General Debate

There is a reason that the member who finished speaking last, Grant Robertson, is in charge of the Wellington Town Belt Bill, because that speech was so beltway that it is just not funny. If workers were sitting at home watching Parliament TV they would be very concerned to know that the Labour Party has put that man in charge of the future of work in New Zealand. When we are seeing in this country and in this economy that 175,000 jobs have been created in the past few years, seeing more people getting into work, and seeing more people coming off the welfare queue and living a life of opportunity, it is hard to know what those members are going on about, because New Zealanders are far better off under this Government and they are succeeding better.

I grew up in a Labour-supporting household. I grew up in a household where there were freezing workers in my household; a household that believed that the Labour Party was the best party for them because supposedly—supposedly—the Labour Party was all about the workers and all about the future opportunities for workers. But when we hear speaker after speaker from the Labour Party not talking about everyday New Zealanders, but getting their heads in the clouds talking about things that are completely irrelevant to everyday New Zealanders, then people like my family—where they grew up, working in the freezing works, thinking that Labour was the party for them—are changing sides and they are moving over to the National Party because they are seeing that we are a party that actually supports workers.

The Labour Party of old used to be a party that supported free trade, but not any more. It does not support free trade. It does not support the jobs created through free trade. It does not support future opportunities for New Zealand workers. The Labour Party of old also used to be about encouraging people to work but now it is all about providing people free money, costing the taxpayer $40 billion - odd for the universal basic income. It would rather send the Government broke than actually encourage people to work. It is no longer about encouraging people to work; it is more about giving people money and coming up with policies to bribe New Zealanders to vote for it.

It also used to be the party of independent monetary policy. Now all of a sudden those members think they as politicians are better at setting interest rates than the Reserve Bank and the banks in New Zealand. Those members think that they are the best ones to decide how banks in New Zealand should be setting their interest rates. I do not think that there are many people out there in voter land who believe that politicians know better than the Reserve Bank, or think that politicians know better than people who actually set interest rates in this country. I am pretty sure that New Zealanders will be rejecting that idea as well.

Labour also used to be the party that welcomed migration. It welcomed people to New Zealand who wanted to come here for future opportunities and wanted to bring skills and investment or come here for training. No longer does it support migrants. It is now more interested in targeting people based on their last name. It is now more interested in targeting people based on which ethnic restaurant they work in, and I think New Zealanders are appalled by that.

We are seeing more people getting jobs in this economy. That is something that the Labour Party should be supporting and should be celebrating. It should be supporting our future opportunities for New Zealanders through free trade and through more investment in infrastructure, but it opposes, time after time, many of the things that we are doing. We are seeing more people getting jobs in the likes of the manufacturing industry, where Labour claims there is a crisis, but manufacturing has actually been growing for the past 41 months. The Labour Party opposes many of our roading projects, but 35,000 people have jobs through the roads of national significance programme. That is 35,000 people who would not otherwise have jobs.

New Zealanders are seeing improvements under this Government. New Zealanders are seeing more job opportunities under this Government. If I can agree with one thing that Grant Robertson said, it is that New Zealanders sit at home and say: “Is my Government backing me?”. The New Zealand Government is backing New Zealanders. The New Zealand Government is providing more jobs through having a better economic policy. We have seen better health services and better education services, and we are seeing crime rates coming down. We are backing New Zealanders, we are seeing better opportunities for New Zealanders, and we reject many of the things that the Labour Party is putting forward.

The Prime Minister’s defensive reaction to questions this week about New Zealand’s potential status as a tax haven because of our limited disclosure for New Zealand foreign trusts tells us exactly what sort of person he is working for and whom he is backing, and what sort of leader he is. We heard this week from the Prime Minister that we have full disclosure on New Zealand foreign trusts, but he and the other members of the National Government are pretty much the only people who will make this claim.

When we look at Mossack Fonseca and the huge leak of documents that occurred, we can see that it was recommending New Zealand to wealthy clients because our foreign trusts have a tax-free status and light disclosure requirements. So, clearly, we do not have full disclosure; we have light disclosure, and, of course, there are a number of tax experts who have said this for many years and who have asked the Government to resolve this problem in some cases.

