Thursday, 6 March 2003

Thursday, 6 March 2003

Thursday, 6 March 2003

Mr Speaker took the Chair at 2 p.m.

Prayers.

Business of the House

Business of the House

Hon Dr MICHAEL CULLEN (Leader of the House): Next week the House will go into a 1-week adjournment. When the House resumes on Tuesday, 18 March, the business for that week will include the Appropriation (2001/02 Financial Review) Bill debate, which is a 4-hour debate, and progress on the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill, the Government Communications Security Bureau Bill, and the War Pensions Amendment Bill (No 2).

GERRY BROWNLEE (NZ National—Ilam): Noting the list of business that the Leader of the House has suggested will be progressed when we get back, and noting also that this Opposition party, the National Party, has talked—indeed, today—about facilitating Government business, to make extra time available to Parliament, I am wondering whether the Leader of the House might now consider the possibility of our having a debate on the situation in Iraq this afternoon at the conclusion of question time. That, of course, would be a matter of leave for the House, which I now seek.

Mr SPEAKER: Leave has been sought to have that debate. Is there any objection? There is.

Rt Hon WINSTON PETERS (Leader—NZ First): Mr Speaker, you will recall that last Tuesday night this House ran out of work and rose at 9.30 p.m. Therefore I ask the Leader of the House whether we are going to see, for example, the Responsible Gambling Bill—which is way down the Order Paper—and the Māori Television Service Bill come up the Order Paper, and whether the longstanding guardianship review will materialise into some sort of bill before this House, as undertaken by the Attorney-General to the leadership of New Zealand First.

Hon Dr MICHAEL CULLEN (Leader of the House): I am grateful for the cooperation of the House. On Tuesday an arrangement was arrived at that enabled the House to rise early after completing a very substantial amount of business that day. If the member is offering to organise support for our dealing with the Committee stage of the Responsible Gambling Bill in, say, about 2 hours, as happened with the Racing Bill, I would be extraordinarily grateful.

Hon Dr NICK SMITH (NZ National—Nelson): Further to the point that has been raised by the Leader of the House, can he—

Mr SPEAKER: No. Please be seated. The procedure for the business statement is that there is entitlement for a statement to be made, and entitlement for the shadow leader of the House to make a response. It is not the custom then to carry on with large amounts of requests that can be easily made by way of a phone call.

Committees

Business of Select Committees

Hon Dr MICHAEL CULLEN (Leader of the House): I seek leave for the time by which the Health Committee must finally report the Smoke-free Environments (Enhanced Protection) Amendment Bill to be extended to 4 April 2003.

Mr SPEAKER: Is there any objection to that course being followed? There appears to be none.

Hon Dr MICHAEL CULLEN: I seek leave for the Hon Matt Robson to be a member of the Transport and Industrial Relations Committee for the purpose of its consideration of the Holidays Bill and the Holidays (Four Weeks Annual Leave) Amendment Bill, but without the right to vote on any question before the committee.

Mr SPEAKER: Is there any objection to that course being followed?. There appears to be none.

Questions for Oral Answer

America's Cup—Team New Zealand Funding

1. MIKE WARD (Green) to the Minister for Sport and Recreation: Why has the Government offered funding of $5.6 million to Team New Zealand four years before the America’s Cup challenge, while Water Safety New Zealand only has funds for programmes to reduce the number of children drowning in 8 out of 17 regional sports trust areas?

Hon TREVOR MALLARD (Minister for Sport and Recreation): The $5.6 million is new trade and tourism money. It has not been taken from the Sport and Recreation New Zealand budget. The Government wanted to make sure that Team New Zealand had a level of financial security, in order to start the process of re-signing team members for a possible challenge in 2007. The member has referred to the pilot programme called Swim for Life, which Water Safety New Zealand runs with eight regional sports trusts. A further three trusts are looking to join the pilot. I have been advised that the remaining trusts believe swimming skills for children are being adequately dealt with through a building arrangement with other providers.

Mike Ward: Has the Minister not been a tad hasty in granting $5.6 million to Team New Zealand before bringing together Team New Zealand, the boat-building industry, and the yachting sector to make sure that our talent is put to the best use?

Hon TREVOR MALLARD: There is considerable work going on now by way of a post mortem and future planning. No decision has yet been made by Team New Zealand, but it is important to have this money in place, because, as members are aware, after the last America’s Cup round people were being poached within days of the racing finishing. Although this is not a view that is unanimously shared by members in the House, there is a strong feeling on this side that the international trade benefits are certainly worth having.

Helen Duncan: Can the Minister tell the House whether the Government has provided funding to Water Safety New Zealand in 2003?

Hon TREVOR MALLARD: Yes. The Government approved granting just over $500,000 to Water Safety New Zealand in December last year, which the executive director was ecstatic about.

Opposition Member: What about this year?

Hon TREVOR MALLARD: The money came this year, but the announcement was made last year. Does the member understand the difference? The woodwork teacher is a bit slow.

Mr SPEAKER: There should not have been an interjection, nor should there have been a response.

Hon TREVOR MALLARD: Mr Muir said at the time: “This will mean that quality water safety education programmes can still be delivered to communities throughout New Zealand.” The money made up for the shortfall in funding from the Lotteries Commission as a result of the drop-off in its funding.

Hon Murray McCully: Can the Minister confirm that, in making decisions on America’s Cup matters, the Government will be guided by a professional assessment of the economic benefits to New Zealand, rather than by a comparison with the level of public funding made available to any sporting code in this country?

Hon TREVOR MALLARD: Yes, along with a number of other factors, including the willingness of private sector people, both within New Zealand and internationally, to put in money. I thank the member opposite for his strong support, and for his suggestion that $20 million should go to Team New Zealand.

Hon Brian Donnelly: How much funding has the Government provided to rugby league during its term in office, and is the disparity between that figure and the $5.6 million for Team New Zealand because rugby league is a working-class sport, played largely by Polynesians, with 13 rather than 15 players per side?

Hon TREVOR MALLARD: Believe it or not, I do not have the exact figures right at my fingertips with regard to rugby league funding. But I will say that, per player, rugby league is proportionately one of the biggest beneficiaries of Sport and Recreation New Zealand. I also understand that rugby league receives a disproportionate amount of pokie money, around which there is some question.

Dr Muriel Newman: Why has the Government put $5.6 million of taxpayers’ money into a billionaires’ yachting regatta, instead of providing another 100 urgently needed police officers in Auckland?

Hon TREVOR MALLARD: Members who are up to date with the facts will know that the 1999-2000 regatta resulted in additional economic growth in New Zealand to the value of $640 million. I understand that, during the latest cup, over $100 million of extra taxation, in PAYE and GST, was paid directly by the syndicates. This Government believes in growth. We think we can leverage off the challenge, and increase economic growth through trade and tourism flowing from it.

Hon Peter Dunne: Will the Minister confirm that the funding that has been announced today is to ensure that Team New Zealand has breathing space to determine the best way of proceeding with a future challenge, if there is to be one, and that it has the assets and the people to do so, and that it is not a precursor of Government funding for the challenge per se, if it should eventuate—in other words, will that be left to private sponsors to organise?

Hon TREVOR MALLARD: Yes, and no.

Mike Ward: What messages do his actions send to community groups dependent on dwindling lotteries funding, and will the Minister be advising them to find a group of sponsors to splash their logos on their water wings, or to move to Europe, before giving them any further support?

Hon TREVOR MALLARD: The message that this Government is giving to community groups through this exercise is that we want to grow this economy so that we have more to share around.

Mr SPEAKER: I would like to advise new members that it would be useful if they could speak a little more slowly sometimes.

Economy—OECD Rating

2. Dr DON BRASH (NZ National) to the Minister for Economic Development: Why did he make a speech in June 2002 stating that “This government has set itself an ambitious target. It wants to see New Zealand once more in the top half of the OECD league table of average real incomes by 2011.”, given that the Prime Minister has stated that the timeframe is “totally unrealistic”?

Hon Dr MICHAEL CULLEN (Leader of the House), on behalf of the Minister for Economic Development: I enthusiastically reply on behalf of the Minister: “I am sure the Minister will agree. I am known as a very positive person who is ambitious for New Zealand. This is reflected in many of my speeches.”

Dr Don Brash: In the light of the fact that Treasury provided advice to the Government in April 2001 that: “It appears more likely that New Zealand’s ranking among OECD countries will continue to fall, and unless there is some improvement in our growth rates relative to other OECD countries, we could be among the lowest income group in the future.”, why did he publicly state, 14 months after that advice had been received, that the Government had a goal of getting back into the top half of the OECD by 2011?

Hon Dr MICHAEL CULLEN: Between those two events, the former Governor of the Reserve Bank resigned and, perhaps in an excess of enthusiasm, the Minister for Economic Development believed that the growth rate would shoot through the roof as a consequence of that move.

Gerry Brownlee: I raise a point of order, Mr Speaker. I do not expect you to rule now, but, on behalf of the National Opposition, I ask you to take a close look at the Hansard of Dr Cullen’s reply. Perhaps when we return after the adjournment you will give us a ruling as to whether you think it complied fully with the part of the Standing Orders that deals with Ministers’ answers to questions. I would suggest that there was a great deal of personal reflection in that answer, and it should not have been allowed.

Mr SPEAKER: The member has made a reasonable request and I will comply with it.

Rt Hon Winston Peters: Has he had an opportunity to discuss with the Prime Minister the incongruity of the two positions taken by the Minister of Finance and her as Prime Minister, or is it the case that she is incapable of being wrestled away from Tom Cruise and photo opportunities?

Hon Dr MICHAEL CULLEN: I am sure that the member would not turn down the chance of a photo opportunity with Penelope Cruz or Nicole Kidman, given the chance. I repeat the advice given by both the Minister of Finance and the Prime Minister that further Treasury analysis on a target date of 10 years out seems unrealistic, given the growth rates that will be required.

Hon Matt Robson: What goals does the Government have for New Zealand?

Hon Dr MICHAEL CULLEN: Certainly, if we can continue to reduce unemployment, continue to outperform the OECD as we are doing, continue to have low inflation, and continue to have very high Budget surpluses, we are on the road to getting back into the top half of the OECD. That is an ambition that contrasts favourably to the unrealistic one of restoring the National Party as a dominant political force over the next 10 years, as Mr English wants.

Deborah Coddington: Does the Minister still stand by his media release of 9 September 1999, whereby he said that Alan Greenspan, the Chairman of the US Federal Reserve, had seen the US economy power ahead with record sustained growth, and that he should replace Dr Don Brash; if he does stand by that press release, will he proceed with his intention, stated in the same release, to offer Greenspan, a libertarian, a job running monetary policy in New Zealand?

Hon Dr MICHAEL CULLEN: The Minister does not see the need any longer to replace Dr Don Brash as the Governor of the Reserve Bank.

Dr Don Brash: Did the Minister make his statement after reading the Government growth strategy of February 2002—at a time that I was still Governor of the Reserve Bank—which contained this chart outlining the Government’s growth targets that indicates that the Government hoped New Zealand would reach the top half of the OECD by 2011; if not, on what basis did he make the statement?

Hon Dr MICHAEL CULLEN: On the basis of ambition and optimism. As explained previously, that graph was imported from another document, and was never seen by Ministers before the document was produced.

Visitors—Visas

3. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Immigration: Since she has been Minister, how many foreigners have arrived in New Zealand as visitors and not left at the end of their visit such as Mr Shinozaki who died Wednesday 26 February, and the six other students from the “rogue” Columbus Academy, who remain here?

Hon LIANNE DALZIEL (Minister of Immigration): More than 4 million visitors have arrived in New Zealand since December 1999. The overall rate of overstaying is estimated to be one of the lowest rates in the world, although, of course, many people depart of their own accord at some point after their permits expire or appeal against removal. I cannot say exactly how many are in the situation of the named student, as he entered New Zealand in July 1997, when I was not the Minister of Immigration. There has not been any occasion during the time I have been Minister that he could have been lawfully removed from New Zealand by the New Zealand Immigration Service.

Rt Hon Winston Peters: Is the Minister not aware that when Mr Shinozaki arrived in 1997 he came as a visitor or tourist, but that his status was later changed—a change that she concurred with as Minister of Immigration—and can she tell me, therefore, how many of the 2.045 million visitors who arrived in New Zealand in the year ending December 2002 actually left, and how many of those 2.045 million visitors remain living here, or does she simply not know?

Hon LIANNE DALZIEL: The question of whether they remain here begs the question as to whether they are here on a lawful permit or whether they have lodged an appeal against their removal.

Rt Hon Winston Peters: They are visitors.

Hon LIANNE DALZIEL: The member should know, because he was the Deputy Prime Minister in 1997 when the individual came in.

Rt Hon Winston Peters: Tourist.

Hon LIANNE DALZIEL: No, the individual came in visa-free. He was granted a visitor permit at the border. He subsequently applied for more than one student permit. At the time that he died he had no student permit—and I advised the member of that fact earlier on this week. He had, however, lodged an appeal with the Removal Review Authority, which means he could not be removed.

Dave Hereora: Can the Minister confirm that no student permits were issued for study at the Columbus Academy; if so, what sorts of institutions did those students have permits for?

Hon LIANNE DALZIEL: No permits were issued for students to study at the Columbus Academy, which is not a registered educational institution. Those who had student permits had permits to attend various schools and tertiary institutions in the Auckland area. Most of those students have been identified and are being checked. But unfortunately I have to advise the House that investigations are being seriously hampered by the academy’s lack of cooperation.

Hon Murray McCully: Can I ask the Minister to answer the first part of Mr Peters’ original question, which was that since she has been Minister, how many foreigners have arrived in New Zealand as visitors and not left at the end of their visit? It seems to me that she should be able to provide an answer to that question.

Hon LIANNE DALZIEL: Four million visitors have arrived in New Zealand since December 1999, and I spelt that out. I can tell the member that we have an estimate of overstayers in the country, as of October 2002, of 18,134. But I should make a comparison with the same figure for December 1997, which was 19,557.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Mr McCully asked the same question that I asked. It is simply a case of the Minister saying that she either knows or does not know, and perhaps of sharing with us the difficulty she might have in respect of her portfolio and her lack of experience. But she cannot go on everyday obfuscating—

Government Member: Give up.

Rt Hon Winston Peters: I am not giving up. Your worst nightmare is about to happen!

Mr SPEAKER: I have never regarded this place as a nightmare. This is always an afternoon event that I have very much enjoyment presiding over. The Minister addressed the question. The answer might not have been satisfactory to the member, but she did address the question.

Hon Roger Sowry: I raise a point of order, Mr Speaker. I want to raise this issue with you. Mr Peters asked the Minister a very precise question about the number of people arriving in New Zealand as tourists and not leaving when their visitor’s visa had expired. She gave an answer, which the House accepts as her word: she said that she did not have the number. She was then asked the same question by my colleague Murray McCully, and she gave a number of 18,134. She had gone to the trouble not only of getting, as she should have done because the question had been put down for oral answer, a number for October last year—which is a bit out of date, but she said that that was the date she had a figure for—but also of getting a number for 1997 so that she was able to give a comparison.

There comes a point, surely, when you have to say to Ministers that if they have the information, they should give it in their answer to the primary question, rather than our having to waste two or three supplementary questions before the Minister gives the number that she was asked to provide. When the Minister stood and said, in her first answer, that she did not have the information, we had to accept that. That was wrong, as we now know, because she had the information; she just chose not to give it.

Hon LIANNE DALZIEL: Speaking to the point of order, I want to say that the Hansard will show that that is not correct. What I said was that I could not say how many were in the situation of the named student, because the named student did not arrive in New Zealand when I was the Minister—and that was what I was asked to provide an answer to—and that there had been no occasion at any point since I have been the Minister that he could lawfully have been removed from New Zealand. I have explained very clearly the number of visitors who have arrived in New Zealand since December 1999, and I have given my reasons for not being able to give an exact figure on the exact movements of every one of those 4 million visitors.

Mr SPEAKER: The Minister has given some information in her answer to the supplementary question. This may or may not be what she was specifically asked or originally asked, but she is entitled to do this.

Rt Hon Winston Peters: Could the Minister confirm that such a visitor is recorded by the statistics gathered at the airport, by way of the incoming card, and that that is the only record, and that therefore she is unable to send people home when their visitor or student visas expire, because she has no idea which visitor or supposed student is staying or leaving; and perhaps she herself might like to enrol in the Japanese academy that specialises in catering for lost souls?

Mr SPEAKER: The last part of the question is out of order. The first part can be answered.

Hon LIANNE DALZIEL: The issue of students who come to New Zealand to study who enter the country by way of visa-free arrangements, then apply for a student permit after they have entered, has led to the Government adopting a very good position on a code of practice. The schools are now required by the code of practice and by immigration policy to notify us if any of the students are not complying with the provisions of their permit. That is when we take action to remove them.

Rt Hon Winston Peters: How is the Minister able to give any sort of assurance to this House and to the country about what is going on in respect of the numbers that we read from Statistics New Zealand, when in fact the cross-referencing does not happen in respect of tourists and those who change their applications to a student permit, and that therefore we have no idea whether 2 million people arrived or 3 million people arrived, or whether we have 20,000 or 40,000 overstayers—is that not a fact?

