Taxation (Bright-line Test for Residential Land) Bill

On the last occasion the House was considering this bill the Hon Hekia Parata was speaking on behalf of the Minister of Revenue, and she has 9 minutes and 30 seconds remaining.

I raise a point of order, Mr Speaker. Just in the context of this point of order, I hope you will allow me to do this. I see that the Minister who began the speech is not in the House, and I draw your attention to Standing Order 287, which says that “The member moving the bill’s first reading must, on the commencement of that member’s speech,—(a) nominate the select committee to consider the bill,” and then talk about any special powers or instructions that are required. As I recall, I was in the House when the Minister was about to do that and was, I suspect, in the middle of the referral motion. It was certainly one of those referral motions that have both a shortened time frame and also a request for the House to allow the committee to meet when the House is sitting and on Fridays and so on.

I just wonder, Mr Assistant Speaker—and I seek your guidance on—what happens when that Minister who is the person noted under Standing Order 287 is no longer here, and whether or not that Minister has to complete it. Can another Minister complete it? I am unaware of whether this has happened before, but it seems like a very unusual situation, particularly when I am not even sure whether the Minister had completed her introduction of the bill.

I think the important thing to note here is the question has not yet been proposed. It is true that the Hon Hekia Parata did commence the speech on behalf of the Minister. McGee is very clear that a Minister must introduce a bill if he or she is responsible for it, unless he or she is unable to do so. That was certainly the case the last time this bill was being considered, but it had literally just commenced. The Minister in charge of the bill is now here. The question has not been proposed, and I submit, therefore, that the Minister in charge of the bill must be the person who continues to move this particular part of the first reading.

I understand the point that the member is making, but I think he has slightly missed the point I was making, which was that it is not a matter of who was or was not here at the time. Minister Parata began this bill. She moved what is specifically required under Standing Order 287, and that is my concern. I am not sure that we had even completed that. We are now going to have a different Minister stand up and I think we could be outside of Standing Order 287. I perhaps invite you to consider a ruling on this matter. I am not sure whether it has been considered before, but clearly we have a specific Standing Order that requires the member moving the bill—that member was Minister Parata, who is no longer here.

Is there any further comment? All right. I am sort of slightly lucky in that I was aware of the fact that this possibility would occur. If members will stay with me for a short time—

💬 Hon Ruth Dyson: We don’t really have a choice!

The ASSISTANT SPEAKER (Hon Trevor Mallard): Well, the member, if she interrupts again, will have no choice but not to. Ministers are generally entitled to act in the House on behalf of absent Ministers. It is long established in McGee at page 175 and also in Erskine May, so it is a tradition in Westminster parliaments.

In this instance, the Minister moved the first reading of the bill on behalf of the Minister in charge of the bill, and that speech was interrupted. The same event arose in the House previously. In 2007 there was a Minister who moved the third reading of a bill on behalf of the Minister in charge of the bill, the debate was interrupted, and when it resumed, in fact a third Minister continued the speech. It was the Weathertight Homes Resolution Services (Remedies) Amendment Bill. Whether members might like to think about the success of it—but we will leave it at that. People can see Hansard, Volume 641, at pages 11251 and 11298. However, this event went unchallenged. Other than giving the call to the Minister, there were no Speaker’s rulings on it.

So I think the first point that has to be ruled on is whether the Minister acting for the Minister in charge had, in fact, started her speech, and Mr Robertson was marginally incorrect in that she had completed the paragraph with regard to the reference to the select committee and the restrictions. That is all she had done. So she had moved the bill and indicated the committee and the conditions with regard to the report back and speaking times that the Minister, in fact, was recommending to the House. If one does look at Standing Order 287, it is very clear that the Minister had started her speech, because it says that the member moving the bill’s first reading must do so on the commencement of that member’s speech. So as to the question of whether the speech had started, yes, it had started.

The next ruling that is necessary is whether a Minister can complete a speech that has been started by another Minister. It is not a matter that is referred to in the Standing Orders or in Speakers’ Rulings or in McGee or, according to the relatively quick research that I have done, in Erskine May. Strictly speaking, having the Minister complete their speech is not necessary. The required motion and the conditions have, in fact, been put before the House. The Minister who started the speech could complete it, but that would require the ridiculous situation of the Minister in charge of the bill having to leave the House. Another option available to the Government, and a more likely one, would be for the Government to abandon this speech or the rest of this call and the Minister to take a call later in the debate.

A Minister’s speech, in moving a first reading, is something that is very important. Speakers have traditionally treated leniently such matters as reading out speeches, because it is a matter of getting things on to the record of Hansard on behalf of the Government—probably more so than any other speech. There is also the question of what is before the House now. The question has not yet been stated, as Mr Macindoe had pointed out, and that occurs at the end of the speech.

So the question of whether a Minister can complete a speech started by another Minister is one that I think should be considered by the Standing Orders Committee. I think it is something that we at least need a Speaker’s ruling on and possibly some clarity with McGee and/or Standing Orders. But in the interim, I am not prepared to rule that Ministers cannot act for each other in this way, and therefore the Minister, effectively, acts for himself in completing the speech started on his behalf by another Minister. I call Roger McClay.

💬 Hon Members: Todd.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Oh, Todd McClay; one of them.

Thank you, Mr Assistant Speaker, and I thank you for the compliment. Can I also thank you for your ruling and agree that it is something that needs to be looked at in greater detail and—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Yes, but the member will not refer to it.

I thank all members for their understanding on this.

Continuing with the speech on this important issue, the Government is committed to ensuring fairness in the tax system and making sure that everyone pays their fair share of tax. This bill continues that focus. Its objective is to improve compliance with the current tax rules for land sales. The current land sales rules can be difficult to enforce, particularly when they are based on a person’s intent. In this case, for the gains made from the sale to be taxable, the Inland Revenue Department has to be able to determine that a person bought a property with the express intention of selling it for a profit, or property speculation. The Inland Revenue Department applies its current intention test, which makes gains from the sale of land purchases with a purpose of intention of disposal taxable. That test stands. The Government is not proposing any changes to that.

What this bill proposes is a simple but effective measure for the buttressing of that test. The brightline test will require income tax to be paid on any gain from the disposal of residential property that is acquired and disposed of within 2 years, subject to some limited exceptions. The proposed brightline test applies to only the disposal of residential land. It does not apply to land used predominantly as business premises or farmland. Residential land is defined as land that has a dwelling on it, land for which the owner has an arrangement to erect a dwelling, or land that, because of its area and nature, is capable of having a dwelling erected on it.

The brightline test will apply to gains from residential property that is acquired on or after 1 October 2015, and disposed of within 2 years. The 2-year period for the brightline test runs from the date of the acquisition of the land to the date of disposal. The date of acquisition is the latest date on which the person acquires an estate or interest in that land. Generally, this will be the date that the title is registered for the purchase of that property. An additional rule applies for off-the-plan sales. The date of disposal is generally the date that a person enters into an agreement to sell the property. When the disposal is other than by sale—for example, by gift—the date of disposal will be determined by current tax rules.

The objective of the bill is to target people who seek to make a profit from property speculation. There are, therefore, three specific exemptions to the brightline test. These are for the disposal or transfer of property that is the main home of the owner, inherited property, and property under a relationship agreement. A property will be the “main home” of the owner when it has been mainly used for most of the time that the person has owned that property as their residence. Where a person has two or more homes their main home is the property with which the person has the greatest connection. If the property is owned in a trust, the main home exemption applies when the dwelling is the main home of a beneficiary of the trust, subject to limitations. A person cannot use the main home exclusion if they have already used the exclusion twice in the previous 2 years.

Members may recall that this brightline proposal was announced in this year’s Budget as part of a suite of proposals to improve property tax compliance, along with the requirement that a New Zealand IRD number is required as part of the land transfer, that offshore persons will need a New Zealand bank account before they can get an IRD number in order to buy a property, and that non-resident buyers and sellers must also provide their foreign equivalent of an IRD number from their home country. Together these measures and the proposed brightline test introduced by this bill will help improve tax compliance with the tax rules for land sales. It is with pleasure that I commend this bill to the House.

I think it is deeply symbolic, the way in which this bill has come to the House and the way in which it has landed here, unsure of its heritage and unclear on its passage. The Minister of Revenue has delivered some rhetoric around the need for change. We all know well the problem of housing speculation in New Zealand, and certainly anyone buying a house in Auckland is well aware of the challenges of getting on to the property ladder for someone on a median income.

The bill is a political measure and, I have to say, somewhat cynically timed, with a 2-year run-in that ends about the time of the next election. The Government, if it passes this measure, will be able to say that it believes that it is working but will not know for sure until after the next election. It can say that it has acted, but the evidence will not yet be collected on whether or not it is in any way effective.

We on this side of the House see it as a rushed and ill-conceived measure. Forty-one percent of sales are to property investors worth billions of dollars, and the Minister of Finance has admitted that he does not even know what effect it will have. That is what we are coming to expect from this Government—a Government that we see more and more often not being straight with New Zealanders. It is a Government that says one thing, when New Zealanders know the situation is different. We saw earlier today my colleague Grant Robertson hold up a graph from ANZ about the economy, which saw a deep trough at the end as the graph headed downward—in fact, the member has it here with us today—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

He speculated that perhaps the Minister was looking at it upside down, because Mr Key had said it was a positive result for New Zealand. So that lack of clarity, that desire to be seen to be doing something, when in fact very little is happening, is what we are seeing again in this bill. It is designed to look like it is doing something about the rampant property speculation that we are experiencing as a country and about the issue of offshore buyers. It is designed to look like it is doing something when, in fact, it will do very little at all.

