Wednesday, 19 March 2003

Wednesday, 19 March 2003

Wednesday, 19 March 2003

Mr Speaker took the Chair at 2 p.m.

Prayers.

Committees

Business of Select Committees

Reporting Dates

Hon Dr MICHAEL CULLEN (Leader of the House): I seek leave for the time by which the Māori Affairs Committee must finally report the Te Whanau-a-Taupara Trust Empowering Amendment Bill to be extended to 30 April 2003.

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

Membership

Hon Dr MICHAEL CULLEN (Leader of the House): I seek leave for Sue Bradford to be a member of the Commerce Committee for the purposes of its consideration of the Status of Redundancy Payments 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.

Hon Dr MICHAEL CULLEN (Leader of the House): I seek leave for Larry Baldock to be a member of the Transport and Industrial Relations Committee for the purposes of its consideration of the Land Transport Management 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

Questions to Ministers

Legal Aid Services—Planning

1. TIM BARNETT (NZ Labour—Christchurch Central) to the Minister of Justice: What plans does he have to pilot publicly provided legal aid services?

Hon PHIL GOFF (Minister of Justice): A publicly provided legal aid service will commence early next year to provide criminal legal aid services in the Auckland and Manukau courts. Under the pilot, which was foreshadowed under the Legal Services Act, up to a third of criminal legal aid services in these courts could be provided by public lawyers, working alongside private lawyers. The pilot, as indicated in the Legal Services Act, will be properly evaluated.

Tim Barnett: What are the benefits of having a publicly provided service alongside private providers?

Hon PHIL GOFF: Most overseas jurisdictions with legal aid regimes similar to New Zealand’s, including Canada, Australia, England, and Wales, have a mixture of publicly and privately provided legal aid services. Research indicates that this is, in fact, the mixture that produces the best results. In particular, a mixed system creates the incentives for each system to improve the quality and consistency of representation, and ensures best value for the taxpayers’ money.

Richard Worth: If the Minister is truly concerned about the provision of good and strong legal aid, why has he overlooked or ignored the proposal that would involve the Legal Services Agency calling for tenders from both law firms and barrister groups for legal services work on a bulk basis, with a consequent improvement in the quality of legal services provided?

Hon PHIL GOFF: Indeed, I have foreshadowed just that. Again, in the Legal Services Act that is another option that the Legal Services Agency will be looking at, and will implement in due course. However, we want to do these things one at a time, so that the Legal Services Agency is able properly to implement each of the pilot schemes that it has in mind.

Stephen Franks: What rules or other steps will the Minister take to ensure that this new service is not simply on top of existing services, and that it does not simply fund endless appeals and other cases without merit?

Hon PHIL GOFF: The same set of rules will apply, in terms of eligibility for legal aid, for publicly provided services as for privately provided services. What having a public system can do, of course, is address some of the concerns that have been expressed about the cost of legal aid. The cost and quality of private services can appropriately be measured against the public sector provider. Equally, the private sector provider, under a mixed system, ensures there is proper competition with the public sector, and we can measure one system against the other.

Dail Jones: What steps will be taken to ensure that the public providers have adequate qualifications and experience, as opposed to the private providers?

Hon PHIL GOFF: It is very important that the public sector providers do have the appropriate qualifications and experience. For that reason, the widest range of legal aid work will be available to public lawyers from the District Court to the Court of Appeal, including duty solicitor schemes. That way we can get a mixture of senior and more junior staff, and the junior staff of course can be mentored by the senior staff. That is also a career structure within the public sector that will attract the right sort of people.

Iraq—Foreign Policy

2. Hon RICHARD PREBBLE (Leader—ACT NZ) to the Prime Minister: In light of the failure of the United Nations Security Council to resolve the Iraq crisis, will she now review New Zealand’s foreign policy which she described yesterday “has at all times been based on its strong support for multilateralism … and for upholding the authority of the Security Council”; if not, why not?

Rt Hon HELEN CLARK (Prime Minister): The Government will not be reviewing New Zealand’s foreign policy, because it believes that multilateralism is the appropriate way to resolve international disputes.

Hon Richard Prebble: Will the Prime Minister clarify what she means by a multilateralist approach, and does she not concede that the only reason Saddam Hussein made any disarmament gestures was the presence of a quarter of a million US, British, and Australian troops in the Middle East; if so, what contribution have the multilateralists, France, Germany, Russia, and New Zealand, made to the cost of this show of force, or are multilateralists just bludgers, always calling for more time because it costs us nothing?

Mr SPEAKER: There were three questions there. Two questions can be answered.

Rt Hon HELEN CLARK: The Government believes the UN process was working. What happened was that some powerful countries walked away from it.

Hon Bill English: Does the Prime Minister believe that the United Nations process would have worked at all, without a credible threat of military force from the US?

Rt Hon HELEN CLARK: At the time the inspectors went back in, there was very little US presence. The presence built up thereafter. Kofi Annan and Mr Blix, and most nations, including ours, agree that the pressure was helpful. It did get traction. The process was working and should have been left to work.

Rod Donald: Can the Prime Minister confirm that the multilateral system would have been perfectly capable of dealing with the Iraq situation if the US and UK had been willing to abide by the UN Security Council majority, which clearly opposed the motion in favour of war that was proposed by the “coalition of the killing”?

Rt Hon HELEN CLARK: The Government believes that the process was working. Furthermore, our position is that we will uphold Security Council resolutions, whether or not we agree with them. That is what being in a multilateral process means.

Hon Peter Dunne: In the light of the failure of the efforts through the United Nations, is the Prime Minister prepared to take a leaf out of the book of her illustrious predecessor Peter Fraser, and promote a reform of the United Nations decision-making procedures so that we do not get to this type of intolerable impasse in the future?

Rt Hon HELEN CLARK: The Government does not believe that we were at an intolerable impasse. We had a process that was working and should have been able to continue to work.

Hon Richard Prebble: Will the Prime Minister further clarify what she means by multilateralism, as she should know that only five nations, including New Zealand, joined Britain in declaring war on Nazi Germany in September 1939, compared with the more than 30 nations that are in the “coalition of the willing”; and would the Prime Minister have advised Britain to follow a multilateralist approach, take Hitler to the League of Nations, and allow diplomacy to take its course?

Rt Hon HELEN CLARK: The member is well aware that the United Nations was not in place at that time. His history book will also tell him that the United States was not one of the five.

Hon Richard Prebble: I raise a point of order, Mr Speaker. I know that the Prime Minister says she is an expert on foreign policy, but it was called the League of Nations. Now could I have the question answered?

Mr SPEAKER: She did answer the question. [Interruption]

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The reason there was a sporadic outburst of interjections from this side was that Mr Prebble had clearly referred to the League of Nations—we all heard it. The answer that came back disputed what he had said and claimed that it was the United Nations that he had referred to. We all know that the Prime Minister was wrong, and you should not be allowing her to slide over it like you did.

Mr SPEAKER: The member is not going to disagree with what I said, because what I said stands. I say to the member that, as far as I am concerned, the Prime Minister addressed the question. The member might not agree with the answer, but that is what democracy is all about.

Overseas Students—Work

3. GORDON COPELAND (United Future) to the Minister of Immigration: Can overseas students work in paid employment while enrolled in a long term course of study in New Zealand; if so, how much work are they permitted to undertake?

Hon LIANNE DALZIEL (Minister of Immigration): Yes, students on long-term tertiary courses may, on application, work for 15 hours per week during term time, and for extended hours during vacations.

Gordon Copeland: If the Prostitution Reform Bill becomes law, is there any way to prevent brothel owners from importing women from at-risk countries like Thailand on student visas, and employing them to work as prostitutes in brothels?

Hon LIANNE DALZIEL: If such an establishment were to bring in people for one purpose but to apply for a different permit, then that particular employer would in fact be in breach of his or her obligations and would be guilty of offences under the Immigration Act. The point the member raises is a very good one, and it was something that I became aware of late last week. Therefore, I have asked for work to be undertaken with the promoter of the bill and the Minister of Justice to ensure that we exclude all immigration permits from the area of brothel-keeping and prostitution.

Dave Hereora: How does the provision of education to overseas students in New Zealand contribute to the New Zealand economy?

Hon LIANNE DALZIEL: Trade New Zealand has estimated the economic value of the export education industry to New Zealand in 2002 at $1.7 billion. That is why it is important that we do follow up on the issue that has been raised by the primary questioner.

Pansy Wong: How can overseas students concentrate on their study or 15 hours of work, when some of them still have to queue outside the New Zealand Immigration Service at the crack of dawn, and what is the Minister doing to fix the problem?

Hon LIANNE DALZIEL: Students do not have to queue outside the Immigration Service at the crack of dawn. If that member were to be helpful and advise members of different communities in Christchurch that they do not actually have to go into the Immigration Service, as I have been trying to do for the last several weeks—there has not been one helpful contribution from that member—then I would take her seriously.

Gerry Brownlee: I raise a point of order, Mr Speaker. You have consistently ruled, Mr Speaker, that all a Minister has to do is stand up and address the question. Are you going to extend that rule to allowing a Minister to stand up and attack the questioner and allow that to stand as an answer to a question?

Mr SPEAKER: No, the Minister was addressing the question. The member may not have liked it. I allowed a certain amount of comment to come back from the other side at that point, and that applied.

Rt Hon Winston Peters: Why is it that after 4 years, every time something goes wrong—for example, people paying for others to queue for them; prostitutes being brought into this country, about which she claims she knows nothing at all; or, worse, the Japanese school in Auckland that she now claims was illegally started, which had people falling asleep because they were working 7 days a week in restaurants illegally—she knows about it only when somebody tells her, and if that is how incompetent she is, why does she not resign?

Hon LIANNE DALZIEL: I have done more as Minister of Immigration than the member did in addressing rorts that existed in the system the whole time that he was in a Government and could have addressed these problems. The point is that people who come to this country as students have an entitlement to work if they apply for open work permits. The original questioner has raised a serious question, and that member would do well to listen to the answers.

Larry Baldock: In the light of that serious issue, has the Minister received any reports that indicate the practice of importing women into New Zealand on student visas to work as prostitutes is already taking place; if so, will she review the rules covering the granting of student visas, with a view to eliminating this practice?

Hon LIANNE DALZIEL: Again, the point the member raises is a good one, because the current law does not make prostitution illegal. It makes the act of soliciting illegal, and it also covers the activities of brothel-keeping and living off the earnings of prostitution—so there actually is a gap in the existing law. I do not have any evidence that people are being brought in under student permits to act in brothels. I do have good evidence that people are coming in from some countries on visitors visas, and are working unlawfully in brothels.

Rt Hon Winston Peters: Why does the Minister blandly rise in the House, day in, day out, giving an assurance with regard to these questions, when, for example—

Mr SPEAKER: I have allowed a little bit of toing and froing on this, but my patience is now at an end. There will be no more interjections. I want to hear Mr Peters’ question.

Rt Hon Winston Peters: Why does the Minister give these bland assurances, day in, day out, when, for example, in the case of the Japanese school in Auckland, she had no idea what the students were doing, she had no idea that the school was operating, she had no idea of the level of illegality; and after a murder was committed she still has no idea of what happened there? Surely, she does not have the resources to give the assurances she has given this House?

Hon LIANNE DALZIEL: I have answered the questions on the issue of the Columbus Academy very clearly, by reference to the fact that the individual student who was killed on those premises—which is now the subject of an intense police inquiry—entered New Zealand visa-free, from Japan, in 1997—a familiar year.

Gordon Copeland: What course attendance and academic progress requirements do overseas students currently face in order to maintain their student visas; and is the Government moving to monitor these for compliance continuously throughout the year, as is being done now in the United States?

Hon LIANNE DALZIEL: Institutions that have enrolled international students under these student permit provisions are obliged to advise the Immigration Service either that the individual student is not complying with his or her student permit by attending courses, or that he or she is failing to meet the course requirements.

Iraq—Disarmament

4. Hon BILL ENGLISH (Leader of the Opposition) to the Prime Minister: Would the New Zealand Government change its view opposing military action to disarm Iraq in the event of Iraq using biological or chemical weapons; if not, why not?

Rt Hon HELEN CLARK (Prime Minister): As spokespersons for other Governments have observed, that question is hypothetical. Our opposition was to unilateral military action. The use by any nation of chemical biological weapons would almost certainly be regarded as a breach of international peace and security and, as such, the Security Council would be bound to address how to restore international peace and security.

Hon Bill English: Does that mean that she intends to follow the lead of a number of spokespeople for the French Government who have said that if Saddam Hussein starts using chemical or biological weapons, that would “change completely the situation for the French Government”?

Rt Hon HELEN CLARK: Of course, it creates a new situation that the Security Council should address. I note that the member cannot decide whether troops should be sent at the moment.

Rt Hon Winston Peters: Rather than wait around for something that may or may not happen, has she made her Government’s view clear to the Iraq Government that should it use biological or chemical weapons her Government would then make the appropriate response?

Rt Hon HELEN CLARK: The New Zealand Government is totally opposed to the use of biological or chemical weapons, as are all those many, many countries that have signed UN conventions. In our view, the UN Security Council would almost certainly regard that as a situation where force would need to be used under Article 42.

Rod Donald: Does the Prime Minister agree that a United States military invasion of Iraq is the single most likely event to cause Iraq to use chemical or biological weapons, if it has them, in which case—[Interruption]

Mr SPEAKER: I will not warn Dr Lockwood Smith again. Members can ask their questions in silence. That is part of our democratic process. The member will be able to ask his question in silence. Every member has that right. Please start again.

Rod Donald: Does the Prime Minister agree that a United States military invasion of Iraq is the single most likely event to cause Iraq to use chemical or biological weapons, if it has them; in which case anyone opposed to the use of those weapons—as I am sure the National Party is—should oppose this illegal, unjust war; if not, why not?

Rt Hon HELEN CLARK: Clearly, Iraq is preparing to fight, but there are mixed views as to whether it would use such weapons. Dr Blix has opined that he thinks on balance it would not. Others have said that it might. However, in our view, no such use of such weapons can ever be condoned. They should never be used.

Hon Bill English: Even if the Prime Minister regards this as a matter that should be dealt with by the UN, does that mean it makes no difference to New Zealand’s stance over the war, or that it would change New Zealand’s stance over the war?

Rt Hon HELEN CLARK: Our objection is to unilateralism, just as the member’s was last week.

Rod Donald: Will the Government be making the strongest possible representations to the United States to ask it not to use nuclear weapons in Iraq, given that the US has declared that it is prepared to use nuclear weapons if it is confronted by chemical or biological weapons; if not, why not?

Rt Hon HELEN CLARK: The Government is totally opposed to the use of any weapons of mass destruction by any country for any reason.

Mr SPEAKER: I call question No. 5.

Hon Richard Prebble: I raise a point of order, Mr Speaker. I thought that Mr Lockwood Smith called for a supplementary question, which he is entitled to do.

Mr SPEAKER: Yes, and the rules are that the ACT party, for example, has eight supplementary questions. It can use them up when it wishes. The National Party has a supplementary question on every question, and when a member asks a question, it has a second supplementary question, which it has had. If the National Party is prepared for Dr Lockwood Smith to ask one, it then forgoes one of its other questions. Does the whip want to have Dr Lockwood Smith ask a question? [Interruption] That is fair enough. That is perfectly acceptable.

Dr the Hon Lockwood Smith: How does she describe to this Parliament, or claim in this Parliament, the success of the United Nations weapons inspections process when it seems that Saddam Hussein has weapons of mass destruction deployable within 48 hours?

Rt Hon HELEN CLARK: The member has no evidence of that whatsoever.

Imported Meat—Labelling

5. SUE KEDGLEY (Green) to the Minister for Food Safety: Can she confirm that 16,862 tonnes of pork, 9,204 tonnes of beef, 2,078 tonnes of lamb and 953 tonnes of mutton were imported into New Zealand in the year to December 2002; if so, is there any requirement that any of this meat be labelled so that New Zealand consumers can know whether they are buying New Zealand or imported meat?

Hon ANNETTE KING (Minister for Food Safety): No, I cannot confirm exact import figures. However, I am advised that although there is no requirement to label the country of origin, imports are accepted only from countries that have comparable quality assurance programmes to our own.

Sue Kedgley: Does the Minister agree it is a fundamental consumer right to know what is in food and where it comes from, and that it is deceptive and misleading for imported meat products to be unlabelled, or to claim, as this item does, that it is made in New Zealand, when in fact the pork is imported from Canada?

Hon ANNETTE KING: Country of origin labelling in New Zealand has not been accepted as mandatory, because we have fair trading laws, and I would suggest that anybody who brings in a substance and then claims it to be a New Zealand - made product would want to look to the fair trading laws. However, when one does look at imported product and country of origin labelling it is rather confusing as to how that product would be labelled, because one could have part of the product that comes from another country whilst most of it comes from New Zealand; how would that product then be labelled?

Sue Kedgley: Why are New Zealand officials vehemently opposed to mandatory country of origin labelling, and even threatening to opt out of Food Standards Australia New Zealand on this issue to avoid introducing it in New Zealand, when it is such a basic consumer right?

Hon ANNETTE KING: I have already addressed that issue. New Zealand has fair trading laws that are different from those of Australia. All products in New Zealand are covered by our fair trading laws, so we do not believe that we need country of origin labelling, because it is not a food safety issue.

Sue Kedgley: What is the basis for the Government stating in briefing papers that “New Zealanders have no interest in country of origin labelling”, when a 2002 Food Standards Australia New Zealand survey found that New Zealand consumers do want country of origin food labelling, and will she require her food safety department to undertake a wide-ranging public consultation and nationwide survey on country of origin labelling before making a final decision in a few weeks’ time on this issue?

Hon ANNETTE KING: In January this year a discussion document was issued by Food Standards Australia New Zealand to examine the issue of country of origin labelling. It has been open to Australian and New Zealand people to make submissions. It will be considered in April, and at that time we will look at what evidence is provided. If I remember correctly, there were 18 submissions made.

Transport Strategy—Reports

6. LYNNE PILLAY (NZ Labour—Waitakere) to the Minister of Transport: Has he received any reports about support for the Government’s recently announced New Zealand Transport Strategy?

Hon PAUL SWAIN (Minister of Transport): Yes, I have. The Automobile Association has commended the Government for developing a 10-year strategy for transport. The Auckland Business Forum has indicated its support of the strategy’s broad purpose and objectives. Transfund has indicated to me that it has received eight applications from councils for alternatives to roading funding, 20 applications for walking and cycling projects, and has approved $23 million of transport regional development funding for projects in Tairawhiti and Northland.

Lynne Pillay: Has he received support for this strategy from any other sources?

Hon PAUL SWAIN: Yes. I received comment that transport priorities should be changed to emphasise economic value and safety, and that there should be tolls and private funding to deal with Auckland congestion. These comments came from the Leader of the Opposition. Assisting economic development and safety and personal security are two of the strategy’s objectives announced in December last year. Toll roads and private funding are both included in the Land Transport Bill introduced at the same time. The Leader of the Opposition seems to be 4 months behind on both issues. Nevertheless I welcome his support. They are big improvements on the comments of his transport spokesperson, who wants a four-lane highway from Auckland to Wellington.

Hon Roger Sowry: Does the Minister agree with the statement of Simon Carlaw of Business New Zealand that: “The major concerns to business from this radical change in transport policy are prohibitive cost increases for road users and continuing neglect of important roading projects. These will both ultimately impact on the competitiveness of the economy and its ability to grow and deliver the living standards we all want.”; if so, what changes does he intend to make to the land transport strategy to allow it to achieve its own stated goal of helping New Zealand return to the top half of the OECD, or has he abandoned that goal?

Mr SPEAKER: The first two questions can be answered.

Hon PAUL SWAIN: I am sure that Simon Carlaw would agree that the land transport strategy, the Land Transport Management Bill, and the significant funding increases that have been put in place by this Government are a huge advantage over what was in place under the previous National Government. Any changes to be made to that bill are currently being considered by the Transport and Industrial Relations Committee, and the Government will wait to hear its deliberations.

Ron Mark: Will the Minister tell the House whether he has received letters of congratulation from the Hurunui District Council, the Waimakariri District Council, or from the Christchurch City Council, as a result of his proposals to defer roading projects such as the northern arterial and the Awatere bridge in the Hurunui district?

