Little Andrew: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeLittle Andrew: Oral Questions — Questions to Ministers[Sitting date: 05 April 2016. Volume:712;Page:10141. Text is incorporated into the Bound Volume.]2.ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that New Zealand is not a tax haven because “New Zealand has full disclosure of information” given Cone Marshall a law firm specialising in establishing trusts for foreigners says “The identity of the settlor need not be disclosed and the trust deed is not registered with any tax or Government authority” and “There is no obligation to file any trust accounts with any person or institution or to have such accounts audited”?Mr SPEAKER: As I call the right honourable Prime Minister my office has been advised that this answer may well be longer than normal.Rt Hon JOHN KEY (Prime Minister): Yes because there is more than one step in the disclosure process. Initially a New Zealand resident trustee must submit a foreign trust disclosure form an IR607 which simply records the name of the trust and the trustee’s contact details. However the trustee must also keep detailed financial and other records including the trust deed; details of settlements and distributions including the recipient’s name and address; details of the trust’s assets and liabilities; the identities of the settlors and the beneficiaries of the trust; and money that the trust receives and spends. The Inland Revenue Department can get this kind of information and will give it to the tax authorities in any other country if requested under a relevant tax agreement or proactively if that country wishes. I am advised by the Inland Revenue Department that New Zealand has always been able to comply with these sorts of information requests from treaty partners. This is certainly full disclosure of information. The income in these trusts is quite rightly outside our tax base. It is foreign income earned by foreigners. It is up to other tax authorities around the world to enforce their own tax laws on this income and on their own residents. We can help them do that by providing detailed information to them on request about trusts that are administered from New Zealand. I make the second point which is that we automatically disclose that information to Australia. It is the one jurisdiction that has asked us; no other jurisdiction has. These disclosure regimes which by any definition are broad and deep were the ones passed by the Labour Government in 2006. [Interruption]Mr SPEAKER: Order! [Interruption] Order!Andrew Little: Is he seriously telling the House that the only obligation that a foreign trust is obliged to make which is completion of an IR706 form and nothing else constitutes a full disclosure regime for this type of vehicle?Rt Hon JOHN KEY: For a start off it is an IR607 form not an IR706 form. And secondly as I pointed out in the answer which was very long and very detailed that is but the starting point which requires them to keep hugely detailed information of what is in there and report that when required. Those are the rules that Labour thought were right when it passed this disclosure in 2006. If the member is now telling us that Labour got it wrong he should get on his feet and apologise.Andrew Little: Why has he failed to heed the warnings from the New Zealand Law Commission the Chartered Accountants Australia and New Zealand the OECD and the Inland Revenue Department that New Zealand’s weak offshore tax laws allow wealthy foreigners to subvert laws and dodge taxes?Rt Hon JOHN KEY: I am prepared to accept that I made one mistake and that is relying on Labour. It passed the rules.Andrew Little: Can he guarantee that no offshore trusts registered in New Zealand are being used to hide illegally obtained assets or dodge tax?Rt Hon JOHN KEY: No Prime Minister can give that assurance any more than Helen Clark could have when this law was passed no doubt with the support of David Parker in 2006. What is quite clear is that New Zealand gives all of that information not only to Australia but to any jurisdiction that asks for it. We have been able to comply with every jurisdiction that has asked. I also note that we have 40 double tax agreements and 11 information-sharing agreements one of which includes Malta.Andrew Little: What effect does he think it has on New Zealand’s reputation when we are viewed as a tax haven harbouring billions of dollars and his only reaction is to boast that it earns us $24 million a year in lawyers’ fees and accountants’ fees?Rt Hon JOHN KEY: New Zealand is not a tax haven. Tax havens do not have the disclosure regimes that New Zealand has. It is as simple as this: if it is such a bad idea it was Labour in 1988 that passed the trust legislation it was Labour in 2006 that had—Rt Hon Winston Peters: Point of order.Rt Hon JOHN KEY: —the disclosure—Mr SPEAKER: Order! [Interruption] Order! When I rise to my feet it requires the Prime Minister to cease his answer.Rt Hon Winston Peters: I raise a point of order Mr Speaker. For countless answers now the Prime Minister has departed from doing his job of answering the question and attacked another political party for a law that is 10 years old and 7 years after he got the job. Please ask him to act responsibly and answer the questions he is being asked.Mr SPEAKER: Order! The Prime Minister addressed the question almost immediately and then because he was then responding to interjections which were not—[Interruption] Order! Because the Prime Minister was then responding to interjections it is inevitable that some politics will enter into the argument.Andrew Little: How does he expect to go to international forums and stop multinational corporations dodging their New Zealand tax when he is letting foreign tax-dodgers use New Zealand as a tax haven?Rt Hon JOHN KEY: Firstly I believe the latter part of the question from the member to be wrong. Secondly in all of the international forums that I have been in in the nearly 8 years that I have been Prime Minister no one has ever raised this issue with me. I am not aware of them ever raising it with a Minister of Revenue and as I said in 2013 New Zealand was given a clean bill of health by the OECD.James Shaw: Does he acknowledge that the Inland Revenue Department said in 2013 that “our foreign trust rules continue to attract criticism including claims that New Zealand is now a tax haven in respect of trusts.”