The bill sets up an incentive for property speculators to hold on to a property for 2 years and 1 day, and to then onsell if they wish. It may postpone the effect but it will not affect land bankers and it will not affect those who are holding land for the purpose of speculative gain over time. It will affect only a small group of people, and it is designed to affect only a small group of people. It is designed to look like it is doing something without doing very much at all. It invites property speculators to hold on to their properties and to flick them on after 2 years and 1 day.

Labour’s policy is very clear on this measure. We would require a person to live here or to build a new home so that the supply issue is addressed. In Auckland, we know that there are thousands and thousands of families who do not have a home. There are people living in cars and garages, and this Government has cynically allowed that situation to continue, creating misery by not addressing the issues of homelessness and the lack of supply of affordable housing, and here is a measure designed to make it look like it is doing something without really having very much effect at all.

We want this Government to be straight with New Zealanders. I think that New Zealanders are growing tired of rhetoric that is not matched by action. We know that it will not deter the land bankers. We know that it will capture only a small number of “buy and flick on” property speculators. And the test in this has been made even weaker by Cabinet agreeing to exempt New Zealand residents from providing their IRD numbers when buying or selling a house, which opens huge loopholes for people to avoid ever being subject to the tax. It is a bill that is being rushed, it is a bill that the Minister of Finance says he does not know the effect of, and it is a bill designed to look like it is doing something from a Government that is no longer being straight with New Zealanders. It is a Government that is increasingly out of touch if it thinks that New Zealanders will swallow this hook, line, and sinker, and if it thinks that New Zealanders will believe that this is going to stop the problem of rampant housing speculation and foreign buyers, particularly in the Auckland market.

Treasury documents show that this measure, this test, is likely to raise only $5 million per year, and the reason it is likely to raise only $5 million per year is because of the high level of avoidance that is anticipated. That is what Treasury says. Treasury says it would otherwise gather something like $30 million or $40 million a year, were it not for the high levels of avoidance that are anticipated. That is because of a deliberate Cabinet decision, and that is the kind of thing we have discovered from this Government. It is a Government that deliberately opens up loopholes to protect the interests that it has always protected and will continue to protect. It is a Government that wants to be seen to be doing something but wants to make sure that it preserves entrenched interests.

It is so out of touch with middle New Zealand it is not funny anymore. The Government ruled out, in fact, a more comprehensive 3-year test, purely on the basis that it could be interpreted as a capital gains tax with an arbitrary cut-off period. It did not want to actually do anything. It was explicit about the fact that it did not want to do anything. This is a cynical Government. It is a Government that is out of touch and arrogant enough—arrogant enough—to even spell out the desire to do nothing and think that New Zealanders will not notice or will not care. Well, the tide is turning. New Zealanders are growing sick of this arrogant, out of touch Government that brings bills to the House dressed up as action when they are cynically designed—designed, in the Treasury comments—not to capture what they are set out to do. Loopholes are opened up so that ordinary New Zealanders are captured, but those who are speculators can walk right through the loopholes.

The Government’s consultation measure was a farce. The regulatory impact statement showed only 14 submissions were received—three opposing and three supporting. Look, that is probably three phone calls that were made in a rush, saying: “We need some submissions in. We need to be seen to be consulting on this.” That is how cynical this Government has become. This is an issue that will affect thousands and thousands of Kiwi families who will be without a house, who will be living in cars and garages, and that is how many submissions the Government received. That was a rushed measure and a farce of a consultation.

Of course, we know that the bill will be retrospective as a consequence of the Government rushing it through. We know that by the time it has finally passed through the House it will be retrospective, because it comes into play on 1 October—as I said, about 2 years before the next election; a period long enough for the Government to be able to say it is doing something without evidence yet being collected to assess whether the measure is effective in any way whatsoever.

We know, of course, that overseas countries have measures in place to stop property speculation. We know that in China you cannot buy land at all as someone who is not resident. We know that in Singapore there are taxation measures to ensure that overseas people cannot buy without paying an additional sum of money. We know that in parts of Australia there is the policy that the Labour Party has, that you must be resident or build a new house rather than purchase an existing one and deprive a resident family of a house in a constrained supply environment.

We in Labour will support this bill going to the select committee. It is a half measure. We believe it could be improved in the select committee and we will seek to do that. We will seek to work constructively because these are serious issues that need to be addressed. New Zealanders are sick of a Government that is arrogant enough to bring legislation to the House with such big loopholes, with rhetoric wrapped around it. But we know that the issue is serious enough that it needs to be looked at properly in the select committee—addressed, improved, and, hopefully, brought through this Parliament in a way that actually has an effect and starts to address the problems in New Zealand that we have because of the housing crisis that this Government in 7 long years has done nothing to address.

That member, David Clark, just put out new Labour Party policy in his speech. In that speech he said, and these are the words that I want all New Zealanders to remember: “You can own a house in New Zealand only if you live here or build a new home.” Those are your exact words. You must—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

The member said that New Zealanders must live here or build a new home. What about if somebody owns a home and then decides to go on their OE? Are they still allowed to own their home? Are they allowed to own their own home? If they go away for a weekend, go away for a month, go away for a year, do they still have to own their own home? They have to sell their home under Labour Party policy. The Labour Party is forcing New Zealanders to sell their homes under its approach for this legislation.

What happens if somebody goes overseas and works for 10 years in London? If a New Zealand - born person goes to a New Zealand school, New Zealand university, and all their family are here, then goes overseas for 10 years, under the Labour Party policy that person has not got the right to buy a house in New Zealand. Under Labour Party policy they do not have the right to buy a house in New Zealand—and that member, David Clark, is supposed to be Labour’s tax spokesperson! At the end that member spoke about the Australian policy, which was “resident or new home”. It is not the same as “live here or new home”. So maybe if we got a decent tax spokesperson for the left, we might actually get some reasonable policy coming out of that side. That was his first mistake and that was his worst mistake.

But his second mistake was another beauty as well, because that member said that holding land for speculative gain is not taxed in New Zealand under—[Interruption] Once you get through the 2 years, that member said, you are not going to be taxed. Well, the 10-year rule has always been there. If you have the intention of purchasing a piece of property with the intention of sale, it is taxable—and that member better leave the House now because he knows he has stuffed it up. The reality is that in tax policy, in tax law in New Zealand, if a person or resident or whatever buys and sells a property with the intention of selling it within 10 years, that is taxable. All this legislation does is deem that within the 2-year period it is featuring within the brightline test and will be taxable for those purposes.

The Opposition has put up great new policy today: members of this country, citizens, and residents must live here or build a new home. That is the only way that people can own a house in New Zealand and that is policy that I am sure the Labour Party will come to regret. I am sure the next speakers will try to adjust it in the way that they normally do—through rhetoric in this House.

That, apparently, was the chair of the Finance and Expenditure Committee, David Bennett, offering us his deep insights into the issues facing potential New Zealand homeowners today. It was ironic in his interpretation of the words of my colleague Dr David Clark. He also managed to mis-ascribe his portfolio. Clayton Cosgrove, a close friend of the chair of the Finance and Expenditure Committee, is in fact the Labour Party’s revenue spokesperson. I am sure you will want the record corrected in that way.

💬 Chris Bishop: I thought it was David Clark.

No, no, no. So that is the thing. It is Clayton Cosgrove, Mr Bishop. Mr Bishop is also another close friend and colleague of Clayton Cosgrove.

This bill is, once again, following on from the last piece of legislation, and a fitting epitaph, I hope, to this Government, which is that it wants to be seen to be doing something, but it has to be the least that it can get away with—the absolute bare minimum that it can get away with. The pressure was building on the Government leading up to Budget 2015 about the fact that it had failed to do anything about a housing market out of control, about a crisis in terms of New Zealanders being able to buy their own homes, about the cost of housing in Auckland going up by 18 percent a year and then 20 percent in another year, and the Government was on the back foot.

We know now that there was nothing in the Budget to actually do anything about that, so it rushed through a series of measures, including this one, to make it look as though there was something there. We know that, because there was nothing in the Budget documentation. When the Budget documentation got released in July, there was absolutely nothing in it about this. You know, the normal process of ideas that are floated around Budget time—about now, actually, for next year’s Budget. Those ideas will be being debated within Government agencies, road-tested, and looked at by Treasury. This was not there, because the Government had not yet decided to do it. It was a last-minute rushed job and typical of the way that this out-of-touch Government goes ahead.

So what we are left with is a tentative and incremental approach to a deep-seated problem in terms of the way in which New Zealand’s housing market works. It is not going to do what the Government says it will. Bear in mind that this is not the Labour Party saying this; this is actually Treasury saying it. Treasury says that the test is likely to raise only $5 million per year due to high levels of avoidance. When Treasury was asked what it would be without that avoidance, it said it would expect a revenue of somewhere between $30 million and $40 million a year. So it is half-hearted—it is less than half-hearted. It is quarter-hearted, eighth-hearted. That is as good as it gets with this Government when it comes to putting forward this kind of legislation.

