Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill

Hon PETER DUNNE (Minister of Revenue) Link to this

I move, That the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill be now read a third time. The bill introduces a number of major business tax reforms, the most far-reaching of which is the reform of the tax rules relating to the offshore income of our controlled foreign companies. Our present system taxes the offshore income of those companies as it is earned, and it is being replaced by one that exempts that active income. The result will be better alignment of our international tax rules with those of comparable companies—Australia, in particular. That will mean removing a taxed cost for our controlled foreign companies that similar companies in many other countries do not face. These changes are intended to encourage businesses with international operations to remain in New Zealand and to enable them to compete more effectively overseas.

Modernisation of the tax rules relating to the life insurance business is another important reform that the bill introduces. The rules are being updated to ensure that the term insurance business is taxed on actual profits, as other businesses are taxed, and that the tax benefits of the portfolio investment entity rules are also available to people who save through life products. The bill also introduces the new payroll giving system for charitable donations, which will operate through the PAYE system. It is an initiative from United Future and it means that employees who donate through their payroll will receive the tax benefit of their donations each pay day without having to present donation receipts. The initiative has been warmly welcomed throughout the charitable sector and was generally applauded during the Committee of the whole House stage. On a similar theme, the bill also clarifies the tax treatment of volunteer reimbursements and honoraria to make it easier for volunteers and community organisations to comply with their tax obligations and to reduce their compliance costs.

Other important reforms in the bill that attracted some attention during the Committee stage include changes that strengthen and rationalise the definition of “association persons” in the Income Tax Act as a revenue protection measure. These measures are generally used to counter tax practices that could undermine the intent of the law because of the closeness of the relationship of the parties involved. The bill also seeks to clarify the law to ensure that the employer payments for relocation, overtime, and meal allowances remain tax free. These changes are designed to remove longstanding uncertainty and to simplify the law, which will save time and money for everyone involved, and generally allow people to carry on doing what they have always been doing but now in accordance with the law.

The bill also updates the petroleum mining tax rules in order to remove possible disincentives to further investment in oil and gas exploration and development in New Zealand. As a revenue protection measure it gives effect to changes to ensure that New Zealand receives its proper share of the benefits from our petroleum mining industry, which is growing rapidly. The point was made during the Committee stage by more than one speaker that the somewhat perverse situation at the moment could allow the case where a company could, in effect, offset all of its expenditure offshore against the New Zealand tax base, and for various reasons pay very little tax in New Zealand. The net effect of that situation could be that the New Zealand taxpayer is simply subsidising offshore exploration. That is a very peculiar situation, and we are closing it off. We are actually the only country in the world, as I understand it, that currently has a provision of that type in place.

This speech is a brief summary of the major reforms that are proposed in the bill. There are a number of other changes that I will not go into, because I do not have time this afternoon. Various Supplementary Order Papers have been added to the bill since I introduced it in July 2008. One of the members during the latter stages of the Committee stage made reference to stapled stock; we introduced a Supplementary Order Paper in August of last year to ensure that stapled stock instruments are treated as equity for tax purposes. That measure is designed to prevent a loss to the revenue through the increased use of that mechanism. Earlier this year, in August, I introduced another Supplementary Order Paper, which made a number of remedial changes, as well as other taxpayer-friendly policy changes, to the bill. In that latter category are specific measures that apply to a small number of taxpayers, and that needed to be legislated for as soon as possible. One of those measures that I should refer to relates to finance company workouts. A slight wording change is required to ensure that the law also applies to compromises not done under the Companies Act. That adjustment will be made in later legislation, and once enacted will apply from the 2008-09 income year.

I conclude by saying that the bill had a number of interrelated aims: to help New Zealand - based companies compete more effectively overseas, to update tax law to reflect today’s commercial environment, to clarify legislation to ensure that it works as intended, to protect our revenue base, and to strengthen the country’s culture of charitable giving. It is a long and technically complex bill. It has required an enormous amount of effort on the part of many people who have taken part in its passage through Parliament: the Finance and Expenditure Committee members, the drafters, the policy officials, the submitters, and all of the members of the House. I acknowledge the contribution that all have made to bringing this very big bill to this stage this afternoon. It is a significant point to have reached, and I record my thanks to everyone who has made it possible. On that point I commend the bill to the House.

Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this

I welcome the remarks of the Minister of Revenue, Peter Dunne, and I state again at this point in the third reading of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill that the Labour Opposition will be supporting the passage of the bill.

