Tuesday, 4 March 2003

Tuesday, 4 March 2003

Tuesday, 4 March 2003

Mr Speaker took the Chair at 2 p.m.

Prayers.

Motions

America's Cup

Hon Dr MICHAEL CULLEN (Deputy Prime Minister): I move, That the House congratulate the Alinghi syndicate on winning the America’s Cup on 2 March 2003, in Auckland, from Team New Zealand; over the course of the challenger and defender series, Alinghi proved itself to be the best syndicate; its success was deserved.

I also move, That the House acknowledge the hard work and efforts of the whole team at Team New Zealand; they faced the unenviable task of rebuilding the syndicate in the wake of a successful defence in 2000. While unsuccessful this year, a new team has been built that is capable of making a strong challenge to the America’s Cup when the next regatta is held.

Motions agreed to.

Points of Order

Business of the House

Rt Hon WINSTON PETERS (Leader—NZ First): I raise a point of order, Mr Speaker. I wish to raise a question with the Leader of the House. Having approached the Clerk’s Office about the format for tomorrow in respect of member’s day and the Budget Policy Statement debate, we were told that the ordinary debate for members will go on. However, having read Chen Palmer and Partners’ latest epistle of 28 February, I find on page 2 that on Wednesday a 2-hour debate will be held on the Budget Policy Statement. We would like to know what is going on, and how it is that that firm knows before the rest of us. Perhaps the Leader of the House could tell us what will happen tomorrow.

Mr SPEAKER: That is automatic under the Standing Orders, if the member would care to consult them.

Hon Dr MICHAEL CULLEN (Leader of the House): I can assure the House that I did not pay Chen Palmer and Partners its usual fees for any such statement.

Allocation of Questions

GERRY BROWNLEE (NZ National—Ilam): I raise a point of order, Mr Speaker. I raise an issue, understanding—as all parties do—that the allocation of questions is done according to a formula. I want to point out that today we have to go to question No. 6 before the major Opposition party has a question. Prior to that, we have three questions asked of the Government, by the Government. I make it clear that question time is for the Opposition parties to question Government Ministers, and, if we have a formula being applied in this case that will mean the major Opposition party does not come into play until halfway through the day, then, clearly, we need to have a new formula.

Mr SPEAKER: I have in front of me the schedule given to me by the Clerk. I will have a look at it. The allocation of questions is done to an agreed formula, and I understand that it is done very carefully. It has been rolled over for months.

Hon RICHARD PREBBLE (Leader—ACT NZ): I raise a point of order, Mr Speaker. I think I can help the honourable member. If he actually goes and looks at the questions for oral answer for today, he will see that in question No. 2 the effective Opposition does ask a question.

Mr SPEAKER: No, that is being silly.

Questions for Oral Answer

Questions to Ministers

Regional Development—Reports

DAVID PARKER (NZ Labour—Otago) to the Minister of Finance: What recent reports has he received on growth in the regions?

Hon Dr MICHAEL CULLEN (Minister of Finance): The latest National Bank regional trend survey showed that nine of the 14 regions posted growth of 4 percent or more last year, and that 12 of the 14 continued to grow through the December quarter, with Otago and Southland performing most strongly.

David Parker: Has the Minister received any further reports on the economic outlook for the regions; if so, what do they say?

Hon Dr MICHAEL CULLEN: I have seen a report that economic growth in Hawke’s Bay was buzzing, and that National, having taken the provincial areas for granted throughout the 1990s, would have to work hard to earn voter support. That report came from the Leader of the Opposition.

Dr Don Brash: How confident is the Minister that recent economic growth will continue this year, given that the survey he cites shows that business confidence is negative in all but one region in New Zealand?

Hon Dr MICHAEL CULLEN: I am quite sure that business growth will slow down this year as a result of a combination of international uncertainty, the likelihood of war in Iraq, the rising exchange rate of the New Zealand dollar, drought conditions, and frosts in Hawke’s Bay late last year. Despite that, the confidence levels in many respects in the provinces are still at very high levels, given the surrounding international circumstances.

Rodney Hide: Does he believe that the growth in the regions has been sufficiently rosy, given his answer, that he is sticking to his goal reported in Metro magazine last December that “he happily confirms that the Government’s economic growth goal remains to return New Zealand to the top half of the OECD in 10 years.”; if not, why not?

Hon Dr MICHAEL CULLEN: If the member cares to look at that so-called quote he will find there are no quotation marks around it.

Opposition Members: Ah!

Hon Dr MICHAEL CULLEN: Ah, indeed. That means it is not a quote from what I actually said. I am sure that if the—

Rodney Hide: I raise a point of order, Mr Speaker. I made it quite plain that it was a quote from the Metro article. That member last week stopped me from tabling it. It certainly is a quote.

Mr SPEAKER: That is a comment on the substance.

Hon Dr MICHAEL CULLEN: The article in Metro does not have that comment in quotation marks as being from me. I say to the member that if the ACT party uses its parliamentary funding for offices in the regions that might help regional growth, to the extent that they can.

Rodney Hide: I raise a point of order, Mr Speaker. I ask you to reflect on that answer and ask yourself whether, at any stage in giving that answer, the Minister addressed the question. What he did do was to suggest that my question was somehow out of order, without raising a point of order, and that somehow passed for an answer. That certainly will not do.

Mr SPEAKER: No, he addressed the question.

Rt Hon Winston Peters: Did the Minister write to Metro to deny the import of the quote in that article; if so, on what date?

Hon Dr MICHAEL CULLEN: I was not aware of that particular part of the article until it was drawn to the House’s attention last week. I think it is a bit late now to worry about what appears in Metro magazine, but no doubt the member’s friend Felicity Ferret will bring it to his attention should future quotes occur.

Jeanette Fitzsimons: Has the Minister received any reports as to whether the growth in those gross domestic product (GDP) figures he quotes for the regions has led to any growth in human well-being in those regions; if so, has that well-being been evenly distributed across the people who live there?

Hon Dr MICHAEL CULLEN: Yes, it has certainly led to growth in jobs, and that is one of the major elements of well-being in a society such as ours. It will probably assist in the re-election of this Government, which is the best way to spread well-being amongst the entire population.

Larry Baldock: Has the Minister seen any reports on the impact of roading congestion on regional economic growth rates such as that in the Western Bay of Plenty, where the nation’s largest export port is located; if so, what were their conclusions, and if not, does he plan to conduct any research of that nature in the future?

Hon Dr MICHAEL CULLEN: Yes, the member makes a fair point that there are road congestion problems in the western bay and most clearly in Auckland. The Government is addressing that through its land transport strategy, but there is a long way to go in that respect.

Rodney Hide: I seek leave to table the Metro magazine from last December that contains the quote in my supplementary question.

Mr SPEAKER: Leave is sought to table that article. Is there any objection? There is.

Economy—OECD Ranking

2. Hon RICHARD PREBBLE (Leader—ACT NZ) to the Prime Minister: When did she decide that New Zealand reaching the top half of the OECD by 2010 was “totally unrealistic”, and what changed her mind given that she previously stated “Could we be in the top half of the OECD in 10 years if we set our mind to it? I think we could.”?

Hon Dr MICHAEL CULLEN (Deputy Prime Minister), on behalf of the Prime Minister: During 2001, in the course of developing the Government’s former growth and innovation goals, which were announced in February 2002, advice was sought on the feasibility of various options and it was concluded that it was unrealistic to set a time frame.

Hon Richard Prebble: Given that the Prime Minister now thinks it is unrealistic to reach the goal of the top half of the OECD, what in the Government does she put this failure down to; was it a change in the mindset of the Minister of Finance, who decided last year to have the tax of the average New Zealand worker increased more than that of any other OECD country, does she blame the failure on the Minister of Labour, who is increasing the compliance costs of every small business in New Zealand, or does she take personal responsibility for that failure? Who is responsible?

Hon Dr MICHAEL CULLEN: It is not a matter of failure. It is a matter of setting realistic goals. If the member would care to refer to last week’s The Economist magazine, he will find that New Zealand is ranking rather lowly in productivity measures in the OECD. Nearly every country above us has a higher tax rate.

David Cunliffe: Has the question of the time frame for reaching the goal of being in the top half of the OECD in per capita income rankings been raised before?

Hon Dr MICHAEL CULLEN: In the House last February Mr Hide asked the Minister of Finance essentially the same question, but clearly, Mr Hide failed to inform his leader of the answer.

Hon Bill English: Is the Prime Minister aware of Treasury’s advice in April 2001 that concludes: “It appears more likely that New Zealand’s ranking among the OECD countries will continue to fall.”, and why did she not take that advice before she set the time frame?

Hon Dr MICHAEL CULLEN: The Prime Minister did not set the time frame.

Hon Bill English: Yes, she did so.

Hon Dr MICHAEL CULLEN: The member’s memory is failing him. The notion of a time frame—[Interruption] Raucous laughter does not change the facts. The notion of a time frame was raised by many people, proposing a 10-year goal. The Prime Minister repeated that time frame. Subsequent analysis showed that the time frame was unrealistic. Nobody could possibly have economic policies to raise productivity 4.5 percent per annum on average.

Rt Hon Winston Peters: Is the quote: “These results are greatly encouraging for our goal of economic transformation and a return to the top half of the OECD ratings by 2011.” from a foreword that the Prime Minister wrote for the Global Entrepreneurship Monitor of 2001, which was a year before the 2002 election, and is she now seeking to disown that statement because she said one thing when seeking an election victory, and something else when facing a declining economy and the consequences of failing to get a decent majority?

Hon Dr MICHAEL CULLEN: The Prime Minister was Prime Minister throughout the period. The statement that it was unrealistic to achieve such a target and that such a timetable would be eliminated was made well before the 2002 election.

Rodney Hide: How can New Zealanders ever take the goals that the Prime Minister sets seriously, when she said at Massey University in 2001: “Could we be in the top half of the OECD in 10 years if we set our mind to it?, I think we could.”, and then said 2 years later that after further analysis that goal is totally unrealistic?

Hon Dr MICHAEL CULLEN: The goal of getting into the top half of the OECD is not unrealistic. Analysis from Treasury and others has demonstrated that the time frame of 10 years cannot be achieved on any realistic assumption about policies.

Electric Power Generation—Alternative Methods

3. CLAYTON COSGROVE (NZ Labour—Waimakariri) to the Minister of Energy: What is the Government doing to encourage the development of alternative forms of power generation in New Zealand?

Hon PETE HODGSON (Minister of Energy): The Government has set a national target for increasing the supply of renewable energy, and is taking a number of initiatives to achieve it. For example, earlier today I announced a decision to make Kyoto Protocol carbon credits available for two proposed wind farms that would roughly treble the amount of wind generation in New Zealand. Allocating the credits will help to ensure it is economic to build those wind farms sooner rather than later. That is a clear example of how climate change policy can help to deliver more sustainable energy.

Clayton Cosgrove: What else is the Government doing to remove barriers to new renewable energy projects?

Hon PETE HODGSON: Another key issue for developers of renewable energy is the cost of connecting to local electricity line networks. The Government’s electricity policy requires the industry to develop standardised pricing for delivering power to the grid across local lines. I am actively engaged in making sure that happens as soon as possible, in order to encourage new investment in distributor generation.

Gerry Brownlee: How can the Minister make the claims he does today when none of the some 15 recommendations on pages 9 and 10 of the Cabinet paper entitled Energy Efficiency, Renewable Energy, and the Resource Management Act involve any action other than a restatement of what has already been said, or, in other words, why is there is nothing new and no direction in which the Resource Management Act might be changed; and how do his climate change proposals and his concern over the Kyoto Protocol stack up with the Otahuhu B and Huntly B stations being fired up for more coal, and the New Plymouth combined-cycle station being geared up for the burning of fuel oil?

Hon PETE HODGSON: The answer to the member’s first question is that he read the wrong paper. The answer to the second question is that, with the earlier rundown of the Maui gasfield, there will be a period of 1 to 3 years in which we will be burning more coal. I think that will start this winter.

Gerry Brownlee: I raise a point of order, Mr Speaker. I asked the Minister a written question, and I got an answer from the Minister that directed me to that Cabinet paper. If the Minister would like to give an answer now, maybe that would be reasonable.

Mr SPEAKER: That is a debating matter.

Jeanette Fitzsimons: Will the Minister give a clear indication now that the Government will not support investment in new coal-fired power station capacity that could undercut the new renewables, which may be the single biggest disincentive to investment in clean technologies?

Hon PETE HODGSON: It would be illogical, indeed, for us to use carbon credits, which is the purpose of this question, to assist the development of thermal generation. The express purpose of using carbon credits is to reduce the thermal electricity used on business as usual.

Gordon Copeland: What is the estimated dollar value of the climate change carbon credits that he has announced will be allocated to the proposed wind farms?

Hon PETE HODGSON: The carbon credits are about a million tonnes of carbon dioxide. They are in the form of a promissory note because the Kyoto Protocol has yet to come into force. That is because Russia has yet to ratify it. The world price of carbon is therefore unknown, but people are paying about five bucks US, as far as I can tell.

Jeanette Fitzsimons: I raise a point of order, Mr Speaker. The Minister said in his reply to me that my supplementary question was about carbon credits. That may have been the question in his mind, and it was his answer. But, in fact, the question as asked was about encouraging the development of alternative forms of power generation. My question was not about how the carbon credits would relate to coal stations but was in terms of the obstacle that they would pose to new, renewable generation.

Mr SPEAKER: I think that the Minister might be prepared to comment.

Hon PETE HODGSON: I am happy to add that the Government has no plans to incentivise the building of coal-fired power stations.

Gerry Brownlee: I seek leave to table a Cabinet paper entitled Energy Efficiency, Renewable Energy, and the Resource Management Act, which shows that the Government is doing nothing to enhance renewable energy in this country.

Document, by leave, laid on the Table of the House.

Australian Prime Minister—Anti-war Message

4. KEITH LOCKE (Green) to the Prime Minister: Does she intend to convey a strong anti-war message to Australian Prime Minister John Howard during his planned visit; if so, why did she say “I don’t think we are going to see either endeavouring to persuade the other of the merits of the other’s approach,”?

Hon PHIL GOFF (Minister of Foreign Affairs and Trade), on behalf of the Prime Minister: Discussions with John Howard will cover a range of bilateral and multilateral issues of importance to both our countries, including the issue of Iraq. Mr Howard will already be well informed about New Zealand’s position on achieving Iraqi disarmament.

Keith Locke: Will the Prime Minister be encouraging Government members to attend peace rallies during John Howard’s visit, as she did prior to the 15 February protests, when on 12 February she told Parliament that: “Members of Government will be present at those rallies.”?

Hon PHIL GOFF: It is entirely up to members of Parliament on the Government side of the House as to whether they attend appropriate peace rallies. I think that many members on this side of the House, of course, will be taking the opportunity to engage with John Howard to discuss those areas we have in common and those areas where we have a different point of view.

Tim Barnett: Is it normal in conducing relations with friendly countries, such as Australia, to shun or abuse leaders over points of disagreement?

Hon PHIL GOFF: No, it most certainly is not. As two sovereign countries we will often have different views on specific issues, notwithstanding our overall close relationship. But to say that John Howard is as welcome here as Saddam Hussein would be, as did the co-leader of the Greens, is, frankly, offensive and immature. To withdraw an invitation to Mr Howard to visit New Zealand would impede, not improve, discussion of issues and would undermine our ongoing and very important relationship.

Jeanette Fitzsimons: I raise a point of order, Mr Speaker. I did not make the statement that has just been attributed to me.

Hon PHIL GOFF: I seek leave of the House to table an article from the Dominion Post, which states: “Co-leader Jeanette Fitzsimons said yesterday he was no more welcome in New Zealand than Iraqi leader Saddam Hussein.” That is dated today, 4 March.

Mr SPEAKER: If the member said she did not make the statement her word is to be accepted, as every other member’s is.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. That may well be so, but I think, really, that the member who is denying her knowledge of the statement owes it to this House to table her denial to the Dominion Post—her refutation of what is being said in her name—or otherwise I do not accept her word.

Mr SPEAKER: She has given her word to the House, and there can be no more important thing than that because, in fact, if her word is not found to be accurate that does lead to very serious consequences. She has given her word to this House.

Hon Richard Prebble: I raise a point of order, Mr Speaker. While I am not questioning your ruling or the statement by the Green co-leader, I am asking whether MPs can still ask questions about that matter—because the Green co-leader has not told us what she did say. For all that I know, there may have been only a minor difference between the quote and what she did say, so I take it that we are still able to ask questions relating to the story in the Dominion Post, even though the Green Party co-leader, understandably, wants to distance herself from that.

Mr SPEAKER: Yes, of course members can ask questions, but they cannot doubt the member’s veracity.

Dr Wayne Mapp: Why will the Government not support a second resolution before the United Nations proposed by Britain, the United States, and Spain, and supported by Australia, given that it has taken 4 months for Iraq—and only when faced with the threat of imminent force—to ante up about the anthrax that it possesses, which is the world’s worst terror weapon?

Hon PHIL GOFF: After 8 years of inspections and over 3 years without inspections—the United Nations Monitoring, Verification and Inspection Commission team has been in Iraq now for only just over 3 months—it is the view of this Government that alternatives to war should always be pursued before the ultimate resort to that sanction is ever applied, because of the huge consequences of undertaking such a war.

Dail Jones: What does the Prime Minister have to say about the Greens’ weird message in threatening to disrupt Prime Minister Helen Clark’s State luncheon for Australia’s Prime Minister—Australia being one of the world’s oldest democracies, and one of our longest and oldest friends—when compared with the Greens’ conciliatory and supportive approach to Saddam Hussein of Iraq, who must be one of the modern world’s greatest serving tyrants?

Hon PHIL GOFF: Every New Zealander, of course, has the right to protest, but most New Zealanders would not support gross discourtesy, if that is what is implied in the Greens’ threat.

Keith Locke: I raise a point of order, Mr Speaker. The supplementary question said the Greens had threatened to disrupt Prime Minister Howard’s visit. There has been no such statement from any Green MP.

Mr SPEAKER: No, no. The member should have raised that when the original comment was made.

Hon Richard Prebble: How stable is this Labour Government and its foreign policy, when the Government will be dependent for certain votes on the Green Party—a party that can see no moral difference between Saddam Hussein, a dictator, and John Howard, an elected leader in Australia, our longest and most stable ally? How stable is this Government?

Hon PHIL GOFF: Somewhat more stable than some parties in Opposition that have been careless enough to lose members.

Hon Richard Prebble: I raise a point of order, Mr Speaker. The answer might be funny, but I just draw this to your attention.

Mr SPEAKER: I will interrupt the member. I do now want the Minister to address the question.

Hon PHIL GOFF: The question was a rhetorical question about stability. This is a very stable Government, supported in confidence motions and supply, generally, by at least two other parties outside the coalition, and particularly stable given its rating of more than 50 percent in the public opinion polls.

Hon Peter Dunne: Are reports correct that security considerations are forcing some limitations on Mr Howard’s programme while he is in New Zealand, and is one of those limitations the report quoted by One News that the Green Party has promised to try to disrupt the State visit of Australian Prime Minister, John Howard?

Keith Locke: I raise a point of order, Mr Speaker. I have just told the House that there has been no such threat made by any Green Party member.

Mr SPEAKER: The member cannot do that by way of a point of order, because the question itself is in order. Any comment that the member is alleged to have made, and that he says he did not make, is different. But this question is about the Green Party in general.

Hon PHIL GOFF: Appropriate security arrangements will be put in place—in particular, because of the threats made by international terrorist groups against Australia and its leadership.

Keith Locke: Do John Howard’s comments last week about stationing American Star Wars missiles in Australia represent a threat to our region, and make it more difficult for nuclear-free New Zealand to have a close defence relationship with Australia?

Hon PHIL GOFF: Australia’s decision with regard to missile defence systems is a decision for Australia. I have made it clear that New Zealand has a different point of view on the effectiveness or desirability of missile defence.

Hon Peter Dunne: Will the Prime Minister be giving any advice to the Green Party about whether it should or should not attend the State luncheon in honour of Mr Howard, or will she simply be suggesting to the Greens that they walk out, keep on going, and return to that distant part of the solar system from whence they came?

Hon PHIL GOFF: I think the Prime Minister’s advice to Green Party members would be that if they do not wish to attend the luncheon as a sign of protest, then that is the way they should go about it.

Māori Language—Government Promotion

5. MAHARA OKEROA (NZ Labour—Te Tai Tonga) to the Minister of Māori Affairs: What approaches is the Government taking to promote and support Māori language?

Hon PAREKURA HOROMIA (Minister of Māori Affairs): The Government is committed to promoting and supporting the use of Māori language, and has funded a wide range of initiatives in the broadcasting, education, and community sectors, including, to name a few, the development of Māori language teaching and learning materials, continuing the establishment of kura kaupapa, further scholarships in bilingual teacher study awards, and the Ma Te Reo fund. There are many more.

Bill Gudgeon: Why is there a delay in promoting te reo and tikanga through Māori Television, and what action is he taking to overcome this delay?

Hon PAREKURA HOROMIA: Let me repeat what I said a couple of weeks ago. We are well on the way to getting to the launching date, in the sense of the appointment of the chief executive officer, and I am pleased to inform the member that a whole lot of the activities in the production are under way.

Hon Georgina te Heuheu: Did he see the recent speech made by the Associate Minister of Māori Affairs, the Hon John Tamihere, condemning current Government policies in relation to Māori underachievement, and the subsequent description of that speech by a former Minister of Māori Affairs, the Hon Dover Samuels, as “visionary”, and can the Minister tell the House how the initiatives he has just described will alleviate the concerns expressed by both those Ministers, particularly in relation to welfare dependency?

Hon PAREKURA HOROMIA: I not only read my colleague’s statements; I heard them for several days. I assure the member that I am a person of action and am taking strategic decisions to ensure that we get on with it, and, as she will see, we have the Māori language strategy that has taken 16 years to come together. You spent 9 years doing nothing. We have done something about it.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The suggestion that you have spent 9 years doing nothing is simply outrageous. That member has been around long enough to know a few things about how answers in Parliament must be couched. It is an insult to you, and I want to see it cease right now.

Mr SPEAKER: He has; I was. I am a reasonable person, and I would hope he does not make that mistake again.

Mahara Okeroa: What impact are these initiatives having on the health of the Māori language?

Hon PAREKURA HOROMIA: Research by Te Puni Kōkiri has highlighted that the health of the Māori language has stabilised, that Māori are optimistic about future growth and development, and that participation by whānau and family pervades heavily in this country. The language is surviving.

Rodney Hide: In promoting and supporting te reo, is he satisfied with the manner in which Te Māngai Pāho has distributed—[Interruption]

Mr SPEAKER: I just caution members that I want to hear questions in silence. Please start again.

Rodney Hide: They are continuing. There has been—

Mr SPEAKER: Please ask the question. I have asked the member to start again.

Rodney Hide: I raise a point of order, Mr Speaker. No sooner had you ruled, than the Hon. Dover Samuels and Taito Philip Field proceeded to yell and interrupt my question, exactly after you had ruled.

Mr SPEAKER: I told the member to start the question again. I have not heard him start. When he does start again, if there is any comment made, that person will leave.

Rodney Hide: In promoting and supporting te reo, is he satisfied with the manner in which Te Māngai Pāho has distributed and administered its distribution of funds for this purpose; if so, why?

Hon PAREKURA HOROMIA: It is the responsibility of that organisation, and generally I am satisfied with it.

Pita Paraone: How does the provision of an ultra high frequency channel to establish a Māori television service specifically to “promote te reo me ona tikanga”do this, when many of those who may wish to access this service, and therefore increase their te reo me ona tikanga skills, may not be able to afford to do so?

Hon PAREKURA HOROMIA: Let me repeat: UHF transmission through BCL has proved to be reliable and a commercially attractive option for Prime Television, TAB, and Sky. There is no difference in the quality between UHF and VHF.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. This Minister is being asked a relatively simple question, understood, in particular, by many people who live in Ngāpuhi, an area that has the biggest tribe or iwi in this country. My colleague is not asking about the quality of the service; he is asking about the availability of distribution, accessibility, and cost in respect of the Māori people, particularly those who are out of that area of communications. It is a simple question.

Mr SPEAKER: I heard the question, and I will ask the Minister to comment further.

Hon PAREKURA HOROMIA: An estimated 800,000 homes already have UHF aerials. Initial transmission will provide coverage for 75 percent of the general population, and a fair bit of that in Ngapuhi, and 70 percent of Māori. The second stage will expand coverage to 86 percent of the Māori population.

Economy—OECD Ranking

6. Hon BILL ENGLISH (Leader of the Opposition) to the Prime Minister: Further to her response last week that she did not stand by her foreword in the Global Entrepreneurship Monitor: New Zealand 2001 in which she said that “these results are greatly encouraging of our goal of economic transformation and our return to the top half of the OECD ratings by 2011”; when did she decide that the 2011 target is “totally unrealistic”?

Hon Dr MICHAEL CULLEN (Deputy Prime Minister), on behalf of the Prime Minister: As I stated earlier, during 2001, in the course of developing the Government’s formal growth and innovation goals, which were announced in February 2002, we sought advice on the feasibility of various options, and concluded that it was unrealistic to set a time frame.

Hon Bill English: Is she aware that in the document she quoted last week as a document that contained the Government’s formal policy on this issue, Growing an Innovative New Zealand 2002, there is a diagram in the first chapter on vision and objective that makes it absolutely clear that her goal is the top half of the OECD by 2011, some 12 months after the Minister just said the Government changed its mind?

Hon Dr MICHAEL CULLEN: Yes, she is, because her colleague the Minister of Finance said in the House on 27 February 2002: “The Government does not have a target date for reaching the top half of the OECD. The text of the Growing an Innovative New Zealand document, which was cleared by Ministers, does not have any reference to a target date. A date appears in a graphic illustration”—which, I would have thought the member as an English honours graduate from the University of Otago would know, is different from the text of a document, or perhaps the English and history departments had lower standards in those sorts of respects—“taken from a Boston Consulting Group document.” Members should listen to this bit, very clearly, from 27 February last year, over a year ago: “The illustrations were not cleared by Ministers.”