Hon LIANNE DALZIEL: When I became the Minister, I discovered that the record keeping in respect of overstayers was abysmal, so I asked the Immigration Service to develop a better mechanism for identifying the rates of overstaying. The best estimate I can provide for the House is 18,134. I can say that when that member was the Deputy Prime Minister the figure was 19,557, and the rates of visitors to this country have increased substantially since then.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. We saw Mr Sowry’s point there again. This Minister never answers the primary question. She ducks and dives, and, when she thinks she has some sort of advantage—perverse as it might be—she seeks to give out some disclosure. That is the reason the House, when it comes to this Minister, is constantly on the verge of a state of disorder—because she will not answer a simple question. Today it was not a matter of which people, like the Japanese tourist, overstayed; the question was how many people who came here as visitors overstayed, such as these eight people by way of example. She sought to say in her answer that she could not quantify those in the same category as the Japanese student, and therefore she did not know. That is just obfuscation of the worst sort.

Mr SPEAKER: I judged that the Minister addressed the question, and there the matter stays.

Gerry Brownlee: I raise a point of order, Mr Speaker. You have agreed to look at the Hansard of the answer to a question earlier today, and to come back to us after the House resumes on 18 March. Day after day we hear you telling the House that you judge that a Minister has addressed a question. The Standing Orders are very, very clear about what a Minister has to do. The Minister must give a reply to a question that is concise and confined to the subject matter of the question asked. I think the point Mr Peters makes is that, in the case of the Minister of Immigration, she most certainly wavers all over the place before eventually deciding, on her own terms, that she might release information to Parliament, usually out of context.

Mr SPEAKER: Anyone listening over the last few weeks would know that there is a great deal of contention about immigration statistics. This is a matter of interchange between members. Different opinions are held and different statements are made. All I have to ensure is that the Minister addressed the question. She did.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. That is the very point. Of course there is controversy. That is why these questions are being asked. She is in charge of the portfolio. Her job is to remove the controversy and confusion and give us some certainty, and if she cannot, she should resign.

Mr SPEAKER: That point of order was not necessary, particularly the last words. That is why I give quite a lot of latitude to members asking questions. They can ask questions of Ministers, but they have to realise that they are not always going to be satisfied with the answer.

Race Relations Commissioner—Confidence

4. Hon MURRAY McCULLY (NZ National—East Coast Bays) to the Associate Minister of Justice: Does she retain full confidence in the Race Relations Commissioner, Mr Joris de Bres; if so, why?

Hon PHIL GOFF (Minister of Justice), on behalf of the Associate Minister of Justice: Yes, he has an important job to do and the ability to do it.

Hon Murray McCully: Does she endorse today’s reported statement made by the Race Relations Commissioner that private businesses should adopt Māori names on the basis that: “It’s good for their branding.”; “It’s good for the image of the country.”; and “It’s a win-win type of thing.”; if so, why?

Hon PHIL GOFF: The Race Relations Commissioner was not attempting in any way to instruct or tell the private sector what to do. He was expressing an opinion, and I am somewhat curious that the member finds that “politically correct”, as he says in his press statement, given that he was part of a Government Cabinet in 1999 that gave this directive: “Government departments to develop a Māori language policy and plan appropriate to their business, by 1 July 2000.”

Dianne Yates: What are the major activities carried out by the Race Relations Commissioner, and why are they important?

Hon PHIL GOFF: The major activities of the commissioner and the commission are to promote good race relations, and to ensure that New Zealanders have a mechanism to get redress when they suffer from discrimination. I believe that the commissioner has been active in doing this—working with schools, local government bodies, community and service groups, Māori and ethnic groups, and in the wider community. As is obvious from conflicts right around the world, it is very important for stability and peace that we do have someone promoting racial harmony and tolerance.

Dail Jones: Can the Minister assure the House that the Race Relations Commissioner is aware that those are his responsibilities and that he ought to stick to them, rather than giving advice about the Taliban, how businesses should run their businesses, and the names given to them?

Hon PHIL GOFF: I am sure the Race Relations Commissioner is aware of the responsibilities he has. The member would be quite wrong to judge a single comment, which was an opinion and not one that I find offensive, about having duality of names. After all, every Government department was instructed by the National and New Zealand First coalition Government to have a Māori name. I do not see why he thinks there is something wrong with the commissioner’s statement now.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. There goes a classic example of disinformation from this Minister. He knows full well when the Inland Revenue Department got a Māori name and all the rest were given Māori names—when he was a junior Minister in the Lange Government.

Hon Dr Michael Cullen: First of all, that is a debating matter, and I suggest we need to start coming down much harder on the issue of people raising points of order with regard to debating matters.

Mr SPEAKER: I am not having anyone making a comment when there is a point of order. This is a final warning, Mr Brownlee.

Hon Dr Michael Cullen: That point of order was a debating matter, and a matter that is in contention. One could respond tit for tat in that respect, all the way through.

Mr SPEAKER: The member is absolutely correct. That was a debating matter, and nothing more.

Marc Alexander: Can the Minister advise us of any other jaw-dropping initiatives that we can expect from the Race Relations Commissioner to foster better race relations, and can we now expect him to lead by example and change his name to “Hone” de Bres?

Hon PHIL GOFF: As I indicated to the House before, the Race Relations Commissioner is dealing with a number of very important initiatives. The member should not overlook the significance of initiatives to promote racial harmony and tolerance, which are vital to our community, because of a single comment or expression of opinion—something that any individual in New Zealand is entitled to make.

Hon Murray McCully: Does the Minister endorse the actions of the Race Relations Commissioner and his colleagues at the Human Rights Commission in continuing to delay a determination of my complaint over the commissioner’s Taliban speech, while the commission’s lawyers work overtime to develop a case for immunity on the part of that commissioner from the very legislation that he attempts to enforce on other New Zealanders?

Hon PHIL GOFF: I do not have information on the subject matter, as I am answering on behalf of another Minister, but if the member wants to put down that question, I will get an answer for him.

America's Cup—Team New Zealand Funding

5. DAVID BENSON-POPE (NZ Labour—Dunedin South) to the Minister for the America's Cup: What were the factors that led to the Government’s decision to commit $5.6 million to Team New Zealand’s 2007 America’s Cup campaign?

Hon TREVOR MALLARD (Minister for the America's Cup): Securing the team for a possible challenge from which New Zealand can leverage in 2007 was the main factor. We are confident that the next campaign will provide a chance to further develop and expand trade and tourism opportunities.

David Benson-Pope: Will the Government contribute further funding for this campaign?

Hon TREVOR MALLARD: The $5.6 million is an initial sum, and it will be a few months before we can confirm the final level of investment. We want to take time to consider the potential economic benefits that can be leveraged off a regatta in Europe. The final contribution will also depend on Team New Zealand’s ability to raise the vast majority of the funding from the private sector to mount a credible challenge.

Hon Murray McCully: Has the Minister found it helpful in making these decisions to have available the economic study that was done of the 1999-2000 America’s Cup, which showed an economic benefit to New Zealand of $640 million, and is he prepared to make a copy of that report available to any members who have difficulty in understanding the reasons the Government is considering funding this matter?

Hon TREVOR MALLARD: Yes, yes, and did not Michelle do a better job on that than she did on other things?

Gerrard Eckhoff: Why has the Government put $5.6 million into a yachting regatta for billionaires, to ease their personal funding requirements, when the same amount could ensure 300 extra hip replacements to ease the genuine pain of those in real need?

Hon TREVOR MALLARD: Because the tax benefits that came from the last campaign, using those maths, would have provided for 6,000 hip replacements.

Tranz Rail—Safety

6. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Transport: Has he received any reports about brake failures on Tranz Rail locomotives; if so, does he have confidence that Tranz Rail is operating safely so that people are not in danger?

Hon PAUL SWAIN (Minister of Transport): Yes. I received a report from the Transport Accident Investigation Commission relating to brake failure on a Tranz Rail locomotive. The report concluded that in view of the safety actions taken by Tranz Rail following the incident—the first of its kind in 30 years—no safety recommendations regarding the accident are necessary. I am also advised by the Land Transport Safety Authority that it is satisfied Tranz Rail has taken suitable safety action to remedy the immediate concern.

Rt Hon Winston Peters: Why does the Minister think he can give such an assurance of safety to the travelling public, when brake parts are falling off Tranz Rail trains, and in one case are found lying on the tracks in Kaiapoi by a member of the public?

Hon PAUL SWAIN: Yes, there have been concerns, which is why the Transport Accident Investigation Commission and the Land Transport Safety Authority have investigated. I am advised that Tranz Rail has now put in a series of operational matters in order to be able to overcome the problems that the member has raised.

Lynne Pillay: What advice has the Minister received from the Land Transport Safety Authority on the actions it has taken to remedy the immediate concerns?

Hon PAUL SWAIN: I am advised by the Land Transport Safety Authority that Tranz Rail has taken the following steps: the incorrect component of the train in question was replaced immediately; Tranz Rail has advised the Transport Accident Investigation Commission that full brake tests will be mandatory in future where any part of the brake system is called into question; and Tranz Rail will be recommending to the locomotive technical committee that component replacements be brought forward from 864,000 kilometres to 432,000 kilometres.

Rt Hon Winston Peters: Is the Minister concerned that a conscientious private citizen in North Canterbury who lives in Clayton Cosgrove’s electorate tried to contact Tranz Rail about brake damage, but was fobbed off and was unable to talk to anyone in authority in that shonky outfit, which has the worst safety record of almost any company in the country; what does he think of that state of affairs?

Hon PAUL SWAIN: There are concerns about some of the safety issues, as advised in the report. If the member could provide us with some details about that particular case, I would be happy to investigate it.

Rt Hon Winston Peters: In an endeavour to help the Minister, I seek leave to table the shoes and brake lining that were found at Kaiapoi, and are marked Tranz Rail—so they are not 30 years old—and the affidavit of the man who found them.

Items and affidavit, by leave, laid on the Table of the House.

Research, Science and Technology—Initiatives

7. TIM BARNETT (NZ Labour—Christchurch Central) to the Minister of Research, Science and Technology: What are the latest research, science and technology initiatives which he has undertaken and why are these important?

Hon PETE HODGSON (Minister of Research, Science and Technology): The Government focuses a good deal on science and technology, because we see them as vital for innovation and diversification of the economy. Innovation is a key driver of economic growth, and these initiatives are important for building a prosperous economy. There are many of them. For example, the $100 million invested in the Venture Investment Fund will, by the end of this month, have been multiplied into more than a quarter of a billion dollars’ worth of venture capital funding at the seed capital end of that spectrum. In addition to that, for example, a year ago there were no centres of research excellence and there were no research consortia. There was only one incubator in this country 3 years ago; there are now 15. And on it goes.

Mr SPEAKER: That went on a little too long.

Tim Barnett: Has he received any reports that suggest alternative ways in which New Zealand could build a more innovative and prosperous economy; if so, will he consider adopting any of the ideas raised?

Hon PETE HODGSON: Yes, I have received such a report. Regrettably, the report was stuck in the 1990s and offered nothing in the way of new ideas to foster innovation. I am unable to pick it up, because it was bereft of any useful new ideas. Sadly, that report was the National Party’s vision for our future.

Dr Paul Hutchison: Does he think his Government’s new initiatives would convince scientist Dr Mike Hubbard, a pioneer of the key identified area of proteomics, who has left New Zealand saying: “Political agendas control the way public money was allocated to an overbearing extent.”, or the 40 individuals who lost their jobs at HortResearch last year while working in the key identified area of bioactives, or Professor Mervyn Smith from Otago, who said: “The Labour Government makes such a big song and dance about the knowledge economy. The words are there but the action is a bit hard to see.”?

Mr SPEAKER: I allowed the member to ask that question because there had been a long answer given previously, but both question and answer have been too long. I now want the Minister to respond briefly.

Hon PETE HODGSON: I will simply say to those people, and, indeed, to the member himself, that since this Government came to office, expenditure on research, science, and technology through this vote has gone up by 18 percent, and if one were to add the capital of the Venture Investment Fund to that, it has gone up by 41 percent. That is what happens when a Government puts its money where its mouth is.

Ian Ewen-Street: When will the Government make a similar investment in ecological systems research to the one it is now making in those new initiatives, which focus so heavily on gene technology in agriculture—a step that will profoundly undermine the ability of our products to be sold in our export markets like Japan and Europe?

Hon PETE HODGSON: I invite the member to keep abreast of developments. The sustainability round, which is the very biggest round of funding this year, is now under way. There is significant investment in this country in the sort of science that the member refers to.

Bernie Ogilvy: Can the Minister provide an estimate of the amount of additional funding required during the recent multi-year reinvestment process that was forced when a number of research programmes due for advancement were arbitrarily rolled over for 1 year or more?

Hon PETE HODGSON: There has been no arbitrary rollover of any programmes recently. About 2 or 3 years ago, just before I became the Minister, there was a complete rollover for 12 months of a variety of programmes, and that was a case of the previous Government trying to get some systems in place.

Dr Paul Hutchison: I seek leave to table two papers. The first is the OECD figures that show that Government spending on science and technology has gone down as a percentage of gross domestic product.

Document not tabled.

Dr Paul Hutchison: The other document is an article from the Otago Daily Times that quotes Professor Mervyn Smith as saying: “The Labour Government makes such a big song and dance about the knowledge economy. The words are there but the action is a bit hard to see.”

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

Television New Zealand—Expenditure

8. KATHERINE RICH (NZ National) to the Minister of Broadcasting: In light of his recent comments regarding the new charter for TVNZ that “the $12 million they’ve currently got, obviously people should … know exactly how that was spent … and what is being done with it”, can he tell the House the exact breakdown of the expenditure of that money; if not, why not?

Hon MARK BURTON (Deputy Leader of the House), on behalf of the Minister of Broadcasting: No, because as the charter came into effect only last Saturday, 1 March, the $12 million has not been spent yet.

Katherine Rich: Why is TVNZ producing cheesy television advertisements promoting the charter; what is their cost; and does the Minister think it is appropriate that taxpayers’ money is spent on promoting a Government policy, rather than on local programming?

Hon MARK BURTON: The member refers to an operational decision on the part of the corporation, which, of course, has absolutely nothing to do with the Minister.

Mark Peck: What are the accountability arrangements for charter funding provided by the Government to TVNZ?

Hon MARK BURTON: The Television New Zealand Act, which this House passed last week, requires Television New Zealand to include in its statement of intent qualitative and quantitative performance measures for measuring performance against its charter, and to include in its annual report a statement of its performance against its charter. In addition, there is a memorandum of understanding between the Minister of Broadcasting and Television New Zealand regarding the charter funding that requires TVNZ to provide the Minister with quarterly reports on how the charter funding has been used.

Sue Kedgley: Does the Minister agree that TVNZ should not be any less accountable for the taxpayer money it receives directly from the Government than it is for the money it receives indirectly through New Zealand On Air, and will he therefore require TVNZ to report specifically on how much it spends per programme, and not just on some vague genre breakdown, as stated in the memorandum of understanding?

Hon MARK BURTON: As the member says, the reporting requirement is on a breakdown by category or genre; that is the reporting requirement.

Deborah Coddington: Can he assure the House that if TVNZ continues to fritter away the $12 million provided to implement the charter on advertising this politically correct, feel-good charter, the Government will provide no more taxpayers’ money to implement its own social agenda?

Hon MARK BURTON: Frankly, I have no idea which charter the member is referring to, because that did not sound remotely like the one that is being entered into. The member should raise operational questions in the appropriate forum. This is not it.

Marc Alexander: Rather than interfering with programme-purchasing decisions, can the Minister tell the House what level of charter subsidisation is forecast to be required over the next 5 years; and if the Government is already propping up TVNZ, how is that consistent with his expectation that TVNZ will continue to pay dividends?

Hon MARK BURTON: I do not think there is any evidence that it is being propped up, as the member suggests. Indeed, I understand that the chief executive of Television New Zealand confidently expects the level of revenue generated through commercial advertising to be maintained.

Katherine Rich: Can the Minister explain why, after so much talk about the charter, the amount of current affairs actually screened by TVNZ has decreased since 2001?

Hon MARK BURTON: If the member wants to put down that question to the Minister, I am sure he will be happy to answer it. Of course, the question is so distantly related to the principal question that I have no such information with me in the House.

Sue Kedgley: Is the Minister concerned about the commitment of TVNZ heads to their brand-new charter, and in particular their requirement to exhibit a sense of social responsibility, given their public defence of fast-food advertising aimed at children, and the recent announcement that they will campaign against any move to ban television advertising of prescription medicines?

Hon MARK BURTON: I think it is fair to say that the chief executive of TVNZ has indicated publicly on many occasions since his appointment last year his strong commitment to the successful implementation of the charter, including the screening of quality children’s programmes.

Police Regions—Front-line Staff

9. Hon PETER DUNNE (Leader—United Future) to the Minister of Police: How has the disestablishment of police regions contributed to increased front-line staffing?

Hon GEORGE HAWKINS (Minister of Police): It has not. I can inform the member that Cabinet on 19 October 1998, as noted in the Martin review, directed the then commissioner to abolish four police regions, cut the number of police districts from 16 to 12, and reduce the number of police staff by about 380 positions. Those cuts were directed by the National Government.

Hon Peter Dunne: Is it not the case that all that has really happened in Auckland, Wellington, and Christchurch is that staff previously employed at the region level have simply been re-established as a second staffing tier within those police districts, leaving front-line shortages as great as ever while desk jobs have multiplied?

Hon GEORGE HAWKINS: The police have set up service centres, but I must tell the member that police numbers are growing.