I concur with the Minister’s warm remarks to officials. It is very easy for us parliamentarians, as we debate the generalities of the bill, to overlook the amount of detailed consideration that has gone into even just the drafting of its 800-plus pages. Even the remedial Supplementary Order Paper is over 50 pages long, and there are other Supplementary Order Papers, as well. The fact that typographical corrections and changing commas took 50 pages reflects the volume of work involved. It is really extraordinary. Leafing through the bill, I see that every page has its highlighting, underlining, and revision tracks, and every paragraph matters, because millions of dollars’ worth of taxpayer funds rest upon such things. We are highly reliant on the good offices of our very dedicated officials and advisers, and I join with the Minister in thanking our excellent team. The public are so much better off for the quality of work that has been rendered. I hope the officials and advisers will pass on the thanks of all parties in Parliament to their colleagues for this mammoth piece of work.

Here the out and out bouquets stop. I think it has been well reflected in the discussion that the process of getting the bill to the third reading could have been, on reflection, a little bit better. The Minister reminded us that the first reading of the bill was in August 2008, following its introduction in July. There had been working papers and an extensive consultation with interested organisations in advance of that introduction. The bill was referred to the Finance and Expenditure Committee, and then the general election happened. I do not know whether it is fortunate or unfortunate, but, given the election loss, at least off the good ship Labour Government there were a few lifeboats, and the Minister of Revenue took one of them. He managed to steer the bill on its passage through Parliament. The issue was whether the select committee had the time to do justice to the bill, and I do not think the dedicated members, or even our excellent chairman, Mr Foss, would in their heart of hearts be able to attest that we were able to give the depth of scrutiny that we would ordinarily like to give to every page of this bill.

The ambit of the bill, if I might take a minute to reiterate themes that I attempted to summarise late in the Committee stage, is broad. The commentary on the bill states: “We do not consider it desirable to put a number of very distinct and significant proposals into one bill simply because they relate to one area of law.” The reason is that even a third or a quarter of this volume would have been more than enough for a select committee process to get its head round. Having said that, the bill provides for the important reform of international tax rules, particularly in respect of controlled foreign companies. The bill regularises and extends life insurance taxation rules closer to the accounting treatment of life insurance portfolios, and particularly around modern practices in that respect. It provides for payroll giving; I think parties around the House agree that that is a good way to assist the charitable sector. Taxation of emissions units is provided for. The definition of “associated persons” has been tightened up a bit in the Committee stage. The tax treatment of relocation payments and meal allowances has been optimised.

There has been significant discussion about the provisions for tax treatment of petroleum mining. Let there be no mistake: in the earlier Committee stage discussion the Labour Opposition strongly supported the Government’s moves to close this egregious loophole, which has been ruthlessly exploited by members of the international petroleum industry. I say shame on them for pushing it that close to the line. When one pushes things that close to the line the line gets moved, because officials and parliamentarians have a responsibility to stand up for the public interest. So I hope there will be a lesson in that to the market. Labour raised the issue of an unintended consequence, or potential unintended consequence. Enough has been said about that issue, except that we will hold the Government to its indication of a willingness for there to be a good-faith process with officials on the basis of the common law position.

It is incumbent upon me as Labour’s finance spokesperson to say that the country is pressed upon by many serious taxation issues, not all of which are of the technical nature of even the international tax rules contained herein. New Zealand has in the latest month achieved a vast improvement on our current account deficit. It is only 6.6 percent of GDP this month; that is still bad in most people’s books. Our national debt is, in net terms, up to 100 percent of GDP, and nearly 150 percent in gross terms. This country has to deal with some significant issues. In summing this up, I guess Labour has a concern that this bill is a tome of necessary, technical, and somewhat rushed amendments and that this House is not giving its attention to the priority tax matters.

What are those priority tax matters? Well, there was very interesting debate around Budget 2009; there was great reference to the international credit-rating agencies, and the reports, for example, of Moody’s, Standard and Poor’s, and Fitch Ratings. Although they came to different conclusions on whether we needed to have our ratings changed, they all made the same underlying points: they had counted upon the Government’s fiscal prudence not just because it is a good thing in itself but because it was papering over the cracks of an economy that is fundamentally not saving enough and not exporting enough. How does tax policy play into that? Well, we know that we have to innovate more. The rating agencies have made it very clear that we cannot diversify our economy unless we improve our rate of innovation. That means that the tax rules have to better support private sector research and development. The previous Government met the OECD average but private sector research and development was at less than a third. That is why the research and development tax incentives were critical. We cannot see an alternative push from this Government to come up with some better idea. If it, in some way, did not like the way the incentives were crafted, I ask that we have a mature discussion, in the national interest, about how to carry our research community and our primary sector forward.