Lynne Pillay: Has he seen any other economic proposals that set targets without time frames?

Hon Dr MICHAEL CULLEN: I have seen a document that purports to provide an alternative economic growth framework for New Zealand. It actually contains neither targets nor time frames nor details. It was put out by the National Party last week.

Rt Hon Winston Peters: In addition to the Prime Minister seemingly having changed her mind over the period of 18 months, is it not a fact that the Minister’s statement that the Government did not have a target of reaching the top half of the OECD on any set date, as he has outlined and reiterated relating to 27 February 2002, is patently and absurdly untrue—it did up to that time have a target; what he has been asked in the House now is when it was changed?

Hon Dr MICHAEL CULLEN: It is patently and obviously true, because the Prime Minister can remember discussing with the Minister of Finance, when that document came out, how on earth a graphic illustration appeared with a time frame in it.

Hon Richard Prebble: In elaboration of the Minister’s answer, which was that the graph should be ignored in this Government publication, can the Minister advise the House whether we are to ignore all graphs and tables in Government reports; if not, which graphs and tables in which reports should we ignore?

Hon Dr MICHAEL CULLEN: I think it is fair to say: rule one, if it is cleared by the Prime Minister one can be absolutely sure it is reliable.

Hon Bill English: Can the Prime Minister advise us which of her absolutely reliable explanations is actually the correct one: that she set the goal and took advice afterwards, to find out it was totally unrealistic; that she actually just repeated the objective that others had set—she did not actually set it; or that she never reads anything she signs out; all of which explanations we have been given today?

Hon Dr MICHAEL CULLEN: No, the member has not been given that. I suggest he consult Hansard.

Building Industry Authority—Meetings

7. MURRAY SMITH (United Future) to the Minister of Commerce: Since assuming responsibility for the Building Industry Authority on 1 January 2003, how many meetings, if any, has she had with its Chief Executive and what was the substance of those meetings?

Hon LIANNE DALZIEL (Minister of Commerce): I am meeting the chief executive for the first time today. I have had two other meetings with the chairman of the Building Industry Authority, on 22 January and 26 February, as part of a schedule of monthly meetings that I have arranged with the chairman. I also receive weekly briefings from my commerce officials with regard to the Building Act review.

Murray Smith: What has the Minister said to the Building Industry Authority concerning the importance of the Building Industry Authority urgently investigating the nature and extent of the weathertightness problem in New Zealand as per recommendation 13 of the Hunn report, and does the Minister consider that the decision of the Building Industry Authority in response to recommendation 13 that it will carry out only research that examines what other research has been done is a satisfactory response to recommendation 13; if not, what will she do about it?

Hon LIANNE DALZIEL: I am still awaiting with interest the report of the select committee into the weathertightness issues. I believe that the select committee will comment on matters that relate to the recommendations of the Hunn report. We are giving priority to those matters, at the same time as reviewing all aspects of the Building Act legislation and the framework for the regulation of people who work in the industry.

H V Ross Robertson: What changes has the Building Industry Authority made to ensure that it has the capacity to meet its new challenges?

Hon LIANNE DALZIEL: The Building Industry Authority has recognised that the significant increase in its workload has put pressure on what effectively is a very small organisation. To address its capacity pressures the Building Industry Authority has appointed Richard Martin to lead the new work programme—that is, the new work directly arising out of the recommendations of the Hunn report that are included in the new statement of intent.

Dr Wayne Mapp: If the Minister is giving such urgency to these matters, why are New Zealand homeowners and the construction industry still waiting for a new building code on treated timber, which was announced in this House by the Minister of Finance last year?

Hon LIANNE DALZIEL: I am aware that complaints have been made about the continued use of untreated timber and the fact that the Building Industry Authority should be recommending that only treated timber should be used in the meantime. I am also aware that there have been public statements that there ought to be only the use of untreated timber while treated timber is being reviewed by the Environmental Risk Management Authority. The bottom line is that these are matters that relate to the future of how the industry will be managed. I hope that we will be in a position to satisfy that member in about a week’s time.

Brent Catchpole: What progress has the Building Industry Authority made in achieving its plan made in the statement of intent to carry out a full investigation of the leaky-homes problem to ascertain the full extent and the cost of the problem, or was this statement in the Building Industry Authority statement of intent merely lip service to disguise the inaction of its chief executive?

Hon LIANNE DALZIEL: I am very confident that the board, with the support of the monitoring group chaired by Paul Carpinter, will manage what essentially is a transition period during the Building Act review. I announced last week that the discussion document would be out in about a week’s time. I am still confident of meeting that deadline that I have imposed on myself. That document will look at a broader scope for the Building Act to include consumer protection, clarification and strengthening of the roles of the regulators, including monitoring enforcement, and looking at the registration of appropriately qualified building professionals. These things should have been done back in 1991. We are getting on to it now.

Murray Smith: What independent performance monitoring has the Minister put in place to ensure that the Hunn report’s criticisms of the Building Industry Authority that it was: “difficult to access; slow to respond; defensive in its responses;” and that “its advice, rulings and determinations are too vague”, are being addressed, given the absence of any proposal by the Building Industry Authority to survey its stakeholders on that issue?

Hon LIANNE DALZIEL: The monitoring group that I referred to before, chaired by Paul Carpinter, was established with the support of the Ministry of Economic Development, which is why, as Minister of Commerce, I now have responsibility for this area. That group is working very closely with the Ministry of Economic Development to ensure that the discussion document that goes out reflects the views of industry and stakeholders so that we can make the changes to the legislation that are required.

Japanese Academy—Ministry Approval

8. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Immigration: With respect to the Japanese academy where a student was found dead last week, how did he and his colleagues get into New Zealand and remain here without the approval of that academy by the Ministry of Education and “set up outside any New Zealand legal-type arrangements” according to Hon Trevor Mallard, when authority for their entry had to have been given by the New Zealand Immigration Service?

Hon LIANNE DALZIEL (Minister of Immigration): The deceased student originally entered New Zealand visa-free as a visitor. He was subsequently granted a student permit to study at two approved institutions, neither of which was the Columbus Academy, which is not an educational institution. That is what the Minister of Education’s remarks referred to. The individuals charged over his death all entered New Zealand visa-free, except for one who came on a working holiday visa. Seven of the eight applied for and were granted student permits for approved institutions, none of which was the Columbus Academy. Several of them had travelled in and out of New Zealand more than once.

Rt Hon Winston Peters: If the Minister of Education has no idea that that “rogue institution” existed, and those students were, in the end, categorised as overseas students, where are the controls that ensure people arriving in New Zealand on a student visa, or who are given a student visa, are actually attending an institution approved by the Ministry of Education, and not simply taking advantage of a lack of determination to halt the invasive wave of would-be immigrants to New Zealand; is it not a fact that the people I have described now number thousands in this country?

Hon LIANNE DALZIEL: Perhaps I can be helpful to the member. I did not mention that the deceased student originally entered New Zealand visa-free as a visitor in July 1997. He arrived in this country when the member was the Deputy Prime Minister.

Mr SPEAKER: I would like the Minister to come to the member’s question and add to the comments that she has made.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. That person may have arrived as a visitor, as, no doubt, hundreds of thousands did to see the magnificent administration of the first coalition Government at work, but it is simply duplicitous of her to suggest that that is how he came, in the long term, to be here in 2003. She knows full well that this House wants to know how he got a student study visa for an approved institution and did not go there. Instead of her being devious, duplicitous, and incompetent, perhaps she could answer the question.

Mr SPEAKER: The member will withdraw and apologise for those two terms. The member knows which two terms.

Rt Hon Winston Peters: I apologise for the two that do not fit.

Mr SPEAKER: The member will withdraw and apologise.

Rt Hon Winston Peters: I withdraw and apologise.

Hon LIANNE DALZIEL: Each of the instances in which people visited visa-free and then applied for a student permit were for approved institutions. The information that I have to hand thus far—and we are checking on each individual who is involved in the matter—is that, of the cases that we have checked so far, the individuals were attending the approved institution.

Helen Duncan: Can the Minister tell the House how long the Columbus Academy has been operating in New Zealand, and whether there has been any previous publicity about it?

Hon LIANNE DALZIEL: It appears that the Columbus Academy was established around the time the company was registered on 21 February 1994. There was publicity about its success in working with troubled Japanese teenagers, in the New Zealand Herald in August 1998 and in the New Zealand Education Review in December of the same year, which is why I am so surprised that the member who asked the original question knows nothing about it.

Rt Hon Winston Peters: With regard to those last comments about knowing nothing about it, I ask the Minister, firstly, whether she is aware that the company was, in fact, established in 1989 when Labour was in Government—

Hon LIANNE DALZIEL: I have the registration.

Rt Hon Winston Peters: —if the Minister goes to Columbus Academy’s website, she will see—and, secondly, the person who lost his life came here in 1997 as a visitor or tourist. How did he, like thousands of others, remain here for 6 long years—almost four of which were during the time she was the Minister of Immigration—without her or her department knowing about it?

Hon LIANNE DALZIEL: The member is making an assumption about the status of the individual throughout that period. I am advised that the individual concerned applied on at least two separate occasions for student permits—

Dr Wayne Mapp: Did he get it?

Hon LIANNE DALZIEL: Yes. They were granted to him.

Rt Hon Winston Peters: Who gave it to him?

Hon LIANNE DALZIEL: I do not have the full details of the name of the officer who granted the permit to the individual concerned. The point I am making is that, at the time he died, he did not have a permit.

Hon Dr Nick Smith: Is the Minister concerned that young Japanese or other students who are troubled are coming to New Zealand; if so, does the Minister intend to make changes in the policy; and, further to that, is the Minister aware of any other institutions that are accepting into New Zealand troubled youngsters from other countries?

Hon LIANNE DALZIEL: The individuals concerned did not apply for permits to be in New Zealand on the basis of being troubled teenagers. Nor did they apply for permits to attend Columbus Academy. They applied for permits to attend ordinary high schools. The information that I have thus far is that they were attending those particular institutions. I remind the member that the full details of this were in the Education Review in December 1998. I think the member was an Associate Minister of Education at the time. I seek leave to table the two 1998 clippings in relation to that particular establishment.

Document, by leave, laid on the Table of the House.

Rt Hon Winston Peters: I seek leave for the Minister, as she was obviously quoting from an official document, to table the computer records for the person in question, which would prove that he came here, in terms of his study permit, during the time that she was the Minister of Immigration.

Mr SPEAKER: The member is seeking leave for somebody other than himself to do something. He can seek leave to do something himself. He cannot seek leave on behalf of another person.

Rt Hon Winston Peters: I am asking that since she quoted from an official document, she now table it.

Hon LIANNE DALZIEL: I did not quote from an official document.

Mr SPEAKER: The Minister says that she did not quote from an official document.

Māori Youth—Welfare Dependency

9. SIMON POWER (NZ National—Rangitikei) to the Minister of Youth Affairs: Is the Ministry of Youth Affairs carrying out any work in the area of Māori youth welfare dependency; if not, why not?

Hon JOHN TAMIHERE (Minister of Youth Affairs): The Ministry of Youth Affairs is engaged in, or contributes to, a range of Government initiatives, including those led by the Ministry of Social Development. They seek to reduce the welfare dependency of young people and their families, including Māori.

Simon Power: Has the Minister instructed his officials to look into serious policy reforms for Māori youth, along the lines of those outlined in his speech distributed to the Knowledge Wave Conference, particularly in the light of the recent support of his Labour Party colleague the Hon Dover Samuels, who said that his speech marked him out as “a visionary”; if not, why not?

Hon JOHN TAMIHERE: As part of a fulsome work programme with the Ministry of Youth Affairs, a wide range of work is under conduct.

Mita Ririnui: What is the rate of participation by young Māori in youth development programmes administered by his ministry?

Hon JOHN TAMIHERE: For the year ended 2001-02, 51 percent of all Conservation Corps members, and 56 percent of Youth Service Corps members, were of Māori descent. Those programmes aim to reduce the risk of welfare dependency of young people by increasing self-esteem, motivation, skill levels, and opportunities for further education, training, and employment.

Dr Muriel Newman: Is the Minister concerned that in spite of favourable economic and unemployment conditions, as well as millions of dollars of taxpayers’ money having been spent on closing the gaps, capacity building, and dubious employment schemes, under a Labour Government youth unemployment has increased by 29 percent of the average rate, and Māori unemployment has increased by 19 percent; if so, can he tell the House precisely when he intends to submit a paper to Cabinet to turn round those disastrous statistics?

Hon JOHN TAMIHERE: No.

Sue Bradford: Given the very high unemployment rates among young Māori, what specific practical steps is the Minister taking to help the Mayors Task Force for Jobs achieve its goal of having all young people under 25 years of age in work, training, or education by the year 2005?

Hon JOHN TAMIHERE: I regret to advise that that matter falls outside my delegation.

Judy Turner: What mechanism exists to identify young people who have been raised in families where long-term unemployment is a feature, to ensure that additional vocational support is given to those young people?

Hon JOHN TAMIHERE: A whole raft of policy work is under way with regard to exploring a range of policy and programme developments to that end.

Simon Power: Will the Minister be standing by the comments in his speech to the Knowledge Wave Conference, and in the Sunday Star-Times, regarding Māori youth and welfare, in the light of the strong support he has received from newspaper editorials, letters to the editor, and talkback radio, and in the light of the clear support he has received from his colleagues the Hon Dover Samuels and Clayton Cosgrove; if not, why not?

Hon JOHN TAMIHERE: I agree with the Prime Minister’s comments. [Interruption]

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Mr Cullen can say “Not again!” but, with respect, the Minister was asked a very, very complex question about what he stood by, and reference was made to what he had said. A Minister cannot get up and say as a reply: “I stand by the Prime Minister’s comments.” Comments on what? Frankly, this is a waste of Parliament’s time if a Minister, having got himself into a hole, is allowed to get himself out with the greatest of ease.

Mr SPEAKER: The Minister did address the question quite specifically.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I ask for a point of clarification. What in the words: “I stand by the Prime Minister’s comments.” could in any way clarify the question asked by Simon Power? I want to know.

Mr SPEAKER: It is not for me to judge whether—[Interruption] That is the last time—the very last time. I am on my feet. The Minister was asked a question. He addressed the question. He might not have satisfied anyone in this House, but he addressed the question, and that is what he is required to do.

Land Sales—General Agreement on Trade in Services

10. ROD DONALD (Co-Leader—Green) to the Minister of Finance: Would amending the Overseas Investment Act 1973 in order to meet the Royal Forest and Bird Protection Society’s request for the Government to ban sales of substantial areas of coastal land to foreigners contravene General Agreement on Trade in Services’ commitments made by a previous Government; if not, why not?

Hon Dr MICHAEL CULLEN (Minister of Finance): That would depend on whether the proposed use of the land was related to trade in services. Off the top of my head, I assume that most would not relate to trade in services.

Rod Donald: Which is more important to the Government: preserving coastal land from foreign ownership, or enforcing the foolhardy General Agreement on Trade in Services’ commitments made by a previous National Government in 1994?

Hon Dr MICHAEL CULLEN: The most important is ensuring broad, good public policy, including access to coastal land. Often, the greatest problems have occurred with New Zealand resident and citizenship owners of land in New Zealand, rather than with foreign owners. Indeed, on occasions I have been able to negotiate conditions of access in a variety of ways with foreign purchasers that would not have been able to be achieved with a New Zealand purchaser.

Mark Peck: What action has the Government taken to strengthen the protection for iconic sites?

Hon Dr MICHAEL CULLEN: The Government has brought into force legislation passed in 1998 to strengthen the national-interest test for farmland, and lowered the trigger point at which the national-interest criteria apply to foreshore sales from 0.4 hectares to 0.2 hectares.

Dr the Hon Lockwood Smith: Could the Minister explain to the House, and to the Greens, how most New Zealanders are affected differently if a piece of coastal land—say, in the Gisborne area—is owned by an absentee landowner living in Invercargill, or by one living in Sydney?

Hon Dr MICHAEL CULLEN: I think that, in that particular case, the absentee landowner lives in Virginia for most of the year. It is worth reminding ourselves that in the last 6 years the Overseas Investment Commission has approved the sale of about 27 kilometres of New Zealand’s coastline. That is less than one-fifth of 1 percent of the total. That greatly exaggerates the net transfer, because it includes coastline sold by foreigners to foreigners, and does not include any coastline sold by foreigners back to New Zealanders.

R Doug Woolerton: Can the Minister please tell us exactly how many hectares of land he has approved for sale to foreigners in the last 12 months?

Hon Dr MICHAEL CULLEN: I do not have that number in front of me today. I will attempt to get an answer for the member.

Rod Donald: Following comments made by the Minister of Conservation that “our capacity to purchase land of conservation value has been severely compromised” by the high prices resulting from overseas bidders, will the Minister ensure that there will be no more commitments liberalising overseas investment rules that would make it even more difficult for the Minister of Conservation to compete with overseas buyers?

Hon Dr MICHAEL CULLEN: I think it is fair to say that the amount of land bought by overseas purchasers is not sufficient to affect greatly the total land market within New Zealand. The problem is that, with regard to some specific areas of coastal land of very high value, New Zealanders have to make a choice about whether they want to purchase that land themselves. Equally, the member has to recognise that if the Government refuses to allow New Zealanders to sell their own land, effectively it is denying them the right to realise the value of their property.

Economy—Reforms of the 1990s

11. Dr DON BRASH (NZ National) to the Minister of Finance: Does he agree with the Prime Minister’s statement that the reforms implemented by the Government over the 1990s left “the poorest New Zealanders an estimated twenty to twenty five per cent worse off”, as stated in her speech to the Eighth Women’s Conference of the International Confederation of Free Trade Unions; if so, what evidence does he have to support such a claim?

Hon Dr MICHAEL CULLEN (Minister of Finance): Yes. The Prime Minister’s speech clearly identified benefit cuts and the move to market rents as having an impact on the poorest New Zealanders to that extent. It is simply a matter of record that in 1991 the National Government reduced many benefits by 20 percent and, in some categories, by 25 percent. Market rents would have compounded those cuts.

Dr Don Brash: Would the Minister be surprised to learn that Statistics New Zealand data on income distribution shows that real average disposable incomes for the poorest 20 percent of New Zealand households actually rose between 1991 and 1998, after having fallen by nearly 5 percent during the previous 5 years of Labour Government rule, and will he now seek to correct the Prime Minister’s mistake on this matter?

Hon Dr MICHAEL CULLEN: No, that is a function of the changes in the labour market, rather than changes in the income of people on benefits.

Dianne Yates: Has he seen the claim that: “In 1990, Australia’s GDP per capita was 5 percent above New Zealand’s and by 1999 it was nearly 40 percent above.”; if so, will the Government do better than we did in the 1990s, by working in partnership with industry to create jobs?

Dr Don Brash: I raise a point of order, Mr Speaker. This supplementary question has nothing to do with the primary question.

Hon Dr MICHAEL CULLEN: It is about the movement of relative incomes, which is what the primary question was about.

Mr SPEAKER: It is close enough.

Hon Dr MICHAEL CULLEN: Yes, indeed. The claim was made by the former Governor of the Reserve Bank—

Gerry Brownlee: I raise a point of order, Mr Speaker. I appreciate that you have given a ruling, but I ask you to reflect on that ruling and come back to the House about it tomorrow. When you see the Hansard and look at the question asked by Dr Brash, the response from Dr Cullen, the supplementary question from Dr Brash, and the further response from Dr Cullen, and then consider the question asked by Dianne Yates, you could conclude nothing more than that that question was wide of the mark.

Mr SPEAKER: No, I can conclude something more than that. The original question was to do with the 1990s, as was the supplementary question. [Interruption] Please be seated while I am on my feet. I am not going to have my ruling disputed. This question addressed the primary question and the supplementary questions. I invite the Minister to reply.

Gerry Brownlee: I raise a point of order, Mr Speaker.

Mr SPEAKER: It had better not dispute my ruling.

Gerry Brownlee: I am simply going to ask you to extend that ruling and tell us whether we can now ask Dr Cullen about fashion in the 1990s, or perhaps fuel prices, or car prices, or something else from the 1990s.

Mr SPEAKER: If it was in relation to the original question, yes, members could.

Hon Dr MICHAEL CULLEN: The claim that we lagged so far behind Australia during the 1990s, and fell so far behind in those 9 years, was made by Dr Don Brash in his speech to the Knowledge Wave Conference as an indictment on the effectiveness of the 1990s reforms. The Government has already halted, and is now starting to reverse, that relative decline.

Dr Muriel Newman: How does the Minister reconcile his answer with the fact that official Statistics New Zealand figures show that the average worker enjoyed an increase in gross pay of 9.8 percent in real terms over the 1990s, and should he not be more concerned about the fact that New Zealanders’ real average net wages have fallen by 2.4 percent over the 3 years he has been Minister of Finance?

Hon Dr MICHAEL CULLEN: Indeed, the member is now compounding the previous error, because she again is confusing household incomes with wage rates and benefits rates. Benefit rates were cut in 1991 by up to 25 percent. Household incomes have risen very strongly over the last 2 or 3 years.

Hon Matt Robson: What has this Government done to improve the lot of vulnerable groups in New Zealand, in consideration of what happened in the 1990s?

Hon Dr MICHAEL CULLEN: The policy of market rents has been reversed, and we have reintroduced income-related rents for low-income State house tenants. We reversed the previous cut to the married rate for New Zealand superannuation, and boosted it, so that it has been increased by more than $20 a week. We have raised the minimum wage, introduced paid parental leave, eased the cost of student loans, and created 138,000 new jobs, 80 percent of which are full-time.

Sue Bradford: Is the Minister concerned that those worst off in this country as a result of the 1990 reforms, such as the benefit cuts and the introduction of the Employment Contracts Act, tend on the whole to be families on benefits, and will he remove the current discrimination that sees the family tax credit available only to those in paid work?

Hon Dr MICHAEL CULLEN: As both myself and Mr Maharey have indicated, we are looking at major restructuring in the context of next year’s Budget, assuming that the existing surpluses prove to be structural rather than cyclical. That will include a restructuring of the whole family support system, whilst ensuring that there are sufficient incentives to move from a benefit into paid employment.

Dr Don Brash: Is the Minister saying that Statistics New Zealand data is incorrect, and that the Prime Minister is right when she says that the income of the poorest New Zealanders went down during the 1990s—something not confirmed by Statistics New Zealand?

Hon Dr MICHAEL CULLEN: The member must not confuse wage rates and household incomes with benefit rates. Benefit rates were cut in 1991. Unemployment peaked in 1991, at 11 percent, then fell thereafter.

Dr Don Brash: I raise a point of order, Mr Speaker. The question related to the Prime Minister’s speech, which talked about the poorest New Zealanders being an estimated 20 to 25 percent worse off. There was no reference to benefits, or household rents, or whatever else. She said that the poorest New Zealanders were 20 to 25 percent worse off because of the policies of the 1990s. There is no evidence of that from Statistics New Zealand.

Hon Dr MICHAEL CULLEN: Speaking to the point of order, I say to the member that this is debating material. He must learn that this is a debating chamber. A person who was on a benefit in 1990 and on a benefit in 1991 had suffered a cut, in real terms, of over 20 percent in his or her income, in many instances.

Mr SPEAKER: The member asked an appropriate question. The Minister addressed the question.

Aid—Non-governmental Organisations

12. NANAIA MAHUTA (NZ Labour—Tainui) to the Associate Minister of Foreign Affairs and Trade (Official Development Assistance): What recent decisions has she made about funding New Zealand non-governmental organisations which work in emergency situations?

Hon MARIAN HOBBS (Associate Minister of Foreign Affairs and Trade (Official Development Assistance)): Last month I approved an increase in funding of over $1 million for New Zealand non-governmental organisations working in emergency situations abroad. This follows on from a decision made by this Government in 2000, giving New Zealand non-governmental organisations access to additional funding available through the Emergency Disaster Relief Fund.

Nanaia Mahuta: What kind of work do New Zealand non-governmental organisations undertake overseas, and why is it so important?

Hon MARIAN HOBBS: New Zealand non-governmental organisations contribute to a wide range of emergency and disaster relief efforts overseas, including cyclone relief in the Pacific and landmine education in Afghanistan. Non-governmental organisations play a unique role in emergency assistance, as they work directly, and often quickly, with local communities.

Dr Wayne Mapp: When will the Government use the full range of non-governmental agencies to deal with the most critical issue in the South Pacific, which is the failing state of the Solomons?

Hon MARIAN HOBBS: At the moment I have in front of me a paper, which I have been trying to read during question time, on working with unilateral organisations to deal with exactly that situation in the Solomons.

Nanaia Mahuta: What support does the Government provide to non-governmental organisations undertaking development once the immediate emergency or disaster has passed?

Hon MARIAN HOBBS: The Government provides over $15 million a year to non-governmental organisations that work in poor and developing communities all around the world. That is particularly pertinent at this time, given the current situation in Iraq. Should war eventuate in Iraq, we have already stated that New Zealand will contribute to any post-conflict relief effort in Iraq.

Points of Order

Debate on Iraq

GERRY BROWNLEE (NZ National—Ilam): I raise a point of order, Mr Speaker. Noting that the Prime Minister has in recent days talked of a likely conflict in Iraq beginning on 17 March, I seek leave for the House to set aside time for an unlimited debate on the situation in Iraq, on Thursday of qthis week, after question time.

Mr SPEAKER: Leave is sought. Is there any objection? There is.

Bills

Government Superannuation Fund Amendment Bill (No 2)

Third Reading

Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Government Superannuation Fund Amendment Bill (No 2) be now read a third time. This bill is not exactly long and complex. It is very short and rectifies a situation that many people have come to regard as inequitable, in that under the pre-1985 superannuation schemes, a remarrying spouse loses her—and in all cases it is the woman in that position—right to the half-pension she inherited from her former husband. In many respects, that is quite contrary to the present understandings about marital property and the inheritance of that marital property.

There was a slightly cheeky reference in the committee to the length of time the bill has taken to be passed. Before Ms Wong gets carried to far along that track, I might remind her that the Government Superannuitants Association asked the previous National-led Government many times in the 1990s to pass this legislation, and was consistently refused by that Government. Indeed, the member might recall her Government actually voting against a member’s bill by Jill White that was designed to do just that. It is this Government that has been responsible for bringing in this legislation.

