Brownlee Gerry: Annual Review Debate — In CommitteeText is incorporated into the Bound VolumeBrownlee Gerry: Annual Review Debate — In Committee[Sitting date: 13 April 2016. Volume:713;Page:10531. Text is incorporated into the Bound Volume.]Hon GERRY BROWNLEE (Minister of Defence): I do need to respond to some of the comments made by the previous speaker David Shearer. I would agree with him that New Zealand does punch above its weight in many international fora. I would agree with him that New Zealand does have a significantly valued reputation among countries of similar minds when it comes to some of the big issues that the world faces. We do have a voice in forums that is considerably greater than our population might normally or most usually allow. But I think the latter part of that speech about the external relations review was fundamentally flawed.The first point is that trust law in New Zealand is there for New Zealanders not for anyone else. It is there for New Zealanders who for one reason or another find it a necessity or prudent to put their assets into a trust. It is not as if it is unusual. There are large numbers of New Zealanders who choose to do this. When they do so they are subject to New Zealand tax laws because they are taxed as the settlor of the trust. So inside the New Zealand structure there cannot be avoidance in our tax jurisdiction. If Mr Shearer and his colleagues are making a case that we should change those laws and therefore bring in more pernicious laws for New Zealanders in order to protect the tax base of foreign countries then I think they are seriously missing the point—seriously missing the point.What Mr Shearer said is that there are trillions of dollars being hidden in New Zealand trusts. That is not true. That is a fundamental misrepresentation of the entire situation. What I would further say is that if there are people from offshore choosing to protect their assets by virtue of having a New Zealand trust and they are nominated as the settlor they will pay tax in New Zealand. If that tax means that there is some avoidance in another jurisdiction it means that that other jurisdiction has got its tax laws in such a complicated state that people cannot work effectively with them.Let me give you a small example. The first point is that if you are a low-income worker in New Zealand with an income below some $40000-odd a year your tax rate is 17.5 percent. If you are a very high-income earner in New Zealand your maximum rate exclusive of GST is 33 percent. If you are a low-income earner as I said under about the $40000 mark in an average OECD country your rate is 35 percent. If you are a high-income earner it could be 90-plus percent. So you have to ask what we are trying to do here.What the Labour Party is arguing is that because some people take advantage of registering a trust in New Zealand and as settlors are paying tax in New Zealand we should change the laws in this country to ensure that all New Zealanders are caught up in some higher tax rate. What it signals is the Labour Party has no real perspective of where New Zealand sits in the world—David Shearer: Why don’t you read the paper?Hon GERRY BROWNLEE: —and wants instead to raise the tax levels in this country to some of those highly pernicious rates. No other conclusion can be drawn from the rubbish that has been talked in the House in the last few days.The member might want to scream out at the top of his head: “Read the papers.” Well I have read the papers and I have got to tell you that he is making a wrong analysis. I am sure that as he stalked the halls of the United Nations in recent weeks with the United Nations job adverts clenched in his fist he was not saying to those foreign jurisdictions: “We’re coming after you for your tax rate.” I am sure that that is not what he was saying.We do have a strong reputation in New Zealand as being a fair country a reasonable country where people can live their lives in a peaceable fashion. We are a country that enjoys extraordinarily advantageous trading conditions throughout the world because successive Governments have chosen that for this country and they have gone aggressively after those trade deals. We have very very good country-to-country relations with other countries throughout the world and that is because they look at us and how we operate in this country—no matter who is in Government—when it comes to external relations and they see that there is a predictable path or at least they have up until now.What we have at the moment is a Labour Opposition that is totally opposed to our engagement in Iraq is totally opposed to anything that might you would say advantage New Zealanders in a domestic sense through our trust laws and in general is quite confused about a picture around trade because it does not want to support the Trans-Pacific Partnership (TPP) agreement. There are two gentlemen over there who do want to support it. One of them is allowed; the other is not allowed and he is going to tolerate that. He is going to say: “No I’ll accept that. I’m prepared to sacrifice my beliefs on the altar of socialism. I’ll just give up what I really think while my bench mate here gets an opportunity to go out and campaign for the mayoralty of Auckland on the basis that he’s in favour of a growing economy.” It is quite an extraordinary situation.It is always sad I think when the external relations of a country become caught up in the domestic politics of a country. There will always be policy differences about how there is an interaction—between one country and another; one institution and another—that may change with a Government. But generally the flavour of the way a country operates the reliability of a country and the fact that you can take a country’s political statements—or should we say international statements by its politicians—for what they are is extremely important. So it is somewhat disappointing that Mr Shearer who had a significant international background prior to his coming to the House would deliver a speech today that starts to destroy that level of trust.The Government is—[Interruption] Oh look at this. You see over there the Hansard will record the sighs and the moans from people saying: “Oh that’s not true.” Well stack it up and have a look at it. Labour members do not like the idea that a law that advantages New Zealand is being used by others to advantage their situation. They do not like the TPP agreement—they are dead against that. They are not going to have expanded trading opportunities for New Zealand. They do not want to acknowledge that the scourge of Daesh on the world is a terrorist organisation that could well affect a country like this and therefore we should be involved. No not from the Labour Party point of view—it does not want to be part of that. And when it comes to a range of other engagements it is a party that wants to deny its past.This Government is extremely progressive. This Government recognises that sometimes partisan politics gets set aside when it comes to dealing with our relationships in the international sense. There is no better example of that than this week when the Government was quite proud to throw its weight behind the Rt Hon Helen Clark in her bid to become Secretary-General of the United Nations and I personally think she has got an excellent chance. I think if we look at the various geopolitical arrangements particularly around Europe as per say the United States she is in a very strong position and this Government will support her.I wonder what the Labour Party really thinks about that because in her there is a leader who has said yes to the TPP agreement yes to a fight against Daesh and yes to a more international outlook for a country like New Zealand. That is the sort of leadership that kept the Labour Party in power for 9 years; it is the opposite of that which has got it in such a bad state at the present time—almost leaderless totally directionless and almost certainly consigned to a longer period to think about the types of policies that it should be offering to connect to New Zealand. It is sad that it is so starkly shown when it comes to external relations where we should expect a much higher level of understanding and commitment to us as a nation.Even this week we will see the Prime Minister going to a country like China. We have got differences and we make those differences known but we also know that this is a country that is going to be one of the strongest emerging economies in the world—it already is strong; it will only get stronger—and to be encouraging it to see us in a light that says “equals” in a light that says “reliable” and in a light that says “We are interested.” is very important.