We have, of course, Michael Littlewood, professor at Auckland University and tax specialist, who told the National Business Review that “the Government … has denied that New Zealand is a tax haven, which for anybody who knows how this works is not a plausible denial”. His Auckland University colleague, well-known tax expert Professor Craig Elliffe, told Newstalk ZB that New Zealand is, in effect, a tax haven “in this area of foreign trusts”. Professor John Prebble, an expert in taxation law at Victoria University, wrote in 2009 that “Since the enactment of the country’s international trust regime in 1988, non-residents have come to rely on New Zealand as a safe haven for their funds, a haven that will not suddenly tax those funds”.

Over and over again, there are a number of tax specialists who say that it is the case that we do not have full disclosure, and yet the Prime Minister comes into the House and insists that we do have full disclosure. That suggests to me that he is not completely honest with the New Zealand public, and he thinks that by insisting that black is white over and over again he can hide the problem and his failure to deal with it from the New Zealand public and voters. This is not the actions of a real leader.

Of course, he did admit in the House, after saying that we do have full disclosure and that “There is nothing to see here—no problem.”, that the Inland Revenue Department (IRD) has not been working on the problem because it is not a priority. So which is it? Do we have full disclosure already, or is it not a priority because the Government’s priorities are to focus on tax evasion in New Zealand by New Zealanders—probably those who are not on incredibly high incomes—rather than stopping New Zealand from being used as a tax haven by the rich and powerful?

Finally, the Prime Minister said that we already have full disclosure and the IRD has not been working on the problem that does not exist because it is not a priority, and then he said that full disclosure would be “barking mad”. A proposal that would enable other jurisdictions—our tax partners—to find out which people who evade tax overseas are using New Zealand foreign trusts would be “barking mad”. Of course, he did that by mischaracterising the Greens’ bill and falsely claiming that it would require the publication of IRD numbers, which is not the case—not the case.

Who is John Key really representing? Who is he working for? In the first place, when he came to power, we had tax cuts for the wealthy, primarily. Since he has been in power, we have had protection for property speculation because the Government has failed to implement a capital gains tax, despite Treasury saying in 2010 that it was desperately needed. He has been saving landlords money with no minimum requirements for a warrant-of-fitness standard for rentals. He has been weakening the protection of workers for Hollywood. He has been subsidising oil and gas exploration and wining and dining oil and gas executives, inviting them to rugby games, and inviting them to come and open up New Zealand’s shores to pollution—climate pollution.

There is such a gap between the rhetoric of this National Government and the reality of who it is actually working for, but we can take its actions to see exactly whom it is working for.

I would like to begin my contribution by talking about some Kiwis. Some people might not recognise me as a Kiwi. They might actually consider that if I go to a house auction, I might be Chinese. But I am, in fact, a Kiwi. I am a very proud Kiwi indeed, and I would like to acknowledge an amazing young Kiwi lady. This week she won a major golf tournament, and I think this House should congratulate and acknowledge Lydia Ko, the youngest player to win two major women’s championships in golf. Lydia, of course, became the No. 1 ranked professional female golfer in February last year, aged just 17 years old. This year, in 2016, she was voted the Young New Zealander of the Year, and we must say we are very, very proud of her. As Ms Anne Tolley said, maybe she will not be allowed, by some people, to buy a house because she just happens to look like a Chinese person.

I think we live in a great country. This Government, under great leadership by John Key, is building this country and growing our economy. We are actually getting known in international circles, and not just because we are doing such great work but also because of our product. I had an opportunity to visit Korea last year and I visited the kiwifruit growers in Jeju Island. It was amazing—they have 100 hectares of kiwifruit-growing land. This is about investment by Zespri. It had a long-term vision about what it wanted to do with New Zealand kiwifruit. It wanted to grow the taste buds of the Korean market so that Koreans will become used to the kiwifruit, and it wanted an opportunity for Korean growers to grow them off season for our producers so that kiwifruit will be available all year round. That means more kiwifruit will be sold from New Zealand to Korea.

