debate today, was released on Tuesday, so too were regulatory impact statements regarding the social assistance provisions, the changes to non-resident seasonal workers, and the Māori authority changes. That material is all out in the public arena.

💬 Hon David Cunliffe: I raise a point of order, Mr Chairperson. I thank the Minister very much for his so far partial explanation, but—

The CHAIRPERSON (Hon Rick Barker): If the member is going to take a point of order, the member should make a point of order. The member does not get up and start issuing thankyous and all sorts of other things. The Standing Orders are quite to the point: they talk about points of order being terse. Thankyous and salutations to anyone are irrelevant. If the member wants to make a point of order, the member stands, asks for a point of order, and delivers the point of order.

💬 Hon David Cunliffe: The point of order is this. If a regulatory impact statement was issued, as the Minister now contends, I take it that you, as the Chairperson, would be responsible for ensuring that it was attached to the draft bill and the Supplementary Order Paper. It does not so appear. Can the Chair explain why the regulatory impact statement is not available to members?

The CHAIRPERSON (Hon Rick Barker): I say to the member that that is not a point of order. It is not a point of process. The member is seeking information. If the member wishes to seek information then he does so by way of debate. The member can stand, take a call, and make the point by way of a call. The member does not make that point by way of a point of order. It has nothing to do with the order of the Committee.

💬 Hon David Cunliffe: I raise a point of order, Mr Chairperson. I thought it proper to address a matter of Committee order and procedure to you as the Chair and not to the Minister responsible, because it is you who presides over the Committee. The Minister is saying that he has issued a regulatory impact statement. It has not been tabled in the House. I take it that as the Chair you are responsible for the Parliamentary Service and the Office of the Clerk. I take it that it would have been the responsibility of the Office of the Clerk to ensure that the regulatory impact statement appeared before the House, which it has not.

The CHAIRPERSON (Hon Rick Barker): I make the point again that the member is not able to distinguish between a matter of the order of the proceedings of the Committee and a matter that is a material fact on what a member has or has not done. If the member has a question about that, it is for him to address to the Minister, because the Minister is responsible for those matters, and as the Chair of the Committee, I am not. I am responsible for the organisation of the debate, the structure of the debate, and making sure that the Standing Orders are complied with. Those are matters for the Chair. I have now answered that question twice for the member. I hope we have it clear at this point.

I will respond to the point that Mr Cunliffe has made. The regulatory impact statements to which I referred have been issued publicly. They are available via the Inland Revenue Department policy website; they are freely available in that regard.

I come back to the point that he raised regarding the portfolio investment entity regime. He and I recall from a previous existence that a lot of the issues that led to the introduction of the portfolio investment entity regime were not, as Mr Nash contended, to do with KiwiSaver; they were a consequence of changes relating to offshore investments that, I think, he initiated when he was holding the revenue portfolio. A number of the changes occurred around that regime in 2007, from memory. He will recall that we had subsequently a lot of discussion about what became known as cash portfolio investment entities, land portfolio investment entities, or various iterations of the portfolio investment entity regime.

The issue has been one of how this new vehicle is adapted for the future, if you like. In many senses, the jury is still out on that issue, because the Savings Working Group, which is due to report early next year, will also be focusing its attention on it in terms of the broader canvas.

In terms of the specific provisions in this part of the bill, they are consequential on the changes being made to the definition of “income” for social assistance purposes. Those provisions do not relate to individual contributors; they relate to the funds themselves. So in answer to the question that he was raising about the impact on contributors, I say that it is lessened. The impact is on the funds. The funds have been fully consulted throughout the development of these proposals and are broadly supportive of them. I think that deals with the question that he was raising. This is a very specific and narrow area; it is not a major area of policy. It is an administrative change consequential upon some other changes that are being made, which one of his colleagues indicated his party was broadly supportive of.

I thought that I should put that on the record at this point. I have no intention of interfering with or delaying the debate, but I put those facts on the record because they may be of assistance.

