Tabuteau FletcherFLETCHER TABUTEAU (NZ First): Thank you Madam Deputy Speaker. It's a pleasure to rise on behalf of the Labour - New Zealand First Government. What I'd like to do with your forbearance Madam Deputy Speaker is just address some of the comments put forward from the previous speaker the Rt Hon David Carter who—dare I say it I actually enjoy and acknowledge that he can now be part of the debate. As much as I disagreed with perhaps about 95 percent of what he said at least it was an enjoyable contribution that at least added something of vigour to the House.Hon Shane Jones: Noise noise noise.FLETCHER TABUTEAU: Ha ha! Others may call it noise and I would be hard-pressed to argue.The member who made the first contribution Mr Joyce spoke about his party claiming success for this bill. He claimed that they had done the work. I stand here to say that this has been a problem for New Zealand for—I think my learned colleague Mr Woods used nine years" as a specific number. But let's agree in the House that it's been nearly a decade that we have been dealing with this problem which that party over there now in Opposition knew was a problem. Mr McClay was told that this was a problem when he was the Minister of Revenue and he sat on his hands. Mr Woodhouse was told that this was a problem and he sat on his hands. This took nine years—those members sat on their hands.As we progressed to an election period the previous Minister of Revenue decided that action was required. Actually it is an opportunity to acknowledge the work of the officials and the previous Minister for the work that was undertaken in this space. But let's be perfectly clear that for nearly eight years those members stood up and said that nothing could be done and that we have to wait for an international solution primarily from the OECD they said. We have to wait for an international solution from the OECD.This is where I have a problem with where we are today because this is a Government that is standing up in the House actually presenting legislation. Let's bear in mind that this is the first reading—Hon Dr Nick Smith: National's legislation.FLETCHER TABUTEAU: Which you said for eight—sorry Madam Deputy Speaker; which Mr Smith said for eight years didn't need addressing but last year there's a problem. That's the record that you come into this debate with Mr Smith: eight years "Not a problem."; a year ago "We've got a problem we better do something about it." That is that party's record.So I am proud to be standing here today on behalf of New Zealand First and this coalition Government to say that the former Government's apathy or non-action—non-action—was an indictment on that party. New Zealanders had been standing up standing strong—Madam DEPUTY SPEAKER: Order! Would you come to the bill? Would you debate the bill please? You've had almost 3½ minutes now on general debate. I would like the speaker to come and discuss the bill. This is a first reading of a bill.Hon Shane Jones: Broad preamble.Madam DEPUTY SPEAKER: It's not a broad preamble; we've had that.FLETCHER TABUTEAU: I apologise Madam Deputy Speaker if I have not worked within the purview of the first reading. It comes from frustration—my apologies.Madam DEPUTY SPEAKER: Generally politics I find.FLETCHER TABUTEAU: I will try and use words carefully so as not to repeat what has been said before but what we're talking about is the neutralising of base erosion and profit shifting. Now what multinationals in particular have been able to do for I've just argued nearly a decade is that they have been able to use four different mechanisms which this bill addresses by which they can avoid we argue their commitment to their tax obligations here in New Zealand. New Zealanders have consistently called as has this Government for those multinationals to pay their fair share.So what we are talking about is what essentially has become an acronym of the 21st century BEPS or base erosion and profit shifting an issue that the world admittedly is having to deal with. It relates to the ability of these multinationals in particular to avoid their tax commitments and there are examples which I would highlight to the Opposition on the other side of New Zealand businesses who are working under New Zealand legislation who are compelled to work within the confines that this House gives them in terms of their obligations of tax which their competitors who are international have been able to avoid by means outlined in this legislation which the House is seeking to address now. So it has not only been a question of those multinationals paying their fair share but of New Zealand businesses being able to compete on an even playing field. New Zealand businesses have missed out on large contracts because multinationals have been able to cost out their long-term commitments in terms of cost and pricing such that they know that they haven't been required to pay their tax. Now that's an immediate advantage that New Zealand businesses have been crying out about for a long period of time.It is important to address these BEPS activities without reducing the attractiveness of New Zealand and the members spoke of that with reasonable fairness—that it is a matter of making sure we do move down a path that is a mechanism by which these multinationals cannot avoid their obligations. But yes we do need international business. There are great businesses around the world that New Zealand would encourage to be here but as I just said in that previous statement let's ensure that New Zealand and multinational businesses are competing on an even playing field.The measures in this bill will prevent the four main methods that multinationals use to allow them to take advantage of this uneven playing field. One method is their use of parent companies being able to charge artificially high interest rates. We have seen examples of that. There's an example which I won't name specifically here in Wellington where that has been exactly the case. The parent company has charged the local branch as it were for want of a better word artificially high interest so that what we would otherwise have called profits have been committed offshore in terms of interest commitments to a parent company. Now what this legislation seeks to do is acknowledge and ensure that these companies recognise that a commitment to a parent company is not a true cost in terms of returns to shareholders. What the bill is arguing is that those returns will remain neutral. You can't artificially manage the interest rates up so that those profits can be shifted offshore.The next methods multinationals use are the hybrid mismatch arrangements that exploit differences between countries which is to say different tax rates in different regions—and I think with the time I have left I will take that as read—and the artificial arrangements to avoid having a taxable presence or permanent establishment in New Zealand. So again I think Mr Woods spoke about the good old days of having a big factory here and setting up shop as it were. Now that's not necessarily the case in services industries nowadays so it becomes very difficult to manage and track these kinds of interactions—spending revenues costs—so that those companies can be held to account in terms of what is fair in terms of their commitment to the New Zealand taxpayer.The last one is the related-parties transactions or transfer pricing which shifts profits into offshore group members in a manner that does not reflect the actual economic activities undertaken in New Zealand and offshore.So with 20 seconds to go may I please say to the House that it is a pleasure to stand in support of this legislation. I do look forward to the work in the select committee. It is populated by a good group of people and I look forward to that work. Thank you."