Ethnic Communities Minister Judith Collins has today announced the appointment of eight Trustees to the Chinese Poll Tax Heritage Trust.
The Trust aims to create a heightened understanding of the Chinese community within New Zealand and to strengthen the unique identity of Chinese New Zealanders.
The Minister has reappointed Kai-Shek Luey, Virginia Chong and Richard Leung for a second term on the Trust. Malcolm Wong, Mark Ngan Kee, Paul Chin, Melissa Wong, and Elisabeth Mei-Xing Ngan have been appointed for their first terms. All terms commence on 15 May 2017 and expire on 14 May 2020.
All eight Trustees are heavily involved in the Chinese and poll tax communities, in addition to a mix of skills and experience in governance, community work, business, finance, directorship and language to the work of the Trust.
The Minister thanked the outgoing Trustees, Peter Chin, Esther Fung, Stanley King, Justine Kohing, and Susan Wong for their significant contribution to the Trust.
I am delighted to be addressing you as Energy Minister as I understand just how vital this portfolio – including your part in it – is to our New Zealand way of life.
Electricity is fundamental to our well being and necessary to our economic success. As trustees of distribution companies you are the stewards of this important sector.
For many decades the electricity industry was largely stable and secure with little change.
Supply followed forecast demand in a predictable manner, and planning for the future largely required simply adding new wires and poles as required.
Today all that is changing, largely due to new emerging technologies, ranging from solar PV and battery storage to intelligent IT systems that help manage networks more effectively.
Responding to change and uncertainty requires nimble and astute management.
The government has a role to provide appropriate governance and regulatory arrangements that give you the necessary flexibility to deliver the infrastructure and services needed for tomorrow’s energy users.
But we also expect you to step up and rise to the challenges the future brings.
In my recent trip to the United States, I saw some of the emerging disruptive technology, and the impact this is having on the energy sector.
The rate of technological change which is evolving at pace will have big implications for the electricity sector, especially distribution companies.
The combination of software with rapidly improving batteries and solar technology will see consumers better manage their own electricity utilisation, allow for alternative generation through community-based micro-grids, and allow consumers to potentially trade in energy – for example, selling to each other or back to the grid. Storage is seen as the new frontier.
Changes like these will have a significant impact on the utilization of trust-owned assets in the future, and this is something I am sure you are all thinking about now.
It is anticipated that many of the future innovations in energy supply and demand management may come from non-traditional market participants, such as software companies – with potential disruption and fundamental changes in the way generators, distributors, and retailers think about their business models.
For you, this increasing pace of change will challenge the traditional model of infrastructure planning and investment.
Trust ownership and governance
The model we have for trusts, and the electricity distribution sector more broadly, dates back to reforms initiated in the 1990s.
This model was introduced as an ownership vehicle, chosen by some communities in the early 1990s. It retained ownership of the local power network by the community, while also delivering the benefits of the stronger commercial focus that came with corporatisation (which was required under the Energy Companies Act 1992).
Overall, the model appears to have delivered value for consumers. However, it is valid to question whether these arrangements are still fit for purpose and whether consumers will continue to see value in the future.
My starting point is that your core business is electricity lines. You are there to ensure your communities receive efficient and reliable access to electricity infrastructure.
We’ve had some notable examples where distribution companies have invested in areas completely unrelated to the sector.
I am not privy to the economics of these specific investments and even if I was, that is not necessarily my concern as Energy Minister.
My point is that you should aim to stay focused on your core business in order to successfully adapt to technological change, meet the needs of consumers, and ensure that the value of your considerable assets is maintained.
The risks arising from disruption by rapidly changing technology are also very relevant to the consideration of future trust ownership and governance.
One question is whether the trust model is a constraint on getting the benefits of greater scale in distribution businesses. It is reasonable to assume the businesses with greater scale will be best placed to trial and test new smart technologies, and to attract the capital and skills necessary to succeed in an electricity system that is rapidly becoming more complex.
If you drop the ball and are unable to adapt to these challenges, and to meet the evolving needs of consumers, then the value of the community assets entrusted to you will erode.