The cost of the changes in the bill also includes a change affecting a very small number of children. As one can understand, we are talking about the children of somebody who died under the pre-1985 schemes, so we are getting on a bit in terms of what is going on in that respect. Only 19 such people also get an inflation index allowance from here on, as opposed to the frozen allowance they had previously. Those are significant changes. The first will make life easier for a number of women, not all of whom are elderly.

One of the difficulties in calculating the costs has been working out what the age structure—and therefore the likely survival times—of those widows is. The rough cost is between $2 and $2.5 million a year, although personally I believe it will be somewhat lower. My office has never quite agreed with the Government Actuary’s estimates on this. We believe that they estimated rather too many young widows, given whom we are talking about in that respect. But whatever it is, the entire cost is taken by the Government on the Crown account, because it is an additional cost to the Government Superannuation Fund that cannot be met out of the existing funds, and never will be.

We look forward to the passage of this bill. I know that there are some people who have taken action in anticipation of its passage. The good news for them is that the bill is backdated to 1 July 2002, so their anticipation will now be rewarded.

ROD DONALD (Co-Leader—Green): I am very pleased to speak in favour of the third reading of this bill. Surviving spouses will be pleased to see it finally passed, as 800 of them have been materially disadvantaged by the unfairness of the current rules.

I would like to declare an interest at this point. I was advised on Sunday night that my partner’s mother is a surviving spouse who has remarried, and she was pressing me as to when we would pass this legislation. I think Michael Cullen has to declare an interest there as well, because my partner’s mother’s former husband was Michael Cullen’s teacher at high school—so there we have it.

The passage of this bill is being anticipated widely in the community, and not just by the 800 who have been materially disadvantaged by the unfairness of the current rules. There are, of course, another 12,000 spouses who can now remarry without disadvantage if they wish. I guess their only regret is that they will have to watch their former spouses’ hard-earned savings frittered away on the sharemarket.

PANSY WONG (NZ National): This arrogant minority Labour Government has only itself to blame for the fiasco created during the Committee stage of this bill—a bill that is supported by all parties in the House. This bill recognises the changed circumstances in which people live in today’s environment. Widows and widowers of the contributors to the Government Superannuation Fund should not have their allowances forfeited simply because they remarry—and for a while there, I thought that Rod Donald was going to declare a conflict of interest. The bill also changes the allowance paid to children of deceased members who came under under the 1985 scheme, by replacing the prescribed amount with an inflation-adjusted allowance.

We were told that the number of widows and widowers affected is estimated to be only about 1,200, out of the 47,000 people who are currently in receipt of the Government Superannuation Fund pension. The number of children likely to be affected is even smaller. The National Party supports this bill none the less, because we believe it is important and significant to those affected.

Unfortunately, this bill—which is very positive and significant for those affected by it—has been overshadowed by the draconian measures used by the minority Labour Government to shut down debate during the Committee stage. First, the Chair at the time, Anne Hartley, would not allow the ACT party leader—

Mr SPEAKER: Procedural issues like that cannot be referred to. Decisions made by the Chair have to be accepted.

PANSY WONG: There was a very wide-ranging debate in the Committee stage on the title of this bill. Given that it is generic rather than specific, I think that many more members would have taken calls to challenge the title. In modern-day legislation, the title of a bill is designed to reflect more accurately its content and purpose. In this instance, a generic title like the Government Superannuation Fund Amendment Bill (No 2), has led to many debates, which have extended to the nature of the investment involving the Government Superannuation Fund. When the Government is introducing bills to this House in future, it should ensure that titles are more specific and reflective of their purpose, rather than being generic. In this instance, it has led to a 35-minute debate on Standing Orders.

The other issue is that during the Committee stage the Hon. John Tamihere replaced the Minister in the chair, the Hon Michael Cullen. That was rather unfortunate, because there were quite a few valid questions being asked, including one that the Hon. Michael Cullen has just provided an answer to—namely, the cost of this change. We were told that the cost is estimated to be between $2 million and $2.5 million. The Minister said it might be less than that, but the public and members of the various parties in this House were entitled to that information. Indeed, repeated questions were asked during the Committee stage, and John Tamihere was not able to—or was unprepared to—take a call and reassure us as to the cost of the changes.

This relatively short bill attracted only three submissions. One was from the New Zealand Law Society, which advised on some technical changes to ensure that the wording of one of the clauses was not confusing. The other submission was the endorsement from the Government Superannuitants Association. The third submission was from the National Council of Women of New Zealand, on whose behalf I have raised the question of the criteria by which an exception can be made for children above the age of 16 who might still be financially dependent.

The National Council of Women is an organisation all members should be grateful for, because it has taken great trouble—conducting research in its own time—to furnish submissions to various select committees on various bills. Although the council supports this bill in general, it has raised the issue of the age at which the children affected are classified as being financially dependent. The council stated that, nowadays, we are encouraging children to stay longer in the educational sector to equip themselves for a much more dynamic society in which education and skill are required to ensure that they secure more fulfilling jobs. It is a valid concern that children are now more likely to remain financially dependent beyond the age of 16. The officials’ answer was that a case could be made to extend the allowance to children beyond the age of 16, and up to the age of 18.

So a whole series of questions was posed to the Minister of Youth Affairs, the Hon John Tamihere, as to what those criteria were; how those children, or their guardians, could find out how to start the process, and who they could consult as to whether they qualified for that waiver. It was extremely disappointing that never at any stage when he was in the chair did the Hon. John Tamihere intend to take a call to furnish those answers, or to consult his officials. No matter how short a bill is, a Minister in the chair should really be answerable to the public, and should answer questions that have been validly raised by members of various political parties. The fact that the Hon John Tamihere was made to sit through the Committee stage, after being gagged by the Prime Minister for his indiscretion in speaking against his own colleague Steve Maharey, the Minister of Social Services and Employment, for the latter’s lack of action, should not influence his ability to stand up and answer to the public on a genuine question raised by the National Council of Women.

GORDON COPELAND (United Future): I have no personal knowledge, of course, of just who is to blame for the long delay in the passage of this important piece of legislation. I must confess, too, that I have yet to develop an appetite for long debates during the Committee stage that relate to the technicality of whether a bill’s title is right or wrong. But I am delighted to know that the widows affected by this legislation will at last get the justice they deserve. In fact, I could not help but think of the story in the Gospels about the widow who persisted in battering an unjust judge who refused to give her due process for such a long time that he finally got fed up and gave it to her. After such a long passage of time, I guess that that is probably the way that the widows who are the recipients of this annuity will be feeling. I only hope that they feel that the wait has been worthwhile. United Future is delighted to see this bill at last pass though the House.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney): During the Committee stage of this bill we witnessed an extraordinary situation. We have a situation where, I think, most members of this House agree with this legislation and support it, yet the Committee stage on such a simple little piece of legislation, involving just two small parts, with only a couple of clauses to each part, took a long, long time to get through—I am not allowed to say why.

This legislation remedies something that was originally done in 1985, and it seems that the then Labour Government, when it brought in the new provisions—the new Government Superannuation Fund schemes—forgot about the people on the old schemes. It did not seem to care about the people on the old schemes. Under the old scheme, when people died, spouses who remarried were forgotten about, whereas the new scheme looks after them. I think that most members of this House do not consider that a very equitable situation, and it is good that Parliament is able to remedy the position now.

There are couple of things of interest in respect of this legislation. We heard the Minister of Finance—after all it is his bill; or at least the bill is in his name—mention a moment ago that the official advice as to the fiscal cost was that it was in the order of $2 million to $2.5 million a year. That may not sound like a huge amount of money, but what is really significant about the Government Superannuation Fund schemes, and any payments made under them, is that the Government Superannuation Fund is a defined benefit scheme. That means that those who qualify to receive payments, or annuities, or allowances from it do get a specified amount of money. What is really interesting about this legislation, of course, is that the particular fund involved in this legislation, the Government Superannuation Fund, has lost a vast amount of money in the last few months. In fact, in the last 14 months it is estimated that the Government Superannuation Fund may have lost as much as $380 million. The question that therefore arises is whether the fiscal provisions for this piece of legislation are totally adequate, because we know that the Government Superannuation Fund is not sufficient to meet the defined benefits that the fund has to meet.

So there is already a taxpayer commitment to topping up this fund, and it varies each year. Members will note from the Budget each year there is an allowance made for the changes in this fund and therefore the liability to the Crown in having to top up the payments made under the defined benefit nature of this scheme. That is, of course, why Dr Cullen has recently tried to avoid having his surpluses muddied by that and developed the Operating Balance Excluding Revaluations and Accounting Changes—OBERAC. Basically, it excludes adjustments for the Government’s superannuation fund.

Mr SPEAKER: This can be commented on in passing, but only in so far as it relates to the operation of this bill—not general comments about the Government Superannuation Fund.

Dr the Hon LOCKWOOD SMITH: Thank you, Mr Speaker. I appreciate your guidance, but, of course, if sufficient money is not appropriated this scheme cannot work. As I pointed out, this is defined benefit scheme. The money that this legislation will require is not money the Government can appropriate each year, then say: “That’s what we’re going to pay to the people who now qualify under this bill.” That is all pre-defined, all predetermined, and that is why it becomes quite an interesting issue as we debate the third reading and the operations of this bill.

As I pointed out, the benefits are defined. The Government cannot simply appropriate money or make a Budget policy decision, and say: “We’re going to pay this amount.”, because the benefits are defined. The Government now, under this legislation, has to face commitments that are difficult to work out, because when it has a fund that is going up and down—and, as I said, in the last 14 months it has lost $380 million—the amount that the Crown is going to have to appropriate to meet the defined benefits in this scheme is unknown. That is why I think that Dr Cullen could not be very specific about the actual fiscal costs of this legislation. Fortunately, the number of people involved is not great—say, 800 widows, and maybe a small number of children, say 19—but that does not mean to say that it is not important legislation. Even if the Government had to stump up all the money—and I suspect that it will have to stump up all the additional money, because already the Government Superannuation Fund, as I understand it, is not meeting the defined benefits it is required to meet. Fortunately, we do know the number of people involved; therefore those estimates of fiscal cost should be reasonable.

There was some debate over Part 2. The select committee in fact recommended, and the Committee of the whole House agreed, that subsection 6(b), inserted by clause 4, be struck out. It was not entirely convincing as to why that should be. A quite important aspect of the original drafting of the bill was that it made it clear that recipients of this defined benefit under this amendment to the Government Superannuation Fund legislation should be entitled to an amount of allowance that included all the adjustments that people who had been on the new scheme since 1985 had received.

I think it was unnecessary to strike out subsection (6)(b), because that made it very clear what people were entitled to. Striking it out does not introduce great uncertainty as to what people are entitled to, but, on the face of the legislation, it does not make it as clear as the original drafting did. The original drafting made it quite clear that they were entitled to an amount under this defined benefit scheme that included all the adjustments since the new schemes came into being. I personally think that striking the paragraph out was not the smartest move, but Parliament, in its wisdom, chose to support what the select committee had recommended. I questioned Dr Cullen on it, and the Minister of Finance confirmed that deleting that paragraph did not alter the amount people were entitled to. All I say is that it is just a shame that on the face of the bill it is not as transparent as it was before. Most people who read clause 4 would not have a clue what it says. That is the provision that sets out, I presume, the amount of the annuity, yet it is not transparently clear what that is. People reading it now will have to delve back to find out what Part 2, Part 5, or Part 6 of the principal Act is—it refers to all of them—to see how much they are entitled to. The original drafting made it much more clear.

The passage of this legislation will be helpful for some people in New Zealand who have been missing out. It is unfortunate it has taken the Government as long as it has to get it into place. Members will note that the commencement date for the legislation is the day after the date on which it receives the royal assent, yet the money required to be paid commences on 1 July 2002. The fact that it has been dragging for on so long does not mean to say people will miss out, because the date is specified. It is just a shame it was not put through more rapidly because most members of Parliament do support this, and it is timely that it be passed now.

DAVID BENSON-POPE (NZ Labour—Dunedin South): I rise in support of the bill.

RODNEY HIDE (ACT NZ): The ACT party rises in support of the Government Superannuation Fund Amendment Bill (No 2). This bill does overcome a longstanding anomaly in which a widow or a spouse of a civil servant who remarries loses the entitlement to which she or he would otherwise be due, simply by virtue of the fact that she or he is getting married. The ACT party agrees with every other political party in the House that that is anomalous, wrong, and unfair, and should be stopped.

The question then is whether it a principle that this House wants to apply generally. Imagine the situation that one is a widower or a widow, one is entitled to a New Zealand pension—not a Government Superannuation Fund pension; I am comparing it to this situation—one remarries, and by virtue of remarrying one loses one’s pension. I am sure members in this House will say that is impossible. They can understand that it was occurring before the passage of this bill, and that that is what this bill is designed to overcome, but, in fact, a New Zealander entitled to New Zealand superannuation who remarries can lose that entitlement. I look around the House, I look at Mr Cunliffe talking on the Prime Minister’s phone, and I see that he is dumbfounded by that statement. Michael Cullen and the Labour Government are supporting the fact that New Zealand pensioners who remarry can lose their pensions.

How can that possibly be? It works like this. If a New Zealander marries someone who is entitled to an overseas pension, that New Zealander is income tested. That is right. I have a case in my electorate of Epsom—I say “my” in the romantic sense of the word, in the sense of my emotional attachment to Epsom, which I know that the Māori members opposite understand—of someone who planned his or her life thinking that superannuation would be available, who worked away, reached the age of 65, went to get the pension, and was told by this Government that there was no pension.

Mr SPEAKER: That is outside the scope of the bill. This bill is the Government Superannuation Fund Amendment Bill (No 2). It is not about the New Zealand scheme. I refer the member to Speaker’s ruling 94/5: “Debate on the third reading is more restricted than it is on the second reading of a bill. It is limited to matters contained in the bill”.

RODNEY HIDE: The matter that is contained in the bill is that if a person remarries, as compared with what Mr McNair would call “living in sin”, his or her financial arrangement should not be affected. I agree with that. It is a bit odd that currently, if one is happily receiving a pension from the State, and one stops what Mr McNair would call living in sin, does the right thing by the lady, and gets married, suddenly, whack, one loses the pension. I know that Mr McNair would not agree with that, and I know that United Future would not agree with that. Actually, without the passage of this bill we are encouraging all pensioners to live in sin and enjoy each other’s company and comfort. If they do that, they will get their pension, but if they go along to the local church or to the registry office, or even if they get married in their own backyard by a marriage celebrant, and they say the magic words “I do.”, whack, they lose their pension. [Interruption] With the passage of this bill—as my good friend and colleague Mr Copeland is pointing out—that anomaly will stop. I ask members of the Government and members of the Opposition whether that is an anomaly that they agree should be stopped.

Pansy Wong: Yes.

RODNEY HIDE: Pansy Wong says it is. I go across to David Cunliffe, who is still enjoying himself on the Prime Minister’s phone.

Mr SPEAKER: The member knows that is out of order. The member will come to the bill or have his speech terminated.

RODNEY HIDE: I ask David Cunliffe whether he thinks that is an anomaly that should be stamped on. If a person is getting a pension from the State, as under this bill, and he or she gets married, does he agree that that pension should continue?

David Cunliffe: Tell us about the ACT offices.

RODNEY HIDE: David Cunliffe has not focused his mind on this bill and his support for it. It is quite odd, because we do have situations in New Zealand still—far more than just those under the Government Superannuation Fund, I have to report—where people get married and lose their pension. I would like to know whether the Labour Party, United Future, the New Zealand First Party, the National Party, and the Green party—and I will get to Mr Cunliffe, whatever party he wants to say he belongs to—think it is correct and right that someone who gets married loses the pension that he or she is entitled to if he or she is not married. I look across to Mr Copeland and Mr Murray Smith and I think they would agree with me that it is odd that people can live in sin and get the pension, but if they get married, no, they do not! Yet, for large numbers of New Zealanders, notwithstanding this bill, that is precisely the situation, as people coming to my office in Epsom have explained to me. I find that an anomaly.

This bill covers the Government Superannuation Fund, which, as members have pointed out, is not a fund sufficient to cover the contractual entitlements that civil servants have in respect of their pensions. Happily, it is closed off, but there still is a large tail. The last time I looked it was about $8 billion. The liabilities are about $8,000 million, and, from memory, the assets of this fund are between $3,000 million and $3,500 million. So the fund’s assets do not cover 50 percent of the liability.

Then we have the problem that the fund has lost $380 million of its value in 14 months. I said to a gentleman this morning, on my way here: “How do you feel about the Government giving money to Team New Zealand?”. He said: “Well, when you compare it to what it’s lost with the fund, I’d rather it spent the money on Team New Zealand.” The point about that money is that Mr Cullen says: “Oh well, that loss is just on paper.” Well, that is how money is recorded in the modern world. It is a real loss, and if that loss is not made up, it has to be made up by the taxpayer. That is the precise situation, and that is how it wags around—similarly with the accident compensation account, where the Government accounts.

I have to say that when we look at that situation and at the anomalies this bill is attempting to address, we find that there is some distance to go if this Government is to convince New Zealanders of the wisdom of a fund such as the New Zealand Superannuation Fund, which is managed on behalf of the Government. I would very much like the next Government speaker to explain, given its support for overcoming the anomaly of one’s losing one’s pension if one remarries, whether that is a general principle that the Government is prepared to support, because if that is so, there are many pensioners whom I could put it in contact with who are not in that situation.

Thank you very much, Mr Speaker, for your kindness in letting me speak.

Bill read a third time.

Bills

Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill

Second Reading

Debate resumed from 27 February.

CRAIG McNAIR (NZ First): Just before I was interrupted on Thursday evening at 6 o’clock, I was talking about the bill confirming the annual income tax rates for 2002-03. I just wanted to touch briefly on the point that New Zealand First wants to think out of the box a little bit as far as taxation is concerned. We want a new tax rate on increased export net profit. We want to reduce the rate to 20 percent. For example, if company A has net income from exporting of $10 million this year, and if it achieves $12 million next year, then the tax rate on the additional $2 million would be 20 percent. New Zealand First, if it were in a position to do so, would put the appropriate machinery and legislation in place to ensure that the system was honest and was kept honest. Within 5 years we would plan to put all exports on the same footing of 20 percent. I just wanted to touch on that issue, considering that part of this bill includes the tax rates for 2002-03.

Another issue that is quite a hot topic, and quite controversial, is the reforming of the rules relating to the taxation of Māori organisations. I was a member of the Finance and Expenditure Committee, along with my leader, the Rt Hon Winston Peters, which heard the evidence, and along with the member opposite Mr Rodney Hide—

Rodney Hide: I remember that member’s questions very well—very insightful.

CRAIG McNAIR: That is good. He was on the committee with me, along with others. I remember hearing the evidence and deliberating on the bill. New Zealand First is concerned that one section of the New Zealand community is receiving an advantage over other groups. We expressed a minority view in the report back, because of our concern. It is our intention in the Committee stage to put an amendment that all sections of the New Zealand community that are able to take advantage of the proposal relating to basic rates of tax at 19.5 percent should be treated in the same way. In the meantime we cannot support the bill, because of its unfair and race-based system, and we will be abstaining from the vote on the second reading. I reiterate that New Zealand First wants to treat all New Zealanders equally, and we are preparing an amendment to give effect to this view.

DARREN HUGHES (NZ Labour—Otaki): I rise to support the second reading of the bill. I was pleased to hear at the beginning of the debate the Hon Dr Michael Cullen, in his role as Minister in charge of this bill, explain quite clearly the different rate that Māori organisations will be paying—namely, 19.5 percent—the rationale behind it, and why it is not a race-based policy, as claimed by other Opposition parties, but is actually quite sensible law. For that reason, I am pleased to support the second reading of the bill.

Dr DON BRASH (NZ National): There is much in this Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill that is plain common sense. There is a lot that is unexceptional, and we would have no problems with a great deal of it in content. But I have to say that for us there are two fundamental flaws in the bill, and for this reason we certainly will not be supporting it—indeed, we oppose it quite vigorously.

The first and most significant problem is that the bill confirms the existing income tax rates. I think that is a huge opportunity missed by this Government. It is running a large Budget surplus—larger than it expected; yet it still proposes to maintain the current income tax rates. Between 1988 and 2000 we had a top personal tax rate of 33 percent and a company tax rate of 33 percent, and within the limits of a progressive tax system that minimised the compliance costs of the taxation system. For reasons that had nothing to do with the need for revenue, but a great deal to do with political envy, this Government raised the top tax rate for people from 33 percent to 39 percent. It did not need to do that for revenue; that is very clear. It did so because it felt that would be popular with a great number of New Zealanders who were paying less tax than that. In fact, it was done in the mistaken view that the tax system in recent years has been rigged so that high-income taxpayers paid a lot less tax.

That is one of the great myths of the tax system in New Zealand. It is a myth, because what we saw in the 1980s was a reduction in the top tax rate from 66 to 33 percent, and people said it was clear the top taxpayers were paying less. What nobody really focused on was that that reduction in tax from 66 to 33 percent, which I must say was absolutely sensible in terms of good tax policy—

Rodney Hide: That was a good Labour Government.

Dr DON BRASH: It was a good Labour Government, as Mr Hide points out. That was done in conjunction with the closure of all the tax rorts, tax loopholes, and tax shelters that had been prevalent prior to that time—the deer farms, the movies, the musicals; and, dare I say it, the kiwifruit orchards—which were owned for the purposes of reducing income tax.

Not many high-income New Zealanders actually paid 66c in the dollar. They were able to manipulate their affairs to pay a good deal less. This Government is going back on that sensible framework, and encouraging New Zealanders to try to find loopholes and shelters, and any way of dodging the tax, which at 39 percent means that people earning more than about US$30,000 a year, a modest level of income by international standards, are paying nearly half their additional income in tax. When we add the 39 percent income tax to 12.5 percent GST, that is about 46 or 47 percent tax on additional income above about US$30,000.

The other fallacy is that, because the actual rates do not go up very steeply in New Zealand, the tax system is not very progressive. That is the widespread belief. But let us look at the situation of someone earning $25,000 a year, with a non-earning spouse and two children under the age of 13—the kind of people many parties in Parliament, including United Future, want to help. That person is paying $27 in income tax per year, or a little under that, by the time we take into account the family tax credit and the other family tax allowances that have been in place for some years. The person who earns $100,000, by contrast, with a dependent spouse and two children under the age of 13—the same family conditions exactly—is paying, not four times as much income tax as the person on $25,000, not 40 times as much, not 100 times as much, but more than 1,000 times as much. So the income tax system, in conjunction with the family tax credit and similar arrangements, is already a very steeply progressive tax system. To make matters more progressive still, Government expenditure typically is spent in ways that are quite progressive in the same sense. The person on $25,000 a year is much more likely to be using Government-funded services of health and education than the person earning $100,000 a year. So we have a very steeply progressive tax system.

I am arguing that the tax system is too steeply progressive, because a system that is that progressive involves very substantial deadweight losses. It means that the people who are most likely to invest, most likely to acquire skill, and most likely to take entrepreneurial risks, are the people whom this tax system clobbers most heavily. We know that high tax rates have high deadweight costs. This bill locks those high deadweight costs into the system, despite the fact that the Government’s fiscal position would make it quite straightforward for it to at least move back to a situation where the top personal tax rate and the company tax rate were the same. I would argue that the Government should go further and reduce both. We have a situation now where Australia’s company tax rate is significantly lower than our company tax rate. At least, the headline rate is significantly lower. We are missing a golden opportunity by keeping tax rates at their present level.

There has been a lot of discussion in the last week or two about the Prime Minister having to back off her promise to take New Zealand to the top half of the OECD within one decade. Why have we backed off that? I think it is because the Government recognises that its policies will not move New Zealand to the top half of the OECD in two or three decades—not one decade, but two or three decades. We will not make it, and one of the reasons we will not make it is that this Government’s ideologically driven policies are intent on increasing the tax rates on people on quite modest levels of income by international standards. That is our first reason for being concerned about this bill and wanting to oppose it.

The second reason we oppose it is the one that Mr McNair alluded to—the preferential treatment for Māori organisations. I have to say that the previous way in which Māori organisations were taxed was unfair and unacceptable. There was clearly a level of taxation that was totally inappropriate. There was a perfectly sensible precedent that could have been used to ease that problem, and it is called the company tax system. There is no reason at all that we could not have applied the same system to Māori organisations as is applied now to companies—a 33 percent tax rate, or something lower, if the Government was not so miserable. It is a tax rate for companies that is a withholding tax for the beneficial owners of companies, which the recipients of the dividends, or the income flow from those Māori organisations, could have treated as a credit against their tax liability, and if their personal tax rate was lower than 33 percent, it could have—

John Carter: It would have been fair.

Dr DON BRASH: Absolutely. It would have been fair, as my colleague Mr Carter points out. That would have been fair and it would have been racially neutral. There would have been no racial preference involved. This party, the National Party, stands for one standard of citizenship. That is a very important principle. This bill locks into place a tax system that gives a preference to one particular racial group. That is very, very sad. We have enough potential problems in race relations in New Zealand already, without creating the widespread public perception, based on a reality, that a preference is being given to Māori organisations. I think that is very sad.

RODNEY HIDE (ACT NZ): What an honour it is to follow Dr Don Brash, who headed up the Brash committee on taxation, which produced a very, very fine report indeed. I wish David Cunliffe had read it, and I wish David Benson-Pope had read it, and then they might have paid attention to what Dr Brash had to say. The fourth Labour Government certainly paid attention to it. I am very pleased also, in speaking to this bill, to see that my good friend and colleague Annette King is down here in the House. I am looking forward to her speech confirming the tax rates, because I remember her as a Cabinet Minister supporting a Government that took the top rate of tax down to 33c. At the time she was 100 percent behind it. I have to say that at the time, I voted for it. In fact, it was so scary I realised I voted for Jim Anderton, because I lived in his electorate. Annette King took the top rate of tax down to 33c. Members should ask themselves about that. Annette King really owes this House an explanation, does she not? If it was a good idea to take it down to 33c in the eighties, why was it such a good idea to take it up to 39c in the nineties?

