Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill

This debate is on clauses 4 to 107 and schedules 1 and 2.

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.

—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delaying again child support changes, because it is not able to implement them because it has a computer system that is out of date.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 select committee 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 been guided 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.

I rise to take a call on the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill. This bill is all about making the tax system simpler and fairer and also strengthening the economy. That is the way we approach this as a Government. We do not choose, as the Opposition does with its alien notions, just to tax the rich and hike the tax rates up. The Opposition’s more ludicrous recommendation today was to make a Man Booker Prize winner the chair of the Finance and Expenditure Committee. The level of contribution to this debate that has come through from the Opposition is pretty well indicative of the level of intellectual rigour that it brings to many of the debates in this House, and it is woeful.

I would like to talk mostly about the taxation of foreign superannuation, because our moves to make it fairer have, in fact, benefited from the process of the select committee. We have made several recommendations to improve and to clarify the rules. For those of us who have electorates, many of us have received complaints either from people who have shifted to New Zealand and have not understood the complexities of the lump-sum payments when they are bringing over their superannuation schemes or from New Zealanders who are moving back. They too are a little unclear about how the system actually works. When you look at the base of what we are doing with foreign superannuation, we are trying to make it as clear as possible.

The Minister who has proposed this bill, the Hon Todd McClay, has sought to provide even greater flexibility over foreign superannuation, because the people who are needing to make adjustments before this bill goes through in April of 2014 probably need a little bit of time to adjust. So too do the financial advisers, I think, because the complexities that existed in the old system have not quite been ironed out. But there is, as I said earlier, a degree of rigour that is bringing a lot of clarity, more transparency, and greater simplicity to the way we do things.

The bill introduces a 15 percent option. That is very important for those who withdrew a lump sum or who made a transfer from their foreign superannuation scheme and did not comply with the rules at the time. A lot of people did comply with the rules, and as far as they are concerned they want to see everybody, I guess, playing on a level playing field. That is why we went to such a lot of trouble and why the Minister intervened—

💬 Hon Trevor Mallard: I raise a point of order, Mr Chairperson. With all due respect to the member, I think she is referring to Part 3 of the bill, rather than Part 2. Is the debate not on Part 2 at the moment? The foreign superannuation stuff, I understand—the bits that I have found are in Part 3 of the bill.

The CHAIRPERSON (Eric Roy): I have to confess that I have not read all 107 clauses that are in the bill.

💬 Hon Trevor Mallard: Oh, come on! Ross Robertson would have.

The CHAIRPERSON (Eric Roy): I take offence—almost—to that comment. The Minister has passed me a schedule of what is in Part 2, and taxation of foreign superannuation is mentioned in a number of clauses.

Thank you, Mr Chair. As I was saying, speaking to Part 2 of the bill, as I was, on foreign superannuation, and for those members of the Committee who were not paying attention, this is a piece of legislation—and this part, in particular—that deals with foreign superannuation. As I indicated, many of us have received complaints from people who are in genuine distress. When you are ushering in a piece of legislation that is this comprehensive, it is important to make sure that people are not left out and that they are, in fact, able to make their adjustments.

I was talking about the 15 percent rule, and I think that when we look at what Todd McClay has proposed there, the 15 percent option is a change that will extend the availability of the 15 percent option to those whose funds have not actually been transferred before that date of 1 April 2014. Funds transfers, as those of you who either through your constituents or through your own experience know, are a very lengthy process. It is a tricky one, and this extension is, in fact, very good news for those who are wanting to take up that option. In fact, I think it would have been very difficult for them otherwise.

When we look at the way that it used to be, the foreign investment fund used to have its rules applying to foreign superannuation interest. It is not going to be involved any more. Instead of that, taxpayers will have the option of calculating the actual income earned during their period of residence if they have a defined contribution scheme. That is a very good thing. I think much of the confusion was around the application of the foreign investment fund to a range of foreign investment schemes, many of which were in the UK. The Australian one is a little bit different because there is a lump-sum withdrawal or transferring of interest to a New Zealand or Australian scheme still being allowed under these new rules.

All in all, this is a bill that does aim to make things fairer and simpler and to strengthen the economy. It also, from the perspective of individuals, makes it a lot more straightforward to iron out the complexities in order to make it easier for older people who want to settle here or for New Zealanders who want to come home to have a very fair approach to the way they are taxed. Therefore, their planning for their retirement will be a lot easier. That is why I commend this to the Committee.