Hon PAUL SWAIN: I may well have received such letters, but do not recall them offhand. The issue that the member raises is, of course, the draft plan put out by Transit. Currently, consultations are going on. I am aware of all those projects that have been deferred. I expect the people concerned to be making strong submissions to Transit, and we will wait and see its final deliberations in the middle of the year.

Deborah Coddington: Why will the Minister not concede that the land transport strategy will not solve any of New Zealand’s transport problems, because it will result in even more paralysis by consultation, especially when tolls and public-private partnerships are concerned?

Hon PAUL SWAIN: That is just not the case. In fact, there has been an enormous amount of consultation leading up to the presentation of the strategy and the bill. My advice to that member, if she wants to take part in consultation, is to have electorate offices in other parts of the country and not just in her party leader’s flat.

Jeanette Fitzsimons: Have any applications for alternatives to roading been received under the new strategy; if so, what impact will they have in reducing pressure on road use?

Hon PAUL SWAIN: Yes, there have been a number of applications to that particular pool, and they have been very positive indeed. They have been things like investigation of the Marsden Point rail link, funding for the Hamilton transport centre, and investigation into extending the Clandeboye Dairy Factory link. Many of those involving rail will take some considerable pressure off the roading network, and will produce a much more multimodal transport strategy, which the Government, along with the Greens, support.

Larry Baldock: Given that the New Zealand land transport strategy outlines a vision to be realised by 2010, how much importance does the Minister attach to the passage of the Land Transport Management Bill as a means for providing flexible road-funding alternatives to help reach that goal?

Hon PAUL SWAIN: We attach quite a lot of significance to that. We simply cannot fund, traditionally, the kinds of projects that everybody wants. We need more flexible arrangements. I thank the United Future party for its support of that bill. There are currently submissions before the select committee, and we will wait and see what the deliberations of that committee are before we consider any changes to be made to the bill.

Rt Hon Winston Peters: What level of consultation or demand came from the United Future party, in particular Mr Dunne, on the question of Transmission Gully, or did he just slide over that as usual?

Hon PAUL SWAIN: There was considerable discussion and consultation with the United Future party before the introduction of the bill. That party is most concerned about alternative funding mechanisms, and those include public-private partnerships and tolls. Certainly Transmission Gully is one of the kinds of projects that would be considered as part of that proposal.

Immigrants—Categories

7. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Immigration: How many of the 2.045 million people who entered New Zealand as visitors in the year ending December 2002 changed category after their arrival?

Hon LIANNE DALZIEL (Minister of Immigration): In fact, 1.341 million visitors permits were granted at the border in the year ended December 2002. Of these, 16,600 people were granted a student permit, 11,400 were granted a work permit, and 8,800 were granted a residence permit following their visitor’s permit.

Rt Hon Winston Peters: Given that Statistics New Zealand gives the figures as being 2.045 million—and she has lost 1 million already—and given that the total sum of the other three categories does not amount to the number who are engaged in this country, is that part of the new-wave immigration she has talked about—

Gerry Brownlee: Third wave!

Rt Hon Winston Peters: —no, it is called new-wave immigration—in a series of five lectures, one of which was scheduled for Thursday, 13 March, at the Durham Street Methodist Church in Christchurch, advertised in this huge advertisement here, and how many people came along to this telephone-booth audience?

Hon LIANNE DALZIEL: The Methodist Church in Christchurch is running a series of Lenten discussions, and I was invited to contribute to that. I did not do a head count, but there were at least 50 people in the audience at the church on the afternoon. I am sure the member knows full well what the inside of a church looks like. I know that the member has treated flippantly the suggestion of my colleague the Minister of Statistics about how these figures work, but that 2 million figure includes New Zealanders who live overseas and Australians.

Luamanuvao Winnie Laban: Has it been official for New Zealand that visitors can apply to become workers, students, or residents without being required to leave the country and apply off shore?

Hon LIANNE DALZIEL: Yes, it is. People who have visited New Zealand before deciding to apply to study here, take skilled employment here, or live here permanently, are in an excellent position to make an informed decision about whether it would be the right choice for them. Settlement outcomes for new permanent residents are enhanced if they are already engaged in the New Zealand education system or labour market.

Hon Murray McCully: What are the resourcing implications for the Immigration Service if a significant proportion of the growing numbers of people entering New Zealand as visitors apply to have a change of status once they have come here, and what is the Minister doing to address those resourcing issues?

Hon LIANNE DALZIEL: They have always been able to change their status in New Zealand.

Rt Hon Winston Peters: Firstly, why on earth would 700,000 New Zealanders coming back to this country be described as visitors, and, secondly, where do those 36,200 whom she referred to in those three categories appear in the statistics?

Hon LIANNE DALZIEL: I seriously wish that that member would take up the offer given in terms of a briefing on these statistics. I will quote from them, yet again: “In the preparation of migration statistics the classification of each passenger is primarily determined by the passenger’s response on the arrival or departure card to the question on intended or actual length of stay or absence. If the person’s intention changes later during a trip, then they may also change their migrant category.” And the warning: “Data users should recognise the limitations inherent in the information supplied by travellers.”

Rt Hon Winston Peters: I again ask the Minister where in the statistics do those three categories amounting to 36,200 actually appear at the end of the year—that is what we are asking?

Hon LIANNE DALZIEL: As the Minister of Immigration, I am not responsible for the collation of Statistics New Zealand’s external migration statistics, which are released every year. As I try to explain to the member, week in week out, I have never come across an individual who cannot comprehend that these statistics are different from the immigration permit statistics.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. With the greatest of respect, I think you should stop the Minister and put her out of her misery if she cannot answer the question.

Mr SPEAKER: That is just a political point. It has nothing to do with this.

Building Industry—Better Regulation of the Building Industry in New Zealand

8. MARK PECK (NZ Labour—Invercargill) to the Minister of Commerce: Has she been informed of any reaction to the release of the discussion document Better Regulation of the Building Industry in New Zealand, and what is the purpose of the discussion document?

Hon LIANNE DALZIEL (Minister of Commerce): The response has been overwhelmingly positive from the building industry—no doubt as a result of the extensive consultation with, and input from, the building industry task force and other key stakeholders. The purpose of the discussion document is to focus attention on the long-term solutions required to address the systemic failure of a deregulated building industry.

Mark Peck: Why was the Building Act review broadened in the wake of the weathertightness problem?

Hon LIANNE DALZIEL: Weathertightness is a symptom of a greater problem. Treating the symptom alone does not treat the cause. The problem in this case was the ideological, hands-off, “leave it to the market” 1990s approach, which allowed that failure to occur. I am determined to find front-end solutions so that we minimise the risk of building failure occurring again. I invite the Opposition to play a constructive role.

Hon Harry Duynhoven: I raise a point of order, Mr Speaker. I am sorry to interrupt proceedings, but none of us here could hear any word of the answer from the Minister to that question.

Mr SPEAKER: The member has raised a valid point. I like to let things flow on a Wednesday afternoon. Sometimes I think that one can be a little too harsh by interrupting all the time, but the member is completely correct. I want the Minister to have the opportunity to answer questions in a little more silence from now on. Supplementary question, Dr Wayne Mapp.

Dr Wayne Mapp: I raise a point of order, Mr Speaker. There is an issue of factual correctness. The Minister should know that the Labour Party actually voted for that legislation.

Mr SPEAKER: The member knows that that is political comment. Would he please ask his supplementary question.

Dr Wayne Mapp: Can the Minister advise this House and thousands of New Zealand homeowners—people who are purchasing their homes now—of what date, or what month, the Building Industry Authority will be promulgating the changes to the building code on treated timber for exterior framing? When will that happen?

Hon LIANNE DALZIEL: I suggest that the member reads the front page of this morning’s New Zealand Herald.

Dr Wayne Mapp: Point of order—

Mr SPEAKER: No, I want the Minister to give a more informative answer, if only to inform me, too.

Hon LIANNE DALZIEL: The New Zealand Herald reports this morning that the Building Industry Authority yesterday announced that it would release proposed changes to the building code for consultation next month.

Dr Wayne Mapp: I raise a point of order, Mr Speaker. My question was specifically about when the Building Industry Authority would actually promulgate the changes to the building code, not issue a consultation paper. Obviously, I am aware of the issue—that is why I asked the question. People want to know the answer.

Mr SPEAKER: I have to judge whether the Minister addressed the question. She has said that she will add a little bit to it.

Hon LIANNE DALZIEL: As the member knows, there has to be a consultation process prior to any promulgation. The consultation process will begin with the release of the consultation document next month.

Hon Roger Sowry: I raise a point of order, Mr Speaker. By way of interjection, we invited the Minister to say that she did not know what the date was, because she had been asked about it twice. First, she told the member to refer to the New Zealand Herald, then, when she was drawn on that, it became apparent that the New Zealand Herald article was not about the question of promulgation at all. When the Minister was asked to confess that she did not know the answer to the question, she said from across the House that she did know the date. If the Minister is able, by way of interjection, to say that she does know the date, she should tell that to the House, as she was asked to do.

Mr SPEAKER: That is not what the member said. I heard the Minister’s comment.

Murray Smith: Given that the Government Administration Committee is due to report on its inquiry into leaky buildings within a matter of days, why did the Minister feel the need to pre-empt that report and risk there being contradictory recommendations from the select committee, which will serve only to confuse the public?

Hon LIANNE DALZIEL: The select committee report is a vital part of the Government’s time line, but I could not wait to include any recommendations in the discussion document. I have been very mindful of the submissions that were made to the select committee in the process of its work. I reassure the select committee, and submitters to its review, that their submissions and the select committee’s report are an integral part of the wider review, and they will be part of the decision-making process.

Hon Dr Nick Smith: I seek leave of the House to table the voting record from when the Building Act was passed in 1991, where the Minister, who has described it as “ideological dogma”, voted for it.

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

Electricity—Price and Supply

9. GERRY BROWNLEE (NZ National—Ilam) to the Minister of Energy: Has he been informed of the comments by Tiwai Point aluminium smelter general manager operations, Tom Campbell, regarding the current price and availability of electricity in New Zealand where he says, “We are very concerned what this means for the winter and about the future of power supply in New Zealand”; if so, is he also concerned?

Hon PETE HODGSON (Minister of Energy): Yes, I have been informed, and, yes, I am concerned.

Gerry Brownlee: In the light of the fact that the hydro lake levels are at only 86 percent of the average level for this time of the year, that the lake inflows are at only 67 percent of the average level for this time of the year, and that electricity demand for the first 2 months of the year was 6 to 7 percent higher than the demand last year, does he believe that there is a possibility of electricity shortages, brownouts, and blackouts this winter; if not, why not?

Hon PETE HODGSON: I discussed those matters at some length a few days ago with the major electricity users group, of which Comalco is a member. Industry generally understands the fact that thermal power stations have this year been running much harder, much earlier than is normal—and I do not think that industry would declare itself to be happy about that. There are two reasons for that: firstly, there is a possibility of a dry-year risk, but it is simply too early to say; and, secondly, some questions regarding the ready availability of alternative fossil fuels this winter still remain outstanding.

Mark Peck: Can the Minister tell us what the underlying problem is, given that dry-year risk is something we face every year?

Hon PETE HODGSON: The member is quite correct. The underlying problem is that the Maui gas field is running down earlier than expected. The next major gas field, Pahukura, is not yet on-stream, so the increased use of coal and distillate for electricity generation is very likely this year, and probably for the next 2 years, as well.

Gerrard Eckhoff: What is the Minister’s view of the bureaucratic planning procedures imposed under the Resource Management Act, which will delay the construction of even renewable sustainable energy developments, such as Project Aqua, for years; and will the Minister revisit the hydro development proposal for the West Coast, or will he continue to allow the Department of Conservation to dictate New Zealand’s energy development?

Hon PETE HODGSON: Generally speaking, the planning legislation works quite well for—as it happens—non-renewables, because they are generally smaller and more compact. But the member does raise an issue of consequence in respect of renewables, which is why the Government, about a month ago, indicated its intention to change the Resource Management Act. The legislation will be introduced later this year.

Gordon Copeland: Is the Minister concerned at the rapid increase in the wholesale price of electricity, and the inability of New Zealand companies to obtain long-term supply contracts, and does he have some answers to those concerns?

Hon PETE HODGSON: If the member is referring to high prices today, that is occasioned by the fact that a bit of kit has gone down, and will probably stay down for several days, I believe. As far as people being exposed to high prices is concerned, businesses that are high consumers generally insulate themselves from the spot market through buying hedges, which are more expensive than the average spot price but less expensive than the current spot price.

Jeanette Fitzsimons: Given the failure so far of the deregulated energy market to deliver security of electricity supply, or other elements of the Government’s policy statement, and hence the likelihood that the Government might need to regulate the industry further at some stage, will the Government refrain from making any further commitments under the General Agreement on Trade in Services in energy services, which would further restrict the Government’s ability to regulate the electricity market; if not, why not?

Hon PETE HODGSON: There are long bows, then there are gigantic ones. I rather suspect that we have just seen an example of the latter.

Gerry Brownlee: Does he agree with the power company, TrustPower, which has said that New Zealand faces the prospect of either cutting production in our industrial establishments now and saving on household consumption now, or having blackouts and brownouts this winter?

Hon PETE HODGSON: Generation companies and retailers in general are moving to inform the public that a bit of conservation now might not be a bad thing. TrustPower’s press statement yesterday is one example of that. There are several others.

Māori Sportscasting International—Grants

10. RODNEY HIDE (ACT NZ) to the Minister of Māori Affairs: When Te Puni Kokiri granted $10,000 to Maori Sports Casting International for a training wananga for 14 sportscasters on 6 and 7 July 2002, did it know and approve $5,400 of that money being spent on an awards ceremony and dinner for 50 guests on 6 July; if not, why not?

Hon PAREKURA HOROMIA (Minister of Māori Affairs): Yes.

Rodney Hide: Does this Minister believe it is acceptable that over half of the taxpayers’ money granted to train 14 sportscasters was spent on a dinner—an old-fashioned booze-up, with a band—for 50 guests, including two Labour MPs seeking re-election, one of whom wore a Labour Party rosette and gave a campaign speech; if so, how does this Minister justify that use of taxpayers’ money?

Hon PAREKURA HOROMIA: No, and my concerns have been communicated to the chief executive of Te Puni Kōkiri. Can I tell that member that my colleagues receive many invitations to attend a range of events, and I am certain that that member, at that time, attended a whole lot of similar events. On this occasion, both members attended the event, just as many others in the House, including the member, would have attended similar functions at that time.

Hon Richard Prebble: Point of order—

Mr SPEAKER: That answer was too long, and there were points in it that were not necessary to complete the sense of the answer.

Hon Richard Prebble: I raise a point of order, Mr Speaker. That was not the point of order I was seeking to raise. I had no objection to the length of the answer. My point is that we asked the question of the Minister but, because of noise from his colleagues, I had no idea what the answer was. I do not know what justification he is giving for spending $5,400 on a piss-up.

Mr SPEAKER: The member knows that I will not have language like that used in the House. There are certain levels of decorum, and that exceeds them. The member will stand and withdraw that comment.

Hon Richard Prebble: I withdraw and apologise—it was $5,400 spent on a “very good evening”.

Mr SPEAKER: I heard the answer to the question.

Hon Murray McCully: Given that tens of millions of dollars have been given away in grants by Te Puni Kōkiri over the past 3 years, and that there has been no monitoring or evaluation of those grants, is it not the case that the Minister has no idea how much money has been given away by his department to fund booze-ups in election year, to be attended by Labour Party politicians; and, if that is the case, what is he doing to find out about it?

Mr SPEAKER: The first two questions can be commented on.

Hon PAREKURA HOROMIA: I offer to that member to journey with me to the ministry to peruse the compilation of both the audits that have been run on performances by other ministries that this Government has funded over a whole range of activities in relation to capacity building.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. We have all endeavoured to understand the answer to the question that Mr McCully asked of the Minister, but that answer had nothing whatsoever to do with the question. Words like “compilation” or “computerisation” might sound impressive in his circles, but it does not help this House, at all.

Mr SPEAKER: I understood what the Minister was saying in relation to that question.

Ron Mark: I raise a point of order, Mr Speaker. I seek your assistance in gaining some clarification from the Minister. Is what he said actually “bureau-speak” for another invitation to another booze-up?

Mr SPEAKER: The member knows that he is trifling with the House. [Interruption] Does the member want to leave the House? He is going the right way about it. I do not want that sort of frivolity.

Mahara Okeroa: My question to the Minister of Māori Affairs is a good question—[Interruption] It is.

Mr SPEAKER: The member knows that is out of order, and if any comment like that is made again, the member will not be asking the question. Just ask the question.

Mahara Okeroa: Does the Minister consider that investing in training for Māori language broadcasting is important?

Hon PAREKURA HOROMIA: Yes, I do. [Interruption] In 2001—hang on; I have not finished the answer. In 2001, some 245,000—

Mr SPEAKER: The question was answered.

Hon Richard Prebble: I raise a point of order, Mr Speaker. The Minister, having told us the answer is yes, is perfectly entitled to let us know why. As it has cost so much to the taxpayer, I think we are entitled to hear the answer.

Mr SPEAKER: If the Minister wants to give a brief comment, I will allow that.

Hon PAREKURA HOROMIA: Yes, I do. In 2001 some 245,000 Māori adults had access to a Māori radio station. Nearly 73 percent of these people listened to a Māori radio station. It is a very, very important medium.

Rodney Hide: Given that this booze-up was hosted by Mr Hemana Waaka of Māori Sports Casting, funded by Te Māngai Pāho to the tune of hundreds of thousands of dollars a year, does this Minister still have complete confidence in the head of Te Māngai Pāho, Mr Trevor Moeke, who, as a man in the communications business with Māori around the country, apparently—and he would lead us to believe this—did not know what countless other Māori, including this Minister, knew, that is, that his manager, Mr Tame Te Rangi, was a convicted fraudster; and if Mr Moeke does share his confidence—

Mr SPEAKER: That is sufficiently long.

Rodney Hide: I raise a point of order, Mr Speaker.

Mr SPEAKER: No, I am not having a point of order on that. The member has had a long question, and he has had two parts to it. That is sufficient.

Hon PAREKURA HOROMIA: There was no such event for hundreds of thousands of dollars held by Mr Hemana Waaka, and most certainly if members read the press release, there is a review of both the processes and the activities around this whole incident.

Rodney Hide: I raise a point of order, Mr Speaker. The question was asking the Minister whether he had confidence in Mr Trevor Moeke, and I note that the Minister did not address that question. In fact, he refused to express confidence in him.

Mr SPEAKER: The member can say what he likes, but the Minister did address the question.

Immigrants—Employment

11. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Immigration: Does her Ministry permit immigrants of working age to enter New Zealand without the prospect of jobs; if so, why?

Hon LIANNE DALZIEL (Minister of Immigration): Yes. The only categories that require an ongoing job offer for residence to be granted are adult children and siblings and the family quota categories of the family-sponsored stream; the Samoan quota and Pacific access categories of the international humanitarian stream; as well as the work to residence programme covering the talent visa and the priority applications list under the skilled business stream. The general skills category introduced in 1991 is based on employability criteria rather than actual employment.

Rt Hon Winston Peters: Why then is immigration continuing when jobs are not available for migrants due to racism in New Zealand, as claimed by her colleague the Minister for Economic Development in the Dominion Post of 12 March, and when will she call a halt to the strain on New Zealand taxpayers’ money, admitted by Mr Anderton when he said that many of them—he was talking about $1.5 million being granted to them—were unemployed migrants unable to get work because of racism, and further, that grants were taking people off welfare and putting them into good jobs; when are we going to deal with New Zealand—

Hon LIANNE DALZIEL: I have not seen the article. I have no idea what the member is talking about.

Rt Hon Winston Peters: You haven’t seen the article?

Hon LIANNE DALZIEL: No.

Rt Hon Winston Peters: Well, get up in the morning and go and read the newspaper.

Mr SPEAKER: The member will stand, withdraw, and apologise for that comment. That is a personal and rude comment to make in this House.

Rt Hon Winston Peters: I withdraw and apologise. I raise a point of order, Mr Speaker. You did not stop her from claiming to have no knowledge of a critical area within her portfolio just a few days ago. She made that objection. She said she had not read the newspaper, and I said to her that she should get up in the morning and read the newspaper. What was objectionable about that?

Mr SPEAKER: I am just saying that making the comment once, I might be prepared to overlook. Further than once, is going too far. I have made that judgment and that is where the matter rests.