Hon Annette King: Will the member stand aside and let me tell him?

RODNEY HIDE: The member can have a 10-minute speech, if she cares to take a call. She is the most senior member in the House, so I look forward to Annette King, rather than trying to shut down the Opposition, spending some Government time standing up in this House and explaining why she voted for 33c in the eighties, voted for 39c in the nineties, and again, this week, is voting for a 39c tax rate.

The ACT party will be voting against this bill, because we think that the 39c tax rate is wrong. We thought Annette King was right when she voted for 33c. We thought Peter Dunne was right when he voted for 33c, and I look forward to my good friend and colleague Mr Copeland taking a call and explaining why he supports voting this week for a tax rate of 39c, because that is what United future is doing.

Hon Annette King: Catch up. It has been that for 3 years.

RODNEY HIDE: Annette King says the Government has been doing that for 3 years. I know, and I have been saying the same thing for 3 years. It is wrong. But every year Annette King comes down here and votes for 39c, when before, she used to come down every year and vote for 33c. I would like to know from her what she has learnt, or what has changed in those years to make a difference. So we will vote against it.

Hon Annette King: It used to be 66c. He doesn’t want to hear that bit.

RODNEY HIDE: It is very nice that Ms Annette King wants to explain her principles to us, by way of interjection. But I invite her just to take a call and let me make my point in relative silence. She is most welcome to take a call. But maybe Helen Clark does not let Annette King speak on matters of tax. [Interruption] Maybe Helen Clark does not take the opportunity to give a speech. ACT will be voting against the bill for those reasons.

A second reason that we will vote against it is that in the Finance and Expenditure Committee we did not agree with taxing Māori authorities at 25c in the dollar. That is wrong. We did not agree with not allowing Māori authorities imputation credits. That is wrong. Māori authorities should be taxed like every other agency and organisation in New Zealand. Our taxation system should not be based on race, ethnicity, religious belief, or creed. We should be taxed according to the rules, and those rules should not apply to the agency that we belong to, or to our race.

Gordon Copeland: On income.

RODNEY HIDE: My friend Mr Copeland pipes up and says that it should be based on one’s income—

Gordon Copeland: Marginal tax rate.

RODNEY HIDE: Absolutely! That is why we advocated imputation credits. I say to Mr Copeland that that is how the taxation system in New Zealand works. Mr McNair will back me up when I say that every Māori authority that appeared before the select committee said it was good that they were to be taxed at 19.5c in the dollar. They said: “If you want to grow a business, you want to be taxed low, because that way you get to keep more of what you make, and you are allowed to reinvest it—plough it back into making more money and into making your shareholders and people prosper.” Every authority said that, and Mr Copeland will confirm that that is so. That is why the Minister of Revenue, Michael Cullen, is doing this. It is an advantage to Māori authorities to have a lower tax rate.

Hon Parekura Horomia: That’s right.

RODNEY HIDE: I am pleased—the Minister of Māori Affairs, Parekura Horomia said: “That’s right.” Well, we say that every business in New Zealand, every organisation in New Zealand, and every person in New Zealand should be able to enjoy that same benefit and be taxed at 19.5c in the dollar. Why allow just Māori to enjoy that benefit? Why not non-Māori? Why not Chinese people? Why not European people? Why not Croatian people? Why should they be taxed at 33c or 39c in the dollar when Māori are to be taxed at 19.5c?

There is a third reason. We have a serious problem with this bill. I take members to clause 103. This is a shocker. We had an Inland Revenue Department inquiry, ably chaired by Mr Peter Dunne, and members of that committee were shocked to learn that when the Inland Revenue Department asserts a debt, a taxpayer is required to produce 50 percent of the debt that is asserted. Members were shocked to hear that. I give a scenario. The department comes along and tells, for example, Mr Catchpole, that he owes it $1 million. He replies that he does not think he does, but he is told that he does. It is then Mr Catchpole’s job as a taxpayer to prove that he does not. That means he has to go to the Taxation Revenue Authority and to the court. But before he does that he has to pay half of the assessment—$500,000. We have heard of New Zealand taxpayers who have gone bankrupt having to pay that half, then finding out that the original assessment was wrong, as the courts would rule—somewhat pointlessly after the taxpayer has been bankrupted. So this bill, quite rightly, does away with that. Clause 103(1), repealing section 138I(1) and (3), has been struck out and now inserts, under new subclause (1C), the following new subsection (2B): “Despite subsection (2), the Commissioner may require a disputant to pay all tax in dispute that is the subject of the challenge if the Commissioner”—which means any tax officer with the delegated authority—“considers that there is a significant risk that the tax in dispute will not be paid should the disputant’s challenge not be successful.”

I ask Government members opposite whether they have ever heard of a more iniquitous clause. For example, the Inland Revenue Department could assert that Mr Catchpole owes $1 million. It is not its job to prove that he does; it is Mr Catchpole’s job to prove that he does not. The commissioner, or his or her officer—anyone in the department—can then say that he or she thinks that Mr Catchpole will do a runner, and hit him for the $1 million. He can be hit for the $1 million before he proves that he does not owe the money—before he can get to the court. This clause means that it is not only 100 percent of the tax that Mr Catchpole would have to pay, but all penalties and interest owing. The commissioner is being given the discretionary power to declare an assessment that may not be true and to demand that that assessment be paid before the taxpayer’s case is tested in court. Not only that, the commissioner can demand that the taxpayer pay any interest or penalties that the commissioner deems are payable, and therefore to rule on, and to bankrupt, a taxpayer before that person has his or her day in court. This bill is wrong. We oppose it.

The ASSISTANT SPEAKER (H V Ross Robertson): I call the honourable member, David Parker.

ROD DONALD (Co-Leader—Green): I raise a point of order, Mr Speaker. I took the call for this speech well before Mr Parker. According to your schedule we are No. 10 in the speaking order, and this is the 10th slot.

The ASSISTANT SPEAKER (H V Ross Robertson): Because someone has spoken out of order, the next call goes to the Labour Party.

ROD DONALD: It is not my responsibility for Labour to seek the call at the right time.

DAVID PARKER (NZ Labour—Otago): I called just as Mr Hide stood down, within a second of the call being sought by the member who has just spoken.

RODNEY HIDE (ACT NZ): I would like you to point this out. I think Mr Parker is absolutely right. He did call as soon as I sat down. The difficulty he has is that he called when he was on the floor of the House. It is quite incorrect that a member can call from the floor of the Chamber. We have a problem, because the call was incorrectly called. But I have to say to my good friend—I am friendly today—Mr Rod Donald that, unfortunately, Mr Parker has been given the call and cannot have it taken away from him. I suggest that you advise Mr Parker that members cannot call from the floor of the Chamber.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the honourable member for his contribution. The call had already been given, so I call the honourable member, Mr Parker.

DAVID PARKER (NZ Labour—Otago): One of the things we have not heard from Opposition members when they talk to address the taxation of Māori authorities is the recognition that at present Māori authorities suffer from double taxation, and they have suffered from it for many, many years. In addition to paying 25 percent, if the income has not been distributed within 4 years, a Māori authority has suffered an additional 33 percent taxation. That is a total of 58 percent tax paid by Māori organisations, which is plainly out of sync with the tax paid by other members of the community and is unjust. The bill contains a number of protections for other taxpayers. One is that the rate of 19.5 percent can be applied only when the Māori authority records the tax number of the taxpayer where distributions are $200 or more. So there is an easy mechanism for the Inland Revenue Department to check where people are receiving income taxed at the lower rate of 19.5 percent, to see whether they have a higher marginal tax rate. In that case if they had underpaid their tax they would be required to pay the balance of the tax at the end of the year.

The other protection that was inserted through the efforts of the Finance and Expenditure Committee was to limit the definition of a Māori authority to exclude wholly-owned subsidiaries of Māori authorities. There was a concern—and there are arguments on both sides of this debate—that a wholly-owned subsidiary of a Māori authority that was taxed at the 19.5 percent rate would have an advantage over another company that had paid tax at 33c in the dollar and so had less retained earnings to plough back into the company. The committee heard views from the Inland Revenue Department that said that in a pure academic sense that was incorrect and that the company paying 33 company would not be disadvantaged. Having said that, there were concerns amongst committee members, including myself, that that would have been a practical advantage to the Māori authority competing with another company. Therefore, we changed the definition to limit the definition of Māori authority by excluding those wholly owned subsidiaries. I, for one, am completely supportive of this proposal. It will save the Department of Inland Revenue compliance costs.

ROD DONALD (Co-Leader—Green): I rise in support of this bill. The Greens are very pleased to see this bill take another step forward. In particular, I would like to comment on the significant improvement to the tax rules for Māori organisations. It is fair and logical for Māori authorities to be taxed at 19.5 percent, given that 90 percent of their beneficiaries are on that tax rate. The old rules created a severe disincentive for Māori authorities to retain earnings and it double taxed them. I am pleased, therefore, that we have changed the rules in relation to Māori authorities and that the select committee has agreed to a fair definition of a Māori authority. It is wider than some submitters sought, and narrower than others requested.

In particular, as the previous speaker mentioned, the committee decided to exclude wholly-owned subsidiaries of Māori authorities from the lower tax rate. That was a sensible decision because it removes what could be seen as an unfair competitive advantage, but I also acknowledge that beneficiaries of a Māori authority are unlikely to be penalised, because the authority will be able to arrange its affairs to achieve the lower tax rate, in any case.

We are also pleased to support the widening of the definition of charitable purpose. At the moment no person related by blood can be a beneficiary of a charity, and this bill changes that definition to recognise that beneficiaries of a trust, or members of the society or institution who are related by blood, can be a beneficiary. The bill also includes marae that do not have charitable status in their own right that are situated on land defined in the Te Ture Whenua Maori Act as being charitable providing the funds are used for administration and maintenance of the marae or for regular charitable purposes.

This change is not only a practical one, but it is also a change that is very important in principle because it is a recognition of the treaty partnership, and it is an acknowledgment that Māori society is not only a communal society, but one that predated the arrival of Europeans, and a society that does not fit neatly into the British charity and tax structures. Therefore, it is quite a significant step forward for this Parliament to recognise that through the change to the definition of charitable purpose.

DAVID CUNLIFFE (NZ Labour—New Lynn): I am pleased to support this bill, particularly as it applies to the taxation of Māori authorities. The first point to be reiterated is that there is nothing special and nothing new about special tax treatment for organisations that face special constraints. In this case, Māori authorities are distinguished because they manage assets that are communally owned. It is not possible for the authorities to dispose of those assets, and for that reason, amongst others, they are given tax treatment appropriate to that class of assets. They are not, however, singled out on the basis of race. This is a bill that tries to fairly represent the tax position of the overwhelming number—about 90 percent—of the beneficiaries of those Māori authorities. It is therefore absolutely correct, and absolutely appropriate.

It is worth reiterating that there is absolutely nothing new about this type of provision. It has been in existence since 1939. Indeed, the last revision was in the 1950s, and it has carried on under both National and Labour. The difference is that we are upfront about supporting it and modernising it to reduce compliance costs. Every time that happens the Opposition trots out the old race card. I was surprised, because it really is not worthy of what we would expect of the Opposition’s new spokesperson on finance. I would like to spend a moment or two on his contribution.

First off he did fairly represent the bill in one respect when he said: “There is much in the bill that is plain common sense.” Indeed, that is true. There is much in the bill that is taxpayer friendly. It increases the maximum amount people can claim as a tax rebate for donations, it broadens the definition of “good behaviour” that can be taken into account when imposing shortfall penalties, it allows business to pool provisional tax payments with those of other businesses, thus reducing their exposure to use of money interest, it allows for the use of intermediaries for PAYE, and so on and so forth. These are simple, common-sense measures designed to reduce compliance costs and the tax burden on ordinary New Zealanders and their businesses.

Dr Brash could not help himself though; he leapt back to the future, as he seems to be in the habit of doing, and argued that this bill should have been used to drop the top tax rate. Of course he failed to mention that it was a previous Labour Government that dropped the top tax rate down from 66 percent; 39 percent is quite reasonable. Where he really departed from reality was when he trotted out that old argument from the Reagan days. It is called the Laffer curve, in the economic jargon. It says that because rich people already pay a lot of tax, if they are given a tax cut they will end up paying more tax. It is a kind of circular logic. The trouble is it has never worked. In the history of economics it has never been proven, and I warrant that it would not work in New Zealand either.

It is a funny thing that has come over Dr Brash. When he was the Governor of the Reserve Bank he used to call Dr Cullen “fiscally prudent”, but now he calls him “miserable”. I suppose it is the same thing. It means that he does not spend everything that he gets in tax receipts. Indeed, that is true. The Government has been very prudent, and we have taken a prudent approach to paying off debt and managing expenditure. That is what I cannot understand about the National-ACT argument about tax policy. On the one hand they want to cut taxes, but on the other hand they want to pay off even more debt. We cannot do both of those things and still fund schools and hospitals. Something has to give, especially when we have people like Dr Wayne Mapp running around and wanting to buy more frigates and strike aircraft. They just cannot have it all ways. The National Party is indulging in voodoo economics. It should know better.

But all that pales into insignificance compared with our old friend Rodney Hide. We have come to enjoy his jovial banter in the House, and he has been doing rather a lot of that lately as he continues his ongoing tour of tax havens in islands around the Pacific and the Hauraki Gulf. He comes from a party that is very familiar with wholly-owned Māori subsidiaries. ACT seems to have one of its own at the moment. The only difference is that it does not want to keep it, and Donna Awatere-Huata wants to stay.

Taking tax advice from the ACT party is something that even its own parliamentary staff are finding perilous. I suppose it is a bit like taking investment advice from Dolf de Roos on a Fiji island. Rodney Hide criticised the 39 percent tax rate as being too high, and again made the mistake of ignoring that it was Labour that dropped it last time. He asked why Māori authorities should get away with 19.5 percent tax—ignoring the plain fact that 90-plus percent of Māori qualify for 19.5 percent anyway, because they earn less than $38,000.

On the one hand, we have a Government that is trying to simplify tax and make it easier for ordinary New Zealanders to meet their obligations. On the other hand, we have an Opposition that seems to be split between going “back to the future” into voodoo economics that have never worked, as Dr Brash is doing, and indulging in a tour of Pacific tax havens, as Mr Hide is doing. Neither of those add up. This bill is good policy, it is good ethics, it is fair, and it reduces compliance costs. I am proud to support it.

A party vote was called for on the question, That the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill be now read a second time.

Ayes 68

Noes 46

Bill read a second time.

Labour 52; Green Party 8; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 6.

Bills

Government Communications Security Bureau Bill

Second Reading

Debate resumed from 19 November 2002.

RODNEY HIDE (ACT NZ): When I left off, I was questioning Keith Locke’s attitude in opposing this bill. I want him to stand up in this House and explain why he opposes it. Here is a member who has supported some of the most repressive regimes that the 20th century ever saw. He supported Soviet troops going into Afghanistan. Those troops inflicted a terrible toll on the Afghani people Here is a man who supported the Soviet Union’s expansionist policies abroad, and its policies at home. He has the audacity—

Keith Locke: I raise a point of order, Mr Speaker. I have never supported Soviet domestic policies in my life.

The ASSISTANT SPEAKER (Hon Clem Simich): That is not a point of order.

RODNEY HIDE: At least we have cleared up one thing. He supported Soviet policies abroad. Mr Locke, by his own admission, has supported the Soviet Union in the past. Even the Communists do not now agree with the terrible range of terror they inflicted on people around the world.

Keith Locke: I raise a point of order, Mr Speaker. I have said in this House that I no longer support the policies that Mr Hide is alluding to, in terms of the Soviet invasion of Afghanistan, which was 23 years ago. He is implying that I still do.

The ASSISTANT SPEAKER (Hon Clem Simich): No, that is not a point of order.

RODNEY HIDE: Here is a man who, by his own admission, in the past supported the Soviet occupation of Afghanistan, where people like Mr Locke would have no rights, whatsoever, to speak their minds or their views, or to stand for election—indeed, to be in Parliament. It is hard to imagine that a person could support such a tyrannical regime.

The ASSISTANT SPEAKER (Hon Clem Simich): I ask the speaker what bill we are discussing.

RODNEY HIDE: We are discussing the Government Communications Security Bureau Bill. I would have thought that all members, whatever our political differences, would have come to the House anxious to secure our people’s freedom, our rights to political office, and our rights to free speech. That is what this bill does, but Mr Locke—and that is what I want him to explain to the House—says that somehow, our rights are being infringed. I understand that, because the price of freedom is that one has to give a little bit away. How much did they give away in Afghanistan? How much did they have to give away in the Soviet Union? How come the Green Party and Mr Keith Locke oppose this measure to protect New Zealanders, while, some years ago, they ticked the tyrannical measures of Soviet expansionism? They were wrong, years ago, about the Soviet policy, and they are wrong about the threat that terrorism poses to the free world today.

That is what I want Mr Locke to reflect on. He admits that he was wrong then; could he have the good grace to admit that he might be wrong now, and to actually understand that it is a bit of a “thin blue line”, to coin a phrase, that protects our people, our democracy, and our freedom—the very things that Mr Locke says he is in favour of, and the very things that have been crushed abroad by tinpot dictators? I say to Mr Locke that I am happy to hear his views, but that I wish that people in other countries could have the rights he enjoys. As a citizen and a parliamentarian, why does he not support them rather than opposing us here?

JILL PETTIS (NZ Labour—Whanganui): The Government Communications Security Bureau Bill is an important bill, and it needs a considered and careful debate. The aim of the bill—certainly as stated by Labour members—is to define the objectives and functions of the Government Communications Security Bureau, while, at the same time, increasing its ability to undertake its operational activities. This bill will place the Government Communications Security Bureau on a similar footing to that of the New Zealand Security Intelligence Service, following the amendments that were made to that organisation’s legislation in 1999.

We are all aware of the great tragedy that occurred on September 11, after this bill was introduced in May 2001. This bill is timely, because it responds to issues that New Zealand itself needs to respond to, but I am also pleased to say that it provides important safeguards to ensure that the privacy of New Zealanders continues to be protected. The Government Communications Security Bureau Bill as amended creates a legal structure that will permit the bureau to adapt quickly and effectively to the highly dynamic global communications environment, and I am pleased to support it.

KEITH LOCKE (Green): The Green Party will be opposing the Government Communications Security Bureau Bill. The bill is very relevant today, in the light of the revelations in the Observer a couple of days ago that the National Security Agency of the United States is spying extensively and intensively on UN delegates. A National Security Agency section head, Frank Koza, was quoted in the Observer as sending a memo advising senior National Security Agency officials that the agency is “mounting a surge” against Security Council members to try to get their votes for a UN resolution giving authorisation for an invasion of Iraq. That is relevant to us because the main asset of the Government Communications Security Bureau is the Waihopai satellite communications interception station, which is part of the National Security Agency – run Echelon network. That involves Waihopai drawing down all the faxes, phone calls, and emails from two communications satellites in the Pacific over the equator.

All the data drawn down is available to the National Security Agency, using keyword filters, key phone recipients, or destination phone numbers or email addresses that are put into the system by the five Echelon partners, which are the Government Communications Security Bureau, the National Security Agency, and the other three partners in Australia, Canada, and Britain, including the Defence Signals Directorate in Australia.

There is no way that the Government Communications Security Bureau can check the rationale for all those key-word filters and phone numbers. So there could easily be a situation whereby the Governments of countries like Chile and Pakistan—Security Council members whose communications the National Security Agency has declared it is trying to spy on—communicate from their countries to their UN delegations in New York over those two Pacific satellites. It could be over the two Pacific satellites because the Echelon system spies on satellites right around the equator. We could be complicit in helping the Bush administration get the information to be able to twist the arms of those Security Council delegates, particularly in the case of poorer countries that are subject to pressures, like Pakistan, Angola, or Guinea, and thereby serve its interests, which would make a mockery of our anti-war stand. That is the problem with the Government Communications Security Bureau and the Waihopai system.

It is clear from other examples that the Echelon system, and our participation in it, undermines our relations with Governments around the world. They know that Echelon is spying on them, their citizens, and their companies, and they do not like it. There have been critical news reports in European and Japanese newspapers, and the European Parliament has conducted its own inquiry into Echelon. There have been several incidents where American companies such as Raytheon have been accused of undercutting their Japanese or European rivals for contracts, because those American companies use the information coming to them through the Echelon system, which involves Waihopai.

Within the Echelon network, as Nicky Hager’s book Secret Power points out, the Government Communications Security Bureau has been assigned the task of analysing intercepted communications from Japanese diplomatic posts. That is not going to endear us to the Japanese Government and people. Likewise, Pacific leaders have expressed concern about Echelon, including the Waihopai station spying on them. New Zealand is a small country—a trading nation whose interests lie in having good relations with all countries, particularly our Asia-Pacific neighbours. Our reputation suffers by being part of the five-power Anglo network spying on the electronic communications of the rest of the world.

We are not at war with any country in our region. We do not have enemies here. We do not need to invade the privacy of Governments and countries in that way. Sure we want to be well-informed about our region, but we would get much more useful information from a single competent journalist specialising in the Pacific—like the New Zealand journalist, Michael Field, arrested in Fiji yesterday—than from a battalion of Government Communications Security Bureau analysts poring over intercepted conversations between politicians in Samoa or Tahiti.

We are against this bill. Of course, one might say that the bill has a positive function, and that is putting the Government Communications Security Bureau on a statutory foundation, but it is damning that that secret agency has operated for 26 years—since 1977—without a statutory basis. For many years it operated in the dark without the public being told even of its existence. It was a secret agency of the State spying on citizens without their permission and without any accountability to them. Under this bill, people will find out a little bit more about the Government Communications Security Bureau, but not very much. It will still be largely unaccountable.

Of course, any intelligence agency operates with a certain degree of confidentiality, but secrecy surrounding the operations and targets of the Government Communications Security Bureau goes well beyond any reasonable secrecy. The reason for that is that if New Zealanders really knew what the Government Communications Security Bureau was doing and who it was targeting, they might well be upset. This bill claims that the Government Communications Security Bureau is gathering intelligence on foreign organisations, but the Government Communications Security Bureau itself is primarily a foreign organisation operating primarily at the behest of the National Security Agency. Of course, that does not mean that it may not secondarily collect some information of genuine use to New Zealand.

The Government Communications Security Bureau is also a subversive organisation, acting today primarily for the signals intelligence agency of a foreign power, namely, the US National Security Agency, and undermining both the sovereignty of New Zealand and our national interests. In signals intelligence matters, successive New Zealand Governments have had a colonial mindset that somehow New Zealand gains something from being an American intelligence dependency, even though they have never advanced any real evidence to prove it.

There is also a problem in that the Government Communications Security Bureau intrudes into the privacy of New Zealanders. One might say: “Hold on a minute, the Government specifically prevents—”

Dr Wayne Mapp: Read the legislation—clause 14.

KEITH LOCKE: There is an interjection there, and it is true that the bill supposedly specifically prevents the Government Communications Security Bureau from spying on New Zealanders. But that does not work, for several reasons. The first is that electronic communications, particularly those intercepted wholesale through Waihopai, do not have passport details attached. Often it will be only after the communications are transcribed and followed up that analysts will be able to work out whether it was a New Zealander or a foreigner at the New Zealand end, or even the overseas end, of the communication. There is also an out, in that the Prime Minister can authorise his or her officials to survey the communications of New Zealanders in special circumstances.

The second problem is that tens of thousands of New Zealanders are part of foreign organisations or international organisations, as defined by the bill, and the Government Communications Security Bureau is authorised to spy on such organisations. The number of those organisations increases as foreign firms take over more and more of the New Zealand economy. If a New Zealander acts as a representative of a foreign multinational or an international organisation like Greenpeace, Oxfam, or the Red Cross, under this bill he or she can be spied upon. In fact, there is evidence that Greenpeace has been targeted by the Echelon network overseas. Unfortunately we have no way of knowing who has been targeted by the Government Communications Security Bureau, and whether the targets include legitimate political dissenters like Greenpeace anti – genetic engineering (GE) campaigners who may indulge in some non-violent civil disobedience.

The Government Communications Security Bureau is authorised to spy on those who are deemed to undermine “New Zealand’s international well-being or economic well-being”, which would authorise spying on either anti-GE protesters or biotech multinationals, depending on one’s political stance, and how one defines “international well-being” or “economic well-being”. We do not know who the targets are, because the Government will not tell us. The oversight Intelligence and Security Committee will not tell us, and is not allowed even to give operational details from the Government Communications Security Bureau. The Inspector-General of Intelligence and Security will not tell us. The electronic spying is of such a nature that it is very difficult for any New Zealander targeted to spot it, let alone question whether it is misdirected. The annual report of the Government Communications Security Bureau under this bill needs only to state whether there have been interception warrants or computer access authorisations, without any further elaboration.

Also, under the bill interceptions, and computer access can take place without a warrant. It is all rather confusing, because under clause 16 the Government Communications Security Bureau has to have a warrant to “install an interception device”, but clause 17 authorises interception without warrant on foreign communications, through an interception device. The only difference seems to be that one device is installed to spy at a particular location, and the other is not.

DAVID CUNLIFFE (NZ Labour—New Lynn): I defend the right of the speaker who has just resumed his seat to express the views that he has expressed. As another member has commented, that is the fruit of living in a democracy. But democracy has to be protected, and I have a newsflash for the Green Party: security agencies do work in secret to achieve their aim. That is the whole point of having them. If they did not work in secret, they would not need to be secret agencies.

Rodney Hide: What’s wrong with the secret police that Stalin had?

DAVID CUNLIFFE: Well, there we are—the born-again liberal, Mr Hide, is piping up.

Rodney Hide: Classical liberal, not born-again.

DAVID CUNLIFFE: The member has not been born again? He should try that in the next life!

The aim of this bill is to define the objective and functions of the Government Communications Security Bureau, while, at the same time increasing its ability to respond to the dynamic and changing international environment. Sadly, that environment is forever etched in our memories, with the destruction of the twin towers on 11 September 2001. It is regrettable that the events that those terrorist attacks set in motion are still with us, even today.