Russell Fairbrother: Has any consideration been given to appointing a regional commander over the three Auckland district commanders?

Hon GEORGE HAWKINS: The Commissioner of Police has entered into discussions with the Auckland Mayoral Forum on this issue and other areas, and there is now a very good working relationship between the commissioner and the Auckland Mayoral Forum.

Hon Tony Ryall: Does the Minister think there is any link between the shortage of 45 staff in his Counties-Manukau district and the fact that the average burglary response time in his own district has increased by 20 percent in the last year?

Hon GEORGE HAWKINS: The Counties-Manukau police will soon be up to numbers. All police districts throughout New Zealand—

Hon Tony Ryall: You have said that for 3 years.

Hon GEORGE HAWKINS: I tell the member to stop pointing and listen. Every police district is now meeting the target of responding to calls in under 24 hours, compared with 8 days under National.

Ron Mark: Will the appointment of a regional commander in Auckland, or anywhere for that matter, do anything to resolve the serious issues that face operational staff, like the reported backlog of 700 years of leave owing—

Rt Hon Winston Peters: How much?

Ron Mark: —700 years of leave owing—or the fact that gangs now outnumber police by three to one—

Rt Hon Winston Peters: How much?

Ron Mark: —by three to one—or the proven inability of the Government to stamp out organised crime?

Mr SPEAKER: The Minister can comment on two of those questions.

Hon GEORGE HAWKINS: The Government has no plans before it to establish new regional commanders. I must say that the police are on top of the gangs in New Zealand, and are doing a good job. It is about time that member supported the police instead of the gangs.

Hon Roger Sowry: I raise a point of order, Mr Speaker. It is grossly unfair that Mr Mark, who asked that question, was accused by the Minister of supporting gangs and not the police. One knows that of all the members in this House Mr Mark, long before he came into this House, campaigned against gangs. That sort of personal reflection against a member brings this Chamber into disrepute.

Mr SPEAKER: Mr Mark did not take objection to it, but the member has raised a valid point of order. I ask the Minister to withdraw and apologise.

Hon GEORGE HAWKINS: I withdraw and apologise.

Dr Muriel Newman: Have any of the operational savings that the Minister has made been anywhere near enough to make up for the cut of over 1 percent in real, core police per capita funding since Labour has been in Government; if not, when does he intend to restore police funding to its proper level?

Hon GEORGE HAWKINS: I tell that member that the Labour Government has funded the police more than ever.

Hon Tony Ryall: No!

Hon GEORGE HAWKINS: We most certainly have. I also tell the member that the last National Government, which her party supported, cut police funding.

Marc Alexander: How can the Minister be so confident that the numbers of front-line staff are sufficient to protect the public when 10 out of every 12 police districts have suffered an increase in burglary response times, and the aggregate number of days of leave not taken by sworn police at the end of February totalled 265,901 days, or just over 700 years?

Hon GEORGE HAWKINS: The member ought to reflect on how many police there are. Police are entitled to accumulate 66 days leave, and the average is somewhere in the thirties.

Hon Tony Ryall: I seek leave to table two documents. The first is a document with data from the Minister of Police that shows that the average burglary waiting-time in his own police district is now 20 hours.

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

Hon Tony Ryall: The next document is in the light of the Minister’s comment that police are on top of the gangs. This is a report that shows that methamphetamine clandestine laboratory catches have increased from 40 to 140 in the last 12 months.

Document not tabled.

Marine Farmers—Permits

10. PHIL HEATLEY (NZ National—Whangarei) to the Minister of Fisheries: Can marine farmers throughout New Zealand, whose permits expire in the near future and who are likely to be within an Aquaculture Management Area, have confidence that they will be allowed to keep investing in their businesses with staff gainfully employed well into the future?

Hon PETE HODGSON (Minister of Fisheries): Yes, they can. Any marine-farming permits, leases, or licences that expire in the near future will be processed in accordance with the existing legislation—the Marine Farming Act for leases and licences, and the Fisheries Act and Resource Management Act for marine-farming permits. If they continue to meet the legislative provisions, leases and licences will be renewed for a further 14 years, and marine farm permits for the duration of their resource consent, which is generally about 15 years.

Phil Heatley: Can the Minister confirm that all those marine farmers who have already set up shop will get the first right of refusal if the space they occupy is still going to be used for marine farming?

Hon PETE HODGSON: For people with leases or licences, the situation they face is that they will be rolled over into the new regime for the balance of their current term plus the 14 years that I mentioned in my primary statement—

Phil Heatley: Point of order—

Mr SPEAKER: Let the Minister finish. He can come back to that.

Hon PETE HODGSON: To get to the member’s question, these lease and licence holders will then have a single preferential right to apply for a new coastal permit. So that is how they come into the new scheme.

Phil Heatley: I raise a point of order, Mr Speaker. I was very specific with my first question. People who have not been involved with this may not realise it, but there is a clear difference—and the Minister will know this—between those who hold permits and the others whom the Minister addressed in his answer. I was specifically asking about permit holders whose permits will expire in the near future.

Mr SPEAKER: That is a fair point. I ask the Minister to comment.

Hon PETE HODGSON: I apologise. I misheard the member. Farmers who are operating under the Resource Management Act, and therefore have permits, do not have an automatic right of renewal now, and will not have an automatic right of renewal in the future. [Interruption] They do not have an automatic right of renewal now, and they will not have an automatic right of renewal in the future. I think that the issue the member may be grappling with is whether there will be tendering on an ongoing basis; if so, I tell him that that is an open point right now.

Phil Heatley: I raise a point of order, Mr Speaker. I did not really want to raise points of order today, but you have always ruled in my favour, so I am raising another one. Again, the Minister talked about rights of renewal, but I specifically asked about the first right of refusal. A right of renewal is about a right in perpetuity. I am talking about whether, in relation to marine-farming areas, marine farmers will get the first right of refusal, not a right of renewal. They are quite different, and I did specifically say that.

Hon PETE HODGSON: The member will find that the two things are the same thing.

Opposition Members: Oh!

Mr SPEAKER: The Minister has given a specific comment. He has addressed the question in that way, and that is where the matter rests.

Janet Mackey: Why is the Government introducing aquaculture reforms for marine farming?

Hon PETE HODGSON: The problems with the current law have cramped the growth of aquaculture for many years. By fixing the law, this Government is improving the conditions for sustainable growth of the aquaculture industry. The establishment of the aquaculture marine areas and the introduction of a streamlined, one-permit consent system will give all marine farmers a degree of certainty that they do not currently have. Communities, on the other hand, will also have a clear way to determine where aquaculture will not take place.

Jim Peters: Given that the Government’s moratorium is due to end on 31 March 2004, is the Minister able to confirm that the moratorium will absolutely end on that date?

Hon PETE HODGSON: Yes.

Gerrard Eckhoff: Does the Minister accept that secure property rights in aquaculture would ensure a result similar to that which agriculture provides—in other words, plenty for all at an affordable price?

Hon PETE HODGSON: The member had better be clear that there will be no in-perpetuity rights under this Government. We are not about to privatise the coastal marine environment.

Phil Heatley: Does the Minister think it is fair to kick out a marine farmer who has invested blood, sweat, and tears, employs enthusiastic locals, and pioneered the industry, just to let a fly-by-nighter take his place and space because there is no right of first refusal—not right of renewal in perpetuity, but right of first refusal?

Hon PETE HODGSON: The Resource Management Act behaves, in respect of every issue, on a “ first come, first served” basis. It does so for existing permit holders, and has done so for many years.

Jeanette Fitzsimons: Does the Minister’s latest response mean that if a marine farmer’s farm is in an area that is then declared an aquaculture management area under the coastal plan, and if the farmer is complying with all the rules, that person will have first right to continue farming in that area, over and above any new person who may wish to take over the space that that person has been occupying?

Hon PETE HODGSON: If the person is a lease or licence holder, yes. [Interruption] How many times do I have to answer Mr Heatley?

Mr SPEAKER: The Minister has addressed the question.

Rotorua Lakes—Water Quality

11. STEVE CHADWICK (NZ Labour—Rotorua) to the Minister for the Environment: Has the Minister received any reports over concerns about the quality of water in the Rotorua lakes?

Hon PETE HODGSON (Minister of Energy), on behalf of the Minister for the Environment: Yes, the Minister has received reports that the water quality of some of the Rotorua lakes is below the standard set by the local authority. The Minister has also received reports of widespread concern about the impact of this on the amenity of the lakes.

Steve Chadwick: Has the Minister taken any action following receipt of those reports?

Hon PETE HODGSON: Yes. The Government supported a project led by the Northland Regional Council to ensure the ongoing survival of Lake Omapere. The project is a success. The first task was to control the weed, and there has been a 95 percent reduction in the amount of weed since September 2001. In respect of the lakes in question, a similar process is likely to be undertaken. Officials from the Ministry for the Environment have been asked to work with Environment BOP, the Rotorua District Council, and other stakeholders to prevent further deterioration of the water quality, and to consider ways of improving the water quality over time.

Hon Dr Nick Smith: Why did the Minister personally oppose controls on nutrient flows into Lake Rotoiti that were proposed by Environment BOP last year in its land and water plan, and now that the lake has become putrid and a national environmental disaster, will the Minister accept that her submission was a mistake and apologise to the people of Rotorua?

Hon PETE HODGSON: I am afraid I do not have that information to hand.

Jeanette Fitzsimons: Will the Minister be taking any proactive steps to prevent further nutrient enrichment of the lake, such as encouraging or requiring riparian plantings on streams and lake margins, or is effort only to go into cleaning up by spraying herbicides?

Hon PETE HODGSON: I remind the House that the responsibility for controlling land use is that of local authorities. In this instance, I am advised that Environment BOP is currently consulting on a rule change to limit farm intensification leading to pollution of the lakes. None the less, central government can continue its work with stakeholders, such as Fonterra, to establish industry standards for cleaner land use, and its work with small communities, to help them to properly dispose of sewage and other polluting waste.

Hon Dr Nick Smith: I seek leave to table records of the Minister for the Environment’s personal submissions to Environment BOP on the proposed regional water and land plan.

Document tabled.

Hon Dr Nick Smith: I seek the leave of the House to table the submissions of the Ministry of Agriculture and Forestry, which oppose controls on nutrient flows into the lake.

Document not tabled.

Police—Leave

12. Dr MURIEL NEWMAN (ACT NZ) to the Minister of Police: What is the aggregate total number of days of leave not yet taken by sworn police as at the end of February 2003, and what assurance can he give that a build up of untaken leave is not compromising public safety or the ability of police to do their job?

Hon GEORGE HAWKINS (Minister of Police): I am informed that, as of 26 February, there was an average of 34.3 days’ leave owing to each sworn officer, which comes to a total of 265,000 days. I am further advised that untaken leave does not jeopardise public safety.

Dr Muriel Newman: Why is there a record 1,000 working years of leave due to the New Zealand Police, which is worth more than $50 million, and can the Minister deny that the police are being told to “use it or lose it”, even though his decisions to cancel recruit intakes and to deploy police to Auckland have left the regions so short of staff that leave is being cancelled?

Hon GEORGE HAWKINS: I was interested to see that that member said: “A lot of police will be tired and stressed out by not having leave.”, yet she is in a party that criticised the passing of the Health and Safety in Employment Act. The police are confident that leave is being handled reasonably well.

Martin Gallagher: Could the Minister outline what is the acceptable maximum number of days’ leave owing to a sworn police officer?

Hon GEORGE HAWKINS: An individual officer can accumulate up to 66 days of leave owing.

Hon Tony Ryall: Is there any link between leave not taken by police in the Bay of Plenty region and the fact that the burglary response time has doubled in the last year in the Bay of Plenty region?

Hon GEORGE HAWKINS: I can tell the member that throughout the 1990s the average amount of leave owed was always over 30 days, so it has not increased dramatically. Furthermore, the police in the Bay of Plenty need the member’s support, because they are doing a good job, and they do not like their local member dumping on them.

Hon Dr Nick Smith: I raise a point of order, Mr Speaker. The Minister said that my colleague Tony Ryall was dumping on Bay of Plenty police. That is not true. I do not think anybody in this House believes that. If you will continually allow Ministers to attack the integrity of members who ask questions, this House will never have any order.

Mr SPEAKER: I judge statements made, and, with regard to a previous comment made, I asked the member to withdraw and apologise. But I thought this was a political exchange, and that the comment did not deserve a withdrawal and an apology.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. You might have been distracted and did not hear the Minister’s comment that local police do not like that member’s gobbledegook. Frankly, the Minister would not know what Bay of Plenty police think of Tony Ryall, and I bet there is not one person who has ever said to him that Tony Ryall was talking gobbledegook. He is not only misleading the House but being abusive.

Mr SPEAKER: I refer members to Speaker’s ruling 35/5: “If a member against whom the reference is made objects, it will be ruled out. But if that member takes no objection it will only be ruled out if it is offensive on the face of it.” Having said that, I think it would be in the member’s interest to withdraw that comment.

Hon GEORGE HAWKINS: I withdraw that comment.

Dr Muriel Newman: What is the Minister’s response to newspaper reports that the build up of leave is reducing productivity and putting enormous pressure on police and their families, and that relief workers are not available to cover police if they do go on leave; and how can he possibly assure the House that that state of affairs is not putting public safety at risk?

Hon GEORGE HAWKINS: I assure the member that the comments she made in the Waikato Times do not fairly reflect the situation. The Waikato district commander, Superintendent Kelvin Powell, said that, on average, Waikato staff are owed 25.9 days’ leave.

Dr Muriel Newman: I seek leave to table the said report from the Waikato Times.

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

Question No. 3 to Minister

Rt Hon WINSTON PETERS (Leader—NZ First): I seek leave to table a report from the Hutt News in respect of question No. 3, which states that Indian cricket sides are losing members who visit here, who, having gone for the four ball over the rope, are going straight past the side screen and off into oblivion.

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

Bills

Racing Bill

Third Reading

Hon DAMIEN O'CONNOR (Associate Minister for Racing), on behalf of the Minister for Racing: I move, That the Racing Bill be now read a third time. The Racing Bill is an industry-driven initiative. In 2000 the Racing Industry Board, TAB New Zealand, the New Zealand Thoroughbred Racing Inc., Harness Racing New Zealand, and the Greyhound Racing Association developed a proposal for reform that they presented to the Government in the form of a draft bill. The key element of the industry’s proposal was to simplify the governance of racing by merging the Racing Industry Board and the TAB.

Mr SPEAKER: I wonder whether the Government whips could have a chat to their members who are right behind the Minister. I cannot hear what the Minister is saying.

Hon DAMIEN O'CONNOR: Consultation with the wider industry revealed overwhelming support for a merge of the TAB and the Racing Industry Board, and this formed the mainstay of the Racing Bill that the Government was pleased to introduce in mid-2001. The Racing Bill repeals the Racing Act and replaces the two existing boards, the Racing Industry Board and the TAB, with a single body called the New Zealand Racing Board. The famous TAB brand will not disappear from New Zealand’s High Street, though, as the bill protects the name for the exclusive use of the new board.

The board will be responsible for both the administration of racing and the provision of race and sports betting services. Its objectives will be threefold: firstly, to promote the racing industry; secondly, to facilitate and promote race betting and sports betting; and, finally, to maximise its profits for the long-term benefit of New Zealand racing. The bill gives the three racing code bodies greater responsibility, whilst strengthening their accountability to the board. The codes will have the responsibility for distributing betting profits to their constituent clubs. Each code will receive a share of betting profits and will have the freedom to make its own decisions about expenditure. However, the board will have the right to withhold funding from a code if it does not approve the code’s statement of intent or its business plan. This is one of a number of accountability features introduced by the Government Administration Committee that are intended to protect the interests of the public and those whose livelihoods are derived from racing, and there are many thousands of those.

Another significant accountability mechanism proposed by the industry is that the rules of racing and the board’s betting and procedural rules will be deemed regulations, with the potential for disallowance by Parliament. The bill is also explicit that no rule of racing may conflict with any other legislation. The Racing Bill does not affect the industry’s ability to offer certain types of gaming products, or its responsibilities in respect of problem gambling initiatives. These are issues that the House will consider in the context of the Responsible Gambling Bill.

Members are aware that many reports have been written on the racing industry. Over the years, racing has been scrutinised by two royal commissions, task forces, performance and efficiency audits, and numerous reports. I am pleased that all of those recent reports, audits, and studies have supported the mainstay of the bill—that is, the merge of the Racing Industry Board and the TAB into a single board.

In 2002 the Minister for Economic Development and the former Minister for Racing, the Hon Annette King, commissioned PricewaterhouseCoopers to undertake an industry-scoping study as part of an economic development strategy for racing. PricewaterhouseCoopers’ main conclusion was that the industry should be restructured using a rules-based commercial model. The Racing Industry Board subsequently established a working-group under the chairmanship of Bill Falconer to develop that idea. The working-group published its report late last year.

I have heard some critics say that the Government should have held up the Racing Bill’s progress and reviewed options in the light of the working-group’s reports. [Interruption] If Mr Tisch would just wait a moment, I will explain why we have not done that. Firstly, there is a pressing need to replace the Racing Act. It was enacted in 1971, as I stated earlier, and while it has served its purpose, today it is hopelessly out of date. Secondly, I tell Mr Tisch that the Racing Bill before the House has widespread industry support, and he knows that. Thirdly, the working-group’s proposals have not met with overwhelming industry support, and the Government is not willing to force change on the industry—unlike the previous Government, the National Party, with producer board reform, where it forced change.