I thank the Minister in the chair, the Minister of Revenue, for that explanation, which is particularly helpful in relation to the distinction between individual contributors and the portfolio investment entities at fund level. The clarification is appreciated.

I think Newton’s law of holes applies to the Minister at the moment: when in one, stop digging. The Minister previously justified the absence of a select committee process on the basis that the draft bill was consulted on with the industry. Were that to set a precedent, the entire generic tax policy process would be down the chute, as they say. For all we know, the Minister is also saying that because a partial regulatory impact analysis may have been undertaken by the department on some aspect of this, and it might be available on the website, then there is no need to table it for the House or attach it to the bill. That is the inference, because the Minister was saying that due process had been followed—unless he is now admitting that due process has not been followed, in which case I would be happy to concur.

I go back to Part 3. I raise another issue of substance that I would be grateful for the Minister’s advice on, and a response from his officials on, since we have not had the opportunity to ask this question in select committee. It relates to the notices of proposed adjustment in new clauses 82B, 82C, and 82D, and the challenge provisions in new clause 82E, set out in Supplementary Order Paper 187. What is somewhat confusing is the scope of the adjustment process in respect of several other exception and modification processes that cross-refer back to Part 2. My personal favourite by nomenclature is new subclause (2BAD), which is appropriately named, in relation to company definitions. Beyond that there are the grandparenting provisions and the provisions in relation to adjustments for family scheme income from amounts derived by dependent children in new section MB11, and family scheme income from non-residents’ foreign sourced income in new section MB12. Officials may be able to assist us through the Minister.

The substantive concern, not a drafting concern, is that we wish to be clear—and the Minister may be able to provide subsequent assurance to the Committee—that the adjustment process brought in in Part 3 through clauses 82B to 82E is not able to be used to double arbitrage, if you like, or make fine-tuning adjustments to what otherwise could be quite generous provisions around family scheme income or foreign-sourced income. The family scheme income is particularly important because it would be possible, at least in theory, to allocate through the ownership of look-through companies income from the company to pertain to the taxable income of individuals who might be at a lower tax rate than the principal owner.

An example is if a principal owner owned shares in a company alongside the owner’s children, who were on a lower tax rate, or a spouse—and I wonder whether this is the Minister having another go at income splitting by another name. He was not able to get National to agree to income splitting. I would be really grateful for his guidance—he may not wish to give his guidance, in light of that assertion—on whether any provisions are inbuilt in the bill that prevent the sort of arbitrage where the ownership of the look-through company could be flexed to reflect the tax rates of the underlying shareholders. We would not want the look-through company regime to operate like an income-splitting system. It would have been better, although we opposed it, for the income-splitting bill the Minister proposed to be agreed transparently, than to have it done—if indeed that is the case, and it may not be—by the back door in relation to this provision.

Finally, it is incumbent on me in respect of new section MB12 to say that the whole interface between the domestic savings regime and the international tax regime is devilishly complicated. I confess to finding myself in the uncomfortable position, when I held the Minister’s current role, of being in an ongoing reliance position in relation to technical advice on that matter.

I move, That the question be now put.

I would like to take a moment in this Part 3 debate to ask a question about the regulatory impact statement and clarify exactly what the Minister in the chair, the Hon Peter Dunne, was referring to. My understanding is that he would have been referring in his comments to the regulatory impact statement as it relates to the bill as introduced.

Sitting suspended from 1 p.m. to 2 p.m.

I remind the Committee that before we broke for the lunch break we were discussing Part 3 of the Taxation (GST and Remedial Matters) Bill. I asked the Minister of Revenue to clarify comments that he made in his introductory remarks about the regulatory impact statement—in his spirit of openness, I think he called it—and whether, in fact, his reference to the regulatory impact statement refers to the bill as introduced to this House in August, a bill of some 57 pages, or whether his reference to the regulatory impact statement refers to the 70-page Supplementary Order Paper that was released by the Minister in the last 48 hours, a document that is some 13 pages longer than the bill itself. If we are not to have a select committee process to inquire into the details of the Supplementary Order Paper, if urgency is to be applied in this House a fortnight before Christmas as we try to see this bill and the Supplementary Order Paper through, and if there will not be any opportunity for others to have input into the bill through the select committee process, then I would have thought that a regulatory impact statement on the Supplementary Order Paper to try to get some sense of dispassionate analysis on the raft of changes it introduces would make absolute sense, because that Supplementary Order Paper is detailed and complex and New Zealanders have a right to know what is being passed. This Committee cannot give the scrutiny to it that a complex piece of tax legislation truly demands.