Similarly, although it is not a tax matter, the Government canned the Fast Forward Fund but has not come up with an equal alternative. KiwiSaver in terms of tax matters saw the employer subsidy withdrawn and the Crown subsidy cut in half. There is a tax-related element to those changes: they were done to fund the 1 April tax cuts. Those income tax cuts dropped the top tax rate and changed some thresholds, but the bottom line was that a third of the benefit went to the top 3 percent of earners. The top 3 percent have the lowest marginal propensity to consume and, therefore, the least multiplier effect during the recession. The cuts did not make equity sense, they did not make tax policy sense, and they did not make macroeconomic sense.

We talked about emissions units in this bill. We have the bizarre spectacle, this week, of a Government that seems to be falling over itself to do some very strange deal with Te Pāti Māori at a time when the Māori Party has given nothing more than a nod to the bill going to select committee with no promise of support after that. That might look like a bad deal. I think that the Government apparently gave the Māori Party precisely zero in return for that nod, other than indexing benefits, which, if common media parlance is to be believed, were already indexed. The real problem with the emissions trading scheme is that there is no cap on the trade, and that means that the Crown’s exposure to the fiscal loss—the tax loss—alongside that is unlimited. The more the pollution is, the more the tax subsidy will be. That has to be amongst the most perverse taxation effects this House has considered for some time. Finally, of course, the manipulation of the carbon price for different public relations purposes will leave the taxpayer—the fisc—picking up the difference between the cap on the carbon price that is used and the international price. That is a severe exposure.

Although much in this bill is to be recommended, and although the process could have been better, my final word in this debate is to ask Parliament and to ask the Government to respectfully lift its sights, because this country faces absolutely critical issues for our economic future. Although this bill makes a useful contribution to the modernisation of some tax rules, it has skirted around the fundamentals, just as Budget 2009 did. We look forward to a sensible discussion with the Government about the next steps for our tax system and the contribution it can make to guarantee a prosperous and independent future for New Zealand.

CRAIG FOSS (National—Tukituki) Link to this

I was half expecting from the previous speaker, the Hon David Cunliffe, an apology for the state of the economy that we inherited from his previous Government. He started off on tax, but we will come to that. [ Interruption] Here we go! The caffeine has kicked in, lunchtime has kicked in on the other side of the Chamber.

From speeches made in the third reading of this very large Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill, it seems obvious that some members are looking forward to the end of the process of this bill going through the House. I again acknowledge the commitment and the contribution of members throughout most of the debates on the bill. I forgot earlier to make a special mention of the independent advisers to the Finance and Expenditure Committee and their assistance with this bill. Therese Turner did a great job in our committee. The committee depends very heavily on her advice on aspects in and around tax. We used an independent drafting adviser, Mr David McLay. I want to go on record to acknowledge his assistance and drafting expertise. [Interruption] He is no relation of my colleague behind me, Todd McClay. I acknowledge his assistance with this substantial bill, even though we have 50-odd pages of further drafting fixes.

Much of the bill consists of remedial and technical matters, particularly the amendments contained in Supplementary Order Paper 224 and the back sections of the bill, which we talked about in the commentary on the bill. I will quickly touch on the last two speakers’ contributions. The first half of the previous speaker’s speech addressed most of these points, but I reiterate that the interaction between the committee, the Minister, the officials, the Inland Revenue Department, and the private sector around the application dates caused a great deal of angst in many sectors, as I mentioned earlier, and I acknowledge the way that process panned out. Although there was a bit of tension at the time, very good solutions were found. On the changes to international taxation provisions, a quote was given to us saying that the changes remove the “grey list” structure that New Zealand has. The previous Minister of Finance said that the “grey list” was basically where New Zealand went boldly where no other taxation authority dared to follow. Now we are trying to remedy that situation. The active-passive proposals and other proposals in this bill are very forward looking, and they lock in a more global and outward-looking New Zealand as an exporting nation.