When you ask yourself why that might be, why the Government would go in such a half-hearted way, it is interesting to look at the comments made by the New Zealand Property Investors Federation when this legislation was put forward. The federation itself sort of half-heartedly said that it did not really think this was a very good idea, but then it came down to the end of it and said that “It is unclear if the move will have any effect on house prices.” This is the Property Investors Federation. It said: “Many New Zealanders believe that speculation in the property market is rife but there is no data to back up this belief. If property trading is rife and the cause of house price growth as many suspect, then this announcement should reduce property prices. If speculation isn’t a significant contributor to house price increases then the effect will be negligible.” So the Property Investors Federation is delighted because the straw man has been set up. The straw man has been set up. It will not deliver because of the fact that there is such an easy way to avoid it, and then the Property Investors Federation will say: “Well, we said if this doesn’t reduce property prices, therefore there isn’t a problem caused by speculation.”

It is all part of the same way of going about this legislation. The Government and its good friends in the Property Investors Federation are setting this regime up to fail. That is as simple as it gets. If they were not, if the Government was really serious about this, why would it allow itself to propose a measure that its own officials say is going to raise only $5 million per year—$5 million per year—a drop in the bucket of the amount of money being made by property speculators? Whatever we in this House decide the definition of that is, there would be no member in this House who would try to claim that the benefit from speculation is only in the 5 percent area.

The intention test exists. We all know the intention test exists, but the fact is that it is honoured barely in the breach. The Inland Revenue Department has come before select committees in the past and said: “Look, we’ve got this. We’d like some more resources to pursue it.” More resources have been given to the Inland Revenue Department to pursue it and yet it is an ineffectual measure. The National Government knows that. That is why it has been forced into a position to do this, but it is a particularly weak measure.

It is particularly weak too when we learn from Auckland that around 41 percent of sales—and the Quotable Value data tells us that—were to property investors. Forty-one percent of sales were to property investors. I have no doubt, and the Labour Party has no doubt, that this is forcing up prices. This is pushing new first-home buyers out of the market. We do need to do more and we need far, far more than this kind of half-hearted measure. When it was brought into place the Minister of Finance, Bill English, was quizzed repeatedly about the effect of it, and he said that he did not know. He was not sure. He did not know how it was going to work, did not know whether it was actually going to achieve what it set out to achieve, and he kind of shrugged his shoulders in the way that Bill English does when he has been made to do something by John Key and the Crosby/Textor polling people. Bill just kind of says: “Oh well, we’ll let it happen. We’ll put it in place because it’s going to scratch the political itch that’s out there.” Bill is actually a relatively upfront guy. He could not defend it. He could not get up there on Q+A and say yes—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am just reflecting on what the member said. The member cannot say that a Minister was made to do something by an outside polling company. The member will withdraw that comment.

I withdraw. Bill English, heavily influenced by information that he has received, decides that, no, he is going to shrug his shoulders and go ahead with something that he does not believe in—and I do not think he does. I think actually some of his colleagues might think they will get away with this, but they will not.

So the loophole that is here, which we need to focus on too, is the 2-year brightline test. This has been raised by a number of people. By having a 2-year brightline test, all we do is move that arbitrary line a little bit. We say: “All right. You have to hang on to it for 2 years.” We have been told this by people involved in the property investment industry that quite clearly people will wait out the 2 years, wait for their 2 years and 1 day, and then move on to sell. We know that the intention test is not working, so therefore 2 years will come up and people will be able to come up with whatever excuses they already use when the Inland Revenue Department comes knocking, and then they will move on to sell their properties. So simply moving the arbitrary line to 2 years is not going to deter the land bankers and the small number of people who actually just work as short-term “buy and flick on” speculators.

We need a much more comprehensive regime than this. We need a regime that addresses the overall problem of speculation. We need to ensure that those who do not have an intention to come and live in New Zealand are not encouraged to simply speculate in properties here. We want to ensure that people who make a commitment to live in New Zealand, wherever they are from, are given the ability to buy their own home. That is part of the New Zealand dream that all of us, I believe, in this House have some desire to protect. But doing a half-hearted measure like this does very little for that. We need a far more comprehensive policy than this.

I want to finish on something that I will come back to at another stage in this debate. It is the question of when and for how long this bill will be debated. This bill, because the Government is so hopeless and incompetent when it comes to managing the business of this House, has to be reported back in very, very short order to even remotely look like it might pass in time to be put in place this year. Bear in mind that it has to be retrospective now. It is going to be retrospective legislation. The Government cannot avoid that now. Why bother with such a short report-back time? Why not actually take the time to get this piece of legislation right, rather than rush it through, just as the policy thinking has been rushed through?

This is a half-hearted bill, designed to make the Government look like it is doing something when it is not. We will support this bill going to the select committee, propose changes and amendments, and try to influence this Government to come up with something better. But the Government’s failure to produce something, after 7 years, speaks volumes about whether it really wants to do anything.

This is an important bill. It seeks to improve compliance with current land sales rules in the Income Tax Act by supplementing the intention test—that we all know exists, as Grant Robertson has pointed out—with an objective brightline land sales test. This will require income tax to be paid on any gains from the sale of residential property within 2 years of purchase but with some exceptions—the main one, of course, being when it is a person’s main home.

In my short contribution to this House this afternoon I want to just run through some points in rebuttal of what we have heard from members opposite. First is the point made by Dr Clark, which was repeated by Grant Robertson, that this bill is all about appearances—that it is not actually about doing anything about housing affordability. We reject that, on this side of the House. This is a serious proposal that supplements the test that is already in the law. It does not go so far as to introduce a comprehensive capital gains tax, but it is a serious proposal that will make a difference to New Zealand.

The more laughable claim that we heard from members opposite was that Labour Party policy is clear on this. Members opposite have been very careful to dance around any commitment to introduce what their policy was at the 2014 election and their policy at the 2011 election, which was a comprehensive capital gains tax. Who knows what Labour Party policy is on this? It is certainly not, as Dr Clark said, very clear. Labour members know that that policy was put to the electorate in 2011 and 2014, and rejected comprehensively every time. In fact, the current leader of the Labour Party won the leadership by promising not to introduce a comprehensive capital gains tax as Labour Party policy. So who knows where the Labour Party stands on this issue?

The second assertion made by Dr Clark that is wrong, and which was repeated by Mr Robertson as well, I think, is that there are loopholes in this piece of legislation and in the companion piece of legislation, which is the bill that we were just considering. This is the brightline test bill—the name of the previous bill escapes me.

💬 Hon Member: Land information.

The land information bill—thank you very much.

The ASSISTANT SPEAKER (Hon Trevor Mallard): And offshore persons information.

The offshore persons information bill—that is the companion piece of legislation. The assertion was made that there were loopholes in this, because neither piece of legislation requires all New Zealanders to supply IRD numbers when they transact property. In the debate on the previous bill, I pointed out the very clear reason for this. It is that there is an exception in both pieces of legislation for a person’s main home. So it is the view of the Government that it would be needlessly bureaucratic to ask New Zealanders to supply their inland revenue information to the Inland Revenue Department and to Land Information New Zealand when they are going to be exempt from the legislation. The people who are not exempt from the legislation have to supply their information, but the people who are exempt should not have to. That seems fairly logical.

Then we hear that this bill and its companion piece of legislation are all about—in the words of the Opposition—preserving entrenched interests. Mr Twyford, right at the very tail end of his speech, almost went so far as to impute all sorts of nefarious allegations as to the motives of this side of the House. We reject those. This is a Government that in Budget 2010 cracked down on investment property. It has put millions of dollars into enforcing current tax law, with significant pay-offs. Budget 2014 put more money into cracking down on current tax law.

Finally, and just briefly, to close off my contribution, we hear the assertion from members opposite that this is a Government that has done nothing about housing affordability. That is absolutely incorrect. Look at what we are doing in Auckland with special housing areas and the improvement in building consent rates, which we are hearing about at the moment. Look at the HomeStart scheme that the Government has introduced, which I know is very popular in the Hutt Valley. Look at what we are doing to develop Crown-owned land.

💬 Phil Twyford: It’s made matters worse.

Here we go. Phil Twyford, who spends most of his time rampaging around Auckland demonising Chinese migrants to New Zealand, will soon stand up and give a typically incoherent contribution to the debate, which will mainly be more about personal point-scoring and demonising a particular ethnic minority than being a useful contribution.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am now going to ask the member to come back to the bill. He did mention it earlier.

I will just close by saying that this bill is part of a suite of measures that the Government is taking to improve housing affordability. I commend the bill to the House.

The Green Party’s overall objective is to create and build a cleaner, fairer economy that works for all New Zealanders, not just for those who are already doing quite well. To that end, we have been advocating for a tax shift for some time. One aspect of that is closing the current tax loophole in housing. That is going to be one way to address part of the problem with Auckland’s out-of-control housing market. We have seen house prices in Auckland increase by 20 percent just in the last year. The current house price to income ratio in Auckland is about eight. To put that into perspective, in Wellington it is about four. There are other cities overseas that are experiencing worse house price inflation relative to incomes, but there are not very many cities like that. Overall, that is bad not only because it makes it more difficult to ensure that every New Zealander has a warm, safe, dry, and secure place to call home, which is incredibly important, but also because it is a risk to the economy as a whole, and the Reserve Bank has been talking about that for some time.

There is a whole bunch of issues that we need to address in order to deal with housing affordability. On the one hand we have to deal with the demand side, so that starts with closing the tax loophole on property. That is only fair. It is only fair that we would tax income from property sales in the same way that we tax income from other types of work. It does not make sense that the income of somebody who makes hundreds of thousands of dollars simply because they bought a house in Auckland at the right time and sold it later would not be subject to tax in the same way it would be for those people who go to work every day and earn their pay cheque.