I also note that the last time this Minister featured in the House in respect of tax issues of any note was when he supplied the wrong speech notes to another Minister, Jonathan Coleman. The speech notes were for a different bill to that which the Minister was speaking on.

💬 Hon David Cunliffe: “Coleman-itis”.

I think that the Minister himself quite rightly claimed culpability for that error, because it was his office that supplied the notes. I suggest to the Committee that he has gone from bad to worse, because here we have a situation where we do not have just the wrong speech notes for a bill that has already passed but the Minister giving speech after speech to the House defending a Supplementary Order Paper that is bigger than the bill itself.

💬 Hon David Cunliffe: Is this Supplementary Order Paper a plot?

That is a comment that others might make. I am not drawn to conspiracy theories. In my past life as a journalist, sometimes people came to me with things that suggested there was a conspiracy, and I usually went for the other option, which is the stuff-up.

💬 Hon David Cunliffe: The con job.

No, normally it is a stuff-up rather than a conspiracy. But this one has different hallmarks, because, as we have noted, there was a process in which the Labour Party supported the bill’s introduction, worked through the issues in the Finance and Expenditure Committee to ensure that the legislation was valid, and made a number of changes to the legislation. Our colleague Trevor Mallard highlighted one of the particular concerns earlier, and I think it is repeated in another part of the bill, about the issue of Inland Revenue Department access to jointly held bank accounts for the tax debts of a particular person. It was a very astute observation from my learned colleague the Hon Trevor Mallard.

💬 Hon Trevor Mallard: I’m not learned. I’m not a lawyer.

He is not learned? No. The point is that the Finance and Expenditure Committee scrutinised the bill to ensure that there were not things within it that would not be good law for New Zealanders. But we have had no opportunity whatsoever for that scrutiny on the Supplementary Order Paper, and it really is a recipe for disaster, because, inevitably, there will be things that come through from the bill that do not help New Zealanders, and we are very likely, as a Parliament, to have to revisit it.

Again, I note that of the nine tax bills introduced to Parliament by this Minister, who is generally highly regarded as a good, competent Minister—

The CHAIRPERSON (Lindsay Tisch): I remind the member that we are on Part 3 of the Taxation (GST and Remedial Matters) Bill, and during the course of his speech Part 3 was not mentioned. We are debating Part 3.

I suggest, Mr Chair, that, in fact, I did introduce Part 3 of the bill, but I will take your steer on that point. The Chairperson is quite right; this debate is on Part 3 of the bill, and it relates to clauses 77 to 86.

One of the parts of the bill that I would like the Minister to give some clarification on is clause 82, which is the clause titled “Disclosure of information for verification of government screen production payment entitlement”. I want to know whether this clause will relate to the Hobbit deal. It was a deal done in a flash, under urgency in effect, by the Prime Minister at Premier House, with the Hollywood moguls, to ensure The Hobbit was filmed here in New Zealand. In fact, The Hobbit was always coming to New Zealand. But I would like to know whether the clause will have any relationship to the funding that will be provided by the Government in that secret deal, which was done under urgency. It had some of the hallmarks of this legislation that we are going through. Clause 82, as provided for in the bill, is around replacing the phrase “large budget screen production grant” with “government screen production payment”. I would like to know whether the Hobbit productions will be beneficiaries of this change and whether we should read anything into it.

