Jacinda Ardern
Minister, Arts, Culture and Heritage
Minister, Child Poverty Reduction
Minister, National Security and Intelligence
Prime Minister
All right, good afternoon. Let me first give you an overview of the coming week.
Today, I want to begin, after my introductory comments, by giving a statement on China, followed by an announcement about fairness and balance in the tax system.
This evening I am hosting the screening of Celia Lashlie’s documentary here in the Beehive Theatrette. On Tuesday, I’m hosting an Air New Zealand function in the banquet hall. On Wednesday morning, I will be chairing the public hearing of the Intelligence and Security Committee, and in the evening I will be speaking at the Business New Zealand Back to Business event.
On Thursday, I’m looking forward to attending Te Matatini at the Westpac Stadium. On Friday, I am hosting the Australia - New Zealand Leadership Forum and welcoming Prime Minister Scott Morrison.
There’s been a fair amount of media attention on China-related issues over the past week. I thought it would be useful today to reiterate some of the context around our relationship and also to correct some of the inaccuracies that I have heard. As I’ve said before, China is a very important and highly valued partner for New Zealand. I know from my discussion with Premier Li in November that China also values its relationship with New Zealand. This is a point recently confirmed by the spokesperson for China’s Ministry of Foreign Affairs last Friday when referring to China and New Zealand “enjoying strong and steady development is in the interests of both countries.” There’ve been suggestions over recent days that New Zealand exports are facing delays at China’s border. These reports don’t reflect the facts on the ground. Our officials in China have confirmed that New Zealand primary products continue to clear the border as usual. There’s no indication of anything out of the ordinary in China’s border clearance procedures for New Zealand products. In a trade relationship of this size, with $28 billion of trade moving between both countries, there will sometimes be temporary technical issues which occur from time to time. We’ve seen some reports of this nature over the last week or so.
We need to keep these in context. A delay in processing a small number of products doesn’t change the overall picture of a significant trade relationship working effectively in both directions. New Zealand’s goods exports to China were up by 20 percent in 2018. The rate of consignments being stopped at the Chinese border for 2018 was 0.26 percent, just over a quarter of 1 percent. In January 2019 it was 0.29 percent, a change of only 0.03 percent. That is not statistically significant. This should also be considered alongside the significant changes to border processing China has made over the past year.
There’ve also been suggestions that China’s Government was warning Chinese people to stop visiting New Zealand. Again, China’s foreign ministry spokesperson last week rejected these reports, suggesting those peddling the story were “either making a big fuss over nothing or harbouring ulterior motives.” And the facts underline the current strength of visitor arrivals from China, which were up 7.3 percent in 2018. Holiday visitors were up 8.8 percent, and visitors’ spend was up 14 percent.
At the official level, it is completely incorrect that five Ministers are awaiting visas for travel to China. There are, in fact, no Ministers currently awaiting either letters of invitation or visas from China.
New Zealand and China have differences of views on some issues, as we do with any other country. However, this is a robust and mature relationship; we manage these differences together in a mutually respectful way. This is a Government which will apply the rule of law and due process scrupulously, and ever more so when addressing matters that affect the security and well-being of New Zealanders.
New Zealand and China also continue to cooperate on a wide range of other issues in the relationship, including working together to strengthen the WTO through high-level discussions, a shared objective to address climate change. The Minister for climate change, James Shaw, visited China last year to progress work on this important issue.
We have strong science and research connections, and rich cultural and people-to-people exchanges. Officials are also negotiating an upgrade of our free-trade agreement, which has seen our trade with China more than triple since it was signed 11 years ago.
To recap, we do place a very high priority on our relationship with China. It’s a significant and complex relationship, but one that brings great benefit to both parties. New Zealanders and Chinese will continue to visit each other’s countries to do business with each other and to bring stronger cultural and people-to-people links.
Today, though I want to move on to an issue discussed at Cabinet and some decisions that have been made. Today Cabinet agreed to progress work on ensuring multinationals pay their fair share of tax in New Zealand. For a number of years the New Zealand Government has been engaged at the OECD on developing a framework to tackle the tax challenges arising from the digitalisation of the global economy. While we have made considerable progress, there are still gaps.
As the global economy has become more digitised, tax systems have not kept up with these changes. This means that currently some digital companies can do significant business in New Zealand and other countries without being subject to paying tax on the income they earn. That is not fair and it is not sustainable. This is a gap in New Zealand’s tax system, which this Government believes should be closed. New Zealand is continuing to work at the OECD level to get broad agreement on this issue, but today Cabinet agreed that we should also be looking at what interim action we can take through the introduction of a digital services tax to help ensure multinationals start to pay their fair share.
A number of other countries are already looking at introducing interim digital services taxes while the broader OECD work is ongoing. This includes Australia, France, Germany, Italy, Spain, Austria, the UK, and the US. Today Cabinet agreed to join them in investigating such a tax. Finance Minister Grant Robertson and revenue Minister Stuart Nash today took a paper to Cabinet outlining the next steps in our plan and the revenue Minister is here to discuss them with you now.