But I wish to offer some reassurance to members of the New Zealand public, in case they are rushing to their phones on the basis of the previous speech, thinking that the Government Communications Security Bureau will be tapping those phones in search of anti – genetic modification protesters or people protesting at Mr Howard’s visit. The point is that one needs a warrant or an authorisation to invade the privacy of New Zealanders, and those warrant processes are answerable to the Prime Minister and the Leader of the Opposition, and to other members of the Intelligence and Security Committee. There are safeguards; this remains a democracy.

Dr WAYNE MAPP (NZ National—North Shore): The previous speaker for the Government defended the right of Green Party members to make their point of view, and of course he is right. Naturally they are entitled to make their point of view. I am waiting in this Parliament for the Green Party to defend the right of the Prime Minister of Australia to come to New Zealand and explain the Australian position. We have heard from the Green Party that it would deny him that freedom of speech. Mr Locke cannot have it both ways. If the Greens truly believe in freedom of speech—and let us, for instance, take them at their word about that—then they must be prepared to hear all points of view. The point has been well made in this House, in any event, of why on earth we would be so rude to our closest friends that we would deny ourselves—

Rodney Hide: Anzacs!

Dr WAYNE MAPP: Anzacs—the ability to talk to them of issues of mutual interest.

The Greens have a vision of our country. From what I can see, it is a vision of a kind of completely isolated country, with no real contact with any other country. That country has no relationships or agreements; it is just stuck down here in the South Pacific. Perhaps approved anti – genetic engineering tourists will be able to come here, maybe approved products will be able to be exported, and we will all live a life of bucolic delight. Well, I say to the Green Party that that is not the world as we know it, and neither is it a world that we want. New Zealand must be connected to the wider world, and that means having relationships with other countries.

I have also heard Green Party members say in this House that they are opposed to terrorism. I guess I would have to take them at their word about that; I do not doubt it, as such. I want to hear, however, just one statement from them in this House that actually has a practical plan of action—not some sort of theoretical dialogue from a seminar—to defeat terrorism, and to defeat the people who plot and plan to blow up airliners and buildings, and who post things through the mail. Mr Locke has to deal with the real world on those issues. Those are—

Rodney Hide: No, he doesn’t. He’s a Green.

Dr WAYNE MAPP: Well, he does not do that; that is actually correct. I guess that that is the point about the Greens: they do not live in the real world.

I want to turn to some particular parts of the bill. It is noted in the bill—and a number of people have said that this is a good thing—that the Government Communications Security Bureau can only intercept foreign communications—for the purposes of protecting the security and defence of New Zealand, of international relations, or of New Zealand’s well-being, generally. People see that as a reassurance, but I have to ask a fundamental question: is that the right way to protect our security? I believe—and I have noted this in the House before—that there is a major gap in our legislation in this area. That gap exists both with the Security Intelligence Service and in this bill. I believe that the relevant committee—either the Intelligence and Security Committee or the Foreign Affairs, Defence and Trade Committee—needs to do an overview, in order to determine what we need to do.

What could happen is that an international terrorist organisation could establish a cell in New Zealand, and the people in that cell could get permanent residence. They could be communicating between themselves and across the ocean, so to speak. Yet, under clause 14 of this bill, those communications could not be intercepted. A number of the people involved in the World Trade Center bombings had permanent residency in the United States. Are we so naive as to suggest that the communications of people like that should not be intercepted? That is how I read clause 14, and I believe that that is a very serious gap. Perhaps in practice the bureau essentially says that if one is communicating with a foreign organisation it intercepts those communications, rather than communications with a New Zealand citizen. But that is a serious matter, and I believe that issue needs to be looked at.

Mr Locke referred to the fact that clause 17 seems to allow the Minister a wider power. If that is the correct interpretation, I say that that is a good thing. Surely we cannot have the situation of a terrorist cell in New Zealand being beyond the reach of either the Security Intelligence Service or the Government Communications Security Bureau. The Government might well say, of course, that the police can handle that situation, but their scope and powers are simply not extensive enough. We need to take one step back here, and to think about how terrorist organisations and the security services work. The security services often intercept communications and undertake surveillance in the belief that a crime could occur in the future, not necessarily on the basis of a proven case at the time. The police’s powers are necessarily more limited to the actual apprehension of a criminal, but under this provision groups and organisations will be under surveillance in the belief that they may be planning a crime—a test that probably could not be satisfied in front of a District Court judge. That is why we have the Government Communications Security Bureau and the Security Intelligence Service: to give slightly more extensive powers than the police have, related to the security and defence of the nation. They are limited to those things.

I believe the proper course would be to have a broader inquiry, in order to knit together the legislation that exists in New Zealand regarding security. It is now spread across a number of pieces of legislation, each of which has been considered separately by select committees, but none of which has had that overview. Surely, in a time of international terrorism when we are facing very clear dangers, it is time for this Parliament, through the select committees, to take a broad overview and to make sure that the gaps in the legislation are adequately filled. I believe we need a principled clause that is not excessive in scope—I understand the concerns about that—but that nevertheless gives sufficient clarity of powers to ensure that the fundamental freedoms of New Zealanders are protected. That is the real issue.

This legislation—and the Security Intelligence Service—is about defending the freedoms of New Zealanders, and, unless we are vigilant in doing so, then terrorism will defeat those very freedoms. I say to members of this House that when we are looking to defend freedoms, we have to take a prudent and reasonable course. If we are not willing to do so, then we will lose the very freedoms that we have in this House and this country to express our points of view.

LYNNE PILLAY (NZ Labour—Waitakere): It gives me great pleasure to rise and speak in support of this bill. It is about security and safety for all New Zealanders, and it also provides important safeguards to ensure that New Zealanders’ privacy continues to be protected.

GERRY BROWNLEE (NZ National—Ilam): This is a very important bill. It is not one that should be dusted over lightly by the House. Quite clearly, some people do object to the Government agencies having a greater degree of authority to intercept communications or to carry out surveillance when matters that might be of harm to New Zealanders come to their consideration, and there are other people who say that such organisations should not be given any greater authority than is given to any other person who claims to be a citizen of this country. Quite clearly, that is inappropriate.

New Zealanders should not imagine that because we are so far from the rest of the world we are in any way immune to the events that have, in many ways, overtaken the world since September 11. After all, in our living history we can recall the terrorist activity that took place in Auckland harbour when the Rainbow Warrior was sunk. Interestingly, we are one of the few countries in the Western World that can say it has been attacked by the French, whose Government’s view of the Iraqi situation now seems to be forming the basis of New Zealand’s current foreign policy. It is quite interesting that we should now be chasing after a country that has attacked us on our soil, and be saying that France’s view of Saddam Hussein is the official New Zealand view of him and his regime. That is very disappointing to members on the Opposition side of the House, but it does not stop us from supporting this bill quite fulsomely.

My colleague Dr Mapp has outlined all the reasons that this bill should be supported, and he spoke particularly about clauses 14 and 17. I make the point that clauses 15 and 16 deal with the right of interception—in other words, whether an agent of the Government Communications Security Bureau needs to have a warrant or an authorisation if he or she is engaged in some sort of surveillance. It seems to me that the suggestion that an agent does need that runs almost counter to the idea of catching some people. The moment that we start looking for a court to issue a warrant, we are setting up a paper trail. The people whom we are looking at, or whom we want this agency to look at—the people who would come under the scrutiny of that agency—do not have high levels of integrity. I do not doubt at all that they would have mechanisms to find out that someone was on their trail. I am not at all sure that it is necessary for some of the provisions to be in this bill, requiring the Government Communications Security Bureau to have a warrant in every case.

Nor do I think it necessary that the Government Communications Security Bureau has access or authorisation from a court to intercept transmissions that occur via the computer networks that operate throughout the country. The fact is that crime—not only domestic crime but also international crime—has become much more sophisticated these days, and we are not immune to that. It is important that we have as flexible an arrangement as we can for an agency that is supposed to be acting on our behalf, and that does act on our behalf, in all those matters.

However, I would like to raise one small matter: the working hours of the Government Communications Security Bureau. I understand that it closes down on public holidays.

John Carter: Huh?

GERRY BROWNLEE: Yes, that is right. If we pick up the phone and ring the Security Intelligence Service or the Government Communications Security Bureau on a public holiday, the staff of those organisations do not answer the phone.

Rodney Hide: I raise a point of order, Mr Speaker. I do not mean to interrupt the member on his feet, but I guess I am. I am not sure whether he wants to be passing out that information. I ask him to consider whether that is in the best interests of New Zealand.

The ASSISTANT SPEAKER (Hon Clem Simich): I thank the member for raising that matter. It is not a point of order.

GERRY BROWNLEE: I thank Mr Hide. He has stopped me mid-revelation, and I will take that matter no further. But I do want to say—[Interruption] Well, it is their fault. I have only had two occasions on which to ring one of those bureaus, and it was appropriate that I did so. But I got a person on the end of the phone who was clearly there to empty the rubbish bins or clean the floor, because that person had absolutely no idea of what was going on. I think, frankly, the organisation was plainly disrespectful of a citizen who had phoned up with a concern. I would like to think that, given these extra powers, the organisation is about to sharpen up its operation quite considerably. There have been two occasions when I have had to call on the bureau; the other occasion was on Anzac Day.

Why should a member of Parliament who receives a communication from someone who might be a nutter, but who feels an obligation to pass on that information, end up being given the run-around by a cleaner or a general office flunkey in one of those organisations? That is quite unacceptable. I have no doubt that had an incident resulted, some terribly plausible reason would have been given for that particular response. I can only assume that as a Government agency, that bureau is very much tied into the employment policies promoted by the Government, and therefore it does not have staff working on public holidays—or at the weekends, for that matter. If some of my colleagues find it strange that I have revealed that, I think I have done the nation a favour.

This bill is about empowering those people. I do not want my comments to demean them in any way; it is just that that has been their general modus operandi when it comes to dealing with me. I say respect is a two-way street.

Dr Wayne Mapp: Wanting to intercept your communications.

GERRY BROWNLEE: I have no doubt that they are, and I welcome that because if they were doing their job that would clear out some of those African banking scams that seem to land on MPs’ computers about every 2 seconds of the day. But clearly the security organisations do not seem to be very interested in those sorts of things, and neither should they. They have more important things to be dealing with.

I think most members would be aware of occasions where these organisations have undertaken some interception work and have ended up with good intelligence that we have been able to pass on to our allies. Of course, just who our allies are at the moment is an open question. This House has not had the opportunity to discuss our international relations in the current unstable environment because the Government is very, very uncertain about what it is going to do. The Prime Minister, it would seem, is on an extended job interview for a high position with the United Nations. She does not want this Parliament to offend some of our so-called friends around the world. I state again that France, the only country that has ever attacked us and perpetrated a terrorist activity on our soil, is now the country that appears to be dictating our foreign policy. I know that the Minister of Foreign Affairs and Trade is very uncomfortable with that, but unfortunately he does not have sufficient sway inside the Government to be able to require the Prime Minister to let the Parliament have its voice on these important issues. In fact, an opportunity that was given to the Government today to have a debate on Thursday was met with a blanket no from the Government.

Hon Phil Goff: What about Wednesday?

GERRY BROWNLEE: The Minister of Foreign Affairs and Trade, who is making a rare appearance in the House on one of the days when he does not get a stamp on his passport, asks about Wednesday. Wednesday is members’ day, the day when the Opposition puts forward bills to tidy up the mess that the Government finds itself in. The Government has most of the parliamentary time at its disposal, and members have only about 6 hours every 2 weeks for their work. Yet the Government is saying that it would be appropriate for members to give up their time for such a debate, because the Government is too busy passing wine bills, racing bills, shop trading bills, and various other bits and pieces on the Order Paper. It would seem that the Government is terribly frightened of getting into a debate on an important issue like New Zealand’s foreign relations.

The National Party is delighted to support this bill. It is necessary. We will be casting our votes accordingly at the end of the debate.

A party vote was called for on the question, That the Government Communications Security Bureau Bill be now read a second time.

Ayes 107

Noes 8

Bill read a second time.

Labour 52; New Zealand National 27; New Zealand First 13;ACT New Zealand 7; United Future 8.

Green Party 8.

Points of Order

Debate on Iraq

GERRY BROWNLEE (NZ National—Ilam): I seek leave for the House to set aside time tomorrow for a debate on the situation in Iraq, and for that debate to take place immediately after question time.

The ASSISTANT SPEAKER (Hon Clem Simich): The member has sought leave. Is there any objection to that? There appears to be objection.

GERRY BROWNLEE (NZ National—Ilam): I raise a point of order, Mr Speaker. I want to be clear here. There was a Business Committee meeting this afternoon. My understanding from Dr Cullen was that that would be a suitable motion. I wonder whether the Labour whips might want to discuss it.

DAVID BENSON-POPE (Senior Whip—NZ Labour): The offer that was made at the Business Committee by the Leader of the House was that a debate on Iraq could take place after the debate on the Budget Policy Statement. That was declined by the member who is raising the point of order.

The ASSISTANT SPEAKER (Hon Clem Simich): Leave was sought. It has been objected to.

Bills

War Pensions Amendment Bill (No 2)

Second Reading

Hon PHIL GOFF (Minister of Foreign Affairs and Trade), on behalf of the Minister of Veterans' Affairs: I move, That the War Pensions Amendment Bill (No 2) be now read a second time. This bill meets the veterans’ community’s desire for their entitlements to be instituted and viewed separately from the wider social security system, in recognition of the special status of veterans. The bill also enables veterans of working age to participate in voluntary or paid employment, should they be able, without losing their veterans pension.

The War Pensions Amendment Bill (No 2) provides formal recognition of the impact of service in a war or emergency on New Zealand veterans, by providing a mechanism to assist with rehabilitation. It does this by amending the current provisions surrounding the veterans pension, and allowing veterans of working age who need support during rehabilitation to engage in voluntary or part-time work without losing their entire pension’s entitlement. The bill removes the penalty of loss of entitlement when veterans undertake voluntary work, and institutes an abatement regime particular to the veterans pension for veterans who undertake paid work. This allows veterans to undertake such work without losing their full entitlement to a veterans pension. There is no stand-down provision associated with the veterans pension.

The introduction of the abatement regime gives members of this group a means of flexibly managing their medical needs without financial disadvantage, if their circumstances alter. Making this change to legislation, and supporting working-age veterans as they re-enter the workforce, is a forward-looking, progressive, and practical way of assisting the younger veteran population. Providing financial support to veterans while they make that transition will benefit their overall rehabilitation.

This Government recognises the special status of New Zealand’s war veterans, and the ongoing impact that service in a war or an emergency has on an individual’s life and the lives of his or her family. As I understand it, the bill received the unanimous support of the Social Services Committee, and I commend it to the House.

RICHARD WORTH (NZ National—Epsom): Some may judge the War Pensions Amendment Bill (No 2) as not exactly a bowel-gripping topic, but that is not the perspective from which I come in connection with this debate. I have to say that war veterans have not been well treated by this Government, and that is unfortunate.

That observation is writ large if one looks at the history of the bill. It was introduced on 12 December 2001. The first reading was not until 16 April 2002. It was reported back on 26 November 2002, and now the second reading occurs today, on 4 March 2003. I believe that that is not good treatment of our veterans.

Just by way of further illustration, on 28 February my office received an email from a veteran who said this: “Quite some time ago a deputation of veterans visited Miss Clark and some of her loafers to plead the case for people on the veterans pension to be allowed to do some paid work. It was on TV, and the case was accepted. However, I phoned War Pensions today and have been told that no it has not been passed yet. We are not allowed to work. My question is how long does the Government need to change something as simple.” There is no doubt about it; in a setting where an injustice could be readily resolved, the Government has paused, to the significant disadvantage of veterans. [Interruption] It is important that I make these comments in the context of this second reading, because it is important that the Government be brought to account for its shabby and shoddy treatment of veterans over a significant period of time—as long as this Government has been in office.

Too readily we dismiss the status of veterans. National made a number of commitments just prior to the last election that were intended to improve significantly the lot of veterans. It used to be the case that New Zealand was a leader in the provision of support to returned servicemen and servicewomen. I think all members of the House now realise that new initiatives are required. For many years there was a general lack of awareness and understanding of the ongoing range of physical and psychological problems suffered by veterans as a result of active service. Of course, with the passage of time, knowledge of the consequences of war on the health of the individual veteran has increased. I believe that the Government has a duty to deal with these issues without delay as veterans age in years.

We also need to remember that the veteran, be it man or woman, volunteer or conscript, loyally served his or her country when called upon, and understood that he or she might pay the ultimate price, and that others would carry the scars of active service, whether visible or not.

I believe that in return for the service that they gave, they had a right to expect that the Government would act to ensure they received ongoing support because of the trauma they suffered. That is why, at the time of the last election, National had specific policies touching on revamping the war pensions legislation, and the introduction of a veterans’ gold card. It is the case that, over the years, the clamour of veterans for such a medical benefit has not waned, yet the Government appears to have substantially set its heart against that plan.

An interesting aspect of this bill is that it has attracted an adverse report from the Attorney-General under the New Zealand Bill of Rights Act and the relevant provision of the Standing Orders. That is a rare event, and I am surprised that the Minister of Justice, in his comments on the second reading, did not see it as appropriate to refer to that. It is not often the case that any Government should proceed against the view of an Attorney-General that legislation significantly and substantially infringes the New Zealand Bill of Rights Act.

I would like to turn for a moment to a document tabled as E.63, which is the report of the Attorney-General touching on the issue of the New Zealand Bill of Rights Act. She said: “The Bill gives rise to discrimination on the ground of sexual orientation. The discrimination on the ground of sexual orientation arises because the provisions set out in the Bill apply only to couples treated as ‘married’ under the Social Security Act 1964. The Social Security Act provides for the recognition of opposite-sex de facto couples as ‘married’, but does not recognise same-sex relationships in the same way.” She then talks about the disadvantages of the legislation from that perspective, and notes: “ … the rate of Veterans Pension to be paid is determined by reference to the veteran’s marital status. A veteran with a same-sex partner will not be paid at the ‘married rate’, but will instead be paid at the proportionately higher ‘single rate’. While this results in a financial advantage to a veteran in a same-sex relationship, it may also be seen as perpetrating the historical and ongoing stigmatisation of same-sex relationships by failing to recognise the status and value of such relationships.” She concludes that this particular bill “in discriminating on the ground of sexual orientation, appears to be inconsistent with … the New Zealand Bill of Rights Act 1990, and does not appear to be justified in terms of section 5 of the Bill of Rights Act.” This is a surprising conclusion. The Government has set its heart against complying with legislation that is part of our constitution—and I note that we do not have a written constitution.

I would like to turn briefly to the main provisions of the bill. I will leave it to Ms Rich, who is to follow me in this debate, to deal with those other matters that particularly touch on her responsibility.

The main provisions of the bill can be summarised in this way. First, an entitlement to a veterans pension depends on one’s being unable to be employed. Under the current law, the situation is that veterans who are under the age of 65 years may qualify for a pension only if they have mental or physical infirmities that prevent them from undertaking employment, and, because of that infirmity, they must be likely to be prevented from undertaking employment permanently or for a substantial period. That is the first core provision. Second, that principle has been modified to allow employment subject to abatement. There are detailed arrangements dealing with that in the bill. In summary, in a new provision the bill provides for the abatement of veterans pensions in the case of veterans who are under the age of 65 years. The rate of abatement is 30c for every dollar of employment income derived by the person receiving a pension that is in excess of $80 per week, but not in excess of $180 per week, and 70c for every dollar derived by a person in excess of $180 per week.

National supports this legislation. But we believe that the time has now come, with an aging veteran population, for the Government to be much more seriously involved in the concerns of veterans. I invite those members opposite, who form this current interim Government, to reflect on what further strategies should be developed for the advancement of the cause of veterans. The time has come when this group can no longer be ignored. There is a raft of injustices across a broad front, which need to be remedied.

JILL PETTIS (NZ Labour—Whanganui): I do not know how Mr Worth kept a straight face while he was speaking; it would seem that he is suffering from a severe case of amnesia. I ask that member what his Government did for 9 years, while he sat here on this side of the House. He now has the audacity to stand up and criticise this Government for putting this legislation into action, and responding to the needs of veterans. Of course veterans are a special category of people. I am delighted that this bill is now going through the House. Let us progress it as quickly as possible. If the member really believed in what he was saying, let us all sit down now, have this bill go through all its stages, and have it implemented as quickly as possible. I am very pleased to support this bill.

BARBARA STEWART (NZ First): I am pleased to rise to speak on this bill. I take note of Jill Pettis’ comments, and will take only a very short call.

Richard Worth: It’s important that veterans should be recognised—speak at length!

BARBARA STEWART: It is important that veterans’ needs are recognised. We believe that this is a really important bill, because it is responding to issues that are really important to New Zealand’s service personnel. New Zealand First is delighted to support this legislation, as we believe that our veterans must be properly recognised for the special contribution they have made to New Zealand’s security. Society owes a debt to those men and women who served overseas in a declared war or in an emergency. On occasions, the full extent of that debt can never be acknowledged. For some people, it will never be acknowledged. New Zealand First believes that our war veterans should receive at least an additional 10 percent in recognition of their sacrifice.

Rodney Hide: Why not 20 percent?

BARBARA STEWART: It could very well be 20 percent; it could be more. In the past, war veterans have not been well treated by the House. It is a shame that this bill was not put through the House more quickly, for the sake of those people who are affected by this legislation. We are really pleased to see it here now, because we believe that this bill is a step in the right direction. It will enable veterans of a working age to participate in voluntary or paid employment, should they be able to do so, without losing their veterans pension. This bill ensures that veterans will be able to work any number of hours, depending on their capacity, without removing their entitlement to a veterans’ pension. The measures in this bill are designed to ensure that veterans will be viewed separately from the wider social security system, in recognition of their special status, and we believe that that is as it should be. New Zealand First supports this legislation going through the House.

Hon PETER DUNNE (Leader—United Future): United Future will also be supporting the second reading of the War Pensions Amendment Bill (No 2). I heard the tail end of Mr Worth’s speech, and although I did not pick up all the sentiments he was expressing, from what I did glean I think he was saying that we need to take the interests of veterans more seriously, even though the numbers of veterans are declining as they inevitably age. That is a sentiment I agree with. It seems to me that this bill, by separating the provisions for veterans’ pensions away from the social welfare legislation, and putting them into the War Pensions Act, is a step in that direction.

I note from the report of the Social Services Committee that many issues were raised by the witnesses. From memory, I think the report stated that only one of the witnesses fully supported the bill. The other eight submissions supported recognition of the special status of veterans, but actually dealt with a range of other issues that are outside the scope of the bill. I think that is part of the dilemma we have here. This bill is a necessary step in the right direction of our giving veterans the special status that I think every one in the House would acknowledge they need and deserve for their sacrifice and for the effort they made in pretty stressful times. But it is also true that there are a number of issues, which are touched on in the report, that need to be addressed. This bill is not the mechanism for doing that, but that does not make the concerns any less significant. I want to refer to just a couple of those that I think will need to be addressed in the future.

We already have the provision in some circumstances for portability of superannuation payments and I think we do need to look at the practicality of the portability of war pension entitlements, particularly for countries we may have some sort of bilateral understanding with. There is also the issue of surviving spouses being able to continue to receive the veterans pension. I think there are some natural justice issues involved here. Overall, we agree with the conclusion that the Social Services Committee reached that this bill is a useful consolidation of the existing legislation that governs war pension entitlements, and that it will be a step in the right direction. The mistake would be to assume that by passing this bill we will have dealt with the issue. That, I think, might have been the point that my friend Mr Worth was attempting to make, but in somewhat different language—he always has a somewhat greater style in these matters than the rest of us, and I acknowledge that.

Rodney Hide: Well!

Hon PETER DUNNE: Well, certainly more than Mr Hide, but never mind.

Hon Phil Goff: Style rather than substance, perhaps.

Hon PETER DUNNE: The Minister should not be too concerned; there is such a thing as words dripping with irony. But seriously, I think this bill is a step forward. It is worth supporting, and we will certainly be pleased to vote it on its way and see it pass into law.

RODNEY HIDE (ACT NZ): I rise in support of this bill. Let me also congratulate the Prime Minister, and the Prime Minster’s staff, on actually taking a keen interest in veterans’ affairs issues, and on hearing veterans’ concerns directly in her office. I think she did a mighty fine thing, and I think her staff did a mighty fine thing. If we are going to progress the cause of veterans, it requires that we put aside any politics, so let us not make politics out of caring for veterans. Let each of us commit as individual MPs, and as political parties, to doing a better job. It is very easy for members of the Opposition to bash the Government for not doing enough, then find themselves in Government and not doing very much. I congratulate the Prime Minister on meeting with the veterans and on progressing this bill.

I also take the opportunity to congratulate the Office of Veterans Affairs, and, in particular, Colonel Jessie Gunn. She has presented the Office of Veterans Affairs with a human face and an understanding heart with regard to the concerns that veterans have. Does that mean that everything has been solved, and that every veteran’s concern has been taken care of? No, but in order to do that, we need to commit more resources. Veterans do not need fine words from politicians. What they need is a commitment and resources, so I favour fewer fine words from politicians and more action.

As we look around this great debating chamber, I want to make this observation also. The most powerful things in it are the wreaths symbolising all the great battles in which our armed forces personnel—New Zealand soldiers, men and women; New Zealand airmen and women; New Zealand navy personnel, men and women—have served and died, or been wounded, physically and mentally. Each year we go off on Anzac Day and honour the fallen. We honour the battles and the sacrifice made in them so many years ago. It seems to me that we do that because, in a funny way, it is free; because those men and women whom we honour then are dead. The last surviving World War I veteran has died.

My concern, of course, is to honour those who have made the greatest sacrifice of all for their country, but spare a thought for those men and women who served our great country on foreign fields because politicians like us directed them to. Politicians directed them into harm’s way—which they went into voluntarily—and they saw and suffered terrible things on our behalf and at our political direction. I myself cannot imagine it. I would not have the heart to do it, but men and women did. I look at Bill Gudgeon here today; he actually did that—and I salute him and them. I ask that we spare a thought every day for the men and women amongst us who served our country with pride and distinction and carry the scars. Not all the scars are ones that we can see. Not all the scars involve a missing limb or a damaged body. Some of them involve a scarred mind. Years later, a veteran closes his or her eyes at night, bad images flash back, and that man or woman suffers.