There are a number of initiatives underway by a range of different parties, which may have some bearing on the future operations of trust owned companies.
For example, the Electricity Authority has work underway with its Distribution Pricing Project, and the Commerce Commission’s Input Methodology Review shows it is actively concerned with the effects of new technology on the sector.
This work by the regulators is intended to enable them to fine-tune their respective regulations to better manage the effects of new technology and ensure electricity consumers see the greatest benefits.
While these two regulators already communicate well and work together on matters of common interest, there is scope for greater coordination.
This is why MBIE has set up a Council of Energy Regulators to share information and identify emerging issues, if and when they arise, and to work collectively to resolve them.
MBIE also plans to develop and publish an energy regulatory system charter, to document how the different parts of the regulatory system work together, and to help identify any areas for improvement.
The issue of distribution company efficiency and governance was raised by the International Energy Agency in its 2017 In Depth Review of New Zealand energy policy.
This report recommended directing the Productivity Commission to review the electricity distribution sector to identify opportunities to improve the sector’s productivity, flexibility and capability in order to meet technological change, including examining the sector’s structure and governance.
While the Productivity Commission could provide valuable insight and recommendations in this area, it may be just as effective to better coordinate the ongoing work of the Commerce Commission, the Electricity Authority, MBIE and the Auditor General. MBIE will report to me on the advisability and usefulness of having the Productivity Commission review the distribution sector and the government will consider that advice.
My visit to the United States reinforced to me the potential of electric vehicles to New Zealand. I toured the Tesla factory in California and was impressed with their hi-tech approach.
Equally impressive is the fact that they manufacture their products in-house. The company reiterated its intention to build a bigger market in New Zealand.
EVs are seeing substantial growth in San Francisco – which is encouraged not just to reduce carbon-emissions but to improve urban air-quality and reduce noise. Again, the pace of change is astounding. Five years ago there were only four EV models available – now there are 40.
It was interesting to see how other countries incentivise uptake – in San Francisco they provide rebates, but also use similar measures to those we are introducing, such as access to special vehicle lanes.
With more than 80% of our electricity generation being renewable, electric vehicles are an excellent option for New Zealand.
I am encouraged by the role the electricity sector is taking to support the uptake of EVs. I believe energy trusts have a role to play here and I know some of your businesses have already taken some action.
Your distribution businesses stand to benefit from EVs, through greater utilisation of network assets, and your communities stand to benefit from improved air quality, as well as helping to reduce carbon emissions.
The impact of solar PV
Solar energy is still small in volume in New Zealand, but is expected to grow in importance as its costs continue to decline.
The Government’s view is that solar power is currently not the most economic and efficient option for New Zealand compared to other renewable alternatives that we have available.
It has a higher cost than hydro, wind and geothermal systems that are currently supplying the national grid, and it does not produce power at night.
Hence growth in solar power may displace cheaper renewable fuels and probably does not reduce the need for network investment (which is typically driven by winter night peaks).
However, we recognise that the world is changing. Solar costs are decreasing and new battery technology is becoming more widespread.
This could see solar generation become cost competitive with grid-based generation across the board within a decade, and batteries could help improve network utilisation.
In California I visited Siemens and Solar City which highlighted to me the emerging opportunities that could arise in New Zealand from more productive solar generation, improved integration of energy infrastructure, battery storage technology, and digital management systems.
It is important that you as trusts keep an eye on these developments as they have the potential to impact significantly on your businesses.
I am aware there is a concern about pricing structures for solar, with some arguing that existing tariffs – particularly volume-based tariffs – implicitly subsidise solar PV, because customers without solar PV will have to pay a bigger share of common network costs.
This issue seems to be broadly recognised across the industry, and you will be aware that several electricity distributors and retailers are developing plans to reform retail tariffs to make them more service-based and cost-reflective.
The Government supports this reform effort, which is enabled by the country’s significant and ongoing investment in smart metering. New Zealand has an abundance of cheap wind and geothermal generation able to be developed, and we want the power system to provide good incentives for the full range of resources – including demand response and batteries – that have the real potential to reduce costs and increase benefits overall.
