Questions & Answers – May 11

by Desk Editor on Thursday, May 12, 2016 — 10:48 AM

Financial Systems—Resilience

1. JACQUI DEAN (National—Waitaki) to the Minister of Finance: What reports has he received on the resilience of the New Zealand financial system?

Hon BILL ENGLISH (Minister of Finance): Earlier today the Reserve Bank issued its Financial Stability Report. It says that the New Zealand financial system remains resilient and continues to perform its functions effectively. Risks to the financial stability outlook have increased in the last 6 months as the global economic outlook has deteriorated. However, financial systems resilience remains high with capital ratios in our banks nearing recent highs and funding and liquidity buffers all exceeding required minimums.

Jacqui Dean: What are some of the risks to the outlook for financial stability identified by the Reserve Bank?

Hon BILL ENGLISH: The Reserve Bank points to the soft global growth, and the momentum in commodity production is contributing to weaker prices, particularly for dairy products, which have stayed lower for longer. Growth in China continues to slow although the bank says that New Zealand will benefit from China’s reorientation towards consumption-led growth. The bank also says that housing constraints, especially in Auckland, are contributing to financial stability risks. Among other measures the bank recommends improving supply by reducing impediments to densification and greenfield development and addressing infrastructure constraints. It is worth noting that each of these risks, should they be realised, could possibly happen together rather than in isolation, with more serious consequences.

Jacqui Dean: What were the results of stress testing by the Reserve Bank on financial institutions in the dairy and banking sectors?

Hon BILL ENGLISH: A stress test is when the Reserve Bank models the effect of severe economic downturns—for instance, a scenario with a 6 percent fall in GDP, unemployment rising to 13 percent, and residential property prices falling 40 percent. Despite modelling this series of severe shocks, banks remain sound. The bank also conducted stress tests on the five largest dairy lenders and found that although there would be a significant effect on loans written off, losses would be manageable for the banking system as a whole if dairy payouts stayed low until 2020. Although the results of the stress tests are positive, I would point out that under these scenarios there would be ongoing negative effects on the economy even if the banking system were able to absorb the pressure.

Jacqui Dean: What is the Reserve Bank’s view on how New Zealand’s improved external balances since 2008 are helping to reduce financial system risks?

Hon BILL ENGLISH: Although the growth in house lending and low dairy prices have been increasing risks to the system, the Reserve Bank says that New Zealand’s current account deficit, currently at 3.1 percent of GDP, is well below levels seen prior to the global financial crisis. It notes that our net external debt has fallen from 83 percent of GDP at the end of 2008 to 57 percent, a significant drop. The bank says the composition of external liabilities has become more stable and lower global interest rates have improved New Zealand’s ability to repay external liabilities.

David Seymour: What role does foreign investment in the banking sector play in the resilience of that sector?

Hon BILL ENGLISH: Technically our four main banks are foreign owned and therefore run by foreign investment. When the pressure came on in 2008—it is hard to tell, but it looks as if the Australian parent banks offered considerable support to their New Zealand banks. However, it is good to see, looking ahead, that there is further diversification in the ownership of our banks, with strong growth in New Zealand – owned banks and a wider range of offshore investors in our banking system.

Prime Minister—Statements

2. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he stand by his statements in the House yesterday?

Rt Hon JOHN KEY (Prime Minister): Yes, and in particular my statement quoting Michael Cullen from 2005, when the current disclosure rules were being developed: “The government has sought to develop policy that works for all concerned, one that enables New Zealand to co-operate with other tax jurisdictions while not disrupting the legitimate financial transactions of foreign trusts.” [Interruption]

Mr SPEAKER: Order! [Interruption] Order! If the member wants to ask a supplementary question, I am happy that he rise and do so, but that level of barrage is unacceptable.

Andrew Little: In light of that answer, and returning to matters of relevance, why will he not give an apology to the Red Cross, Amnesty International, and Greenpeace, following his failed attempt yesterday to divert attention away from his support for the grubby foreign trust tax-dodging industry? [Interruption]

Mr SPEAKER: Order! The question has been asked.

Rt Hon JOHN KEY: Because what I said yesterday is factually correct. If you go into the database it is quite simple. A very quick search of Greenpeace International shows you that it is a beneficiary of the Exodus Trust. What this actually goes to prove is that all of the names of innocent New Zealanders that have been dragged across the TV sets and sullied by members of the House, all because they unwittingly ended up on this database should be taken with a grain of salt by other New Zealanders.

Andrew Little: Was it appropriate of him as Prime Minister to attack an MP over her family trust in the UK, which allows her to stay in her grandmother’s house—[Interruption]

Mr SPEAKER: Order! [Interruption] Order! The question is, at this stage, a legitimate question. I need to hear it, so the level of interjection from my right-hand side will cease. Would the member like to start the question again?

Andrew Little: I am obliged to you, Mr Speaker. Was it appropriate of him, as Prime Minister, to attack an MP over her family trust in the UK, which allows her to stay in her grandmother’s house, in his, once again, desperate effort to distract from mega-wealthy foreigners using New Zealand as a tax haven?

Rt Hon JOHN KEY: Far from attacking an MP, the point I was simply making is that (a) it is in the member’s pecuniary interest and has been stated in the media, (b) it is a statement of fact that she is a beneficiary of a foreign trust, and (c) the very reason that foreign trusts can operate legitimately is people use them all the time for legitimate reasons.

Metiria Turei: I raise a point of order, Mr Speaker. My point of order is that the inaccuracy of the Prime Minister’s statement yesterday—

Mr SPEAKER: Order!