It also distorts the market to have this tax loophole, because it means there are all sorts of problems. The first one is that it contributes to wealth inequality in New Zealand. We have growing wealth inequality in New Zealand. That is the gap between those who have and those who have not. It distorts how people make investment choices. They are more likely to invest in the housing market than into the productive sectors of the economy, the way we actually earn our way in the world. That, in turn, contributes to our current account deficit, which can affect the overall financial stability of the country. So we want to close the tax loophole on housing. There are different ways of doing that. I do not believe that this bill goes very far in that direction, but it is a tiny little step, so we will reluctantly be supporting the bill at its first reading and we will look forward to the submissions and conversations in the select committee, although I suspect it is not going to be a very protracted process, because the Government needs to get this through as quickly as possible.

Other ways that we can address the demand side problem in Auckland include limiting the impact of foreign capital. That is not to say that we are opposed to people migrating to New Zealand and living here. If they are going to migrate and be residents or citizens, that is great; but if we do not put some restrictions on the sale of property to foreigners, then we end up having a lot of foreign capital coming in, and that ultimately is not beneficial for New Zealanders. It makes it harder to ensure that all New Zealanders have a place to live. It bids up the value of houses in places like Auckland. So that is problematic, and the Green Party has a very practical solution to that, which is, simply, that if you want to buy property in New Zealand you have to be a resident or a citizen. It is pretty simple, and lots of other comparable jurisdictions overseas do just that.

Another way that we can reduce the demand pressure on housing in New Zealand is by protecting renters. We actually have some of the worst or least comprehensive regimes for looking after those people who are renting here in this country. It is for that reason that the Green Party proposed recently a warrant of fitness on rental properties. It is really, really important that everybody, no matter whether they are living in their own home or whether they are renting, is sure that their home is warm and dry and secure. We have a real problem with substandard housing, and without regulations what ends up happening is that we have a race to the bottom and we have really poor, cold, shoddy rental housing.

Protecting renters impacts the demand side in two ways. It takes pressure off those who maybe do not want to buy a house but just want to have a secure place to live—at the moment they have got no guarantee of being able to live in a place and ensure that it is being looked after, so there is more pressure for people who maybe want more flexibility to go ahead and buy a house—and, of course, it gets those dodgy landlords out of the housing market who are currently landlords simply because they are sure that they can make a tax-free capital gain in the future. They are not actually investing in the housing stock and they are not looking after their tenants. It is really important that we protect those renters. That is going to help get some marginal landlords out of the market, and it is also going to take pressure off those who are looking to buy houses.

On the supply side, which the Government is always talking about, there are some things that we can do and that the Green Party advocates. One is allowing more multi-family dwellings in places where land values are really high—that is places that are close to lots of jobs and close to education. At the moment we have a number of district plans, particularly the proposed unitary plan rules in Auckland around the residential zones, that actually prevent intensification. So there is a market out there for people who want to live in high-quality apartments, town houses, and character flats, and they simply are not being provided because Government regulation actually makes it uneconomic and impossible to provide. So this is an area where one would hope that the Green Party could build an area of agreement with those who are constantly banging on about reducing local government regulations that are onerous, yet this Government actually is not doing much in that area. I have not seen anything so far that would enable more high-quality apartments to be built where people really want to live.

The other supply side issue is, of course, the involvement of the Government in providing homes. We think that the Government should be providing more State houses. If you look at the places where housing markets are working really well in OECD countries, there is significant involvement from the Government in the provision of houses, whether that is at the council level or at the central government level. I note that the Royal Commission on Auckland Governance recommended that there was quite an important role for councils to play in providing social housing, and that, of course, has been completely ignored by this Government.

So we will support this bill with extreme reluctance, because it does take some tiny steps towards closing the tax loophole on housing. But I can see immediately from the bill as introduced that there are a couple of problems with it. Firstly, the 2-year time frame is way too short. I think that in Treasury’s recommendations—if you go back a few years to when it was recommending to the Government that it take action on this, which it finally has—it was looking at at least 5 years. But, really, why have a time limit at all? Does it matter what the intention is? If we have people who are earning money because they have bought property at the right time and sold it at the right time, why should that income not be subject to tax just like income is subject to tax if you are an engineer or a doctor or a factory worker? Why not?

We already have exemptions in this bill for the family home and for cases like inheritance and relationship break-ups, so it is unclear to me why we need to have this 2-year time limit. I do not think it will do much. It certainly will not raise much revenue. Also, it is going to affect a fairly small proportion of house sales, and since we already have the exemption for family homes, I do not see why we would not have at least a longer time frame or no time limit at all. If it is not your family home, pay income tax on the income earned from owing the property.

The other problem with this bill, of course, is that it applies only to residential land, and, really, this fails pretty much all tests of how you would be implementing a tax regime if you want it to be simple, if you want it to be comprehensive, and if you do not want a lot of exemptions. This limiting it to residential land is, I think, extremely problematic. The distortion that exists with the tax loophole on property is not just a distortion that is impacting housing; it also exists for all types of land, even if it is zoned for other uses.

I think that the National Government ultimately has bowed to public pressure and to the pressure being put on by economists and by the Reserve Bank, who said it had to do something about Auckland’s out-of-control property market because it is a risk to the economy and it is not good for people living in Auckland. But this bill is too little, too late. It is not going to make a difference. The Green Party will reluctantly be supporting it because it is better than nothing, but it is certainly not enough.

It is with some frustration that I stand today, because New Zealand First would normally support a piece of legislation like this in its referral to the select committee, but what I have seen and what New Zealand First has seen in this piece of legislation—just like the piece before—is that it is so facile and so vacuous that it serves absolutely no point whatsoever, and will achieve none of the stated objectives of this Government. We know from experts, we know from our own experience, and we know from talking to the people in Auckland that these measures will achieve absolutely nothing. This is another token gesture that achieves nothing.

Here is a bright idea: 82 percent of New Zealanders want a ban on foreign ownership. New Zealand First wants this Government to listen to the people for once—and, in fact, to listen to its own support base—who want something to be done and done now. So I put it to the members on the other side of the House that what we need right now is a moratorium on the sale of land and houses to foreign investors and foreigners, full stop. We need to stop this freefall into foreign ownership. Only Kiwis should be able to buy Kiwi land and Kiwi homes.

💬 Alastair Scott: You mean Chinese, don’t you? You only mean Chinese, don’t you? That’s what you meant to say—Chinese. Just say it. You don’t like Chinese.

Well, the Chinese—the honourable member points out—do not let you go over and buy Chinese land over there either, and the Prime Minister would be the first to admit that you cannot go and buy land in Hawaii if you are not a person of Hawaiian descent. So let us just be consistent with what is happening with the rest of the world. There is a huge problem going on. Let us put a moratorium on this. Let us stop it now. Let us create some real understanding. Let us get some real data so that we can address an issue that we all know New Zealanders understand to be a huge, huge problem.

This Government needs to stop talking about foreign investment. It is not investment when we sell off strategic assets and homes and lands to foreigners. It is not an investment to New Zealanders and it is of no benefit to New Zealanders; it is, in fact, the complete opposite. Yet again we have legislation that achieves nothing—as well as being completely redundant—because the legislation is already there. There are already powers to address these issues, and Mr Bennett himself spoke about them previously. This National Government refuses to have them applied, and so we have this huge housing crisis in Auckland, for example, right now. This Government is deliberately tinkering around the edges. Experts are in accord with New Zealand First when we insist that this bill will achieve absolutely nothing.

Here is a brightline test definition: a brightline is a clearly defined rule or standard composed of objective factors that leave little or no room for varying interpretation. The purpose of a brightline rule is to produce predictable and consistent results in application. This Government says we need a brightline test because the current legislation and intention test is too difficult to enforce because of its subjectivity. New Zealand First says this new bill will only muddy the waters even further and will add another level of complexity to an already difficult and complex set of rules.

We insist that this will be of no economic benefit to the country either. We are talking about a tax take of next to nothing. We also insist that the Inland Revenue Department’s unwillingness to apply the current legislation becomes a self-fulfilling prophecy, and that poor enforcement of the current Act simply contributes to the perception that the intention test is too difficult to apply, although it is not hard to understand the confusion. Mr Bennett’s contribution earlier, in his examples of the problems that will only get worse ahead, highlighted the confusion that is prevalent throughout New Zealand.

I will read just one of the intentions of the bill: “This Bill proposes a new objective ‘bright-line’ land sale test, to improve compliance. The bright-line test will require income tax to be paid on any gains from the disposal of residential property that is acquired and disposed of within 2 years, subject to some exceptions.” So it is not much of a brightline test already, within its own description.

In a report it says: “The bright-line test will apply where a taxpayer did not buy property with a purpose or intention of resale, but due to financial or other circumstances (such as loss of employment, relationship breakdown [etc.]) … is required to dispose of the property within the two year period.” Even if there is no economic benefit and there is no intent—it has just simply happened that they have fallen within the 2-year period—they are going to be taxed, and yet there was no intention.

This legislation does not change that confusion, it simply adds to it, and already that level of complexity is ranked up with just that one example. The Minister of Revenue, Todd McClay, spoke about removing ambiguity, but, as stated, New Zealand First believes that this new bill does not achieve what the Minister wants. The application of the main home test will introduce greater uncertainty. This legislation makes no effort to clarify at what point or over what time frame in the “dim-line” time period a property must be the main home. It speaks about a main home being exempt, but nowhere in the legislation does it clarify that if you are in it for 2 years—but does it have to be 2 years? Can you be there for just a certain period of time in the 2 years? Does it become your main home then? The confusion and the complexity continue to mount.