Transmission Pricing Methodology
As I’m sure you are all aware, the Electricity Authority has been consulting on proposed revisions to Transmission Pricing Methodology (or TPM). The Authority’s recent work is the continuation of an attempt to resolve a problem that has vexed the industry for several decades.
Any change to the status quo, and even the status quo itself, can be contentious.
The delay announced on April 26 by the Electricity Authority to redo its cost benefit analysis is unfortunate, as delay prolongs the regulatory uncertainty for stakeholders. I also am aware that some parties see this further delay as a reason to cancel the process, or for me to intervene in some way.
Legally, my powers to intervene are limited, even if such action was desirable. However, I can and will ensure that the Authority keeps me and my officials fully informed of its intentions going forward and works closely with Transpower to ensure that if and when a new TPM is developed, that it is workable.
In closing, I would like to reiterate how important the distribution sector, and particularly trust owned companies, are to New Zealand – both in terms of powering our economy and contributing to the wellbeing of our people.
The Government looks to your sector to deliver innovative solutions that will allow consumers to benefit from new technologies.
We recognise that the future presents a number of challenges that may call into question existing business models and technologies.
I look forward to your sector’s solutions in response to these challenges.
More than $10 million in research and development loss tax credits have already been paid out after the first year of a scheme designed to help start-up companies access some of their tax losses sooner, Revenue Minister Judith Collins says.
Pay-outs are still being processed for the last financial year, which saw 187 companies successfully lodge applications to `cash out’ business losses associated with R&D spending.
“This has been a tremendous initiative for helping innovative start-up businesses with the cash flow they need to turn their ideas into a reality. I’ve been pleased to see how easy it is to claim the credit,” Ms Collins says.
By following the clearly laid out steps on the website, businesses are spending less time on paper work and more time on developing their product.
“I was delighted to see the difference it made for the two kiwi businesses profiled on the Inland Revenue website.
“These are exactly the sort of companies to help get their big ideas off the ground and the R&D loss tax credit is helping them do that,” Ms Collins says.
Applications are currently open for the 2016/17 financial year. Eligible businesses can claim a credit of up to $224,000.
More information on the R&D loss tax credit along with videos profiling two companies that have benefited can be found at www.ird.govt.nz/rd-credit.
Inland Revenue will waive use of money interest on late tax payments when flooding has prevented people from paying on time, say Lead Minister for Edgecumbe Anne Tolley and Revenue Minister Judith Collins.
“In the aftermath of the Edgecumbe and Bay of Plenty floods businesses in affected areas have enough to deal with without having to worry about their tax obligations at the same time,” Mrs Tolley says.
“Inland Revenue will waive use of money interest on late tax payments and will cancel late filing and late payment penalties for taxpayers who are unable to pay their tax by the due date because of the recent flooding,” Ms Collins says.
The terminal tax date for the 2016 income year for taxpayers with tax agents was 7 April, and 20 April is a due date for employers.
Inland Revenue has also announced discretions on income equalisation for farmers who are significantly affected by the flooding.
“This will allow people to make late deposits from the 2016 income tax year and to apply for early refunds. This means farmers and fishers can average their taxable income over several years more easily,” Ms Collins says.
Energy and Resources Minister Judith Collins has today announced the appointment of two new members to the Electricity Authority.
The Electricity Authority is an independent Crown entity established in November 2010.
It is responsible for governance and regulation of the electricity market and its objective is to promote competition, reliable supply, and the efficient operation of the electricity sector for the long term benefit of consumers.
Allan Dawson and Sandra Gamble have been appointed for terms of five years each commencing 18 April.
“Both Allan and Sandra have held director, chair and executive positions and will be excellent additions to the Electricity Authority.
“Allan brings extensive knowledge of the New Zealand electricity market as well as understanding of the global energy environment and its impact here. Sandra brings significant experience of working within the energy and water sectors and has insight into the critical issues facing the New Zealand industry.”