I say that there is no interest in anyone in this House playing politics, because we are looking after those great men and women who served their country when they were young. We should just do it. We should congratulate the Prime Minister, and, indeed, this Government, on doing what they have done. We should congratulate them, too, on making a distinction between civilians on a benefit and a veteran receiving his or her pension or disability allowance, because there is a fundamental difference. A beneficiary in hard circumstances might be entitled to a benefit, but veterans served this country at political direction, and that is why they are on that pension, and, indeed, why they have disabilities. Let all of us, from every political party, be generous to them, and realise that it was politicians in this House who put them in harm’s way, and saw the damage done to them as young men and women.

We should also understand this: it is my observation of veterans that they are different from the rest of us, because they served. It is not their nature to turn up and ask for a handout. We should never think of a veterans’ allowance or pension as a handout, because it is not. It is a payment for service. It is a payment for the damage done to mind and body during that service. We must bear in mind that a man or woman who puts him or herself in harm’s way in a foreign war zone is a proud person, a strong person, and a proud Kiwi. It is not in their nature to put their hands out. It is my observation that when a veteran comes for help, he or she is at the end of their tether. They are not trying it on, and we should respect that. The rules that apply to veterans should not be the same rules that we apply to everyone else, because they have served. No one else can say that. Mr Gudgeon can; I cannot, so we should respect that.

I think it is great that veterans on a disability allowance can now work hours. It has been explained to me, and I have observed it myself: sometimes the best rehabilitation is to do a bit of work, but sometimes a veteran suffering terribly from post traumatic stress disorder cannot make the transition to full-time work. I think that everyone in this House now agrees that what we had operating before was cruel and inhumane. It is cruel and inhumane to say to a veteran that if he or she attempts to get back into the workplace and suffers and misses some days, then he or she loses the pension. Again, I congratulate the Prime Minister and her office for taking on the veterans’ concerns and doing something about them.

I ask members of this House to reflect on these few words: to do a better job of looking after veterans, we all must agree. Opposition members of Parliament must chide and chivvy the Government along, whoever is in power, to make those concerns a priority and keep them that way. But let us not do that in a way that plays politics. Let us do it in a way that is well meaning and good-natured—just like those men and women who went off to serve. When they put their bodies and minds in harm’s way, they did not play politics; they did their job. Let us try to do the same. Let us give Colonel Jessie Gunn and her staff our utmost support and praise for the very difficult job that she must do. I do not know of a tougher job than that of looking after veterans, and I do not know how she copes sometimes. What I do know is that she could do with a lot more help and resources, so I plead with my fellow employees to give her that.

DARREN HUGHES (NZ Labour—Otaki): I am very pleased to stand in support of the second reading of this bill. In doing so, I want to endorse the comments that Phil Goff made earlier in the debate. I was not in the Chamber for his speech, but I heard it on the radio in my room. I thought he summed up the bill and the feelings behind it very well. I am proud to support it also as the member for Otaki—the electorate with the highest number of people over the age of 65, and therefore one containing a very high proportion of people on this war pension. The bill will make a big difference for them and meet the desire of the veterans’ community to have its entitlement viewed separately from the wider social security entitlements in the system. That is recognition of their special status as veterans and is an appropriate thing to do. I am pleased to see the bill going through the House.

SUE BRADFORD (Green): The Green Party welcomes the return of the War Pensions Amendment Bill (No 2) to the House, although, given the simplicity of the legislation and the evident and welcome support for it from all parties in the House, it is a pity it has taken so long to resurface since its first reading in May 2002. As others have mentioned, for the gentlemen and women concerned, it has been a long wait.

The Green Party supports the core goals of the bill, the first of which separates veterans’ pensions from the Social Welfare (Transitional Provisions) Act and moves them over to the War Pensions Act as the basic legislation. We welcome the consolidation of the legislation into war pensions law as that recognises the desire of so many returned servicemen and women to have a special status separate from the bulk of social welfare beneficiaries. Along with my colleagues, I understand that motivation completely, because of the sacrifices they have all made.

The second core aim of the bill is to allow veterans under retirement age who are eligible for the war pension, to work, albeit subject to the abatement regime that applies to all other working age beneficiaries. It is astonishing to me that that anomaly has taken so long to be tidied up. It was an injustice to the veterans, and again it is why I am hoping this bill will be passed as soon as possible.

I will speak briefly on a couple of other matters. When the bill first came into the House, Margaret Wilson, as Attorney-General, provided a special report on it in relation to legal recognition for same-sex de facto couples. I know it seems strange to members that we have that report, but this bill—like all other amendments to social security - related legislation—is caught up in this Government’s desire to create a situation where there is no discrimination on the grounds of sexual orientation; that is, whether a couple is gay or straight, they should be treated the same way under law. That is a deep and controversial issue on which the Green Party has quite mixed feelings, and we look forward to the day when it can be debated properly in the House. In dealing with this bill, the select committee and the Government have basically glided over the Attorney-General’s report. I just wanted to say that we have not forgotten the issue, and that it is a very real one that needs proper debate and consideration by all of us in the House.

The second issue I wanted to raise is that one of the most moving submissions we received on the select committee was from a gentleman who had served on either the Otago or the Canterbury —I cannot remember which ship—during the French nuclear tests at Mururoa Atoll. He talked with us at length about his experiences at Mururoa.

Richard Worth: It was the Otago.

SUE BRADFORD: Thank you. Certainly, I found his presentation very affecting, and I could understand his desperation. The issue I had not been aware was that those servicemen had not been recognised in terms of declaring their tour of duty as an emergency, either for the veterans’ pension or the war disablement pension. Again, that seemed extremely strange. Since the committee heard that submission, the Minister of Veterans’ Affairs has remedied the situation and declared that they are now eligible. I am sure that is a great relief to all of us who heard him speak.

In conclusion, the Green Party supports this bill, and we look forward to seeing it enacted as soon as possible.

RUSSELL FAIRBROTHER (NZ Labour—Napier): I am pleased to rise and speak in support of this bill. The electorate of Napier has a proud tradition when it comes to supplying people who have fought overseas, and although this bill really affects only about 100 people, it makes clear the difference between those who are entitled to work and receive a pension because of past service, and those who draw a benefit and do not work. The point of this bill is to recognise past service, and those who can work, despite their age, will still be entitled to their pensions under this bill. That is a major advantage. It recognises the dedication to duty of those who served this country well, and it recognises the duty and dedication that is recognised continually in Napier at the Returned Services Associations and various functions for the veterans, and those who have a great sympathy and support for them. For that very brief and short reason, I enthusiastically support this bill.

KATHERINE RICH (NZ National): First, I would like to make a couple of comments about the two speeches by the Labour members. I am quite sure that this bill will have an impact on a greater number of lives than just the 100 mentioned by Mr Fairbrother. Secondly, I would like to ask the member for Otaki if he is 100 percent sure that the veterans in the home in Levin have been well looked after. It is my understanding that there is still a great sense of unhappiness about the way the management of that home has been treated by this Government.

I want to commend Mr Hide for his contribution. He pointed out that one of the important things we need to do as members of Parliament is develop the ability to empathise with a wide range of people who might not have had the same experiences as we have. That is quite important when looking at this War Pensions Amendment Bill (No 2). Very few of us in this Chamber have had the sort of experience that we perhaps need to be able to really understand what it is like to be a veteran. Most of us, I suppose, rely on the experience of our families, the stories that some of our elderly folk have told us, or people we have met in our travels as members of Parliament. I grew up in the small village of Outram, and I always remember lining up with my pack on Anzac Day and hearing read out the long list of names of the young men from Outram who went to both wars and never returned. When one is 7 or 8 years old, one does not really understand the huge impact that would have had on the families of those soldiers.

Today I rang a Mr Perce Wellington in Dunedin, who has been a member of our party for well over 60 years. I took the opportunity to ask him about his experiences in World War II. He was a prisoner of war of the Japanese from March 1942 to September 1945. When he became a prisoner of war, he was 13½ stone, but when he was finally released, he was a mere 6 or 7 stone. One of the things that my generation struggles with is understanding what it was like to be at war. Most of us can be quite flippant in some of our comments about war, because we do not have a true understanding of the sacrifices that were made. I cannot imagine what it would be like not seeing a member of one’s family for years, not knowing whether that person was alive or dead, not getting any letters; and not being able to have the products and things that we hold very dear today. I think the younger generation does forget about those who have gone before.

Mr Hide made a very important point in saying that the provision of entitlements and special treatment of veterans is based on the presumption that society has a debt to repay to those New Zealanders who served in the wars or some other kind of emergency. I very much believe in that. People who have put their bodies on the line are quite different. They do not go to war because they choose to; they go because they are directed by Governments to serve their country. Very few of us have a true understanding of what that sort of sacrifice is like.

In terms of recognition, it is important for all of us to understand that there are some things that make returned servicemen and women quite special. One of the things that this bill sets out to do is to start to set in place ways of recognising those differences. It is a good idea to move the management of pensions away from social security legislation to the War Pensions Act. That sets veterans aside; it says that they are quite different, and that we should deal with them specifically. Another positive move in this bill is the changes made to the abatement regimes. This bill provides that veterans can work any number of hours without losing their entitlement to a veterans’ pension. Sue Bradford pointed out that that anomaly should have been tidied up a lot earlier.

It is interesting that only one of the nine submissions was totally in support of the bill. Many submitters perhaps used the opportunity to raise a whole lot of other issues that were just as important but not covered by the scope of the bill. There was some discussion of issues like the portability of pensions for people who choose to travel overseas. New Zealanders see themselves as very international citizens, and increasingly they want the ability to be able to take their pensions with them.

Darren Hughes: No detailed knowledge of war veterans’ homes!

KATHERINE RICH: I must have really hit a nerve with young Mr Darren Hughes, because throughout this entire speech he has interjected about the Levin war veterans’ home. I say again that he should check out his home patch, because we on this side know that there is a lot of unease and unhappiness about the way the management of that home was just left—

John Carter: By the Government.

KATHERINE RICH: By the Government.

The other thing I would like to do is pay tribute to the Returned Services Association and some of the comments it has made about this bill. As an advocacy group, the association is extremely good at bringing to our attention the things it thinks we need to know about issues to do with its members. This issue is not going to “die out”, so to speak, because younger servicemen— particularly those who have served in East Timor and other areas; people who have seen equally upsetting sights and been equally traumatised—can argue that they too deserve special recognition when their time comes to retire.

There is a lot of consensus on this bill and, as members are no doubt aware, our party will be supporting it. I disagree with comments that perhaps we should have rushed the bill through and not spoken to it at such length. It is important that we recognise the importance of this legislation and give members of all parties the opportunity to make that recognition.

The last comment I would like to make relates to an interesting Government oversight. It relates to the way that same-sex and de facto relationships have been treated by this bill. The Attorney-General has said that parts of the bill are in breach of the New Zealand Bill of Rights Act. It is interesting that Tim Barnett and other members on the other side of the House have not raised that as an issue. Although they are quite happy to bring the issue up when it comes to other legislation, they have glossed over it with this particular bill. I would like to know what the rainbow branch of the Labour Party thinks of the Government’s oversight, because it seems to support those issues when it suits it, but not in other areas.

We will be supporting this very important bill. It gives veterans the recognition they deserve.

Hon RUTH DYSON (Minister for ACC): It gives me great pleasure to speak in support of the War Pensions Amendment Bill (No 2), but before I speak to the specifics, could I put on the record, for the benefit of the member who has just resumed her seat, the fact that Presbyterian Support Services now operates the Levin War Veterans Home—

Darren Hughes: Very successfully.

Hon RUTH DYSON: Very successfully, according to the local member, Darren Hughes, who, frankly—

Jill Pettis: What’s his name?

Hon RUTH DYSON: Darren Hughes, who, frankly, knows a lot more about that issue, and who has taken a very strong and active interest in the ongoing continuance of the Levin War Veterans Home. I was delighted to see a satisfactory resolution of what was a very unsatisfactory situation. I would like to acknowledge the leadership role that Darren Hughes played in ensuring that the home was able to continue in that fine town of Levin. I am disappointed that Mrs Rich chose to use what is basically non-political, bipartisan-supported legislation to have some sort of dig at Presbyterian Support Services—an organisation that certainly does not deserve in any way, shape, or form any criticism. In my view it is a very strong supporter not just of our war veterans but of older people in our communities generally. It has my continued admiration for this.

There are a number of quite strong philosophical themes running through the debate today, and, particularly, support of the wish of the war veterans’ community to have their status specifically recognised by their being set aside from the rest of the social security system. That is not because there is any negative view towards anyone else who receives a benefit, an allowance, a pension, or anything of any description at all in the benefit system; it is solely as a means of saying that war veterans do have special status in our society, and our being able to recognise them in the social security system in that way is a very good thing for us to do as a Parliament.

The second part, of course, is to allow veterans of working age to participate in voluntary or paid employment, if they are able to do that, without losing their veterans pension entitlement. This has been a wish of veterans for some time, and I am delighted we are able to progress it.

Sitting suspended from 6 p.m. to 7.30 p.m.

BILL GUDGEON (NZ First): New Zealand First supports this bill, not only because it is right to do so but also in recognition of our servicemen and servicewomen who have served our nation with distinction, established our citizenship, and made it known throughout the free world. Before going any further, I would like to compliment and thank previous speakers from parties throughout this House who have recognised this.

In recent gatherings that I have attended with servicemen and servicewomen throughout the country, this matter has been a very popular topic. Many are still not aware of what is available to them that might be of assistance in their later years. Comment received from veterans under retirement age and in receipt of a veterans pension is that they are aware of people on the unemployment benefit who work extra hours above and beyond what they are entitled to, and who are not penalised, unlike the abatement scheme that servicemen and servicewomen are subject to. In my view, a recommendation should be made to the officials from the Ministry of Social Development to progress this issue; a special case should be presented to the ministry in favour of our servicemen and servicewomen.

On page 5 of the commentary on the bill it states: “At this time the issue of the definition of war or emergency in relation to eligibility for a veteran’s pension was concerned primarily with the status of service in Malaya and Indonesia. In 1995 service in Malaya and Indonesia was considered as routine service only,”—that is an indictment on the thousands of men who served in that area—“for the purpose of accessing a war disablement pension under the War Pensions Act 1954, and therefore was not qualifying service for a veteran’s pension … In 1999 the Government recognised service in the Malayan Emergency, Indonesian Confrontation and on the Thai/Malay border … Initially some restrictions were applied to the service requirements for these emergencies. However, these restrictions were removed in June 2002.”

When we hearken back to the years of service that our fellow men have given in these theatres, why was it only in June 2002 that that service was recognised? Let me put this from the perspective of the people who served there. There was a war, and the Victoria Cross was awarded to a member of a Gurkha battalion that was attached to the Royal New Zealand Infantry Regiment. A member of our own Royal New Zealand Infantry Regiment received medallic recognition of his acts of bravery in saving members of his own platoon.

New Zealand First supports the bill, and will also support further amendments that will enhance the personal conditions of our veterans, in recognition of their unselfish service in putting their lives on the line for Queen and country.

I remember a quote from a former battalion commander of the 28th Māori battalion, Colonel Awatere: “We have won the war, and now for the battle.” I wondered what he meant by saying “now for the battle” on returning to New Zealand and to the service of his country and the men who had served with him, those who suffered through being wounded, and those who had died and were buried over there in the countries that we see commemorated around this House. I now realise what Colonel Awatere meant. What was the battle he was talking about? Was it for their living conditions? Was it for the conditions of their homes? Was it for their health? Was it to be recognised? It was not that they wanted to be recognised, because they were men who would never, ever ask for a handout. And I speak for all the servicemen and servicewomen of New Zealand, having experienced these things personally. I talk to my fellow servicemen and servicewomen, but they will never ever ask for a handout.

I recognise the remarks made by Mr Hide. It should be our duty, regardless of our political affiliation, to recognise the service that these people of our country rendered for us. We are bound by it, and it is our duty to give this recognition to the people who did that for us.

I remember that we were invited to go to see the Prime Minister of that time, Mr Holyoake. We received a message through our radios: “Your Prime Minister is visiting you.” We were on operations on the Thai border, so we tossed a coin to decide who would go. We must have walked about 3 to 4 hours through those jungles in Thailand and Malaya to see our Prime Minister. None of us at that time thought about politics or anything to do with politicians, but because a Prime Minister had taken it upon himself to visit his troops who were serving our country, we felt honoured. I did not realise how short he was until I saw him. We called him “Kiwi Keith”.

It is our responsibility, regardless of our culture, our race, and our religious affiliation, to recognise the servicemen and servicewomen of this nation. We are a proud nation. We have some of the best servicemen and servicewomen in the world. They are professional and able to carry out their responsibilities and duties, regardless of the risks they face, which are accepted by them before they go away. I admonish this House to support the bill and anything that will enhance the living conditions of these men and women, because they will never ask us for it. They never will. We honour them, and if members do not believe that, they should go to the Anzac Day celebrations and learn what they have done for us. I thank the House for the opportunity to speak on behalf of our servicemen and servicewomen.

Bill read a third time.

Bills

Racing Bill

Instruction to Committee

Hon ANNETTE KING (Acting Minister for Racing): I move, That it be an instruction to the Committee of the whole House on the Racing Bill that it take the bill part by part and consider any schedules as one question.

Motion agreed to.

In Committee

Clause 1 Title

LINDSAY TISCH (NZ National—Piako): The genesis of this debate goes back many, many years. In fact, if we were to go back to December 1970—

Rodney Hide: Good heavens!

LINDSAY TISCH: Yes, that long ago. There was a report commissioned 33 years ago, called Horse Racing, Trotting, and Dog Racing in New Zealand. It was a report of a royal commission of inquiry chaired by Sir Thaddeus McCarthy, so it was known as the McCarthy report. That report was done 33 years ago, and some of the issues that were identified at that time are worth recording now, because, in my view, not much has changed.

If we turn to page 140, we see under “Disabilities of the Present Control Structure”: “We have a strong view that the present administrative and control structure has resulted in three main disabilities. First, its impotence or reluctance in making decisions where the two codes are in conflict. The evidence here is conclusive. It may be seen in such unsolved problems as those of further totalisation licences, the allocation of licences existing in future between codes, and the allocation of race meeting dates and the distribution of TAB profits.” Those points were made 33 years ago, and we are seeing today, in this bill, exactly the same sort of points being made. The title of the bill could be the “Restructure of the McCarthy Report of December 1970 Bill”.

More recently, we had the Ernst and Young Report on the Performance and Efficiency Audit of the New Zealand Racing Industry Board, dated 3 July 1997. That report’s priority areas for action are now included in this bill. They include a simplified Racing Act, which enables the industry to act on its own problems, and merging the Racing Industry Board and the TAB to effect better coordination of policy and delivery. That is exactly what this bill will do: it will merge the Racing Industry Board and the TAB. The third point is driving down industry costs, particularly through an early review of administrative structures. This report was done in 1997, and, as I said, the genesis of the bill we are debating tonight can be traced right back to that date. So this bill could be titled the “Ernst and Young Revival Bill”, or the “Ernst and Young Bring It Again Bill”, or whatever we want to call it, because a very comprehensive report in 1997 about the racing industry identified what needs to be done. That report talked about efficiency and effectiveness, and that is certainly something we are concerned about with this bill.

More recently, 3 years ago, a draft bill was prepared for the then Minister. A lot of changes have been made to the draft bill—just little words, which will come up during the debate—and we now see those changes in the current bill. Basically, this document, dated 20 November 2000, includes the comments, points, and items in the bill that we are debating tonight.

In more recent times, the Minister commissioned a very comprehensive report from PricewaterhouseCoopers. It is very unfortunate that tonight we are debating a bill that was deliberated on before the recommendations of that July report, commissioned by the Minister, were available. We actually finished deliberating on this bill back in May of last year. We were ready to debate it in the House—and National supported it—back in May, to coincide with the 1 August calendar date for the racing industry. There has been delay after delay, then these reports have come out, the first one being the PricewaterhouseCoopers report, which has some very, very good points in it.

The CHAIRPERSON (H V Ross Robertson): Just before I call the next member, I remind members that the debate on clause 1 is not a wide-ranging debate. I ask members to adhere to that when they give their speeches to the Committee.

DAIL JONES (NZ First): The member I am following talked about the history of this legislation. Of course, despite his best efforts in the short amount of time available to him, he was not able to refer to all the reports that have come forth with regard to this legislation—legislation that the Government suddenly wishes to rush through the House.

There is yet another report, which Mr Tisch was unable to refer to—and if I were to name the bill, I would call it the “Racing (Many Reports Not Activated by the Labour Government) Bill”—and that is the report of the Racing Industry Working Group comprising Bill Falconer as the chairman, Brian Beattie, Tom Jamison, Wendy Pye, and Steve Thompson, which has just come to hand.

Members may even have received a submission today in their mail, which indicates how rushed this legislation is. I have received one from United Fisheries Ltd. Would members believe that the consultant is one Hon Doug Kidd DCNZM, LLB? There is life after Parliament, even if it is as a consultant! My friend Doug Kidd is now a consultant on this legislation, and, clearly, his submissions must—

The CHAIRPERSON (H V Ross Robertson): The member must talk to the title.

DAIL JONES: I am saying that the title could be the “Racing (Many Submissions Not Activated by the Labour Government) Bill”, and an example of that is the submissions we are now getting on the report of the Racing Industry Working Group. For New Zealand First, I just say that if it has taken 33 years to get as far as this, I think we can take another 2 months or so to have a look at the report of the working-group.

Lindsay Tisch: Even another week.

DAIL JONES: Even another week, as the honourable Lindsay Tisch suggests. But we could take some further time. After all, the Rt Hon Winston Peters, when speaking on this bill on 10 October 2002, in relation to his request for time to consider this very report—and I am talking about how the bill should be titled—he made it very clear that a five-member committee had been working for some considerable time on the racing industry, and had not yet made its recommendations. We are very grateful to the Government for accepting New Zealand First’s submission that the second reading should be delayed until the report from the working-group came through. The report has just become available, and I think the Government should spend a little more time on it, because, in looking at this other report, I see there are various indications as to how the board should be selected, who should be selected, whether the trots and the dogs should be included, and who should be involved with it all—

Hon Annette King: They are.

DAIL JONES: They are, but the question is that perhaps they should not be. After all, this is a bill about the thoroughbred racing industry and the TAB. Why should the dogs be included? There is, obviously, disagreement between me and the Minister in the chair. The suggestion is that this matter should go to a select committee for the working-group’s report to be considered. As Lindsay Tisch indicated, we have reports going back 33 years. What is another week, so that full consideration can be given to this legislation, which, as I suggest, should be entitled the “Racing (Many Reports on It) Bill”?

I am speaking to one of the latest reports on the issue, the report of the Racing Industry Working Group. If I am taking some time and labouring the point, it is because of all the time that this issue has already taken. Last Thursday the Leader of the House, the Hon Dr Michael Cullen, indicated we would be considering the bill this week. Well, there is hardly enough time to consider it. It affects the very many New Zealanders who are working in the industry. I think about 33,000 New Zealanders work in it, and there must be many hundreds of thousands of, if not in excess of a million, New Zealanders who involve themselves in the industry every weekend. Surely the House has enough time to put this bill aside for a few more days, for a week, so that a select committee could fully consider the working-group’s report, rather than our rushing the bill through in the way that is finally being done today. I would like the Minister to take a call and tell me whether she has read the report of the Racing Industry Working Group. What are her comments on that report?

MARC ALEXANDER (United Future): On behalf of United Future, I would like to submit that this bill should be called the “It’s About Time Bill”, because it has been a long time coming. The purpose of the bill, which is to merge the Racing Industry Board and the Totalisator Agency Board into a single statutory body to simplify the governance of the racing industry, has been asked for for a very long time. It is about time that we put it to the vote and pass it. The racing industry needs the legislation. It has been begging for it for a very long time.

As has already been stated, the bill is the result of the 1997 review. An audit found that the current industry racing structures are ineffective. The bill will give the legislative grounds to design and implement a management and organisational structure to set up a joint group. It will be far more efficient, and it will take away a lot of the inefficiencies. We have a few concerns, but we are glad that the bill is finally before the House. We think it should be called the “It’s About Time Bill”, just to emphasis the relevance of that fact.

One of the areas we need to look at is the prohibition of races on Easter Sunday. This is echoed in our amendment, and I am convinced that the Committee will welcome it. Other amendments will probably be necessary to make the legislation workable, including support for an appeals process against decisions by the board in relation to the revocation of race dates. We will also probably support an amendment that provides for some fairness in the distribution process, but that comes later.

The main aim of the bill is to unite two facets of the racing industry. The industry has been asking for this to happen, and we are now jointly giving it the legislation to facilitate it. As I said, the bill should be called the “It’s About Time Bill”.

The CHAIRPERSON (H V Ross Robertson): Before I call Dr Paul Hutchison, I remind members that clause 1 is not an opportunity to debate the purpose or principles of the bill. There will be an opportunity to do that when Part 1 is debated. I refer members that the title of this particular bill is the Racing Bill.

Dr PAUL HUTCHISON (NZ National—Port Waikato): I am delighted to speak on this bill. Undoubtedly, the title should reflect what the bill does. However, due to the Government of the day, often that does not occur. This bill is somewhat of a misnomer. The correct title should have been along the lines of the “Labour Government Stop, Start, Stagger, and Stumble Bill 2001”.

As my colleague Lindsay Tisch just pointed out, the genesis of this bill goes back a long time, but the more recent genesis really comes from the Ernst and Young report of 1997 or 1998.

Hon Annette King: 1997.