Metiria Turei: Sir, it will take just a moment. The inaccuracy of the Prime Minister’s statement was dealt with in a personal explanation yesterday by Mojo Mathers. As a result of her personal explanation, the Prime Minister is not entitled to restate that false accusation in this House.

Mr SPEAKER: Order! [Interruption] Order! I do not need assistance. I listened very carefully to the answer from the Prime Minister, and at no stage did I think he stated anything that is not correct. He actually referred to a member’s pecuniary interest. If the member involved feels she has been misrepresented, there is an appropriate place to go, but at this stage, there is nothing—[Interruption] Order!—There is nothing that I can see incorrect in the answer that has been given by the Prime Minister.

Metiria Turei: Speaking to the point of order.

Mr SPEAKER: I have dealt with that point of order.

Metiria Turei: I raise a point of order, Mr Speaker. I am seeking some clarification from you about the Speaker’s ruling.

Mr SPEAKER: It is not the point of a Standing Order or a point of order to seek clarification. I will give the member the benefit of the doubt.

Metiria Turei: Thank you Mr Speaker. Speaker’s ruling 152/3 says that “the member’s personal explanation may not be debated or otherwise challenged” in the House, so I would ask if that therefore means that if a member in this House stands up and says that Mojo Mathers is the beneficiary of a foreign trust, is that a direct challenge to her personal statement as of yesterday and is not allowed in this House?

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. I am little perplexed that the Greens have brought this issue up. I would have thought that it might have been discussed when the question was agreed between them and Labour this morning.

Mr SPEAKER: Order! [Interruption] No, I need—[Interruption] Order! I am on my feet. When the personal explanation was allowed yesterday, it was done by leave of the House. Mojo Mathers gave a personal explanation. It was not challenged in any way yesterday. The Prime Minister is now referring to a question from Andrew Little. I do not think, in any way, that breaches the personal explanation that was given yesterday by Mojo Mathers. If she thinks she is being misrepresented, her best course of action now is to study the Hansard very carefully and use Standing Order 359 if it is necessary.

Chris Hipkins: I raise a point of order, Mr Speaker. It is very important that members have the ability to raise points of order that are genuinely points of order. It is also particularly important that the Leader of the House in his role should have the ability to raise points of order and is given some prominence in the point of order – raising process. However, twice in 2 days the Leader of the House has used that to raise points of order that are not points of order and are, in fact, attacking members or the whole Opposition. I ask you to actually pay attention to that and ensure that that right of members to raise a point of order is not abused in that way.

Rt Hon JOHN KEY: Point of order.

Mr SPEAKER: No, I do not need any further assistance whatsoever. In regard to the point of order raised now by Mr Brownlee, I think there is a little bit of substance in the member’s message. [Interruption] Order! It was not actually helpful to the order of the House the way it was asked. In regards to a suggestion that the same thing happened yesterday, I certainly did not detect it at the time and I did not detect it when I re-examined the Hansard last night.

Andrew Little: Why has he fallen back on his old tricks of deny, distract, and demean those asking questions rather than focusing on cleaning up the foreign trust industry?

Rt Hon JOHN KEY: Firstly, the Government has been dealing with the issue in a number of ways. John Shewan’s review is an important part of that, and the work we are doing on base minimisation is part of that. For the last couple of nights New Zealanders have been on TV and their names have been there because they are in the database—they happen to be in the database along with a great many organisations, like Greenpeace. I think New Zealanders will now know that if they go into that database and they type in a name and they see a name, they should take that with a high degree of scepticism that it is real.

Andrew Little: If New Zealand is not a tax haven, as he has been claiming, why is an online gambling magnate, Calvin Edward Ayre, who is on the run from US authorities for money-laundering and tax evasion, able to use a New Zealand foreign trust to stash his assets?

Rt Hon JOHN KEY: Firstly, I do not have those details, and the Inland Revenue Department will not be able to until it gets all of the data, which has not been released yet by the investigative journalist. But if it does, it will be able to look through that, and if that trust is true and the person has been established—and established by someone who is covered under the anti – money-laundering rules in New Zealand—then it will be quite clear, because that person who had established it will have failed in their obligations. Secondly, it is not me who says New Zealand is not a tax haven; the OECD says that. Interestingly, last night when I was watching Newshub, they went through asking the obvious question: “Was New Zealand No.1, 2, 3, 4, 5, 6, 7, 8—

Mr SPEAKER: Order! [Interruption] Order! No, the answer is now going on for far too long.

Andrew Little: If—

David Bennett: Come on, Andrew. Pitch it.

Mr SPEAKER: Order! My last warning to David Bennett: if he interjects again through question time, he will be leaving the Chamber for the balance of question time.

Andrew Little: If New Zealand is not a tax haven, as he has been claiming, why was a French investor able to move his holding company from Luxembourg to New Zealand and then tell the French Government that he owed it no tax because he had paid the zero-rated tax rate in New Zealand?

Rt Hon JOHN KEY: The member makes the right point, that there are mismatches around the world, and that is why New Zealand is working with the OECD. But when the member says—this is the whole problem, is it not—someone has moved something from Luxembourg, it is as if there should be a hiss across the House. That is the whole point with the database, because when I go into it I see that Greenpeace is a beneficiary of the Exodus Trust.

Andrew Little: Why does he not do what most New Zealanders expect of their Prime Minister: protect our reputation rather than protecting the foreign trust industry and demeaning the people who want to clean it up?

Rt Hon JOHN KEY: We have been absolutely protecting and defending New Zealand’s reputation in a great many ways, including the automatic disclosure legislation that is before the House, the changes we have made to shell companies and the like, and the work we are doing with the OECD. If anyone is to blame for sullying New Zealand’s reputation, it is people like Andrew Little and James Shaw, who on Saturday night were parading to the world that I was responsible for the Cook Islands, because one of their mates wrote something, when they knew it to be patently incorrect.