Hon Dr Nick Smith: I raise a point of order, Mr Speaker. This Minister made derogatory comments earlier in this House about my colleague Pansy Wong, saying that she was not doing her job properly, and you said that was OK. I find it totally inconsistent that Mr Peters makes a light comment about the Minister’s habits in the morning, and suddenly that is out of order. I simply ask for some consistency in your rulings.

Mr SPEAKER: That is probably fair enough, and I apologise.

Hon LIANNE DALZIEL: I cannot answer the specific question because I have not read the article concerned. I can say that the rate of emergency benefit uptake in the general skills category under this Government has reduced significantly.

Georgina Beyer: What changes has the Government introduced since 1999 to reduce the risk of recent migrants taking up emergency benefits?

Hon LIANNE DALZIEL: On 1 October 2001 we introduced a 3-year residence requirement for wider family-sponsored migration, coupled with a statutory declaration that enforces the obligation to meet the cost of family-sponsored migrants for 2 years after their arrival. This Government did that.

Pansy Wong: Does the Minister accept the research commissioned by her own ministry that concluded that the net financial gain from New Zealanders born overseas for the year 2002 is $1.7 billion, which would have led to more job prospects; if so, why did she then raise the level of English language requirement, which will reduce the number of Asian migrants in particular and lessen the financial gain.?

Hon LIANNE DALZIEL: The standard or level of 5 in the International English Language Testing System, which has been increased to 6.5, is for the principal applicant in the general skills category only. It applies only to people who are tertiary qualified to claim residence under that category, and I am getting sick and tired of people who are misrepresenting the basis of the policy change, which is all about qualified, skilled jobs for qualified, skilled migrants.

Rt Hon Winston Peters: How many Māori MPs from the Labour Party have visited her office complaining about the use of taxpayers’ money for foreigners, when hundreds of thousands of Māoris are left on the economic scrap heap, and who were those Māori MPs?

Hon LIANNE DALZIEL: As Minister of Immigration I have met with the entire Government Māori caucus. Not one other Māori member of Parliament has raised it with me.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. First of all, I am a Māori member. The Minister should wash her mouth out. I seek leave to table the Dominion Post article “Politics and News” of 12 March this year in which—

Hon LIANNE DALZIEL: You took a long time to get out of bed!

Rt Hon Winston Peters: Yes, but at least I wasn’t under the bed like you were. [Interruption]

Mr SPEAKER: A little bit of jocularity was in order, but the Minister will now stand, withdraw, and apologise.

Hon LIANNE DALZIEL: I withdraw and apologise.

Rt Hon Winston Peters: I seek leave to table this Dominion Post article of 12 March under the headline “Anderton defends $1.5 million grant”.

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

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. With the greatest respect, the junior whip said there was an objection. I was chastised—

Mr SPEAKER: The member will please be seated. As the member knows, any member can take objection. That is what leave means, and that is where the matter ends.

Rt Hon Winston Peters: I understand that, Mr Speaker, but I am relating to the fact that I was chastised for telling the Minister to get out bed and read the article. I have now endeavoured to show it to her, and that is the reaction. I think I am owed an apology.

Mr SPEAKER: I am sorry, but that is irrelevant to the question that was put to the House.

National Certificate of Educational Achievement—Assessments

12. Hon Dr NICK SMITH (NZ National—Nelson) to the Minister of Education: Why did the New Zealand Qualifications Authority advise all principals and all heads of departments in a circular dated 7 March 2003 of a “study to evaluate the feasibility of schools assessing some NCEA level one external standards” when the Cabinet decision on NCEA required at least 50 percent external assessment?

Hon TREVOR MALLARD (Minister of Education): That is a question that I asked, as well, although without the Cabinet reference, which is not strictly correct, and not in such parliamentary language.

Hon Dr Nick Smith: How can this Government possibly contemplate dumping more National Certificate of Educational Achievement (NCEA) assessment on schools when it has not provided a single dollar to schools for the extra costs, when it has doubled and in some cases trebled the cost to parents, and when the New Zealand Qualifications Authority has had a huge increase in taxpayer funding for the NCEA, and is that not a classic example of the Government taking the money and expecting the schools to do the work?

Hon TREVOR MALLARD: No, and that is why the advice was withdrawn by the New Zealand Qualifications Authority within a few days of it being issued because it had not been and would not have been authorised by the chief executive, the board, or myself.

Jill Pettis: Can the Minister advise whether he has indicated that there will be a review of the NCEA?

Hon TREVOR MALLARD: Yes, but not until we have completed implementation this year and next.

Deborah Coddington: What is it exactly about an exam set and marked internally by a school that makes it external?

Hon TREVOR MALLARD: That is a very good question, and if one looks at the circular it does not make sense, and that is why it was withdrawn.

Hon Dr Nick Smith: How can employers, parents, students, and this Parliament have any confidence in the New Zealand Qualifications Authority when it puts out a memo one moment and withdraws it the next, given that this is the fifth document put out by the New Zealand Qualifications Authority on NCEA that turns out to be wrong?

Hon TREVOR MALLARD: I think it is fair to say that the New Zealand Qualifications Authority’s record recently, up until this point, has been a lot better than it had been in the past. This is a glitch, it is wrong, and there are probably a number of public servants who are not very happy as a result of their errors.

Hon Dr Nick Smith: I seek leave to table the memo that was sent to all schools and all heads of department in respect of this issue of the NCEA.

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

General Debates

General Debates

JUDY TURNER (United Future): I move, That the House take note of miscellaneous business. When family life seriously disintegrates, to the point where children need to be relocated for reasons of safety, there is always a huge sigh of relief when a caring relative is found who is willing to offer his or her home and resources to care for the children.

Mrs S is one such relative. At 54 she was at the peak of her career, earning in excess of $60,000 and travelling the length and breadth of New Zealand to train clients. Her children had all finally left home. She had recently remarried, and she and her husband were making great gains in their savings towards what they planned to be their golden years of retirement. What Mrs S and her husband had not counted on was that her daughter would become a desperate drug addict who would have an unplanned baby, and who would leave the newborn baby girl in the care of her mother and disappear within days of the little girl’s birth. At first Mrs S reasoned that this situation would be a short-term problem, that her daughter would use the time out to get her act together, and would return to take up her parental responsibilities. Five years later it became evident that this was not to be the case.

Relatives like Mrs S, most of whom are grandparents, are some of the unsung heroes of our nation. Today, I would like to use the few minutes that I am allocated to make the House aware of the plight of many of those caregivers, in the hope that I can begin to make a case for more substantial Government support for those people, who are numbered in their thousands.

Mrs S considers herself lucky, compared with the many others that she is now in contact with through the Grandparents Raising Grandchildren Charitable Trust. Having raised her granddaughter from birth, she does not have the struggle that many grandparents have when they receive severely traumatised older children into their care. She has not had to contend with her daughter, or her daughter’s partner, threatening her with violence in order to stop her from applying for income assistance—which would alert the department to their false application for the domestic purposes benefit. She has not had to remortgage her home to cover costs, although there is nothing left of the retirement fund.

The personal cost to those grandparents is immense. Grandparents caring for their grandchildren find it difficult to sustain their own social connectedness. They are included less and less in the activities of their old friends, as it is difficult to participate in them with children in tow. They are often too old to fit in with their grandchildren’s friends’ parents. Other grandchildren in the family miss out on their share of their grandparents’ time and energy. There is an unavoidable inequity in the treatment of other grandchildren, and that can breed family tension.

Grandparents who are raising grandchildren live with a constant range of fears. Mrs S articulated those very clearly. She worries about the likelihood of the police turning up to tell her that her daughter has died of an overdose. She is worried that her daughter, who is still a serious addict, will one day drop off her subsequent children and walk away. She worries about her own health and what will happen if she cannot live long enough to complete the task of raising this child. Other grandparents fear the regular and erratic comings and goings and demands of the unfit parents of their grandchildren. Approximately 70 percent of those on the Grandparents Raising Grandchildren Charitable Trust database—and that is by no means exhaustive in its content—have experienced expensive court cases, ranging in price from $8,000 to $15,000, in fighting their own children for the ongoing custody and safety of their grandchildren.

STEPHEN FRANKS (ACT NZ): I want to review the illustrious recent career of a major non-producer on the Government benches, the “Minister of Justice Announcements” the Hon Mr Goff, who announces and then reannounces and reannounces programmes, instead of dealing with issues. We heard today about a pilot legal aid programme. That programme is an absolute trifle compared with the eligibility for legal aid review and report that we were supposed to have had 2 years ago. If we had had that report, we might not have some of the unfairness that we have at the moment to middle-income earners, some of the rorts in the Resource Management Act, and some of the scandals like the $1.3 million spent on the Tukuafus. We might, if this Minister was not a non-producer, have had the official victimisation survey that was due on 29 March last year, and we might have had a little earlier than 2 weeks ago the bill for the Independent Police Complaints Authority. The only thing that bill does is to put “Independent” in front of the name of the authority; it does nothing else that a little increase in budget would not have done.

How can we take Mr Goff’s vein-throbbing anger and his trembling passion as anything more than manufactured feeling? It is just a political performance, given that he dithers or does nothing to live up to his title—Minister of Justice—in one of the few areas where he cannot blame others for the miscarriage of justice. Mr Goff is the gatekeeper for the exercise of the prerogative of mercy. That prerogative, of course, protects one of our most precious heritages: the concept of innocence until proven guilty, and the concern that says it is better that 10 guilty people go free than one innocent person be convicted.

There is a worrying conviction growing in this community that something sinister is happening in our justice system. There is a fear that we are getting more miscarriages of justice than one can just attribute to the random accidents that any justice system must have, because resources are not infinite. There is reliance on secret witnesses, uncorroborated evidence, and astonishing confessions to paid cellmates. Those are all signs of a political pressure for results, a sort of panic perhaps, or perhaps an understandable reaction to frustration on the part of the police that the courts and corrections department are losing criminals faster than they can put them in prison. It may be that there is a fear that the police’s frustration is sending us down that dark path of mysterious beatings of people in cells, or of the sort of cynicism and corruption known in Australia.

Why do the high-profile cases now almost automatically attract offender support groups? David Bain’s case is just the most recent example of that, but we have had many others since we lost our innocence over Arthur Allan Thomas. Members will remember the Donnellys, Peter Ellis in the Christchurch crèche case, and a number of rape cases—they go on. In all of that Mr Goff is our present fail-safe back-up. But he is sitting on his hands. In the middle of last year he announced that his favourite justice official, Professor Warren Young, would produce a report on how to review such cases. That report was due before the end of last year, and it is still not available. There is no sign of it. Perhaps it is available, but just not to the public. Perhaps it is undergoing the same process as the youth justice report, from which Professor Young is cutting out the bits that the Minister does not want to hear. Perhaps it is undergoing a reworking of the data, like the official victimisation survey due nearly a year ago.

I draw the attention of the House to two cases that could be our equivalent of those terrible British cases concerning the Guilford and Bradford defendants, where public confidence in justice took such a terrible hit. In one case Mr Peter Hartley has satisfied me that there is a strongly arguable case that three men have spent the best part of a decade in prison, on the basis of false complaints from a woman who has since been convicted for attempting to have two more men falsely charged on similar fantasy evidence. Mr Hartley had to bring the prosecution of the woman privately, because the police refused to do it. Eventually, the Crown solicitor took over the case and secured two convictions. That is a startling success. It is certainly startling that the Minister urged me to ignore that case on the basis that the man was just a scumbag. If those three men are the victims of similar perjury, Mr Goff’s indifference for a year will have exposed the Crown to huge sums of avoidable compensation.

Hon RICK BARKER (Minister of Customs): That was the most disappointing speech I have ever heard from the ACT party. It had no passion, no substance, and no anything. I can explain why that is to members. It is because the ACT party is sinking into a pit of slime, sleaze, and controversy. The ACT party needs to front up to this Parliament and to say why its members are not prepared to do a full day’s work. The ACT party needs to front up to this Parliament and tell it why it is drawing nine salaries and nine sets of expenses, but is not casting nine votes at all.

I have examined the record from the Clerk, and I shall go through the voting record of the ACT party. On the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill ACT cast five votes. That means that the ACT party had only three MPs in this House, and was drawing salaries for nine. Again, the record shows five votes, and on some occasions—

Gerry Brownlee: I raise a point of order, Madam Speaker. There are two matters that need to be considered. The first is that it is inappropriate for any member of Parliament to refer to the absence of members of Parliament at any point, and that member should desist from doing so. The second is that he has alluded to matters that have been subject to an investigation from the Parliamentary Service Commission and that were part of a press release or of press conference information given by the Speaker this morning, and they are ongoing matters in that investigation. It would be unwise to allow the member to continue with the nonsense that he currently wishes to perpetrate.

Hon Trevor Mallard: I refer to the first part of that point of order. Of course members are allowed to refer to the voting records of the House. It has been a tradition in New Zealand for many, many years that members have indicated situations where parties have been lazy and have not had their full complement of votes cast, and issues like that. The other point the member was attempting to make was that we should somehow pretend that matters are not under investigation, and that is not the case.

Madam DEPUTY SPEAKER: I just make the point to everyone that there will be silence during points of order. Members cannot speak about the absence of a member from the Chamber, but they can speak about the voting records, as the member has said. Mr Brownlee’s second point was a debating matter.

Hon RICK BARKER: It seems that all through the taxation bill the ACT party was casting five votes, which meant that it had only three members in the precincts of Parliament. When we get to the Racing Bill, we find the ACT party was a bit more excited about it.

Madam DEPUTY SPEAKER: Would the member please be seated. The member cannot say that. He referred to the absence of members from the House.

David Benson-Pope: I raise a point of order, Madam Speaker. As you so correctly ruled, the voting order is a matter of public record. Clearly, when there is a vote in the House the whips are not entitled to vote beyond their entitlement. So mentioning the actual vote and the consequences of that—to wit, the membership in the House—when no individual was named must be in order.

Madam DEPUTY SPEAKER: I shall give members another warning that they should be silent while points of order are being made. I wish to rule on this matter. When the member called the number voting for ACT, that did not necessarily mean that anybody was absent from the House.

Hon Trevor Mallard: I raise a point of order, Madam Speaker. While the comment you have just made is technically correct, it is not out of order for members to indicate the effect of the Standing Orders, which is that when a party casts five votes, there may be as few as three people here in the House. For members to say that is not out of order.

John Carter: There has been a long convention that the absence of members from the House is not referred to. If we get to the stage where members are using all sorts of convenient or devious ways in which to do so, then I am afraid that the convention will go out the door. I suggest to the House that it may well be better to move on and not to refer to the absence of members, because it is something we have not done in the past and it would be useful for us to continue to not do so in the future.

Madam DEPUTY SPEAKER: It may be all right, but what Mr Barker actually said was that members had been absent from the House. I ask Mr Barker to keep to the spirit of not referring to members being absent.

Dail Jones: I raise a point of order, Madam Speaker. Could it be that Mr Barker has now had 5 minutes and his time has expired?

Hon RICK BARKER: I want to carry on with the voting record of the ACT party, and to say that the ACT party cast only five votes on the taxation bill. When it got to the Racing Bill the ACT party pulled up its pacers—it was obviously more excited about the Racing Bill—and cast six votes. On the Television New Zealand Bill the ACT party started by casting seven votes. In the 79 votes taken since the start of this session, the ACT party has not once cast nine votes. It has cast five votes seven times, has cast six votes eight times, has cast seven votes 38 times, and has cast eight votes 26 times. The ACT party is drawing expenses for nine MPs, but has not cast nine votes. The ACT party should explain to the public why it is voting down below nine and still drawing the full amount for nine MPs. If one was in business and was being given payment for nine things, but only delivered eight, that would be deemed to be fraud.

The political right in this Parliament is in terrible disarray. Not only does ACT have all sorts of internal problems surrounding it but it is the only party on the right that has a clear line on what we should do in Iraq. The ACT party asked this Parliament to vote on Iraq and even though, unusually, it got Parliament to vote on that, ACT only cast eight votes. In comparison, the National Party has now had three positions on Iraq within the matter of a week. Last week the National Party said that there should be a UN resolution. This week the National Party said that that does not matter now, and we should simply support the US. But when pressured about whether that meant New Zealand should commit troops, the National Party would not answer. The National Party goes any way that it thinks the wind is blowing, or is to its convenience.

That means the ACT party should be in a great position to fill the vacuum left by the National Party on the right of New Zealand’s political spectrum. But the ACT party is in no position to do that. Why would anybody vote for the ACT party if it cannot deliver in this House the number of votes it is given? Why would anybody give the ACT party its vote if he or she knew it would not deliver nine votes? If people decided to give the ACT party a greater mandate, they could never have any confidence that it would ever cast its full log of votes.

I think it is a disgrace that in terms of the 79 votes taken in this Chamber since this House has reconvened, the ACT party has not once cast its full list of nine votes. The ACT party continues to take approximately $110,000 per MP for all nine of them, and does not cast nine votes. I want the ACT party to explain to the public what it is doing bludging on the taxpayer. I want to hear ACT members get up and say why they are taking all those expenses, and all the support that goes with that, but not delivering their nine votes in the House. All the voters in New Zealand—all two million-plus taxpayers—know that when they vote for a person or a party to represent them in this House, they expect that person or party to be in this Parliament casting votes on their behalf. The ACT party has taken 145,000 votes and is only using approximately 120,000 of them in this House today. It is taking the full expenses—$110,000—for nine MPs and is only delivering the work of sometimes seven, sometimes six, and sometimes five MPs.

GERRY BROWNLEE (NZ National—Ilam): I raise a point of order, Madam Speaker. The speaker who has just resumed his seat has expressed a degree of outrage about the lack of work, apparently, by some MPs. As a $160,000 MP he has spoken only once in the House this year. I seek leave for an extension of time for him.

Madam DEPUTY SPEAKER: That is not a matter for a point of order.

GERRY BROWNLEE: I sought leave for there to be an extension of time granted to that very expensive Minister, who has contributed very little to the House in the last 4 years.

Madam DEPUTY SPEAKER: As the member knows, he cannot seek leave for that on behalf of someone else.

KATHERINE RICH (NZ National): What a shambles of a speech that was—just like the shambles that the present welfare system is in. Labour had a once-in-a-generation opportunity to change the welfare system—to change things when the economy was doing well—and it blew it. I am not the only person to say that. John Tamihere agrees with me. He said: “The time to change the welfare system is when things are going well.” Labour has blown it. Where have all the hīkois gone? Members may remember that back in 1998 members of this House hīkoi-ed up and down the country. They were outraged by poverty. They were outraged by disadvantage in this country. Now the silence is absolutely deafening. Where have all the hīkois gone?

This week the Child Poverty Action Group released a report. It said that under this Government child poverty has gone up. Steve Maharey travelled the country, talking with absolute outrage about the use of food banks. What has happened to food bank usage? Under his watch it has gone up, and now he is totally silent. Radio New Zealand asked the Minister to front up to talk about the Child Poverty Action Group report, and he would not do it—he would not front up. It is a group that Steve Maharey personally snuggled up to during his years in Opposition, but now, when he is the Minister, he will simply not address the issues.

But let us look at some of the members who are addressing this issue. I want to bring up some of the comments of John Tamihere, an excellent member, who has been bold enough to make some points about welfare; to challenge the Government and say that its old-left and statist views of welfare will simply not work. I ask members of the House who has more credibility on welfare: somebody who has been a bit of an academic within a university situation, or someone who has worked at the coalface, at the front line, of welfare delivery? I can tell members who the general public would listen to.

Tariana Turia has made some comments about welfare, as well. As a result of the Child Poverty Action Group report she had this to say: “The statistics of child poverty are shocking, and the prospects look even worse.” Well, I say to Tariana Turia that I agree with her. Under this Government things will not get any better, as the Government has relaxed rather than improved the welfare system. This Government has had the best economic conditions in a generation, and still Treasury is predicting 30,000 more beneficiaries by 2007. This Government has had the best conditions in a generation, and still the numbers on the invalids benefit are increasing at such a dramatic rate that even the Ministry of Social Development does not know why that is the case.