Dr PAUL HUTCHISON: The Minister tells me it was 1997. I am glad to hear that she is alert on this chronology, because it is important in terms of the way her Government has not managed it. After all, here we are at least 6 years later finally about to deliberate on the bill. The reason the bill should be called the “Stop, Start, Stagger, and Stumble Bill” is that it took a long time for the Minister and the Labour Government to get the Ernst and Young recommendations into the form of a bill and then to process it on to the Government Administration Committee. After the committee’s deliberations had taken place, the Minister, in her wisdom, decided that it would be right and proper to get Price Waterhouse to make a report on the industry, which it did. That was the first stop or stumble, maybe both, which is absolutely relevant to the title I am talking about. It was after its report recommending the setting up of a working-party to consider option 2, which was a rules-based commercial model, that Price Waterhouse also suggested four meetings be held around the country, all of which have taken place. The last of those meetings was held last Wednesday in Hamilton. Next Friday was to be the day that the submissions would be heard. What is remarkable in terms of this stop, start, and stumble process, is the fact that the Government, in its wisdom, has suddenly brought in this bill without even having heard the recommendations of the working party. That must have cost a lot.

An alternative title could be the “Labour Government Let’s Spend Money on a Serious Report then Ignore it Bill”. Undoubtedly—

Jill Pettis: Stop mucking around—just get this bill through.

Dr PAUL HUTCHISON: This is a very serious matter. This is a Government that purports to be concerned about accountability, and here it brings in a serious report, and absolutely ignores it. This is the mark of the Labour Government—stop, start, stumble, and stumble again, which absolutely describes the name appropriate for this bill. That is what we have seen the Government do in terms of chronology from 1998—and the very report it ordered, at considerable expense, has been ignored. Although the submissions are due in on Friday, the Government suddenly whips in the bill. Surely it would have been sensible to at least do what the working party recommended—that is, look at what the report said and what the Government has spent its money on—and have a much more considered bill.

Indeed, either of my suggested titles would be appropriate. Sadly, under this Labour Government, the Racing Bill seems a misnomer of the highest order. As I have suggested, we have had not only a staggering stumble exhibited by the Labour Government in the way that this bill has been progressed, but also a serious worry about accountability in terms of the money the Government has spent on the Price Waterhouse report and the huge amount of time and energy that has been put into the report of the racing industry working-group, involving some very respected New Zealanders.

Hon ANNETTE KING (Acting Minister for Racing): I begin by thanking those members who have worked hard to support this bill and to bring it back to this Chamber, largely unchanged, from the Government Administration Committee. I know that most members in the Committee tonight support the bill, and that the racing industry will welcome that.

I was the Minister who brought this bill to the House. I became Minister for Racing when we came into Government at the end of 1999. Very early on I met the racing industry, and it brought to me its many concerns about the industry and its future. Members of the racing industry said to me how worried they were. There had been little change in the 9 years previously and little emphasis and concentration on this very important industry. I told them that this Government would take the racing industry seriously but that if we were to have a racing bill and make changes to the racing industry, then I would want agreement on the bill that would be brought to the House. The hallmark of this industry is that there has been a lot of argument, a lot of dissention, and a lot of division. I was not prepared to bring a bill to the House—and I can understand why other Ministers for Racing have been reluctant—if there was no agreement in terms of the approach that was about to be taken.

Whilst it is a bit fun to give the bill all sorts of names—and I acknowledge that we ought to have a little light heartedness in this Chamber—I take exception to the stop, start, and stagger speech made by Mr Hutchison. That was a rather unfortunate and mean-spirited speech. I could have said that it was a stop, start, stagger, and stagnate approach from the previous Government. I have decided that once I have made this speech I will not go back and rake over the old coals, because I am interested in passing a bill for the good of the industry.

I know that is Mr Tisch’s approach, and he has been very positive in it. I am just disappointed that Mr Hutchison does not take the same approach. It does take time to get agreement, and it took some time before the industry brought a bill to me that it agreed on. Members need to know that the bill that was introduced into the House is basically the industry’s bill. Our role in that industry must be to ensure a proper regulatory framework and to let it get on with running its own business. Members of the industry brought the bill they wanted to me. There were lots of arguments about it, but finally they said: “We agree on this.”

The matter of the report has been raised. It was a report that was done to look at the economic benefits of the racing industry. Members of the industry said to us that for years, members of this Parliament have not recognised the economic impact of racing in New Zealand—the number of people employed and the income it generates. They wanted to look at the economic impact and future of the racing industry, and that report, which looked at what impact it had and what changes could be made, was carried out. It was agreed long after the industry had agreed on this bill. It is important for members to know that many of the industry groups opposed the working group’s proposals. They also said that many of the working group’s proposals could be implemented, if the industry wanted to do so, without any recourse to further legislative change. So that is a red herring.

I was disappointed in the speech from the New Zealand First member, because it is obvious that he has had no association with the racing industry. To talk about whether harness racing or the dogs should be in this legislation shows that he has never talked to those two other codes that make up the racing industry. This bill came in with the agreement of the harness racing industry, the thoroughbred racing industry, and the greyhound racing industry. Members of those codes sat down and agreed. I say to that member that this legislation is not rushed, but considered. It is the result of the work that went in by those members of the different racing codes in order to give us a bill that they believe would work for their industry. That is not say that there are not a few people who nibble around the edges, but at the end of the day, the industry has informed me that it wants this bill to proceed, and to proceed as soon as possible.

I thank members tonight for their attention to ensure we can get this bill through the Committee stage and passed. I know that the racing industry will thank us for that. I hope we can carry out the debate in the proper spirit, as we ought to, over a bill that will assist a very important part of the economic structure in New Zealand.

Clause 1 agreed to.

Part 1 Preliminary Provisions

LINDSAY TISCH (NZ National—Piako): It was very interesting to hear the Minister’s comments about the uniformity and consensus between the three racing codes—I know they put a joint submission in to the Government Administration Committee. I was on that select committee. Why, then, did the Minister commission a report after the select committee had deliberated and after we had moved to report back? The introduction to the PricewaterhouseCoopers report states: “This report has been prepared in response to terms of reference developed by the Department of Internal Affairs on behalf of the Minister for Racing and the Minister for Economic Development.”. If that report is so important, and if a working group has been established, which has not yet reported back to the Racing Industry Board, why are we debating this bill tonight? Why are we debating this bill tonight when a week would have allowed those submissions from the working group to be considered by the Racing Industry Board and to be taken to the Minister—or has the Racing Industry Board already reported back to the Minister without hearing what the meetings around the country have been deciding?

I went to the working group meeting in Hamilton last Wednesday. At that meeting, the chairman told those who were present that they had an opportunity to make comments on the working group’s report by Friday, 8 March—that is, this Friday. The Racing Industry Board would then look at the submissions from around the country, deliberate on them, then talk to the Minister about whether any changes to the bill were needed. I would have thought that that was pretty important to the consultative process. The industry needs all the support it can get—we acknowledge that—and that is the point of having a report commissioned by PricewaterhouseCoopers. The report makes certain recommendations. I do not know what the cost of that report was, but a report prepared by a firm like PricewaterhouseCoopers would have cost megabucks. Then the working party said it would travel the country with that document so that members of the codes could have input. There would have been a couple of hundred people at the meeting in Hamilton last Wednesday, and there was a lot of discussion. It was a well-run meeting, and there were a lot of opportunities. People at that meeting were told that they had the opportunity to have a say on the recommendations that were made in the working party’s report. If those people have not had a say—which is the case now, because we are debating the legislation—all those people have lost an opportunity.

I can tell the Minister that a lot of people out there are pretty annoyed and upset because they were led to believe that they still had an opportunity to have a say on the report of the racing industry working group. In fact, today I got a letter from a solicitor who is well known in the racing industry and in my electorate, Piako—he comes from Cambridge. The letter stated that he was at the meeting on Wednesday, which was chaired by the chairman of the Racing Industry Board, and that at the meeting people were told that submissions in relation to that report should be in by 8 March. That is why I am saying that the commencement date of this bill is being rushed. I am suggesting that we could have had a week longer in order to hear what the working group had to say. I am not saying that the answers would have been changed—I am not saying that at all—but people were led to believe that they had an opportunity to make submissions. Those meetings were well attended—there were full meetings around the country—and those people are being disenfranchised by our having this debate and moving the bill through the Committee stage tonight. I am not saying that the findings of the Racing Industry Board would have changed the bill in any way, but that those people have been disenfranchised. There are a lot of unhappy people in the racing industry tonight who are concerned that their voices have not been heard.

DAIL JONES (NZ First): We heard some very fine words from the Minister when she spoke. She made a gripping speech that indicated her strong knowledge of all the legislation, but she did not answer the question that Lindsay Tisch and I put to her earlier. That question is: what is she doing about the report of the racing industry working group? Is she telling us that it was all a waste of time and that the Government has no intention of adopting it? Is it the Government’s view that the PricewaterhouseCoopers report is purely an internal matter and that the report of the racing industry working group is also an internal matter? Does the Government have no intention of taking any notice of either report? I am sure that that is totally contrary to all the ways in which we operate in this country.

The bill was delayed while a five-member working group was considering the matter. I am sure that everyone in the group, and all those who made submissions to it, would have been under the impression—which, we now take it, was a mistaken impression—that the Government was going to take some notice of their report. It now appears that this minority Labour Government has no interest in the views of the people in the racing industry and will just put this bill through as it was reported back from the select committee, with a few minor alterations here and there, and without any regard for the views of the racing industry working group. There is another view. Perhaps the Government has totally forgotten about the racing industry working group. Perhaps the Government was short of work this week, and perhaps Government members thought they would just bang the Racing Bill in, get it through, and keep Parliament going for a little while in order to spare them the embarrassment of adjourning Parliament early tonight because they do not have much to do. Perhaps the Government thought it would just fill in the time with the Racing Bill, and that a few members might just keep things going. That is hardly the way to run a democracy.

I note the submission from the Hon Doug Kidd, which refers to the first part of the bill and the way in which it was changed. In paragraph 16 of his submission he states that even without the benefit of the two reports now to hand, the select committee clearly had a sense of the need to refocus for the future, when, with a small but critical amendment, it changed the first objective of the New Zealand Racing Board from “promote the sport of racing” to “promote the racing industry.”

It then sought to emphasise and underline the enormously important change of adding new clause 9(1)(aa), and the significant new provisions of clauses 18A and 20A, relating to business plans. That is really what the PricewaterhouseCoopers report is all about. The report of the racing industry working group is also a reflection of the PricewaterhouseCoopers report. Reference is made to the fact that we are dealing with the racing industry and that its views should be taken into account by the Government.

I conclude with one simple question. Is the Minister saying she will take no notice of the report of the racing industry working group and that all those people who have made submissions are just wasting their time?

Dr PAUL HUTCHISON (NZ National—Port Waikato): We have just heard the Minister talk about the three codes being at one on this bill. Undoubtedly, National does indeed support the bill, and we agree with that. The Minister in the chair, Annette King, talked about the bill serving an important industry, and National absolutely agrees with that. She talked about the bill being important for New Zealand, and there is absolutely no doubt about that. But let us have a look at the purposes in Part 1. They include “to provide effective governance arrangements for the racing industry;” and “to facilitate betting on galloping, harness, and greyhound races, and other sporting events;” and, finally, “to promote the long-term viability of New Zealand racing.” The Minister said in her speech that the report we have been talking about—the report of the racing industry working group—was about looking at the economic implications of the industry, in line with the purpose of this bill, which is to promote the long-term viability of New Zealand racing. Therefore, she has been telling us that that report is of importance. I absolutely agree with my colleague Lindsay Tisch—why did we have to bring this bill in tonight when a delay of just 1 week would have allowed consideration of the very important report of the racing industry working group?

The genesis of that report came from the initial PricewaterhouseCoopers report of July 2002—in plenty of time for tonight; over 6 months ago now—which contained some very important implications. They are very important implications when one ties them down to paragraph(c) of the purpose clause of the bill, “to promote the long-term viability of New Zealand racing”. In fact, it stated: “Our discussions and analysis led us quickly to the conclusion that a report that recommended particular areas of initiative for further development and/or investment might be interesting but will not, in itself, address the factors that have inhibited long-term economic growth in the Industry. In fact, it could be both misleading for those involved and create even further impediments to rationale economic performance and investment. There is need for major reform; tinkering around the edges will not help.”

The recommendation was indeed to set up the industry working group. It is of huge worry that the Government and the Acting Minister for Racing, Annette King, chose to commission an expensive report, went about getting some eminent New Zealanders—including Bill Falconer the chairman, Brian Beattie, Tom Jamison, Wendy Pye, and Steve Thompson, who put considerable effort into the report and held four meetings around New Zealand amongst the racing industry and interested people—then ignored the report, or at least brought in the bill before there was time for a full report on the submissions. It seems absolutely wrong of any Government to do such a thing. We ask the Minister to take a call and tell us why she has done that when a purpose of the bill is to promote the long-term viability of New Zealand racing. She has said: “Oh, no. This report was to look at the economic implications of the industry.” The economic implications of the industry are absolutely vital for its long-term continuance. As Mr Tisch said, there will be large numbers of people in the racing industry and the area surrounding it who will be very disappointed with the Minister and the Government for having hurtled into the bill tonight when waiting for only a week or a couple weeks could have resulted in a much more considered and refined bill that would adhere to the purpose of looking at and promoting the long-term viability of New Zealand racing.

LINDSAY TISCH (NZ National—Piako): I refer the Committee’s attention to clause 3, “Purpose”. Clause 3(c) states: “to promote the long-term viability of New Zealand racing.” This bill is about governance, and nothing more. In my view it does absolutely nothing to improve the lot of racing. It does not put more money back into stakes, and does not help owners or trainers. It is about governance: bringing together the codes and the TAB under one body. There may certainly be savings in terms of administration, and I have no qualms about that—I support that—but what we are really looking for, and what clause 3(c) provides for, is for the bill “to promote the long-term viability of racing.” What the bill does not do—

Jill Pettis: Why didn’t they do this during the select committee process?

LINDSAY TISCH: I am actually making a very important point here about the purpose of this bill. The bill does not identify where the viability, the long-term prospects, and the growth and investment that we need are. The bill does not deliver on that. It is about governance.

Hon Annette King: It’s not supposed to.

LINDSAY TISCH: Why, then, do we have clause 3(c), which states: “to promote the long-term viability of New Zealand racing.”? I would have thought the viability of an industry was about where it would be heading in the future economically, where it would be positioned in the world, and where investment would come from.

This bill does not—and this is why there are major concerns in the industry—address in any way the viability of the industry or the taxation regimes. However, further on, it allows opportunities to have pokie machines, and we will come to that point in a later part. But one of the areas in which the industry needs to be very focused is on having one vision, one plan, one industry, and accountability of all the codes. One part of that that the industry is looking for is to have as close to an equitable basis in terms of taxation as one could possibly get.

National’s policy at the last election talked about the depreciation rates on stallions and brood mares. This Government has not moved on that matter. I tell the Minister that it is one of the areas that, in terms of viability, makes the investment and the greater prospects that this industry needs. There has been no move on, or attention given to, the shuttle stallions that we have to bring in from overseas. We pay thousands and thousands of dollars—it is all tax deductible; that is fine—but that $800,000 or $1 million that we pay in shuttle fees goes off shore. We do not get that money, and it is not retained in New Zealand. If we had attractive depreciation rates then there would be investment, and people would invest in stallions and brood mares.

The other area—

Hon Annette King: We did change the depreciation of brood mares.

LINDSAY TISCH: Oh, yes. That was done. It was moved from 15 years down to 11 years. OK. We are looking here for—

Hon Annette King: You said we had done nothing.

LINDSAY TISCH: Well, the Government removed the GST payable on dead horses. I know that—

Hon Annette King: That’s good.

LINDSAY TISCH: She said: “That’s good.” Oh, well, here we are. That is the highlight of the Minister’s speech—she removed the GST payable on dead horses. But if we are serious about this industry, the Government needs to look further at taxation. I tell the Minister that I have here a very good publication. I do not know whether she or her advisor has had the opportunity to look at it. It is about the taxation of bloodstock in New Zealand, and it encompasses all the things that the industry needs to look at, in order to be able to grow and create investment. At the end of the day, we need to make the industry attractive for the 30,000 people involved in it. The stakeholders of this industry are the owners of the horses, and the punters—the people who go and put their money on the horses. If we do not have punters, we do not have an industry.

The long-term viability of the racing industry—and I talked about this at the Government Administration Committee—is not covered in this bill. While it sounds very grand to promote the long-term viability of New Zealand racing, the bill does not go anywhere because it is about governance. We also need to have some detailed plans of where the Minister will be taking the industry in terms of taxation and the 20 percent duty that is paid in the racing industry, versus the level of duty paid in the other gaming industries.

RODNEY HIDE (ACT NZ): I rise on behalf of the ACT party, which is now in support of this bill. I say to the Minister that it is a step in the right direction, and ACT members think it will be better for the racing industry. The bill does not go far enough in our terms, but we realise that the Minister has done her best given the industry and the issues involved.

The racing industry is a great industry. It is actually a great New Zealand industry, and we should be very proud of the bloodstock industry, of racing, of the success that New Zealanders have had in developing the industry, and of the pleasure that they give to hundreds of thousands of New Zealanders. Racing is not my particular cup of tea, but I understand that people get passionate when watching horses go around a track, and, indeed, having a punt. Why should they not?

Hon Dover Samuels: And the jockeys.

RODNEY HIDE: Well, yes. I did try out to be a jockey, but they sent me off to be a hooker—in the local rugby team. So ACT does support this bill, but I want to make some general comments about it. I think that this bill should go through quite quickly, and I will not take another call—unless something upsets me.

My question to members is this: what do politicians actually know about this business? I would suggest we do not know much. We certainly do not have anything particularly invested in the business of racing. I know that some people here like a few bets, and that some even have a part-share in a horse. But that is it. The ACT party and I are a bit disturbed about the fact that we are trying to micromanage this industry. We talk about changing the depreciation rate or a particular rule, but I say the ACT party looks forward to the day when the racing industry is treated like every other industry in New Zealand. There should be nothing special about its treatment. Looking across at my United Future friends, I say that there is nothing particularly naughty or bad about the racing industry. People like to have a bet. It is their money; they should be allowed to do so.

Marc Alexander: Is that bad?

RODNEY HIDE: Marc Alexander calls out. Does he think it is bad? Well, he does think it is bad on some days.

We say that it is up to the punters themselves, and the racing industry itself, to choose. So we look forward to the day when the racing industry can flourish like any other industry, without having politicians pretending they are experts—without knowing much about the industry. Other politicians probably know a bit more about racing than me, but I know nothing so that would not be hard.

Marc Alexander: Amen.

RODNEY HIDE: Now we have the United Future party saying prayers in the Chamber on my behalf. I thank it for that. I say to the Minister that if she wants the industry to go ahead, the way to do that is the same as for any other industry—let us get the taxes down on the racing industry. And let us not get the taxes down on just the racing industry but on every business in New Zealand. Let us also cut out some of the mad rules and regulations. Let us try something radical in the racing industry, and it might spread to the rest of New Zealand. Let us just trust the people, for a change.

DAIL JONES (NZ First): Looking at the purpose of the bill and, as I mentioned before, speaking of racing as an industry, I say New Zealand First agrees that changing the Racing Act and merging the Totalisator Agency Board and the Racing Industry Board is all fine. But we ask what we are doing for the racing industry in this legislation. What does the Minister propose, for example, in terms of changing the tax policy for breeding, or of having a reduction in duty relative to other forms of gaming, in order to make racing competitive with them? The Government should start being fair, and adopt the same tax rate that applies to casinos for the racing industry. Does the Government have any proposals to adopt that approach?

I understand that the English, Irish, and Australian racing industries had similar problems to the New Zealand industry’s in the past, but those countries have gone out of their way, in different ways, to solve them, and the industry in those countries is doing very well. We have asked the question in the past of why people should bring, for example, a stallion to this country, get no depreciation write-off whatsoever, and try to compete against Australia and other countries. What proposals does the Minister have to really assist the racing industry where it matters? She suggests that this is a bill to set out how the racing industry is governed. But really, if this Labour Government is concerned about the industry itself—about the 32,000 or 33,000 people who work in this industry all around the country; and probably mostly in some of the provincial areas rather than in the city areas—what will the Government do to support this industry?

Nowadays the racing industry’s share, as I understand it, of the gambling dollar is only about 17 percent, and is going down. What will this Government do to support the racing industry and enable it to get more income? Obviously, without income racing will no longer be an industry. It is a wonderful sport; and it has always been supported in this House in one way or another—

Hon Annette King: It is an industry.

DAIL JONES: The Minister says it is an industry, but for some people who have the occasional flutter it is a sport, depending upon the way that we look at it. Racing has always been the sport of kings, and if for a day a worker can be a king that is great.

Rodney Hide: What about queens?

DAIL JONES: I will leave that interjection to one side. But all New Zealanders can enjoy racing, and be a king for a day. The question to be asked of this Minister and the Labour Government is this: what will they do to help the industry where it really matters—where its income and tax rates are concerned? The question was put that the amendments set out on Supplementary Order Paper 16 in the name of the Hon Mark Gosche to Part 1 be agreed to.

Lindsay Tisch: I raise a point of order, Mr Chairperson. There are a number of amendments. Which one are we referring to?

The CHAIRPERSON (H V Ross Robertson): These are the amendments on Supplementary Order Paper 16. They are all being taken together, Mr Tisch. I now put that motion.

Amendments agreed to, and Part 1, as amended, agreed to.

Part 2 New Zealand Racing Board

LINDSAY TISCH (NZ National—Piako): Part 2 is a very important part of the bill, and I draw members’ attention, in particular, to clause 15(3). I have Supplementary Order Paper 282 in my name about this clause, which relates to the distribution of profits. Clause 15(3) states: “Unless each of the racing codes otherwise agrees in writing, the amount referred to in subsection (1) must”—I ask members to note the word “must”—“be distributed among the racing codes in the same proportions that the Board considers are the proportions to which the codes contributed to the New Zealand turnover of the Board for that racing year.”

There is a lot of dispute in this area. There was much discussion at the Government Administration Committee, as the members of that committee will know. There have been huge increases in the turnover on overseas thoroughbred racing. I have the figures from 1 August 2001 through to 31 July 2002. The turnover from overseas gallops is referred to as being $276 million, which is an increase over the previous 12 months of $21.5 million or 8.4 percent. In terms of overseas harness racing, the figure is now $32.4 million—an increase over the previous 12 months of just over $6 million. The figure for overseas greyhound racing overseas has increased by $583,000. Those are huge increases.

My point—and I ask the Minister to respond on this—is that the overseas gallops are contributing 89.3 percent to the profits from overseas racing. But if we are to base the distribution of surpluses to the codes on their New Zealand turnover—and this is the important point—the gallops in New Zealand are returning 62 percent. Let us just make it very clear that there have been huge increases in local people betting off shore. In fact, the last figures that I have, as at 31 July last year, show that thoroughbred racing has contributed 89.3 percent to the overall overseas total. The New Zealand domestic figure is 62 percent. The bill states that the distribution of offshore profits is to be based on the New Zealand turnover—the domestic turnover. That means that all the extra money that is coming in from overseas will only be allocated out to the thoroughbred racing code on the basis of its New Zealand turnover average, which is 62 percent. It makes up 89 percent of the offshore total, and 62 percent in New Zealand.

The point I am making here, and I ask the Minister to take a call on this point, is that in my Supplementary Order Paper I state that the board should determine the distribution of surpluses. We should not put a payout formula in this legislation. We do not do that for the dairy industry or anywhere else. There is no flexibility. When we put a formula in legislation, there is no discretion and no flexibility. I tell members that if the racing industry is falling over and we put in place a formula that is set in concrete, as this bill states it will be, then that will rest on the votes in this Chamber. I say we should give flexibility to the industry. That is what my Supplementary Order Paper provides for. It is very, very clear. It simply states: “The amount referred to in subsection (1) must be distributed among the racing codes in such proportions and on such basis as the board from time to time determines.” Let the board have the flexibility to determine the payout and make those distributions, rather than this Committee setting in legislation what the formula should be.

DAIL JONES (NZ First): I refer to the role of the governing body, the membership of the governing body, and the nomination of the advisory panel, as set out in Part 2. The bill states that the governing body should consist of seven members, and the racing working-party group refers to that in paragraph 4.5 of its report. It states that the governing body should consist of seven members and an independent chairperson appointed by the Minister, one person appointed by the Minister on the nomination of New Zealand Thoroughbred Racing Inc., one person appointed by the Minister on the nomination of Harness Racing New Zealand, one person appointed by the New Zealand Greyhound Racing Association, and three persons appointed by the Minister on the advice of the nomination advisory panel. Clause 12 refers to the nomination advisory panel.

Let us remember, then, that the nomination advisory panel is to nominate three persons for appointment to the governing body. Clause 12 states that the nomination advisory panel consist of five persons: the responsible Minister; the independent chairperson of the board; and the chairpersons of the three racing codes. How the panel will ultimately appoint those three persons, who will be the chairman of the advisory panel, and on what sort of basis the nominations will be made, are interesting questions. I presume that in some cases the nomination may end up being determined by a majority vote. I see with interest that the working-group refers, at paragraph 4.5.2 of its report, to the composition, qualifications and experience required of board members, to the term of the appointments referred to, and to the appointments advisory panel.

When I looked at all those things and heard the comments made by Mr Lindsay Tisch on the very important question of how the income earned by the new board is to be utilised, it seemed to me that there is a very good case for holding this bill back for a couple of weeks while some of these matters are further considered, as has been suggested by New Zealand First. I will be interested to hear the Minister’s comments on that matter.

Dr PAUL HUTCHISON (NZ National—Port Waikato): Part 2 is very important. I would like to emphasise the value of my colleague Lindsay Tisch’s Supplementary Order Paper 282 regarding clause 15(3). The principles are quite clear and, indeed, quite important. Just to reiterate the wording of that amendment, he has suggested that the amount referred to in subclause (1) must be distributed among the racing codes in such proportions and on such basis as the board from time to time determines. In line with what my colleague from ACT Rodney Hide was suggesting, I say the principle of the industry being able to govern itself should be exercised as much as it can be, if at all possible. That is the principle behind Lindsay Tisch’s amendment. Surely it is right and proper for the board itself to determine what the distributions should be. Undoubtedly, there are variations in the overseas and the domestic takings from time to time, and undoubtedly considerable unfairness could arise from the disproportionate takings that occur. Surely, rather than having a rigid system that has come from central government, it would be preferable to allow the board discretion to determine what the distributions should be. Again, as I think was pointed out, the dairy industry does not have that principle, but it does have flexibility. Surely that amendment is one of the minor areas that would improve this bill considerably.

