Bradford Sue: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — First Reading 
Bradford Sue: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — First Reading 
[Volume:648;Page:17390] 
SUE BRADFORD (Green) 
: 
 Although there are some aspects of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill with which Green Party members have no problem including those dealing with the voluntary sector—at least as far as I can identify those aspects at this stage—we are horrified by proposed changes affecting the offshore taxation regime for New Zealand companies. We will oppose these moves and vote against the bill every step of the way. 
In exempting from tax active income earned offshore by a company where a New Zealand resident has the controlling interest this bill is a charter for exporting jobs and closing down our manufacturing sector. The Government is acting as if the shape of the future is one in which we are nothing more than a head office and design centre for enterprises likely to be based mainly in Asia but based in other parts of the world as well. It is insanity that at a time when the impacts of climate change peak oil and an incipient global recession are beginning to kick in our Parliament should be considering legislation that provides serious tax incentives to companies to take their production offshore. 
I thought it was bad enough when I heard stories in years gone by such as for example that of the Swazi Apparel clothing company in Levin which was told by the Ministry of Economic Development officials that it would be best advised to shift its operations to China. It did not matter that this would mean the loss of around 90 jobs with the resulting impact on the local economy not to mention the workers involved. I thought it was even worse when some members of the Labour Government tried to tell us that Buy Kiwi Made should be not only about companies that make things in this country but also about businesses like Icebreaker which had made the decision to take its production offshore. But the bill in front of us tonight really takes the cake. It seems to be driven by a belief that we should actually incentivise people to close down their operations here and that there is no future for manufacturing in New Zealand. 
What a disaster. What a disaster after all the money work and commitment that have gone into the Buy Kiwi Made programme on the part of manufacturers Business New Zealand retailers unions and the Ministry of Economic Development. What a disaster after all the cross-sectoral goodwill and work that went into the long-running Manufacturing Plus project. Why on earth does Labour want to motivate manufacturers to self-destruct in this way? Was the manufacturing advisory group that came out of Manufacturing Plus happy with these new tax proposals—that is if it still exists? The justification given is in part based upon fostering so-called economic transformation. Transformation to what? Being a colony of Australia South-east Asia and China perhaps? Having an economy totally dependent on foreign imports the price of which will keep going up as the price of freight increases exponentially alongside the price of fuel? 
Treasury argues that the current rules create an incentive for companies to move completely offshore—head office and all as Dr Cullen was saying earlier—and that the point of the new rules will be to allow head offices to stay here while the manufacturing part of the business goes elsewhere. Reducing the tax costs for firms looking to expand offshore will it appears to argue make us more competitive and more compatible with the globalised market—above all with Australia. Behind this argument sits the underlying assumption that we should not even bother manufacturing here because we cannot compete. It would appear that it is time for us to internationalise and globalise our jobs and our businesses out of business apart from a few head office staff in Auckland or Wellington. Treasury also argues that the new tax exemption will make New Zealand more attractive for foreign investment and that the fact that headquarters will stay here will create work for headquarters-type people. 
Even more bizarre is the fact that if the Taxation (International Taxation Life Insurance and Remedial Matters) Bill goes through companies manufacturing in New Zealand will still be taxed while those offshore will not. So our loyal local companies will in fact be at even more of a disadvantage comparatively—as if the high dollar was not enough to contend with! The madness of all this takes me back to the early 1990s a time many of us—including some National MPs I suspect—might prefer to forget. That was a time when for example the then Minister of Finance Ruth Richardson took pride in hosting a conference in Auckland aimed at marketing what was left of our assets to overseas companies. That era also saw the final sell-off of rail by Jim Bolger one of the biggest ever rip-offs of New Zealand taxpayers by a foreign company. 
I do not understand Dr Cullen. On the one hand he and his Government have done a great thing by buying back and reinvesting in rail and biting the bullet on the cost because Labour does appear to understand on one level that climate change and peak oil mean we must rebuild our national passenger and freight infrastructure. On the other hand—and simultaneously—he is presiding over the incongruous aberration before us tonight aimed it seems at undermining any desire of New Zealand manufacturers to keep making things here. For a member of a party that—as Dr Cullen proudly told this House recently in response to one of my questions on employment issues—is the party of workers it is odd in the extreme that he does not appear to care a fig for the hundreds of thousands of jobs that may well disappear as a result of the tax incentives contained in this bill. Where does he think the jobs to replace those lost will come from? 
I find it odd that once again I find myself giving Dr Cullen history lessons. Does he not remember what happened when his own Government stripped out our manufacturing base in the 1980s? Can he not remember the acres of empty factories and industrial zones or what happened when tens of thousands of people in the cities and towns ended up jobless? Some people—and above all tangata whenua and Pacific peoples—are still reaping the consequences of those policies of the 1980s in places like South Auckland Northland Tai Rawhiti and the Bay of Plenty 
What the Government is proposing will give Icebreaker a tax cut for making lovely outdoor wear in China but not Earth Sea Sky for making lovely outdoor wear in Christchurch. Norsewear—that formerly iconic brand—will reap a financial benefit for having taken its jobs to Asia while Swazi Apparel staunchly staying local will miss out. The bill will give tax cuts to large firms that send fish to China for filleting and packing but not to small-time fishermen who process locally and who create environmental and social benefits by not carting fish back and forth across the planet. The bill will give Fisher and Paykel a tax cut for the whiteware it makes in Mexico but not for the whiteware it makes in Auckland. 
To all those companies business organisations and trade unions that have been involved in Manufacturing Plus the Buy New Zealand Made campaign and Buy Kiwi Made I call on them to join the Green Party—and any other parties who oppose this madness—to help persuade Labour to change its mind on this one. Globalisation does not have to be about giving up on our manufacturing sector. We simply cannot afford to lose our ability to make things here either for local use or for export. Nor can we risk losing tens—if not hundreds—of thousands of jobs at a time of increasing global economic and environmental insecurity. 
The other aspect of the bill that I feel constrained to address briefly tonight is that dealing with petroleum mining. The first aspect is that the bill prevents petroleum companies from deducting overseas expenses from their New Zealand income and thus ensures that New Zealand will get the tax benefit of mining here rather than having the profit hidden behind expenses incurred overseas. That is fine with the Greens. However looking beyond this the bill will also remove disincentives that may affect investment in oil and gas exploration and development in New Zealand adding up to a huge tax cut over 4 years in the petroleum industry. 
The Green Party really questions why we are giving major tax cuts to these companies at a time when even those who would not normally follow the oil markets can see the massive profits being made. The bill somewhat disingenuously describes these changes—for example allowing development costs to be amortised over the life of the mine and repealing the current distinction between onshore and offshore development—as being necessary to safeguard tax revenue. However in reality what the changes mean is less not more tax income from petroleum mining. Secondly through these measures the Government is manifestly encouraging more mine exploration and development with apparently no regard for the environmental and climate change consequences. 
The parts of this huge bill that deal with manufacturing and the tax cuts for petroleum mining are sufficiently outrageous that from our point of view they totally negate the other beneficial changes that are being promoted. The Green Party will therefore do everything we can to oppose the bill and to warn people of the danger it poses to our economy our workers and our environment.