?Rt Hon JOHN KEY: I have not seen the particular quote but as I said earlier the Inland Revenue Department has come up with a whole range of things it wants on the work programme and I would have thought the most important thing was making sure that New Zealanders actually pay their fair share of tax and that has been the priority.James Shaw: Is he disagreeing with Inland Revenue Department’s advice in 2013 that the way forward is to strengthen our disclosure and reporting requirements with New Zealand foreign trusts?Rt Hon JOHN KEY: What the Government is doing is working with the OECD on its base erosion programmes. It is quite happy to take advice and suggestions from others and over time there may be arguments about things we could strengthen. But if you look at what the requirements are under IR607 they are extremely broad and deep.James Shaw: So is he opposed to greater transparency for New Zealand foreign trusts when greater transparency will only hurt people using foreign trusts for illegitimate purposes?Rt Hon JOHN KEY: Clearly not because we have the ultimate in disclosure when it comes to Australia because we give it full disclosure without even making reference to the Australians because they ask for it. We would do it for any other jurisdiction that asked us to do that. If any country wants to come to New Zealand and have the same requirements as Australia has asked us for we will provide it with all that information. As I said in my answer to the primary question which was quite long New Zealand actually collates a great deal of information and it shares it with every jurisdiction that asks us.James Shaw: So would the Prime Minister agree with me that for foreign trusts with nothing to hide they should have nothing to fear from greater transparency?Rt Hon JOHN KEY: In the end if a foreign trust is established in New Zealand it is really important that it does understand that we have a full disclosure regime. It is for it to assess that. We are quite different from the sorts of places that are tax havens where they do not have disclosure regimes.James Shaw: I seek leave to introduce a member’s bill in my name that would end the secrecy around foreign trusts in New Zealand by imposing a registration and disclosure scheme on foreign trusts to be set down as members’ order of the day No. 1.Mr SPEAKER: Leave is sought for that purpose. Is there any objection? There is objection.Andrew Little: How proud is the Prime Minister of the company he is now keeping when the Panama Papers lump New Zealand in with such auspicious company as Belize the Seychelles and Costa Rica in the list of 21 tax havens?Rt Hon JOHN KEY: I think New Zealand can stand quite proudly on the regime that it runs here in terms of disclosure. I am sad that the member is running a country mile from what his colleagues around him did but no wonder they are quiet as—Mr SPEAKER: Order! That answer will not help the order of this House.Andrew Little: Does he not see when faced with the biggest tax-dodging scandal in history and when New Zealand is named internationally now as a tax haven and his only response is to side with the mega-rich tax dodgers rather than cleaning it up under the law that his moral compass is completely broken?Rt Hon JOHN KEY: The outrage would be a little bit better if the answer was not actually correct and I will read it to the member again because he clearly did not hear it the first time. Initially a New Zealand resident trustee must submit a foreign trust disclosure form an IR607 which simply records the name of the trust and the trustee’s contact details. However the trustee must keep detailed financial and other records including the trust deed; details of settlements and distributions including the recipient’s name and address; details of the trust’s assets and liabilities; the identity of the settlors and the beneficiaries of the trust; and money that the trust receives and spends. If that is not full disclosure when it is given in totality to any jurisdiction that asks for it I do not know what is.Andrew Little: I seek leave to table a document. It is the OECD 2013 report on New Zealand tax compliance which makes criticisms of our foreign tax regime.Mr SPEAKER: Before I put the leave I just want to check. Is it freely available on the OECD website?Andrew Little: I cannot confirm that. It has been supplied to me in hard copy only.Mr SPEAKER: On the basis that it cannot be confirmed I will put the leave and the House can decide. Leave is sought to table that particular 2013 OECD report. Is there any objection? There is not. It can be tabled.Document by leave laid on the Table of the House.Grant Robertson: I seek the leave of the House to table a combined Inland Revenue Department and Treasury paper entitled Tax Policy Report: Taxation of Multinationals dated 15 August 2013 in which the department says: “To protect our international reputation it may be necessary to strengthen our regulatory framework for disclosure and record-keeping.”Mr SPEAKER: Leave is sought to table that particular Treasury and Inland Revenue Department report. Is there any objection? There is objection. [Interruption] Order! I have put the leave. Any member has the right to object.