One of the other speakers spoke about the life insurance changes just before, but I note that there was a difference in this bill. Going back to the international taxation provisions, given that the bill was so large, and given the assistance we needed to get our heads around a lot of the issues, we inserted a signposting section into the Income Tax Act 2007. That is section EX 18A, inserted by clause 116B of the bill, which is a bit of a road map for the uninitiated who may, for some reason, happen to read the Act. It is a plain language direction as to the intent of that particular clause, which is more than would normally appear in an Act. It will be interesting to see how that pans out in other taxation bills that, I am sure, will come before the Finance and Expenditure Committee and the House.

On the changes to the associated persons provisions, the Minister noted earlier that they were initially born in 1973, I think it was. We had many absurd examples of how people could be associated under the original proposals of the original bill of August 2008. It was pointed out time and time again that the absurd examples could already be used. Common sense prevailed, and the original intent of that 1973 provision has been followed through on and clarified in this bill. I say that with all due respect to our committee and officials, who made some quite fundamental changes to the bill as it appears in that particular part. I acknowledge the work that went into that, because eventually quite a simple test went through, with an on-off switch to test in a pretty quick way whether people are associated.

Changes were made in this bill to the rules on portfolio investment entities to reflect changes that had been made, mostly under the previous administration. Again, the committee made a few changes there. I know that further discussion is continuing on the issues around the rules on film production and Government funding, and I acknowledge the good intent of the Minister and officials in making sure that no unintended mischief has been created. I commend all members following through on the intent of the provisions on payroll giving. I am interested that one party is voting against this bill. I think that is the Green Party, and I thought its members would applaud the provisions on payroll giving, charities, and allowances, and the ones that make it easier to give to charitable causes, whatever they might be.

I commented earlier on the commencement date. Tax threshold changes were in the original bill, and, as I said earlier, they were picked up from the February legislation on small and medium sized enterprises.

I look forward to hearing from other speakers on this taxation bill. I will take only a small amount of time. I am very tempted to respond to the second part of the previous speaker’s speech, as he started to get political, but I think I will just let it lie on the table. I look forward to other speeches.

STUART NASH (Labour) Link to this

I rise in support of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill. The irony has not escaped me or members of the Labour team that we are finally passing this bill under urgency, because the bill has a retrospective provision that goes back to 1986. Yes, the Inland Revenue Department has caught up with a legal tax problem that had slipped under the radar for 23 years and remained unamended. It relates to the Parliamentary Service and is deemed to apply from 1 April 1986. It is rather fitting, then, that this bill is included in the urgency motion. As we have discussed, for the first time this week an urgency motion is justified, because it is appropriate to provide certainty to those who will be affected by this bill. There is no doubt that the passing of this legislation will provide that level of certainty to a whole range of industries that demand it.

I start by reiterating the tests that tax legislation has to meet. There are basically four tests. First and foremost, it has to be effective and it must not hinder growth. Ideally, it should promote growth. It would be a grand bonus if all aspects of this bill, when implemented, would in fact help the long-term sustainability and economic development of our economy, both domestically and on the international scene. It allows us to build on a competitive advantage and, as mentioned, in this day and age of globalisation, a tax bill that meets the international standards is very important. This bill does that. Secondly, there must be equity. This is the question around who bears the burden of taxes. It cannot place an unfair burden on those for whom there is no equal advantage. For example, we cannot be seen to take from Peter to give to Paul.

Of course I would argue that the Government’s tax cuts for the upper end of taxpayers, and the proposal mooted by the Tax Working Group to raise GST so as to be able to lower tax at the top rate, does not meet this equity test, especially if we extend this test to include social equity, which is something the Labour Party has done with every bill in its 94-year history. In fact, Harry Holland, the first leader of the Labour Party, had a very simple test. He always asked “Is it right?”. Harry Holland realised that if it was right for the people of New Zealand, it would be right for the New Zealand Labour Party. This underlying principle of whether it was right for the people of New Zealand has guided this party long after Harry’s untimely departure from this world, and it will continue to guide the Labour Party under the leadership of Phil Goff, the next Prime Minister of New Zealand.