With the amazing work by our former Minister of Trade and now the Ambassador to the United States, the Hon Tim Groser, we have a Korean free-trade agreement. What that means is that in the next 5 years the tariff, which was set at about 45 percent for kiwifruit, will be going to zero. We were paying in excess of $20 million a year just in tariffs for kiwifruit, and what an amazing thing that is. Not just that—that opportunity has meant that we are giving opportunities for Korean growers to have better job prospects. Often, orchardists and farmers in Korea are not earning as much compared with New Zealand farmers, and our helping them grow more kiwifruit means that we have more opportunity for more people to like kiwifruit and it ends up with New Zealand exporting more kiwifruit, as well.

I also want to talk about another Kiwi, and that is Kiwibank. Today’s announcement about Kiwibank is a great commitment that this Government has made to stable economic management. It is a bottom line of this Government that Kiwibank will remain 100 percent Crown-owned and to support the transfer of shares inside Crown agencies. What that Crown-owned model actually means is that ACC and the New Zealand Superannuation Fund will hold minority shares in Kiwibank, which will continue to be under majority control of New Zealand Post. Kiwibank was originally established as a niche market banking unit in New Zealand Post, but it is now a market competitor in the banking industry and it is growing. It needs a little bit of capital injection, and I think selling to ACC and our Superannuation Fund and getting the funds to grow its business means that it will actually improve its services and improve its market share.

The decision by the Government also shows a great example of better service practices being applied to Crown-owned enterprises, and, no doubt, those members opposite will support this great opportunity. After all, Sir Michael Cullen is their former Deputy Prime Minister and New Zealand First advocated for the freeing of capital at Kiwibank back in 2008. So I am sure that those members opposite will be voting for this bill, as well. I am happy to lend support to the Government’s bottom line to keep Kiwibank 100 percent Government-owned and an active part of the New Zealand market.

Also, I want to—oh, I need to wrap it up—thank the New Zealand Police. In the last couple of weeks we have had issues with Asian students being attacked, and police have acted very quickly and many arrests have been made. I think that we need to congratulate the police on the amazing work that they continue to do for New Zealanders.

I just want to touch on a couple of things that the previous speaker, Melissa Lee, just said. She talked about the importance of being a Kiwi and being respected as a Kiwi. I just think it is really unfortunate that a few years ago she made it very clear that she does not respect the Kiwis in South Auckland, accusing them of getting off the motorway in Mount Albert and committing crimes in her neighbourhood. Let us not forget that. She also talked about the international reputation that New Zealand has gained under the National Government. Well, the international reputation that we have gained under that Government is absolutely an embarrassment to this country. The international reputation that we have gained because of that Government is along the lines of what John Oliver has put out there. Let us just see what that is: the world now knows that our Prime Minister urinates in the shower. That is fantastic for our international reputation—thank you, National Government!

In the past couple of days there have been revelations about the world’s most wealthy elite using our country as a place to hide its money, and that is a shameful indictment on John Key and his National Government. To make it worse, in recent weeks we have had it brought to our attention that multinational companies are not paying the tax, or their fair share of it, that they should be. When we look at that, we have to feel a little bit concerned as New Zealanders, because on the one hand we have people not paying their fair share, and on the other hand here we are as a country struggling with record high levels of child poverty and struggling with record low levels of homeownership. We have got $1.7 billion here that has been, effectively, cut from our health system, we have got an education system that is drowning our young people in debt, and while New Zealanders are dealing with all of that the world’s wealthy elite is getting richer off the back of New Zealanders and New Zealand.

What is absolutely shocking is that, despite knowing all of this, John Key refuses to acknowledge we have a problem with foreign trusts and refuses to crack down on multinational companies and the tax that they should be paying. He admits that what they are doing is ethically wrong, but says it is still within the confines of our law. There is an easy enough solution, the rest of the country would think: review the laws surrounding foreign trusts and tax. The Prime Minister has said on a number of occasions that the foreign trust legislation was introduced under Labour in 1988, but those members are the ones in Government. They have had 8 years to fix it. It was brought to their attention—it was brought to the attention of the country under their watch. It is John Key and his National Government’s responsibility to address the issues.