It is a great pleasure to rise to speak to the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill. As my colleague Dr David Clark has said, although Labour is supporting this bill and we think there are some very positive elements in it, we have some reservations. He started outlining some of those.

This bill was originally introduced, of course, by the Hon Peter Dunne. Or is he that honourable, in fact, given that we have had such a terrible time in the House in recent days in trying to get Mr Dunne to actually clarify for us what information he had and whom that information went to? But, anyway, getting back to Part 2 of this bill, this is, of course, where the substantive part of the bill lies. Part 2 has got numerous provisions actually putting in place most of the major changes that are identified in this bill and is, as I have said, largely uncontroversial. In fact, the new rules will clarify a number of important matters.

I thought I would identify some of the key elements in here, but before I do that I would like to acknowledge my parliamentary colleagues who were on the Finance and Expenditure Committee, which dealt with this, because this is clearly a very technical bill and deals with a lot of quite complicated matters around taxation. I think it is a substantive bill, obviously, and those people, some of whom are in the Chamber at the moment, have obviously worked very hard to get it to this point.

In Part 2 we deal with a number of matters dealing with foreign superannuation withdrawals, and taxation related to that, as well as matters relating to mining. I just want to outline some of those. Basically, Part 2 looks at the mining of specified minerals to make the rules less concessionary and more consistent with those for taxpayers generally. It clarifies the rules for Working for Families tax credits, makes remedial technical changes to rules for general and life insurance businesses, and makes a number of other changes that are quite technical to many of us but are important. One of the things I did want to comment on is the importance of having a fair taxation system and having a taxation system that works in a way that ensures that those who can afford to pay do pay their fair share, and that that is invested into our country.

One of the problems we have on this side of the House—and we saw it in the House as recently as today, in fact, when the Prime Minister was saying: “Oh, well, as for the extensions to paid parental leave, you’ll have to wait and see, but, really, what Labour is proposing, with an extension to 26 weeks, is unaffordable.” So, in other words, he is saying that there is not enough income for the Government to pay for that. One of the things that is conveniently forgotten in this House is the fact that that is a deliberate thing. It was deliberately done by the National Government when it first got into power. Basically, it cut taxation, income tax rates, for those on the highest incomes and, in fact, put some of the burden—quite a significant amount of the burden—on the taxpayers with the lowest incomes. It was supposedly a taxation switch.

💬 Paul Goldsmith: What’s this got to do with Part 2?

Well, we are talking about income tax in this bill, Mr Goldsmith. I am really just talking about a well-functioning tax system, to which in Part 2 we have a number of changes proposed in various areas, including in relation to mining. These changes are to make this fairer and to deal with taxation rates that are applicable to that circumstance—for example, in the mining sense—to make them less concessionary and more consistent with those of taxpayers generally.

My point is really that this is a Government that has favoured those on very high incomes at the expense of other New Zealanders, who are struggling to make ends meet. They have higher costs as a direct result of the so-called taxation switch introduced when this Government first got into power, which raised GST. That directly went on to the costs that families face in this country. One of the things that that means is that household incomes are really squeezed. Prices are rising. Incomes are not rising for most New Zealanders—the 40 percent who did not get a pay increase last year.

While we are talking about tax, I would note that those people are the same New Zealanders who have to pay each and every dollar of taxation that they are required to pay. They cannot escape paying their taxation, whereas, in fact, many others, especially those at the big end of town, do.

Kia ora tātou. I direct our attention to Part 2 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill, and the portion of it dealing with mineral mining. I shall preface my remarks knowing that there are quite polarising views around this type of economic activity. I will definitely avoid worsening any polarisation of that matter, but it is one of the two areas I am going to focus on in this 10-minute call, with your support, Mr Chairperson. The first area is the question of at what point in time, and how, does an investor in an area riddled with uncertainty enjoy the opportunity to claim back the entirety of the dough or the capital they are expending? Obviously on one side we want to avoid a situation where an enormous amount of dough is poured into it—

💬 John Hayes: Do you mean money?

Well, yes, I do mean money. Yes, we are supportive of the notion that when the funds in our domestic economy are absent, there is nothing wrong—subject to suitable guidelines and legal parameters—with that money coming into our country, but those people investing in our country need to abide by whatever the statutory framework is. I will have more to say on the pū and competitiveness framework tomorrow; that is another matter.

