McNair Craig: Taxation (Base Maintenance  and Miscellaneous Provisions) Bill — Second Reading 
McNair Craig: Taxation (Base Maintenance  and Miscellaneous Provisions) Bill — Second Reading 
[Volume:626;Page:21438] 
CRAIG McNAIR (NZ First) 
: 
 Like the member Harry Duynhoven I was surprised to see another Labour MP apart from the Associate Minister of Revenue—and a Minister normally takes the initial call—get to speak on a bill such as this. 
I want to make just one other point before I get specifically on to the bill. The National member Pansy Wong talked in her speech earlier about the small-company tax unit this Government is setting up. Well that is not the only such unit this Government has started to set up. Obviously in the last couple of weeks we have just seen the Government set up after pressure from New Zealand First a small Immigration Service unit as well. The Government is into setting up small units. 
Pansy Wong 
: That’s not tax. 
CRAIG McNAIR 
: Obviously as Pansy Wong has said that is not exactly about tax. 
Pansy Wong 
: It is. 
CRAIG McNAIR 
: Well it is I guess. 
Pansy Wong 
: It’s funded by tax. 
CRAIG McNAIR 
: Yes that is right—it is funded by tax. The commentary on the bill states: “The bill introduces new thin capitalisation rules to prevent foreign-owned registered banks operating in New Zealand from accessing interest deductions if their capital in New Zealand is insufficient to support their operations in this country and their offshore investments made through New Zealand.” It also states: “Banks also use cross-border financing arrangements funded by debt to generate income that is not subject to New Zealand tax.” and that is a very worrying thing. It continues: “The banks then claim a deduction for the interest expenses on the resulting debt which reduces their New Zealand tax liability.” 
Last night the Hon Bill English former leader of the National Party former Minister of Finance former Minister of Health and National’s current spokesperson on education made a very interesting admission. He said that National had taken the people for granted and that Labour has too. That is what that member said last night in the debate on the performance and current operations of Crown entities public organisations and State enterprises. I believe that that was a very honest admission. The member was being honest with us and I think it is a very relevant comment in relation to this very bill that we are talking about tonight the Taxation (Base Maintenance and Miscellaneous Provisions) Bill. 
The reason why I believe that it is a very relevant comment is that for the last 7 or 8 years or even longer than that New Zealand First has been highlighting this issue to successive Labour and National Governments. Month in month out and year in year out in this Chamber and at the Finance and Expenditure Committee our leader the Rt Hon Winston Peters and others in New Zealand First have highlighted this issue with the Government of the day. The question I ask is why nothing was done about this issue for such a long period of time. New Zealand First quite openly supports this bill and I want to restate that support tonight because the bill is a step in the right direction. It provides something that we have been highlighting for the last 7 or 8 years or maybe even longer. 
It is actually quite interesting that we are only 3 months out I think from an election— 
Hon Richard Prebble 
: Oh I don’t know we might be a month out. 
CRAIG McNAIR 
: We might be a month out—say a maximum of 3 months—out from an election and this Government feels all of a sudden the need to pass this bill under urgency. As I said for years and years New Zealand First has highlighted and raised this issue with the Government. The Rt Hon Winston Peters started raising these kinds of issues right back at the time of the wine-box inquiry and we have been constantly raising them ever since and nothing has been done about it. We come to 2005 and a maximum of 3 months or maybe a month or 2 months out from the election all of a sudden the Government feels the need to pass this bill through the House under urgency. I think it is quite telling and also very interesting that the Government is doing this at such a time. 
I said earlier that this bill introduces new thin capitalisation rules and other measures to stop banks from avoiding tax basically—if people want to interpret what I said earlier and make it pretty simple. To cut a long story short this bill is introducing these rules to stop the banks from avoiding and wriggling out of their taxes. I think it is quite shameful when we look at this bill and at what I was highlighting earlier on about National admitting that it had taken people for granted and saying that Labour has too. I think this is a very significant bill to highlight that fact. During Labour’s last reign in Government back in the 1980s it sold Postbank for $678 million—over 20 years ago—and sold the Rural Bank for $687 million and in the 1990s National sold Housing Corporation mortgages for $2.4 billion. Then we had the shameful shameful sale of the Bank of New Zealand which we all know came back to bite this country badly and the country had to bail the bank out. 
 I think it gets even more shameful and scary when one looks at how much banks have earned over the many years since the successive Labour and National Governments opened up the banking industry to foreign-owned enterprises in the way that they did and when one considers the way that some of these foreign-owned banks have treated the public of New Zealand—the taxpayers of New Zealand. They have treated them with no respect whatsoever by trying to wriggle out of the tax rules that are in place and that is why we are speaking on this bill tonight. The ANZ National Bank had an after-tax profit of $680 million in 2004 and $713 million in 2003 and Westpac had an after-tax profit of $617 million in 2004 and $462 million in 2003—gone straight out of New Zealand. The Bank of New Zealand which is the saddest one of all I think considering its history had an after-tax profit of $471 million in 2004 and $548 million in 2003. The ASB had an after-tax profit of $316 million in 2004 and $278 million in 2003. The combined profit for all 16 registered banks was up 8.8 percent to $2.6 billion. The most worrying thing out of all of this is that the total assets among the main banks have increased 5.4 percent to $188.3 billion led by ASB’s $5.5 billion increase. Westpac’s was $2.6 billion and the Bank of New Zealand’s was $1.7 billion which as I stated earlier is one of the saddest stories I believe in our New Zealand economic history. 
I just want to read to members the  
Dominion Post 
 article of 12 May in the “BusinessDay” 
section: “Intense competition and a damaging shift by home owners into fixed-term loans have not stopped banks ramping up profits to a record $2.08 billion in 2004. Profits for the main banks were up $91 million or 4.6 per cent on 2003”. Then one hears all these stories of these banks making billions of dollars since they were sold to foreign-owned enterprises and one sees other stories.