Mr SPEAKER: Order! [Interruption] Order! Again, the answer is long enough.

Prime Minister—Statements

3. JAMES SHAW (Co-Leader—Green) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): My answer reads “yes”.

James Shaw: Does he stand by his statement in the House yesterday that charities including Greenpeace and Amnesty International are named in the Panama Papers as beneficiaries of foreign trusts?

Rt Hon JOHN KEY: I think if the member checks the Hansard, you will see that I said “on the database”. They are in the database, and if you actually look at how this information is presented, you go to the International Consortium of Investigative Journalists. There is a single website link, and it says “Offshore leaks database”, and then it says: “Find out who’s behind almost 320,000 offshore companies and trusts from the Panama Papers and the Offshore Leaks Investigations.” Than you type in “Greenpeace” and it comes back with “Beneficiary of Exodus Trust”.

David Seymour: Can the Prime Minister recall answering a question from the Green Party about the environment?

Rt Hon JOHN KEY: I think in 2008, when I became the Prime Minister, I got one, but since then it has been, you know, a little off radar.

James Shaw: When he made that statement yesterday, was he aware that those charities that he named were actually all found to have been victims of a scam where their names were used as a front by those seeking to use foreign trusts to avoid tax?

Rt Hon JOHN KEY: Absolutely not—absolutely not. But this is the point, is it not? This is the point—that so many New Zealanders are being implicated, and that member has been at the forefront of sullying the names of New Zealanders because they are in the database. So when Deborah Pead’s name was on TV last night, according to James Shaw, it is fine, but when it is his mate Greenpeace it is not fine. They are both in the database.

James Shaw: Does that not exactly prove the point that the problem that we have got is a regulatory regime that allows foreign trusts to be used for illegitimate purposes and that we need greater transparency and disclosure?

Rt Hon JOHN KEY: No. No, it shows his lefty mates went and hacked into somebody’s website, put it up there, did not actually filter it out, and did not have the decency to protect everyday New Zealanders who might be implicated, and all of a sudden, when one of their mates is there, they do not like it. Well, actually, the truth is we do protect New Zealanders, and if the member had some decency about him, he would not have gone on the news on Saturday night and said I was responsible for the Cook Islands when he patently knows it is not true.

Mr SPEAKER: Order! There is just too much interjection occurring.

James Shaw: Can he tell the House why he chose to attack charities and my colleague Mojo Mathers rather than answer legitimate questions about the lack of disclosure in New Zealand’s foreign trust regulation?

Rt Hon JOHN KEY: Sadly, the problem with question time is—this is the way it works. The member asks the question, and if it is to the Prime Minister, I have to answer it. Yesterday the member asked me a question about foreign trusts, with all sorts of implications that they were bad, and lots of questions about the database—apparently, it you are on it, you are bad—and yet my simple point is this, to New Zealanders: next time you hear about this database, next time you hear about the Panama Papers, and next time you see James Shaw making these ridiculous assertions, just ask what is behind it. I am absolutely sure that the member is right: Greenpeace is unwittingly named as a beneficiary, but, nevertheless, it is in the database and it is a beneficiary of the Exodus Trust. [Interruption]

Mr SPEAKER: Order! The specific member in the front row was the one I received the most complaints about by my emails yesterday. I will accept some interjection, but when it is continuous, I am going to have to deal with it.

James Shaw: Given that answer, why will he not apologise to Greenpeace, Amnesty International, and Mojo Mathers for misrepresenting them in the House yesterday?

Rt Hon JOHN KEY: I have not misrepresented Greenpeace. It is in the database as a beneficiary of the Exodus Trust. I do not like the fact that it is there, but it is there, so in what way am I misrepresenting it? I think the member should do this. I think he should get on his feet and he should say: “John, on Saturday night”—

Mr SPEAKER: Order! [Interruption] Order! The Prime Minister will resume his seat. [Interruption] Order! [Interruption] Order! The Prime Minister will leave the Chamber. When I stand to my feet—it happened yesterday; I gave him fair warning—and call for order, he is to be treated no differently from any other member in this House. The Prime Minister will leave the Chamber.

  • Rt Hon John Key withdrew from the Chamber.

Property—Overseas Ownership of New Zealand Properties

4. Dr JIAN YANG (National) to the Minister for Building and Housing: What reports has he received on the number of properties bought and sold by those with tax residency overseas and how do they compare with previous reports?

Hon Dr NICK SMITH (Minister for Building and Housing): Yesterday’s data provides us with tax residency status for every property bought and settled between 1 October 2015 and 31 March 2016, or 67,087 transfers. There were 1,692 buyers, or 2.5 percent, with offshore tax residency, and 1,695 sellers with offshore tax residency—i.e. there was a net reduction of three properties over 6 months owned by people with overseas tax residency. This latest data from Land Information New Zealand is actually very much in line with the Inland Revenue Department report that was published a year ago, estimating that 2 percent of properties in New Zealand are owned offshore, including by New Zealand residents or citizens who are tax residents offshore. [Interruption]

Mr SPEAKER: Order! The member can have a supplementary question shortly.

Dr Jian Yang: What conditions apply to the data that need to be considered in how it is interpreted?

Hon Dr NICK SMITH: The data is preconditioned by four factors. Firstly, it is specifically for the 6-month period and does not include property agreements entered into before 1 October. Secondly, it is about tax residency and not citizenship or residency. A New Zealand citizen or permanent resident whose tax residency is in China, Australia, or the UK would be included in those numbers, although we would not usually describe them as foreign buyers. Thirdly, when there is more than one taxpayer, which is quite common on property transfers, if even just one of the five names on the property transfer is from a person who is offshore, the transfer is included in the numbers. Finally, the data includes non-residential properties where there are no houses, which make up about 10 percent. So these numbers are likely to overstate the number of homes that are owned by people beyond New Zealand tax residency.