Fourthly, should the working-group’s proposals prove to be robust, and eventually gain industry support, they could be implemented at a later date, and we would be willing to facilitate that. In any case, many of the working-group’s proposals could be implemented without recourse to further Government intervention.

The Government is prepared to support further reform that has widespread industry support. However, industry bodies must be challenged to take the initiative on the working-group’s proposals. As the report notes, that will require very strong leadership; nevertheless, it will be possible for the new board to implement many of the report’s proposals without further legislation. The working-group has made some challenging recommendations and I am confident that, with strong leadership, the racing industry can advance these matters.

During the Committee stage of the bill the House considered a Green Party amendment proposing the introduction of a statutory complaints procedure. I feel it is important to explain the Government’s reasons for not supporting that amendment. The select committee debated the issue at length, but decided, instead, to recommend a series of changes to specific sections of the bill to improve accountability and to establish robust processes to safeguard the interests of the industry participants. The Government supports the committee’s decision. It was a sound one. A statutory complaints procedure would undermine the board’s ability to make difficult decisions in the best interests of the whole racing industry. If there were to be an appeal mechanism, the appeal body would end up making all the contentious decisions that are vital to the industry’s future. The Government believes that it is preferable that a board that is accountable directly to the industry, and expert in racing issues, make those vital and often contentious decisions.

To conclude, the underpinning policy objective of the Racing Bill is improved administrative efficiency. It provides a modern framework for key industry bodies to work together for the betterment of the New Zealand racing industry. This bill may not be the final answer to all the industry’s problems. However, many within the industry are confident that it is an important stepping stone towards a better future. It is expected that the Racing Bill will commence and be in full swing by 1 August this year, coinciding with the beginning of the new racing calendar.

I would like to express my thanks to all those involved in developing this legislation, particularly my parliamentary colleagues on the Government Administration Committee. Under Dianne Yates’ leadership they made many positive changes that enhanced this bill. I also thank the former Minister for Racing, my colleague the Hon Annette King, who did a considerable amount of work to get the bill into the House, and who is very committed to the well-being and growth of the industry.

Finally, as well as thanking all the officials involved, as I have said, I would like to acknowledge the work of the current Minister for Racing, the Hon Mark Gosche, who, regrettably, cannot be with us today, for family reasons. This bill will be received positively by the racing industry. It is desperately needed. I now challenge the industry to move forward and make the industry the kind of success that will make this country proud of horse racing.

LINDSAY TISCH (NZ National—Piako): The passing of this bill has been referred to in many quarters as the first leg of the treble. National has supported the progress of this bill. However, we argued in the Committee about the haste in getting the bill through its Committee stage on Tuesday. [Interruption] We have supported this right through, as we did last year. But the point I want to make to the Associate Minister for Racing is that the industry is not all in one. While the codes have certainly done that, this Government went out and commissioned a report—the Minister mentioned it—the PricewaterhouseCoopers report, an analysis of where racing should be, and it made some recommendations. One of those recommendations was that a working-party would be set up—the Minister referred to that.

The process of that working-party was to travel the country, so that stakeholders could hear what the working-party had come up with. I attended the meeting last Wednesday week in Hamilton, where some of the participants were very vocal about what was in the working-party report, but it was made very clear at that meeting that submitters had an opportunity to get their views through to the Racing Industry Board by tomorrow, Friday, 7 March.

The point that I make to the Minister, as I did in the Committee stage, was why could the Government not wait 1 week so that we could receive the submissions that the Racing Industry Board and the chairman of the Racing Industry Board had made, at that public meeting in Hamilton. I have been receiving them. They have been sending me copies of their submissions. I have one here today that has just come in. The point I make here is that the undue haste that this has come in, in a week, could have been put off for another week, and we would have had that opportunity to read those submissions. But that has not happened.

I am not arguing about the merits of what was in the working-party’s report. I am not arguing about the merits of what the submissions may say. What I am saying is that those stakeholders have wasted their time. Not only that, the eminent people who were on this working-party, those distinguished persons, have also wasted their time. Why would people travel the country with the indication that they could have a say, report back to the Racing Industry Board by tomorrow, Friday, 7 March, and those points would then be taken to the Minister, if appropriate—when, on the other hand, we did the Committee stage on Tuesday, and here we are doing the third reading?

I am concerned about that. If this is the first leg of the treble, then I would say that much goodwill has been lost in some sectors over this last week. I do not know what the second and third legs of the treble are likely to be, but I do pose the question: why is the Government involved in racing at all? I have canvassed this view over the last couple of years, and in particular in relation to the Racing Bill. During the 1990s there was a reduction in Government involvement in businesses, but racing has continued to receive and look for Government support. Deregulation of many industries required them to respond to market forces, and most of them have thrived; but racing has not thrived, and the needs for change are being driven by social and economic concerns.

The introduction of casinos, gaming machines, weekend shopping, and other entertainments is putting pressure on punters who are looking for greater choices to spend their discretionary money and time, and the racing industry has not responded to that need. The Racing Bill is about governance. It does not do anything for the fortunes of the industry, or attract investment into the industry to make it flourish the way we need. That will be one of the challenges that the new board needs to address.

Racing has enjoyed a special status with its own legislation and Minister. Why do we need a Minister for Racing? Why do we need an Associate Minister for Racing? Why do we actually need them? We do not have Ministers for the icons of rugby and beer. Why do we have a Minister for Racing? Racing has been around for a very, very long time—for 100 years. The special status it enjoys has probably held the industry back. Political patronage, to please everyone, has its risks and costs, and politicians of the past have tended to preserve the past rather than prepare the industry for the future. With this in mind, why can private companies not run race meetings? Many sports clubs, corporates, or private individuals with their own venues run sports events. Why should racing clubs have this monopoly?

I was able to introduce clause 63A into the bill. That clause goes a little way down the road to giving the board the flexibility of being able to run special meetings, but it does not go far enough. I had great difficulty in getting the clause introduced, but at least it is there. The increasing importance of off-course betting, now providing more than 90 percent of betting turnover, has made access to the Trackside television channel a critical factor in race-meeting profitability. Everything is scheduled around being able to see the races on television. Why do we limit the number of race meetings? Is it because they have to be shown on television? We do not tell McDonald’s how many Big Macs they can serve from each outlet per day, yet we are saying here we will limit the number of race meetings that are to be held.

The TAB is a monopoly provider of off-course betting services to the industry and racing clubs, and the question needs to be asked whether the industry and racing clubs are getting the best deal when we have the TAB as the monopoly provider. To my mind, racing does not need to be run like a nationalised industry with its own legislation. Greater innovation and investment in the industry will provide for market development, and this will allow the industry to diversify and give flexibility, which will be paramount.

This is a multimillion-dollar business that employs in excess of 33,000 people. In the area that I represent in the Piako electorate and Matamata, the racing industry is paramount. Matamata township owes its living to the racing industry, and to Cambridge and other towns within the Piako district it is very, very important. National supports this bill. We support the racing industry, and we do wish the new board all the best with the second and third legs of the treble. I do not know what they are, but there are challenges. We have not voted against the bill; we have supported it. We have recommended some changes, but those have not been forthcoming. But we do wish the new board all the best in the challenges ahead, and I for one will continue to have my flutter and enjoy the thrill and excitement that racing provides.

MARC ALEXANDER (United Future): The racing industry has been incredibly patient waiting for the passage of this bill, so I will not take anywhere close to my 10 minutes, in the hope that it will speed things along just that little bit more quickly. United Future’s position on the bill can be summed up in a few points. First of all, we are pleased that this is an industry that has come to the Government with its ideas in order, before trying to have them included in legislation. I would note that as a Parliament, if we saw more consensus-based, self-produced legislation regulating other industries it would make our lives a little easier here. Having to wade into a sector-localised fight and decide for industries how they are to conduct their affairs is never ideal. Our power to impose on a part of New Zealand what we think is best for people is only really well utilised when they tell us coherently and collectively what they as an industry want and need, in order to achieve what is best for themselves and the wider public.

That is why, at the end of the day, we are happy to support this bill, because that is exactly what it is—a bill produced by the industry for the industry, crafted with a good balance between competing interests as far as possible. United Future supports the policy behind the new bill—that one body should be responsible for both the commercial and broader policy issues facing New Zealand racing. We hope that this will ensure that commercial decisions are adequately taken into account and that the impact on the racing industry and its stakeholders, and vice versa, is accountable and transparent. This means that the Racing Industry Board and the Totalisator Agency Board are disestablished and a new board, the New Zealand Racing Board, is to cohesively manage all the functions of the racing industry under one entity.

There have been, of course, some areas where we feel that the balance of interest has not been struck correctly, and we have attempted to adjust those—hence our support of various amendments. That has included ensuring the continued prohibition on Easter Sunday racing. It was not done for any moralistic reason but quite simply to avoid delaying the bill further, as the matter would otherwise have been a conscience issue and the bill would have been mired in even more debate, probably continuing for another 6 months.

It is unfortunate that the reasons for having Sunday racing were originally brought forward by an industry that had a bit of foresight in thinking that if it was able to include this in the legislation now, then when and if the time came that trading on Easter Sunday was the norm it would not then have to sit around and wait for Parliament to legislate yet again. Unfortunately for those people, it backfired, but they had the right inclination, I believe.

The institution of an appeals process providing efficient natural justice to those wanting to appeal against the decisions of a statutorily constituted racing board whilst ensuring the prohibition of vexatious and petty claimants, is something we would have liked to see pushed a little bit further, and we are glad to have supported Sue Bradford’s amendment in that particular regard. We are sorry that it did not go through. Lindsay Tisch’s amendment to ensure the fairness of distribution of profits amongst the codes was something else we sought to support. Sadly, that too has not progressed. But on the whole I believe that this bill should not remain languishing, because it is something that the industry has been wanting for a very long time, and I entrust it to a speedy conclusion. I recommend this bill to the House.

Rt Hon WINSTON PETERS (Leader—NZ First): I am not certain where the previous member was when an attempt was made to bring this bill before the House on 10 October last year. At that time, the PricewaterhouseCoopers report was being examined by an advisory committee, and notwithstanding the fact that it had not even reported, this Government tried to ram through the Committee stage back then. Now we have this extraordinary event. The advisory committee has recently reported, a review committee has gone around the country, and undertakings have been given by officials on behalf of the Minister that people would have a certain time by which to make submissions. That date was 8 April. Today is not 8 April; it is 6 March, and it bespeaks bad faith and a shocking public process. What is the use of making submissions by 8 April, if the bill is through its third reading on 6 March? How can the Minister explain that, other than to say that something is going on in respect of the formation of public policy that is not defensible?

Hon Damien O'Connor: Absolute rubbish!

Rt Hon WINSTON PETERS: No, it is not absolute rubbish. Perhaps the Minister, Damien O’Connor, can explain to me why the Government tried to have the Committee stage of this legislation moved up the Order Paper on 10 October last year.

Hon Damien O'Connor: The industry wants it.

Rt Hon WINSTON PETERS: Look, I know the industry wants it, but the industry does not want shonky public policy. The industry has had a succession of meetings, and I want to know why the bill is being rammed through the House. Even now, on the advice of the Minister to his officials, people are being told that there is a certain date by which they must make submissions. Doing so will all be forlorn and a waste of time, because the bill will already be through Parliament. [Interruption] Not at all! I would have thought it was a bit illogical. If the closing date is 2 days from now and the bill is passed through the Committee stage today, what does that make it? A total waste of time!

I was disturbed to learn that the ACT party, which puts itself up as a paragon of constitutional virtue and legalistic understanding—particularly Mr Franks from the Securities Commission, although I do not know how he ever got the idea that that qualified him for any sort of status, given the commission’s appalling record when it comes to certain issues like the Bank of New Zealand—

Gerrard Eckhoff: Self-interest!

Rt Hon WINSTON PETERS: Oh no, it is not self-interest, and that is proven by countless court cases all the way to the Privy Council. How is he to explain his colleagues’ dilatory attitude towards that issue when he was in charge of it? Here is Stephen Franks, that paragon of constitutional virtue and commercial rights, but when the Greens put up a thoroughly meritorious proposal that there should be an appeal procedure—which we see in every other area of life—what does the ACT party do? It says no. In consequence, this Government, not being in any way persuaded by arguments of civil rights, appeal rights, and commercial rights—that is why it wants to get rid of the Privy Council, for goodness sake!—had a reason for doing what it did. But I cannot understand what the ACT party, admittedly in Opposition, was thinking about. When this provision came before the House, the National Party supported it, the Greens promoted it, United Future supported it, and New Zealand First supported it, but the ACT party, in its perverse way, said no. As a consequence it is lost, and no person who has future dealings with this administration will ever have a right to take his or her case beyond a finding by the current establishment set up by this bill to a more legal and judicial authority. That is very regrettable.

In respect of the racing industry, I want to say that, with the exception of Mr Simich, we have had a procession of racing Ministers who know absolutely nothing at all about racing. I do not know why we appoint people to be Ministers for Racing if they do not know one end of the horse from the other.

Hon Damien O'Connor: Ha, ha!

Rt Hon WINSTON PETERS: Is Mr O’Connor the associate Minister? One day at the Kumara races does not qualify him to know anything about the racing industry, its permutations, the breeding industry—

Hon Damien O'Connor: How many have you got?

Rt Hon WINSTON PETERS: I have three.

Hon Damien O'Connor: You’ve got three horses?

Rt Hon WINSTON PETERS: Yes. That comes as a surprise to him, does it not? And they are about to run very shortly.

Dail Jones: Are they worth betting on?

Rt Hon WINSTON PETERS: I will let the member know after the results are in. [Interruption] No, no, it is fully recovered.

This great industry directly employs 32,000 people, and beyond that, tens of thousands like myself and others who have an interest at various points in the industry. The way the racing industry in this country has been treated since Roger Douglas came in in 1984 and changed the whole taxation regime, compared with, say, Australia and Ireland, is absolutely disgraceful. Racing has been down ever since. I want to make a commitment on behalf of New Zealand First that when we return to Government—which will be as soon as this Labour Party in Government throws in the towel, which it will. It could not even make the last election in 3 years, but had to have it in 2½ years, at the end of its first term. We will change the depreciation regime for both mares and stallions. We will ensure that we have decent stallions in this country, which we are losing—

Clayton Cosgrove: Why didn’t he do it when he was Treasurer?

Rt Hon WINSTON PETERS: I was Treasurer for 20 months, and did a thousand little things. Unfortunately, Jenny Shipley decided she had ideas above her station, and that is why she is not here any more. She took the National Party to its worst defeat in its whole history, and she is gone. But I would have got around to it in 1999, in my third Budget. One cannot do everything in one day, but this party is in its fourth year of Government, and when it comes to the taxation regime, it has made one minor change to the depreciation allowance for mares. For stallions, it has done nothing, and for the racing industry itself, it has this perverse result.

Why do casinos have a privileged tax position compared to New Zealand racing? For foreign-owned casinos like the one in Auckland, there is a very special rate, but the New Zealand – owned racing industry—the thoroughbred industry—has the highest taxation that the Government could possibly mount against it. The Government does not want to know a thing about racehorse owners, or about their costs and expenses. But the moment one gets involved in the racing industry, bang, along comes a Government that is totally unsympathetic to racing and an Inland Revenue Department that is very, very punishing.

There was a time when if one’s horse won a race in New Zealand, that would have paid its costs for the rest of the year—just an ordinary race at an ordinary provincial racecourse. Now, it would take four or five races to do that. Given the enormous potential market on the eastern seaboard of China, and in other parts of the world because of favourable regimes, this is an industry that has been truly Cinderella-ised and marginalised. That is the reason that so many New Zealand breeders and racing experts are relocating offshore in terrible climates like Singapore. They are doing it because it is too harsh and too difficult back in New Zealand.

I recommend to the Government that it does something in the next 2½ years to help this industry, because it will sell far more than wine ever will. This industry is capable of multiplying its profits five times over, if it were but given a chance. Instead of going along to the races and sort of “gladhatting” around the place, it is high time that some members of Parliament put a bit of serious study into this matter and were a bit more helpful.

DAVID BENSON-POPE (NZ Labour—Dunedin South): I would like to thank the previous speaker for resuming his seat. I say to him, and to Mr Tisch who spoke earlier, that the very reason that the Government is finally progressing this bill is because of the requests from the industry. Prior to the last election, I can recall the unanimous wish of racing industry parties in the Waikato to get on with it, and I find it extraordinary that the National Opposition would delay this bill in any way at all.

SUE BRADFORD (Green): I am pleased that the Racing Bill is finally receiving its third reading this afternoon. It has not exactly galloped, raced, or even trotted through the House, having had its first reading in June 2001—nearly 2 years ago. No matter what they think of the bill in its final form, I am sure that the various diverse streams of the racing industry will be relieved to finally know where they stand, and will be able to begin to make plans based on the changes that the bill brings forward. Despite the reservations I have had about some aspects of the bill, I think it marks the start of a new era for racing in New Zealand. This legislation provides the opportunity for the creation of a fresh governance framework—the new Racing Board—which I hope will comply with principles of both natural justice and social responsibility in all its dealings.