The other important aspect of this part is the functions of the board. I note in the commentary on the bill that the Government Administration Committee recommended amending the functions of the board so as to include developing policies that are conducive to the overall economic development of the racing industry. Undoubtedly, the Lindsay Tisch amendment is in absolute sympathy with that. The committee also recommended that those functions include research, development, and education, and a general advisory function. It believed that those additional functions would provide a better balance to the work of the board. It is absolute right and proper that there is some emphasis in the areas of research and development and education. So many industries in New Zealand have not formalised that part of their development, which is obviously very important, not only in terms of new innovations and ideas but also in terms of measuring and monitoring in the operational research side that is so vital to see whether one particular aspect works.

In terms of the functions of the board and the appointments to it, the working-party did comment on that aspect. It made a valuable contribution that could have been considered, had the Minister been prepared to delay the reading of this bill until such time as we did receive the working-party’s deliberations. The working-party suggested it was sensible that all appointees to the board be independent, again taking the principle of letting the industry have the maximum amount of governance and determination of its own destiny. Once again, I say it is very regrettable that both the Price Waterhouse report and the working-party report have been ignored by the Minister so far. That just does not add up, when she says that she agrees it is very important to promote the long-term viability of New Zealand racing and that the economic aspects are vital.

SUE BRADFORD (Green): In this part of the bill that deals with the role and membership of the new New Zealand Racing Board, the Green Party is putting forward an amendment with regard to clause 12. That clause deals with the make-up of the advisory panel that will assist the Minister in working out who three out of the seven members of the board will be. While we have no problems with the current members of the panel, as outlined in the bill—that is, the Minister, the independent chairperson, and the chairpeople of the three racing codes—we believe that alongside them there needs to be a representative of clubs with three or fewer race days. That is not a radical suggestion. My original intention had been to seek a representative of those clubs for the board itself. However, as there seemed to be no way that the delicate balance on the board, already worked out by extended consultation and negotiation between the codes and the Government, could be changed, I am looking for support now for this much-reduced attempt to make sure that country and provincial racing gets a voice, in terms of who makes up the board.

There are many contentious issues within racing, as anyone involved in the industry knows all too well. However, a bottom line for me throughout the process of consideration of this bill has been a recognition of the threat that underpins the survival of the small clubs in particular, not just in relation to the clubs themselves but to the owners, trainers, breeders, and the wider community in the local districts. Once a local race club loses its viability through the loss of race days or of funding, or both, that loss is felt not just by those directly affected but by the whole district around them. The Green Party believes that the continued erosion of race days and of the funding allocated to small clubs is a threat to the heart of racing, and that if this bill does anything, it must be to do what it can to redress the balance between the big, rich, and powerful players within the racing world and the smaller bodies that are struggling for survival. That particular amendment to clause 12 is one of several that we are proposing in order to try to do what we can to make sure that the voice of those who have the least is heard by the Minister and the other major players when it comes to making nominations for the new board. That amendment will not cost the Government lots of money, nor will it threaten the delicate balance on the board itself. I call on all parties in this Committee, including Labour, to consider giving it their support.

In respect of another aspect of this part of the bill that Lindsay Tisch has been talking about, the Government has put up a Supplementary Order Paper relating to clause 15, as has Mr Tisch. Late last year there was a lot of pressure from some parts of the racing industry to look again at that clause, because it deals with the critical issue of the distribution of reserves and surpluses to the codes. The Green Party does support Mr Gosche’s amendment to that clause, as we believe that it moves to a necessary compromise between the two positions—that of Mr Tisch and some parts of the racing industry, who would like to see the board have complete discretion over determining who gets what, and the original clause as reported back to the House, which is perhaps overly binding in terms of the proportions to be given to each code. The Government’s Supplementary Order Paper 16 moves to a situation whereby the proportions distributed to the codes can be changed, as long as two out of the three codes agree to that. We think that is fair and reasonable, and we will be supporting it accordingly.

Hon ANNETTE KING (Minister of Health): I want to comment on clause 15, which, as it stands at present, provides for the distribution of profits from the board to the racing codes. It currently provides that unless each of the racing codes otherwise agrees, the board surpluses must be distributed amongst the racing codes in the same proportion that the board considers are the proportions to which the codes contributed to the New Zealand turnover of the board. That was how the clause was in the bill as introduced. When the bill went to the Government Administration Committee, the Racing Industry Board, the Totalisator Agency Board, and the three racing codes supported the clause as drafted. However, during the select committee stage there was some opposition to it, particularly from some within the thoroughbred code. So the Government has moved a Supplementary Order Paper that will enable some of the flexibility Mr Tisch was talking about in terms of changes to the funding formula.

The Government’s Supplementary Order Paper allows flexibility for the new board to depart from the statutory formula for distributing betting profits, but it has to have the agreement of at least two of the three racing codes. So it does allow for more flexibility. It is saying that when two codes—for example, thoroughbred and harness—agree that there should be a change in the distribution, then that can take place. It seems to us that that not only gives some flexibility but also ensures that one code cannot at some stage out-vote the other two codes and put in place a funding that disadvantages the other codes within that group.

We think that the provision does provide some flexibility, but that agreement is needed. It seems to us that having two of the three codes agree gives that flexibility and a democratic approach to those changes.

LINDSAY TISCH (NZ National—Piako): Madam Chair—

Dianne Yates: Give it a rest.

LINDSAY TISCH: This is important legislation we are debating tonight, and comments by the member do not add to that.

David Cunliffe: Don’t filibuster then.

LINDSAY TISCH: I am not filibustering, at all. This is important legislation, and we have to get it right. In relation to the amendment to clause 15(3) on Supplementary Order Paper 282, I want to pick up on the Minister’s point that two out of the three codes can change the policy. At the moment there are only three codes—thoroughbred racing, harness racing, and greyhounds, so it could well be that harness racing and the greyhounds codes could out-vote the third code, the thoroughbred racing code. The difference between the Minister’s Supplementary Order Paper and my Supplementary Order Paper is that mine talks about the board, which comprises seven members, making the decision, whereas the Minister is saying that the decision is made by the three codes. That is the difference. I am saying that there is more discretion and flexibility with seven members of the board making the decision, as opposed to two out of the three codes making it. I do not think that what the Minister is suggesting will work.

I make that point so that it will be very clear when we come to vote on it. I am saying that a board of seven should make the decision, not the two or three codes. I do not think it will work. I ask The Minister to reconsider that in terms of Mark Gosche’s Supplementary Order Paper.

Hon Annette King: But the member set out his agenda when he spoke on overseas racing.

LINDSAY TISCH: I am saying there needs to be clarity here. It should be remembered that the board has seven members, not a board of three members, or three codes—which is what the bill states. The board has much wider interests. Why would only three people, or two of the three codes, have the final say when the board has seven members? I tell members it will not work. I ask the Minister in the chair, Annette King, to delete the amendment to clause 15(3) on the Minister’s Supplementary Order Paper, because I tell her now that it will not work. It is not fair. It does not actually change what is in the bill now. The bill states there can be discretion, but Mark Gosche’s Supplementary Order Paper states that two of the three codes can determine what it will be. But what about the other members on the board? There are seven members on this board, not three members. It is important that members realise the difference. I am telling the Committee that this will not work, and the proposed amendment will not work.

Hon Annette King: The board has to agree.

LINDSAY TISCH: The Minister said that two out of the three codes could make the decision. That is what it states.

I bring the Committee’s attention to clause 11, “Membership of governing body”. As I said in a previous debate, one of the areas in this clause where there have been some changes relates to the statement that: “The governing body consists of 7 members, acceptable to the Minister”. That means that all members “must” be acceptable to the Minister. If we were to go back to the draft report of 2000, we would see that it states that appointments have to be “concurred” with by the Minister. There is now a big difference between what was originally recommended, way back in the 2000 report, and what is actually in the bill today, which states that all members “must” be acceptable to the Minister. That is one of the areas I am not happy with. It is a change from what was mooted back in the draft, and that is a concern.

I also draw members’ attention to clause 11(3)(b), which states that “if a vacancy occurs during the period, an appointment may be made by the Minister to fill that vacancy”. It does not state that the appointment “must” be made, but that it “may” be made. One of the areas that I believe is important here is that we have only a seven-member board. A vacancy could occur at any time—and remember, these appointments are for 3 years—so why is it that the bill states that an appointment “may” be made by the Minister? I would have thought we would want some certainty here.

DAVID CUNLIFFE (NZ Labour—New Lynn): I move, That the question be now put.

Motion agreed to.

The question was put that the following amendment in the name of Sue Bradford to clause 12 be agreed to:

to amend subclause (1) by omitting the expression “5”, and substituting the expression “6”.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 8

Noes 108

Amendment not agreed to.

Green Party 8.

Labour 52; New Zealand National 27; New Zealand First 13;ACT New Zealand 6; United Future 8; Progressive 2.

The question was put that the following amendment in the name of Sue Bradford to clause 12 be agreed to:

to amend subclause (1) by adding the following paragraph:

a representative of clubs with 3 or fewer race days.

Amendment not agreed to.

The question was put that the amendment set out on Supplementary Order Paper 282 in the name of Lindsay Tisch to clause 15 be agreed to.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 54

Noes 62

Amendment not agreed to.

New Zealand National 27; New Zealand First 13; ACT New Zealand 6;United Future 8.

Labour 52; Green Party 8; Progressive 2.

The question was put that the amendment set out on Supplementary Order Paper 282 in the name of Lindsay Tisch to clause 15 be agreed to.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 54

Noes 62

Amendment not agreed to.

New Zealand National 27; New Zealand First 13; ACT New Zealand 6;United Future 8.

Labour 52; Green Party 8; Progressive 2.

The question was put that the amendments set out on Supplementary Order Paper 16 in the name of the Hon Mark Gosche to Part 2 be agreed to.

Amendments agreed to, and Part 2 as amended agreed to.

Part 3 Racing codes and clubs

LINDSAY TISCH (NZ National—Piako): I will take just a brief call on Part 3, in reference to clause—

Darren Hughes: Say it seven times.

LINDSAY TISCH: No, I will not say it seven times. I raise a point of order, Madam Chairperson. The member is interjecting while not in his seat. Under Speaker’s ruling 52/6, he should abstain from interjecting—

The CHAIRPERSON (Ann Hartley): I have called the member to order. There is no need for those interjections.

LINDSAY TISCH: I will look briefly at clause 25, which deals with the wind-up of a club. One of the areas of concern relates to the disposal of funds. Subclause (1), which states that “racing, public, charitable, or other purposes in the manner that the club, with the approval of the racing code with which it is registered, determines.”—gives flexibility in terms of where the club should put its money if it does wind up.

One of the issues that came up during the select committee process—one that I am very certainly very mindful of—relates to an industry that is looking for investment and wants to improve its position and grow. I would have thought that any proceeds, any assets, to be distributed should go to racing-related industries. That is what we should be looking at. It could well be that the money go into training in the equine industry. It could go into training jockeys, or it could be retained and used, possibly, for investments in certain areas. The bill is quite wide as to where money may go, and this was debated at the select committee. In my view it needs to relate to the industry. It is important that we have money retained in the industry.

Clause 20A, “Racing codes must prepare statement of intent and business plan” is a very important clause. One of the things we have noticed over the years, certainly in the work I have done as a consultant in a previous life, is that it is very important for a lot of businesses to have a business plan—and we are treating this as a business; it is an industry that needs to understand what the principles are. Clause 20A was inserted by the select committee. There was much discussion about it, and I certainly want to reinforce the importance of putting this industry on a business footing. Part of doing that is preparing a statement of intent and having a business plan that allows for transparency and accountability as the industry grows. Those points will be important when we look at distribution. When the codes are paying out to the clubs, we want to make sure that the clubs that will be getting the money are in a position to use it and to make sure it is not squandered.

That brings me to clause 22, “Distribution to clubs of funds received from Board”. I know that within the galloping, or the thoroughbred racing industry, there could be about $32 million that will go out. We are talking big money. We are talking about large sums of money, and it is very important that the transparency and accountability mentioned in clause 20A is there. We do not want to see money being wasted. We want to make sure it is used for the right purposes and we want to make sure there is a return on the investment. It is important that the industry has that opportunity to invest and grow, and we do not want to see that money wasted.

DAIL JONES (NZ First): I assume, as I look at clause 25, that most racing clubs are incorporated clubs under the Incorporated Societies Act, or are registered in some form, perhaps, under the Charitable Trusts Act.

Hon Annette King: Most are incorporated.

DAIL JONES: Yes. If they are incorporated, then the rules of the Incorporated Societies Act require that they specify what happens on a winding up, anyway. There is a slight ambiguity between that and clause 25, which suggests that on the dissolution of a club, the assets must be disposed of for racing, public, charitable, or other purposes, because if they are incorporated societies, they are bound in terms of the Incorporated Societies Act to wind up and to pay out the assets of a club in terms of its incorporated societies rules.

I see that subclause (2A) deals with the possibility of a dispute. I would have thought that whether or not a dispute occurred, if the society was an incorporated society then it must be paid out in terms of that Act. Similarly, if registered under the Charitable Trusts Act, it would be obliged to pay out in terms of that Act. Clause 25(1) is somewhat ambiguous and might cause problems as it stands.

Dr PAUL HUTCHISON (NZ National—Port Waikato): I want to take just a very short call on Part 3. My comments are in relation to clause 20A, “Racing codes must prepare statement of intent and business plan”. Undoubtedly, National concurs absolutely with that. It is vital to be accountable and to have a clear business plan in mind. What I do think of huge concern, however, is the lack of ambition and vision that has been encapsulated in this bill, and, once again, the lost opportunity that the Government has caused by not taking notice of the PricewaterhouseCoopers report and the subsequent working-group report. One of the points they did make was that whatever is done with the racing industry in New Zealand, it is extremely worthwhile to go from the current 33.5 percent across all codes, in terms of the amount that comes back, to double that amount in dollar terms; or in other words, to increase stake money from about $50 million to $100 million a year. While we absolutely agree with the requirement for the racing codes to prepare statements of intent and business plans, it does seem a hugely lost opportunity not to have some objective purpose in terms of what we can reach. That, as I said, is one of the great lost opportunities that the Government has caused by not using the very useful advice of the working-group on this bill.

SUE BRADFORD (Green): The Green Party has put forward two substantial Supplementary Order Papers to Part 3, which deals with racing codes and clubs. The first of our amendments is to clause 20A, which defines the way in which codes have to prepare statements of intent and business plans. One of the things that came through really strongly during the select committee process was the need to make the accountability structures between the codes and the board as clear and as strong as possible. The codes and the board will be dealing with matters at the very heart of the future of all parts of racing, including the allocation of race dates and the distribution of surplus funds.

The Green Party believes that as part of this mutual accountability the codes must be required to demonstrate that firstly the codes’ own statements of intent and business plans are consistent with their own objectives, and secondly that the codes’ rules must not be unreasonable, undemocratic, unfairly discriminatory, unfairly prejudicial, or contrary to law. Our amendment aims to make sure that this happens and is an attempt to improve code accountability. I welcome the Government’s promised support for this amendment, and I hope that other parties who also seek greater fairness in the new structures will support us likewise.

Our second amendment to this part calls for the establishment of a review and appeal procedure that is able to review decisions of the Racing Board. Our Supplementary Order Paper asks that the Minister appoint a formal racing industry reviewer, for a period of not less than 3 years, and with the power to respond to appeals not only in the area of fund distribution and racing dates, which are, of course, likely to be the most contentious issues, but also in relation to any decision that appears to be unfairly prejudicial or discriminatory. The Government Administration Committee did consider the possibility of establishing a disputes resolution process during its consideration of the bill, but unfortunately the majority of the members on the committee were adamant in their rejection of it, despite the fact that in almost all similar legislation that I am aware of some form of review and appeal process is seen as essential and integral to the structures.

The racing industry is plagued by vested interests, mistrust, warring factions, and fears for the future. It is as plagued as any other struggling part of New Zealand society or the economy. This mistrust and factionalism is being used as an excuse for not introducing an appeals process in this bill. Yet logic and common sense tell me—and, I believe, many in the racing fraternity—that unless we do establish some form of accepted legislative review and appeal structure as part of this bill, things may well continue in the same difficult vein that they have so far. We should be trying to improve this bill and make it as good as we can tonight and not let things go backwards. This is our opportunity as responsible legislators to ensure that the new governance is fair and just to all parts of the industry, not just some of it. In all likelihood, and judging on past history, it will be the smaller and rural clubs that will suffer the most if no clear and transparent method of appeal is accessible to all parts of the industry. As I mentioned earlier, I think it is at our peril that we neglect the future of country racing.

The question was put that the following amendment in the name of Sue Bradford to clause 20A be agreed to:

to amend subclause (2) by inserting the following paragraph:

(aa) the code’s rules, as required by section 6 of the Incorporated Societies Act 1908; and

Amendment agreed to.

The question was put that the following amendment in the name of Sue Bradford to clause 20A be agreed to:

to omit subclause (4), and substitute the following subclause:

(4) Without limiting the generality of subsection (3), the board may decline to approve a racing code’s proposed statement of intent or business plan if the board considers that—

(a) the code’s objectives are inconsistent with its own objectives; or

(b) any of the code’s rules are:

(i) unreasonable; or

(ii) undemocratic; or

(iii) unfairly discriminatory; or

(iv) unfairly prejudicial; or

(v) contrary to law.

Amendment agreed to, and Part 3 as amended agreed to.

New Part 3A Review and Appeal Procedure

The question was put that the following amendment in the name of Sue Bradford to insert new Part 3A be agreed to:

Part 3A

Review and Appeal Procedure

26A Interpretation

In this Part—

applicant means the recognised industry organised that has requested a review by the Racing Industry Reviewer

reviewer means the Racing Industry Reviewer

26B Appointment of Racing Industry Reviewer

The Minister must—

(a) appoint a Racing Industry Reviewer for a period of not less than 3 years; and

(b) consult with the members of the New Zealand Racing Board and other parties as the Minister thinks fit, before making the appointment; and

(c) take into account any representations made under paragraph (b).

26C Review of Racing Board Decisions

(1) Any recognised industry organisation may ask the reviewer in writing to review the decisions made by the board under section 9(a) or (c), the determination of the racing calendar and the distribution of funds obtained from betting to the racing codes.

(2) The reviewer may agree to review any other decision of the board, if in the reviewer’s opinion the decision appears to be unfairly prejudicial or discriminatory.

(3) If such a request is made the reviewer must, as soon as practicable, review the decision and report the results to the board and the requester in writing.

(4) In considering the decision the reviewer must give consideration to the purpose this Act and the objectives of the board.

(5) The board must, within 10 days of receiving the report, implement the recommendations of the reviewer’s report or, if the board does not implement the recommendations, notify, in writing, the reviewer and the applicant of the board’s decisions for not doing so.

26D Appeal to arbitration

(1) Where the board does not implement the reviewer’s report under section 26C, the reviewer or the applicant may refer the matter to arbitration by an arbitration tribunal.

(2) The tribunal shall consist of 3 independent arbitrators who shall be formed and decide the dispute under the Arbitration Act 1996.

(3) Each of the parties in the dispute will have the right to appoint to the tribunal 1 arbitrator. The 2 arbitrators selected will then select the third, who will chair the tribunal.

(4) All members of the arbitration tribunal must be acceptable to the Minister of Racing.

(5) All parties must meet their own costs, with the costs of providing the tribunal to be met by the racing board.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 56

Noes 60

New Part 3A not agreed to.

New Zealand National 27; New Zealand First 13; Green Party 8; United Future 8.

Labour 52; ACT New Zealand 6; Progressive 2.

LINDSAY TISCH (Junior Whip—NZ National): I seek leave to have the question on Part 3 put again because I cast an incorrect vote on it.

The CHAIRPERSON (Ann Hartley): Which part?

LINDSAY TISCH: You moved that Part 3 stand aside?

The CHAIRPERSON (Ann Hartley): Part 3 has been approved as amended.

LINDSAY TISCH: I am seeking leave that that vote be recorded, because I voted against it, and I should have voted for it. I am seeking leave that Part 3 be voted again.

The CHAIRPERSON (Ann Hartley): The member is seeking leave for that purpose, is there any objection? There is no objection. The clerk will conduct the vote again.

Rodney Hide: I agree the need. I just need some clarification as to what the vote is now for.

The CHAIRPERSON (Ann Hartley): The vote is that Part 3 as amended be agreed to.

A party vote was called for on the question, That Part 3 as amended be agreed to.

Ayes 116

Noes 0

Part 3 as amended agreed to unanimously.

Labour 52; New Zealand National 27; New Zealand First 13;ACT New Zealand 6; Green Party 8; United Future; 8 Progressive 2.

The CHAIRPERSON (Ann Hartley): That should have been called on. It should not have been a party vote.

Part 4 Racing rules and judicial system

The question was put that the amendment set out on Supplementary Order Paper 16 in the name of the Hon Mark Gosche to clause 35 be agreed to.

Amendment agreed to, and Part 4 as amended agreed to.

Part 5 Racing calendar and licences

LINDSAY TISCH (NZ National—Piako): I just want to take a brief call on clause 40, and give a little background to how clause 40 runs into clause 43, and then later on through into clause 48. If we go back to the Racing Act of 1971, section 38 talks about win betting, place betting, double betting, and so on. An important amendment was made back in 1992 to the Act, and provided for totalisator clubs to use totalisators as they saw fit for the purposes set out in this new section 38, which is including win, place, double, and forecast betting, and so on. However, under the Racing Bill, that has gone. There is no equivalent to the old section 38 as originally set out in 1971 or in the 1992 amendment. Instead there is a structure under the board committee to determine and allocate racing dates, which is clause 40. Once the dates allocation and conditions have been determined, the board is to issue betting licences to the racing clubs for which dates have been allocated, and that is clause 43.

It is an important point to note, Madam Chair, that the actual conduct of betting is now in the hands of the board, either by itself or by means of racing clubs or agents appointed. That is clause 48. It is not with the clubs, as in the earlier position. I just make that point now, that the board will be a very important part of this new legislation. Also, that both on-course and off-course totalisator betting will be completely under the control of the board, whereas under the 1971 Act the on-course totalisator betting was the domain of each club, once licensed.

That is the difference that I bring forward. I am not arguing against it. I am just saying that there is a difference between what has happened under the 1971 Racing Act and what is proposed here under this Racing Bill.

The question was put that the amendments set out on Supplementary Order Paper 16 in the name of the Hon Annette King be agreed to.

Amendments agreed to.

The question was put that the following amendment in the name of Donna Awatere Huata to clause 42 be agreed to:

to omit this clause, and substitute the following clause:

42 Unlimited restriction on racing days

Racing will be permitted, without exception, every day of the calendar year.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 6

Noes 110

Amendment not agreed to.

ACT New Zealand 6.

Labour 52; New Zealand National 27; New Zealand First 13; Green Party 8; United Future 8; Progressive 2.

The question was put that the following amendment in the name of Marc Alexander to clause 42 be agreed to:

to insert, after the word “on”, the words “Easter Sunday”.

Amendment agreed to, and Part 5 as amended agreed to.

Part 6 Betting

The question was put that the following amendment in the name of Donna Awatere Huata to clause 49A be agreed to:

A party vote was called for on the question, That the amendment be agreed to.

Ayes 6

Noes 110

Amendment not agreed to.

ACT New Zealand 6.

Labour 52; New Zealand National 27; New Zealand First 13; Green Party 8; United Future 8; Progressive 2.

The question was put that the following amendment in the name of Donna Awatere Huata to clause 52A be agreed to:

To insert, after clause 49, the following new clause:

49A Bookmakers to be allowed to take bets on course

(1) Racing clubs are permitted to allow bookmakers to take fixed odds bets on course at any race meeting for which a betting licence has been issued, subject to imposition of reasonable conditions, including payment of any rentals and levies agreed.

For the purposes of this section, bookmakers offering fixed odds on course betting must comply with the provisions of this Act relating to fixed odds betting with any necessary modifications.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 6

Noes 110

Amendment not agreed to.

ACT New Zealand 6.

Labour 52; New Zealand National 27; New Zealand First 13; Green Party 8; United Future 8; Progressive 2.

The question was put that the amendments set out on Supplementary Order Papers 16 and 62 in the name of the Hon Annette King be agreed to.

Amendments agreed to, and Part 6 as amended agreed to.

Part 7 Miscellaneous

LINDSAY TISCH (NZ National—Piako): I just bring the Committee’s attention to new clause 63A, which is a significant clause and one that I promoted at the select committee. One of the areas we need to look at in racing is giving the boards the opportunity to think outside the square, and for clubs to be able to run and be involved in—with the approval of the Minister, as stated in the clause—running a race meeting. There may well be individuals who want to put up stakes of, if you like, $100,000. At the moment a person cannot do that, but new clause 63A allows that to happen. It also allows the board to be able to be involved in gaming issues, which is covered in clause 59 in Part 6. I do not know what the impact of the Responsible Gambling Bill will be on clause 59, but we will be waiting to see, with interest. Because that will have a big impact on how the board operates, whether it operates its own race meetings and how it will operate with gaming machines. We will be waiting to see that one when it comes in. Certainly, it will have an impact. I think clause 63A is an important one, because it allows investment in the industry; it allows someone to come in, with the Minister’s approval, and say: “I believe I can run a race meeting. Let’s go and do it.”

Part 7 agreed to.

Part 8

agreed to.

Schedules

Dr PAUL HUTCHISON (NZ National—Port Waikato): In both Part 8, and the schedules, about which we are now talking, National has contributed considerably in advancing and progressing this part of the bill, but we still have not had from the Minister an explanation of why the PricewaterhouseCoopers report or the report of the racing industry working-group was not taken notice of. I hope that the Minister will, before we complete the reading of the schedules, take a small call and give us a logical explanation of why she has not taken notice of that very important report, and of the people who spent a lot of time compiling it.

The question was put that the amendments set out on Supplementary Order Papers 16 and 62 in the name of the Hon Mark Gosche to the schedules be agreed to.

Amendments agreed to, and schedules as amended agreed to.

Bill reported with amendment.

The House adjourned at 9.30 p.m.