David Seymour: Has the Minister heard any reports of conspicuously Australian people bidding at house auctions?

Hon Dr NICK SMITH: No; they might be wearing a Wallabies jersey. But I think the member very astutely makes the point of the anti – New Zealand approach of attacking one ethnic group—be they Australians or someone else.

Dr Jian Yang: Does this data support the claims made last year that 40 percent of the buyers in Auckland are from China?

Mr SPEAKER: Order! Before I call the Minister, he needs to be very careful with his answer, in that according to Speaker’s ruling 197/5, it is not appropriate now to use this question to bring an Opposition party into the answer when the question has come from the Government. I will allow the Minister to presume—

Hon Dr NICK SMITH: No. There is no possible interpretation of the data that would support the claim that 40 percent of buyers are from China. Only 444 of the buyers had tax residency in China, or 0.7 percent of the property bought and settled in the 6-month period. The Australian figure was about the same. The UK figure was about half. The data might move around a bit as we get a longer-term period, but anybody who claims that the figure is 40 percent is being deliberately misleading.

Employment Rate—Forecasts

5. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Will his expectation stated in Budget 2015 that unemployment would drop below 5 percent in 2016 be met; if not, why not?

Hon BILL ENGLISH (Minister of Finance): We do not know yet, because we will not know until February next year when the fourth quarter of the household labour force survey is reported, but given that we have seen more than 50,000 additional jobs in the last 6 months, it is still possible.

Grant Robertson: Why has the number of young people not in employment, education, or training continued to climb after 8 years of a National Government, with the latest increase in the rate for young men being the greatest since records began in 2004?

Hon BILL ENGLISH: The member does himself a disservice. The “neet” rate has recently been as low as it has ever been. In the last quarter it has jumped. We do not know why. We know that the quarterly numbers jump around, but what we do know is that between trades academies, Māori and Pacific trade training, strong expansion of the apprenticeship system, the youth services, and the vocational pathways, we are getting close to a time when we can tell whether each single young New Zealander is on a path to work or welfare.

Grant Robertson: How can it be, with all of those programmes and plans that he has just listed, that the number of young people not in employment, education, or training continues to grow, now reaching 82,000 people, or are they just pretty damned hopeless?

Hon BILL ENGLISH: We just dispute the member’s assertion. The best general statistical description of what has been happening in the last few years is that it has continued to shrink until recently. In this last quarter it has jumped. It could be just a statistical artefact, actually. We will know in the next quarter and the quarter after that. In the meantime we will continue to focus on ensuring that our programmes show the feedback loops that indicate success in keeping young people on a path to work.

Grant Robertson: Do the latest household labour force survey figures show that the number of young people not in employment, education, or training has reached 82,000—26,000 more than when he took office?

Hon BILL ENGLISH: What it shows is a jump in the numbers this quarter, compared with what has been a consistent decrease in the previous quarters. We would like to know why it has jumped. In the meantime, we are getting on with the job, which is spending literally hundreds of millions of dollars on much-improved systems to keep these young people on track.

Grant Robertson: I raise a point of order, Mr Speaker. I asked a very specific question about the increase in the latest—

Mr SPEAKER: And I listened very carefully to the answer. It was, without doubt, addressed—maybe not to the member’s satisfaction, but it was clearly addressed.

Grant Robertson: Is it correct that in the latest household labour force survey the number of young people not in employment, education, or training is now 82,000—26,000 more than when National took office?

Hon BILL ENGLISH: Actually, you cannot necessarily agree with that. What we have is one quarter of a long-running survey, in which quarterly numbers often jump around. So, in time, we will find out whether it has actually increased or not, but even if it has, the Government’s programmes, which we have broadly in place, show that we are spending hundreds of millions in much more effective ways than in the past to get young people on a path to work, not to welfare.

Grant Robertson: I raise a point of order, Mr Speaker. You encourage us to ask specific, factual questions without any political innuendo. I asked that question twice, about the specific household labour force data that the Minister himself has referred to in the House, and twice in a row he has not addressed that question.

Mr SPEAKER: In the first question raised, I am absolutely sure that it was addressed in the way that it was asked. The second question asked was subtly different, and you started with the words “is it correct”. As I recall the Minister’s answer he, effectively, said no, it is not correct. The member might not agree with that statement, but that is the way that the Minister chose to answer it.

Grant Robertson: I raise a point of order, Mr Speaker. I am concerned to get some clarification from you about what happens when a Minister needs—or a Prime Minister needs—to correct an answer that they have given, but you have ejected them from the House. I know that if someone has given an incorrect answer they need to come back to the House and correct that as soon as they are able to—

Mr SPEAKER: Can I have the point of order please.

Grant Robertson: What are the circumstances when someone has been ejected as to when that occasion—

Mr SPEAKER: As soon as the particular member who has been asked to leave is then allowed back, and I determine that. And then it is over to the member who has been ejected as to whether he feels that it is needed to correct any answer.

Question No. 6 to Minister

Hon GERRY BROWNLEE (Leader of the House): I raise a point of order, Mr Speaker. The Prime Minister is in the precincts of Parliament, but he is clearly not able to be here to answer this question. No other Minister wants to answer on his behalf. [Interruption]

Mr SPEAKER: Order! [Interruption] Order! The way forward is: the question has been accepted, I am going to let Ron Mark ask it, and if no Minister rises to his feet to answer it—

Hon Member: Her feet.