I am talking about the broader framework that relates to mining as an activity—in particular, the period of time over which the spread of money invested can actually be legitimately claimed back. We do not have a capital gains tax in New Zealand, so one thing we certainly want to avoid is that if something is spent and the asset—if it does turn into an asset—is sold, there is no way for the State to claim back what it is entitled to. It is reasonable that for an investment of this nature there should be some way, given that these people are putting money at risk, they are paying wages, and they are paying exorbitant fees to geologists. I guess a similar thing pertains to lawyers; I only hope I do not fall into that trap myself. What we are saying is that when the expenditure is spread over the life of the project, we want to ensure that it is also relevant to the level of production that is secured.

This is something we agree with. It is tidying up an area that I suppose you could say is quite a controversial area. Some will say that the tax system should abandon this approach because there is no rightful place in a modern economy for mining. Obviously, we say that it is an indelible feature of the modern economy, but if there is a way of transitioning our economy into other economic activities, then we hope that investors will move us in that direction. Rest assured, by the end of the year help will be on the way, and we will move with a greater level of alacrity to a more balanced economy; one that generates fewer environmental bads and actually stands for the long-term prospects of less volume and more value in the economy.

But we are stuck with the endowment resources that nature has given us, and we are stuck with those investors who are putting money into this sector. In my view, some of the more responsible investors are not using the tax system to avoid any of their liabilities, but this bill clearly outlines that if you are in this particular area, there are specific obligations that from now on you will be required to meet. But that does not mean that such investment will be blacklisted or that it will not be regarded as an acceptable part of the modern economy. The challenge, of course, is to ensure that the surveillance by tax inspectors—I do not even know if we still have tax inspectors—is actually such that these measures are implemented in such a way that the corporate advisers, the accountancy advisers, and the general counsel of the various firms investing huge amounts of money into mining activity understand what the new regime is and what their obligations are.

I know it is a rather odd sensation for members on the other side of the Chamber when we are actually agreeing with some of this. Of course, some of these changes are caused by that side of the Chamber playing catch-up rugby. These are things that were adumbrated, outlined, quite some time ago. I also want to direct our attention—[Bell rung] Mr Chair?

The CHAIRPERSON (Eric Roy): Yes, the Hon Shane Jones.

💬 Jami-Lee Ross: Close call—close call.

Thank you very much, Mr Chairperson. I heard one of the animal kingdom squeak over there. Is there a need to call for first aid? Was that a mole, a little noise I might have heard coming from under the earth, or was that a butterfly learning to fly—a monarch butterfly? Probably not.

I want to direct our attention to one of three other things in respect of Part 2, but I have to say, before I settle upon it, that the Finance and Expenditure Committee operates quite effectively. On this occasion there was adequate opportunity given to our colleagues from the Green Party—probably far greater than I would have given them, had I been in the chair, but I am just an Opposition MP. I have to say that they had an opportunity and the submitters had an opportunity.

Despite the great effort being expended by the current chair of the Finance and Expenditure Committee, Paul Goldsmith, he unfortunately did not follow the party tradition that the Finance and Expenditure Committee chair is immediately moved into Cabinet. I have some commiserations in that regard. The chair of the Finance and Expenditure Committee will, unfortunately, go through his career having never been a Cabinet Minister, because by the time 2021, 2024, or 2027 arrive, he will perhaps be approaching Jim Anderton’s age. It is hardly likely that the party will have a place for him then, because that is when that man will be back as a member of a Government. They need to bear in mind that one swallow a spring does not make. Although that poll result over the weekend was difficult for me personally to swallow, it is just a small ephemeral passing phase. The flagging fortunes of that member’s party will soon become evident once winter and autumn strike, interest rates go up, and a host of other woeful things beset us. But help is on the way.

💬 Hon Dr Nick Smith: Wishful thinking—wishful thinking.

We are hearing from a very senior member of Parliament. We are hearing from Dr Smith. Recently I was referred to as someone who, along with my matua from Woodstone, has suffered a few calamities but has stood again. I am in a kōhanga reo when it comes to comparing my fortunes, ebbing or flowing as they may be, with those of that particular member. I will tell you one thing, though: he does understand the truth. He does understand the truth. So I thought it was rather bizarre that John Banks today should challenge me—I seek a little bit of acquiescence from you, Mr Chair—

The CHAIRPERSON (Eric Roy): I am not sure you are going to get it. Come back to the part.

OK, OK, OK. I am extraordinarily disappointed that there is not the sense of latitude that one would expect, commensurate with your not inconsiderable size, Mr Chair—a man of girth, a man of substantial southern ardour.

