John Key’s response to the Panama Papers leak

Written By: - Date published: 9:13 am, April 5th, 2016 - 42 comments
Categories: Globalisation, International, john key, national, Politics, same old national, slippery, tax - Tags: , ,

john key working for new zealand sign with grafitti money bag

You can bet that deep in the bowels of National Party HQ the research unit and the party’s pollster are urgently trying to work out what lines they should use concerning the Panama Papers leak.  An urgent call may have been put into Crosby Textor although they may have an urgent clean up job that takes priority.  The party’s pollster has not blogged on the issue even though it has dominated the media for the past 24 hours.  Other Ministers are strangely silent.  No doubt polling is being conducted and the focus groups are being assembled to work out what should be said.

Key’s current lines are:

  • The tax system has been in place since 1988
  • The OECD has given our tax system a clean bill of health
  • There is a full disclosure of information requirement and you have a tax haven when you do not have this sort of system in place.

If you had the misfortune of watching the video of yesterday’s post cabinet press conference you would have seen these points made again and again and again and again.

But this is classical Key.  He stands up and with complete confidence and assurance gives an emphatic description of the current situation.

The only problem is that his lines do not reflect reality.

While the tax system has been in place since 1988 it has not been a significant problem until the last few years.  And recent events would cause a responsible government to review current laws.  In an article posted in October last year Gareth Vaughan wondered if New Zealand was becoming a paradise for money launderers.  His article said this:

The NZ Police Financial Intelligence Unit (FIU) details suspicious transaction reports filed with it under the Anti-Money Laundering and Countering the Financing of Terrorism Act (AML/CFT Act) by the likes of financial institutions and casinos. Although at around 12,000 the volume of these reports didn’t budge much in 2014-15 from 2013-14, the value of transactions in them shot up to $8.6 billion from $3.4 billion. …

Just what the FIU does with those suspicious transaction reports once it gets them isn’t completely clear. A Police spokeswoman said my question asking this was being treated as a request under the Official Information Act. We have, however, been told by Justice Minister Amy Adams that between December 2013 and May 2015, suspicious transaction reports contributed to four police operations in NZ that resulted in 30 people being arrested and about $220 million worth of drugs and assets seized.

Here’s hoping that $8.6 billion figure paints an accurate picture of the parts of our economy that are caught by the AML/CFT Act. But even if it does it’s merely the low hanging fruit. Because tempting swathes of the economy are excluded from the AML/CFT Act, crucially including real estate. Also excluded is the eighth wonder of the world, the offshore operating NZ registered – but not regulated – financial service provider.

Of course if you want New Zealand to become the Switzerland of the Southern Hemisphere and a refuge for the rich and powerful you would turn a blind eye on the source of the funds entering the country.

Has the OECD given New Zealand’s tax system a clean bill of health?  Well sort of in that it is better than some of the really notorious tax havens that had stronger secrecy provisions.  But the IRD warned in 2013 that our foreign trust tax regime posed a reputational risk.  This is hardly a clean bill of health when your own tax entity says that there is a problem.

And the full disclosure requirement?  As pointed out by Deborah Russell all that has to be disclosed is the name of the trust, the name of the trustees and if the settlor lives in Australia.  Details of the beneficiaries and the assets owned by the trust need not be disclosed.

So the interim answers from Key clearly are just spin.  I would expect there to be a gradual change in position as the polling results come in.  And I would not rule out a law change if the pressure becomes too much.

42 comments on “John Key’s response to the Panama Papers leak ”

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  1. One Anonymous Bloke 1
    5 April 2016 at 9:25 am

    Time for an urgent meeting of Cabinet Club. “We regret to inform our members that we cannot stay bought on this issue. We may be able to delay investigations while you make other arrangements, if you pay us more”.

  2. Draco T Bastard 2
    5 April 2016 at 9:27 am

    I would expect there to be a gradual change in position as the polling results come in. And I would not rule out a law change if the pressure becomes too much.

    Possibly a slight change in position but if there was any law change from this government on this subject then I’d expect it to be like their promise to get rid of zero hours contracts which ended up with a law to entrench them. And it’ll be passed under urgency so that the opposition can’t renegotiate it.

  4. Sacha 4
    5 April 2016 at 9:35 am

    Is it too much to expect journalists to ask the PM what he means by “full disclosure”, because it is such a blatant lie?

    • TC 4.1
      5 April 2016 at 11:46 am

      We dont have any journalists, they are lackeys of the owned msm and mostly unskilled to handle such a situation even if allowed to.

      There will not be any asking the tough questions, till they get an acceptable response. Nor a sustained intelligent objective commentary on the timelines, law changes, ignoring of ird and legal experts concerns, evidence etc etc.

