Boscawen John: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
Boscawen John: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
[Volume:656;Page:5994] 
JOHN BOSCAWEN (ACT) 
: 
 I would like to comment on what Mr Nash has just talked about. He talked about the reason for the change to the taxation of mining by petroleum companies arising out of a loophole in the legislation. Let us be absolutely clear that the ACT Party supports the decision to close that loophole. The ACT Party supports that decision and I believe that is the position of all parties in the House. As Mr Nash said we understand there was an incident where many hundreds of millions of dollars of expenditure were deducted against New Zealand petroleum income against the New Zealand tax base and that that loophole needed to be closed. The ACT Party is absolutely clear on that issue. However the ACT Party is also absolutely clear that there should be no retrospective tax legislation. A company should be able to plan its affairs based on the taxation legislation and not have the law changed so its tax position subsequently changes. 
I listened very carefully to the Minister’s comments when he said he certainly would not be commenting on individual taxpayers’ positions. He said it would be very unwise for him to do so. I think he also said it would be very unwise for other members of this House to do that. But I have previously alluded to Greymouth Petroleum and I want to talk for a few more minutes about that situation. I do so because Greymouth Petroleum is a New Zealand company that we should celebrate. It is a small petroleum-mining company and I understand it employs around 100 people. A lot of its exploration is in the Taranaki region. That company has gone out to South America and lodged bids for petroleum-mining rights in Chile. It has been successful in doing that against worldwide competition. That is the sort of thing that we should promote and support. I note that the then Minister for Economic Development in the previous Labour Government congratulated Greymouth Petroleum on winning and securing that tender and the right to explore for petroleum off the coast of Chile. 
The current Minister has been helpful by saying he wants to see evidence of contractual commitments and he talked about the need for Greymouth Petroleum to start talking. I think his words were that the company needed to start talking to officials. But the company has been talking to officials for close to 18 months. It was talking to officials about the taxation treatment of its mining exploration costs before 4 March 2008 when the law was changed. For example it wrote to the Inland Revenue Department on 4 May this year to advise that it had lodged its tenders on 9 October 2007 and it recorded the fact that it had issued a press release on 17 November 2007 advising it had been successful with the tenders. 
The ACT Party is concerned about a New Zealand company that has gone out on the worldwide stage entered into tenders posted what has since become a US$400000 bond then under fear of forfeiting that bond subsequently formally signed contracts. We should be in no doubt whatsoever that as of 16 November 2007 when the Government of Chile announced that the tenders had been accepted first the company was up for the loss of its US$400000 of bonds if it did not complete the work second it could have been sued for non-performance and for damages and third it suffered the loss of its reputation. One of the problems I understand that the Inland Revenue Department has had is that the contracts concerned are in Spanish and I believe a letter was delivered to the department yesterday. It was certified by a senior associate of Minter Ellison Silvana Schenone who speaks Spanish. That person certified what those contracts said. 
Let me finalise my speech by saying the ACT Party does not support retrospective taxation legislation. We are under no doubt whatsoever that there was a binding commitment on Greymouth Petroleum to proceed once those tenders were announced as having been accepted on 16 November 2007 which of course is some 4 months before the taxation change was alluded to. Thank you Mr Chairman.