Tabuteau FletcherFLETCHER TABUTEAU (NZ First): There are three main policy aims in this bill and I would like to focus on the last one—that is the elements related to the foreign trusts and tax jurisdiction. But first—and it is unusual with the new Minister of Revenue but I would like to concur with some of the statements he made in his address to the House and I am well pleased to see he is pleased about it—I would like to support what the Government is saying with regard to the provisional tax system. I have only just realised that Labour called for it the Greens called for it—well New Zealand First called for it years ago as well. So there is a lot of common sense—Hon Clayton Cosgrove: We wrote a policy on it.FLETCHER TABUTEAU: —yeah—running through the House and the Government picked up on it. It is a great thing and we do support that. The support is somewhat tempered by the obscene sums of money that the Government is having to spend in terms of the Inland Revenue Department upgrades the ICT capabilities. We are talking sums in the billions of dollars. As to how often the case is that these omnibus bills come up especially with regard to tax it is a great frustration—of mine in particular but for New Zealand First of course—that these omnibus bills cover such distinct and varied pieces of policy. So although I would love to stand up and support the Government with this bill with regard to streamlining business operations in terms of their tax obligations—helping them with provisional tax obligations because I think that is sensible—the third part of this bill is an abomination. It is an abomination to this House and it is an insult to the people of New Zealand. So of course this is where I would like to spend my time. I apologise for this long quote from a business magazine from overseas but if you would give me some leeway Mr Assistant Speaker: When New Zealand Prime Minister John Key flew into Malta for the Commonwealth Heads of Government Meeting in November 2015 he already knew he shared some important views with his host Malta's Prime Minister Joseph Muscat about the importance of keeping the tax secrets of foreign investors. Both countries are quiet achievers in the ranks of global tax havens and both are determined to keep it that way. While Malta has been fiercely resisting pressure to close tax avoidance loopholes used by foreign companies including Australian firms to move profits out of the European Union New Zealand has fought just as hard to protect its laws that make foreign profits tax-free and invisible for beneficiaries of its offshore trusts." This is not a perception around the world; this is the reality as the world sees it. We are a haven and we are being abused. It is described by many as an opportunity for corrupt politicians organised criminals fraudsters bribe payers arms dealers and terrorists to use New Zealand's loose regulatory framework. New Zealand's 12000-plus offshore trusts pay no New Zealand tax on foreign earnings. Their beneficiaries are not registered and their accounts are not filed with any public body. New Zealand regulators may demand this information if so requested but it is not disclosed to foreign Governments. Yet Mr Woodhouse the Prime Minister rejects claims that New Zealand is a tax haven. To quote the Prime Minister: "our tax settings are relatively robust by international standards but we're always open to considering changes if they're warranted." The release of tax haven records underline the ease with which corporates and individuals can use New Zealand to hide their wealth. Even Mr Shewan in his report said: "it is reasonable to conclude that illicit funds are being hidden in New Zealand foreign trusts." That is a direct quote. Mr Shewan would not state it outright but given that his terms of reference did not include actually looking at the Panama Papers he could only make that assumption. He may have described the terms of reference in his preface to the report as broad and comprehensive but New Zealand First said at the time that they were not broad enough. What we are seeing here today bears that out although actually to be fair Mr Shewan did come down quite hard on the Government's lack of action in terms of transparency. So there were a few statements there made by Mr Shewan that were embarrassing to the Government. This is a quote from Mr English: "Mr Shewan's inquiry noted that foreign trusts are legitimate vehicles and that New Zealand's tax treatment of foreign trusts is appropriate." That is what Mr English got from the inquiry—that was it—and yet the inquiry concludes that the existing foreign trust disclosure rules are inadequate. Then he goes on to say that the rules are not enough to protect New Zealand's international reputation. Let us be clear for the members of the House: New Zealand First is dead tired so tired of this National Government's half measures when it comes to legislation—half measures on the housing crisis half measures on regional development half measures on transport infrastructure half measures on our social infrastructure and half measures on just looking after small New Zealand businesses in terms of the uneven playing field they have to play on with regard to their GST and tax obligations when compared with their overseas competitors. It is all about half measures and spin and it is beyond frustrating. This bill with regard to foreign trusts is yet another half measure. It does not even go halfway I put it to you. Let us be absolutely clear: the response in this legislation is completely inadequate and I use the European Union to measure how inadequate this response is. New Zealand's tax regime will come under investigation as Europe prepares a "black list" of global tax havens and guess what? New Zealand and that National Government will be on that list. It is looking all over the world and it has confirmed that New Zealand will be investigated.Hon Michael Woodhouse: He's retracted that. He's corrected that. He said that was misreported.FLETCHER TABUTEAU: They will investigate us Mr Woodhouse. Let us be realistic. The Prime Minister's pet industry has been put under the spotlight. Mr Woodhouse has said the formal investigation may not take place but we know that the EU is now looking at us very very closely and it has put us under a microscope. Right now without a free-trade agreement—right now without those magic free-trade agreements that this Government likes to make up—the EU is our third-largest trading partner so it is pretty critical that our relationship with the EU is on the up and up. Here is the kicker: New Zealand does not comply even with the recommendations made by Shewan even if those are implemented—and not even all of those are implemented in this bill. For example "no tax exemption of foreign income"—New Zealand will not meet this standard. It wants an automatic exchange of information with foreign tax authorities and the jurisdictions where the settlors and beneficiaries are resident to be reported—New Zealand will not meet this standard. It wants a public register of trust ownership and details—New Zealand will not meet this standard even after this legislation is enacted. We are facing scrutiny at the very least from those that we would like to sign a free-trade deal with. New Zealand First would like to be able to support parts of this bill as I said. There are good aspects to it that we think the select committee should investigate and expand on further. But because this is less than a half measure in protecting our reputation and ensuring that this country does not support thieves and robbers from around the world New Zealand First cannot endorse this piece of legislation even at this stage. It is not an honest attempt and I suggest to the Minister that he come back with a full comprehensive and honest go at solving our problem with tax havens."