Wood MichaelMICHAEL WOOD (Labour—Mt Roskill): It is a pleasure to take a call to speak on the Taxation (Business Tax Exchange of Information and Remedial Matters) Bill although I must concede some disappointment that the Minister of Revenue has not stuck around after the dinner break. I have very fond memories of one of my first political—Mr DEPUTY SPEAKER: We do not refer to members' presence or not in the House.MICHAEL WOOD: Thank you Mr Deputy Speaker. None the less I have very fond memories of earlier debates with the Minister—my first political debate in fact when we engaged over the question of the Iraq war. I have admired the Minister's tenacity and consistency since then even sometimes in the face of overwhelming facts.I want to begin on a positive note by drawing attention to the aspects of this bill that Labour supports. Of course we are supporting this bill with some reservations which I will come to later. Those positive aspects have been noted by colleagues earlier and they relate to Part 2 and Part 3 of the bill. Across the House there is very strong support for measures to simplify and streamline taxation matters for businesses particularly small businesses in respect of provisional tax. I think that is something that we can all applaud across this House.As we have heard during the speeches this evening various parties—and certainly my own party the Labour Party—have for a long time advocated for these kinds of measures. Every single one of our constituencies across the country has small businesses often operating with real constraints people putting themselves on the line doing what they can to contribute to our community and employ people and the question of provisional tax is a difficult one for them. Cash flow can be lumpy and unpredictable at the very best of times. What we know about most of the small businesses—and there are about 110000 that fall in this category—is that most of them want to do the right thing. Most of them want to contribute to our community. Most of them want to pay the tax that they know they owe to keep our society and our community going but we have got to find ways of making it easier and more manageable for them. So the measures in this bill that lessen penalties that streamline the system and most importantly that deal with those tricky things around provisional tax are to be commended and the Labour Party fulsomely supports them.But moving on to the reservations to me the question here is about doing a job and doing it properly the first time; not identifying a problem and doing half a job of fixing it up. In respect of foreign trusts that is what we are seeing in this bill. What we have at the moment is no transparency about foreign trusts in our country. This bill gives us some transparency but it is most certainly not enough transparency. It is my view that an important starting point is to define the problem and to actually concede that there is a problem here. That might be the issue at hand because of course the Government was very very reluctant to concede—and very very tardy in conceding—that there was a problem to begin with.We have to remember that it was back in 2013 that officials from the IRD came to the Government and said: We have a serious issue with foreign trusts. It's not just some matter of technical interest. This is something that is putting New Zealand's international reputation on the line." The IRD officials came to the Government came to the Minister with that view which they had formed—and they had formed it on the basis of good evidence. They had been watching they had been observing and they had seen that foreign trusts had increased from 6000 to around 12000 between 2006 and 2012 and they took that to the Minister. And what happened? Well we know what happened. We know that there were discussions between the Minister and the Prime Minister and we know that the work that IRD commenced in this area got cut off at the knees.And then we went through that farcical period where we had the news of Mossack Fonseca raining down through our media. We had our leading business journalists people like Matt Nippert and Fran O'Sullivan pointing to the fact that there was a significant problem in this area—Chris Bishop: Matt will be happy. "Leading journo"—Matt will be happy.MICHAEL WOOD: Foreign trusts were making a mockery of New Zealand's reputation which is something that Mr Bishop is appalled by. I can see that right now.But the Government continued to resist. The former Prime Minister Mr Key—what did he say? He said that we had transparency. He said that it was economic sabotage to be considering bringing in greater transparency to the foreign trusts regime in New Zealand. But the heat simply got to be too much for this Government. Eventually after huge pressure we got the Shewan report. What he said was very clear. He said that our existing rules were not fit for purpose—they were not fit for purpose. There is one very important thing that he added on to that. He said that they were not fit for purpose in respect of our cooperation with other jurisdictions. I want to return to why that is important a little later.I want to turn back now to what the bill actually does deliver because it does deliver some transparency. It means that we will have a record of the names of trusts the settlement details and trustee and settlor contacts. That is a good start. It means that the police and the IRD where they have reason to believe that there is something criminal or improper going on have the ability to pull up that information.But there is an obvious "Rumsfeldian" problem and that is the problem of unknown unknowns. What we do not have is a truly open and a truly transparent register which is the obvious thing to do. It is the obvious thing to do. What we are relying upon is investigating authorities from other regimes from other jurisdictions knowing that there is a problem and sort of having enough detail to mount a bit of a fishing expedition. I have not heard in any of the speeches that have been provided by the Government in this debate any good reason whatsoever put forward for that lack of transparency. Labour is asking that question and when Labour has the ability to make a change here we will ensure that foreign trusts are fully searchable through a register. That is where I want to come back to the question of being not fit for purpose—not fit for purpose—according to Mr Shewan in respect of our cooperation with other jurisdictions. How are we enhancing that cooperation with our friends and allies if they sort of have to sniff around and ask the right questions to try to uncover details of potentially criminal dealings and tax evasion from their citizens taking advantage of New Zealand's foreign tax trust law status?The question has to be why when New Zealand companies and New Zealand charities are on a fully searchable register we would provide this level of protection to foreign trusts. Mr Bayly speaking earlier spoke of foreign trusts as though they were businesses. Well they are not—they are not. Foreign trusts do not contribute anything to our country. They are not paying taxes to support our system here in New Zealand. These are wealthy individuals from overseas jurisdictions who are often hiding wealth in highly unethical ways and there is plenty of literature on that. Why would we give them a greater cloak of secrecy than we give Kiwi charities and companies in New Zealand? That is something that this Government has singularly failed to answer and that needs to be resolved.As has been outlined by my colleagues the bill also stops short of implementing phase two of the anti - money-laundering provisions. Again there has been no explanation offered on that in the debate in this House. What we always hear from the Government benches whenever regulations are introduced whenever there is a suggestion that a regulation should be introduced is this argument that you have got to be very careful about that because smart lawyers will always find a way round it. That is often given as a reason for not introducing public-good regulations.What we are doing in this case is we are leaving gaping big holes that we can identify. We are not bringing real estate in we are not bringing the lawyers in and we are not bringing the accountants in when there is plenty of evidence that if you close off one avenue that is where the hot money from overseas will go to be laundered.Is it still a big issue? Absolutely yes it is. My colleague Mr Robertson referred to the 1Malaysia Development Berhad case which has made major international news again affecting New Zealand's reputation. It has impacted on our courts system. You have to ask why a foreign trust that owns a Bombardier plane has penthouses in New York has hundreds of millions of dollars of these assets in overseas jurisdictions—what is the point of that trust being registered here in New Zealand? It does absolutely no good for our country and it can only raise the suspicion of our friends and allies on the international stage that our institutions are being used to rip them off.So in that respect this bill does not meet that test of Mr Shewan's of enhancing our reputation and ensuring that we are cooperating with other jurisdictions that we would want to be cooperating with. I might note the comments from Mr Michael Littlewood from the University of Auckland who noted that around the world we have tens if not hundreds of billions of dollars sloshing around internationally in these trusts. I say that we should have absolute transparency over what is happening there.I just want to finish by saying that the Prime Minister began the year by saying that the Government had reached its limits and it is kind of like that with foreign trusts as well. They knew there was political pressure they had to do something but they have reached the limits and they are not delivering the transparency that we need. Thank you.Bill read a third time."