I will quote from a KPMG report. It notes that “a full two year period of occupation for the main home exemption to apply will not be feasible if the start date for the bright-line test is the date of the contract to purchase as recommended. This is because the property is unlikely to be occupied between the contract date and date of settlement.” So you are getting experts just querying: “Where’s your time line? Where’s the definition? Where does it begin and where does it end?”.

Then we have the question around trusts. A lot of good, well-intentioned people have their main home in trust. They own it, and they probably own it with their children. This piece of legislation will add to the complexity because we do not know how the rule will apply, because trusts are supposed to be able to be taxed under this legislation, but what if it is the main home? We just do not know that at all.

Then we have the question around farmland versus lifestyle block use. The statement is that farms or lifestyle blocks do not fall under this legislation. So if a person buys a small lifestyle block as an investment—maybe he wanted to retire on it—and rents it out, and then because of unforeseen circumstances he sells it in 2 years, actually, he does not have to pay and he is not liable for the tax under this legislation. Where is the consistency? Where is the fairness?

The other one that struck me when I was reading the legislation and doing the analysis was the example of people whose career it is to go and do up homes. They intend to sell their property and make some money out of it, but if they are living in it and if it is their main residence then, under this legislation, they are not liable for that tax component. So this, as far as a brightline test goes, just makes no sense whatsoever.

Just to conclude, I think this Government is deliberately missing the point. There is nothing wrong with New Zealanders owning New Zealand land and just New Zealanders owning New Zealand land. Overseas speculation does not add any real value to the New Zealand economy. This Government is keeping its head in the sand. It knows that this and the previous legislation, the Taxation (Land Information and Offshore Persons Information) Bill, will achieve nothing. Therefore, New Zealand First cannot support this bill any further. Thank you.

I am disappointed, but not surprised, to hear that the New Zealand First Party is not supporting this bill. I often find myself in the position where I am following Mr Tabuteau in these debates, and, once again, I wish to correct him on his inaccuracies and the false statements he has made to this House. He is very wrong on a number of points. The heart of this bill is all about introducing greater fairness for all taxpayers, and it is all about ensuring that those who are speculating on property do pay their fair share of tax. Rather than making it more complex, as has been described by Mr Tabuteau, it actually makes it far simpler for New Zealanders and those paying tax to understand how the system works.

There has always been an intentions-based test where if one is purchasing property with the intention of trading that property for income, then one should be paying tax. The difficulty is that that is very subjective. This bill is all about introducing a brightline test that makes it a lot easier for individuals to determine whether or not they should be paying tax. Should they buy and sell a property within 2 years and it is not their own home or it is not part of a deceased’s estate or a martial settlement, then they should be paying tax. That is greater simplicity for all taxpayers, that is a good thing for the tax system, and that is why this Government supports this bill.

Mr Tabuteau is wrong in his argument that the Inland Revenue Department does not want to enforce the existing rules—absolutely wrong. This Government, under successive Ministers and under Bill English, has put millions of dollars into enforcing the current rules. It has paid dividends for New Zealand. We have put in $33 million since 2010 to ensure that property tax compliance has increased in New Zealand and, as a result, we have seen $258 million of tax revenue come in. For every dollar we have put into tax compliance we have received $8 back. That is good for the Government. That is good for taxpayers. But what is more important is that we now look to having greater fairness within the tax rules, and that is what this bill is all about.

I also want to tackle the argument that has been proposed by Mr Tabuteau about foreign buyers. If one is to stand in this House and say that no person who is from another country and has migrated to this country should be able to buy a property—

💬 Phil Twyford: Oh, don’t be an idiot. No one’s saying that.

That is what you were saying. That is what Mr Twyford has said. That is what—

💬 Phil Twyford: You fool. You’re an idiot. No one is saying that.

I raise a point of order, Mr Speaker. I have got a pretty thick skin, but I take exception to that.

The ASSISTANT SPEAKER (Lindsay Tisch): Yes, the member—I am referring to the member who made those comments. I will ask the member to withdraw those comments. You cannot refer to another member in that manner.

💬 Phil Twyford: I withdraw.

There are people in this House who have argued for many, many years now that foreigners should not be able to buy property. Well, if one is to say that, then they should also be honest and say that no one would be willing to come here and bring their skills to this country. No one would be willing to come here and invest and bring capital to this country. No one would be willing to come here and migrate and bring their family for investment or skills purposes, because that is the reality of saying no to foreigners.

This bill is about greater fairness. Attacking the Chinese, attacking migrants, is not the answer, and if the New Zealand First Party wants to continue to go on about supposed foreigners—people who do not look like them—I would ask them to really look in the mirror and ask themselves whether, when they go on the Grey Power circuit, they are going to be honest with the people with the thick British accents and say that no one should be able to buy property in this country if they are not from New Zealand originally. That is not the answer to housing in New Zealand. The answer is greater fairness. The answer is greater—

💬 Phil Twyford: I raise a point of order, Mr Speaker. The member is wilfully misrepresenting other members in this House.

The ASSISTANT SPEAKER (Lindsay Tisch): No, no. Look, these are debating points.

I am almost finished, Mr Assistant Speaker. The answer is greater fairness. The answer is to ensure more houses are being built in New Zealand—and in Auckland, particularly—and that is what this Government is doing.

The next call is a split call. Dr Russel Norman—5 minutes.

The origins of this bill really are in the Auckland housing market, which is on fire. If you look at a 1960s house in a suburb that is not particularly in the centre of town, you are talking about a doubling of price over the course of 4 years, from $400,000 to $800,000. It is a housing market that is completely out of control—a 20 percent rise in the last 12 months.

It is no mystery why this is happening. It is pretty well understood, in fact. You have got a combination of migration pressures that are putting a huge amount of demand side pressure on Auckland; you have got a significant tax incentive because, of course, capital gains are tax-free in New Zealand, more or less; and, of course, on top of that you have got a big surge in foreign demand. That is not just happening to Auckland; that is happening right around the Pacific Rim, whether it is Sydney, Melbourne, Vancouver, other cities in the United States, and elsewhere. There is a big surge, and, of course, China is a part of it. It is not the whole story, but it is a significant part of it.

On the demand side that is the issue, and then on the supply side, essentially, what we have not been able to provide is affordable medium-density, high-quality housing in sufficient volumes to meet that demand, and so the increase in price is kind of inevitable. This bill that we have in front of us and the companion bill, the Taxation (Land Information and Offshore Persons Information) Bill, are an attempt to deal in a very minor way with that out-of-control housing market. You could think of it as trying to put a thimbleful of water on a giant fire. So we will be supporting these bills because they are positive moves, if ever so small.

This bill, in a way, is trying to deal with the issue around capital gains and how you tax capital gains. What it does is it says: “OK, if you’re an investor and you flick the property on in a couple of years, you pay tax on those capital gains and at your marginal rate.” That is a positive thing. It creates a brightline test around what kinds of income get taxed and what do not, so that is a good thing. Unfortunately, it sits alongside the intention test, which is a very difficult piece of tax law, because the intention test around tax law says that it all depends on whether you intended to flick the property on. Were you trying to make capital gains out of the property, or not? Of course, that is a very subjective thing, and makes it very difficult for the Inland Revenue Department to deal with.

The Green Party has for a long time supported having a consistent capital gains tax on investment properties—so, excluding the family home. The reason for that is pretty simple, and this law does go some of the way towards dealing with that in a very small way. We will support it for that reason. But a capital gains tax—the idea behind it is simply that whether your income comes from wages, or whether your income comes from capital gains, you should pay tax on that income. So we all pay our taxes, and that is how we fund public health and public education.

This bill makes some progress in the smallest way possible towards introducing a kind of a capital gains tax, which is a bit better than the intentions test capital gains tax, which is rather confusing and difficult to enforce. It is a brightline test, which does have the benefit of clarity. Even if this new legislation will make only a marginal difference, none the less it is good.

What it means is that you pay tax on capital gains. If you think about it, most people in New Zealand do not make capital gains. Capital gains tend to be restricted to those, unsurprisingly, who have capital to invest, which is a very small minority of the country. Most people earn wages, and they pay taxes on those wages, as we all should, and that means that that is how we pay for things. So why should people not also pay tax on capital gains, which is a kind of income? That, of course, is the idea behind having a capital gains tax, which pretty much every other OECD country other than New Zealand has introduced to some extent or another to deal with this exact issue.

It is a very common tax within the OECD to deal with the issues around fairness in the tax system, but it also has other benefits. It also has some dampening effect on house prices by dealing with one of the drivers on the demand side. But we also do need to deal with some of the other drivers on the demand side, and of those the offshore demand, particularly, is a significant problem. The companion bill, in a very minor way, also tries to deal with the offshore demand problem, but we also really need to deal with the supply side problem.

Medium-density, high-quality housing—that is, Auckland going up instead of out—is also central to the solution to this problem. If we do not get our heads around that, then we are going to continue to have this kind of pressure on house prices, not to mention the impacts on transport, climate change, and all the rest. Thank you.

I suppose that the quality of the debate from across the House tonight is an indication of the half-hearted, drop-in-the-bucket, lacklustre piece of legislation that we have got before us in the House tonight, because of the inability of the National Party speakers to actually get up and make a coherent, logical, reasoned, measured argument in its favour. Instead, they have resorted to hyperbole and idiotic, illogical arguments to pad out their thin speaking notes. They cannot even muster a strong argument around it.

Labour is supporting this bill going to the select committee because we believe that this is a significant issue and because we want to have the debate at a select committee in a measured, logical, reasoned way, and enable the discussion with submitters about what would improve this piece of legislation so that when it comes back to the House it will actually be a much better bill than the piece of legislation put before us tonight.