Let us look at the progress, or lack of it, that has been made at the Department of Child, Youth and Family Services. The Mick Brown report was announced with much fanfare. That report made some quite clear recommendations about what needs to be done within the Department of Child, Youth and Family Services. Today we find out that there is a secret-squirrel evaluation going on that even members of the Social Services Committee are not aware of—another review. It will not do much. The time for reviews, committees, and discussions is over. People are expecting that unallocated case list to be reduced to zero. That was one of the points that the select committee made. Why has that Minister made no progress in terms of implementing the Mick Brown report?

Hon Trevor Mallard: This member used to have potential!

KATHERINE RICH: That Minister has had 2 years, and only 15 of those recommendations are even close to being completed. The last figure I saw showed that 1,400 children were waiting for this Government to give them a social worker. Who knows: there could be a Delcelia Witika or another Olympia Jetson waiting in that line. While we are on the subject of Olympia Jetson, where is the Government’s review? Where is the review of that disastrous case? It is supposed to have been released by now, but we have not heard about it. This is a lazy Government. All it has done is relax the welfare State. I predict that the numbers will go up. Explain to me why the numbers on the invalids benefit are predicted to skyrocket. Why is the cost of the invalids benefit going to double on your watch? It will double from $600 million to $1.2 billion by 2007. Well, I ask you. Nobody, even within the Ministry of Social Development, has been able to explain that.

Madam DEPUTY SPEAKER: The member is not to bring the Speaker into the debate.

KATHERINE RICH: This is just predictable. Labour talked the talk, it snuggled up to the social sector groups, but I tell members that Labour is certainly not delivering, and things are about to change.

Hon CHRIS CARTER (Minister of Conservation): After listening to that member I again thank the good fortune of this Government to have such an Opposition. I tell this House that I support Bill English. I think he is a great leader of the National Party—

Simon Power: What’s this member doing about dogs?

Hon CHRIS CARTER: Unlike Mr Power, Mr Brownlee, and perhaps Mr Smith, who sit opposite me in the House today, I think the Leader of the Opposition is doing a great job—as, of course, is his front bench. I would like to share with members why I think Mr English is doing a fantastic job. I love his inconsistency.

I love his diversity and wide-ranging views on issues. Let us take Iraq. It is an issue that is No. 1 in the House at the moment, for obvious reasons. What is Mr English’s view on Iraq? Last week he and the National Party supported a UN resolution to take action. Yes, that was last week. But yesterday it had all changed and he was for unilateral action. What about troops? Yesterday, New Zealand troops should go to Iraq, according to Mr English. What did he say on Morning Report this morning? He said that he was not sure whether they should go. Is that not great?

Hon Trevor Mallard: Flip-flop.

Hon CHRIS CARTER: It is a case of “Mr Flip-Flop”. He makes politics so interesting. It reminds me of his fascinating observations about Afghanistan and Operation Enduring Freedom. We might remember that just before Christmas Mr English, the leader of the National Party, a party that had supported Operation Enduring Freedom, called for the withdrawal of New Zealand troops participating in that action—one that the Government strongly supported—but, of course, within 24 hours he flip-flopped again. He was again in favour of Operation Enduring Freedom.

What about the Treaty of Waitangi? Recently I attended the gathering at Waitangi, as some members of this House might remember. Although my singing ability might not have been wonderful, at least I was consistent while I was there. I called for people to work together to build a better future. What about Mr English? He told us in the New Zealand Herald on the morning of Waitangi Day that he would go there to give a serve at Te Tii Marae. He would tell off those people for not letting non-Māori media on to the marae. I sat there, along with my colleague Darren Hughes, the Hon Margaret Wilson, and a few other MPs, and we waited with a little bit of trepidation, because there were some pretty radical people sitting on that marae. We all waited, and Mr English got to his feet, gave a very creditable mihi, thanked the people for their welcome, and praised the Treaty of Waitangi—but he did not mention anything about journalists not being allowed on to the marae. He also did not talk about the treaty creating two types of citizenship, or some of the other issues that we have heard from him in this House.

I enjoyed reading later that day the opinion piece that Mr Gerry Brownlee had written on the treaty. At least Mr Brownlee had some consistency and some logic to his argument. It was not one that I agreed with, but at least it was consistent. I think Mr Brownlee has stuck to those points, unlike his leader, of course, who seemed to be absolutely mesmerised by the welcome he had received at Te Tii Marae. He was very charming and welcoming to the people, and I am sure he left a very favourable impression with the Harawira family—not one, of course, that he had led the people of New Zealand, the public who read the New Zealand Herald, to expect. It was pathetic!

I was reminded, too, that Mr English had said before Christmas that he would lead a crusade against the Local Government Bill. I, as the Minister of Local Government, had the privilege of seeing that bill through this House—[Interruption] The crusade? Well, I am afraid the crusade was rather a fizzer. It was something that had never been mentioned once during the election campaign mid-year. Once again, it was a case of Mr English talking tough but doing nothing. I am pleased to say that the Local Government Bill passed before Christmas, just as the Government had said it would.

My colleague Mr Barker spoke earlier about the sleaze in which the ACT party is being mired. ACT has a real opportunity, because the National Party has been pathetic—hopeless. That has been well recorded in the media by journalists whom one would not normally think sympathetic to the Government, but all and sundry in this country have been saying how pathetic the National Party is. Who could argue with them? ACT has an opportunity, but it is mired in sleaze, as Mr Barker has pointed out. We have had the charming ACT party congress that occurred last weekend. I sort of thought of it as the ninth party congress, a rather Stalinist event, where Mr Rufus Dawe, an old veteran of World War 11, got up and tried to challenge the party line on involvement in the war in Iraq. He was howled down, called a pig, insulted, and so on. I thought it was very reminiscent of actions in the Auckland Central electorate when Mr Prebble was its MP.

SUE KEDGLEY (Green): I would like to talk about a subject that may not be of great interest to members in this House, but I can assure them it is of deep interest to the consumers of New Zealand—that is, country-of-origin labelling, or, rather, the lack of it, in New Zealand.

Even though New Zealand is a food-producing nation, we import hundreds of thousands of tonnes of food, including, for example, more than 30,000 tonnes of meat from countries such as China, Canada, the United States of America, and Australia. Our meat imports have absolutely rocketed. In 1998 New Zealand was a net exporter of meat to Australia to the tune of $10 million. Now, we are a net importer of meat from Australia to the tune of $78 million. The point is that if consumers were to wander around a supermarket, as I have done, they would not find a single label to identify whether the meat they are about to purchase has been imported from China, Australia, or wherever. That begs the question: where do all these hundreds of thousands of tonnes of meat that we import actually end up? The answer, of course, is that they all go into our supermarkets and are sold as unlabelled fresh meat, or are processed into meat products like the one I have here. It says on the label “Made in New Zealand”, even though the pork in this product actually comes from Canada.

The reason for this grossly misleading and deceptive practice is that there is no requirement for mandatory country-of-origin labelling in New Zealand. There is in Australia and in Europe, and it has been introduced into the United States and Canada—but not in New Zealand. Surely it is an absolutely basic consumer right for us to know what is in the food we eat and where it comes from. This is so particularly for meat products, which may contain residues of growth promotants and other things not used in New Zealand, such as the pig growth hormone widely used in Australia. Astonishingly, our Government is vehemently, implacably opposing this basic consumer right, and it has been involved in a prolonged, secret fight with Australia over this issue. Australia has mandatory country-of-origin labelling, and because we are harmonising our food standards with Australia’s, we should be introducing the same mandatory labelling that Australia has. But, no, our officials are even threatening to opt out from the Australia New Zealand Food Standards Code on this issue, or seek a variation, to avoid country-of-origin labelling.

To justify this extraordinary opposition to what is simply a basic consumer right, the Minister for Food Safety said in question time that we did not need that labelling because we have the Fair Trading Act. What utter twaddle! If that were the case, why would we have percentage labelling? Why would we have genetic engineering labelling? Why would we have nutrition labelling? All that the Fair Trading Act does is enable the consumer to take a case to the Commerce Commission. It does not give consumers the basic right that they are entitled to: to know what is in their food and where it comes from.

The second reason the Government gives for opposing country-of-origin labelling is stated in an official paper, which I will be tabling. It says that there is “virtually no demand for this information in New Zealand”. How can that be? In 2002 a survey was undertaken of New Zealand consumers, and it found that New Zealand consumers—surprise, surprise—do want country-of-origin labelling. They do want it, so how could officials come up with this statement that we do not want it?

The other astonishing thing is that many of the officials who are writing these papers and engaging in this war with Australia in a particular food standards committee—and who are vehemently opposing country-of-origin labelling—are from the Ministry of Food Safety, which is a department charged with promoting consumer choice through accurate and meaningful labelling. That is the second statement of purpose of that department. So how can officials who have a duty to promote consumer choice, and accurate and meaningful labelling oppose mandatory country-of-origin labelling, which would give consumers the right to know where their food comes from? It is absolutely preposterous! The Minister for Food Safety is the Minister in charge of the department that is required to promote accurate and meaningful labelling. The Minister therefore has a duty to ensure that happens.

DAVID BENSON-POPE (NZ Labour—Dunedin South): In recent days and weeks much attention has been given to the activities of the ACT party, which were highlighted by its pretend suspension, as referred to by my colleague, of a member of its caucus, where it deliberately followed a course of action designed to ensure that it kept $110,000 of party funding for a member whom it claimed to have disowned the same day.

Now that the ACT party is so discredited, it is little surprise to learn that it is considering a name change. What is it planning to call itself? Liberals! We know that ACT members have been toying with the “l” word. Catherine Judd and Roger had a look in the dictionary and they were dismayed. Liberal means: “giving, or giving freely; generous, open-minded, not prejudiced, favouring moderate political reform”. I do not think so! It is not the ACT party, is it? ACT members have determined that henceforth they will call themselves the “Littorals”—that is, with two “t’s” and an “o”; not “Literal” with one “t” and an “a”, because the whole country knows only too well that one cannot believe a word any of those members say. That would not have done, anyway, as it is too close to the word “litter”, with two “t’s”—an invitation to descriptions of ACT and its policies as a foul brood, or rubbish, junk, and refuse. That is too close for comfort. So they will call themselves the “Littorals”. For those members who are unfamiliar with the word, let me elaborate. “Littoral” means things to do with the seashore.

Jill Pettis: Why?

DAVID BENSON-POPE: I hear the member ask why that name. Is it because, like any populist party, its members believe that perhaps every New Zealander has had at least one happy experience at the beach—unless, I suppose, they were there with Rodney Hide? Could it be because everything ACT members do smells fishy? Could it be “Littoral” because when the hard questions come they clam up? Could it be because their party’s political tide is rushing out, or because, when asked to spell “integrity”, they are all at sea? Could it be because their leader, almost a “Pebble”, is on the rocks, or could it even be because their aspiring leader is named after a fish, or, perhaps, because their whole caucus is desperately grasping for “paua”?

Those are all perfectly good reasons on their own, but none of them are the actual reason for the name change. The real reason, of course, is their extraordinary preoccupation with seafood. Like all seafood, when it goes off, as that party has done, the stench is unparalleled. I hear my colleagues ask: “Preoccupation with seafood?”; let me explain.

At Christmas we learnt of the activities of the Pipi Foundation. It has been a while since Christmas, and those pipis are certainly starting to smell now.

The first week of March told us what was happening in Pipitea Street. Nine, or is it eight, salaries and budgets totalling half a million dollars, designed to enable MPs to be available to the electorate, are being massaged to provide money for ACT party activities inside Parliament. The office furniture was moved in only after that rort had been revealed in the media. That “Pipitea” is starting to smell rather a lot, as well.

The third “pipi”, for those members not familiar with the German language, is the pipi of the little boy’s room—clearly, an area in which Mr Hide, from the revelations in the New Zealand Herald, has some interest and expertise. I do not know “wai” the heck he does, but he clearly does. We would all prefer Mr Hide not to tell us about the smell.

I think we should all thank that party and its members for making it so abundantly clear to our community what they have to offer New Zealand. What a fine kettle of malodorous fish: besmirched by a humble bivalve, pickled by a pipi, and munted by a mollusc. We are delighted on this side of the House, as are all New Zealanders, to see that those people are finally all washed up.

SHANE ARDERN (NZ National—Taranaki - King Country): Never before in the history of New Zealand politics has there been so little delivered by a Government that had so much. If members want an example of that, they should go back to the speech made by the Prime Minister at the beginning of this parliamentary session, on 11 February. She told the media, before she gave the speech, that it would be boring. A Prime Minister who had overwhelmingly won her second mandate in an electoral process in a democratic society told the media that her speech at the opening of this session of Parliament would be boring—and she was dead right! Her own colleagues struggled to keep their eyes open for the duration of the speech, when they were supposed to be attentive.

Never before has there been a Government that has had so much going for it. Never in my farming career, which is now 25 years old, have I seen the stars of high commodity prices around the world, of favourable weather conditions, of favourable interest rates, and of favourable exchange rates line up in the way that they have. Despite the Government, that is what has happened. The Government has had all of that income. I have to say that the sunny weather is over. The golden weather, for this Government, is now over, and it will have to start to front up. In the speech made by the Prime Minister, which she had told the media would be boring, she never referred to the chook that has laid the golden egg—that is, agriculture. Not once did she refer to the industry that has helped this Government so much.

There is an expectation in society that Labour Governments deliver on social issues. There is an expectation that we will get a Labour Government from time to time—God forbid—and that when we do get it, it will deliver in the social area. What have we had so far from this Government? We have certainly had no delivery in the social area. If members look at what has happened in that particular area, they will see that child poverty has gone up. Who would have credited it, with the best economic circumstances in a generation, and with a Labour Government running the country in its second term? How could it be? How could the Government mismanage the only area where it has expertise? And when it comes to expertise, Labour’s certainly is not broad. If we look at the front bench, we see that it is mainly made up of academics, teachers, and people from a social services background.

In the area where the Government has expertise, in the area where we would expect it to deliver, what do we have? Child poverty has gone up. What has happened in the area of housing? We have unprecedented waiting lists for State houses. People are trapped in poverty traps such as we have never seen in the history of this country. We would have to go back well before my time, way back to the 1930s, to find a time when as many people were dependent on the State, and were totally locked into that and could not get out. The reality is that there are people from within the Government’s own ranks who know this. The Hon John Tamihere said so.

Hon Trevor Mallard: Who?

SHANE ARDERN: The Minister who is heckling from the other side of the House would do well to listen to what John Tamihere has to say. Some of what he has to say makes a lot of sense. I suspect that Minister over there actually knows it, but will he do anything about it? Never in your life!

Members should look at what has happened in the health sector. They should look at the situation at Taranaki Healthcare, where two chief executives are being paid quarter of a million dollars.

Jill Pettis: Who appointed the board for a second time?

SHANE ARDERN: The member for Whanganui is bleating over on the other side of the House. The fact is the chief executive who was there was laid off while he was away on his honeymoon, and to this day the claims against him have not been substantiated. He is on $250,000 a year, plus another one is flying in from Christchurch once a week, at a cost of $1,000 a week for travel and accommodation. My secretaries are asking for more time so that they can handle the flood of people queuing up outside my offices because they cannot get good health-care in Taranaki - King Country.

Hon DOVER SAMUELS (Minister of State): Kia ora. I want to talk about something quite different. I want to talk about the privilege accorded to members of Parliament to make comments in this House under privilege. Quite clearly, that is a kawa and a protocol that has evolved over many years, and should be protected diligently in terms of the context.

In the last 2 days I have witnessed allegations and attacks upon a Māori organisation—namely, Māori Sportscasting International Ltd. It is an organisation that is well known for its integrity right around Māoridom in terms of its ability to broadcast sports occasions right throughout New Zealand in te reo Māori. When I hear the verbal abuse from Rodney Hide and the unsubstantiated allegations that have been made against a company and against individuals who have no recourse in terms of answering those allegations, I think it is time to look at the issue of parliamentary privilege.

I am standing here today to inform this House, and to defend Hemana Waaka and his company, in terms of the allegations made by Rodney Hide. His name is not “Harmony Waaka”, but “Hemana Waaka”. Perhaps Rodney Hide could go to a kōhanga reo and learn Māori so that he can pronounce “Te Māngai Pāho”. Perhaps he could take some lessons from his colleague Donna Huata. She is certainly more prominent in Māori than he is. Some of the allegations that Mr Hide has made against that company are completely outrageous.

Then he has tried to imply things somehow, in some way, simply because my colleague John Tamihere and I got an invitation sometime in June last year to attend a function. I want to read to the House what the invitation said: “Māori Sportscasting International, Te Reo Whakapaoho Takaro o Te Ao Ltd, requests the pleasure of the company of the Hon Dover Samuels at our inaugural awards and dinner, to be held at the Lakeside Convention Centre, Boardwalk Room, Montgomery Street, Mangere, Auckland.”

I know that many, many members of this House and many Ministers receive such invitations. Would it be prudent, would it be protocol, for me to say: “Sorry, I can’t go there.”? Would it be prudent for me to ask: “Who’s going to pay the bill?” before I even respond? We all know that we receive hundreds and hundreds of such invitations, and we reply accordingly.

In this event, we went. We went to the presentation of the awards. At those awards there were a number of prominent Māori, including the late Sir John Turei. He was there, and he was there to support the kaupapa, and this company, and this firm in terms of its ability and its desire to uplift our young people in this profession of broadcasting sports in te reo right throughout this country. I say to Rodney Hide that I fronted up. I fronted up and I supported it. I fronted up along with my colleague John Tamihere, red rosette and all—and I would have worn two if I had been asked. Let me say that there is nobody who is going to stop me from wearing a Labour Party rosette at any function that I desire to go to.

I put the same challenge to Rodney Hide in terms of fronting up. Yes, we fronted up. Yes, we can understand that there was a certain amount of funding that went to the organisation that paid for that dinner, but I want Rodney Hide to front up about the rort that he conducted in Fiji. He inspired people to go to a conference in Fiji at which New Zealanders got ripped off to the extent of $10 million, whereas what we are talking about here is $5,500. Yes, that is a lot of money, but members should compare it with that figure of $10 million in relation to Rodney Hide. He has not fronted up. He has not fronted up to the New Zealanders who were ripped off, whom he ripped off, and whom he encouraged to be ripped off.

Hon MATT ROBSON (Deputy Leader—Progressive): Yesterday Parliament had the opportunity to talk about the possible implications posed to the multilateral trading and diplomatic order by the US Republican Party’s decision to invade Iraq in order to install yet another regime change in that country, in the face of the opposition of the united community of nations. We do not know for sure yet, but Tuesday’s announcement in Washington could turn out to be a watershed in the evolving management of relations between nations, pointing to some big changes in the way in which nations have dealt with each other during the past half-century. The Progressives hope that the pro-war party will, at the last moment, step back from the brink of what could turn out to be a serious blow, at least in the short term, to the United Nations system, which promotes diplomacy and conflict resolution ahead of war.

It is too early to assess how much damage the Iraqi issue may have done to political relations between some of the world’s largest economies: the US on the one hand, and Germany, France, and China on the other. If that damage is as significant as some fear, however, it could in the short term also flow through into other areas of multilateralist endeavour, such as the work of the World Trade Organization. GATT, the predecessor of the World Trade Organization, was originally planned to be an integral part of the UN system to help rebuild a shattered world after the Second World War, and to be at the service of the world. A cold war political stand-off ensured that GATT, as it was, did not get off the ground until very much later. The cost of delaying the original formation of GATT—which later became the World Trade Organization, a distorted version of GATT because of its dogmatic, right-wing, free-trade policies—damaged the ability of the world to reduce international barriers to cross-border trade in agricultural goods.

The delay in creating a fair world-trading system through the cold war period continued to disadvantage developing countries unfairly at the cost of lives and living standards. The cold war trading system also disadvantaged New Zealand because it meant that our competitive advantages were not allowed to fully flower as they would have done if the world had adopted fair trading rules whereby our agricultural exports could flow, without barriers, to consumers in the richest economies.

No one, it would be fair to say, was surprised by the ACT party’s stance in favour of war yesterday. What was surprising to us was that National fell into line with ACT, as the two parties increasingly adopt the same set of core values and policies. For over half a century, under first past the post, Labour and National seemed to have had an unwritten understanding that on foreign policy there was a need to stick reasonably closely within the ambit of international law and the multilateral system. The National Party’s support for so long for the war in Vietnam and for apartheid strained that, of course. But, as the only two parties of Government, both fully understood the importance to New Zealand, as a small, trading nation, of the UN and a rules-based trading system.