The good thing about it is that this particular clause has come through in the bill as it was introduced, so the Finance and Expenditure Committee has had some opportunity for consideration and could take account of the wide range of issues that one must consider in the select committee process. That is not true of the Supplementary Order Paper, which, of course, has a huge number of changes incorporated in it. The fact that we are here under urgency with the Government’s wish and intent to see the bill passed today gives no opportunity for us as members of the House to consider the changes. So I would like the Minister to take a call and give some clarity as to whether clause 82 will indeed allow for the provision of financial support to The Hobbit. Is that the particular clause that will allow the taxpayer to fund to the tune of, I think, tens of millions of dollars the Hobbit series—the two films? Was that clause drafted ahead of the Government’s intention to provide support at that level to that particular bill?

The other thing I will say is around the issue of the complexity of the legislation. As a new member of this House and of the Finance and Expenditure Committee, I must say that when we see tax legislation come through it is eye-watering in detail, and it is obviously a task indeed for members of the Finance and Expenditure Committee to stay on top of the legislation in order to ensure it gets the sort of scrutiny that Parliament and the New Zealand taxpayers would demand, because they understand the importance of tax legislation. Everybody in New Zealand is affected by tax legislation, whether or not they are an earner, because if someone is not earning, they are supported by someone who is earning, and is therefore subject to the Inland Revenue Department’s regime. I would really like to say that we have a situation where, given the opportunities that we as a select committee have to scrutinise tax legislation, still stuff goes through. I referred to nine different tax bills in just 2 years in this Parliament, which whistled through at a fair rate of knots. That involves hundreds and hundreds and hundreds of pages of complex detail in total, which is entrusted to the select committee members to give due regard to—to listen to submissions, to make sure that the legislation is doing what the Government intends it to do, and to look for the fish-hooks in it. I think we do a pretty good job in a bipartisan manner across that select committee, and that relates as much to Part 3 of the bill as to any other part of the bill.

But, of course, it does not apply in respect of the Supplementary Order Paper tabled by the Minister just 48 hours ago. It is a 70-page document, which makes it extraordinarily hard for anybody to follow what is being introduced. I challenge the members opposite to take a call, and to use the value of the call process to give some real substance to their contributions to this debate, in order to let Parliament and the people of New Zealand know that members are scrutinising legislation carefully and making sure that this bill will deliver what the Minister originally intended before he introduced the Supplementary Order Paper.

I move, That the question be now put.

Parliament is the shop window of democracy, and since this morning the Opposition has been parading its distress at the process by which we are passing taxation legislation. If anyone is listening to this debate, they may well be confused as to why we are resistant to the process. The answer lies in the complexity of the legislation. No legislation—except in exceptional circumstances—should bypass a select committee, but taxation legislation in particular is astonishingly difficult. It is famously difficult. Parliamentarians are ordinary people. There are no tax experts amongst us, so we seek to give tax legislation the scrutiny that is needed with the assistance of experts. That is how taxation law is made, and how it has always been made.

For those folk who are listening, I will give some indication of the complexity. We are looking at Part 3 of the Taxation (GST and Remedial Matters) Bill. There is a large Supplementary Order Paper that is as large as the bill itself—in fact, slightly larger. It has been put into the mix without going through a select committee, so the bulk of the legislation has not been subject to a select committee. I will quote from the bulk—the Supplementary Order Paper—which contains bits of amendments. Almost randomly, I will quote from new clause 80B in the Supplementary Order Paper, in reference to new section 42B in the principal legislation. This is the chapeau: “Returns by look-through companies and owners of interests”. Let us read the English that follows: “This section applies to persons who have effective look-through interests for a look-through company, and to their look-through company.”

Now let us see what an owner of a look-through company looks like. I will briefly go back to Part 2; I am sure the Chairman will allow me to do so. Here is what an owner of a look-through company is: “A person who has an effective look-through interest for a look-through company has a deduction to the extent to which a deduction results from the application of subpart HB (Look-through companies) to them and the look-through company.” I will read that again. Here is what the owner of a look-through company is: “A person who has an effective look-through interest for a look-through company has a deduction to the extent to which a deduction results from the application of subpart HB (Look-through companies) to them and the look-through company.”