Mr SPEAKER: Or a female Minister, that is true. If no Minister determines to answer it—particularly in light of many Speakers’ rulings that this is question time, that it is the time to hold the Government to account, and that Ministers should answer questions unless it is in the public interest not to—then the public of New Zealand will judge the appropriateness of the course of action that Minister Brownlee is determined to take. That becomes a matter for Mr Brownlee.

Hon GERRY BROWNLEE (Leader of the House): I raise a point of order, Mr Speaker.

Mr SPEAKER: Do you want to talk to that point of order?


Mr SPEAKER: I will allow Mr Brownlee.

Hon GERRY BROWNLEE: What I would point out is that although you have outlined that this is the time for the Government to be held to account, you have also required the leader of the Government to be out of the Chamber and unable to account. Therefore, I think it is perfectly reasonable that the question is held over to another day, or the Prime Minister is allowed to come back to answer it later in the day, perhaps, or we simply do not answer it.

Mr SPEAKER: It should be very clear to the Minister—he sits very close to the Prime Minister—why the Prime Minister was asked to leave the Chamber. When I get to my feet, all members will immediately resume their seats. To carry on giving an answer when I am calling order is completely unsatisfactory. A strong warning was given to the Prime Minister yesterday. He chose not to listen to that warning. He has got only himself to blame for the situation that has now arisen. I am going to proceed the way that I have said. Mr Ron Mark will now proceed to ask question No. 6. If the Government of the day is of a mind not to stand and answer that question, that becomes a matter for the Government. I cannot force a Minister to answer, but I am sure the public of New Zealand will judge this accordingly.

Prime Minister—Statements

6. RON MARK (Deputy Leader—NZ First) to the Prime Minister: Does he stand by all his statements?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Yes.

Ron Mark: How does he stand by his 2012 statement that says “we’re a relatively cheap and easy place to set up a company, but it’s obviously important that we preserve our international reputation.” when gunrunners and money launderers continue to register New Zealand companies and trusts?

Hon BILL ENGLISH: Of course the Prime Minister stands by his statement. There are actually probably quite a few New Zealanders whose backgrounds may be questionable who are quite legally able to register companies in New Zealand.

Ron Mark: Is Dunedin-based Incom Trustees Ltd and its sole New Zealand director, Nicolaas Francken, preserving our international reputation by helping to hide the assets of indicted gambling billionaire Calvin Ayre?

Hon BILL ENGLISH: I have no idea. But in respect of New Zealand’s international reputation, there is no evidence for the assertions of the Opposition that New Zealand’s reputation for tax policy and transparency is in question; it is not. We have one of the tightest set of tax rules around foreigners in the developed world, and we are consistently rated very highly on transparency. But we are always keen to improve it where it is required.

Ron Mark: I raise a point of order, Mr Speaker. I am aware of the rulings in respect of the documents—

Mr SPEAKER: Can I just have the point of order, please.

Ron Mark: To assist the Government, could I seek leave to table the New Zealand First research on Incom Trustees Limited and Calvin Ayre, which we conducted this morning?

Mr SPEAKER: No. I am not prepared to put the leave, and I ask the member to have a look at Speaker’s ruling 165/1. I did allow it yesterday. I had a look at the material that was subsequently tabled; I do not think it informed the House in any significant way at all. Speaker’s ruling 165/1 states: “The document must be from an authentic source. It is not acceptable in this House to seek to table members’ own views of the facts, or documents annotated to substantiate those views … documents prepared in parties’ own research units or documents prepared by members are not material envisaged by [Standing Order 377].”

Ron Mark: I raise a point of order, Mr Speaker. To assist the Prime Minister and the Deputy Prime Minister to understand Mr Ayre and the—

Mr SPEAKER: Order!

Ron Mark: Can I seek leave to table a newspaper report?

Mr SPEAKER: No, the member cannot.

Ron Mark: What does it mean for our international reputation when the Government of Macedonia is trying to liquidate another Nicolaas Francken New Zealand company, Guardian Fiduciary Services Limited, a company with links to convicted money launderers and fraudsters?

Hon BILL ENGLISH: I think their advice is that if there are any tax issues or transparency issues on which the Macedonian Government wants assistance, then the Inland Revenue Department (IRD) is ready, willing, and able to provide the information that is required. The only issue ahead of us is whether that should be done automatically and whether some of that information should be on some kind of public register or publicly available. But there is no question mark over New Zealand’s reputation.

Ron Mark: What investigations has the Prime Minister made in the 24 hours since we asked him for assurance that foreign-owned companies here are not involved in gunrunning, people smuggling, money laundering, or financing terrorism?

Hon BILL ENGLISH: Any such investigations would be carried out by the appropriate authority rather than by the Prime Minister, and if there are taxation issues, that will be IRD. If Interpol raises issues with the New Zealand Police, they will be fully compliant with any requests, but it is not necessarily the obligation of our authorities to be policing Macedonian activities.

Property—Overseas Ownership of New Zealand Properties

7. MELISSA LEE (National) to the Minister for Land Information: What did the data, released by Land Information New Zealand, in the Property Transfers and Tax Residency report indicate regarding the tax residency of those buying and selling property in New Zealand?

Hon LOUISE UPSTON (Minister for Land Information): In the 6 months up to 31 March 2016, 2 to 3 percent of transfers involved buyers who indicated an overseas tax residency. In the same period 2 percent of transfers involved sellers who indicated an overseas tax residency. Land Information New Zealand collected this data to ensure that those involved in property transfers pay their fair share of tax.

Melissa Lee: Can the Minister tell us more about the data?