Yesterday National turned its back on that, and highlighted an important political development. National is no longer a major party. Any pretence to it being the natural party of Government has gone. It is no longer a governing party in waiting, an alternative Government. National today is one among six minor parties operating within the MMP electoral system. It is one of the five Opposition minor parties. In the vote for war, National and ACT garnered just 35 votes out of the 120 available.

What that meant is that in the critical test of foreign policy alone, National is no longer in any position to hope to lead a Government in New Zealand. Its hopes of leading a Government may be real, but the hopes are not credible. It is not credible to imagine a senior party in Government that is not able to implement a coalition foreign policy compatible with the policy of the leading party of that Government. Foreign policy is a critical responsibility of any party that hopes to lead a Government. It is not possible to imagine a National-led Government after yesterday’s vote, because it is not credible to imagine a Government in which the major party has a foreign policy that is at odds with those of all its potential coalition partners. Coalition partners will have as many, or more, seats in Parliament—as in the present Parliament—than the major party in Government. One cannot reconcile the approach of New Zealand First and United Future with National’s rejection of multilateralism. No such Government, led by National, is therefore possible as no Government can ever not have a foreign policy.

National’s recent adoption of ACT’s key values and policies on economic, regional, and industry development is another serious indicator that National’s hopes of one day leading a future Government in New Zealand are diminishing. Nearly all New Zealanders want to see a growing economy creating more high-wage, high-skill jobs. The overwhelming majority applaud the Labour-Progressive Government’s programmes to address market failures practically, in order to promote and facilitate our economy’s performance.

Hon DOVER SAMUELS (Minister of State): I seek leave to table a communication statement from Hemana Waaka, the director of Māori Sportscasting International, stating that the function was not for political reasons, and that some of the suggestions made by Rodney Hide are incorrect and fabricated.

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

JILL PETTIS (NZ Labour—Whanganui): Democracy requires a cohesive and coherent Opposition, but, sadly, in this country the Opposition is fragmented and failing. It is all about the place, with no direction, and is certainly not in a position to make any long-lasting decisions about the future of the party or the country. The Opposition is bereft of any vision, and most certainly has no policy. It is torn by an ideological struggle. It is trying to “out-right” ACT.

Poor old Don Brash, brought in as the new boy wonder, keeps on wanting to take us back to the glory days of the 1930s. We all know the tragedies that occurred then, with the major Depression that this country and the world were in. As I have said before, Mr Brash is an intelligent man, but he ain’t no politician. He has lots of lessons to learn. One of the first things he needs to learn around here is that all questions are rhetorical. He should not ask questions in this place if he wants to know the answer. That is not how it works around here. He should get up to speed. I will never be able to understand why he gave up such a good-paying job to come here, where he has no future. Quite frankly, he is going nowhere.

The other tragedy about the National Party is that when Bill English took over, 21 percent of New Zealanders had him as their preferred Prime Minister. Whoopsie! What has happened since he got into a position of leadership? His support is now at 6 percent. Mr English has even been surpassed by that other chameleon of the House. Now he does not even command the status of Leader of the Opposition in the polls—something that most leaders of the Opposition have done since democracy first began in this country. In another whoopsie, he has already conceded the next election by saying that this Government already looks like a three-term Government.

I have another piece of advice for Mr English, which is the old saying: “Keep your friends close, but your enemies even closer.” He has a few enemies in his party alone, who are not making complimentary statements about him, at all. The tragedy is that the current leader of the National Party has no credibility. Everybody knows he is ineffective. Some of my best friends are Tories—we are very liberal on this side of the House, and we have a wide selection of people whom we meet from time to time—and they very quietly say that they are sure he is a nice bloke, they are sure he is decent, but he ain’t no leader, and he has to go.

This is not radio with pictures, but one just has to look at the picture on the faces of most National MPs to see that they are embarrassed. Poor old Roger Sowry has no other mission in life but to raise points of order, and talk about four-lane highways from North Cape to Bluff. It is just vacuous—and I am not just talking about Roger Sowry.

Hon Trevor Mallard: Beaten by Judy Keall, beaten by Darren Hughes.

JILL PETTIS: He has been beaten by several people over several years.

Hon Trevor Mallard: He likes it.

JILL PETTIS: Masochism runs through many people. The other irony in this House is the ACT party. Have members ever seen such a farce as that party? It is the party that was going to be the perk-buster. It was going to clean up everything. I constantly look for Rodney Hide on the wing of the plane each time I get on, but he is not there. Here it is—

Hon Dover Samuels: I raise a point of order, Madam Speaker. Have we got a doctor in the House? I think the member for ACT has passed away. I am serious; he has been still, and his eyes are closed.

Madam DEPUTY SPEAKER: No. Please be seated.

JILL PETTIS: For a moment, I thought the member was serious. The tragedy of the situation with the ACT party is that it styled itself as the perk-buster of New Zealand—“We live a squeaky clean life.” But all the rorts that those members have been involved in are now being uncovered—painful as that is. It says so much about that party. One of the most despicable things that the party has been involved in just lately is the verbal assault on one of its long-serving members, Rufus Dawe.

Hon BRIAN DONNELLY (NZ First): Much has been made of the voting record of ACT during this particular session, but the real test of ACT’s integrity will come next members’ day, when a vote will be taken in this House on the National Certificate of Educational Achievement Moratorium Bill. As we well know, ACT campaigned against the National Certificate of Educational Achievement (NCEA) in the election. It said then that it would get rid of the NCEA, and we well know that it has been anti it ever since. We well know that Donna Awatere Huata has been ACT’s most vocal opponent of the NCEA, so she will most certainly want to vote for her bill. The ACT whip carries Donna Awatere Huata’s vote, and the question will be whether ACT will use it. Will there be a vote of nine? That will be the test of ACT’s integrity. If it does not give a vote of nine, we will have to question the integrity of ACT.

But that is not really what I want to speak about. I will start my speech with a quote, which is arguably the most famous in New Zealand’s educational history. It reads as follows: “The Government’s objective, broadly expressed, is that every person, whatever the level of his academic ability, whether he be rich or poor, whether he live in town or country, has a right, as a citizen, to a free education of the kind for which he is best fitted, and to the fullest extent of his powers.” Members on the other side of the House will know that that quote is attributed to Peter Fraser, who was arguably one of our most capable Prime Ministers—albeit the words were written by Clarence Beeby on his behalf. Those words really articulate the fundamental philosophy upon which our education system has rested since they were printed in 1939. It needs to be recognised that Peter Fraser was a Labour Prime Minister. For nigh on 50 years Labour was a party of economic and social equality, and greater educational opportunity was one of the main means of achieving that.

I will compare Peter Fraser’s vision with the decision this Labour Government has made over the NCEA fees. The facts are very simple. Research by the Poverty Action Group shows that in 2002 many children either withdrew from, or did not even enter, the NCEA because the costs were too great. Costs for school qualifications have been rising steadily since this Government got in. For example, in the year 2000 it cost $25 to do four Sixth Form Certificate subjects; the cost was $75 in 2002, and it will be $150 in 2003. What did this caring Government do, with this research available to it? It doubled the cost in 2003, which means it will make the problem that much worse.

I commend Government members for being very, very honest on this one. I go on about this issue like a cracked record; once New Zealand First members get their teeth into something, we do not let go—and I can tell the Minister I will not let this one go. Ever since I first began raising this question, members on the other side of the House have been embarrassed. Their body language has shown it: they fidget, squirm, and look away. They are certainly embarrassed. I commend those members for the honesty they demonstrate through their body language, because the decision made by the Minister of Education is clearly wrong.

I see the Minister of Finance is here, and he must have also been involved in the decision. It does not fit the fundamental philosophy of the Labour Party, or what this Government espouses. Who will be hurt by this decision? It will not be the rich people—they will come up with the dough. It will not be the beneficiaries, because they have to pay only $35. It will be the parents who are working class, but on low incomes, who are hurt. Those are the people who will have to come up with $150. It will hurt the children of parents of larger families. Māori and Pacific Island families will be hurt.

I challenge the Minister to front up and say: “We got this one wrong.” The Prime Minister did it about the painting; she said: “I got this thing wrong.”, and she did not lose any respect for it. I challenge the Minister to say: “We got it wrong, and we are going to fix it.” The Minister should get up and say: “Yes, we got this one wrong. We are going to fix it, to bring the fees down, by pumping more money into the New Zealand Qualifications Authority.” Even if the Government brings the fees to the same level as last year—though it should go lower—it will earn our respect.

The debate having concluded, the motion lapsed.

Financial Review Debate

Financial Review Debate

Debate on the Appropriation (2001/02 Financial Review) Bill resumed from 18 March.

LINDSAY TISCH (NZ National—Piako): Before the House rose last night, I had the opportunity to talk about growth and investment in the economy and about the huge compliance costs that businesses are facing. Today I want to concentrate on a very important part of the economy in the Piako electorate, which I represent, and that is the racing industry. The House has recently passed the Racing Bill, which National supported. [Interruption] I tell Dr Cullen that we were happy to support the Racing Bill, because it dealt with an important process in terms of governance. However, the legislation does not improve the lot of racing. It does not put any more money back into the industry.

One of the disquiets the racing industry has today is the huge cost of both compliance and accident compensation. We note on page 70 of the financial statements that the Accident Compensation Corporation has made a profit of $243 million, but in the year 2001-02 the levies on the racing industry increased from $3.61 to $5.48 per $100 of earnings. That was a 52 percent increase for that period. Today the new rate being mooted for 2003-04 is $7. The accounts show the Accident Compensation Corporation making very good profits, yet at the same time the racing industry is struggling for its viability and being penalised—especially the trainers—by having to pay huge accident compensation levies.

The information I have received through parliamentary questions shows some discrepancies. When I have spoken about this in the past, different versions have come from the corporation. A letter dated 6 March states: “What is not evident from the data for the 2002-03 year is that the risk group has been restructured to include sports and services to sports, which is now a riding classification.” That change was one of the factors that contributed to the levy increase between 2001-02 and 2002-03. In answers to questions I have asked in relation to the huge increase in levies on the racing industry, I have been told that the costs have gone up because of increasing accidents. In fact, that is not right. The letter I have from the corporation confirms the reasons for the costs going up. Perhaps at a later stage the Minister will be able to answer these questions.

We are now seeing that groups involved in pony clubs, equestrian events, and cross-country riding are being included in the horse racing industry. As a result, there is a huge increase in the levy in terms of the restructuring of the reclassification—now up to $7.03 per $100 of earnings. This is not right. It should not be happening. The point I make is that it is not fair that industries that are playing their part by paying their taxes and contributing to the overall growth of their communities, are being very heavily hit.

An example I would like to bring to the attention of the House is that of trainers in Matamata. They are training 32 horses. They get paid $37 a day in training fees, and on top of that they get 10 percent of the winnings—if the horse wins. Their accident compensation levy for this coming year will be $15,000. The particular operation I refer to employs seven people, but only three of them do track work. The other four muck out—cleaning out the stables—and doing the administration. Yet the fee being struck is the same across the board for those seven employees. In my view, that is not acceptable. Here we have an industry that is so important, but it is being penalised because of the restructuring that now includes the much bigger group.

If we were to look at what the 7 percent levy means, we would find that somebody who is employed full time—2,080 hours a year, multiplied by 7 percent, which is equivalent to about 146 hours—will be off work for 18 days per year, because of accidents. In reality, the racing industry is being penalised. It is being restructured to include other groups outside the realm of the horse racing industry. National is concerned about that. We have articulated our concerns in previous debates. The situation has become worse, not better, because we now have a rate that is going from $5.48 to $7.03. Who is paying it?

This Government should be held accountable for these unacceptable increases.

A party vote was called for on the question, That the Appropriation (2001/02 Financial Review) Bill be now read a second time.

Ayes 69

Noes 48

Bill read a second time.

Labour 52; Green Party 9; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 8.

Bills

Appropriation (2001/02 Financial Review) Bill

Third Reading

Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Appropriation (2001/02 Financial Review) Bill be now read a third time.

Bill read a third time.

Bills

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

In Committee

Debate resumed from 6 March.

Part 2 Amendments to Income Tax Act 1994 (continued)

GORDON COPELAND (United Future): I am surprised that I have 4 minutes and 30 seconds remaining, because I think I had completed less than one sentence when consideration of this bill came to an end on Thursday, 6 March. I was then speaking to clause 68(2) and the rate of 19.5c for Māori authorities.

By my own count, on at least three occasions Dr the Hon. Lockwood Smith has challenged parties on this side of the House to name one person who will benefit from this change in tax rate who is not a Māori, saying that if we can do so, he will publicly apologise to the House for insisting that only Māori will benefit from that provision. I personally know one such person. He is, I believe, of Irish ancestry, but, in any event, he is certainly not a Māori, and my contact with him was precisely because of his status as a shareholder and beneficiary of a Māori authority. He is a Catholic priest by the name of Monsignor Patrick Cullen. My instincts tell me that there are probably many Māori authority beneficiaries who are of Asian, European, or Pacific Island ancestry. But the member’s challenge was quite specific—namely, that if we could name one person, he would publicly apologise, and Dr Lockwood Smith is an honourable man.

Today I want to ask National Party and New Zealand First Party members to take a call and give a yes or no answer to a straightforward question. My question is this: as a matter of tax principle, do they believe that members or beneficiaries of family and other trusts, Māori authorities, and superannuation funds should pay tax on income arising from those sources at their personal marginal tax rate? If their answer is yes, then for them to select out just one of those groups—namely, the Māori authorities—is to select on the basis of race. That is the very thing they have falsely accused the Government and United Future of doing.

On the other hand, if their answer is no, then I will personally do my part to ensure that their policy in that regard is made known to Business New Zealand, representing 74,000 businesses in this country, and who do support the principle in this bill; the Investment Savings and Insurance Association of New Zealand, which invests the superannuation savings of probably around 500,000 working New Zealanders; and the 150,000 or more New Zealand families who have established family trusts. The 19.5 percent rate in clause 68 has been struck precisely because it is the marginal tax rate of 90 percent of the members of Māori authorities. In principle, it has nothing to do with their race and everything to do with their personal marginal tax rate.

I want to speak further to clause 68, and to address some of the comments of the ACT members. Dr Muriel Newman and Gerrard Eckhoff, who have also claimed that the 19.5 rate is race-based. I must say I was amazed to hear that, because the ACT spokesperson on taxation, Rodney Hide, is a member of the Finance and Expenditure Committee and expressed himself to be in favour of that rate. If one reads the committee’s report, one sees that a minority view claiming that that provision is race-based was filed by New Zealand First and National but not by ACT. I want to draw members’ attention to the commentary on the bill where that is clearly set out.

I guess my amazement at hearing Rodney Hide’s ACT party colleagues taking an exactly opposite point of view is based on my fairly short experience of belonging to a caucus that takes a “united” and “future”-looking view of these matters, whereas, consistent with its libertarian ideology, it appears that in the ACT party each individual member does what seems right in his or her own eyes.

BRIAN CONNELL (NZ National—Rakaia): The more I listen to this debate, the more pessimistic I become about it. In particular, I want to focus on clause 24, and start by saying: “Here we go again! This politically correct Government is doing deals for its Māori mates, and to hell with what the majority of hard-working Kiwis think.” In any other Western democracy, this would be called apartheid. This creeping, crawling, insipid political correctness that has pervaded this country, and that this Government champions, is soul-destroying. Doing special deals for Māori is highly divisive, and the day will come—and I think it is coming soon—when we will see a significant backlash to this type of deal. A special tax deal like this is not the Kiwi way. Our society has developed out of a sense of fair play, and this bill is not a fair go to our fellow Kiwis. If one offends that sense of fair play—as I believe this bill will do—one will suffer the consequences. I say to members opposite that that day is coming quickly, and I think it will be very apparent in the next election.

When I read the select committee report, I saw that the majority of committee members argued that the lower tax rate was being introduced because of the lower income of authority members. How very convenient that argument is! If the Government is really solely concerned with low-income earners, why is it only Māori who will be favoured with this type of tax treatment and not Pacific Islanders, Asians, and white New Zealand business people? It is not even supported by the Federation of Māori Authorities. The answer, of course, is that the Government cares more about its mates. This politically correct Government is subjugating the rest of New Zealand to a treaty that was signed 163 years ago, rather than having the strength of character to interpret the treaty just as it was written, signed, and understood by those who were present. We have already done more than most Western democracies.

I say to members of this House that this is not a time for separate deals; it is a time for coming together. There should be one standard of citizenship for all New Zealanders. Did members of this House ever think that there would come a time in this country when they would see two tax systems based on race? I never thought I would see this day. The Government is quite unashamedly favouring one race at the expense of another. That is not a fair go. If the Government had the courage to deal with the Treaty of Waitangi gravy train, and the absolute abuse therein, this situation would never have arisen. It might interest members to know that under the settlement process to date, one fifth of all settlement moneys has gone to consultants and lawyers—not to the Māori beneficiaries, who were meant to be getting it. If our economic growth—and here is something that Dr Cullen might want to think about—kept pace with the Treaty of Waitangi gravy train, he would not have the dilemma about where we rank in the OECD, because we would be leading it.

Let us look at the advice the select committee received from such notable authorities as Chen Palmer and Partners and PricewaterhouseCoopers. Chen Palmer said the changes would provide a $70 million windfall for Māori authorities in the fishing industry alone. They went on to say something that I find extraordinary—that discrimination based on race is contrary to the New Zealand Bill of Rights Act. The majority of members on the committee conveniently ignored that.

Let us look at some of these “poor” Māori businesses—the emphasis here is on “poor”. The Waitangi Fisheries Commission controls about one-third of New Zealand’s fishing quota. The Crown Forestry Rental Trust has only a “meagre” $200 million worth of assets.

Hon Dr MICHAEL CULLEN (Minister of Revenue): There was a lot of sort of hatred and almost self-loathing coming through that speech. Let us just deal with a few facts. Firstly, of course, companies are not taxed at 19.5 percent. The select committee changed that rate to 33 percent for wholly owned companies. Various parties in this House have suggested that they would pop up and move an amendment to lower the rate back to 19.5 percent, but nobody has actually done so, I notice. Mr Morgan will remain unsatisfied on that point, because he could not find any stooge in the House to pick it up and move the amendment for him.

Secondly, in respect of the so-called separate tax regime, there has been a separate tax regime for Māori authorities since 1939 in this country—long before the term “politically correct” was even thought of. Indeed, it was not long after the National Party was thought of, which is one of the worst mistakes we ever made in New Zealand politics. There have been separate tax regimes since 1939. For most of the last 10 years or more, Māori authorities have been overtaxed compared with the rest of New Zealand income-producing assets and organisations. Most Māori authorities have ended up being double taxed, due to the absence of an imputation system, and with two 25 percent rates. [Interruption] There is a difference, and the difference is very simple. The difference is that people cannot leave Māori authorities. If one is a beneficiary, one’s assets are locked into a Māori authority, and one cannot exit from it. It is not like holding shares in a company. It is not like being a member of those wonderful family trusts that National Party members all set up as a means of tax avoidance. That is what they exist for. [Interruption] I bet Dr Lockwood Smith does not have a family trust he can set up, because it is not permitted to have one for one person.

Rodney Hide: I raise a point of order, Mr Chairperson. The Minister has accused National Party MPs of setting up trusts to commit a criminal act—tax avoidance—and I suggest that you put him right into order.

Hon Dr MICHAEL CULLEN: Speaking to the point of order, Mr Chairperson, I want to say that tax avoidance is not a criminal act. Tax evasion is a criminal act.

The CHAIRPERSON (H V Ross Robertson): I thank the honourable member. It is a debatable point.

Hon Dr MICHAEL CULLEN: So we have organisations whose members are locked in. Many of those members, by the very nature of Māori authorities, are very small shareholders, because Māori authorities have thousands and thousands of members. If those authorities were taxed at 33 percent, the taxpayer would have to fund a very large amount of administration to deal with thousands upon thousands of rebates of $10, $15, or $20 a year. So stupid are Dr Lockwood Smith and Mr Connell that they would actually like to pay more taxes to fund the Inland Revenue Department to have hundreds of extra officials, so that we can deal with tens of thousands of rebates of $10 or $20. They call that being non-politically correct. I call that being utterly stupid, which is why the Inland Revenue Department and Treasury were the source of the suggestions about the changes to the taxation of Māori authorities.

