Swarbrick Chlöe; Parker DavidCHLÖE SWARBRICK (Green—Auckland Central): E te Māngai tēnā koe. Tēnā koutou e te Whare. I didn't intend to actually take a call during this part of the debate but the reason that I have is because of the type of debate that we're presently having around taxation and around tax loopholes and particularly with regard to trusts. So I have a direct question for the Minister here and here I think it is really important to refer to what we are talking about in Part 2 which is what has effectively as alluded to by the National Party Opposition been a part of this legislation that's been flagged by the Minister with a different hat on as potentially in breach of the New Zealand Bill of Rights Act. Notably the Privacy Commissioner has said that he's not all too concerned about it because it is manageable but none the less. So here we have in Part 2 effectively a piece of the puzzle which enables greater transparency of trusts in Aotearoa New Zealand. That's something that the Green Party welcomes. It's something that is long overdue. The reason for that as I alluded to just last night is that the kind of situation that we ended up with in 2000 when then Minister of Finance Sir Michael Cullen brought in higher income tax rates without amending anything around capital gains or wealth tax or otherwise is that eventually wealthy people—as actually interestingly was just alluded to by the Minister in the chair—through convoluted means were shifting their wealth into trusts and then purchasing property which in turn resulted in a 17 percent inflation in the price of property in this country which I may add is the major driver of inequality.So I just want to ask when the Minister has advice—which all of us now have access to because it's been tabled—for a preference for option five as noted in this advice from officials—and I'll quote it for those who don't have the privilege of access immediately to this: Option five is for the 39 percent personal rate to be implemented alongside a corresponding increase in the trustee income tax rate the trustee rate and with consideration of integrity measures. This is the Inland Revenue's preferred option." Why did the Minister take the track of attempting to make trusts all the more transparent—noting as well that he's recently been in the media saying that this is potentially an avenue for tax avoidance and that he may potentially look at further down the track implementing that 39 percent rate on trusts themselves. If he already had this advice why did he not pursue that to begin with? Finally I think it's also really important to note that with the way that this is currently formulated again—again—it must be emphasised that the bill is not going to achieve the Government's own intended objectives: that of raising revenue. Here I would speak again to the point around trusts where it has stated in this document from officials that the options which reduce the scope for behaviour—that is of tax avoidance—will increase the benefits—the proposal as shown in table two. Raising the trustee rate at the same time as the top personal tax rate is expected to raise $3.7 billion in total over the forecast period. That's $3.7 billion over the next five years as opposed to the $2.2 billion. We've also been speaking about tax avoidance and we're also here speaking about how trusts can be used as a part of that picture.So I'm just really imploring the Minister to answer why he didn't go for the simplest option for what was already being recommended by officials. Was it simply a matter of what was the easiest thing to progress politically? Because ultimately there is a massive opportunity here as outlined in his own documents as recommended by officials which would simplify the tax system and it would not be necessary to actually engage in these transparency measures although they are welcomed. I'll just conclude by referring to the Law Commission's review and report of trusts. Here I quote: "One reason for the popularity of trusts is that there is favourable tax treatment of trusts in New Zealand compared with other jurisdictions … New Zealand now does not have any estate duty gift duty stamp duty or capital gains tax." This is why we have these problems and I look forward to hearing the responses and the answers from the Minister who I know is a big fan of Thomas Piketty and understands why we have the massive wealth disparity that we do in this country today which will not be resolved by this legislation.Hon DAVID PARKER (Minister of Revenue): One of the main reasons why we have chosen to gather more information about what is happening with trusts rather than jumping to the conclusion that we should increase the trust rate to 39c in the dollar was that that was the promise that we made to the electorate during the election. We knew that if we were to not follow through in what we promised to the electorate we would be criticised for doing so and that some people would have felt that we had not honoured our promises to the electorate. We like to honour our promises to the electorate so that's the main reason. There is another reason. At the moment there are legitimate reasons for trusts. A thing that I think most members understand and feel sorry for the circumstance of is where you have a disadvantaged child often through physical or intellectual disability. Trusts are used to protect the future interests of those children by putting aside money for them in the future when they need it perhaps when their parents have passed on. At the moment where that income for reasons of the child not being entitled to that money until a later date cannot be treated as beneficiary income that child despite their terrible circumstance is already effectively in respect of the earnings to that trust paying 33c in the dollar. If we were to have moved on that to move the trust rate to 39c in the dollar we would have been making that problem worse. So these things are complex. Those are some of the reasons why we've reached that."