Norman Russel William: General Debate 
Norman Russel William: General Debate 
[Volume:658;Page:7012] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I move  
That the House take note of miscellaneous business 
. I stand today because to paraphrase the words of Hamlet something is rotten in the overseas banks in our country. We have now had some very serious cases of tax avoidance in New Zealand. Two of the largest banks in New Zealand have been convicted of massive tax-avoidance on a scale that is seldom seen in our country. These are giant tax-avoidance cases which the High Court of New Zealand has ruled on. 
The most recent case involves no less than the Government’s banker Westpac. According to the High Court of New Zealand Westpac now owes nearly $1 billion in taxes and interest payments to the people of our country. It has been found that Westpac avoided tax of over half a billion dollars. When we take into account interest payments on top of that we see that Westpac owes nearly $1 billion. In the words of Justice Harrison who was the High Court judge in this case: “I have rejected Westpac’s primary arguments on all contested issues.” Justice Harrison ruled that the four transactions in dispute were created solely for the purpose of tax avoidance. 
It is extraordinary that the Government’s banker has just been convicted by the High Court of New Zealand of putting together a series of transactions that were created according to Justice Harrison solely for the purpose of tax avoidance. If we read the judgment we see that Westpac was able to decide what rate of tax it would pay in New Zealand. When we look at it from the point of view of the ordinary taxpayer who thinks that we have to follow the rules and pay our tax—because we all know that paying tax is the price we pay to live in a civilised society and all businesses in New Zealand know that paying tax is what they do because they are good corporate citizens—we see that it is extraordinary that Westpac was able to decide what rate of tax it would pay. 
According to the judge not only were the arrangements unlawful but the four transactions tested in the case were “tax avoidance arrangements entered into for a purpose of avoiding tax;”. Anyone who has followed this case will be amazed at the extent Westpac went to in order to have this series of structured finance arrangements—very very complicated structured finance arrangements—in order to in Justice Harrison’s words simply “avoid paying tax”. That was the only purpose of those arrangements. 
It is also quite sad that one of the people involved—in fact he was one of the key advisers to Westpac in this case—was no less than John Shewan who is now chairman of PricewaterhouseCoopers one of our most important accounting and advisory firms. John Shewan according to the judgment advised Westpac to make tax payments as low as 6 percent—most taxpayers would be surprised by such advice—but no lower. That is in the context of New Zealand’s company tax rate being 30 percent. Westpac was advised by one of the most senior tax lawyers in our country to have a tax rate of 6 percent but no lower. Justice Harrison wrote in his judgment: “The bank”—that is Westpac—“was anxious not to reduce it unduly because of its reputational effect; it wanted to appear as a good corporate citizen paying a responsible level of tax. For that reason Westpac’s chief executive officer imposed a minimum ETR for the Westpac group of 25% in 1997. All these transactions took that factor into account. However management progressively allowed the ETR to fall first to around 20% in about May 2000 and then to the ‘high teens’.” The Government’s banker is organising its tax affairs in order to reduce its corporate tax rate to under 20 percent. It is an extraordinary turn of events. What is even more extraordinary is that one of Westpac’s key advisers John Shewan from PricewaterhouseCoopers is now on the Government’s Tax Working Group. 
Craig Foss 
: I raise a point of order Mr Speaker. I apologise to the member for interrupting. Can I ask for an assurance via you Mr Speaker that the matters the member is addressing are not subject to an appeal before the court because there are very serious matters here. I am concerned that the member is straying very very close particularly given rulings around sub judice matters that came before the House recently. I suggest that it would be a comfort to the House if that assurance is given by the member raising those issues. 
Mr SPEAKER 
: I was listening very carefully to the member speaking because obviously this is a sensitive matter. We heard from the Minister that an appeal has not yet been lodged. I think the member speaking has been quite careful. He has quoted from the judgment as I heard him and referred to the matters contained in it. I have not heard any outlandish allegations being made that could perhaps be considered irresponsible. I think the member has been handling what is to him a serious matter in a pretty responsible way. As I understand it the matter is not at this moment sub judice. 
Dr RUSSEL NORMAN 
: We have to say to the taxpayers of New Zealand that it is unacceptable that the Government’s banker has been convicted in the High Court of illegal tax-avoidance to the tune of over half a billion dollars. What would ordinary taxpayers say to that situation? I call on Westpac and all those who are involved in this and I say that it is time for it to clean up its act and it is time to do the right thing by the taxpayers of New Zealand because they expect Westpac to be a good corporate citizen especially in its role as the Government’s banker.