I also note that the bill has been strengthened during the select committee process by an addition to the purpose clause, which states very clearly that one of the bill’s three core goals must be to promote the long-term viability of New Zealand racing. Throughout the 2 years of the bill’s meander through parliamentary proceedings, we have heard many submitters and lobbyists telling us the sad story of the current state of racing in this country. There are problems with the diminishing number of horses available to race; the loss of race days by some clubs, in some cases altogether; the decline in attendance at meetings; unwelcome decreases in stake money; loss of income for trainers and breeders; loss of betting income to overseas jurisdictions and other forms of gambling, and so on. That litany of woes makes it absolutely critical that the new board takes a leadership role right from the start in developing a capacity to build a strategic overview that takes into account the needs and concerns of all parts of the industry, but is able to transcend petty feuding, so that in the end, the sector as a whole might move forward successfully and, above all else, survive.

From the point of view of someone outside the racing world like myself, it seems as though far too much time is taken up in some parts of the industry with petty feuds, desperate power plays, and the pursuit of naked self-interest. I do not know whether it is possible, but I hope the new board will have the capacity to pursue achievable and visionary goals, and the ability to work developmentally and fairly in the interests of all parts of the racing world. After listening to and reading the various submissions and working-party reports, one thing that seems apparent is that despite the best efforts of many individuals and groups within racing, there has not been any kind of strategic visioning or implementation across the industry for a very long time. If nothing else, I believe that this must be a top priority for the new board, and I sincerely hope that the Minister and the nomination advisory panel will do their best to select seven members who have the skills and experience to provide that kind of leadership.

I believe the Racing Bill, overall, sets a second underpinning goal for the new board, and that is to do everything it can to promote principles of natural justice and equity in racing—not only in its own activities and decisions, but also in the codes. The bill does its best to outline clear and fairly detailed accountability structures between the board and the codes, but it will be up to the board—and to some extent the Minister—to do their utmost to ensure that happens.

Along with colleagues and other parties in this House, and with the racing industry, I tried very hard to get an amendment to the bill earlier this week that would have enabled an appeal procedure to be established. That process would have reviewed decisions of the board, and would have been particularly useful in the most naturally contentious areas of distribution of reserves and allocation of race dates, as well as other board decisions in a broader sense. Our Green Party amendment would have provided the industry with a fair process to guard against prejudice and protect the interests of the smaller clubs and groups, which lack the financial and political clout of larger and richer organisations. Without such a review and appeal process in place, I am very concerned that many of the current problems may continue under the new system. If the board is of a high enough quality and is ultra-accountable, I may be proved wrong. I certainly hope that will be the case.

Meanwhile, I was dismayed the other night by the failure of either the Labour Party or the ACT party to support the Green amendment. All we were trying to do—along with United Future, New Zealand First, and National—was to make the industry more transparent and fairer for all stakeholders. I cannot understand why Labour and ACT were so keen to oppose the review process, especially given the fact that almost all other similar law contains such provisions.

Rural and provincial race clubs are the lifeblood of racing. At a time when the industry is under both internal and external threat, the last thing any of us should be doing is undermining the smaller clubs any more than they have been already. Over the past decade, and more, there have been too many moves to coerced amalgamation and enforced loss of race dates, on the theory that the largest clubs need and deserve the lion’s share of dates and funds to survive. That is madness—the rich and powerful taking from the weak to make themselves stronger, if they can. It is an understandable madness, in that all groups in nature fight for survival, but nonsensical when one looks at the long-term interests of racing in New Zealand.

I hope that in future, and even without a review and appeal process in place, the board and the codes will do everything they can to make their decisions in an even-handed and thoughtful way, recognising that everyone cannot get what he or she wants, but that everyone deserves to have a role and a rightful place that need to be supported to the maximum extent possible.

Finally, I would like to thank the Government for its support for another Green amendment that we put up earlier this week. That amendment will go some way to addressing our concerns about discrimination and inequity. I hope that its provisions will be applied in practice by all who might need them in future.

In a broader sense, I would like to thank everyone who had a role in shaping this bill. I know that the whole process of the genesis and formation of the Racing Bill has, right from the start, been long, slow, and difficult, and not easy for anyone concerned. It is a credit to the various Ministers, officials, submitters, and the dogged members of the Government Administration Committee that we finally have before us legislation, which, if applied well, will sow the seeds of a much happier future for New Zealand racing.

JILL PETTIS (NZ Labour—Whanganui): I would like to speak at length about this bill, because I am a great supporter of horse racing in New Zealand. I just wish I had time to go to more race meetings. Unfortunately, I do not. My claim to fame is that I have named a successful racehorse, which actually won—

Hon Member: What is it called?

JILL PETTIS: Salt Spray. Suffice to say, I have spoken on this bill before, and am pleased to speak again on its third reading. The most important thing is that we get this bill through the House. It is supported by the racing industry, and we look forward to the further prosperity of that industry. The bloodstock industry is an exciting industry, and I wish it well. Let us get this bill through.

GERRARD ECKHOFF (ACT NZ): I had real pleasure in speaking during the first reading of this bill. As I recall, I emphasised just how important it is to ensure that the small rural clubs throughout New Zealand get a fair shake out of this new bill. There is no question about the importance of small clubs right throughout New Zealand. Most New Zealanders have been brought up with the country club meeting, and whether it is on a Saturday, a Sunday, or midweek, does not really matter; it is a great family day out. The whole ambience that has evolved around the racing industry has come very much from those small and very important little clubs.

I think back to last New Year, when one of the most popular small racing club events in New Zealand, the Glenorchy Races, was held. Some intrepid reporter spoke with the Department of Internal Affairs about how long the function had been going, and so on. To the department’s shock and horror, the Glenorchy Races had been going on for years and years, highly successfully but without a licence, so that shocking situation was remedied immediately. That illustrates how capable small clubs and rural people are in having a great day out without the excessive bureaucracy that seems to permeate so much of our lives these days. I am happy to say that, as I understand it, a great outcome has been achieved by the Glenorchy club—and, indeed, by the authorities—to ensure that the cost structures imposed on this industry are not so great as to force the closure of what is an increasingly popular day. I will certainly welcome my colleague from the Green Party, Sue Bradford, who has indicated a wish to come to Glenorchy and view that race on New Year’s Day. I look forward to that.

In this bill, we have decided on centralised control, but it is the breeders who are responsible for this industry, and who have made New Zealand famous. It is not the TAB or the New Zealand Racing Board that have bred the Phar Laps or the Sunlines. Our breeders go to Bahrain and Tokyo. They are fantastic ambassadors, they put New Zealand bloodstock at the forefront of the racing world, and it is hugely important that that continues. But I emphasis again that it is the breeders who have achieved that—without the rules, the regulations, and the centralised bureaucracy. They have relied on their individualism, their brilliance, and their knowledge of the industry to achieve those wonderful goals. It is the racing industry, rugby, and—dare I say it—the right-of-centre philosophies, that have made New Zealand absolutely famous throughout the world. One would hope that that would continue well into the future.

It is incumbent upon the new board to recognise that this House demands that it understands and respects the wishes of the industry. The industry, too, must respect the intent of this bill, which is to give every racing club—and especially the small clubs like Glenorchy, or wherever—a fair shake in this new and exciting era of racing in New Zealand.

DARREN HUGHES (NZ Labour—Otaki): As the member of Parliament for Otaki I am very pleased to speak in the third reading of this Racing Bill. In my region there are a number of racing clubs that contribute very significantly to our local economy, and they have been looking forward to the passage of this legislation. I remember attending the community racing forum that the Hon Annette King held in the Beehive theatrette in June 2000, and from that forum a consensus emerged across the three codes in the industry to have this legislation written. It has taken us 2½ years to get it to this point of the third reading, but I know that the Foxton Racing Club, the Levin Racing Club, the Otaki Māori Racing Club, and the Kapiti Harness Racing Club will look forward to using this legislation and its new governance arrangements to ensure great economic development in my electorate. I support the bill.

Dr PAUL HUTCHISON (NZ National—Port Waikato): On behalf of the National Party, I am very pleased to support the third reading of the Racing Bill. This bill is designed to strengthen the governance of the racing industry in New Zealand, and is supported by the three codes. I am particularly pleased to speak on this bill, because Port Waikato—the area I am so privileged to represent—happens to be one of the emerging premier areas for racing in this country. In particular, I speak of the Karaka region, where we have recently seen the opening of the Glenmorgan stud, not to mention the Westbury stud or the premier sales facility at Karaka itself.

I am deeply aware that this bill has been a long time coming and that its genesis probably did originate from the Ernst and Young report commissioned by the National – New Zealand First Government back in 1997. It has taken a long time for the bill to reach its final form, and it is quite evident that the three codes are of one mind in wanting the bill to be progressed. It has also been said that the bill itself is not perfect. I note the efforts of my colleague Lindsay Tisch, who has spent a great deal of energy and effort on every branch of the industry that would talk to him—and I must say that that represents many, many hours of meetings—in order to help achieve a better shape for this bill. Lindsay Tisch put up a very important and constructive amendment to clause 15(3) but, unfortunately, the Government did not take any notice of it. He also urged that some of the major concerns of the wider industry be noted, in terms of addressing depreciation rates of stallions and mares, and of correcting the disincentives in New Zealand that have brought about the high use of shuttle stallions. That results in profits not being retained in New Zealand and the steady decline in stallion numbers. National, in its formal policy, said that it will support investment in the bloodstock industry. We will allow accelerated write-off of stallions over 2 years. That will encourage investment in breeding, rather than the leasing of shuttle stallions. We will allow the write-off of brood mares in full from age 12 years, and we will review the inequity in the taxation duties over gaming activities. That certainly beats the Labour Government’s record. All it did was forgive the GST on dead horses—quite extraordinary.

During the Committee stage of this bill, National aired its concern that the Government spent considerable money on the PricewaterhouseCoopers report—which it commissioned and which was published as far back as July 2002—and, subsequently, on the racing industry working group. As we have heard, the racing industry working-group submissions were to have been finally submitted not tomorrow but the next day—Saturday, 8 March. It does seem utterly nonsensical that the Government would spend significant funds on those reports, involve the time and effort of a considerable number of people in the industry, then bring this bill into the House before the benefits of that work were considered, particularly after the Government has had 3 long years to have the bill ready before last season’s racing began. Just 1 week’s delay after 3 long years could have made a difference and, at least, honoured all the work of the eminent people who compiled the working-group report.

The ways of the Labour Government are erratic and incomprehensible. However, it is good that the wishes of the three codes are generally embodied in the bill that we have before us. Many of the racing industry working-group’s recommendations could be applied in the future. As my colleague Lindsay Tisch has mentioned, why should the Government have so much influence in the racing industry? National is pleased to support the passing of this bill. National recognises the huge potential of the racing industry, but also the fact that over the last few decades there has been a steady downturn in its viability. We are very aware of the great employment opportunities within the racing codes, and we are very keen to see wise governance in progressing the interests of racing. National wishes the racing industry a very prosperous and viable future, and looks forward to the industry working well within the framework of this legislation. Hopefully, the recommendations of the PricewaterhouseCoopers report and the working-party will not be ignored.

Bill read a third time.

Bills

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

Instruction to Committee

DAVID BENSON-POPE (Senior Whip—NZ Labour): I move, That it be an instruction to the Committee of the whole House on the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill that it take the bill part by part and consider any schedules as one question.

Motion agreed to.

In Committee

Clause 1 Title

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney): This is the start of the Committee consideration of a very important bill. Clause 1, of course, is the title, and this bill has been called the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill. There is always a bit of a debate about whether a bill’s title accurately reflects what is in it. The title of this bill at least makes an attempt to describe what is in it—one has to comment reasonably positively on the fact that it does make an attempt—but is it accurate? I refer to the first part of the title, which concerns annual rates. It might have been more appropriate to state what this bill actually does—it confirms very high annual rates.

If we look at the most recent publication of The Economist, we will see that although New Zealand may not rank in the top half of the OECD in terms of growth rates, it sure as hell does in terms of tax rates on working families. In fact, New Zealand ranks sixth in the OECD. This bill is confirming those tax rates, so it would be slightly more accurate to call this bill the “Taxation (High Annual Tax Rates) Bill”, or the “Taxation (Sixth in the OECD Annual Tax Rates) Bill”, because that is what the latest data from the OECD shows. The latest data from the OECD shows that the direct tax burden on a working family in New Zealand is the sixth highest in the developed world. I am surprised that a Labour Government would want to confirm, under this legislation, those kinds of tax rates on working families. Labour claims to support working families. We are getting used to this Labour Government claiming all sorts of things. There is lots of rhetoric and lots of political spin but no action, and everyone is starting to realise that now. People listen to Prime Minister Helen Clark with one ear, because they know that what is going on behind the scenes is something totally different. That is why it might be more appropriate for the title of this bill to refer to the high annual tax rates that are being confirmed.

The next bit of the title is: “Maori Organisations”. What that does not tell us is that a large number of members of this House consider that that the part of the bill, covered by that part of the title, is introducing a racist piece of tax legislation. Therefore, it might be more appropriate to call the bill the “Taxation (High Annual Rates, Racist Rates) Bill”, because under the “Maori Organisations” bit of the title, special tax rates are being conferred on the basis of race.

Clayton Cosgrove: Rubbish!

Dr the Hon LOCKWOOD SMITH: I invite Clayton Cosgrove to take a call and name one person in New Zealand, other than a Māori person, who can gain any benefit from the special tax rate being imposed under the bit in the title called “Maori Organisations”. If he can name one person in the whole of New Zealand, other than a Māori person, I will stand and apologise. I give the member that guarantee. If he takes a call and can identify one person, other than a Māori person, who, under the “Maori Organisations” part of this legislation, is going to get a favourable tax rate, I will stand and apologise to him directly in this Parliament. That is what the bill does, and that is why the title is too bland—it refers to taxation and to Māori organisations. In fact, a racist tax rate is being imposed here, and the title should reflect that.

Hon George Hawkins: I raise a point of order, Mr Chairperson. The member keeps referring to racist legislation. That is out of order.

The CHAIRPERSON (H V Ross Robertson): No.

Dr the Hon LOCKWOOD SMITH: It was not only my view. In fact, distinguished consultants such as Chen Palmer and Partners came to the Finance and Expenditure Committee. The Rt Hon Geoffrey Palmer is a former Prime Minister and a former leader of the Labour Party. His consultancy considers that that measure is a racist measure. His consultancy came to the select committee and said that it considered that measure to be inappropriate. In fact, they submitted to the select committee—and I can refer members to the day they did it—that what is going on in this legislation is probably contrary to the New Zealand Bill of Rights Act.

The CHAIRPERSON (H V Ross Robertson): Before I call the next speaker, I suggest to members that they should be careful with some of the language they use, because it can lead to disorder.

CRAIG McNAIR (NZ First): I take pleasure in talking to the title on behalf of New Zealand First. As I was looking at the title “Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill”, I did think of some different names that could come along with the bill. Some other names could be used in relation to Part 2, which talks precisely about what Lockwood Smith has been talking about—that is, different tax rates for Māori organisations. I thought that we could call this bill the “Taxation (Annual Rates, Unequal Opportunities for”—

Dr the Hon Lockwood Smith: That’s a more polite version.

CRAIG McNAIR: Yes, that is probably a more politically correct version.

Dr the Hon Lockwood Smith: It’s discriminatory.

CRAIG McNAIR: Yes, that is a good point. I have put forward a Supplementary Order Paper on this bill, and we will be voting on it during the debate on Part 2. Basically, New Zealand First would agree with the bill if all New Zealanders had that opportunity, not just one type or one race. We believe that other groups should have that available to them, as well.

The CHAIRPERSON (H V Ross Robertson): I just say to the member that the debate on clause 1 is not an opportunity to debate the purpose or the principles of the bill. There will be an opportunity to do that during the debate on Part 1. I know that the member is a new member. If the Committee wants to widen the debate on clause 1, then that is a course that the Committee could take, but it has not done so as yet.

CRAIG McNAIR: Thank you for your guidance, Mr Chairperson. I was getting right back to my point. If we adopt my Supplementary Order Paper, maybe we could give the bill a different title. We could call it the “Taxation (Annual Rates, Equal Opportunities, Taxpayer Compliance and Miscellaneous Provisions) Bill” or the “Taxation (Annual Rates, New Zealanders First, Taxpayer Compliance and Miscellaneous Provisions) Bill. We could call the bill the “One Nation (Organisations and Annual Rates) Bill”—or we could use the term “One New Zealand”. We could think of a whole raft of different names for this bill. I am sure the honourable Dr Lockwood Smith would agree with me, and I think that other members around the Chamber will see my point and see where I am coming from. They can see where we are going with this whole deal. If members support a Supplementary Order Paper like the one I will be promoting, New Zealand First would be happy to support it, and we would be able to change the title of the bill.

Hon TONY RYALL (NZ National—Bay of Plenty): The debate on the title is actually quite a serious debate. I want to pick up on the comments my colleague Dr the Hon Lockwood Smith made about the importance of the title being a fair reflection of the content of the bill. Certainly, when members of the public and members of this House are drawn to a bill, the title that gives an indication of the bill’s substance and import. I put it to the Committee that, as Dr Lockwood Smith said, the title of this bill does not provide a fair reflection of what is included in the legislation, and I would like to give three examples of that.