This is, indeed, designed as an issue both of equity and of tax simplification. The select committee decided that in terms of equity it was fairer to tax wholly owned companies at 33 percent, where they would be competing with other companies being taxed at 33 percent. But Māori authorities are unique. It is true that no other country in the world has a separate tax regime for Māori authorities. There is a reason for that: this is the only country in the world that has Māori authorities.

CRAIG McNAIR (NZ First): I do admire the Minister of Finance. He is able to make an argument about a tax system such as this one, based on race, sound quite—

Rodney Hide: Almost reasonable.

CRAIG McNAIR: He can make it sound almost reasonable. Speaking as a member of the Finance and Expenditure Committee, along with a few of the other members here, such as Lockwood Smith and Rodney Hide, New Zealand First was concerned, and my leader, the Rt Hon Winston Peters was concerned, that one section of the New Zealand community is receiving an advantage over other groups. We expressed a minority view in the report, because of our concern. It is our intention to move an amendment that all sections of the New Zealand community that can take advantage of the proposal relating to basic tax rates of 19.5 percent should be treated in the same way. We cannot support the bill in its current form, because of its unfair and race-based system.

I reiterate that New Zealand First wants to treat all New Zealanders equally, and I have prepared some amendments to give effect to this view. I shall quickly read them out. The first one states: “That the words ‘Subpart 1—Māori authorities’ be deleted as shown on page 18, line 9, and be substituted by the following words ‘Subpart 1—Māori authorities and applicants’ ” The second one states: “That on page 21 between lines 6 and 7 the following words be inserted ... ‘Election to become applicant’—‘(1) The applicant whose tax characteristics and tax rates are similar to those of a Māori authority as referred to in this Act shall be entitled to make a similar application to the Commissioner as a Māori authority can under this Act by giving notice to the Commissioner as a Māori authority is entitled to do in terms of paragraph HI 1C of this Act, and shall receive the same treatment as a Māori authority is entitled to receive in terms of this Act.’; ‘(2) The words ‘applicant’ or ‘applicants’ shall include all persons legally entitled to be called a legal person in terms of any and all Inland Revenue Department and any other tax legislation including, but not exclusively, individuals, companies, incorporated societies, charitable trusts, sole traders, partnerships, and any other parties liable to pay income tax.’; ‘(3) The provisions of Subpart 1 as applicable to Māori authorities shall apply to an applicant.’”

In many ways the amendments answer very well the question that Gordon Copeland, the United Future MP, asked. The Federation of Māori Authorities welcomes these amendments too and is looking forward to the Government supporting them.

I reiterate that one of our Māori members, Edwin Perry, is the chairman of a trust that has 4,000 acres. He has 80 beneficiaries and they have said to him that they do not want to be treated any differently from anybody else. We as a party also believe that having different rules based on race will just create and continue the dependency programme that this Government has. We feel this very strongly, as a party that believes in one country and one people. Māori soldiers are not treated any differently from any other New Zealanders when they are in the field. They excel exactly the same as other soldiers who have enlisted with them, and they get their jobs on merit. This is the same way that our tax system should be. We have a soldier in our own party. In fact we have a couple of them. We have Bill Gudgeon here, and he had to work just as hard as anybody else to get exactly what everybody else got, no matter what race they were.

Hon John Tamihere: Tell him to get up and take a call.

CRAIG McNAIR: OK. The lion in the media is starting to roar. But we all know that he has proven to be a lamb in Cabinet.

Hon Dr MICHAEL CULLEN (Minister of Finance): The Government will be voting against the amendment for a very simple reason. It is actually incomprehensible and almost certainly just about inapplicable. Probably the only bodies we could be reasonably sure might slip through would be the subsidiary companies of Māori authorities, which reverses the decision taken by the Finance and Expenditure Committee. Otherwise, if we are talking about tax characteristics we would find it very hard to find anybody who fits into the Māori authority category because of some of those characteristics, which are peculiar to Māori authorities, and I have already outlined those. People are locked into membership and there are no such other organisations around that one knows of.

The amendment is meaningless. It would create huge uncertainty within the tax law, and we try to avoid uncertainty within the tax laws as far as we can.

STEPHEN FRANKS (ACT NZ): I appreciate the fact that the Minister in the chair is taking calls and responding to, and explaining, issues. I would like to have an explanation of the effect of the anti-avoidance provisions, the eligibility criteria, and the implementation of the committee’s recommendation that companies not benefit from this concessionary or privilege regime. I ask that because it seems to me that a result of the change recommended by the select committee—a sort of attempt to lessen the insult of the race discrimination in this so that companies go back out into a more normal regime—is that companies will be a less preferred form of business entity for Māori-owned businesses. The effect of this will be that Māori may, for tax reasons, be encouraged to not use normal limited liability companies, and, instead, to trade through trusts.

If that is the case, it may be one of those horrible results of tax planning that means that the Māori authorities as defined that are not companies will be trading in a more risky position with the assets they are stewards of, and could lose them because they have decided not to use the limited liability company subsidiary structure, which is, of course, designed to allow risk to be isolated and confined to the particular enterprise. So I would be very pleased if he would take a call.

I will now go back to the comments made by Gordon Copeland, whom I first heard when this was debated several weeks ago espousing the theory that this was not racially discriminatory—that this was not racist—because anyone could qualify for the same treatment as long as that person made sure that he or she did not earn enough. I thought hard. I thought: “He is an enthusiastic member who is doing the bidding of his masters. He has definitely been given very short notice to come in here and speak, and he hasn’t a clue what he is talking about or he wouldn’t speak such twaddle.” However, I heard it again today. The member has had time to reflect, and he still says that this is not race discrimination because the same tax rate—19.5 percent—can somehow apply if people do not earn enough. I really do ask for this Committee to allow him another call to try to get to the bottom of that.

What we have here is a regime that every superannuation fund, and every trust and authority that has a mixture of members who have a low income or a low marginal tax rate, and others who may have a higher one, would dearly love to get. What it really says is that company tax, which is a withholding tax under an imputation regime, will be withheld at the rate that is applicable to the lower taxed beneficiaries instead of the higher taxed beneficiaries. Well, of course, we would all love that. The fact that this is a concession only for Māori, when so many other parts of the community would love to have it, is, of course, racism. It is not, as Mr Connell says, the result of subjugating us to an unsuitable old treaty; it is in fact a result of not applying the treaty. Article 3 of the treaty states that all New Zealanders should be subject to the same rights and privileges as British subjects. Article 3 of the treaty would not allow this provision, if it were properly applied.

I commend Mr Connell and the Minister to Sir Apirana Ngata’s little treatise on the subject of road rates, which were the way that so much of New Zealand was opened up and roads were built. They were special rates that rated the property that got the benefit of pushing road through. For decades Māori were not subject to road rates at the same rate as Pākehā. Sir Apirana said, very clearly, “This is a breach of the Treaty of Waitangi because it is treating us differently.” He went on to say: “It may be something of a quid pro quo for other breaches of the treaty, but both are undesirable, and as soon as possible we should get out of this position.” If Sir Apirana had been listened to, we would have got out of it. We would also have got out of it if this Government had bothered to treat the Convention on the Elimination of All Forms of Racial Discrimination seriously. That convention states that every form of discrimination must have an end date. It states that positive discrimination is OK, but that it must be defined for a specific period. This bill breaches that.

METIRIA TUREI (Green): Perhaps it would be good to start with a quick definition of what racism is for the Committee. I suggest that racism is discrimination against, on the basis of race. I suggest to those members who are concerned about what racism is that they might want to gather some more information about it and investigate what constitutes discrimination against. This bill does not discriminate against anyone. This bill attempts to recognise that there is such a thing as cultural difference, and that there is such a thing as a treaty-based nation, which is the nation in which we live. The treaty was signed by two sovereign States or nations that are entitled to equal recognition. I guess it is difficult for some to understand that, and some people need more time to do so, but I do commend members who have that difficulty to undertake some treaty education to inform themselves about what it means to live in a unique nation such as ours, which is premised on a treaty between two sovereign nations, and where the structures, values, and institutions of both cultures are equally recognised.

For those Māori who have made contact with the Greens and spoken to me about the bill, some will be disappointed with it, because it has some gains and some losses. But let me say that the Greens support this bill in recognition of those gains to Māori, the marae, the whānau, the hapū, and other Māori organisations. To some small extent, it is another step towards an understanding that not everything from 19th century England is appropriate in the 21st century, and, more important, that not everything from 19th century England is appropriate for the indigenous people of this colonised land. It is some small step towards recognising that this is, as I say, a treaty-based nation.

We are pleased that the definition of “charitable purpose” has been extended to include those who are related by blood. Traditional Māori structures that prioritise whānau and hapū have had real difficulty in gaining recognition as valid structures in our society. Once defined as “beastly communism”, those structures are actually fundamental to Māori cultural, economic, and political development. The extension of the charitable purposes definition goes some way towards ensuring that Māori authorities and marae are no longer prejudiced by inappropriate, culturally biased definitions.

We are also pleased that the definition of “marae” has been extended in the bill. Serious concerns were raised by the Dunedin Community Law Centre that Māori were discriminated against in the first draft of this bill, because marae could have charitable status only if the funds of the marae were to be used for the administration and maintenance of the property—the physical structures. Very real concerns were raised that such restrictions do not apply to similar organisations like churches. We are very happy that the provision has been changed so that a marae will be deemed to have a charitable purpose if it is on a Māori reserve under the Te Ture Whenua Maori Act, and if the funds it receives are to be used for a charitable purpose. That change eases the financial burden on marae and recognises the whānau and hapū support and development activities that are central to the purpose of a marae.

Finally, I will comment on the New Zealand First Supplementary Order Paper extending Subpart 1 to other applicants. The Greens do not support that Supplementary Order Paper. Those particular provisions in the bill are there to recognise the specific legal difficulties and constraints that Māori authorities face in dealing with community-owned assets. The extension proposed by New Zealand First should form part of a specific discussion in this community and in Parliament so that the full implications can be canvassed. But also—and I reiterate this because I understand that some people need time to understand it—under the Treaty of Waitangi, Māori structures and values are not to be discriminated against, and the blanket imposition of rules suggested by New Zealand First, National, and ACT, which are premised on the cultural values of the dominant culture, is nothing less than structural discrimination.

The CHAIRPERSON (H V Ross Robertson): Before I call the next speaker I thank the member for her speech and suggest that she look at Speaker’s ruling 21/8.

SHANE ARDERN (NZ National—Taranaki - King Country): If there was ever any evidence needed for what I said earlier in the general debate, that never before in the history of New Zealand have we had a Government that has had so much yet delivered so little, then here is the example. If members need a further example of why we are in such a mess with this legislation today, they need look no further than watching an academic with a PhD getting involved in a topic—in this case tax law—that is not relevant to his or her area of expertise.

I congratulate the Minister on taking a call and trying to explain how he has come to the half-baked conclusion he has come to—that we should have two different tax rates based on race. I acknowledge to the Minister and those present that there are some major issues in terms of multiple ownership in Māori incorporations, and of how we should deal with them. I also acknowledge that some of those Māori incorporations are doing well, despite all the difficulties they have, and despite the Government—particularly this current Government. Today we are debating having two separate tax rates for Māori incorporations. A large chunk of them involve dairy farmers. Some of them are in my electorate, where the population comprises 23 percent Māori. We are saying to them that it is fine for them to go out and compete with other dairy farmers of non-Māori descent on a different tax rate. We are saying that is fine and that it is not discrimination.

I suggest to the Minister, to the Māori members present, and to those who are heading up some of these Māori incorporations that it is discrimination, and this bill will not solve the problem. In fact, what is likely to happen is that when we get the nanny State—headed by a socialist Government—interfering, these incorporations are likely to fail. That has been the experience of Māori in New Zealand over generations, under socialist regimes—led sometimes by National Governments, I have to say, and sometimes interfered with by National Governments, but mostly led by Labour Governments—where Māori have been trapped into poverty, steered up the wrong road, and told that the nanny State will help them at the end of the day.

Most of the heads of Māori incorporations have spoken to me and said that they have had enough, that they are better than that, and that they can foot it on the main stage with the best of them. And they are demonstrating that; there is no doubt that they can. The Hon John Tamihere has said that in recent speeches, and I totally agree with him. In my view, it is absolutely incomprehensible that United Future member Gordon Copeland could come down to the House and accuse Dr Lockwood Smith of getting it wrong because he has found somebody who is a non-Māori somewhere, who will benefit from this tax rate—

Dr the Hon Lockwood Smith: He didn’t say he was a non-Māori.

SHANE ARDERN: He did not say that?

Brian Connell: He said he was Irish.

SHANE ARDERN: He said he was of Irish descent, but he could have Māori blood in him, as well. He is saying that he has found somebody who does not fit the description in this bill, and here we have the beginning of a rort, because there is a group of people that somehow or other may be able to fit itself into this without meeting the criteria, as most people understand them to be—and Gordon Copeland has actually said that.

Obviously, United Future members are in a hole here. They have vowed to support the bill, and they know it will alienate most of those who voted for them. They know that the bill is absolutely opposed to what they campaigned on, so they are trying to dig themselves out of a hole. Well, the first lesson in politics is that if members are in a hole, they should stop digging—and those members are in a hole. There is no way that United Future supporters will support the type of legislation that is in this bill. No amount of explanation, and no amount of gymnastics in terms of trying to find a way around disclaiming what was said by my colleague the Hon Dr Lockwood Smith—who I would suggest has a lot more knowledge on this issue than the Minister himself has—will dig United Future members out of that hole. My advice to them is to stop digging.

Chen Palmer said that $70 million worth of tax differential would go to the fishing industry alone. I suggest to the Minister that this industry is not headed by poor Māori. So who will be the beneficiaries? As the Hon Winston Peters has said many a time, poor Māori have not even seen a snapper out of this industry.

Rodney Hide: That was me!

SHANE ARDERN: It might have been too, but I know that the Rt Hon Winston Peters has used that line, as well—not even a snapper.

RODNEY HIDE (ACT NZ): I have to get up and sharply disagree with our colleagues across the aisle—what are they, “Future United”? Which way round are they—united in the future, or in the future they will be united? Those members say that the ACT party supports this bill. In fact, the ACT party will be voting hard against this bill. I would like to see United Future members explain to their voters how it is possible for them to be supporting two separate tax systems—one for Māori authorities and one for everyone else. I look forward to that discussion, because the ACT party says that is wrong, New Zealand First Party says that is wrong, and the “New Zealand Great National Party” says that is wrong. We are parties that stand up and say that every New Zealander should be treated the same under the laws of this country, no matter their race, religion, or creed. Members of the United Future party are standing up and saying: “Phooey to that.” They are saying that they will have a separate tax law for Māori through Māori authorities, and we say that is wrong.

Let me commend the Minister for these things. It was wrong that Māori authorities not have imputation credits—and full marks for that; it was wrong that Māori authorities appeared to be getting the advantage of being taxed at 25 percent, when everyone else was taxed at 33 percent. But the fact that there were no credits applying meant they were often overtaxed compared with people taxed at 33 percent. The simple decision to make is to have the same tax rules for each and every New Zealander. What is hard about that? Why will Mr Copeland of the United Future party not stand up, put his party’s flag up a pole, and say that United Future believes that all taxpayers should be the same before the law? One’s ethnicity does not matter.

Mr Copeland thinks it somehow makes this bill acceptable that he has found an Irishman who can rort it and get on the 19.5 percent rate. He says that it is OK, because non-Māori can get in on the rort. We should be closing those rorts down, I tell Mr Copeland. We should be saying that the tax rate is the same for everyone.

Gordon Copeland: Everybody in the same tax band—that’s right, Rodney!

RODNEY HIDE: Well, Mr Copeland sits there and chips in with: “Everyone in the same tax band.” That is absolutely right. That is why the National Party, the New Zealand First Party, and the ACT party say: “Let’s have imputation credits.” I did not hear the Minister after he had heard the Green Party’s speech in favour of this bill. I thought he was going to stand up and vote it down. He certainly did not think that was what this bill was about—something about cultural imperialism and overcoming that. Again, how hard is it to go forward as a nation with our tax laws the same for everyone?

I asked the authorities that came before the committee whether they thought having a lower tax rate would be good for their business. Do members remember that? Each and every authority said: “Yes. Having a 19.5 percent tax rate when everyone else has to pay 33 percent will be good for our business.” Dr Michael Cullen does not believe that, because he says that tax rates do not matter—that we can put up the tax rate and it does not affect business or the economy, or that we can drop it; it will not help. But the Māori authorities coming before the select committee said it would help. I would like to hear what Mr Jim Anderton has to say about this bill.

Brian Connell: Who?

RODNEY HIDE: Mr Jim Anderton. He is the economic wizard of this Labour Government. He said that if we have a tax cut it is an economic intervention.

Dail Jones: It’s a subsidy.

RODNEY HIDE: Well, here we have a subsidy, but only to some. I look across at my colleague the Hon John Tamihere and ask him how our children are to grow up together in New Zealand, as New Zealanders in one country, if we have two sets of laws: two sets of policies and two sets of tax systems, on the basis of whether the State declares one to be Māori and another to be non-Māori? I should declare a conflict of interest here, because both the Minister of Māori Affairs and Tariana Turia said that I am Ngāi Tahu.

PANSY WONG (NZ National): It is with regret that I take part in the debate on Part 2, which creates two systems of taxation. The part has been very well argued by the ACT party and my colleague Dr the Hon Lockwood Smith and Mr Shane Ardern. When one thinks about it, the Minister’s objective sounds quite reasonable. He says that eventually most taxpayers will be on a lower tax rate, so, for administrative purposes, why not lower the tax rate for Māori organisations and therefore save those people from having to claim a refund at the end of the process? However, the question remains as to why other taxpayers who are also on a lower income level cannot receive the same benefit. That defies logic. There is no logic to that. Other taxpayers in New Zealand on a lower income level would not be able to claim the same benefit. They would have to go to the trouble of filing a tax return and claiming a tax refund, etc. That defies logic and is not fair.

The second reason is even more discouraging. The Minister and the Labour Government is resigned to the fact that the majority of benefactors of Māori organisations will remain in a low income tax bracket. Therefore, instead of sending a positive signal to Māori taxpayers to aspire to be high-income earners, the Government is conceding that they will remain low-income earners. Recently, a report conducted by the independent National Bureau of Economic Research was commissioned by one Government department. It reached a very positive conclusion on the economic performance of Māori organisations. That report stated that those organisations utilise their assets very well. I have some news for the Labour Government, which has not read that independently researched report and has continued to put down Māori taxpayers: that economic report states that a lot of Māori organisations are doing very well. So, Māori are aspiring to become high-income earners.

It makes sense that the Government has two choices. One is to bring down the tax rate for all organisations and all taxpayers, which would send a positive signal to everybody and show that the Labour Government, for a change, wants everybody to do well and wants New Zealand to return to the top half of the OECD. So Labour should be prepared to reduce income tax levels to encourage all taxpayers to aspire to become high-income earners. The alternative choice is not to complicate the tax system and the work of the Inland Revenue Department any further by creating two separate systems. Because of the complications involved in that process, we end up having to debate, once again, a bill that runs into more than 100 pages. No doubt during the process a lot of people will be arguing about the definition of a Māori organisation, and we will get into all sorts of technical interpretations. Once again, it is good news particularly for tax lawyers, but what has this particular tax legislation achieved?

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

The CHAIRPERSON (H V Ross Robertson): No, not just yet.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney): It was kind of sad a few minutes ago to listen to Mr Gordon Copeland trying to justify United Future’s support for something it knows is morally wrong. United Future members know that it is wrong to discriminate on the basis of race, and we heard him trying to justify that he had found some priest somewhere—a Monsignor Cullen—who he claims is of Irish descent. He did not say that he was of Māori descent as well.

Gordon Copeland: I raise a point of order, Mr Chairperson. I believe that Hansard will show, because there was so much interjection at the time, that I said “but, in any event, he certainly is not a Māori,”.

The ASSISTANT SPEAKER (H V Ross Robertson): No, the member will sit down. That is a debatable point.

Dr the Hon LOCKWOOD SMITH: I remind Mr Copeland that it is not unusual for people to claim different ancestry for different occasions. I well remember Mr Peters often claims Scottish descent when that suits him, and he is of Māori descent when that suits better.

However, I want to address a couple of serious issues because there are three areas where Part 1, I believe, is discriminatory. I realise that the bill is not in the name of the Minister in the chair, but I really would appreciate it if officials could assist him with some answers to these quite serious questions.