The third requirement is that any tax legislation has to have fiscal integrity. By this I mean that tax legislation cannot provide incentives for people to restructure their affairs in order to perpetrate tax avoidance. As I mentioned during the Committee stage it was Dr Michael Cullen—who, I think, was the Minister initially in charge of this bill; if it was the Hon Peter Dunne, I apologise to him—who said that if as much intellectual energy, grunt, and capacity went into increasing the productive wealth of the economy that is now directed into perfecting the art of tax avoidance, then we would be a very wealthy nation. I am sure that at some stage we will be back in this House with amendments to this bill. We simply cannot have a bill that is over 800 pages long without the odd error. Goodness knows that the officials, consultants, and even some of the submitters went to extraordinary lengths to ensure that every possible loophole was identified, tested, and closed. But as we all know, and as is testament to Dr Cullen’s comment—and he was in the House a lot longer than any other members present have been or will be—there will be some smart person out there looking to make his or her reputation at the expense of the greater good by looking for a way to rip off the tax system. My message to that person is that we will close these down as soon as they even think about beginning to appear. Tax legislation is an organic beast, and it must be for ever growing and adapting, transforming to meet the requirements of the international and domestic users of our system. This bill is testament to that fact.

The fourth point relates to compliance and administration. Citizens must understand their rights, or it must be relatively simple for citizens to be able to access information that will inform them of their rights. Compliance costs should be kept to a minimum, without compromising the integrity of the system. I refer back to the 800-page income tax rewrite of 2000, which was part of this compliance and administration test. In fact, one of the notable features of this bill is that it introduces significant reductions in compliance costs, and thresholds for a whole range of businesses in the tax system as they apply to small and medium sized enterprises.

We all know that this bill started life as a Labour Government bill. We certainly know that Labour is the party of the small to medium sized enterprise business sector.

AMY ADAMS (National—Selwyn) Link to this

It is quite satisfying to take a call in the third reading of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill, if for no other reason than that it is good to know we are getting towards the end of it. It has been a big piece of work, as previous speakers have mentioned, and it is obviously very much needed in our system, which I acknowledge is reflected by the fact that it was commenced under the previous Labour Government and is being completed by the National Government.

Listening to the previous speaker, Stuart Nash, highlighted somewhat for me one of the major differences between the Labour Opposition and this National Government. Labour talks a big game when it comes to jobs, the economy, and small to medium sized enterprises. According to Labour members, they understand that side of New Zealand and support it. But the reality is they do not. They can talk about it, but New Zealand knows there is no substance.

RAYMOND HUO (Labour) Link to this

In my previous speeches on the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill during the Committee stage, I might have cited inappropriately a catchphrase invented by the oratorically gifted US President, Barack Obama. That catchphrase was “wee-wee’d up”. The media worldwide was puzzled until 2 or 3 days later when White House spokesman Robert Gibbs shed some light on it, and gave the definition that “wee-wee’d up” is when people get nervous for no particular reason. He added that “Bed-wetting would be probably the more consumer-friendly term.” A bright side of my using that phrase inappropriately in this honourable House was that it may help us to appreciate how important it is for us to have a consumer-friendly version of the bill and to get the basics right. I thank the officials and other independent specialist advisers for their excellent work in helping to transfer lots of heavy, loaded terminology into a user-friendly version when dealing with this huge and complex bill.

The bill was originally introduced on 2 July 2008 by the Labour-led Government. The bill represented the first stage of the Labour Government’s review of our international tax rules, and it has been greatly influenced by extensive consultation with businesses and their advisers. This is a huge and complex bill, nicknamed the “September Bill”. As the Finance and Expenditure Committee noted in its commentary on the bill, “The size of the bill, and the depth and breadth of the material it covers, have made our consideration more difficult than it might have been otherwise.” As pointed out by some of my colleagues, there was a general lack of sufficient time for members to fully consider the immense detail of the bill. The situation was made worse by the introduction of the large Supplementary Order Papers that had not been referred to the select committee and will not be scrutinised before they are passed into law in this honourable House, which is sitting under urgency.

However, Labour supported the bill, and it is appropriate for me to reiterate some major points in its third reading. Firstly, the bill provides for the reform of international tax rules with the intention of allowing New Zealand residents with active businesses in overseas markets to compete on an equal footing with their competitors. Secondly, and what interests me the most, is the underlining philosophy behind the bill, which replaces the current legislation that was put in place in 1991 and 1992. To some extent the important part of the active-passive distinction is whether our country will have an outward-looking taxation system or an inward-looking taxation system. Therefore, the real issue is whether we want New Zealand companies to internationalise, compete, grow, and enhance our export-oriented economy.