The bill has the quite innocent-sounding phrase “Maori Organisations” in its title. This bill has nothing to do with the setting up of Māori organisations. It has nothing to do with the management of Māori organisations. What it does have a lot to do with is the provision of preferential tax treatment on the basis of the colour of one’s skin, and that fact is not reflected in the title. This bill has nothing to do with setting up or establishing Māori organisations, and everything to do with providing a tax break based solely on the colour of someone’s skin. It is bad that that could be allowed to happen. Similarly, the words “Taxpayer Compliance”, which are also in parentheses, do not give a fair reflection of what is proposed in the bill. It is added taxpayer compliance that is proposed in this bill. We know that the compliance review team work, led by Mr Al Dunn of McDonald’s Restaurants of New Zealand, was explicit in its view that quite radical changes were needed to the relationship between the taxpayer and the State when it came to the issue of compliance. This bill does nothing to reduce taxpayer compliance in the system. Just saying “taxpayer compliance” does not reflect the fact, as Dr the Hon Lockwood Smith pointed out, that there is an added burden on New Zealand taxpayers in this legislation.

The third point I want to pick up on is that it is wrong to say that this is an annual rates bill. We know that under this Labour Government tax rates have gone up. This Government has rapaciously collected more tax from hard-working New Zealand families than any other Government in the history of New Zealand. I say that the best way to fix child poverty, fix housing, fix education, and fix health is to leave that money in the pockets of the people who earn it. That is common sense, and I cannot understand why United Future members are going to vote for validating higher tax rates. United Future is going to vote for preferential—[Interruption] Well, it is in the title. It is not right to say “Maori Organisations” in the title. The bill gives a preferential tax break, based on the colour of one’s skin. That is in the bill, and it has to be clearly reflected in the title. If it was reflected in the title, I bet that the United Future members would not be voting for it. I bet they would not be voting for a bill entitled the “Taxation (Separate Tax Rates on the Basis of Your Skin) Bill”. I do not believe that they would. I have been on a platform where United Future MPs have spoken against race-based policies in bills. If the title were correctly amended, I cannot believe that the Government’s “coalition partner”, United Future, would be supporting this sort of a bill. Frankly, United Future members have to understand what is in this bill—higher tax rates from the most rapacious tax gatherers in the history of New Zealand, the “Labour-Alliance United Christians Government”. The words “Race-based Tax Rates” should be in the title because that is what is in this bill, and “Added Taxpayer Compliance” should also be in the title because that is what is included in the 154 pages we are debating today. The National Party says: “Change the bill.”

Hon PAUL SWAIN (Associate Minister of Revenue): Perhaps a little history lesson for that member might be in order. The first point I want to make is that there have been separate tax rules for Māori authorities since 1939. I wonder how many National Governments have been around since then. Far too many for my liking, I should say.

Darren Hughes: Four.

Hon PAUL SWAIN: Only four. [Interruption] That is a good point Mr Chairman. I want to address the issues of the title, because the member was saying that the bill should be called other things. I think it is important to note that there have been separate tax rules for Māori authorities since 1939. The second point is that the review of this entire area, which has led to clause 1, “Title”, was started by the previous National Government in 1997—by the Hon Bill Birch. The third point is that during all this time, Māori authorities have been double-taxed. No one ever said that that was a racist issue. They were double-taxed, and that situation needed to be fixed. But the important thing the Finance and Expenditure Committee has done, which justifies the title of the bill, is tighten the definition of “Māori authority”, which ensures that the new rules are limited to a specific group of organisations that meet the Government’s strict policy criteria for being a Māori authority. Very, very good work has been done. I think it is important to know that where we are today was started by the previous National Government.

PANSY WONG (NZ National): First of all, I compliment the Minister on taking a call, and I hope that he keeps up this good practice. We have many, many more questions that we will put to him, and I encourage him to continue to take calls. It is absolutely refreshing that a Labour Minister has taken a call during the Committee stage—except that he did not make much sense to me, or to the public, but that is beside the point. We encourage him to continue to take calls.

The Minister tried to tell us that if something has happened for the last 50 or 100 years, then it is good enough to continue. That is sad, because one of the reasons the title refers to tax rates for Māori organisations is that most taxpayers of Māori ethnic origin are on low incomes. If the Minister is saying that whatever happened in the last 50 years is good enough, I think it is very sad to aim so low. As well, I would like to take up that point, because my very learned colleague the Hon Lockwood Smith, a member of the Finance and Expenditure Committee, is adamant that there has not always been double taxation on Māori organisations, unless those organisations did not distribute their profits after 4 years. It is not true for the Minister to say that that was double taxation, because if it were, I would want the Minister to take another call to say whether this Government would refund that double taxation. He has to be a bit careful when he makes those assertions.

In relation to the title, I agree with my colleague the Hon Lockwood Smith that new legislation should have a meaningful title to convey to the public its purpose. So I think that the Labour Government should accept an amendment to the title, for a start, of the “Taxation (Top Half OECD High Tax Rate) Bill”. After all, the Labour Government should be happy. It has returned New Zealand to the top half of the OECD—unfortunately not through income levels, but through high tax rates. The next time the Hon Dr Michael Cullen stands up in the House he should not apologise for abandoning the target of returning New Zealand to the top half of the OECD; he should claim credit and say that, in effect, Labour has returned New Zealand to the top half of the OECD, but only through high tax rates. To be fair to members of the public and to convey to them what this bill is trying to achieve, it should be renamed the “Taxation (Preferential Treatment for Maori Organisations) Bill”. Now, I am getting a little bit concerned about why Mr Chairman keeps staring at me. I hope this speech is very narrow and focused—

The CHAIRPERSON (H V Ross Robertson): The debate is to the title.

PANSY WONG: Yes, absolutely! The title should be changed to “Taxation (Preferential Treatment for Maori Organisations) Bill”, which is a lot more appropriate. After all, if the Labour Government prefers to dish out that preferential treatment, then it should be courageous enough to include it specifically in the title so that the public will immediately know that the content of the legislation relates to the treatment of Māori organisations.

I have an interesting question for the Minister. Today we learnt that the Race Relations Commissioner advised private businesses to take on Māori names for their organisations. Would those businesses qualify for this preferential tax treatment because they have taken on a Māori name for their organisations? It is a matter of being fair to all New Zealanders, because I understand that some submitters challenged the definition of a Māori organisation when they made their submissions at the select committee.

It would also be useful, when the title simply states “Taxpayer Compliance”, for it to be more specific about what compliance that is.

GERRARD ECKHOFF (ACT NZ): The title of any bill, not the least this one before the Committee at this time, has to be instructive. It has to show at first glance exactly what the bill is about. Surely the title has to be informative about its true purpose. I suspect that it should also be reflective of the content of the bill. It should be totally accurate in all the above, and, indeed, should be self-explanatory. But, when one of the people in Otago picks up the Otago Daily Times, sees, as happens every day, that there are proceedings in the House—and the paper will indicate that this bill is being read in the House—and reads the title, I wonder whether he or she will probably just turn the page very, very rapidly, because it is a totally boring title and is not reflective of what this bill actually does. If, for example, the title contained the phrase “ 19.5 percent taxation for Māori”, I think that the good people of Otago, and everybody else in this country, would say: “Whoa, hang on here! Come back a step. What is this 19.5 percent for Māori?”. Then they would ring David Parker, the local constituent MP, and demand to know what this title is truly about. But they will turn the page, because the title is not instructive in any way, shape, or form about the true content of this bill.

When people see that the bill mentions taxation of Māori organisations, they will say that that is good, fair, and reasonable, because every organisation in this country should be taxed at the same rate as every other organisation. There is no problem with that, whatsoever. But this title does not contain the most vital piece of information that anybody would be looking for when trying to understand what the title is all about. The term “19.5 percent” is missing. I would suggest that when the people of the South Island look at this bill they are going to ask, given that most Māori live in the North Island, why the Government is giving special treatment to North Islanders yet again. South Island people will say: “The Government already takes 4c tax away from us in our fuel tax and shovels it up to Auckland to assist it with its transport problems.” All of a sudden, they see yet another example of the South Island missing out because the Government has decided to give a special group in our society a cheap rate of tax at 19.5 percent. But the tax rate, I must hastily add, is one that the ACT party totally agrees with. A flat tax rate of 19.5 percent for everybody would be fantastic and see this country really start to move, but this title has not given us an explanation about why a tax rate of 19.5 percent cannot apply to everybody.

The title also talks about “miscellaneous provisions”. What is a miscellaneous provision, at first glance? The public, I think, are actually very interested in the proceedings of Parliament. They affect peoples’ lives indirectly and, of course, directly. So people need to know what the “miscellaneous provisions” in the bill are. Yet, when the bill is reported in newspapers throughout this country, people will be none the wiser. Is a miscellaneous provision something that Mr Gordon Copeland agrees with? He wants to see tax cuts for people with health insurance, for example. Is that provision part of this bill? Is it reflected in the title? I cannot see it anywhere. These things are hugely important.

CLAYTON COSGROVE (NZ Labour—Waimakariri): I rise to support the title of the bill. I think that the title Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill is accurate, and does reflect what this bill is all about.

I want to address, in rebuttal, a couple of the issues in relation to what other speakers have said, directly related to the title. I think that what our Minister said is quite apt. National members forget that in the 1990s the tax rate was 25 percent, and non-Māori organisation tax rates and company tax rates were at 33 percent. Forgive me—I am not a mathematician—but I would have thought that there was a gap there. There is a difference in those particular rates. As the Minister said, those special tax arrangements have been around since 1939. Dr Lockwood Smith, Mr Tony Ryall, and a number of others on that side of the House were members of a Government that did nothing to change that situation, and that did not object to it.

As the title reflects, this is an equitable and sound measure. Why? Because Māori authorities, as mentioned in the title, have a different scheme of arrangement from, say, commercial entities. Māori authorities are communally owned. They have huge constraints on their business activities. Members and beneficiaries of Māori authorities cannot dispose of their assets, as the title of this bill reflects, in the same way as beneficiaries of private sector entities.

I am amazed that some members got up and gave redneck, racist speeches—which are for the constituency they are trying to appeal to—instead of identifying the accuracy of the title of the bill. Instead of honing in on the title, they offered nothing—and they did nothing when they were in Government. I want to reflect on what submitters said about the title and legislation, and get it on record, because the Institute of Chartered Accountants of New Zealand said that only a limited group of people will qualify for the 19.5 percent tax rate, and that Māori authorities face unique issues. Again, that is reflected in the part of the title that refers to Māori organisations. KPMG Peat Marwick replied that their clients, that is, Māori organisations, do have the same—

The CHAIRPERSON (H V Ross Robertson): I say to the member that his comments are becoming completely irrelevant to the title. Would he please bring his points for debate back to speaking to the title? This is a very narrow debate. The purpose and other parts of the bill will be dealt with in Part 1. The member will return to the title, please.

CLAYTON COSGROVE: I want members to reflect, through this debate on the title, that the title accurately reflects the provisions and the intent of this bill. I finish by saying that even Business New Zealand, a bastion of belief in National Party policies, said that it would be concerned if this bill were subject to abuse, but also said it feels that there are equity issues that need to be addressed. Indeed, in this title and bill, and since 1939, these equity issues are addressed. I commend that.

LINDSAY TISCH (NZ National—Piako): Maybe the banter could stop, so that I can make some important points about the title of this bill. I reiterate, as Dr the Hon Lockwood Smith, the Hon Tony Ryall, and Pansy Wong—who has been on the Commerce Committee, is an accountant, and has a very good understanding of these issues—have pointed out, this bill does cover a number of underlying issues. One might say that that is OK, as this title is one of the few that actually state quite a lot. It is quite a long title, but it does not cover the underlying issues in the bill. The title refers to taxation, annual rates, Māori organisations, taxpayer compliance, and miscellaneous provisions. But that is really just a cover-up, because it does not spell out what is in the bill. That is the important point that I will articulate this afternoon.

One of the important issues here—and this has been mentioned before, but it is important that members are fully aware of it—is that the bill gives a preferential tax rate of 19.5c in the dollar to a special group, which is Māori. So the title of this bill should be the “Special Māori Taxation Bill”, or the “Special Provisions for Māori Taxation Bill”. A number of interpretations can be made of the current title. When I buy a book, I want to know what is in it. I do not just want to know what the title is; I want to know what the book is actually about. As previous speakers have said, this title is a cover-up for what is really in the bill. This bill gives preferential treatment to one sector of the community. [Interruption] That member had a chance to speak, but he strayed off the topic. I am referring to the title. We have a provision here whereby a tax rate of 19.5c in the dollar will become the norm.

When the Minister spoke earlier, he said we have had double taxation. I remind the Minister—and I invite him to take a call—that the taxation provision applies only when profits have been retained, and have not been distributed at the 4-year peg. That is where double taxation has come in. As my honourable friend has said, that is why the title of this bill needs to be changed.

The other point is that this legislation confers taxation rates on an annual basis. It provides that we will have the highest taxation in the OECD group of countries. This is the only Government that has increased taxation.

Dr the Hon Lockwood Smith: The Czech Republic.

LINDSAY TISCH: My friend mentions the Czech Republic. This bill is about taxation. We are the only country in the OECD group of countries that has increased taxation.

Hon Tony Ryall: Unbelievable.

LINDSAY TISCH: It is unbelievable. It is absolutely draconian. This Government has no idea about what makes the world go round, and no idea about business. It has increased the tax rate to 39 percent for those on incomes of $60,000. That is why the title of the bill must be changed: it has to reflect the increases in taxation.

As I said, the title is just a cover-up. It does not indicate what is in this bill. What about the corporate tax rate of 33 percent? What does this bill provide? It provides that a Māori authority will have a 19.5 percent tax rate. Does it indicate to my friend Pansy Wong, from the Asian community, that if she is in business she will receive a preferential tax rate of 19.5 percent? It does not do that. I am in business. Does the bill indicate that I can have a preferential tax rate of 19.5 percent? That is why the title of this bill is so important. In order to reflect the essence of this bill, the title should be the “Special Māori Taxation Bill”.

HELEN DUNCAN (NZ Labour): I move, That the question be now put.

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

Ayes 67

Noes 45

Motion agreed to.

Labour 52; Green Party 7; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 5.

A party vote was called for on the question, That clause 1 be agreed to.

Ayes 67

Noes 45

Clause 1 agreed to.

Labour 52; Green Party 7; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 5.

Clause 2 Commencement

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney): This is quite a complex commencement clause. The Minister could assist the Committee a bit in its consideration of some areas of this clause, by explaining why there are so many different commencement dates. Let us start with clause 2(1), which states: “This Act comes into force on the date on which it receives the Royal assent, except as provided in this section.” That is rather different from usual, because bills normally come into effect on the day after the date on which they receive the royal assent. Maybe the Minister can explain why this particular bill does not come into effect the day after the date on which it receives the royal assent. I am not sure why that would be.

I will now go on to clause 2(1B). Interestingly, that contains a reference to the special provision the Government has put in for the superyachts that I guess came to New Zealand for the America’s Cup. They would have come to New Zealand at about the middle of last year, so I suppose it makes sense that the commencement date for that provision is 28 May last year. It is a retrospective provision, which confers a benefit on those superyachts and luxury pleasure craft. I guess that is a priority for this Labour Government. We have serious child poverty in New Zealand, but this Labour Government wants to enact retrospective legislation that excuses from taxation the superyachts and pleasure craft that came here for the America’s Cup. I guess that is why that provision has a retrospective commencement date. That is a demonstration of Labour’s priorities: New Zealand has children living in poverty, but the Government is giving tax away in respect of the superyachts. That would appear to be why that provision has a commencement date of 28 May 2002.

If we then go on to clause 2(2), we see that clause 45 is to come into force not last year, but on 15 January 2004. It does not come into effect until almost a whole year from now. One has to explore what clause 45 is all about. Clause 45 does confer benefit. It establishes the new PAYE intermediaries system, and that will be helpful to some taxpayers. One fully accepts that, but one has to ask the Minister in the chair about its commencement date, and it would be helpful if he could answer the question. It would be helpful if the Minister tried to address these commencement dates seriously and actually listened to us, instead of talking to the Chair. I am trying to find out why 15 January 2004 is the commencement date for the new PAYE intermediaries. It would seem to me that the start of a financial year would make more sense than that. One could accept that maybe that provision should not come into effect immediately, because a whole new system has to be set up. But why is the commencement date for that 15 January 2004? That is not the start of a tax year, so it would seem to me that that would add compliance costs. Maybe the Minister could explain the reason for that date. Maybe it has been chosen because 15 January may be the start of the work year. If that is the argument in favour of that date maybe it will add complexity, because it does not have anything to do with any tax year. But maybe that is the reason for it.

I am interested in the clauses that commence on 1 April 2003, because that is just 3 weeks away. We go into an adjournment next week, and that does not leave this Parliament much time to pass this bill. If those clauses are to come into effect on 1 April 2003, there is not a lot of time to get this legislation through Parliament. Interestingly, those clauses that are to come into effect on 1 April 2003 will enable the Government to take all the tax where a taxpayer has a dispute with the Inland Revenue Department. At the moment a taxpayer can hang on to 50 percent of the tax where there is a dispute, but clauses 101 to 103, which come into effect on 1 April this year, will enable the Inland Revenue Department to take all the tax that is in dispute. Of course, the amount of interest paid on it is way below commercial rates. It is interesting that the Government is being pretty tough on taxpayers by having that provision start on 1 April 2003, although I do accept that that is the start of the new financial year. It means that this Government will have to get off its butt and get this legislation through Parliament, because 1 April 2003 is not far away.