You could drive a truck through this bill, with the loopholes that it contains. It is an example of the many pieces of legislation that this Government puts up when the Government needs to be seen to be doing something, and here is a half-hearted, lacklustre approach to it that says: “We do not really want to make too much difference to it, but we want to be able to say that we are doing something about this particular issue.” That is what we have got with this legislation, unfortunately. But what we do hope is that when it gets to select committee we can tease out some of the issues, particularly the issues that I am about to touch on.

The two main issues are around the $5 million revenue estimate. What we are saying is that this has been rushed and it is ill-conceived, and it actually is not going to deliver a great deal back. We want to tease out what the Inland Revenue Department has estimated, which is that the new brightline test is going to raise just $5 million a year in additional tax revenue. What the Inland Revenue Department said about this bill was that it really expressed some real concerns. When you take into account that the Treasury figure for total tax revenue last year was $61.5 billion, then $5 million is really just a drop in the bucket. You cannot argue with that—not you, Mr Assistant Speaker, but the members across the House cannot argue with that.

In the regulatory impact statement the officials said that that revenue estimate of an additional $5 million a year was based on a number of behavioural assumptions that are inherently difficult to quantify, such as the number of sales that could be delayed in order to exceed the 2-year holding period. I know that other members have canvassed those issues. That is one of the most significant problems with the bill, and when the Inland Revenue Department is saying that, then it really does need to be looked at further.

The other issue I just want to touch on is really the lack of depth of investigation that has gone into the development of this bill. The Prime Minister himself said that he actually suggested this new brightline tax 4 or 5 years ago but they had only recently come round to the idea, and the Minister of Revenue said that it has been only a month in the works. When you put a piece of legislation like this to the House, you would have thought that there had been a great deal of work that had gone into it. There clearly is a difference in opinion about what the depth of that work has been, and clearly there needs to be some more work done. Hopefully, that can be done at the select committee stage, which is going to be pretty important.

Labour, as I said, does support this bill going to the select committee. We support measures that will cut property speculation, and that is where the logical and measured debate needs to be—around what the best measures can be—and not around the hyperbole that is being delivered by the members opposite in the House.

It is a pleasure to be talking on the Taxation (Bright-line Test for Residential Land) Bill. It is good to hear that the previous speaker, Clare Curran, as a member of the Opposition, is supporting this bill, which is a good thing because this bill is actually complementary to the other bill that we have been talking about tonight, which is the Taxation (Land Information and Offshore Persons Information) Bill. What this really is is the second part of a package of measures to make sure that we are protecting the tax system that we have in New Zealand, that everyone is paying their fair share of tax, and, in particular, that investors in property assets are also paying their fair share of tax.

Some people characterise this as a capital gains tax. It is not, actually; it is actually an income tax, and everyone has an obligation to pay tax. It is the same scenario if you are buying and selling shares on a regular basis—we have applied the same principle to those people who want to buy and sell houses on a regular basis. Essentially, the brightline test requires tax to be paid on any gain from the sale of a residential property within a 2-year period. During the select committee stage, we extended the definition of residential property to include serviced apartments, and also vacant land when it is proposed that it be subdivided or when there is the intention to build a dwelling on it.

As we have heard tonight, there are three key exemptions: the first one is for the main home, the second one is in relation to inherited property, and the third one is when there is a sale as a result of a property settlement agreement—or, in other words, when there has been a divorce. Also, I want to note that the exclusion also takes into account land used predominantly for business purposes or as farmland. We have been very careful about the definition of land that is used for business purposes so as to make sure that we come up with a pragmatic solution for that.

The select committee also dealt carefully with the definition of what is regarded as a main home, and we have introduced this new concept of “greatest connection”. This is particularly pertinent to owners of houses who have more than two houses, and how we have applied those rules is really important in terms of this new definition, or concept, of “greatest connection”.

I will say that the other side of this bill deals with making legitimate deductions and also deals with offsetting losses on the sale of property, but we have put a caveat on that so that any such deductions or losses must meet the brightline test and, secondly, can be applied only to other such similar property arrangements when there has been a sale of land.

I want to commend this bill to the House. I think it is a good bill, and it is part of a good, comprehensive package that we are putting in place.

My grandmother was fond of saying that if a job was worth doing, it was worth doing properly. With apologies to my granny, this National Government believes that if the problem is worth addressing, it is worth a grudging half measure, because that is what the Taxation (Bright-line Test for Residential Land) Bill is. It is yet another grudging half measure. Property speculation is rampant in Auckland, and the National Government does not need the polls and it does not need David Farrar and Curia Market Research to tell it that the Auckland housing market is totally out of control. Average house prices went up 24 percent in the last 12 months, according to Quotable Value. According to Quotable Value also, 41 percent of all mortgage lending in Auckland over the last 12 months went to speculators—41 percent. It is absolutely rampant. It is both foreign and domestic speculators—there is no doubt about that—and everybody in Auckland will tell you that.

Under this National Government the policy settings are very clear. What they say to New Zealanders is that if you want to make a dollar and if you want to get rich in John Key’s New Zealand, then become a property speculator. That is what this National Government’s policy says. It is not interested in the productive economy—it is not interested in people making things or in innovating the goods and services that the rest of the world wants to buy. This National Government thinks that we can get wealthy as a country by selling houses to each other—that is one of the defining qualities of this National Government over the last 7 years.

There is a frenzy of property speculation going on in Auckland at the moment. It is unbelievable—buying and selling purely for the purposes of capital gain. The New Zealand Herald is full of it. You cannot pick up that newspaper without seeing stories of unbelievable windfall gains made by people buying and selling properties. But this National Government does not care. It does not care about that because the members of the National caucus, including some of those sitting opposite on the National benches, are multiple owners of residential rental property. That is what they do with their assets. They are big landlords over on the Government benches, so they do not want to do anything about this problem. That is why this bill is a pretence. It is a charade.

The bill is not intended to do anything serious about the rampant property speculation in Auckland. It is not just the fact that the National Party members in this House—so many of them—are major landlords with multiple properties; their donors also are making a killing at the expense of “Generation Rent”. I mentioned in the debate on the Taxation (Land Information and Offshore Persons Information) Bill that some National donors who donated $370,000 to the last National Party campaign had amassed $26 million worth of Auckland property within a few years of being in this country. That is the other reason why National does not want to do anything about the problem of property speculation.

But there is another reason and it is that the Prime Minister has made a cynical political calculation. He is happy to see house prices go through the roof in Auckland because he believes that there are enough votes to be harvested from Auckland homeowners who are happy to see their paper wealth increase day on day. He has made the cynical calculation that he can get more votes from those people than from the other half of the Auckland population who are renters—a whole generation of young Aucklanders who will never ever own a home of their own in Auckland unless these policies change and unless this Government is replaced.

That is at the heart of this Government’s policy. It does not want to do anything about the flood of foreign money that is pumping up Auckland house prices. It does not want to do anything about the flick merchants who are buying and selling houses and who are bidding up prices beyond the reach of ordinary Kiwi first-home buyers. It does not want to do it, because it is the party of speculators and land bankers. It is not a party that stands, as we do on this side of the House, on the side of young Kiwi first-home buyers. In a nutshell, that is the difference between National and Labour—between the Government and the Opposition parties.

Labour wants to rein in Auckland house prices. We believe that the Kiwi dream of affordable homeownership actually stands for something, and that is why we will do something about it when the Government changes. We will crack down on speculators. Unlike this pathetic, derisory, little bill, which will not make a blind bit of difference, we will do something about property speculation. We will ban offshore foreign buyers from buying existing houses in this country. We will do that. We will have a register of foreign property ownership, so that it is transparent and so that New Zealanders can see what is going on, because Kiwis have had a gutsful of their land, their property, and their houses being sold out from under them under this National Government.

This bill implements the so-called brightline test. It requires that anyone buying or selling residential property within a 2-year period pay tax. If the Government were serious about this problem and if it wanted to do something more than this insubstantial bill it so easily could have. Treasury’s own calculations are that this will net $5 million—that is all. John Shewan, one of the Government’s most-trusted tax advisers, said after the policy was announced that it would have little impact on house prices. He said that it would not deter property speculators. And it is plain for everybody to see, because there is a loophole a mile wide at the heart of this bill, that all that speculators need to do is hold on to the houses for 2 years and 1 day and then sell them.

For goodness’ sake, just be real with New Zealanders. Front up and admit that you do not want to do anything about this—when I say “you”, I am talking about National Government members. Just be honest. Give up these pretences, these media stunts, these half-hearted, grudging measures that the National Government announces day after day. Poor old Nick Smith; he cannot have any self-respect left—the indignity of standing in this House day after day and having to defend this charade of a housing policy.

The game is up. No one believes this National Government any more. That is why, on issue after issue on housing, the polls say that 60 percent, 70 percent, or 80 percent of New Zealanders do not believe you any more. They want a register of foreign buyers. They want a policy that seriously cracks down on foreign property buyers. They want a policy that actually builds houses, not this special housing areas policy that you have got. For goodness’ sake, National Government members, be honest with New Zealanders. They do not want this ridiculous pretence—one announcement, one bill after another that are designed simply to convey the impression that you are doing something.