The solution seems simple enough: review the legislation. But John Key is not about meaningful solutions. As Gordon Campbell recently wrote about in an article, he is about crisis management ploys, and over this issue he has been running the gamut of those ploys so predictably. In fact, how about we describe what those ploys look like? The first ploy that Gordon Campbell describes is the “no problem here, move on” ploy. “I don’t think it’s embarrassing,” the Prime Minister said, and “the OECD also had a review of its tax regime in 2013 and they gave New Zealand a clean bill of health”—repeated in almost all media reports. The actual truth is that there has been a continued call for change from the Opposition parties, from the Inland Revenue Department, and from that same report that he talks about, the 2013 OECD report. There have also been calls from professors of taxation, including one from the University of Auckland, who said “the revelations showed New Zealand’s laws were out of date and the rules needed to be tightened.”, but the Prime Minister continues to ignore them.

The second crisis management ploy that the Prime Minister is well-known for is muddying the pool with irrelevance. We saw that today, actually, with Bill English taking a page out of the Prime Minister’s book. When he was talking about the tax issue, he quickly said: “Here is the Opposition concentrating on this tax issue. Why is it not concentrating on family violence and youth unemployment?”. They are three completely different issues. That Government should be over everything. The Opposition has to be over everything. We should not be muddying the waters by trying to mix them up.

The third ploy for crisis management is blaming Labour, and we have seen that all week, with the Prime Minister saying that the issues we are confronted with are because of the fact that Labour introduced this legislation, but yet, on the other hand, he says there are no issues. It was 1988 when that trust’s Act was introduced. I was 10 years old at the time, but of course it is my fault! It is my fault and it is not the Prime Minister’s fault, despite the fact it was brought to his attention and he has done nothing to fix it.

It has been a fascinating debate, and gee, I have got to say there have been some weird and wonderful things said, but what I thought I might just concentrate on for a moment is talking about some of the good stuff. I thought I would just do a quick little whip-through—

💬 Dr David Clark: And that’s the end of your speech, then?

—just for you, Mr Clark. First of all, 3 years ago we had an $18.4 billion deficit. Through the good work of the Minister of Finance we turned that into a half-billion-dollar surplus last year, and of course we are hoping for a surplus this year, knowing we have recorded a $900 million surplus at the end of January this year. Secondly, we had a growth rate of 2.3 percent last year, and we are forecasting—well, actually, Treasury is forecasting—a growth rate over the next 3 years of about 2.7 percent. Most economies around the world would love to have growth rates like that.

Running surpluses means that we will be able to increase spending in those crucial areas like health, like education, and like security, and, of course, it does mean that we can repay debt. Of course, many people do not do the work on debt. They think New Zealand has a relatively high rate of debt, which is, of course, totally incorrect. At the moment our debt to GDP ratio is 25.2 percent, which is a very modest figure even compared with Australia, and certainly miles below what the rates are in America and in England and Europe. Anyway, we are aiming to get it to 20 percent by 2020.

What I like is that we continue to invest this extra money we are generating into health care. Last year we put in another $400 million to take it to $15.9 billion, the biggest vote item in our Budget. Then we put another $300 million into education, taking that to $10.8 billion—lots more money into the important things that count. We are seeing also how this is flowing through into the economy—how businesses and how people working in jobs are benefiting. We are seeing manufacturing recording its 41st monthly increase in confidence and growth, and we are also seeing the services sector, which, unfortunately, this Opposition never seems to focus on, and which by the way accounts for just under 70 percent of our economy, growing at its strongest rate in the last 7 years. What it is also meaning, coming down to the people working, like all of us—the wage growth rate last year went up by 3.1 percent.

💬 Paul Foster-Bell: How much?

By 3.1 percent—wages increased by 3.1 percent, even though we had inflation of only 0.1 percent. So wage earners are benefiting, and that is the way it should be—that is the way it should be—because they are the hard-working people of New Zealand.

One of the things I would like to just remind us of is how we continue to grow the economy. I would say that the Trans-Pacific Partnership (TPP) agreement is an important ingredient. Of course, we have got an Opposition that is vehemently opposed to it, even though those members know in their heart of hearts that it is a great thing for New Zealand. What it does is it creates an immediate gain to all our businesses—our hard-working businesses—by accessing 42 percent of all the markets and people of the world and by reducing tariffs. So it does not mean any additional costs to export to somewhere like America, if we are successful in getting the TPP agreement. What it means is that those companies that choose to redirect their exports to those markets will immediately benefit from it.