      The sort of commentary that circles the logic wagons around the inevitable conclusion is desparately needed as the CT spin and DP units will be getting primed and ready to divert, deflect and diffuse their wizard of oz moment.

  5. ianmac 5
    5 April 2016 at 9:44 am

    Funny that neither the Herald nor other MSM are writing much online about this issue. National Radio has and The Standard has but…

    • Bearded Git 5.1
      5 April 2016 at 12:45 pm

      Wrong ianmac. Read the Herald editorial today which, for once, is right on the mark.

  6. RedLogix 6
    5 April 2016 at 9:45 am

    Compare and contrast with over the Tasman:

    The Australian deputy opposition leader, Tanya Plibersek, said: “We have got evidence today of hundreds more Australians that are structuring their finances, perhaps some of them for legitimate reasons, but others perhaps making use of offshore tax havens to avoid paying their fair share.

    “That affects us all. It is hard to pay for our health and education and other investments in our community if very large companies and high net wealth individuals aren’t paying their fair share.

    “We know that ordinary wage and salary earners don’t get to restructure their affairs so they can avoid paying tax because they have set up in some tax haven overseas.”

    http://www.theguardian.com/global/2016/apr/04/panama-papers-release-sparks-war-of-words-in-australia-over-tax-avoidance

    Switzerland of the South Sleaze more like it.

    • ianmac 6.1
      5 April 2016 at 10:11 am

      I guess we in NZ are so gullible, so naive, and so trusting in our PM. If Key says everything is OK then so it must be. Huh!

  7. Lanthanide 7
    5 April 2016 at 10:21 am

    I do wonder if the ‘focus groups’ to determine government messaging actually exist?

    Surely if they did exist, someone would have gone to the media about having been involved in one.

    I guess if the participants are paid $$ with a confidentiality clause, they wouldn’t blab though?

    • Gabby 7.1
      5 April 2016 at 11:05 am

      Surely if they did exist, someone would have gone to the media about how they don’t exist.

    • shorts 7.2
      5 April 2016 at 11:07 am

      http://www.curia.co.nz/clients/

      what media story is their in being on a focus group?

      I assume you are intelligent enough to know they don’t simply ask people what the govt should say in any given instance…. if they did we’d hear a lot more yeah yeah nah’s

    • McFlock 7.3
      5 April 2016 at 11:10 am

      Participants might not know who the client is.

      You go to the market research company, they discuss a whole bunch of stuff (possibly involving topics from multiple clients), you leave. It’s not like they’d hold the focus groups in the Beehive.

      • Lanthanide 7.3.1
        5 April 2016 at 12:21 pm

        The party’s pollster has not blogged on the issue even though it has dominated the media for the past 24 hours. Other Ministers are strangely silent. No doubt polling is being conducted and the focus groups are being assembled to work out what should be said.

        Let’s say the government needs to have a clear message to deliver by Wednesday, Thursday at the latest. The story broke on Monday.

        If they are using focus-groups to divine the message, on this tax-haven issue which has largely come out of left field, then they need to hold these focus groups no later than today; 30-40 hours after the story broke.

        Ergo, they can’t be using *focus groups* to help formulate this type of political messaging.

        I also doubt that much in the way of formal polling on the public would have a fast enough response time.

        More likely National would be reaching out to their members, and their members naturally reporting to MPs and ministers, what they think about the issue.

        • McFlock 7.3.1.1
          5 April 2016 at 12:35 pm

          Ok, let’s say you have an ongoing relationship with a market research company that has several other clients.

          The market research company runs regulary focus group sessions, maybe twice a week, sometimes looking at beer ads, baked bean cans, power company ads, and social issues.

          You pay a wee premium to piggy back the crisis du jour into tomorrow or this afternoon’s focus group, two days at the outside, and get fast draft analyses returned.

          • Sacha 7.3.1.1.1
            5 April 2016 at 12:50 pm

            I believe Curia also do daily polling during election campaigns, so no reason they can’t turn around crisis management likewise. And how many times have we seen a 24-48 hour lag before the Nats’ lines settle into place?

            • Lanthanide 7.3.1.1.1.1
              5 April 2016 at 1:48 pm

              “so no reason they can’t turn around crisis management likewise”

              Sure there’s a reason – not having staff available to run the poll (eg they’re all working on other polls, or aren’t rostered in to work) and not having the questions prepared.

              It’s not like you can snap your fingers and get poll results with no work involved.

              • McFlock …
                5 April 2016 at 1:56 pm

                well, when I was casual on hospo I’d more than once received a phone call saying “can you work tonight?”

                While you’re getting the staff, the client is picking half a dozen questions they feel are important.