Hon LOUISE UPSTON: The data is based on actual counts of property transfers and the tax residency indicated. Over the last 6 months around 67,000 transfers were registered. This equates to about 1,692 being overseas tax residents, and the data was collected for tax purposes. Land Information New Zealand also asked questions about the type of property, the person’s connection to New Zealand, and their intention to reside at the property. Ninety percent of the respondents indicated there was a home, and, of those, 97 percent were New Zealand residents, citizens, or on a work or student visa. The only area where there has been concern about the data is the third question about the people’s intention to live at the property. The way this question was answered showed Land Information New Zealand that in some cases people had misinterpreted whether the question applied to them, and Land Information New Zealand is working on better guidance to support that final question.

Melissa Lee: How does this compare with other data that the Minister has seen?

Mr SPEAKER: Again, I just caution the Minister in answering.

Hon LOUISE UPSTON: The data released by the Government yesterday is credible and puts into perspective our long-term objective to get accurate information on property transfers by tax residency. It is about ensuring those who earn income off property pay their fair share of tax. It is also about informing policy-makers and the public about housing. In comparison, I have seen data by others that is purely based on Chinese-sounding surnames and has got nothing to do with fact.

Phil Twyford: Why did she exclude businesses and trusts from her calculations?

Hon LOUISE UPSTON: Unfortunately, that member does not understand what the report says. They are not excluded. Every single property transaction has been captured, with the only exception being those that were contracts entered into prior to 1 October, which is not captured by this legislation.

Phil Twyford: I raise a point of order, Mr Speaker. I believe that was a very straight question, and to say the answer was obtuse would be under—

Mr SPEAKER: Order! A very straight answer was given. The member asked why businesses and trusts were excluded and the Minister said they were not.

Phil Twyford: I raise a point of order, Mr Speaker. If I may, they were excluded from her calculations. The calculation of the number that the Minister—

Mr SPEAKER: Listen—[Interruption] Order! The member is in danger. When I stand, the question has been addressed. If the member wants to try a try a different angle—but I listened to the question very carefully. The way I listened to the answer, it has been addressed.

Housing—Overseas Ownership of New Zealand Properties

8. PHIL TWYFORD (Labour—Te Atatū) to the Minister for Building and Housing: Does he stand by his statement in relation to data showing that 1,694 houses were sold into foreign ownership, excluding any bought via trusts or companies, that “the numbers are so small”?

Hon Dr NICK SMITH (Minister for Building and Housing): Yes, particularly compared with the member’s 40 percent buyer claims based on racial profiling of people with Chinese-sounding names.

Phil Twyford: Why should any offshore speculators be allowed to buy New Zealand homes?

Hon Dr NICK SMITH: The member continually uses the word “speculators”. My challenge to him is to go to any auction and to differentiate between those New Zealanders who are genuinely wanting to invest and those who pretend they are speculators.

Phil Twyford: I raise a point of order, Mr Speaker. That was a very, very straight question, and he completely failed to address it.

Mr SPEAKER: No, he did not. The member asked why any overseas speculator should be allowed to buy, and the Minister said the difficulty is in defining who is buying at a particular auction, etc. That addresses the question. It may not be to the satisfaction of the member, but it certainly addresses the question that was asked.

Phil Twyford: How many sales to foreign speculators does he think represents a large enough problem to warrant action?

Hon Dr NICK SMITH: I draw the member’s attention to the data. During the first 6 months of properties that were sold—

Dr David Clark: Answer the question.

Hon Dr NICK SMITH: Give me a chance, mate. In respect of the sales data there were 1,692 buyers from overseas tax residents and there were 1,695 sellers. There was a net reduction of three in terms of the number of properties owned in New Zealand by persons that were tax residents overseas. That does not sound to me like a crisis.

Phil Twyford: Is he aware that when the exceptions the Government used to manipulate the figures are removed, the raw data actually shows that 8.8 percent—or 15,905 properties—are being sold to offshore speculators a year, and does he think that that is too small?

Hon Dr NICK SMITH: No, the member’s claims are about as accurate as those on Chinese-sounding names. We have 100 percent data on every one of the transactions over that 6-month period that were purchased and settled within those 6 months. We have tax residency status for every single one of those. The number is 2.5 percent, and that includes New Zealand residents and citizens who are tax residents overseas but bought properties in New Zealand.

Phil Twyford: I seek leave to table calculations from my office showing that the actual number of offshore buyers is nearly 16,000 a year based on that Minister’s data—

Mr SPEAKER: Order!

Hon Dr NICK SMITH: I raise a point of order, Mr Speaker.

Mr SPEAKER: No, I need to deal with this one first. I am certainly not putting the leave. I read out a particular Speaker’s ruling only about 10 minutes ago. I was hoping the member might have heard it. If it is information that is prepared by the research units or by your office, it is not authentic enough to be of information to members.

Phil Twyford: Why did he exclude businesses and trusts from the calculation of foreign buyers in the market in the time period that was used?

Hon Dr NICK SMITH: The member is incorrect. The tax residency status applies to every single transaction. If the property is owned by a trust, if the company is owned by a company, if it is owned by an individual, the tax residency status is noted. It is actually quite cautious. A number of property transactions involve a number of companies or a number of trusts or a number of individuals. If any one of those are overseas tax-registered, the transaction is listed as overseas tax resident.

Tax System—Overseas Trusts

9. JULIE ANNE GENTER (Green) to the Minister of Revenue: Does he agree with the Prime Minister, who said the disclosure and reporting requirements for foreign trusts under IR607 were “extremely broad and deep”?

