Scott AlastairALASTAIR SCOTT (National—Wairarapa): Thank you Mr Chair. There's plenty to talk about in this part of the bill that's for sure. I'd like to first acknowledge some of the comments that the Minister in the chair Stuart Nash has said when he said that this is a complex piece of legislation. It's a progressive and evolutionary tax legislation that will continue to be developed. I'm just reflecting on what the situation was 10 years ago when the global financial crisis hit the globe. Some of that was down to the fact that there were losses sitting in jurisdictions that people were not aware of where derivatives played a major part in the bankruptcy essentially of banks and financial institutions across the globe because one party could deal with another without the relevant IRDs knowing what was happening in those derivative and credit derivative markets. So we have come a long way. We have come a long way legislatively to ensure that profit sharing and base erosion particularly is less than it was then. But I do acknowledge that this is not going to stop it. This is not going to eliminate it. I acknowledge the Minister's comments when he said this is an evolutionary process because you close one loophole and essentially you will end up creating another or a number of them—perhaps smaller—but you can't eliminate these loopholes.So I commend both sides of the House and the Finance and Expenditure Committee for doing a lot of work in what's been produced here but I do have a couple of questions. The first does relate to those exotics. I'm just unsure or uncomfortable that the select committee has dealt with the type of exotic derivative credit derivative and over-the-counter derivative product that may not be known to any inland revenue department of a particular country. So those exotics—I heard some comment in the select committee but I wasn't especially satisfied. As the Minister says there are some smart people out there a lot of smart people and I just want to be comfortable that all the effort and time and energy has been put into that particular sector that particular group of people who are moving or historically have moved profits from country to country without any real underlying business—without any underlying business.The second point I would like to clarify to the Minister is around the beeps" and this—Dr Deborah Russell: BEPS.ALASTAIR SCOTT: —the "beeps"; B-E-P-S—risk and the high leverage ratio of 40 percent. I'm asking the Minister: what determined the 40 percent? What determined the 40 percent? What's so important about the 40 percent? A subsidiary in New Zealand will quite likely have a very different risk profile to its parent whether the parent's offshore or even onshore. So for example you might have—and it doesn't have to be cross-border. You'll have an owner of a portfolio and that owner might put a—well we know that say for example the dairy industry is a very highly leveraged industry so that might have a leverage appropriate and bankable of say 80 percent. Then we have another type of business that wouldn't be quite so bankable at that rate and maybe you wouldn't want to put too much debt across it at all to make it a very high-risk investment. Perhaps you know goldmining for example or gas and oil exploration even. So you may not want to put a lot of debt across that—two quite different businesses. So by putting the 40 percent blanket across both potential subsidiaries of a parent who will have its own risk for debt and risk rating but to transfer and assume I think is a simple—very simple; it's an easy manageable thing to do—but a potentially unfair measure and methodology and the same can apply to the 15 percent tax rate that is determined to be a low tax rate. So how did the 15 percent tax rate be determined?"