Then there are a number of other clauses that come into force on 1 July 2003. Again, it would be helpful if the Minister could advise us why that date has been chosen. I do accept that for some businesses 30 June is the end of the financial year. But we could do with an explanation as to why the Minister has chosen 15 January for the commencement of some provisions, and also 1 April—which is the start of the normal financial year—and 1 July for other provisions.

Hon TONY RYALL (NZ National—Bay of Plenty): We are now speaking to clause 2, “Commencement”. I just observe that on Saturday I will be going to the opening of the new Catholic secondary school in Tauranga. I think the people there will be very disappointed to hear that Mr Copeland and the united Christians have voted for this bill. When I tell them that the commencement date will provide for the first racially based tax concession in New Zealand’s history, I do not think that that will go down very well with the many hundreds of people who will be there to hear me inform them that that is what the united Christians stand for. Why is that Minister proposing to compound the error of that special provision by allowing it to come into force before other provisions in the bill that will benefit the community as a whole? Why is he compounding his error by allowing that provision—clause 65—to come into force before the provisions that benefit the whole of the country? That is a very important point.

The National Party is saying up and down this country that it does not think that there should be tax concessions based on race. The one standard of citizenship that the Hon Bill English, our leader—the next Prime Minister—has talked about should be reflected in taxation. It is clear that New Zealanders are yearning for a Government that will put the ethos of the “spa pool liberals” in Cabinet to one side. National will not pursue race-based policies. I want to hear the Government justify why a trust whose beneficiaries are Pākehā cannot distribute funds to those beneficiaries at a tax rate of 19.5c in the dollar. Why do my kids have to pay 33c in the dollar in their tax payments as children, and yet my neighbours’ kids, if they are Māori, can have their trust distribution taxed at 19.5c in the dollar? They can go to the same school and travel on the same bus as my kids, but because their parents, or they, are beneficiaries of one Māori trust or another they will be treated differently, and that is wrong.

I am opposed to any commencement date that will allow that to happen. So I have moved an amendment to delay the introduction of this bill until 1 July 2006, when the next National-led Government will repeal those provisions. We will repeal those provisions. I tell the Government that everywhere I go, Bill English is getting a big tick for raising the issues that I am raising in this debate. The Government knows that, because its focus groups tell it what our focus groups tell us. This is an issue for which the time has come, and Bill English is the leader who has the credibility and the presence to be able to advance that argument, more than any other leader in this House. That is what New Zealanders say.

Why do my kids have to pay a higher taxation rate if they receive a distribution from a trust than some kids down the road who just happen to be Māori? Why should that happen? [Interruption] I say to Mr Duynhoven that that is not right. Why should Mr Duynhoven’s children have to pay 33c in the dollar, but someone else’s children pay 19.5c in the dollar? It is just not fair. There is the argument that for all the beneficiaries of Māori trusts, their effective tax rate is 19.5 percent. How patronising it is to Māori to say that they are all on the lowest tax rate, so that is what we will make the tax rate. That is atrocious; that is patronising. What about saying to people that they will be treated the same as others? That is how they would get ahead—not with this sort of patronising nonsense.

PHIL HEATLEY (NZ National—Whangarei): I can only continue Tony Ryall’s sound arguments put to this House regarding the commencement dates, and the particular issue he raises, that not only is there a more favourable treatment for Māori in terms of the tax rates—whereby we have 19.5 percent for Tony Ryall’s neighbours’ children, if they are Māori—

Darren Hughes: What clause is it?

PHIL HEATLEY: Clause 68. In fact, if Labour members had read the bill they would find that clause 68 changes the tax rate so that not only will Māori children receive a more favourable tax rate than Tony Ryall’s children, who live just next door, but that that favourable tax rate will come into force on a commencement date earlier than for Tony Ryall’s children. In other words, it is not just more favourable treatment, it is more timely treatment. I focus on that because we are talking about the commencement dates.

I was interested to see that those provisions—we are talking about clause 2, but clause 68 talks about that tax rate—come into force on the day that this bill receives the royal assent. Whereas other conditions, such as clause 45—a considerable number of Labour members have not read the bill, but if they turn to clause 45 they will see a graph in the bill that Ministers have approved. Did members notice that there is a graph in the bill, that Ministers have approved—as opposed to graphs that Ministers do not approve—that explains the payroll and employee information from employer to the pay intermediary to the employee. Of course, the Inland Revenue Department is kept in the loop.

Legislation addressing issues like that will not come into effect until 15 January 2004. Yet that is an essential part of the bill, of the running of this country, and particularly of businesses. Why will those provisions not come into effect when this legislation receives royal assent? That is the question that I put forward. Tony Ryall has put that question forward, as will other members on this side.

I notice a whole lot of new provisions in the Supplementary Order Paper. The commencement dates of those provisions are put back much further than the provision of the favourable treatment in terms of tax for Māori. That has been expanded from the original bill; where there were 9 clauses to come into force on 1 April 2003, there are now 16 clauses that were to come into force at the same time that Māori receive more favourable treatment under New Zealand’s tax law that have been put back.

I just put it to the House that members can argue all they like that Māori should receive more favourable tax treatment, but will they also argue that they should have more timely legislation, that they should receive that treatment in a more timely manner? The level playing field is fast disintegrating, and that is indicated in this bill. Clauses 133 to 136, 137—part 2 of that—138, and 142: 1 July 2003. They are put back even more—another few months, apart from that which addresses the more favourable tax treatment of Māori. If members investigate those parts of the bill, clause 133, for example, which, for members who have not read it, addresses interpretation—that concerns me.

Hon PAUL SWAIN (Associate Minister of Finance): I will answer very quickly the questions asked by Dr the Hon Lockwood Smith, and keep them in the same order as in the bill. First, as he rightly said, the superyacht one was the date of the announcement by the Government. Second, the accreditation period to register as PAYE intermediaries is to apply from the pay periods after 1 April 2004, which is the tax date. Third, fixing up the area of previous legislation: that is the date to which the previous legislation applies. Fourth, as he rightly points out, that is the beginning of the tax year; fifth, the issues related to GST and telecommunications: those were the agreed dates with the industry.

CRAIG McNAIR (NZ First): I want to speak just briefly to the commencement clause. I heard Tony Ryall say in his speech that he was putting up an amendment to it. New Zealand First wants to get in behind that amendment and support it, but probably not for quite the same reasons Tony Ryall gave. Tony Ryall obviously lives in a little bit of a fantasy land in thinking that Bill English will be the Prime Minister in 3 years’ time. Bill English just does not have enough charisma; he is just not going to get there. However, I come back to the commencement clause. Tony Ryall asked members opposite a very good question about one of the issues he was talking about. I do not think many members here caught the question, because he was not trying to be too loud, but I caught it. He asked why other ethnic groups do not get the benefit of this 19.5 percent tax rate, and Mahara Okeroa said: “Because you’re Māoris.” Darren Hughes knows, because he heard it. People on that side of the Chamber heard it. Mahara Okeroa said that the reason other ethnic groups do not get a 19.5 percent tax rate is that they are Māori. I thought that was pretty honest, but I guess he answered that question very well.

Sitting beside me is Edwin Perry, who is one of New Zealand First’s Māori members. He is the chairman of a trust involving about 4,000 acres and 80 beneficiaries. Those people are behind what New Zealand First is saying here. They say that they want this measure, and that is fine, but they want it to apply to all New Zealanders. They do not want special or preferential treatment. That is the message Edwin Perry has been getting, and he is the chairman of a Māori trust. One has to ask oneself a question when a member from the Labour Party, Mahara Okeroa, says bluntly that the reason is that they are Māori—

The CHAIRPERSON (Ann Hartley): I ask the member to come back to the commencement date.

CRAIG McNAIR: Thank you for your guidance, Madam Chair. I have given New Zealand First’s reason for supporting Tony Ryall’s amendment. It is definitely not for the reasons he gave in relation to Bill English taking off his shirt and trying to become the Prime Minister in a few years’ time. We will support his amendment and oppose the commencement date.

GERRARD ECKHOFF (ACT NZ): Many would ask whether the commencement date of a bill is important and worth the bother of debating. I think it is. Commencement dates are very important, for a very obvious reason. If we ask people what the significant dates are in their lives, they will often say—[Interruption] If that member over there would stop squawking, she might actually learn something. If we ask people what the important dates in their lives are, one that they will say is important is Christmas Day, 25 December. Everybody reels that off. Others say that Anzac Day is a hugely important date. They also say that Waitangi Day is important, although in increasingly fewer numbers. Nevertheless, 6 February is an important day. Those are the dates when the commencement of a special celebration took place. So commencement dates are very important. I suspect that the commencement dates in this bill will also rank alongside, some would say, infamy, because they are the dates we will introduce in legislation that give a special tax rate to Māori. That is why the commencement of this process is so terribly important.

At this time, in this Parliament, a select committee is sitting on a question of fairness, amongst other things, in the scampi inquiry—essentially it is on a question of fairness. I ask the Committee this question: is the commencement date in this legislation fair? The answer—and I always get a good answer when I ask myself a sensible question like this—is “Absolutely not.” It is not fair to commence legislation that gives one section of our society a special dispensation. It would be marvellous if the commencement date for a 19.5 percent tax rate were next week, or on the particular date that this legislation will be enacted. That would be something that would be welcomed by any sensible, thinking person in this country. Every member on this side of the Chamber, I suspect including members of the United Future party, would say that the commencement of a fair and reasonable tax rate for everybody in this country is appropriate.

If we are to have this factionalism, this sectionalism, then I would stand and say that I think it is appropriate we should have a commencement date for special tax rates for high-country farmers. Now that would be a hugely popular measure amongst 350 of us, but I suspect that the rest of our community would say that a commencement date for special treatment for a small grouping of people like that would be inappropriate—and I guess that in a quiet moment I would have to agree with that—because I do not agree, and I am sure the majority of people in this Chamber would not agree, that we should at any time or any stage of our deliberations on this bill look at commencing legislation that is going to give separate, special treatment.

What is the word for that separate development? It used to be a South African word. I am sure it will spring to mind shortly. I think we all know what that word is. But that is the problem that will occur if we have a commencement of special treatment for a special group. Māori are a special group—I give them that. There is no question about that, just as I say that high-country farmers are a special group, just as people who live in Tauranga, for example, might be a special group. But we cannot isolate them and we cannot say that those people deserve special treatment and should have an enactment that gives them an advantage over the rest of our society. So that is why the commencement of this legislation should be held over, and I support Mr Tony Ryall’s contention that when the next election occurs—and I am sure it will be a centre-right Government by then—we can revisit this question of a 19.5 percent tax rate for everybody.

HELEN DUNCAN (NZ Labour): I move, That the question be now put.

LINDSAY TISCH (NZ National—Piako): The commencement date of legislation is very important, but when I look at the commencement dates that are mentioned here on page 6 of the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill, I note that a number of dates are retrospective. On Supplementary Order Paper 60, which has been lodged in the name of the Hon Dr Michael Cullen, I note there, under the commencement date, sections 5B and 65(14B)—

Dr the Hon Lockwood Smith: That’s retrospective.

LINDSAY TISCH: Yes, they are treated as coming into force on 28 May 2002. That is retrospective. That is last year. So here we have commencement dates that are retrospective. Now, this party does not stand for retrospective legislation.

David Benson-Pope: What do you stand for?

LINDSAY TISCH: We are standing for lower taxes. That is what we stand for, and we are not going to support retrospective legislation that comes into effect on 25 May 2002. Further down Supplementary Order Paper, clause 2(4) states that sections 58B, and 165 to 171, are treated as coming into force on 17 October 2002. Once again, we have retrospective legislation. Here we have commencement dates that have already happened, as far as this bill goes, because they are retrospective.

My colleague the Hon Dr Lockwood Smith talked about section 100, which members will find in clause 2(5). That clause in particular states that those sections come in on 1 April of this year, and I just draw the House’s attention to that section 100 in the Supplementary Order Paper. Members will notice that it is the same in the bill, but it is reflected here in the Supplementary Order Paper. What does clause 100 say? This is significant in terms of a commencement date. It is very significant, because clause 100 is the obligation to pay tax where competent objection has been lodged. It states here: “the Commissioner may require a taxpayer to pay all tax in dispute if the Commissioner considers that there is a significant risk that the tax in dispute will not be paid should the taxpayer not succeed in objection proceedings.”

This is a very important part of the bill, and we will be discussing clause 100 in detail when we get into Part 3 of the bill. But this now includes a provision that on 1 April, which is not far away, this will come into effect. We are opposed to that in particular, because it takes away the rights of those people who may be in dispute with the Inland Revenue Department and having some issues they have to address. We feel that natural justice should prevail and we will not support that sort of clause being included.

We will not support the commencement date where we have legislation that gives favourable treatment to any one sector. We know what this bill is about. It is about a 19.5 percent tax rate for a certain sector of the community. That is what it states. It is very interesting that the people over there want to object, but if they actually read the bill they would know what it says. We will not support any commencement date that gives favourable treatment to one sector.

As I said in the debate on the title, the bill is misnamed. It should be the “Special Māori Taxation Bill”; so any commencement date that confers special privileges on any sector will not be supported by National. We will not support tax breaks on a racial basis, so any commencement date that confers that will not be accepted here. We will not support a commencement date where we have much higher compliance costs. That is the name of this bill. When we go back to the name of the bill, it talks about it being a taxpayer compliance and miscellaneous provisions bill, so even in the title we will see huge compliance costs, and we will not be supporting this commencement.

DARREN HUGHES (NZ Labour—Otaki): I move, That the question be now put.

A party vote was called for on the question, That the question be now put.

Ayes 67

Noes 45

Motion agreed to.

Labour 52; Green Party 7; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 5.

The CHAIRPERSON (Ann Hartley): The amendment in the name of the Hon Tony Ryall is ruled out of order under Standing Order 316.

The question was put that the amendment set out on Supplementary Order Paper 59 in the name of the Hon Dr Michael Cullen to clause 2 be agreed to.

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

Ayes 67

Noes 45

Amendment agreed to.

Labour 52; Green Party 7; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 5.

A party vote was called for on the question, That clause 2 as amended be agreed to.

Ayes 67

Noes 45

Clause 2 as amended agreed to.

Labour 52; Green Party 7; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 5.

Part 1 Annual Rates of Income Tax for 2002-03

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney): Part 1 of this Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill consists of only one clause, but it is a huge clause. This clause confirms the current tax rates on the people of New Zealand. What we now know about the tax rates being imposed by this legislation is that they will confirm New Zealand in the top half of the OECD, but not for our economic growth—no, we are down near the bottom of the OECD for our economic growth. The Economist published on 1 March this year, 2003, confirms that New Zealand ranks sixth in the OECD—top half of the OECD—for the level of income tax, direct tax, we impose on industrial workers with a family. The tax burden on the average working family in New Zealand is the sixth highest in the OECD.

What is more, the rate of increase, since Labour has been in office, according to OECD data released just 2 weeks ago, shows us that this Labour Government has clawed, from the average working family in New Zealand, the biggest increase in tax that has occurred in any other country in the OECD—except the Czech Republic. What a great record; what pride this Labour Government must have! The Hon Paul Swain in the chair must feel delighted that he has clawed from the average working family in New Zealand the biggest increase in tax of any country in the OECD—other than the Czech Republic. Part 1 confirms that next year that process will continue; that the Government will continue to claw more money from average working families.

I want the Minister to address this particular issue. Labour claims to care about low-income people. I want him to face this fact: Part 1 will confirm that low-income working people with, say, one, two, or three children, earning between $10,000 and $15,000 a year, will pay an effective marginal tax rate of 100 percent.

Opposition Members: What!

Dr the Hon LOCKWOOD SMITH: I repeat this for the benefit of the Minister in the chair: working families earning between $10,000 and $15,000 a year will pay an effective marginal tax rate of 100 percent. For every dollar they earn above $10,000 a year, the Government takes the lot. Part 1 confirms that fact. I want the Minister in the chair to stand and tell the Committee why he is exempting the wealthy people on superyachts from paying any income tax at all, while for poor families, earning between $10,000 and $15,000 a year, for every extra dollar they earn, the Government takes 100 percent, and if we add on GST, it is more than 100 percent.

That is frankly disgusting. It is disgusting to exempt workers on superyachts from paying any tax, and to tax our poorest families 100 percent. It is not just on those poorest families, either. Take middle-income families. Take a family with four children, earning between $40,000 and $55,000—there are a lot of working families with four kids, in that tax bracket—Part 1 confirms their effective marginal tax rate is 63 percent. If they earn an extra dollar above $40,000 the Government takes from a family, with four children, 63c of that extra dollar. Add GST, and if they are spending all they earn, which they probably will be, on $40,000, with four kids—they will not be saving any money, so they will be spending it all—and the Government takes 75 percent of every extra dollar they earn above $40,000, for a family with four children. That is disgusting. I want the Minister to justify what he is doing to working people in this country.

Hon TONY RYALL (NZ National—Bay of Plenty): I want to support my colleague, Dr the Hon Lockwood Smith. We are talking on the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill, which is a long-titled bill. Amongst its many provisions is one that provides a concessionary taxation rate for people on the basis of the colour on their skin. That provision is not in Part 1, which we are discussing. Part 1 does not provide a taxation benefit depending on whether one is Māori; this part confirms the current tax rates.