The first question concerns this matter. On 3 October the Law Society appeared before the Finance and Expenditure Committee and pointed out to us that the way the imputation system will work for this special taxation system for Māori authorities, is different from the way the imputation system works for normal company taxation. The Law Society indicated to us that the way it had read the bill was that it was possible for taxpayers to get an imputation credit greater than the tax they have paid, and to get a refund for tax not paid. The society certainly indicated that the way this system works is different from the normal imputation system. It would be helpful if the Minister could explain to the House whether the way the imputation system works in Part 2 is the same way the imputation system works for the normal imputation system. On the one hand we have a concern that there is discrimination on the basis of the 19.5 percent tax rate. OK, lots of colleagues have debated that issue. I am not asking the Minister specifically about that; I am asking him specifically about the way the credit system will work for tax paid by a Māori authority in allocating that credit to the beneficiaries of the authority, and whether there is a discriminatory procedure in the mechanism of the system that will treat beneficiaries differently from the recipients of imputation credits under our normal imputation law. If there is, that is a second discriminatory process in this legislation—second to the fact that there is a discriminatory tax rate in the first place. I am not asking the Minister to comment, because we have had lots of debate on that, but I would appreciate his advice, if his officials could assist him, on whether the mechanism is different and more favourable in that it would enable refunds to be paid that would not be payable under the normal imputation system.

My next question to the Minister is this: is clause 66 in Part II also covering that extension to charitable purposes? That is also discriminatory, because for all other people in this country where beneficiaries have blood ties to the charity, they do not qualify under the definition of a charitable purpose. This legislation will allow exclusion on the basis of blood and blood ties for Māori people alone, and for no one else. Pacific Island people who may have blood ties to an Irish charity do not get that benefit. It is specifically for Māori people. OK, that is another discrimination made on the basis of race, but clearly the Government has decided to make it. My question to the Minister specifically concerns this issue. When the Inland Revenue Department was in front of the Finance and Expenditure Committee on 30 October it was asked how many people would benefit from that change, and what would be the fiscal cost of removing that exclusion on the basis of blood ties and extending charitable purposes to marae.

The Inland Revenue Department could not tell the select committee. I tell the Minister standing in for the Minister responsible for the bill, I think it is fair enough that, in this Committee stage, this Parliament should know the fiscal cost of this provision, because the Inland Revenue Department—and I have notes here from 30 October—could not tell the select committee what the cost was, how many people would be involved, or the cost of this provision. So those are two specific questions for the Minister, and I think they are reasonable questions. The first question was: is there a different arrangement in the way the imputation system will work for this special Māori taxation system? The Law Society certainly believed there was. My second question is simply: what is the fiscal cost? Those are reasonable questions deserving an answer.

Hon JOHN TAMIHERE (Minister of Youth Affairs): I move, That the question be now put.

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

Ayes 69

Noes 48

Motion agreed to.

Labour 52; Green Party 9; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 8.

The question was put that the following amendment in the name of Craig McNair to clause 24(1) be agreed to:

to omit the words “Subpart 1—Maori authorities”, and substitute the words “Subpart 1—Maori authorities and applicants”.

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

Ayes 48

Noes 68

Amendment not agreed to.

New Zealand National 27; New Zealand First 13; ACT New Zealand 8.

Labour 52; Green Party 8; United Future 8.

The question was put that the following amendment in the name of Craig McNair to clause 24(1) be agreed to:

To insert, after new section HI 1, the following new section:

HI 1A Election to become applicant

(1) The applicant whose tax characteristics and tax rates are similar to those of a Maori authority as referred to in this Act shall be entitled to make a similar application to the Commissioner as a Maori authority can under this Act by giving notice to the Commissioner as a Maori authority is entitled to do in terms of section HI 1C of this Act and shall receive the same treatment as a Maori authority is entitled to receive in terms of this Act.

(2) The words “applicant or applicants” shall include all persons legally entitled to be called a legal person in terms of any and all Inland Revenue Department and any other tax legislation including (but not exclusively) individuals, companies, incorporated societies, charitable trusts, sole traders, partnerships and any other parties liable to pay income tax.

(3) The provisions of Subpart 1 as applicable to Maori authorities shall apply to an applicant.

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

Ayes 48

Noes 68

Amendment not agreed to.

New Zealand National 27; New Zealand First 13; ACT New Zealand 8.

Labour 52; Green Party 8; United Future 8.

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

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

Ayes 68

Noes 48

Amendments agreed to.

Labour 52; Green Party 8; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 8.

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

Ayes 68

Noes 48

Part 2 as amended agreed to.

Labour 52; Green Party 8; United Future 8.

New Zealand National 27; New Zealand First 13; ACT New Zealand 8.

Part 3 Amendments to Tax Administration Act 1994

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney): Part 3 covers amendments to the Tax Administration Act. Clauses 86 to 89 cover the issue of distribution statements of Māori authorities and the credit account returns of Māori authorities. I ask the Minister in the chair again, whether there are differences in the way the imputation system or the credit system will work for Māori authorities. Are there differences from the standard imputation system? We were led to believe at the Finance and Expenditure Committee that there were differences that were discriminatory because the way the system will work here confers favouritism that is not available through the standard imputation system to the people of races other than Māori. I think it is fair enough, and there may be good reason there is a different imputation system, but we need to know. If this Parliament is passing legislation, it is fair enough to know what it is doing. I think it is reasonable that the Minister should explain. Is the imputation arrangement here the same, apart from the fact that it is a discriminatory tax rate, or does the credit system, or the imputation system, differ in the refunds available for tax not actually paid? That is my first issue.

The next issue is this. Clause 74, in particular, relates to the power to remove documents from businesses. The Law Society was very concerned that the power provided in this legislation—the power of search and seizure—on the face of it was in conflict with the New Zealand Bill of Rights Act. This was not some minor submission to the select committee. The New Zealand Law Society made this submission. Again, I would like the Minister to advise us what further advice the Government has taken on whether clause 74, and this issue of the power of search and seizure, is in conflict with the New Zealand Bill of Rights Act. That is my second question to the Minister.

Another very important issue in this part of the bill is, I think, under clause 100. Up until now, if a person has had a dispute with the Inland Revenue Department, there has been a provision that the department collects 50 percent of the money from that person, and that person does not have to pay the other 50 percent until the dispute is sorted out. The amendments in this legislation will enable the Inland Revenue Department to claim 100 percent of the money in dispute. Sure, the select committee managed to get some easing of this provision so that the department is meant to claim this 100 percent only if it has concerns that it may not receive the money in the event it wins the case. But the problem is this: if the department gets 100 percent of the money and it is wrong, the use-of-money interest rate it pays is only 4.83 percent—way below commercial rates.

There is an issue there that should be addressed by the Government. I would like the Minister to respond to this. If he is allowing the Inland Revenue Department to claim 100 percent of the tax in dispute with this legislation, why is it not that a more reasonable use of money interest would be paid if, in fact, the department were proved to be wrong when the dispute is resolved? That is my third question to the Minister.

The fourth question concerns clause 114, which, from memory, provides for promoter penalties where promoters promote schemes that are clearly inconsistent with our tax legislation. National has no great problem with penalties in that clause to start avoiding what are ridiculously avoiding schemes. But the problem is—and I want the Minister to explain what would happen in this case—what happens when there is a tax adviser who has promoted a scheme that he or she believes is perfectly reasonable? The Inland Revenue Department is not sure about it, and gets into dispute with the taxpayer. The taxpayer gets all nervous about being in dispute with the department and settles with the department, because lots of taxpayers are scared of the might of the Inland Revenue Department. That means a precedent is set that suggests that the scheme is outside the law.

Now the tax adviser who promoted the scheme is caught without having had any say in its defence—in the first place because a person involved in the scheme may have agreed to a settlement with the department. I would like the Minister to explain to us how in this legislation the situation will be overcome in which we have a perfectly honest and reasonable tax adviser, promoting what he or she believes is a reasonable scheme, but being caught because a taxpayer agrees to a settlement.

SHANE ARDERN (NZ National—Taranaki - King Country): Following on from my colleague in this part—

Rodney Hide: A good speech, actually.

SHANE ARDERN: It was a very good speech—very informative. It was most helpful. My colleague touched on a few very good points. I would ask the Minister in the chair to take a call to answer some of the questions that the member raised. Why is it that legislation concerning the Inland Revenue Department can require somebody to pay 100 percent of the tax the department deems to be owing, before it has been demonstrated that it is owing? Why is that the case? Why is it that that person will then receive a much lower interest rate than he or she will probably be borrowing to pay the tax? The people who are likely to find themselves in that situation are the entrepreneurs of this country—the sorts of people that the Prime Minister of this “Labour propped-up Government by a few on the side” has said—

Brian Connell: United!

SHANE ARDERN: United Future members, who say one thing, and vote another way. That Government has said that it will support entrepreneurs. It will support small-business people. It will support the wealth creators of the economy. Here we have a situation where Part 3 of this tax amendment bill being debated in Parliament today does exactly the opposite to what the Government has been talking about doing for the last 3½ to 4 years. In fact, it could be enough, as my colleague has pointed out, for people like tax advisers to become so shy of what could happen—its ramifications to them and their businesses; they could be in breach of the law—that they will not give that advice.

Dr the Hon Lockwood Smith: The penalty is 100 percent.

SHANE ARDERN: The penalties are so tough. Most people know that they do not want to get offside with the Inland Revenue Department, and I know in my own farming business, and in small businesses around me, the amount of effort that people go to, to make sure they comply with the department’s requirements. Sometimes it is to an extreme point, where they worry themselves and they worry their families. There are many documented cases of where that has happened. Many members of this Parliament have raised those issues, and here today, despite all the rhetoric about those issues, we have legislation that is likely to make them worse. That is absolutely contrary to what the Government has told everybody it will do. It is another layer of cost, another compliance that will be hard to live up to, and another potential situation for good honest citizens who do not understand the detail of tax law to get themselves slightly out of line with the Inland Revenue Department and to have thrust on them that draconian penalty of 100 percent of what the department deems them to owe. There is no natural justice in that. I suggest that the Minister take a call and explain to us why, on this basis, the legislation should proceed through this Parliament.

I also want to touch on the whole issue—once again, it is referred to in Part 3; I have just been flicking through and having a look—of two separate tax rates. It is the issue of a different tax rate based on race. I want the Minister to explain that to this Committee, once again, because the previous Minister in the chair, the Minister of Revenue, got up and made an attempt to explain it. I congratulate him on that but I certainly was not convinced, and I know that the Māori authorities were not convinced either. This Minister in the chair may have a different approach that is more convincing. I suspect he will have a few Māori authorities in his own electorate, and I am sure he will have a bit of knowledge of the issue. Maybe he can take some advice from his officials. I would like this Minister to take a call when my time is complete, to explain to us why we will have this draconian legislation pass through Parliament under this Labour-led Government, and why it feels we should have our tax laws based on racial grounds rather than any other criteria that would be sensible to apply.

The Minister may not consider taking a call right now. He might consider waiting until the Minister of Revenue comes back. That will be fine, but one Minister somewhere in this Government needs to explain to the rest of the New Zealanders who are listening today, and who are wondering about this legislation, why we are proceeding with it, given the overwhelming advice of a range of people in the select committee my colleague was part of, who suggested that this was not the right approach. Why has the Government finally decided that it needs to proceed with Part 3 of this bill today, when there is an overwhelming majority of people who have said it is not right?

RODNEY HIDE (ACT NZ): We see in the Chamber today the contempt with which this Government treats Parliament. We do not see the Minister rising up to answer questions. I can understand that, because this Minister in the chair, the Hon Mark Burton—

Jill Pettis: There are thousands here.

RODNEY HIDE: —is incapable of understanding this bill or answering questions on it. I am pleased that Jill Pettis called out about the lack of Government MPs in the Chamber, because there are only three MPs from the Government present. One of them is the Minister sitting in the chair, not paying attention, and the other two are here to move that the question be now put. Not one of them will stand up and speak to the bill, or answer questions. I am afraid the Greens have become doormats, and I hope the United Future members are not doormats, because I have a very serious issue and want to take members to page—

Jill Pettis: How many ACT members here—one?

RODNEY HIDE: Ah, but what a member!

The CHAIRPERSON (Ann Hartley): I remind members about the convention of not referring to the absence of members. Thank you.

RODNEY HIDE: I was referring to the fact that there were three Government MPs present. So it is not that the others are absent; it is that there are three Government MPs here. I want to direct the attention of members to clause 103, which is a disgrace. We had a committee inquiry to hear how the Inland Revenue Department could get a bit out of hand. It was a good committee, chaired by Peter Dunne. Members were stunned to learn that one could get hit with a 50 percent prepayment of an amount in dispute. We heard of cases, demonstrated as true, where the Inland Revenue Department without any reason declared that a taxpayer owed $1 million. The poor old taxpayer had to front up and pay half. We thought that was outrageous. It was never tested in court, but just made up. So we got rid of that provision in this bill. The payment goes to zero—unless the commissioner says otherwise. That means the commissioner, or any one of his or her officers. They could just say: “Oh, look, we don’t actually like you, so we’ll charge you 100 percent, plus interest.” That is arbitrary power.

Every submission we had was against that arbitrary power, but members will be pleased to know I have drafted an amendment—[Interruption] Thank you! I know that United Future will come in and support it and so will Mr Dail Jones—to delete clause 103(1C) and clause 103(1D). With good Minister Dr Cullen’s assistance through the experts in the Inland Revenue Department, we have it in form so that it will absolutely work and do the biz-o. A commissioner or departmental officer will not just decide that Mr Dail Jones is to be “done”, and make up a million-dollar tax bill against him without proving it, and without having any reason for thinking it. Poor Dail Jones would be bankrupted before he could ever get to court. That is wrong, and that power should never be put across.

I invite members to reflect on this point, and I am sure that Mr Dail Jones as the only lawyer present will back me up. There are two lawyers—one from the Green Party. She will back me up. If they think that there is a problem they can go straight to the High Court—and help me with my pronunciation—[Interruption] No, John Tamihere was a lawyer, and that is a long story; he was a lawyer, but he had to give up his licence. They can go to the High Court and get a Mareva injunction, which ensures that assets are not distributed. So the person goes to a second authority—a High Court—presents the case in front of a judge, and can hold the assets. That is the way every other litigant or disputant has to do it. Why? Because that is a fair process. How can we have the Inland Revenue Department finding a taxpayer a bit mettlesome, and saying: “You owe $1 million, and you have got to pay it now because we think you might run away. If you don’t think you do, take us to court. Oops! Sorry. You’re bankrupted.” ?

Dr Lockwood Smith knows this. We heard this from taxpayers who were in that situation. This is the most draconian move against taxpayers we have seen in my time in Parliament. We are giving the commissioner, and all who work for him, arbitrary power to declare an amount of tax, never to have it tested, and to demand that it be paid. It is a backward step of unimagined proportions. I am afraid that if this goes through, taxpayers will have to be very, very afraid, and it is unnecessary.

I myself do not take any heart from the Inland Revenue Department saying: “Oh, we’ll use it only in a limited number of cases.” The people who decide whether it is appropriate are Inland Revenue Department people. I look forward to members supporting my amendment, because I know that under this Government I will not get to speak on Part 3 ever again. The Government will move to shut it down.

CRAIG McNAIR (NZ First): I wish to speak to Part 3.

Rodney Hide: Will the member support my amendment?

CRAIG McNAIR: New Zealand First will support the amendment to clause 103. First and foremost, I want to talk about the imputation system in clauses 86 to 89. This revolves all around this separate taxation system. I must admit that Rodney Hide was very right. I am very proud of Rodney Hide. He was very selfless. Being a member of the—

Rodney Hide: The Ngāi Tahu.

CRAIG McNAIR: I was going to say Te Māngai Pāho, but I do not think it is that. He is a member of the Ngāi Tahu tribe. He is laying it down—

Rodney Hide: I’ve got no Irish in me though.

CRAIG McNAIR: He has no Irish in him! However, he said we should all be treated as one people. Even when we are talking specifically about clauses 86 to 89 in relation to the imputation system, it still revolves all around this particular issue of a separate tax system, and so on. The Hon Dr Lockwood Smith made some very interesting points. It would be good for the Minister in the chair at this point to talk about the reason that this imputation system is in place with this bill. If he is not totally up with the play on it since the bill is not under his name, that is not a problem. I will not make fun of him for that, but maybe he could get that information for us or he could speak to us. That would be much appreciated by all members on this side of the Chamber. Pansy Wong and I are in agreement. I guess we will enjoy that moment, because it is a bit of a worry. We might not see that moment ever again.

I want to ask a question in relation to this part. Is this bill fair? Are clauses 86 to 89 fair? Rodney Hide asked a good question. Is it a fair process?

Opposition Members: No!

CRAIG McNAIR: Members all around the Chamber agree with me. They do not feel that it is a fair process. Is this bill just?

Rodney Hide: No.

CRAIG McNAIR: It is not just. I do not know what the lion is saying, but he is laying down like a lamb. He is roaring again. As we look through this part, the question we need to ask is whether it is draconian legislation.

Rodney Hide: Yes.

CRAIG McNAIR: The answer is yes. It has changed from no to yes. We also have to ask whether it is arbitrary. Yes, it is. We have to ask ourselves whether this is a step forward in the right direction for the people of New Zealand.

Rodney Hide: No.

CRAIG McNAIR: Even the member of Ngāi Tahu says “No”. It is not fair for all of us when we talk about clauses 86 to 89.

BRIAN CONNELL (NZ National—Rakaia): I want to focus on clauses 86 to 89, as well. Essentially, this goes to the heart of this debate. I am talking about the tax rate and imputation credits. I want to take a moment to read from the commentary. It is important that people understand exactly what this issue is: “Currently income retained by Māori organisations is taxed at a rate of 25 percent,”—there is something in that for a start—“refundable if the income is distributed within 4 years.” Up to that point there is not a problem. “If the income is retained for 4 years before distribution to members, the distribution is subject to resident withholding tax at a rate of 33 percent.” This is where we run into a problem. No credit is given for the 25 percent tax paid by Māori organisations.

That is clearly wrong. I do not think members on this side of the House have a problem with that, but one does not fix one problem by creating another. The tax imputation issue should be dealt with. One does not have to go down the track of introducing a race-based tax just to fix that issue.

The other issue I would like to draw to the attention of the Committee is that the way this legislation is drafted is anti-competitive. By that I mean that it gives a party a competitive advantage. If we really want to grow our economy and if we really understand how to grow our economy, we will understand that we need to attract foreign capital, we need to give those people a fair go, and we need to give our business people a fair go. We will not do that, if we put in place legislation that is anti-competitive.

Let me remind members why I say that it is anti-competitive. The select committee was told that this would provide a $70 million windfall for the Māori authorities in the fishing industry alone. That is not a fair go. It will lead to a racket. Gordon Copeland has already started to establish that there will be rackets. He has gone out and found someone who feels that he or she would like to take advantage of this. But, more than that, we have authorities like PricewaterhouseCoopers that told the select committee that it would not be difficult for Māori businesses with the help of PricewaterhouseCoopers to access the very favourable 19.5 percent tax rate. I again ask the members of this House whether that is a fair go. What does it suggest to members? It suggests to me that we will see widespread abuse. What we are doing is creating structures with the incentive for abuse—and human nature, being what it is, will take advantage of that.

I will reflect on United Future’s position for a moment. I find it very ironic that a party with the word “united” in its title can be supporting legislation that is so divisive. What they are saying to the people who supported them—[Interruption] Someone is yelling out over there. I think it is the senior Government whip again. I did not think that genetically modified organisms had been released yet! United Future members are telling the people who supported them on the basis that United Future wants a united future for this great country of ours, that they are supporting a race-based tax. They will put a minority group of people at an advantage over others.

The irony of this, of course, is that the Minister is right to reduce taxation if he wants to grow the economy. The problem is that the Government should not do so for just one section of the community. It should do so for everybody. It is a basic construct, if I could use that word, that if we want to share wealth, then we have to create it, and by lowering tax, that is exactly what we will do.

PANSY WONG (NZ National): I really think the Minister should take a call, because my colleagues, starting with the Hon Lockwood Smith, have raised four very substantial questions during the debate on this part. We have not heard one intelligent reply from the Labour side, or from the Minister. National will certainly support the amendment to the draconian measures imposed in clause 103.