I think these are the types of critical things that will help move New Zealand even faster forward than it currently is. I have got to say it has been a pretty good row to hoe up to today. Thank you very much.

We did not hear from the prior speaker, Andrew Bayly, that we have got youth unemployment of 15 percent. Actually, youth unemployment in parts of South Auckland in respect of minority groups is close to 50 percent. The underemployment of youth is even worse. We have got the lowest homeownership rate that we have had in New Zealand since 1951 and the highest ever house prices in Auckland—averaging now around $900,000, which most people cannot afford. What is this? Why do we not hear that from the National Government?

This week’s events, more than any in recent weeks, have shown that this Government is of the 1 percent, for the 1 percent. What are the advantages that the 1 percent in New Zealand get? Every time that there is a tax cut in New Zealand under this Government, it gives it disproportionately to the 1 percent. Actually, the last tax cuts went 40 percent to the top 10 percent of income earners—even more disproportionately to the top 1 percent.

Overseas websites and New Zealand service firms’ websites advertise New Zealand as being a haven for big money. What do they say the advantages are for “1 percenters” investing in New Zealand? They say we have no stamp duty, no land tax, no other capital tax, no tax on capital gains, no minimum capitalisation rate for their property purchases, and no charges for water if they are going to use it, even if they are bottling it like has been proposed down in Ashburton and is happening up north near Napier. So all of those things you do not pay in New Zealand if you are investing here. Effectively, overseas investors in New Zealand come and if they are buying land assets they pay no tax.

That is bad enough. What happens if you are a multinational and coming into New Zealand to invest? Well, again you pay virtually no tax; you bludge off other taxpayers. Those companies are owned by the 1 percenters overseas and, again, they bludge off other taxpayers in New Zealand. They come here and they pay no tax. The examples are legion. Bunnings is an Australian-owned company, with shops up and down the country competing with Mitre 10, which is New Zealand - owned. Bunnings pays no tax; Mitre 10, which competes against it, has to carry the cost of paying tax because it does. Apple, Google—these companies pretend that their transaction is in an overseas jurisdiction when, in actual fact, it is New Zealanders who are buying their services in New Zealand. The Government refuses to plug these loopholes because it is of the 1 percent and for the 1 percent. The Prime Minister’s instincts, because he is of the 1 percent for the 1 percent, is to introduce the ethics of Wall Street to New Zealand, and occasionally he comes unstuck like he has this week because he sticks up for these terrible practices.

Those things that I have spoken of until now are bad enough, but even worse is what has been disclosed in the Panama Papers, where we have got money-laundering, we have got stolen assets, and we have got tax evasion—not tax avoidance, but tax evasion—by rich “1 percenters” overseas using New Zealand to do it. And what does the Prime Minister say? Well, he says all his normal things—the normal things that have been listed by Gordon Campbell. His first defence is always: “There is nothing to see here.” He says that there is no problem. He pretends that we have got full disclosure when, in actual fact, no one knows what they do not know. They do not know who the beneficiaries of these trusts are who are laundering money, hiding stolen assets, or evading tax, because they do not know they are the beneficiary of the trust. They do not they are the settlor of the trust. All that is public is the name of the trust deed—the Inland Revenue Department gets that—and the name of the trust. But it could be “Fictitious Trust No. 1 Ltd” and the trustee could be “John Smith of Auckland” acting in a professional capacity. And what does the Prime Minister say? He says that is full disclosure. It is not. It is New Zealand being used for “1 percenters”, in this case for nefarious purposes.

The Government allows “1 percenters” to drive up the value of our land prices so that houses and farms are no longer affordable for New Zealanders. This Government acts in the interests of the 1 percent, not in the interest of those in the middle, who end up having to pay more tax than otherwise and who end up having to pay higher asset prices than they would otherwise have to. This Government is for the 1 percent, of the 1 percent—bringing Wall Street ethics to New Zealand.

I think that New Zealanders are waking up to that. They do not like that. That is not the New Zealand they want to live in. That is why you see the media saying the five excuses of John Key: “There is no problem here—move on.”, muddy the pool with irrelevancies, blame Labour because it passed the legislation in the 1950s or whenever it was—

The debate having concluded, the motion lapsed.