Hon MICHAEL WOODHOUSE (Minister of Revenue): Yes, because once a trustee has registered a trust through the IR607 they must keep detailed records in relation to that trust, including particulars of any settlements made on the trust and particulars of distributions made by the trust. The Inland Revenue Department (IRD) can get this information at any time from the trustee. The IRD can then exchange this with its treaty partners, either automatically or on request. I would point out to the member that those rules were put in place in 2006, and the Government is open to making changes around the disclosure rules covering foreign trusts, which is why we recently appointed John Shewan to conduct an independent review.

Julie Anne Genter: Can he confirm that according to section 59B of the Tax Administration Act, unless the settlor is resident in Australia there is no requirement to disclose to the IRD any information about the settlor, the beneficiaries, or their countries of tax residence?

Hon MICHAEL WOODHOUSE: I draw the member’s attention to section 22 and 22(7) of the Tax Administration Act. It requires that documents that evidence the creation and constitution of the foreign trust, and particulars of settlement made on and distributions made by the foreign trust must be collected by the trustee. All of that information is available on request or proactively by IRD.

Julie Anne Genter: Is tax law professor Michael Littlewood correct in his paper where he says that as a consequence of section 59B “if the settlor is resident anywhere other than Australia, the IRD generally have no idea of who the settlor is or of the country in which he [or she] resides. The IRD is therefore not able to inform that country’s revenue authority that one of their residents has set up a trust in New Zealand. And, of course, the other country’s tax authority is unlikely to ask,” because it would not know?

Hon MICHAEL WOODHOUSE: I certainly dispute the last two parts of the quotation in that question—that the IRD is unable to find the information and unable to provide it to the foreign jurisdiction, because the foreign jurisdiction would not know. It appears that the member is under the mistaken illusion that somehow the transactions that go on overseas in the procurement of assets and the transaction of business are somehow completely beyond the radar of those tax authorities because they are New Zealand – registered foreign trusts. That is simply not true.

Julie Anne Genter: Can he confirm that only 1 percent of the nearly 12,000 registered New Zealand foreign trusts have a settlor resident in Australia, and therefore 99 percent of New Zealand foreign trusts do not automatically disclose to the IRD information that would be necessary for us to share information with other jurisdictions’ tax departments?

Hon MICHAEL WOODHOUSE: No, I cannot, but the member may well be correct about that. I go back to the point I have made earlier in this question, and yesterday, and last week, and the week before that: there is plenty of opportunity for foreign tax jurisdictions to ask for, and the IRD proactively to offer, the information when it is necessary.

David Seymour: Has the IRD committed personnel to searching through the so-called Panama Papers to look for names and records of New Zealand taxpayers?

Hon MICHAEL WOODHOUSE: Yes, but that is business as usual for the IRD. It does that as a routine process anyway, primarily to ensure that New Zealand tax residents are not using New Zealand resident foreign trusts to shelter income that they should be paying to the New Zealand taxpayer. This is business as usual for the IRD.

David Seymour: If the IRD is prepared to use those “stolen records”, as the Prime Minister described them earlier in question time, will the IRD start hacking the records of private law firms itself, or is it good enough just to receive stolen goods?

Mr SPEAKER: Order! Marginal question—I will allow it.

Hon MICHAEL WOODHOUSE: I can assure the member that the IRD’s investigations are well within the law.

Julie Anne Genter: Would it not make it easier for the IRD to provide information to our tax treaty partners if we collected more relevant information at the point of registration, as we currently do with Australia? If it is the case, why is his Government so opposed to having greater disclosure?

Hon MICHAEL WOODHOUSE: I note that is exactly the question that Dr Michael Cullen, as Minister of Revenue, asked in 2005 and 2006, and came up with the answer no. But that is the essence of the inquiry that is being led by John Shewan, and we will have further information on that in the next couple of months.

Housing, Auckland—Overseas Ownership of New Zealand Properties

10. DENIS O’ROURKE (NZ First) to the Minister for Building and Housing: Does he stand by his statement concerning offshore buyers pushing up Auckland house prices, “The easiest trick in the book is to create a scapegoat that it’s these foreigners that are a problem”?

Hon Dr NICK SMITH (Minister for Building and Housing): Yes. Blaming foreigners is not only the easiest but the oldest political trick in the book, whether the issue is housing, employment, or crime. They are easy targets because they cannot vote and because it is easy to create misconceptions about people far away and of a different culture.

Denis O’Rourke: What information did the Government use to even consider a land tax if, as he claims, foreign buyers are not a problem for Aucklanders trying to buy a home?

Hon Dr NICK SMITH: All that occurred was that the Prime Minister was asked whether he would rule out a land tax, and he said he would not rule anything out at this time.

Denis O’Rourke: How can he deny that his Government has stalled for years on collecting meaningful data on foreign buyers and has now resorted to flinging fictional flimflam in the face of angry Aucklanders trying to buy a home?

Hon Dr NICK SMITH: Last year I tabled in the House a report from the Inland Revenue Department (IRD) based on tax returns. It showed that the level of overseas people declaring rent was about 2 to 2.5 percent of properties in New Zealand. The data that was provided by Land Information New Zealand yesterday provides comprehensive data on the tax residency status. [Interruption] I suspect that the members opposite will not be satisfied unless we blood and DNA test every person at a housing auction.

Denis O’Rourke: What does the Minister say to Aucklanders turning up to house auctions to find that they are constantly outbid by foreigners with deep pockets, other than just peddling more dodgy statistics?

Hon Dr NICK SMITH: I would draw attention to the head of one of Auckland’s largest housing companies, who said on the radio this morning that at those auctions there were many people of different ethnicities, but the vast, vast bulk of them were New Zealand citizens and residents, and it is simply the nature of the changing face of New Zealand. That is something I would hope most members of this House would welcome.

