Turei Metiria: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeTurei Metiria: Oral Questions — Questions to Ministers[Sitting date: 01 December 2015. Volume:710;Page:8381. Text is incorporated into the Bound Volume.]5.METIRIA TUREI (Co-Leader—Green) to the Minister of Revenue: What has been the overall impact of tax deductions for petroleum and mining expenditures on the level of oil and gas exploration and prospecting in New Zealand since 2012/13 and how much revenue has the Government forgone as a result of these tax deductions in this period?Hon TODD McCLAY (Minister of Revenue): I am advised that the Inland Revenue Department does not collect data on tax deductions for petroleum mining or any other industry. However I can confirm that the petroleum industry is treated the same as other businesses in New Zealand in respect of deductions. It is therefore not possible to ascertain what the impact of tax measures is on the level of prospecting and exploration. However other factors such as prospectivity and global commodity prices are likely to have a greater impact on petroleum investment decisions in New Zealand. I am advised that the Government has not forgone any revenue based on tax measures in place for the oil industry.Metiria Turei: Can the Minister confirm that the tax breaks his Government has given to the oil industry are more or less than the estimated $36 million that the previous Minister of Revenue Peter Dunne confirmed in 2012?Hon TODD McCLAY: In my answer I said that the industry is treated the same and so I cannot confirm that because it is not correct. There is however one exemption that is in place for the prospecting industry for oil. I am advised that this is either neutral from a tax sense or that it is slightly tax positive and it is a result of our double tax agreements which mean that any non-resident who has things in place in New Zealand for more than 183 days must pay tax in New Zealand. We found that there was a churning where items used for exploration could be exported out of the country and brought back in and deductions therefore would be available. This has been rectified so that they do not have to be taken out of the country. It actually is good not only for the economy—Mr SPEAKER: Could you bring the answer to a conclusion.Hon TODD McCLAY: —it is very good for the environment.Metiria Turei: Why is it that his department is not now calculating how much the Government is losing in tax breaks to oil companies when the previous Minister of Revenue Peter Dunne could when he was the Minister?Hon TODD McCLAY: I am not sure where the member gets her figures from nor whether she is making a reasonable or fair comparison. The Inland Revenue Department does not collect information on deductions. There are no special deductions for the industry she has raised or for any other industry in New Zealand. All companies are treated the same. We expect everybody to pay their fair share of tax. We expect that where there is a deduction that is allowed under law they may use that on their profits. They must also pay tax.Metiria Turei: I seek leave to table a letter from the office of Peter Dunne dated 19 June 2012 which answered the exact question—Mr SPEAKER: Order! The letter has been described. I will put the leave. Leave is sought to table that particular letter. Is there any objection? There is no objection. It can be tabled.Document by leave laid on the Table of the House.Metiria Turei: Can the Minister confirm for this House that he does not know how much public money is being lost to the public purse on tax breaks to oil companies?Hon TODD McCLAY: No no it is not that I do not know; what I am saying to that member is that in as far as revenue collection is concerned all businesses in New Zealand are treated the same. Where there is a business activity then there is a cost that is allowable for a deduction under the Income Tax Act the business can have that deduction. There is nothing special about the oil exploration business or any other business in New Zealand when it comes to the way that we apply proper tax policy.Metiria Turei: Are the tax breaks that are given to the fossil fuel industry by this Government more or less than the tax breaks given to the clean-energy sector?Hon TODD McCLAY: I refer to my earlier answers but will be as clear as I can—there are no tax breaks in as far as tax deductions are concerned for the oil industry.Metiria Turei: Does the Minister believe that he has a better understanding of what constitutes a subsidy or a tax break than the OECD which has said that New Zealand’s tax concessions “distort investment decisions in favour of fossil fuel production … and counteract New Zealand’s efforts to address global climate change and thus should be discontinued.”?Hon TODD McCLAY: No but what I would say is that the Government is very open and transparent. I note that the APEC inefficient fossil fuel subsidy peer review found that as well as being fiscally neutral or positive for the taxpayer the policies in place actually reduce greenhouse gas emissions and did not encourage wasteful consumption. Further than that we volunteered to have our policies on mining and extraction and the oil industry reviewed by independent energy and climate change experts at APEC and by the Friends of Fossil Fuel Subsidy Reform. They looked at eight key policy areas including the four related to oil and natural gas production and four relating to consumption and Solid Energy. New Zealand’s position was completely vindicated this year when the reviews concluded that New Zealand has no inefficient subsidies that encourage wasteful consumption.Metiria Turei: Can the Minister not see how his failure to reveal to the New Zealand public the tax breaks for the fossil fuel industry makes the Prime Minister look hypocritical when last night he demanded that other countries reveal their subsidies for the fossil fuel industry?Hon TODD McCLAY: No quite the contrary. The Prime Minister has shown exceptional international leadership on this issue when today he presented a message along with 40 nations calling for the removal of inefficient fossil fuel subsidies. He said: “Phasing out fossil fuel subsidies is absolutely vital if the world is to succeed in substantially reducing emissions.” He went on to say: “Countries subsidised fossil fuels to the tune of US$500 billion in 2014.” I note New Zealand is not one of those but I have seen a report that was on the TV this morning from Green Party MP—Mr SPEAKER: Order! That part of the answer is not going to be necessary.