Investment Opportunities
Mr Speaker,
The lift in private savings will benefit from a sound savings environment. Investors need both confidence to invest, and quality, reliable investments to invest in.
The collapse of the finance company sector was a major setback to confidence.
Since then, the Government has materially improved the savings environment.
This includes creation of the Financial Markets Authority, overhaul of securities law, regulation of the insurance sector and of financial advisors, and prudential supervision of non-bank deposit takers.
In terms of investment opportunities, both the issue of Earthquake Bonds, and the offer of equity to New Zealand investors under the Mixed Ownership Model, will help deepen the local capital markets.
In addition, the Debt Management Office will issue a new, long-dated, inflation-indexed bond. This reflects clearly expressed demand from long-term investors.
The local government funding agency will start operating later this year. It will be a collective vehicle, providing cheaper funding for local body projects as well as more liquid, better diversified assets for investors.
Mr Speaker,
This year the ACT Party will bring two challenging Bills to the House, which the Government will support to select committee.
The Regulatory Standards Bill seeks to improve the quality of regulatory processes. It includes a mechanism for providing transparency around the making of regulations, and an incentive mechanism to ensure compliance with the process.
The other ACT Party Bill is the Spending Cap (People's Veto) Bill. This Bill seeks to cap real per capita government spending.
In both cases the Government will give the Bill, and the submissions on it, careful consideration.
Mr Speaker,
The final elements of last year's tax package have now come into force, including tighter income definitions related to State assistance and reducing the company tax rate to 28 per cent.
This low rate of tax on businesses demonstrates that we are prepared to back them and recognise that business is the growth engine in a modern economy.
Mr Speaker,
Last year's review of the thin capitalisation rules did not include banks, which are subject to a separate regime because of their high gearing.
Having reviewed the banking sector, we have decided to lift the minimum level of non-deductible capital from 4 per cent to 6 per cent, which is more in line with international norms.
This will provide estimated revenue of $100 million over the next four years.
I thank my colleague, the Hon Peter Dunne, for his ongoing work in improving our tax system.