💬 Hon Trevor Mallard: It is more a mirror than a look-through.

My non - learned accountant colleague Trevor Mallard suggests that it is more a mirror than a look-through. I think that is a prescient remark.

We must take that prescient remark and return to Part 3, where new clause 80B inserts new section 42B(1). I will read to the Committee another bit of English; we have read it out before, but we will have it again. It states: “This section applies to persons who have effective look-through interests for a look-through company, and to their look-through company.” We can see—I am not sure what we can see. That is really the point. I could go to any other part of this legislation and take it out of context. That is what I am doing; I know it is unfair, but that is what we are invited to do. We are presented with the amendments, not with the parent legislation or the amendments in the original amendment bill. That is the whole point. Supplementary Order Papers are out of context. That is how they are designed.

The explanatory note of a Supplementary Order Paper is non-explanatory. It is a codified English of what is going on clause by clause. I will give the Committee a random example of the explanatory note, but only briefly because it is not part of the bill: “New clause 42BAB amends section HG 12 of the Income Tax Act 2007, consequential to the introduction of look-through companies.” Members get the point.

There are a couple more clauses in the Taxation (GST and Remedial Matters) Bill that I would like to talk about. Clause 84 is more of an explanatory clause dealing with shortfall penalties. If the Committee will allow me, I will give a brief summary of the proposed amendment. I refer to section 141JAA of the Tax Administration Act 1994. That provision is probably more easily referred to as “the TAA”, because if I have to say Tax Administration Act 1994 a number of times, I will use up my 10 minutes without actually saying anything.

💬 Hon Trevor Mallard: TAA—isn’t that an airline?

Yes. What happened to that one? As I was saying, section 141JAA of the Tax Administration Act caps some of the shortfall penalties being clarified. It does not apply if the taxpayer makes a disclosure at the time the tax position is taken. This is under section 141H of the Tax Administration Act 1994. This is a bit of background to clause 84. If the cap applied to the disclosures made at the time of filing, taxpayers can actually take positions—or they could take positions, before this bill—that could not meet the standard of being about as likely as not to be correct, knowing the maximum penalty they would face is $50,000.

Obviously, this amendment will apply after the bill comes into force, but I will give a little bit of background on clause 84. Shortfall penalties can be reduced for a number of reasons. Under section 141 of the Tax Administration Act, the shortfall penalty is reduced by between 40 percent and 100 percent if the mistake is voluntarily disclosed before the beginning of an audit. So the tax department allows the taxpayer a little bit of leeway. It recognises that people do make mistakes. This bill is a classic one. This Supplementary Order Paper is a classic one. But taxpayers do make mistakes.

💬 Sue Moroney: What kinds of mistakes?

Well, occasionally, they put in an incorrect tax return. But if they voluntarily say to the Inland Revenue Department that they have made a mistake and have put in the wrong tax return, then the Inland Revenue Department, if it is in a benevolent mood, can actually reduce the shortfall penalty by 100 percent. But if it is not feeling that benevolent and it was honest, it could reduce the shortfall penalty by only 40 percent if it wanted to. But the bottom line is that if the mistake was voluntarily disclosed, then the Inland Revenue Department did have the ability to make a reduction there.

💬 Hon David Cunliffe: But now it is capped.

Yes. Well, under section 141H of the Tax Administration Act a shortfall penalty for an unacceptable tax position or an abusive tax position is reduced by 75 percent if the taxpayer makes an adequate disclosure of their tax position at the time they take the tax position.

There are two types of mistakes that are made. Well, there are probably more than that, but there are people who deliberately try to rort the tax system. I do not think there is any member on any side of the Chamber who thinks that is a good idea. In fact, we fight very hard to stamp down hard on the people who rort the tax system. There is no doubt about that. [Interruption] Accountant? I have no comment to make on that, I say to Mr Cunliffe. But with regard to accountants, I say that I have a very good accountant. He is a very good guy.

