Parker David: Westpac New Zealand Bill — In Committee 
Parker David: Westpac New Zealand Bill — In Committee 
[Volume:672;Page:18811] 
Hon DAVID PARKER (Labour) 
: 
 The point I want to have some more information on from the member in the chair Craig Foss on this occasion is the preamble to the Westpac New Zealand Bill we are considering. Recital (5) states: “Legislation is the only means by which these assets and liabilities of Westpac Banking Corporation can be vested in Westpac New Zealand efficiently and economically.” When I read the phrase “efficiently and economically” I wondered what was meant by it. So I looked at the report on the bill that came from the Finance and Expenditure Committee and it says no more than that; it just states that legislation “is the only means by which the vesting of these assets … in Westpac New Zealand can be effected efficiently and economically”. The preamble states that and then the explanation from the Finance and Expenditure Committee in the commentary on the bill does not say what that means in practice. Does that mean it is the only way that it can be done tax-efficiently? If that is what it is talking about I want a bit more information about that because we have had on occasions the banks of New Zealand in New Zealand avoiding their fair tax liabilities and having to be taken through the courts before they will pay the proper amount of tax on their profits despite the fact that they have made many billions of dollars of profit in New Zealand. I have no problem with them making profits in New Zealand but when they do they should pay the proper amount of taxation. 
The reason that I inquire about this is that if we are going to be transferring assets across it is relevant as to the price at which they are going to be transferring those assets. I want to make sure that what is economically efficient from a tax point of view for the bank is actually fair to the New Zealand tax system. If banks are able to sell those assets in an excess of their value and revalue them in the future or realise the loss on those assets in the future then that therefore decreases their future profitability because they have effectively transferred those assets in at an inflated value and realised the loss that they have then used to offset against their New Zealand - based income and they would be able through that means perhaps—and I am not sure about this—to deflate their future income and therefore reduce their future tax liability under the New Zealand tax system. 
If that is what is meant by “efficiently and economically” then I am not sure that I agree with it. But I am not sure whether it is so I would like the member in the chair to clarify that for me because the report back from the Finance and Expenditure Committee sheds no light on it whatever and just parrots the phrase that is in the preamble itself—that is it asserts that it is the only way that it can be done efficiently and economically but does not tell us why that is the case. If the Minister—I mean the member—could please take a call— 
Craig Foss 
: I like “Minister” better. 
Hon DAVID PARKER 
: Well unfortunately that might be a bit premature at the moment. Could the member please take a call. I would hope that the member in the chair as the sponsor of this bill can inform the Committee as to why it is the only means by which this can be done efficiently and economically. He could tell the Committee what protections are in place to make sure that those assets are not transferred at an inflated value that puts at risk future tax revenue that would be properly payable on future profitability of the banking sector. 
I will turn to another sector while I have the floor. Yes it is true that the New Zealand banking sector performed better than some other sectors but it was not perfect. It did actually require a bank guarantee and it did require the Reserve Bank of New Zealand to step in and purchase bundles of securities from the banking system because the banking system could not roll over loans to support those securities that they had out in the New Zealand markets. Although it is true that the New Zealand banks did better than certain overseas banks it is not true that they were not in need of some Government support. They did require the guarantee of the New Zealand taxpayer in respect of deposits both at wholesale and retail levels and they did require the intervention of the Reserve Bank to maintain liquidity by buying bundles of securities from banks so they could use those moneys to repay loans to their overseas lenders. 
Yes it is true that the banking system was relatively sound in New Zealand compared with some of the problems experienced in other parts of the world but it is not true that they were not in need of Government support and I would just like to put that on record given some of the things that have been said in praise of those banks. It is not a criticism of those banks; I just want to put it on record that they were not perfect either. It would have been worse had they in terms of the risk that was faced by New Zealand depositors in the event of default by the bank had the—