Having said that, we cannot talk about our taxation law without addressing some related issues. The major issue relates to the concerns expressed strongly by our export sectors. Banks have grown faster than the surrounding economy, indicating wealth transfers from the traded economy to the non-traded economy. As the chief executive of the New Zealand Manufacturers and Exporters Association, John Walley, pointed out, we have a whole range of policy settings that shelter the internal economy at the expense of the traded economy. As a result, our economy is on a simplification trajectory that reduces the potential for leverage of creativity, innovation, and value-adding. The opposite trajectory is increased elaboration and sophistication of products and services. The basic upgrade process amplifies and liberates innovation and creativity. As the Hon David Parker said earlier in this House, research and development tax credits are not fixed in this bill. The shocking statistics show that our business expenditure on research and development is one-third of the OECD average. The main disparity between New Zealand and other countries is in the low research and development spending from businesses. Unless we do something about it, it will fail us—the export sector, competitiveness, and other levels of productivity will fail. We urge the Government to reinstate the research and development tax credit.

To conclude, Labour supports the bill. As I said, it represented the first stage of the Labour Government’s review of our international tax rules. The focus of several of the reforms is on reducing tax costs for businesses. The bill will also bring tax law up to date with today’s commercial environment, ensure legislation is working as effectively as possible, and protect New Zealand’s revenue base. I commend the bill to the House. Thank you.

AARON GILMORE (National) Link to this

It is a pleasure to rise and talk on the third reading of this bill. Everybody has talked about the sheer size of this bill, and the fact of it being intimidating. No doubt it is, but the potential impact on the parts of the economy are equally potentially huge.

I will talk a little bit about my experience with the Finance and Expenditure Committee on this bill, given that I am a late arrival to the committee, and a late arrival to this bill. As the virgin member of this committee, I was deflowered by this bill. I must admit to being quite shocked when I was given this bill amid taking over from the now senior whip, Chris Tremain. He gave me a file that was about 3 feet thick, and said: “Here you go. Enjoy.” I must admit, being given the bill and having 24 hours to get my head around it was an interesting experience.

I will talk a little bit about some of the positive aspects of this bill, because everyone has been talking about the negative issues. There are some really neat positive aspects. I will touch on two of them in particular. One is around the petroleum mining regime changes. Most people do not seem to understand that petroleum mining last year, in 2008, was our third-biggest export market. We exported $3 billion worth of petroleum products. That put petroleum exports third behind dairy and meat. Many people are surprised by that. This bill has some changes that bring in some new incentives to allow petroleum explorers to be more creative in their expenditure, and that would allow them to spend a little bit more money and effort to drill in New Zealand. That has the potential to make New Zealand incredibly wealthy. We are very lucky and blessed in New Zealand to have the potential to put money into some of our natural resources, such as oil, and maybe find resources off the coast of the South Island, particularly in Canterbury in the South Island, that might amount to billions of dollars. If this bill goes a little way towards that, I think that is a really good thing.

The other aspect that I want to quickly touch on is one that has not been mentioned in the Committee stage or during the other readings. That is the change to the GST treatment of loyalty points. Anybody can have a Fly Buys card, a BP rewards card, an Automobile Association rewards card, or whatever. This bill has some changes to the GST treatment of loyalties schemes. That might not mean much to many people sitting in the House today, but to the average punter it will. My mum, for example, was very excited when I explained to her that she might get a few extra points because the GST treatment on the loyalty points will change. That will mean that those companies that currently account for loyalty regimes, such as our Fly Buys and Air New Zealand points, will have a much better situation and a lot less cost in terms of administering their schemes. We are a Government that is about reducing administrative costs and having more flexibility.

I will touch on a couple of other aspects that this bill deals with. It contains a complicated set of things that do not link together very well, and that has made it quite difficult for people to get their heads around it. Again, many people have mentioned how well the officials have done to put such a complicated set of disparate subjects together in a bill and make it work. I think that many Opposition members have spoken on this bill. They talked about Labour introducing this bill and National carrying it on. I do not really care about that. I care about what we have done collectively. We have put in place a bill that will, in parts of New Zealand, reduce some tax complexity, and that has to be a really good thing.

I also quickly comment—looking at the time tonight—that we have a number of issues to talk about, but many people want to get to a couple of functions. We will soon be blessed by having the great Richie McCaw, the All Blacks, and the Wallabies here. I know that is not the subject of this bill, but I look forward to being able to go there. I commend this bill to the House.