💬 Hon Darren Hughes: Why does the member need an accountant?

Well, that is another story, as well. But having said that, there is another type of person who tries to rort the system. When I say “rort the system”, I mean that they hand in incorrect tax returns. As I said, they are the bad ones. But others may have just made a mistake. That can happen. A bill might fall on the floor and be found under a desk, and, as a consequence, a mistake is made.

This bill caps the penalty at $50,000. In the past, the Inland Revenue Department could be benevolent about it. Under section 141JAA (1) of the Tax Administration Act, the shortfall penalty for not taking reasonable care—and I suppose we use the reasonable care test—or for taking an unacceptable tax position can be limited to $50,000 if the taxpayer voluntarily discloses their tax position or the commissioner determines the shortfall “no later than the date that is the later of—(a) the date that is 3 months after the due date of the return to which the shortfall relates; and (b) the date that follows the due date of the return to which the shortfall relates by the lesser of—(i) 1 return period; and (ii) 6 months. It is not clear that the limit in section 141JAA of the Tax Administration Act 1994 applies only to voluntary disclosures under section 141G. It is also not clear whether it applies to disclosures made under section 141H.

I move, That the question be now put.

I will start off with a relatively unusual contribution, one that might sometimes be ruled out of order at a Committee stage. I want to refer to a clause that is not here. I ask the Minister in the chair, the Minister of Revenue, what happened to new clause 78A. If we look carefully at the top of page 58, running over from page 57, we see clause 78. Then if we look at the Supplementary Order Paper, we see clause 77 as amended at the bottom of page 61. But at the top of page 62 of the Supplementary Order Paper we have new clause 78B. I am wondering what happened to clause 78A. I want some sort of assurance that there is not a printing mistake, and that we have not jumped over from one area to another area by accident. I would appreciate that assurance, even if it is only a nod and a wink from the Minister. I know the way these things are fixed up. When there is a drafting or a numeration mistake in a bill, then the Clerk’s Office—working, no doubt, with the Inland Revenue Department—will be able to sort it out later on, if in fact it was just a mistake and there was never meant to be a clause 78A. If there is meant to be a 78A, then I want an assurance from the Minister that it is not a vital clause. It is not a vital clause?

The CHAIRPERSON (Lindsay Tisch): Well—

It is the Committee stage. You are always allowed to go back and forth.

💬 Hon Peter Dunne: It is a drafting style issue. Nothing was deleted.

So it is a drafting style issue. So they do not have As any more, they have Bs—I apologise, it might be the case. So we go now from nothing, to B, and then to C, rather than from nothing, to A. Well, I say that if one were working one’s way down the street trying to find a flat, and “A” was always missing, I would submit that that is a drafting lack of style. My colleague the Hon Pete Hodgson has pointed out something that I would have got to on my second, third, or fourth call on this particular area. In fact, we have two areas to note in clause 79B. I tell the member—and I will get back to it—that what clause 79B in the Supplementary Order Paper does is amend clause 79B in the bill itself.

💬 Hon Pete Hodgson: I don’t think so.

The member might not think so, but that was my interpretation. But I will rely on my colleagues, who have looked at this bill more carefully than I have.

The second question I ask the Minister is why there are different arrangements for superannuation funds and retirement savings schemes, vis-á-vis portfolio investment entities that are such, versus portfolio investment entities that are not. I cannot think of a good reason for having a different reporting system for the notification of investors. Some people invest through superannuation schemes—some of the portfolio investment entities are superannuation funds or retirement savings schemes, and some of them are not. There appears to be special treatment being given—delayed reporting treatment—to the portfolio investment entities that are in fact themselves superannuation funds or retirement savings schemes. I ask the Minister to indicate why there is a delay in those extra advantages in place for that particular type of scheme.

