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Source: New Zealand Parliament – Hansard

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. Just on the matter of the Privacy Commissioner’s involvement in the collection of information for tax purposes, the departmental disclosure statement does reference that. So for Mr Seymour’s benefit, I’ll just quote: “Due to the insufficient information available on the specific use cases associated with the proposal to collect information for tax privacy purposes, the Privacy Commissioner is unable to assess the associated privacy risks.” So not only do we have the Attorney-General saying that this is an invasion on the right to protection from unwarranted search and seizure, and a breach of freedom of expression, the Privacy Commissioner is saying that we’re not even sure if the privacy issues that he is responsible for maintaining will be complied with. Certainly, the vast majority of the Minister’s answer and the contextualising of the reasons for this clause were certainly spoken to as the Minister of Revenue, not the Attorney-General—and I’m not sure that the Attorney-General would have been entirely satisfied with that explanation.

Now, I’m not over the details of the Owen Glenn and Eric Watson spat—and there has been a considerable amount spent in that dispute—but Inland Revenue, it seems to me, is on the sidelines of that dispute and now seeks to inject itself with what can only be described as a “stalking-horse clause.” We’re going to gather the information for policy purposes, but according to the new amended subsection (3), actually if we gather information subsequently obtained by the commissioner under another section of the Act, then that’s going to be OK for potentially investigation prosecutorial purposes.

Now, I don’t want to misunderstand what the Minister said in his answer, because the primary purpose of that intervention was the context, which was helpful, albeit just as concerning, I interpreted the answer as saying, “Yes, it is technically possible for the commissioner having identified evidence potentially for proceedings but prevented from being able to do it by subsection (2) can nevertheless regather that information, subsequently obtain it under another section of the Act, and use that for potential prosecution.” So I don’t want to misunderstand it. If I’ve got that wrong, if the Minister could explain why I got that wrong, that would be helpful; otherwise that’s the way I’m going to interpret the amended clause 33.

The other information that I would like is, actually, who asked for what, and I would like an explanation from the Minister about the broader context from a policy perspective and the conversations that have gone on between the Inland Revenue Department policy team and the Minister of Revenue since he took on the warrant. Did the Minister of Revenue receive submissions from the Inland Revenue Department saying, “We think there is a need to clarify the law around trusts and the gathering of information.”, or did he go to the Inland Revenue Department and say, “I think we’ve got a problem, I want to give the commissioner a new power.”? I’d like to know the answer to the question of that in the committee of the whole House, but, rest assured, whatever the Minister says, we will be seeking that information under the Official Information Act so that we can best understand the genesis of the need for this, because we’re hearing that “Oh well, this is just a tidy-up.” In fact, in the Minister’s own submission it says it’s a clarifying amendment to clarify that the commissioner’s information-gathering powers include being able to require persons to provide information solely for the purpose of tax policy and development. That suggests to me that they’re already getting that information and they want to use it for a different purpose. That’s not what the Minister just described in the Glenn v Watson issue. That’s like “Well, we’re on the sidelines of a spat, we want to inject ourselves into that; we may not use it for prosecutorial purposes but we’re going to take it and have a good look at it, see if it highlights a loophole in existing tax law, and then close that loophole. But if it also provides evidence or prima facie evidence of breaches of the Income Tax Act, we’re going to go and gather it under a different section of the Act and take proceedings against it.”

That’s my interpretation of this clause. If I’ve got any of that wrong, I’d appreciate the Minister just explaining how I’ve got that wrong. But definitely I’d like to know what the genesis of the discussion between him and the IRD was about why this was necessary.

Hon DAVID PARKER (Minister of Revenue): In respect to the question as to whether these provisions in respect of trusts, which was the member’s question, were raised as a matter of concern by the revenue department or by me, the revenue department, as is very clear from the information that’s already been released, have been concerned about avoidance risks in respect of trusts, which is the genesis of the trust provisions.

The comments that the member made in respect of Eric Watson, I’m not aware of whether Eric Watson is under investigation by the revenue department; I would not ask—and even if I asked, I would not be told. So the assertion that the revenue department is inserting themselves into that dispute is mere speculation, and I know nothing about that. The point I was making is that the complex affairs of wealthy people who want to avoid responsibilities for things can be very, very convoluted.

I would also make the point that I think the Opposition has to be very, very careful here that they don’t position themselves as being on the side of tax avoidance. [Interruption] Well, those were the arguments that I heard from them last night on the trust issues, which I thought erred on the wrong side of that argument. In respect—

David Seymour: What’s the difference between privacy and tax avoidance?

Hon DAVID PARKER: “What’s the difference between privacy and tax avoidance?”, the member for Epsom says; there is a difference.

David Seymour: Well, tell us.

Hon DAVID PARKER: What’s that?

David Seymour: Tell us.

Hon DAVID PARKER: There’s a difference. If the member—

David Seymour: Describe the difference.

Hon DAVID PARKER: Well, if the member doesn’t know the difference between right and wrong, I’m not sure I can teach him.

In respect of another point, I would say to David Seymour, David Seymour was saying last night that in his view we should have a broad-based, low-rate income tax system. Avoidance by people who don’t pay a broad, low rate threatens that principle.

David Seymour: Yeah, that’s right.

Hon DAVID PARKER: Thank you for agreeing with that.