The Reserve Bank has enacted more serious policy on curbing demand in the Auckland housing market than the Government has. This Government has outsourced its housing policy to the Reserve Bank. Listen to Grant Spencer’s speeches on housing. He gives one almost every week. What has he been saying for the past 6 months? He has been saying that the Government has not done enough about the shortage of Auckland housing. Speculators are a major problem. Just read his speeches—do not take my word for it. The Reserve Bank Governor and Deputy Governor—the mouthpieces of the central bank of this country—are hardly firebrand socialists. They are saying week after week, time after time, that this Government’s housing policy has failed. It falls woefully short.

Speculators are a problem. They are driving up house prices. They are a threat to the financial stability of the banking system in the whole economy, so do something about it—not this ridiculous bill, which your own tax advisers say will not make any difference. This housing crisis calls for serious action. It is driving inequality between generations, and between Auckland and the rest of the country. It is a social and economic disaster, and this bill will not make a blind bit of difference.

Mr Twyford almost got through his speech without criticising foreigners, which is quite surprising. But in the end, he did. He said that he would not let foreign owners buy property unless they live here. We also had a similar comment from the Greens finance spokesperson, Ms Genter, who said that there was too much foreign capital in this country. And, of course, we have the New Zealand First “Professor”, Mr Tabuteau, who railed against foreign owners and said they are not required, they are a bad thing, and they should not be allowed.

The same people forget that the New Zealand Superannuation Fund is a major investor in overseas assets and property. They forget that Fonterra invests overseas. They forget that Turners and Growers owns, leases, and controls huge tracts of land in Europe, where it grows apples. They also forget Miraka. Mr Tabuteau’s colleagues could look up the directorships of Miraka and see that as well as Vietnamese names, there is a good stamping of Wairarapa names across that board of directors. And what a good thing that is.

The wine industry has foreign investment. The Premier Beehive bacon company in the Wairarapa is owned by the largest food group in the world. This is a good thing. Foreign investment is a good thing for New Zealand. It is a necessity for New Zealand, and it must continue for the benefit of New Zealand. And houses are but one class of asset—one class of asset, alongside the sharemarket, alongside the bond market, and alongside the housing market.

This bill fine-tunes and reinforces the part of the Income Tax Act that already exists around land purchased with the intention of selling. This is a good bill. It captures speculators, and it taxes them fairly. I commend it to the House.

I move, That the Taxation (Bright-line Test for Residential Land) Bill be reported to the House by 22 October 2015 and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 191 and 194(1)(b) and (c). Our tax system relies on voluntary compliance with our tax rules. For the most part taxpayers do the right thing: pay their taxes and meet their tax obligations. The Inland Revenue Department works to help people understand and meet their obligations, but there remain those who avoid those obligations. In such instances the Government will act to close off loopholes and help ensure greater fairness in the tax system.

The measures introduced by this legislation apply to residential property that is acquired on or after 1 October 2015 and disposed of within 2 years. The brightline test proposed by this bill will work in conjunction with other measures introduced in this year’s Budget to improve tax compliance by property speculators. Along with the brightline test, those measures are proposed to come into effect on 1 October of this year. This is what this bill is about and why I propose a shorter select committee period.

What an outrageous proposal from the Minister of Revenue. It is ridiculous at so many levels. The first of those is that he has just acknowledged that 1 October is the date that this comes into force. There is no way, because of the incompetent running of this House by the Leader of the House, that this bill can actually be passed by 1 October. So now we are going to have a bill reported back on 22 October. It is already retrospective legislation. That is bad enough, but given that it is already retrospective legislation, why not have a full select committee process? Why not actually give an opportunity for New Zealanders to consider the bill properly and for the Finance and Expenditure Committee to hear expert advice and take the time to get the legislation right? It is not as if there is a rush to get it done by 1 October, because the Government has blown that already.

💬 Hon David Parker: It’s not going to work anyway.

Yes, it will not work anyway. We can actually spend some time in the select committee getting it right, but no. The Government wants to sweep this away under the carpet. It wants to get it off the books before Christmas because it is embarrassed by this piece of legislation, and so it should be embarrassed by this piece of legislation.

Having a report-back date of 22 October means that we have a piece of retrospective legislation, but we are not even giving the committee enough time to properly consider it. When the Standing Orders Committee decided that these kinds of truncation debates would take place, this is what it said: “The truncation of the select committee process can have serious implications for legislative quality and confidence in the legislative process.” That is the problem here. This action by the Minister of Revenue, in calling for such a short period of time for the select committee to consider this bill, goes to the heart of that concern: the quality of and the confidence in the legislative process. What it does is it raises the concern that many New Zealanders will have, having listened to the Government speeches tonight, which is that the Government does not really want this measure. It is window dressing at best, and it would prefer that there really was not a proper debate on this measure. That is why we are seeing a truncated select committee process to 22 October.

If the Government really wanted to get this right it would take the 4 months, have a proper consultation, go around the country, get tax experts to work through the detail, look at the consequences, test it with international ideas, and then come back to the House with what I am sure would be a better bill. But the Government does not want that. It wants to sweep this away under the carpet because it is embarrassed by it, and it just wants to look like it has done something right.

The other part of the motion that I want to refer to is the question of when the committee will meet. This is under Standing Orders 191 and 194(1)(b) and (c), which have been suspended under this motion. It might be all very well for members on the other side of the House to say: “Well, we can meet on Fridays and, you know, we can meet at select committee meetings in the evenings and so on.”

💬 David Bennett: What’s the matter with work? Don’t you like work?

Well, yeah. David Bennett asks: “What’s the matter with hard work?”. The constituents of—I usually get this wrong—Hamilton East? Yes. The constituents of Hamilton East do not expect their MP to show up on a Friday, because they have had David Bennett as their MP for some time. But in other parts of the country they actually expect their MP to come in and do—

💬 David Bennett: I raise a point of order, Mr Speaker. I take offence at that.

The ASSISTANT SPEAKER (Lindsay Tisch): Oh, that will not—no.

No. Ridiculous. They actually expect their MPs to show up on a Friday and be there in their constituencies. Here I want to speak on behalf of the smaller parties that are on the Finance and Expenditure Committee, which actually have limited numbers of members who can be available to do this. This calls on their time in the House because the suspension of Standing Order 194(1)(b)—if this passes—means that we will allow a committee to meet during a sitting of the House. A committee doing that means that if you are from a small party, your resources are stretched very, very thinly.

This is a bill that is of significant interest to all parties in Parliament, and by setting this up we actually set up quite an unfair process in terms of how many people will actually be able to be at the committee. We will also have the ability to sit in evenings on a day in which there has been a sitting of the House, which a committee cannot usually do. Again, MPs have other commitments. This is putting a lot of MPs in the position of not necessarily being able to attend all of the select committee meetings.

We also know from previous experience with truncated select committee processes that this will be used as an excuse by members of the Government to limit the time for submissions. It will be used as an excuse to limit the amount of time for people to put their submissions in and then the amount of time that we have for hearings of submissions. That is not acceptable with a bill like this. We know that working through the implications of tax bills takes time. We have just had a bill passed in this House where the Inland Revenue Department said it did not have time to work out the compliance costs. It did not have time to do a full consultation with those who were affected by the bill. Then we are going to repeat it all over again with this bill.

We have independent tax advisers who support the Finance and Expenditure Committee. They often take a considerable amount of time to sit down with tax accountants and with tax experts and to then debate the issues with the officials from the Inland Revenue Department. That debate often leads to better law. That is the nature of taxation work. It takes time to work out how it will be implemented—you know, how people like Mr Bayly will organise their accountants to get around the latest tax initiative that comes out of this House. The tax officials and the tax experts who advise the select committee need the time to test those ideas out. Otherwise we come back to the Standing Orders Committee’s concern about legislative quality with truncated select committee processes.

We could not get bills more in need of a lengthy process than taxation bills. I would challenge any member of this House to read through every page of every taxation bill that comes up. Sometimes they go over 1,000 pages, and the problem with that is that we rely so much on the officials having the time to get it right, to test out the ideas, and to come back to us. We have not had any kind of argument in this House from the Government to say why this should be different. This bill actually needs to be improved significantly, and it deserves the time in the select committee to get it right. That is being denied today by the Minister.

On this side of the House we have supported this bill going to the select committee. We have done that in good faith because we believe that this is an area where New Zealanders are crying out for the Government to do something to try to rein in the horrendous property speculation that is pushing so many New Zealanders out of the housing market. This Government is not giving us the opportunity to get that right. We have supported this bill in good faith. Good faith in return from the Government would be to say “Let us do this properly. Let us give it 4 months.”, or even 6 months, because it is going to be retrospective anyway. Those members know it is a shambles once they make it retrospective, do they not? They know that all those people who are quickly trying to get in to avoid this will now be placed, perhaps, with a little bit more wiggle room if it goes on any longer.

We know, on this side of the House, that this is an important measure. It has not been handled well by the Government. New Zealanders and the rest of this Parliament are not responsible for Gerry Brownlee’s disorganisation, and that is fundamentally what is happening here today. The Leader of the House has not organised himself sufficiently to get this bill passed by 1 October. We have retrospective legislation—that is bad enough—and now we have a Government that is not interested in hearing from New Zealanders. It simply wants to shove this through so it can get the embarrassment that is this bill out of the way. That is wrong, and we need to make sure that as a group of parliamentarians we do not allow that.

We are strongly opposed to the motion that has been put forward by the Minister. I think National members could do a much better job.

Sitting suspended from 6 p.m. to 7.30 p.m.

💬 Mr DEPUTY SPEAKER: Kia ora mai tātou. Tēnā tātou katoa. Members, before the dinner break the House was discussing the debate on the instruction to the committee on an early report back-date for the Taxation (Bright-line Test for Residential Land) Bill. Grant Robertson had the call. He has a minute remaining.