Denis O’Rourke: In relation to that answer, does he accept that, in fact, foreigners with student or temporary work visas, or who are otherwise here under the Government’s liberal immigration policies, are some of the people buying up Auckland houses, using foreign trusts, for their overseas mates and families?

Hon Dr NICK SMITH: I would draw the member’s attention to the tax residency status data that covered every single one of the 67,000 transactions over 6 months and showed that only 2.5 percent of them had people overseas and that actually, surprisingly, there was a net reduction in the number of people who were tax residents overseas who owned a New Zealand property.


11. Dr SHANE RETI (National—Whangarei) to the Minister of Education: What recent announcements has she made that will increase support to students with special needs?

Hon HEKIA PARATA (Minister of Education): Today I was pleased to make a pre-Budget announcement that an extra 1,250 students will get help from increased teacher-aide hours thanks to a $15.3 million Budget funding increase for in-class support. The operating funding increase, to be spread over 4 years, will ensure that students with a range of learning difficulties receive support tailored to their individual needs. Together with the increased funding in last year’s Budget, the Government is now funding an extra 550,000 hours of classroom support for students with ongoing learning difficulties. I know from my visits to schools that teacher-aides play an invaluable role in the classroom. They work alongside our teachers to enable students with additional learning needs to become more independent and confident learners.

Dr Shane Reti: What other support has this Government provided for students with special needs?

Hon HEKIA PARATA: Supporting children and young people with special education needs is a high priority for our Government. We want every child to get a good education, and that is why we are working hard to ensure that the kids who need it get the right resources at the right time. For example, under this Government the $1.6 million upgrade to Blomfield Special School in Whangarei was opened in 2013, which provided for one of the more advanced and innovative special school facilities in the country. We currently spend over $590 million supporting children and young people with special education needs every year. That is almost 30 percent more than 6 years ago.

Chris Hipkins: Has the Government conducted any estimate of the total number of students who require additional special needs support but are not currently getting it; if not, why not?

Hon HEKIA PARATA: No, the Government has not conducted a survey because it is responding to real kids in real time and providing the resources they need.

Student Achievement—Literacy

12. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of Education: Why does she accept some responsibility as Minister of Education for Hon Bill English’s statement that a lot of Kiwis are “pretty damned hopeless” and “they can’t read and write properly”?

Hon HEKIA PARATA (Minister of Education): The member has incorrectly stated what I said in this Chamber last week. I said: “… I do accept responsibility for my part as Minister of Education, but we all have a role to play—including the member—in encouraging educational success in all our young people.” I do hope the member is rising to affirm that.

Chris Hipkins: Does she agree with Bill English’s comment that there is a “cohort of Kiwis now who can’t get a licence because they can’t read and write properly and don’t look to be employable—y’know, basically young males.”; if so, is she confident that every student leaving school now, after 8 years of a National Government, is not adding to that cohort?

Hon HEKIA PARATA: We are focusing on every young person in our schools. There are different levels of educational challenge, and all schools are doing their very best to meet that. Where we are very sure is that now that we have national standards in place we can understand much earlier in our system how well, or not, our kids are doing and intervene sooner, unlike the previous Government—and, actually, I think it is on record now that Labour would do away with national standards and go back to driving blind.

Chris Hipkins: I do not think even blind people are allowed to drive without a licence.

Mr SPEAKER: Order! I will have the supplementary question.

Chris Hipkins: Why did she tell the House in March this year that she had full confidence in the minimum literacy and numeracy requirements for the National Certificate of Educational Achievement (NCEA) when she was advised by the Ministry of Education in May last year that the standards were not up to scratch and needed to change?

Hon HEKIA PARATA: I said I had full confidence in teachers assessing the requirements for NCEA, which included the rigorous improvement from 2013 for the 10 credits for literacy and numeracy. At the same time—because we are devoted to continuous improvement—the Ministry of Education is working with the sector to understand what benchmarks would be more appropriate, has been investigating the use of the youth assessment tool that the Tertiary Education Commission uses, and has been working with the moderators on how best to understand what assessment is working. It is not perfect; the member understands that. But this Government is absolutely committed to continuously improving. That is why we have seen achievement rates go up so much under this Government. [Interruption]

Mr SPEAKER: Order! No, that part is not helpful. Just ask the supplementary question.

Chris Hipkins: Do the current minimum literacy and numeracy requirements for NCEA meet the OECD benchmarks for the minimum level of literacy and numeracy required for life in a modern society?

Hon HEKIA PARATA: I think the member is referring to the report published by the in December last year using 2012 information, so on that basis our literacy competencies are not completely aligned with the OECD, but we are absolutely confident that they relate to our circumstances. However, they do need improvement, and that work is being done.

Chris Hipkins: Does she agree that it is not the kids doing their best to complete their qualifications that are “pretty damned hopeless”, but the Government Ministers who, having been told minimum literacy and numeracy requirements for NCEA are not enough to prove school leavers are functionally literate and numerate, continue to sit on their hands and do nothing about the problem?

Hon HEKIA PARATA: I do not agree with the member blaming kids at all.

Chris Hipkins: How is describing any New Zealanders as “pretty damned hopeless” evidence of her claim that the Government has high expectations for everyone?

Hon HEKIA PARATA: I do not know whether the member just does not understand or whether he is just being wilful about it, but what the Deputy Prime Minister was doing was quoting what employers have said to him. I am aware that we do have young people who do not have the literacy and numeracy skills that they need to be successful, and that is why I told the House last week that we have introduced initiatives that are focusing on getting those young people reconnected. We have introduced credits for driver’s licences; we are taking a wraparound approach, because we are not prepared to sacrifice any one of our young people.

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