There are several other portions here, not least of which are the almost incomprehensible sections dealing with imputation credits. Each successive Government endeavours to address this particular issue. We stand with our colleagues on the other side of the Chamber and seek those refinements. When I spoke earlier— slightly to the irritation of Mr Chairperson, I suppose I would say—I delved into the complex matter of Working for Families and he reminded me that is not in this part. But families are everywhere, and I can tell you that when things do not quite work out, as families should, they can be incredibly expensive. But that is another matter. I do not think that has to do with tax.

💬 Dr David Clark: It’s Part 3—that’s Part 3.

You mean that pleasure awaits me?

💬 Dr David Clark: Yes, indeed.

That pleasure awaits me. I only hope that I am on the Māori news or something before Part 3 arrives. But I bring us back to the somewhat technical sections. They do pertain to the minerals sector. Contrary to what is tossed around about us, we do see that sector as being deserving of appropriate tax treatment. There is a fear, because of the long-term development rights associated with it and the need to put money into it year by year, that the tax system may not fully collect from those investors what it is entitled to. I say that providing people realise that the tax treatment of those investments—it has to be simple, it has to be clear, and if we do scare away investment—

I too want to make a few comments on Part 2 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill. I would like to preface my comments by expressing my disappointment that I am yet to hear a call from either the Minister who introduced the legislation, the Hon Peter Dunne, or the Minister who is currently in charge of the bill, the Hon Todd McClay. This is a matter that is highly technical and, with all due respect to the Minister in the chair, the Hon Michael Woodhouse, I have heard nothing from him either to indicate that he is across what is very important detail in this legislation.

Of course, if the Minister who introduced the bill had been in the Chamber, he would be the subject of interrogation as to the holding of information, the importance of the integrity of the taxation system, and the way that that relies on people who are involved in it, including the Minister, not sharing information—obviously, except with the Commissioner of Inland Revenue—that they come across when case matters are referred to them. I should say that it is a matter of a lot of concern to the House. Maybe, in the end, when the backdated inquiry occurs into the comments that Mr Dunne has made and into his making available otherwise confidential information, it could well be that we want to ask the question about whether any taxpayers’ information, as well as Government Communications Security Bureau (GCSB) information, was made available. Of course, I am sure that the GST that was due on the GCSB information would have been paid, but it is a question of what was made available and whether there was any consideration involved in that. What was the price that Mr Dunne paid, other than his ministerial post for a relatively short time? And what has the effect of that been on the revenue? Although I do note that the effect on the revenue through the changes seems to have been positive, because there are now more Ministers than there were previously. But the Government’s fiscal position is negative because we are paying extra. We are paying an additional Minister. So the net effect of the change led by Mr Dunne’s forced resignation is, in fact, something that is negative.

I would now like to go to something that is pretty specific, and it is around the clauses in Part 2 of the bill that go to classification of mining expenditure and, in particular, the timing of the deductibility of various aspects. The first point that I would like to focus on is the acquisition of land and the timing of the deductibility of that acquisition. In fact, without drawing you into the debate at all, Mr Chair, I know that those who are well versed in Southland mining issues know that there has been massive acquisition of land in Southland for the purposes of lignite mining. After the mineral rights have been stripped from those titles, that land has then been onsold in some cases—not in all cases; in some cases it is a long-term lease. That is clearly an interest in the land, and that interest is recognised within this.

If one looks at the net position of Solid Energy, which is almost certainly the organisation that has done most of it, my question is whether that is the type—I do not want the Minister to answer questions about a specific taxpayer, even if it is a State-owned enterprise. “Enterprise” is probably the wrong word; “State-owned liability” might be a better expression for Solid Energy, the way that it is now.

💬 Dr David Clark: It wasn’t under Labour.

Well, under Labour it had a damn good Minister. The question I want to ask the Minister to address is whether it is appropriate to give a deduction to a loss-making mineral organisation—for exploration, prospecting, and prospectively mining—for the loss of the interest in the land as a result of stripping the mining rights away from the land. Clearly, land is bought at one price and is sold at another price, which is almost certainly lower than the original price. This recognises the difference in value to the organisation that strips the mineral rights. The question I have is whether the value of the stripped mineral rights is taken into account in deciding the value of the land once it has been sold, or whether if a piece of land has been sold minus the rights, then the full loss that the organisation makes is deductible. My next question is whether that is fair.