One minute? Mr Deputy Speaker, thank you very much—a bonus minute to recap on the fact that the Government is now so embarrassed about how weak this piece of legislation is that Government members are in this House with a report-back date for this bill of 22 October. Bear in mind it is meant to come into force on 1 October. They have stuffed up. They have not got it in in time. It is already retrospective legislation and they come to this House and say: “We want to get it off the books.” They are embarrassed.

They are embarrassed because this is a huge problem for New Zealanders who want to get in and buy their own home. They have come up with a half-baked solution. It is one that does just enough to make it look like they have done something to address the housing crisis in New Zealand and, in actual fact, they have completely failed. Bill English could not even tell New Zealanders what effect this would have. Treasury told him it would get $5 million of revenue because it was so poorly designed. This bill deserves a proper consideration from the select committee, not a half-baked one—not one designed to serve the National Government’s political agenda but one where New Zealanders can have a say.

I call Phil Twyford.

It is a very good choice from a crowded field, Mr Deputy Speaker. The thing that is most galling about the truncated select committee time frame for this bill is that the National Government has been denying that property speculation in the Auckland housing market is a problem—denying, denying, and denying it for the past 3 years. Now it brings this bill to the House—a tax bill. This is probably the last kind of bill that it should be rushing through the legislative process with a shortened select committee hearing time when there has been, for at least the past 3 years, intense public debate about the effect of property speculation in Auckland.

It did not need to be this way. It did not need to be a truncated select committee hearing period. Tax bills of any kind deserve the right kind of scrutiny, expert evidence, officials giving considered advice to the select committee, and the chance to really tease out the provisions of the bill, because, goodness knows, this bill is fraught with problems. The problem that we have got with a shortened time period is that we will not actually do the much-needed job of improving the bill—going through it clause by clause, putting it under the microscope, and trying to improve it. If we do not do that, there is every chance that we will be back in the House here at a later stage fixing those mistakes and rectifying the errors.

In the papers supporting this debate, Treasury makes it clear that it thinks this bill, with the so-called brightline test requiring people who purchase and onsell a property within 2 years to pay income tax on the capital gain, will raise about $5 million a year. It says that if there was not that avoidance—

💬 Mr DEPUTY SPEAKER: I just warn the member that he needs to restrict his comments to the issue of the shortened time frame for debate before the select committee, not the value of the bill or his view on the bill—solely on the shortened time frame. He seems to be wandering away at the moment.

If we consider what Treasury said, which I was just referring to, how on earth are we going to get the proper analysis in a truncated time frame—

💬 Mr DEPUTY SPEAKER: Take your seat.

—from economists like Tony Alexander of the BNZ, who I think said when this policy was announced, when the bill was foreshadowed by the Government, that he did not think that it would have any effect? How are we going to get people like Tony Alexander to come along and do the analysis and check the work that Treasury has been doing? John Shewan, who is one of the most influential of the tax advisers the Government uses, also said, by the way, that he did not think that this bill would have much effect at all on house prices and that it certainly would not deter speculators. That kind of technical expertise is exactly what we want to see at the select committee. If we do not have enough time at the select committee to go through this bill and give it the scrutiny that it deserves, then the glaring errors and loopholes that are evident in this bill will never get fixed.

As Grant Robertson said, the legislation is going to be retrospective anyway. The handling of this bill has been so ham-fisted that the Government has made a commitment that the legislation is going to come into effect on 1 October, and there is no shortage of commentators who have observed that the frenzy of speculative buying and selling in the Auckland housing market that we can see right now is a direct response to the fact that people are anticipating this bill coming in on 1 October. So there is an imperative now to see that the bill does pass into law, but because of the Government’s ham-fisted management of the legislative process, it is going to be retrospective. No one likes that.

Why rush it now? If it is going to be retrospective, you may as well take it through a proper select committee process, air the issues, and give the select committee the time to do its work. After all, we have a unicameral Parliament—we do not have many of the other checks and balances. The select committee process is one of the few protections we have against the very inferior lawmaking that has been a characteristic of this Government’s time in office. We are constantly coming back to fix up the messes that Nick Smith and others have made with legislation that they have brought to this House, yet here we are, being asked to do it again. We are being asked to push a taxation bill that is actually a reasonably complex bill through and not give it the proper select committee scrutiny.

This bill is hopeless and there are no shortage of commentators—not just members on this side of the House, but experts—who have pointed out that there are real flaws with the bill. At its heart is a loophole that you could drive a bus through. The very intent of the bill is to stop or reduce property speculation, but the fact is that people need to hold on to properties for only 2 years and 1 day in order to avoid the provisions of the bill. That needs to be properly scrutinised, and we need to see the modelling on how many speculators will get caught by this bill. We want to see what the modelling is, based on Treasury analysis about how many speculators will get caught and how much money will be brought in by this tax. If we do not have the time at the select committee, we are never going to really unearth this.

This bill is being rushed through. It was like so much of the legislation on housing that has been brought to the House by this Government. It has been cobbled together at the last minute because of the polls and because of the media. As a result of that shambolic political management, we are being asked to support a reduced select committee process that undoubtedly will produce an inferior result. Thank you.

I will be brief. The select committee process is fundamental to our lawmaking. It is the time when the public get an opportunity to have their say on the laws that this Parliament passes. If we have a truncated process, there will be less time for submissions, there will be less time for the public to actually present their submissions to the select committee, and officials will be under strict deadlines in terms of reporting back. This is tax legislation. It is complex legislation. Having a truncated select committee process means less scrutiny by the public, less scrutiny by officials and potentially, bad law with more loopholes. That is why we are opposing a truncated process.

In relation to the debate on the referral of the Taxation (Bright-line Test for Residential Land) Bill to the Finance and Expenditure Committee, the truncated period of time that is being allocated here by the Government is why we need to debate this issue. It really goes to a fundamental point about how this Parliament operates and the lack of respect that the Government of the day has for the parliamentary process.

I, for one in this House—and, I would think, all of the people on the Opposition benches—actually do take that parliamentary process seriously. But, increasingly, this Government is disrespectful, arrogant, and demonstrates hubris around the importance of the parliamentary process and the need to scrutinise legislation and have a proper select committee process—to get experts and people who want to have a say about laws before a select committee, give them the opportunity to have their say, and then to have the opportunity to get good advice and to have a decent amount of time to do that. That is why we are having this debate tonight in the House, and that is why this Government is lacking in its respect for the fundamental, democratic system that we have in New Zealand.

I just want to refer to a comment that was made by the Minister of Revenue, Todd McClay, on 3 News on 18 May this year.

💬 Hon Simon Bridges: Oh, that’ll be in context, then.

Well, he is welcome to get up and dispute that he made the comment. What he said in relation to this bill was this: “despite only being a month in the works, it was carefully thought-through.” The quote is—and I am sure there is video footage to prove that he actually said it—“Over a four- or five-week period we looked very closely at not only what the Reserve Bank is doing, but what other measures may be there from a tax point of view.” I ask you whether that is, in a rhetorical sense, a decent amount of time—a month, 4 weeks—for there to be a substantive piece of legislation put before this House. I actually feel a bit of sympathy for officials for being put in the position of being given such a short period of time to bring a bill before the House.

There are times when short amounts of time are necessary—when there is a matter of great urgency, such as the debate that we have been having around the refugee quota and the importance of responding in a compassionate way to issues of great moment in our time like humanitarian crises. It is also true that we have a crisis in the housing market in this country, that we have a major issue of housing supply in Auckland, and that we have a major issue with property speculators.

This bill, for which we are debating this motion on the truncation of the select committee process, is an issue of great importance. It may be that a bill needed to be brought to the House in a hurry—and a month is a hurry—but it should also be given the opportunity to have a decent amount of time for there to be a good select committee process. That is the problem. We are not being given that. So 22 October is, what, around 6 weeks away? In order to advertise for submitters, to actually get the submitters in the room, how many days are we going to have for submissions? And not only for the actual physical submissions on this bill, but how many days, then, does this select committee get for a response from officials and for the opportunity for members on that select committee to ask questions and to get adequate responses?

This is a travesty. It is treating Parliament as a joke, and it is happening over and over and over again. It is an embarrassment, and anybody listening to this debate tonight should be deeply concerned about the “third-term-itis” that this Government is demonstrating—about the way it is treating the whole parliamentary process with absolute disrespect. The Labour Party is supporting this going to the select committee because we want to have this discussion, but we are not going to get the amount of time that we need to have the discussion. Instead, it is going to be rushed through. It is going to be sent back to Parliament, and then the Government will say “Tick. Move on.”, and, actually, there will be very little effect.

I notice that Government members have all got their heads down over there because they know that that is what is happening, and it is happening increasingly. It is an embarrassment. They should all be embarrassed to be representatives in this House, with the amount of legislation where this kind of process is happening—where you are not getting proper public input, where the officials are being disrespected, and where the experts are not being brought in, or, if they are, it is as a token gesture.

This is a truncated period of time for a select committee process. I do not know how many times the Opposition members have got up and argued on these issues. It is an embarrassment. The Minister of Revenue himself says the legislation has been only a month in the works. The Prime Minister did the usual shrug of his shoulders and said: “Oh, you know, I might have said something 4 or 5 years ago, but, you know, we’ve only just come round to the idea, and, oh, what the hell. We’ll just give it a tick and move on and people will forget about it.” Well, it is a matter of great moment. Parliament should be taking this seriously, and we need to extend the period for this select committee process.