Andrew Little: I would get rid of foreign trusts

Labour leader Andrew Little says there are no strong reasons for offering  foreign trusts in New Zealand, and if Labour were elected, they’d ban them.

Prime Minister John Key rejected Mr Little's call as a "kneejerk reaction" that "could have unintended consequences".

However, the PM added that Inland Revenue would chase down any leads in the leaked Panama Papers data after it's made publicly searchable on Tuesday NZT.

"If there's a New Zealand individual that's identified that's come out of the Panama Papers release that hasn't paid their fair share of tax they should expect a knock on the door," Mr Key said.

Speaking on TVNZ's Q+A, Mr Little said. “I don't see any value for New Zealand, and the only argument that's been put up so far is they generate $24 million in fees for lawyers and accountants. “Well, actually, that's not a reason.”

“If we want to talk about economic development, there's other things we should be doing. So right now my point is I see no value in them; I'd be getting rid of them. And I think what we'd do is have a close look. If there is no convincing reason, then they will go," he said.

Mr Little also said that the fact New Zealand’s fallen two places in the global corruption-free index is a worry. 

“It is this sort of stuff — us appearing to harbour the tax avoiders of other countries — that undermines our integrity and reputation,” he said.

RAW DATA: Q+A transcript: Labour Party leader Andrew Little

Watch the interview here

CORIN Well, we did ask Mr Key to appear on Q + A this morning. He declined. Joining me now is Labour leader Andrew Little. Good morning to Mr Little.

ANDREW Morning.

CORIN Has John Key got a point here? Is this just an unfair criticism?

ANDREW Well, I think it's a very small point out of what is now a huge issue facing the world but also New Zealand. We know from the original drop of the Panama Papers. It revealed for the first time we have 12,000 of these foreign trusts. We know that New Zealand is mentioned 60,000 times in these Panama Papers. The issue about the Cook Islands is a little obscure. There's no question with the old wine box issue, you know, 20-odd years ago. The Cook Islands was at the heart of that. There has been some cleaning up of that, but I think John Key's point that we have absolutely no responsibility for the Cook Islands is wrong. We have a special relationship with the Cook Islands, and we ought to be continuing to monitor what they do.

CORIN So, for a start, are you concerned that the Cook Islands does have tax practices which are not good?

ANDREW Well, they were meant to have been cleaned up in light of the wine box stuff, and we need to play— we have a relationship with the Cook Islands where we get information from the Cook Islands on their tax affairs, and we're meant to be monitoring what they do. I don't know what the latest on that is, but what I do know is that the issue about the Cook Islands and their involvement is frankly the least when it comes to what has been revealed in the Panama Papers about New Zealand and what we are harbouring here and the tax avoidance activities that we're sheltering.

CORIN So what you're saying is that if the Cook Islands practices aren't acceptable, we should be, what, pressuring them through our close relationship to clean that up?

ANDREW Absolutely, they're not only a South Pacific island nation in our backyard; we have a special relationship with them. One of the things the Cook Islands have been doing is agitating for our support to allow them to vote on their own account in the United Nations. They don't have that because they have a special relationship with us. We have a close relationship with the Cook Islands. We provide aid to them. We can influence them, and we ought to be using what influence we've got to make sure they conduct themselves in a proper way.

CORIN Would Labour ban foreign trusts? Is it time to just draw a line in the sand here and say, 'There's no point is us having these things?'

ANDREW I see no value in them. I cannot see what the purpose is apart from allowing others— you know, citizens in other countries to avoid their tax responsibilities in their home countries. And I'm at the point now where I'm saying, 'Actually, unless I could be convinced otherwise, that we should just get rid of them.'

CORIN So if a Labour government came into power, you would, unless— Well, we've seen some strong lobbying by that industry who've put up a case. But you would say you'd ban them?

ANDREW I don't see any value for New Zealand, and the only argument that's been put up so far is they generate $24 million in fees for lawyers and accountants. Well, actually, that's not a reason. If we want to talk about economic development, there's other things we should be doing. So right now my point is I see no value in them; I'd be getting rid of them. And I think what we'd do is have a close look. If there is no convincing reason, then they will go.

CORIN Has the reputational damage, though, been overstated. I mean, it's not like we are being trashed globally in international media all the time about this.

ANDREW Well, we don't know. What we do know is that under this government we've fallen two places in the corruption-free index already, and it is this sort of stuff — us appearing to harbour the tax avoiders of other countries — that undermines our integrity and reputation.

CORIN We're not even in the top 10 list, though?

ANDREW ...in honesty when it comes to tax.

CORIN They put out a top 10 recently. We're nowhere near that.

ANDREW Well, we are slipping. And, you know, do you say, 'Well, we've got room to slip even further?' I mean, this is not a good strategy for us to adopt. We used— We sat number one in the corruption-free index. In fact, only three years ago Judith Collins — when she was Justice Minister — gave a speech about how wonderful it was, how attractive New Zealand is to do business because we are regarded as number one in the world in terms of corruption free. Well, since she gave that speech, we've slipped two places, helped in part by her conduct over Oravida. But this is a government that, I think, pretty cavalier about our international reputation on these matters, and in the end, the more we slip down that index, the more costly it is for business and the harder it is to attract international investment. We've just got to stop it.

CORIN Okay, Andrew Little, thanks very much for that. We'll talk to you again a bit later in the show on housing.