I will now talk about issuer status, and ask what the system is that the Inland Revenue Department uses when it is making decisions after someone has notified under new section 32M(2B) in clause 79(1)—I have already pleaded guilty to having trouble with the modern style that has been used within this bill—where it says “to become an approved issuer, the person must notify the Commissioner that they wish to have approved issuer status.” The legislation pretty well sets out the sorts of people who have that approved issuer status, but the question I have is whether that will flow pretty much automatically and whether they will get the approved issuer status.

This does not appear—again I am subject to correction from my colleagues; I am talking about the bill as it was reported back from the select committee—to replace any other legislation. So my question asks whether this is necessary or whether people in the past had the ability to have issuer status without there being the necessity for legislation, and whether there was discretion on the part of the Commissioner of Inland Revenue or whether it was just assumed. I suppose the question about whether we are adding unnecessary detail in the legislation could go to Sir Roger Douglas and others. I do not think we have ever indicated before that one had to write a letter in order to make an application. I wonder whether that complicates it.

The next question concerns the type of notification. I am looking at new subsection (2B) of section 32M in clause 79. Is there a requirement for the notification to be in writing? Does a facsimile count? Is there a form on the Inland Revenue Department website? Can it be done by email? Is there a Facebook way of notifying the commissioner that one wants to have approved issuer status? I have been unable—again, I am subject to correction by the Minister—to find notification in this part of the legislation. I accept that the Minister will probably berate me by saying that this is not the new bit of the legislation but the bit that has been to the select committee. If I had been on the committee I would have spent some time trying to work out, at that stage, what notification is, but seeing—

💬 Hon David Cunliffe: We’ll take you on for the next one.

I thank the member. I think the Opposition spokesperson on finance wants to pass his role on, but I do not think that that is totally his decision. I go back to the bill, and I want to check that new clauses 80B and 80C are still within this part of the legislation. I would not, at this late stage, want to miss them out. I see that, yes, they are still within Part 3. In fact, they must be part of it, because my colleague the Hon Pete Hodgson was referring to them before. I think he was making the point that I would have made. I use the word “mirror”, because although there is the expression “look-through”, in fact it appears that some sort of mirror arrangement is being set up. I know we should not always expect tax legislation to be in pure English, because my former colleagues who are accountants, and, more especially, those who are lawyers, would not make any money if it were in pure English. But generally it should be, and this sort of mirror arrangement is quite hard for a layperson to understand.

Firstly, it is appropriate in relation to the portfolio investment entity issues in Part 3 to note the serious concern on the matter that was expressed by the Government’s senior whip, Mr Tremain, on 18 May 2007. He called for a substantial review of the way that portfolio investment entities were treated. I invite the member to take a substantive call to tell the Committee whether he is satisfied that this legislation addresses the issues he raised. Of course, because he is the Government whip, I would assume that the Minister has consulted with him, but I think it is incumbent upon him to explain to the Committee whether he is now happy.

One of the sad things about this bill is that there were elements of the bill as introduced that members on this side of the House were comfortable with. One of my colleagues, Mr Burns, mentioned the issue of the so-called Hobbit clause, clause 82, titled “Disclosure of information for verification of government screen production payment entitlement”. How useful would that have been if it had been passed before the skulduggery that went on in the politicisation of the process around The Hobbit. This would have been a very useful clause. So, too, as Mr Nash said, is clause 84, regarding shortfall penalties, although we ask how the cap will be applied. So is subsection (12), inserted by clause 86, about the issue of joint accounts, which we raised earlier in the debate about this part, and about the potential for income-splitting arbitrage by using look-through companies. On all of these issues, and on the matters raised in the amendments to insert new clauses 82B to 82E—about the relationship between the proposed adjustments in taxpayer assessment in relation to the children’s provisions in MB 11, the offshore taxpayers, the grandparenting provisions, and, in HB 7, the depreciation provisions—the Minister in the chair, the Hon Peter Dunne, has yet to take a call.