                • Lanthanide …
                  5 April 2016 at 2:01 pm

                  Depends if the polling company has staff on call like that, or not. I guess they could.

                  But generally there’s quite a lot of work that goes into designing a survey. Sure you can just throw some questions together, but often the ordering of them is important, and the way the question is asked needs to be clear to the audience, etc.

                  I’m not saying it can’t be done, but the assumption that things like this can be thrown together at short notice seems off-base to me.

          • Lanthanide 7.3.1.1.2
            5 April 2016 at 1:49 pm

            That’s feasible.

        • mickysavage 7.3.1.2
          5 April 2016 at 12:45 pm

          So are you saying National does not poll religiously and never uses focus groups? My quote says “focus groups are being assembled”.

        • Psych nurse 7.3.1.3
          5 April 2016 at 1:13 pm

          It’s already been buried in the mainstream media, the lead stories on Stuff are some news readers breasts,batchelorettes [ ? ] and the sexual performance of a groom the bride met that day. No mention of trust funds.Nothing to see here, move on.

    • RJL 7.4
      5 April 2016 at 4:42 pm

      Sure, it’s hyperbole to claim that every single iota of government messaging is minutely focus grouped and surveyed.

      Sometimes, the delay is simply because Key/Joyce et al are struggling to dream up any suitable angle at all. And / or are hoping the issue will disappear of its own accord.

      On the other hand, as others have noted the polling company (i.e. Curia) will not explicitly say that it is doing National Party polling. That would simply be bad statistical practice as it would skew the results if the participants knew the poll purpose was for National Party policy/messaging. Also there will be a whole selection of issues and questions polled, partly to gain information to classify the respondents by demographic, partly to be efficient and to poll several issues at once, partly to calibrate responses, and (perhaps) partly to obscure the intent of the poll.

      Read here for a report of how Curia polls: http://publicaddress.net/hardnews/a-call-from-curia/

      Note, I realise that focus groups is a distinct tool from polling, but the general approach is likely to be similar.

  8. Penny Bright 8
    5 April 2016 at 11:26 am

    So – under this John Key led National Government tax changes were made in 2011 to help New Zealand become an arguably more attractive ‘tax haven’?

    http://www.chapmantripp.com/publications/Pages/New-Zealand-now-an-attractive-tax-location.aspx

    New Zealand now an attractive tax location for offshore managed funds
    10 October 2011

    Foreign investors in a New Zealand fund with only foreign investments will now bear no New Zealand tax on their income, whether or not the fund distributes that income.

    The tax change, which came into force in September 2011, should make New Zealand managed funds an attractive alternative to funds resident in Luxembourg, Ireland or the Caymans.
    …..
    ____________________________

    Penny Bright
    2016 Auckland Mayoral candidate.

  9. ianmac 9
    5 April 2016 at 12:15 pm

    Question 2 today:
    “ANDREW LITTLE to the Prime Minister: Does he stand by his statement that New Zealand is not a tax haven because “New Zealand has full disclosure of information”, given Cone Marshall, a law firm specialising in establishing trusts for foreigners, says “The identity of the settlor need not be disclosed and the trust deed is not registered with any tax or Government authority” and “There is no obligation to file any trust accounts with any person or institution or to have such accounts audited”?”

    A good question. How will Key pass this off as a joke?
    http://www.parliament.nz/en-nz/pb/business/qoa/00HOH_OralQuestions/list-of-questions-for-oral-answer

    • alwyn 9.1
      5 April 2016 at 5:33 pm

      You might do well to read what John Key’s answer was to this question.
      He didn’t pass it off as a joke and appears to have thoroughly scotched Little’s claims.
      A pity that Little didn’t appear to listen.
      http://www.parliament.nz/en-nz/pb/business/qoa/51HansQ_20160405_00000002/2-tax-system—overseas-trusts

      • McFlock 9.1.1
        5 April 2016 at 5:56 pm

        Wow. What a joke.

        The existence of the trust is reported, along with the NZ trustee.
        No other information is reported unless the IRD explicitly requests it? And after requesting it, any enforcement body would have to sort through the myriad of payments and counterpayments between a variety of entities in several havens that any good laundromat would do?

        And that’s before you get into all the fun of “ExelsIor Trust” vs “ExeIslor Trust” on the paper records of those transactions (capital i and lowercase L swapped around), just to screw with text OCR.

        Money laundering dream.

        • alwyn 9.1.1.1
          5 April 2016 at 6:02 pm

          Why don’t you read right through Key’s answers, but this time try and do it with your brain engaged. If you have one.
          Try and keep up, won’t you. Read what he said, not what you would like to think is the case.