I acknowledge that if it is a State-owned enterprise that is doing it, then, actually, the net position of the Crown is unchanged. The core Government position is different, but the total position of the Crown is unchanged. What we are preparing here is law for all parties, and we are preparing it in a context where organisations may not always be State-owned enterprises. So the relatively simple question that I have for the Minister is about the loss on the acquisition of the land—which is really a loss of disposal, that difference between the disposal price and the acquisition price, which we know is something that is deductible in the year that it occurs. Even if mining is not going to occur for another 30 or 40 years, that is a deduction that occurs in the year of disposal. My question is whether that net loss takes into account the matters that I referred to earlier.

Clearly, what we do know is that under new Subpart DU 12(3), inserted by clause 35, “Mining development expenditure does not include—(a) the cost of land:”. But what is also clear later on—

💬 Paul Goldsmith: It’s not clear at all.

Sorry?

💬 Paul Goldsmith: It’s not clear at all.

Well, no, no, it is. It is clear. It is on the face of the bill. It says in new Subpart DU 12(3): “Mining development expenditure does not include—(a) the cost of land:”. Was Paul Goldsmith on the committee that considered this bill?

💬 Dr David Clark: Yes, he was.

Did he chair it?

💬 Hon Shane Jones: Yes.

Well, have we seriously got interjecting now in this Chamber the person who was in charge of the bill through the select committee process and he is not aware of the question of the deductibility of land acquired for mining? I accept that it is not an insubstantial bill, but the deductibility of mining expenditure is something that is very important when one is considering the bill. I am just going to toss back at the member that if he has not read the bill well enough, either in its introduced form or in the report back, then that is shameful. It is absolutely shameful that the National Party has as the Prime Minister’s nominee to chair the Finance and Expenditure Committee someone who cannot be—Paul Goldsmith. Just make sure. We will put a name on him. I do not want to generally slur the members of the Finance and Expenditure Committee, because there have been some good ones. But Paul Goldsmith has made it clear in this Committee that he has not read a major part of the bill—really, one of the main operative clauses, on mining expenditure. We have a chair of a select committee who is so damn lazy. He is working hard to lose an electorate seat. He is working hard to lose an electorate seat.

The next question I want to ask goes to the question of mining rehabilitation expenditure and the deductibility of that, and what is, effectively, it appears to me, a double deductibility. With due respect to the comments that my colleague Shane Jones has made, and even those of David Clark earlier, who seemed to indicate that there is a relatively fair regime, I wonder whether we are heading into an arrangement now where we have a Crown subsidy for mineral explorers whose projects fail. So, again, it is an area of relatively simple change, and this is one of the areas of amendments made to the legislation by the select committee. The rehabilitation expenditure “means expenditure that a mineral miner incurs … directly in relation to the rehabilitation of land that is the permit area of their mining operations or associated mining operations carried out as a result of”—I am summarising—the permits, the Crown Minerals Act access arrangements, the Resource Management Act, conservation, or authority under the Historic Places Act.

So what we are saying is that miners get a set of obligations. There is no doubt. The question I have got is whether if they are foolish enough to do prospecting and exploration and make a mess of an area, it is really the job of the taxpayer to subsidise their clean-up and rehabilitation costs through what is effectively double deductibility. Is that a good use of taxpayers’ funds to say that miners can destroy a monument and then rebuild it as part of the exercise? I will be interested in the comments of my Green Party colleagues in this area because I have heard the explanations from two of my own colleagues and, frankly, those and the contribution by Maggie Barry are a little bit wanting. The explanations are a little bit wanting.

You know, we have the Prime Minister saying in this House today that we are short of funds for paid parental leave, but somehow we have money to subsidise miners in their rehabilitation costs. Why is it? Why is it? What are the priorities? What are the priorities of this Government? What are its priorities if it is not prepared to say that it is important for parents—especially mothers—to bond with their kids for 6 months as part of paid parental leave, but if you are an overseas miner, we will subsidise you through additional deductibility in order to do rehabilitation, which is what you have got to do in accordance with the law anyway? Again, I am not saying that I will vote against it, but I am just asking a question about where this Government’s priorities are, as far as particular actions of that sort are concerned.

I will be interested in the explanation from the Minister in the chair, the Minister of Revenue, on the new “Mineral mining” section, section EJ 20B(2), inserted by clause 37G(1), which is the spreading rule. I think this is an important part of the legislation. It has come in, again, as a result of the select committee. There is a question that the Minister has to ask about the establishment of the “rate x value” formula that is in there. I know that, unlike Paul Goldsmith, Todd McClay will be right across the detail of the legislation and will be able to go to the rate questions and tell us about either the straight line or the diminishing value approaches, which are available in new section EJ 20B(4)(a) and (b). The question I have got is—

I move, That the question be now put.