We would like to propose a way forward on this, despite the apparently shocking abuse of process that has gone on in bringing to the Committee this complex set of amendments, this mammoth Supplementary Order Paper that dwarfs the original bill. It is like having a train that dwarfs the locomotive. That is what this is like. The Minister should have in front of him an indexed briefing folder from his officials that explains all these matters. If he is not prepared to take a call and respond in a reasonable and decent way to the substantive questions that have been raised by the Opposition, I call upon him to table that briefing folder so that the Opposition might be able to satisfy itself in due diligence whether these matters have been appropriately handled.

I invite Chris Tremain to satisfy himself whether he thinks his deep concerns about his own Government’s handling of portfolio investment entities have been satisfied. I suspect that, firstly, they have not, and, secondly, who would know? We have had this just dropped on us, instead of it going through the normal select committee process.

The Minister has been squirming on this. I do not think he is an evil bloke; he is a pretty decent bloke, but this is not his characteristic style. Someone said he is angling for London. Personally, I think it is Ottawa. I think he is an Ottawa-type guy. He has obviously had Ottawa in his head or on his head. He is clearly angling for something, because this is not his normal style. I think that because he has been squirming, he has been at risk of digging himself in a bit deeper here. He has told the Committee that this can be excused because the intent was in the Budget, because there is an internal assessment of regulatory impact on the website, and because there has been consultation between officials and the department. If all of those things were so great, why would any tax bill go near a select committee? Why would it subject itself to having to be looked over by members of other parties if there were simply a trilateral process between Ministers, officials, and members of the business community? Or is that perhaps a sign of things to come? Is that what the new corporatist State under National looks like? There is a triangular relationship, an iron triangle, between Bowen House, the Wellington Club, and the Beehive.

I move, That the question be now put.

The CHAIRPERSON (Lindsay Tisch): The question is—

💬 Hon Trevor Mallard: I raise a point of order, Mr Chairperson. The member’s colleague was going for the call. Is he allowed to do that?

I decide who gets the call. There is a closure motion, which I have accepted. The question is that the question be now put. Those of that—[Interruption] The question is that the question be now put.

💬 Hon David Cunliffe: I raise a point of order, Mr Chairperson. I am not trifling with your ruling.

The CHAIRPERSON (Lindsay Tisch): Well, you are. I am putting the question.

💬 Hon David Cunliffe: I have not yet begun to trifle.

The CHAIRPERSON (Lindsay Tisch): I am on my feet. Sit down. I have accepted the closure motion, and I am putting it. The question is that the question be now put. Those of that opinion will say Aye—

💬 Hon David Cunliffe: I raise a point of order, Mr Chairperson. It is a new point of order, and the new point of order is that I was not able to make the last substantive point of order, and the last substantive point of order was one of genuine confusion. Your ruling was not yet made at the point at which my colleague Mr Mallard interrupted you, then when you rose to your feet you said that you had ruled—in the past tense.

Sit down. I will deal with it. He asked whether a colleague on the Government side was seeking the call. That is what he asked. I said that I am the sole judge of who gets the call. I gave the call to the senior Government whip, he moved a closure motion, and that is what I am putting.

A party vote was called for on the question that the question be now put.

I raise a point of order, Mr Chairperson. I sincerely apologise for this, but it might save our getting the Speaker back in. It is my understanding that when a member who has already had a call and someone who has not had a call go for the call, then a closure motion cannot be moved by the member who has already had a call.

Thank you for bringing that to my attention. It is not in the Standing Orders. The Chair of the Committee is the sole judge of who gets the call. I gave the call to the senior Government whip and that is the end of the matter. That is where we are at. We have a vote in progress.

💬 Hon Trevor Mallard: Point of order, Mr Chairman.

The CHAIRPERSON (Lindsay Tisch): The member is trifling with me. I am halfway through a vote. We have actually started the vote. I will ask the Clerk to please start the party vote again.

I move, That the Chairperson report progress to obtain the Speaker’s ruling on the giving of a call by the Chairperson. I want to ask the Speaker to return in order to have a considered ruling on whether you have the discretion to give a second call to a member and accept a closure motion when another member who is a colleague of his was seeking the call.

Motion agreed to.

House resumed.

Speaker Recalled