          • Hanswurst 9.1.1.1.1
            5 April 2016 at 7:26 pm

            What? Why don’t you read it? I read it, and McFlock’s first two paragraphs seem pretty accurate.

  10. Mosa 10
    5 April 2016 at 12:59 pm

    Is it just me or is this country going to hell in a money bag
    Its become a joke and this government is totally inept at governing for the interests of ordinary kiwis
    This is TAX EVASION pure and simple
    This would be still hidden if not for the Panama leak
    and we have to rely on that to find out what this regime is hiding from us
    We have become a supressed third world state
    We don’t need a President we have 61 corrupt ones to do the job

    • Draco T Bastard 10.1
      5 April 2016 at 5:17 pm

      Is it just me or is this country going to hell in a money bag

      It’s not just you. Started going that way under the 4th Labour government when they promoted rich people over everybody else.

  11. adam 11
    5 April 2016 at 1:56 pm

    You Know the Tory scum are shitting themselves when Auntie Helen (TM) is their only answer.

    I laughed and laughed and laughed when I saw the herald today.

  12. Ralf Crown 12
    5 April 2016 at 2:26 pm

    As so often, this will even more damage the New Zealand reputation and damage our welfare and trade. People around the world consider that you have a right, as a human right, to keep your private life, including financial, just private, especially away from prying state eyes who use the “tax” system as a way of confiscation like for instance the communists in old Soviet Union did.

  13. billmurray 13
    5 April 2016 at 2:46 pm

    The financial ability to have off-shore Trust’s we bought into Law by the Helen Clark / Michael Cullen Labour government.
    You should know that as you are trust expert.

    • Draco T Bastard 13.1
      5 April 2016 at 5:19 pm

      And then National made them secretive in 2011 so that NZ could act as a tax haven.

  14. Jim Bogan 14
    6 April 2016 at 12:07 am

    Whilst this latest revelation re the shady financial dealings encouraged and enabled by our current government are, and should be, of great concern to us, let us not forget the greatest tax-based rip off perpetrated by this government. The tax breaks of a few years ago that sucked many millions of dollars of revenue out of our coffers with obscenely generous reductions for those on high incomes, andcompared to the crumbs thrown to low income earners which were absorbed by the concurrent 2.5% increase in GST. Also, the villfication of beneficiaries, in particular benefit fraudsters, whose impact on lost tax revenue pales in comparison to that of corporate evasion. I don’t condone tax evasion in any form, yet it seems when it is committed by wealthy individuals and corporate entities, it is seen as sound financial practice. Claim an extra $20,000 in welfare you are not entitled to, although wrong, and suddenly you are the Devil incarnate. Let’s start asking the right questions, target all fraudsters equally, and maybe we can get back to having an economy, country and community we can be proud of and live comfortably in and with.

  15. Raff 15
    6 April 2016 at 12:23 am

    What line will he take? Well, “I’m comfortable with that”, obviously.

  16. reason 16
    6 April 2016 at 10:32 pm

    Former National supporters have been up to their necks in tax scams for a long long time http://www.stuff.co.nz/business/money/8515361/Money-trail-leads-home-to-New-Zealand …… ( I think it’s this research/article that lead to Hooton trying to give out Nicky Hagers home address to angry criminals ).

    National is part of the problem and not part of the solution when it comes to shutting down tax scams and other dodges for the rich and corporations ……….

    John Key is our figurative Dingo being hired to do the baby sitting on this issue.

    I wonder how much hot/dirty money has gone into inflating New Zealand real estate prices …. another area where National are again part of the problem and not part of the solution…..

    I hope Winston goes Dingo hunting ……………….

    For entertainment I recommend watching the movie “The big short” and while watching try and work out which character or actor best would best resemble John Key……. I’m sure his old employers play a role in this movie which details some of the greed and dishonesty in the financial industry causing the GFC.

    When some-one like Key calls an idea “barking mad” it should be remembered it was only by Governments and the state pumping TRILLIONS of money into the greed driven corrupt “free market” financial Industry that prevented a worldwide collapse of the banking systems …….

    Key mistakes greed for sanity and will be reluctant to close our ‘legal’ tax dodge haven status……..

    This is an area where the Nats are very weak and sometimes closely associated with …. which is why the trolls have been told to give it little to no air.

  17. Murray Simmonds 17
    7 April 2016 at 5:21 am

    Interesting new take on the USA as the World’s biggest tax haven over on Zero Hedge this morning:

    http://www.zerohedge.com/news/2016-04-05/rotschild-admits-america-biggest-tax-haven-world-obama-slams-tax-evasion

    I listened to Obama’s speech in disbelief yesterday. This article nicely puts it in context.

    Seems that Obama and Key really do have something in common . . . .