I think it is worth repeating to those who are listening to this debate the very, very enlightening figures that the National Party’s spokesperson on revenue, Dr the Hon Lockwood Smith, talked about. He said that The Economist provided information not 2 weeks ago that proved that New Zealand is in the top half of the OECD—not by 2011, but now—when it comes to the level of income tax on workers with a family. In fact, that information shows that New Zealand has the sixth-largest taxation burden on working families in the entire Western World. Further, Dr Smith went on to tell the Committee that New Zealand has had the biggest single increase in the taxation burden on working people. The tax burden has increased more on working people here than in any other country in the Western World, except the Czech Republic. So that means that New Zealand’s working families are carrying more of a tax burden than working families in any country—just in the last few years under Labour—other than the Czech Republic. I presume that in the case of the Czech Republic that has a lot to do with industrialisation, yet that certainly would not have anything to do with it here in New Zealand. That is just outrageous.

I am not prepared to vote to confirm the current tax rates. This Government is on track to collect several billion dollars more from working New Zealanders than it needs. Government members do not need to collect several billion dollars more from them, and I will not vote to give it to the Government. This Government cannot be trusted with our money. It is to close down the private prison in Auckland that costs $43,000 per prisoner, and to have a public prison that will cost $72,000 per prisoner. That is a waste of our money, and I will not give this Government one extra dollar. This Government does not realise that, by closing down that private prison, it will now have to staff the prison as per the collective employment agreement. That means the number of staff in the prison will go from 120 to 480. Cabinet did not work that out when it made that decision. It means more of our hard-working taxpayers’ money will be wasted, and I will not give the Labour Party one more dollar of that.

During Dr Smith’s speech he talked about the fact that a low-income family earning between $10,000 and $15,000 a year with one child faced an effective marginal taxation rate of 100 percent. That means that for every dollar the family earns over $15,000, it loses a lot of the social welfare and inland revenue add-ons. Basically it is a substitution: the family loses $1 off the add-ons for every dollar that it earns. During Dr Smith’s debate the senior Government whip, Mr Benson-Pope from Dunedin, said that that was too low, and asked the Minister whether we could do better than that. In fact, he went on to suggest the effective marginal taxation rate should be $1.05 for every dollar. He said the effective marginal taxation rate should be 105 percent. I want to explain to Mr Benson-Pope, who is on $120,000 a year as the senior Government whip, that when one is earning $15,000 a year, a 100 percent effective taxation rate is an awful lot of money. He may have forgotten what it is like for those people now that he is on $125,000 a year, but I say that when one is on $15,000 a year every dollar counts. I am not prepared to vote extra money to that Labour Government when its senior whip says an effective marginal taxation rate of 100 percent is not high enough. That is appalling.

Dr Smith also went on to say that a working family on about $40,000 a year with four kids faces an effective marginal taxation rate of 75c in the dollar.

David Benson-Pope: You are so concerned—

Hon TONY RYALL: That member says that we are concerned. We cut taxation for those people, but he has not done so.

CRAIG McNAIR (NZ First): It is very interesting to be talking to this bill. It is an undeniable fact, and I am sure that people from different parties will agree with me, that the higher one’s taxes are, the more that stifles growth. That is a fact. Would the member agree with me?

Brian Connell: Basic construct!

CRAIG McNAIR: That is right; yes, that is very true. That is in honour of the Minister of Māori Affairs. If we are to look at the basic construct, as the Minister of Māori Affairs would say, as far as tax weighing down the growth of a country is concerned, we have to look at a few facts. So let us do that. We see that New Zealand’s average gross domestic product (GDP) volume growth since 1985 was 2 percent. If we compare that with the growth rate of other nations, we find that every year for the last 16 years we have been falling behind. So the predicted growth that is being described as robust by this Government continues to lag behind the predicted growth in other OECD countries, and is far below both our potential and our requirements. When we compare our performance with that of other countries of similar populations but with fewer resources, the picture is even gloomier. That all comes back to what I was talking about as far as the annual rates of income tax for 2002-03 are concerned.

New Zealand First has always been, and still is, on a campaign to think outside the square a little more. We need to think more creatively with regard to taxation and what is going on in terms of economic growth in New Zealand, and how to expand growth. One of the ways that we can expand growth is by providing taxation incentives to exporters. We just need to look at a few figures with regard to that. New Zealand’s exports total US$3,600 per man, woman, and child. The figure for Ireland is US$19,300—over 530 percent more. Our beautiful country has many resources and things to export, but Singapore’s exports are US$34,700 per person—10 times more than New Zealand’s.

Gordon Copeland: I raise a point of order, Madam Speaker. I am reluctant to interrupt the speaker, but I really fail to see the connection between the export levels of various countries and the rates of taxation.

Madam DEPUTY SPEAKER: That is a valid point. One clause is about income tax.

CRAIG McNAIR: That is exactly what I am saying, and Gordon Copeland has to agree with me—I heard him talking, in his maiden speech, about how taxes weigh down an economy. If one can reduce the taxes, then one can create more growth. That can be done in many ways. I am talking about tax incentives; that is one way of increasing growth. The National Party members agree with me. I have heard Dr Lockwood Smith, many a time, saying that the amount of income tax—

Madam DEPUTY SPEAKER: It is about the basic rates of income tax.

CRAIG McNAIR: The higher the basic construct of the income tax rates, the harder it will be for a country to grow. That is all I have to say about that.

I also feel that higher annual rates of income tax will put a heavy weight on families. United Future members are supporting the Labour Government.

Dr Muriel Newman: No, are they supporting the Labour Government?

CRAIG McNAIR: That is what I hear through the grapevine. Those members are strong advocates of the family.

JILL PETTIS (Junior Whip—NZ Labour): I move, That the question be now put.

Dr MURIEL NEWMAN (ACT NZ): I rise on behalf of the ACT party to speak on this bill, which introduces race-based tax laws. We absolutely oppose every part of the bill.

Part 1 is the part that concerns our income tax rates, and it tells me and every other New Zealander that Labour has turned its back on working New Zealanders. Traditionally, working New Zealanders used to vote for the Labour Party. My family voted for Labour until 1996, because we were a poor family and we thought that Labour stood up for poor families and poor workers. This bill confirms that that has absolutely changed, and Labour has now turned its back on its traditional voting bloc. Under Labour, working families are worse off than they have ever been. They are 2.4 percent worse off than they were before Labour came into power. That means that the average family is working harder and going backwards. I say to the Minister sitting in the chair that he should take a call and try to explain why it is that, after New Zealand has had the best economic conditions in decades, working families have slipped backwards. I would like to hear the Minister’s answer to that.

Low-income working New Zealanders pay the highest taxation rate in the world. Those people being taxed at 19.5c in the dollar in New Zealand would be paying 3.5c in the dollar in Britain. Their income tax would be 3.5 percent of their income there, whereas here it is 19.5 percent. That is too high. We should be seeing, right now, a bill to lower taxes for workers. If this bill lowered taxes for workers, ACT would be supporting it. Instead, it is a bill that lowers taxes for Māori. I tell members why that is. The reason is that Labour has a strategy of trying to buy support from Māori, Pacific Islanders, people on welfare, and superannuitants—not from workers, who are out of the door. Labour has figured out that if it looks after that lot, it will have over a million voters and it will stay in power. That is absolutely shameful. We need a Government that provides incentives for hard work and that rewards people who go out of their way to try to better their families. We should be doing that through lower taxes for those families and giving the money back to families to use in their best interests, not giving it to a Government to buy votes.

This Government is very lucky. Firstly, it had a low exchange rate—as a result of Labour getting into power, all confidence left New Zealand and the exchange rate plunged—which has meant that exporters have done well. There has been a windfall gain in earnings, which the Government did not expect. Secondly, the Government stuffed up the immigration numbers. An extra 33,000 people came into the country who had not been planned for, which has driven the economy. So there have been two different events driving the economy. But that is not sustainable. One just has to watch the world news to know that New Zealand’s economy will get crunched along with all the other economies.

This Government has not put the economy on a sound footing. To do that, it should lower taxes and reduce compliance costs on small business, and get on with the process of welfare reform. Instead of being soft on welfare so that more people go on to it, the Government should be helping those people who are on welfare to get themselves off it and into jobs, so that they can be independent of the State. John Tamihere brought some of those things up in the House, and what happened? Labour bashed him, gagged him, and silenced him. We want to know whether Labour members listened to Mr Tamihere. I suspect they did not. ACT has been saying those things since we came into Parliament, and it is shameful that Labour has not realised that that is a plan for growth. Lower taxes are the key to getting this economy on a sound footing, so it can weather any storm that comes up.

Part 1 of this bill tells us that the Government is ignoring common sense and experience from around the world. Every other sound economy has lower taxes than ours, not higher taxes. What Labour is doing is absolutely shameful, and for Labour to be turning its back on working families is even worse. Those people used to vote for Labour, but now they have to vote for other parties in Parliament instead.

MAHARA OKEROA (NZ Labour—Te Tai Tonga): I move, That the question be now put.

BRIAN CONNELL (NZ National—Rakaia): National does not accept what has been proposed in Part 1, clause 3, “Rates of income tax for 2002-03 income year”. Despite the golden weather of the last couple of years, New Zealand stands at the edge of a cliff, economically speaking. We are simply not earning enough to support our level of expenditure. We are languishing in the bottom half of the OECD, and the Pinocchios Clark and Cullen deny that they have even had a discussion about setting a target to turn that around. Treasury is predicting growth of around 2 percent for the next decade. The level of Government expenditure as a percentage of gross domestic product is just far too high, and compliance and red tape are killing business.

If we are not able to grow our economy, we must reduce our expenditure. [Interruption] Surely the member who is yelling out understands the connection between the levels of expenditure, revenue, and taxation.

Hon David Carter: And therefore rates.

BRIAN CONNELL: And rates. Every housewife in the country understands the basic budgeting concept that if one cannot earn enough, then one must stop spending. But the Government ignores that basic premise. It wants to keep dishing out money to unwitting folk, so it keeps paying for them. The damage that does to this country is absolutely sickening. To grow our economy in a sustainable way we must reduce taxation, not increase it, as that stimulates investment, which, in turn, brings about jobs and prosperity.

It is a basic construct that if we want to share wealth—and I do not mean just to distribute it—we first have to create that wealth. It might surprise members to learn that only 47 percent of the people in this country are actually earning a living. Yet this Government is hell-bent on tapping them for more and more, not just through income tax, but through indirect taxes, the compliance costs of legislation like the Health and Safety in Employment Act and the Holidays Act, which are eroding profits, and, as people from Rakaia know, petrol taxes.

David Benson-Pope: We’re on Part 1.

BRIAN CONNELL: The Government whip is yelling out again. When he does that it makes one think that we cannot bring on the legislation dealing with dangerous dogs quickly enough, because I would support him being muzzled.

This Government’s problem is that it has no vision and no coherent growth strategy. Its only answer is to push up taxes and to take more from those who already contribute far too much. If we want our children and their children to call New Zealand their home, then we must address that problem. I have lived and worked in economies where, if the growth rate got to 4 percent, people became pessimistic. Yet we are being conditioned to think that 4 percent is the best that we can do. Well I say “Humbug!” to Michael Cullen and his cronies. If they had not lived in academia for most of their lives they would know how to make a buck, rather than just how to spend somebody else’s.

The Government wants to keep putting up taxes in order to support its welfare expenditure. It might surprise members of the Committee to know that since the 1970s the number of beneficiaries has risen to such an extent that the whole working-age population of beneficiaries would not fit into the city of Christchurch. We have seen a twelvefold increase in the number of beneficiaries, yet our population has not even doubled. Every working-age beneficiary in this country at the moment has only four people supporting him or her. We need to address that issue not by putting taxes up but by lowering taxes, so that we can stimulate growth.

DAVE HEREORA (NZ Labour): I move, That the question be now put.

A party vote was called for on the question, That the question be now put.

Ayes 67

Noes 45

Motion agreed to.

Labour 52; Green Party 7; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 5.

The CHAIRPERSON (Ann Hartley): The amendment in the name of the Hon Tony Ryall to clause 3 is ruled out of order under Standing Order 316.

A party vote was called for on the question, That Part 1 be agreed to.

Ayes 67

Noes 45

Part 1 agreed to.

Labour 52; Green Party 7; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 5.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney): I raise a point of order, Madam Chairperson. I have delayed raising this point of order until now because I did not want in any way to be questioning your decision to accept the closure. I would like you to reflect on a very important issue. A senior colleague left the Chamber in disgust, having waited for some time to speak on probably the most important debate—

The CHAIRPERSON (Ann Hartley): The member will be seated. The member is relitigating the—

Dr the Hon LOCKWOOD SMITH: I am not.

The CHAIRPERSON (Ann Hartley): I have put the closure. It is my decision, and there is no debate on it. It is a matter for me to decide, and I have decided. The matter cannot be relitigated. I warn the member about relitigating.

Dr the Hon LOCKWOOD SMITH: I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Ann Hartley): I warn the member that it had better be a new point of order.

Dr the Hon LOCKWOOD SMITH: My point of order relates to the general issue of the acceptance of closures. I have made it very clear—

The CHAIRPERSON (Ann Hartley): I am sorry; the member will be seated. There is a clear Standing Order on closures, and it is the Chairperson’s call. I have addressed that, and I have called the closure correctly. The member cannot relitigate the closure issue. I warn the member that raising points of order that have been ruled on, and that I have dealt with, is in itself disorderly.

Dr the Hon LOCKWOOD SMITH: I raise a point of order, Madam Chairperson. I have been a member of this Parliament for 19 years. There is no member of this Parliament who has served as a Cabinet Minister longer than I have. I do not raise a point of order for no good reason. I accept absolutely that it is the Chair’s perfect right to accept a closure. I am not disputing that in any way at all, and obviously a Chair has to weigh up certain reasons for accepting a closure. My plea, however, is that where debates are of huge moment to the whole of New Zealand—and I do not want to refer to the specific issue here; let me just leave it as a general case—the Chair considers that fact when weighing up whether to accept a closure. That is my point of order, and I trust it is not out of order.

The CHAIRPERSON (Ann Hartley): I have taken those matters into consideration. That is how the decision was made.

Part 2 Amendments to Income Tax Act 1994

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney): Part 2 is probably the most offensive part of this legislation. Part 1, which we have just debated, is bad enough because it locks into place tax rates on our lowest-income people that result in 100 percent of effective marginal tax rates. But Part 2 does something even worse. Clause 68 sets a favourable tax rate for a proportion of our population, based purely on race. Members of the Opposition of many ethnic backgrounds find that offensive. For certain organisations defined as Māori organisations, clause 68 prescribes a new tax rate of 19.5 percent. We would have no objection to certain organisations receiving a tax rate of 19.5 percent if a general condition applied—that is, if 90 percent of the beneficiaries of an organisation were people on a 19.5 percent personal tax rate. No one could object to that, because the ultimate rate being paid by the beneficiaries is 19.5 percent, and such an organisation should qualify for that. But that is not what Part 2 does. It picks out only those organisations that are Māori.

Let me challenge the Minister in the chair to identify just one New Zealand person who, under Part 2, could receive the benefits of a 19.5 percent tax rate, but is not a Māori person. If the Minister can name one, I would be prepared to apologise profusely, but as I read clause 68 and the various other clauses in Part 2, the only people who can benefit from that 19.5 percent tax rate are Māori. That is why it is a racist tax measure, and why Chen Palmer and Partners argued before the select committee that it was contrary to the New Zealand Bill of Rights Act. If I remember correctly, when we tried to get information from the Attorney-General, she would not tell us what her advice was on the matter.

When we have the consultancy of a former Prime Minister and a former leader of the Labour Party telling us that this provision is contrary to the New Zealand Bill of Rights Act, we have an issue. What is more, we know that the Federation of Māori Authorities has written to the Minister of Finance wanting the decision of the select committee not to allow this special beneficial tax rate to be extended to wholly-owned subsidiaries to be changed so that wholly-owned subsidiaries can get the benefit. That shows that this 19.5 percent tax rate confers a very real competitive advantage on Māori businesses alone. If there are two businesses side by side and one is owned by Pacific Islanders—whose beneficiaries, sadly, are overrepresented among our low-income people—the Pacific Island business where 90 percent of the shareholders are Pacific Islanders will not benefit from this special tax rate. Only a Māori business will get it.

National considers that does not confer one standard of citizenship in this country. It is objectionable to most New Zealand people, and that is why we are implacably opposed to that provision. We accept there is a problem with the status quo. We accept that under certain circumstances some Māori organisations could be doubled taxed. If they retained their earnings for 4 years before distributing, they could be doubled taxed. That is not right, either. We accept that change is necessary. That is why we initiated a process to examine this issue, but to come up with an answer that confers a privilege—a competitive advantage—based purely on race is simply not acceptable. That is why I challenge the Minister to name one person other than a Māori, who, under Part 2, could receive the benefits of a 19.5 percent tax rate. If he can do so, I will apologise.

GORDON COPELAND (United Future): I would like to respond just briefly to the frequent challenge that the Hon Lockwood Smith has made to the Minister in the chair, Mr Swain, and also, I think, in an earlier speech, to United Future. He said he will apologise if we can name, under clause 68, one person who is not Māori who will receive a tax rate of 19.5c in the dollar. I would like to ask whether the member is confident that no one of Chinese ancestry—

Progress reported.

The House adjourned at 6 p.m.