Ms Collins says the Authority will benefit from having its vacant board position filled, with its substantial work programme progressing steadily.
There will now be six members of the Authority, with the others being Dr Brent Layton (Chair), David Bull, Susan Paterson and Hon Roger Sowry.
Background information on appointees:
Allan Dawson is the current Customer Manager for New Zealand Trade and Enterprise. He was formerly the Chief Executive for the Independent Market Operator in Western Australia, and the Energy Market Company in Singapore, and worked on the development of New Zealand electricity industry rules and arrangements in the 1990s. He has chaired the Association of Power Exchanges, and two bodies in Western Australia: the Market Advisory Committee for the Wholesale Electricity Market and the Gas Advisory Board. He brings strong governance, leadership, communication and relationship management skills, and experience in roles that directly interface with energy regulators.
Sandra Gamble is currently a non-executive director, with roles as an Independent Advisor to the Audit and Risk Committee at Sydney Metro, and Director of the Woodville Alliance, as well as Chair of its Audit and Risk Committee. She was formerly the General Manager for Business Strategy and Resilience for the Sydney Water Corporation, where she held various committee Chair and Executive Convenor positions, and a director of Save the Children Australia. She is an electrical engineer with significant experience working in the energy and water sectors, and brings strong leadership, communication and relationship management skills.
A new tax bill introduced into Parliament today will help modernise our tax administration while ensuring that the current system works as it should, says Revenue Minister Judith Collins.
“The Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill contains proposals relating to collecting employment and investment income information. The proposals will help Inland Revenue to ensure that people are on the right tax code and receiving any entitlements correctly.”
The Bill also contains proposals to modernise the taxation of employee share schemes.
Employee share schemes are arrangements where companies provide shares or share options to their employees as part of an employee’s remuneration.
Changes proposed in the Bill include new rules to ensure the tax treatment of employee share schemes is consistent with other forms of employment income. This includes providing a deduction for the employer for the cost of shares in line with other forms of remuneration.
“The employee share scheme measures proposed in the Bill are based on feedback from two rounds of public consultation in May and September 2016. The consultation process has been valuable in shaping the reforms contained in this Bill.
“For example, the original proposals raised the possibility of abolishing the tax regime for widely offered schemes, but in response to feedback the rules are being retained, but simplified and improved.
“There will also be another opportunity to provide feedback on the Bill during the Select Committee process.
“Through the consultation process, the Government also became aware of practical issues facing start-up companies offering employee share schemes.
“To address these issues, my officials are currently developing a public consultation document that refines the start-up proposal that was contained in the 2016 issues paper. I hope interested parties will provide feedback on these proposals too,” Ms Collins says.
Ms Collins says a range of measures addressing taxpayers’ concerns such as issues with demergers and decommissioning costs for petroleum miners are addressed by the Bill. There are also a number of GST-related matters included.
“And there is a proposal to add five new charities to the list of donee organisations eligible for tax benefits. These are, Byond Disaster Relief New Zealand, Flying for Life Charitable Trust, Médecins Sans Frontières New Zealand Charitable Trust, Tony McClean Nepal Trust, and Zimbabwe Rural Schools Library Trust,” Ms Collins says.
Revenue Minister Judith Collins and Tertiary Education, Skills and Employment Minister Paul Goldsmith say they are encouraged to see a marked increase in overseas student loan defaulters contacting Inland Revenue and taking steps to pay off their loans.
Since December 2014 there has been a 66% increase in the number of overseas borrowers who are behind on their payments getting in touch with Inland Revenue.
In the same period there has been a 32% increase in the number of defaulters who are now making a dent in their loan. Repayments by those who defaulted increased by $24.5 million for the year ended December 2016.
“Since the overseas-based borrower compliance initiative was established in 2010, borrowers have made an estimated $361 million in additional repayments, as of December 2016, with more than $100 million of that in the last financial year,” says Mr Goldsmith.
“We know that repayment times for overseas borrowers are much longer than for those residing in New Zealand, and that they account for more than 90 per cent of the roughly $1 billion that is in default. It is vital for overseas borrowers to make a plan with Inland Revenue to repay their loan.”
“Moving overseas is not a way to hide from your student loan obligations,” says Ms Collins.
“I’ve been pleased to see the recent data match arrangement with the Australian Tax Office proving successful. Inland Revenue has been provided with the contact details for almost 57,000 borrowers, which has already resulted in some large payments to Inland Revenue.”
Ms Collins says some borrowers have stumped up with significant lump sums after being contacted while many more have made arrangements to get back on track.
“I strongly advise any student loan borrower planning their OE to contact Inland Revenue before they leave. Sorting out a workable repayment plan in advance could save headaches later on.”
“The significant investment made by taxpayers in tertiary education and the student loan scheme means that around 82 per cent of the cost is shouldered by taxpayers, so it is important that borrowers make arrangements to repay their loans,” says Mr Goldsmith.
Energy and Resources Minister Judith Collins is leading a petroleum sector trade delegation to Texas and an electricity sector trade delegation to Silicon Valley next week.
Ms Collins will be accompanied by a petroleum sector delegation, which includes representatives from New Zealand Oil and Gas, Todd Energy and the Petroleum Exploration & Production Association of New Zealand, to Texas.
In Texas, Ms Collins will be attending the American Association of Petroleum Geologists’ Annual Convention & Exhibition in Houston, as well as meeting with exploration and service companies to discuss investment opportunities in New Zealand.
Ms Collins will then lead an electricity sector delegation, which includes representatives from Mercury, Contact Energy, Vector, Power Systems Consultants and Genesis Energy, to California’s Silicon Valley.
“The electricity sector is going through a lot of change internationally and the trade mission to Silicon Valley will help New Zealand companies learn about the opportunities with emerging technologies, support New Zealand businesses looking to partner with US firms, and encourage electric vehicle manufacturers to enter the New Zealand market.”
The delegation to Silicon Valley is due to make calls on Tesla’s electric vehicle plant, Siemens, Volkswagen, energy technology company Enphase, Plugshare, SolarCity, Pacific Gas & Electric, Wrightspeed and Californian State energy regulators.
Ms Collins will be in the United States from 1 to 7 April.
Revenue Minister Judith Collins today welcomed Inland Revenue’s new webpage to help trustees of foreign trusts comply with the new disclosure rules.
“Foreign trusts now have to provide significantly more information than in the past. The webpage has all the information on the new rules and includes the forms which trusts need to complete in order to be registered by 30 June 2017.
“This information will help Inland Revenue get a much clearer picture about the beneficiaries of foreign trusts and their activities, as well as enable greater exchange of information with tax treaty partners.”
“Our new comprehensive foreign trust disclosure regime reinforces New Zealand’s international reputation.”
Trustees are encouraged to visit www.ird.govt.nz/international/exchange/foreign-trusts/ to download the forms and find more information.
A Bill to improve and strengthen the tax rules passed its third reading today, Revenue Minister Judith Collins says.
“Building a more competitive and productive economy for New Zealanders is a priority for this Government.
“Making sure that the tax rules keep up with social and economic changes, as well as current business practices, is a vital part of a well-functioning economy.
“Improvements to the tax rules following enactment of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Bill will give taxpayers more certainty over their tax affairs by dealing with inefficiencies and complexities that have occurred over time.
“That in turn, should result in lower compliance costs for business,” Ms Collins says.
Changes include:simplifying the look-through company rules and the dividend rules as they apply to closely held companies, to ensure that the decision to convert a small business to a company is not driven by tax considerations; bolstering the rules around the tax treatment of interest earned in New Zealand by non-residents to ensure greater fairness; taxpayer-friendly changes to the GST rules, such as enabling businesses to deduct GST associated with the costs of raising capital; depreciation rollover relief for businesses in the upper South Island and Greater Wellington areas hit by last year’s earthquakes and aftershocks, and adding 14 new charities to the list of donee organisations in schedule 32 of the Income Tax Act 2007, making donors to those charities eligible for tax benefits on their donations.