I am going to raise another question, and I really think it would be helpful if the Minister could pay attention, start to read Part 3, and start to consult the officials. I have been reading Part 3, in which there are quite a few definitions. Part 3 involves the issue of penalties. Clause 72, “Interpretation”, now has a subclause (2B). We now have the term “acceptable tax position”. The term “acceptable tax position” apparently means a tax position that is not an unacceptable tax position. This is very interesting. The public will be interested to know that an “acceptable tax position” means a tax position that is not an unacceptable tax position!

So at that point, I thought I had better do some research. I went back to section 141B, “Unacceptable interpretation’’, of the Act. Apparently, in that section headed “Unacceptable interpretation”, an unacceptable tax position occurs when it: “(a) Is an interpretation or an interpretation of an application of a tax law; and (b) Viewed objectively, that interpretation or application fails to meet the standard of being about as likely as not to be correct.”

I think that the Minister should really take a call. The wording of that section is very unclear, and many taxpayers may start to get really worried. First of all, I would like the Minister to explain whose objective will be taken into account when they interpret whether that application fails to meet the standard of being about as likely as not to be correct. What is the test to determine whether the interpretation is “as likely as not to be correct.”? Is it at the sole discretion of the commissioner? Is there a process of application for review, or is it done through some very long-established court cases?

I say to the Minister that it is important for taxpayers to understand when a penalty is imposed on them, when they become caught in a position that is actually not an acceptable tax position—no wonder people need lawyers to help when they are filing simple tax returns! I raise that issue because that particular interpretation alone is enough to scare taxpayers, because how can they be sure that they are in an acceptable tax position?

I also want to, once again, comment on a very important point—it was raised by both the Hon Lockwood Smith and Rodney Hide of ACT—and that is this: why is it once again not a level playing field? The Inland Revenue Department is a very significant Government department. It is well resourced. Why should it not be held to the same standards in terms of getting its assessments correct, and in terms of the detail it needs to go into before the commissioner can actually say how likely it is for one to assume that the taxpayer is part of a scheme that is liable to be caught under the Act? It certainly is not fair for the commissioner to arbitrarily say “50 percent” or whatever the outstanding liability should have been.

Hon JOHN TAMIHERE (Minister of Youth Affairs): I rise to talk about issues regarding clause 103 that were raised by Rodney Philip Hide of the ACT party. Clause 103 should be renamed “Kiwi Protection Clause Against Rodney Hide and the ACT Rort Party”. The reason the clause should be so renamed is that when payments are disputed—and in large part they are disputed by larger corporates—[Interruption] There is Rodney Hide, protecting his mates. He worked for Tappenden Holdings, with his friends Gibbs and Farmer. I have to tell members that these clauses are vitally important to protect the revenue of the nation against white–collar, gold-pen pushing people who owe the State $4 billion.

Rodney Hide: I raise a point of order, Madam Chairperson. Does the Chair seriously think it is in order for John Tamihere to speak like that—because he is a guy who has actually been done for fraud in the courts of this country.

Hon JOHN TAMIHERE: Madam Chairperson—

The CHAIRPERSON (Ann Hartley): Is the member wishing to speak to the point of order?

Hon JOHN TAMIHERE: Well, it was not a point of order, so I wanted to get your steer so that I can get on with my speech. He is trying to break it up.

The CHAIRPERSON (Ann Hartley): Members need to stick to the bill and be orderly, otherwise it will lead to disorder.

Hon JOHN TAMIHERE: I refer to the requirement for payment of disputed tax, and the requirement for a discretion on the part of the commissioner. We must protect the revenue. There is $4 billion outstanding, and it is owed particularly by corporates who dance and use smart alec accountants and lawyers to defeat the purposes. The wage earners and salary earners in this country are the honest Kiwis. They make up 89 percent of the payers, and they pay on the knocker every time. We have to protect them against the types of people from the rort party. That is what clause 103 is all about. Clause 103 protects the revenue, and it protects the revenue from the types of people Rodney Hide is in Parliament to look after.

DAIL JONES (NZ First): I have never heard anything as despicable as the speech I have just heard from John Tamihere. He is supposed to have had some legal training, and for him to say that that type of clause is there for that type of purpose is utterly ridiculous.

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

DAIL JONES: When the Committee rose, various issues were being discussed. We had just had to put up with a speech from the Labour Minister, the Hon John Tamihere, which must have been one of the low points of the House since I have come back to it. With speeches like that, one wonders how he can remain a Minister under this Labour Government. From his speeches about Labour Party policy, and from the manner in which he conducts himself in the House, it seems he has dissociated himself from Labour Party policy, which is totally outside the Westminster system, but that is obviously the standard the Prime Minister wishes to set. That is all I will say about that.

In so far as the bill is concerned, I refer to clause 103, “Obligation to pay tax during challenge”. As I see the bill now, it seems to require that the total amount has to be paid. There was a time when one paid only 50 percent—and although I say “only 50 percent”, it was still 50 percent. I believe the reason it has been increased to 100 percent is that it was possible under the old system to get some money back from the Inland Revenue Department. If one had paid the Inland Revenue Department 100 percent, and was under a challenge, one could then say to the Inland Revenue Department: “Look, I’ve paid you 50 percent more than I had to, and now I want 50 percent back.”

That situation applied to a client of mine when I was involved with the taxation review. Do members think I could get that 50 percent back from the Inland Revenue Department? Under that system, the department insisted that people pay 50 percent, but when people overpaid the department and they tried to get 50 percent back, it was virtually impossible. Fortunately, in that case, not only did I win, but I was also given interest on the money the Inland Revenue Department had failed to pay back to my client. That is a dreadfully uneven playing field.

As the honourable Rodney Hide mentioned, people can go broke in the course of that process. As the member also suggested, if there were a malevolent Government in place that could somehow influence the Inland Revenue Department, this clause could be grossly manipulated to put people into bankruptcy and companies into liquidation. I am pleased to say I have never ever known that to happen, but times can always change.

Even in the fairest of economies, and in the fairest of times, someone in the Inland Revenue Department can make a mistake. We have known of cases where that has happened. Was there not a Mr John Henderson involved once?

Rodney Hide: David.

DAIL JONES: David Henderson—he got into all sorts of financial difficulties, as I recall, and that would have been under the 50 percent system. Members can imagine what would have happened to him under the 100 percent system.

This is an iniquitous clause. It is dreadful legislation. It shows that the Government and the Inland Revenue Department have no faith in their view of things. Most people have the opportunity to go to court and to fight out a case, and if they lose, they pay. One of the things Roger Douglas did in the 1984-90 era was to increase the amount of penalties, so that people thought twice about getting involved in that type of situation. If they did try to take on the Inland Revenue Department and lost, they paid through the nose with interest, penalty interest, and suchlike. That made it very, very dangerous to try to take the Inland Revenue Department on. I will be supporting Rodney Hide’s amendment, for that reason.

The other area I will discuss is with regard to Māori authorities, which are mentioned in this part of the bill, as well.

JOHN CARTER (NZ National—Northland): I am taking a call on Part 3 because I have been listening to this debate, and I have to say that this bill, the whole bill actually, is causing me more and more concern. This bill, I think, is quite a serious bill because of what it is doing. Part 3 is an example of that, and we have just heard a very good speech from Dail Jones about the concerns we have. To be fair, I must say that the Minister of Finance was taking calls in this debate, and helping to explain to the Committee what is going on—

Hon Paul Swain: Not according to my notes.

JOHN CARTER: Michael Cullen did not take a call? He has taken a call, but not on this part. In fact, he took two or three calls, and I thought he was very helpful. He tried to explain the bill but, at the end of the day, he was not able to. Nevertheless, his contribution was useful, and it was good to see the Minister in the chair take a call. I really would like the Minister in the chair now, Paul Swain, to stand up and advise the Committee why he thinks this legislation should be passed. Also, it would be great if the Minister of Māori Affairs would take a call on this part and explain to the Committee why he believes it is an important part of what the Government is doing for Māori.

Rodney Hide: He needs money for the booze-ups.

JOHN CARTER: Well, he could explain why money has been spent in the wrong places. But what concerns me—and I know that it probably concerns the Minister of Māori Affairs; or I suspect it does—is the injustice of what this bill will do for all non-Māori in this country.

Hon Parekura Horomia: Don’t forget your mokopuna.

JOHN CARTER: She would not expect to have special attention just because she is of Māori descent. She is a person who will stand on her own feet in this country, thank you very much. She does not need to have a Government saying to her: “Sorry, you aren’t capable of looking after yourself.” She is a young lass who will get on her feet and make something of her life by herself, for herself. She does not need somebody like the Minister of Māori Affairs coming along and saying: “Sorry. You’re not capable.”, which is what this bill is doing. It is saying: “Sorry. You seem to be disadvantaged and incapable of looking after yourself.” I am pleased to say to my colleague across the way that my mokopuna will not be in that situation—no one in this country needs to be—but the Government, with this legislation, is encouraging that to happen.

I know that that Minister across the way does not think like that, actually. I am surprised that he is sitting here, listening to this debate, and not contributing. More important, I am surprised he is allowing his Government to put this sort of legislation through. In the days when he was an ordinary person, prior to becoming a member of Parliament, he never thought like that, at all. That member over there worked at trying to get people on their own feet and using their own values. That is what he used to do. Now, he is not even defending Part 3.

As I said, we have just heard a very good speech from the honourable Dail Jones, who told us about the difficulties that this legislation will cause people, and about the extra costs they are likely to incur. I am talking entirely about the extra costs that are likely to be imposed on people if there is a dispute about any area of Part 3 with regard to the payment of tax. I say to the Minister in the chair and to the Minister of Māori Affairs, particularly, that they need to be concerned about that. The Minister of Māori Affairs needs to read Part 3 if he has not yet had the opportunity to do so—and he may not have—and ask why an extra impost will be put on his people. He needs to ask why the Government is imposing extra compliance costs when this legislation is supposedly an advantage to people of Māori descent. I say to the Minister across the way that I do not know that that is so, at all. He needs to think seriously about how he will vote on this legislation, because when he is on the marae next time, somebody who knows a bit about taxation law will stand up and start asking him some questions—and what is going to happen?

GORDON COPELAND (United Future): I will speak on clause 103. If members look at the clause, they will see that it has the word “New” written there, then, in brackets, the word “unanimous”. For the benefit of those listening, I point out that that simply means the clause was unanimously approved by the Finance and Expenditure Committee. The names of the members of the Finance and Expenditure Committee are also set out in the bill, and they include the honourable member Rodney Hide. At the select committee Rodney Hide agreed with everyone else that clause 103 was a good clause to include in this bill. He heard the explanation, as we did, from the officials. They said that this clause is intended to address situations where people blatantly set out on a course of tax evasion, then, when the Inland Revenue Department catches up with them, decide to transfer their assets off shore, liquidate their New Zealand position, and dodge the tax. This clause is aimed at addressing those specific situations where there is significant risk—and that is what the wording is; “a significant risk”—to the revenue. People will have to front up with that tax, and pay it into an escrow kind of account whilst the matter is determined in the courts.

However, I go back to my comments about the member, Rodney Hide. Having agreed to the clause in the select committee, he now comes along to the Committee of the whole House tonight and proposes his amendment. I have not actually seen the amendment. He has not bothered to show me a copy; nor has he bothered to read it to the Committee. We have no idea what is in it. But I ask myself why he has done that. Is it because the member does not know his own mind, or could it possibly have something to do with the fact that what happens in the select committee with the officials is kind of a private matter, whereas what is happening here in the Chamber tonight is broadcast on the radio?

The CHAIRPERSON (H V Ross Robertson): I am sorry to interrupt the honourable member, but I am having trouble hearing him because of the noise that is taking place to my right. I remind honourable members that if they want to have long conversations, they can do so in the lobbies.

GORDON COPELAND: Concerning the situation about the so-called race-based rate for Māori authorities, I would like to make a couple of points. First, once again, if we look through the list of members on the Finance and Expenditure Committee, we will see that it includes Rodney Hide from the ACT party. He did not lodge any kind of minority report about his disagreement with that particular clause at the select committee, yet he comes to the Chamber tonight and brings out the race card. By contrast, Craig McNair and Lockwood Smith, from the other two Opposition parties, at least had consistency in their position—a position, by the way, that I completely and utterly disagree with. But at least they were consistent in saying at the select committee and here in the Chamber that they oppose those particular provisions in Part 3.

I was delighted to hear Brian Connell admit that the present tax rules that apply to Māori authorities here and now tonight are totally unjust. They amount to a double taxation on those authorities, and I am glad that he picked up on that and was prepared to admit it. Tonight we are removing a complete injustice, a double taxation, which applies only to Māori authorities. That is the point—it applies only to Māori authorities. It does not apply to companies. It does not apply to other organisations. Tonight we are putting right a fundamental injustice towards Māori organisations. That, in my opinion, is something that this Chamber ought to freely acknowledge. As I said before, I totally and utterly disagree with the position taken by New Zealand First and National. On the one hand, Brian Connell has started to admit that this is a serious injustice and, on the other hand, he argued that this injustice should continue. I believe that that is a totally unacceptable situation.

The CHAIRPERSON (H V Ross Robertson): Would members please resume their seats. I am sorry to interrupt the honourable member, but there is too much noise. One or two yellow cards will be going out. Will the member please continue his speech.

GORDON COPELAND: I do not think there is really much more one need add. This is a clear case of Parliament being asked to rectify an existing serious injustice against Māori organisations. I think that that is the reality, and I totally disagree with all the concerns being expressed that somehow this is racially based. If it is racially based, it is removing an injustice that applies only to those people who are predominantly Māori.

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 71

Noes 46

Motion agreed to.

Labour 52; Green Party 9; United Future 8; Progressive 2.

New Zealand National 27; New Zealand First 11; ACT New Zealand 8.

The question was put that the following amendment in the name of Rodney Hide to clause 103 be agreed to:

to omit subclauses (1C) and (1D).

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

Ayes 46

Noes 71

Amendment not agreed to.

New Zealand National 27 New Zealand First 11; ACT New Zealand 8.

Labour 52; Green Party 9; United Future 8; Progressive 2.

The question was put that the amendments set out on Supplementary Order Paper 59 in the name of the Hon Dr Michael Cullen to Part 3 be agreed to.

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

Ayes 71

Noes 46

Amendments agreed to.

Labour 52; Green Party 9; United Future 8; Progressive 2.

National New Zealand 27; New Zealand First 11; ACT New Zealand 8.

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

Ayes 71

Noes 46

Part 3 as amended agreed to.

Labour 52; Green Party 9; United Future 8; Progressive 2.

National New Zealand 27; New Zealand First 11; ACT New Zealand 8.

Part 4 Amendments to other Acts

SHANE ARDERN (NZ National—Taranaki - King Country): Here we are again, under a Labour-led Government—and it is a good thing that the Minister of Māori Affairs is in the Chamber—debating legislation that adds more costs to business in this country. We have been told: “We’re going to look after small business. We’re going to look after entrepreneurs. We’re going to help people out, and we’re going to help Māori in particular.” But despite that rhetoric, which we have heard up and down the country, here we are passing legislation that does exactly the opposite of the stated objective.

My colleague the very good member Pansy Wong wondered whether she could carry out this debate in Chinese. I told her I could see no reason for her not being able to do that. The Minister of Māori Affairs answers most of his questions in Chinese, so I can see no reason for that not being permissible. But here we are again adding costs, under a Labour-led Government, to the very people who provide it with the wherewithal that it desperately needs to spend on its social agenda. And there is no better clause to demonstrate that than clause 146(1). Under that clause the definition of “PAYE intermediary” means that somebody else can pay the tax on behalf of another person. That seems fair enough, on the surface. I cannot see anything wrong with it. But when we look at the clause in Part 3, which states that taxpayers can be penalised up to 100 percent of the tax outstanding—unless, in cases where it is wrong, they prove they are innocent—and pay interest on that, as well, at whatever rate is set by the Inland Revenue Department at the time, and then look at what happens in Part 4, clause 146(1), we find that if a person who is making the payment on the taxpayer’s behalf goes broke in the process, thereby losing the taxpayer’s money, then it is still the taxpayer who is still liable.

I wonder whether the Māori corporations—and I can see the Minister is listening very carefully now—that presented submissions on this bill to the Finance and Expenditure Committee said they were happy with the notion that if they enter into a new business venture, they will be liable for 100 percent of the tax outstanding, plus interest on that at whatever rate is set by the Inland Revenue Department, and that they will still be liable for that amount even if the person who is paying the Inland Revenue Department on their behalf goes broke in the process. I wonder whether they raised that issue with the select committee. I wonder whether the Minister of Māori Affairs was made aware of that. Obviously, the Hon John Tamihere was not made aware of it, otherwise he would have spoken about it in his speech earlier. He never mentioned it. However, it is an issue.

I would like the Minister in the chair, the Hon Dr Michael Cullen, to get some advice from his officials and take a call to clear this up for the Committee and for those who are listening tonight. That is the way it looks to me, and I know there were submissions to the select committee by senior accountancy firms in this country that also pointed that out.

I see that the honourable United Future member Gordon Copeland is listening. I know he has some knowledge in this area, so perhaps he will take another call and clear this up. One of the things I know for sure is that people who voted for United Future never realised that party would load all those costs on to them. I am sure that if voters had realised that, then United Future would not have got the amount of votes it did. Its leader said the party stands for common sense, but this bill absolutely flies in the face of common sense.

Clause 146(1) has the ability to add a huge cost in litigation, extra tax, and losses, because if an agent who is paying the tax on behalf of a business fails to meet the obligations set down by the Inland Revenue Department, it could potentially result in the failure of a few businesses. If that happens, the taxpayer who authorised the agent to act on behalf of his or her business will be liable for substantial amounts of funds—and we could be talking about amounts of up to $100,000 or maybe $200,000—which they may potentially have to pay twice. That will be the case in most Māori corporations, because they will be employing an accountant to do this work for them. I wonder whether the Minister has considered that.

DEBORAH CODDINGTON (ACT NZ): In talking to Part 4 of the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill, I want to refer in particular to the amendment to the Student Loan Scheme Act. I see that the amendment is to take in the other changes in this bill whereby there can be a PAYE intermediary. The Student Loan Scheme Act that was brought in was good legislation. This Government, instead of just amending the Act to allow the inclusion of a PAYE intermediary, has used its powers to change the purpose of that Act totally in terms of getting rid of the interest on student loans when students are still qualifying. That is putting a burden on all taxpayers in New Zealand. I say if it is not fair for students to pay the interest on their loans, why is it fair for all the other taxpayers to pay that interest? Allowing students not to pay interest while they are studying is just deferring that payment further down the track, although probably not for them but for their children and their grandchildren.

This Government, in getting rid of interest on student loans while people are studying, was just trying to get the student vote. I have been visiting universities in the last couple of weeks, during enrolment, and I have been talking to students. Most of the students in this country who attend universities and tertiary institutions—that is, Government institutions, not private ones—come from middle to upper class families. These students are not stupid. They realise this is just income churning, because the Government is taking money from the middle and upper class families, in the form of income tax and corporate tax, in the first place and then paying it out to them in terms of interest-free student loans, while they are studying. The students are aware of that. They know it is just cynical vote-buying. They also know that capping tertiary fees is just a return to the Muldoonism of price controls, and it is reducing the flexibility of universities to increase their income in terms of setting their own fees. I condemn this Government for its cynical ploy to try to buy the votes of students. It might well work with a few of them but there is no way that students are not aware of what is going on.

The other thing I would like to talk about is clause 148, “Employer to make repayment deductions”, or, as provided by this bill, the PAYE intermediary. Why should this burden be put on to employers? Why should the employer be the tax revenue gatherer for students who have taken out loans? Again, it is just more income churning that this Government indulges in—taking from the corporate owners on the one hand and trying to give it back to the children of the corporate owners, on the other. This just adds more compliance costs on to employers.

Employers are the ones who are in the gun if they do not, firstly, gather it properly and, secondly, pass it on, in the manner that is required by law. In fact, there is no reason that employers should have to gather in this repayment of the student loans, make the repayment deductions, on behalf of the Government. Employers are not required to make repayment reductions for people who take out mortgages. When people take out a mortgage their employer does not take the loan reductions out of their pay packet.

Hon John Tamihere: This is not about mortgages.

DEBORAH CODDINGTON: That member is very lucky if he does not have a mortgage. Many of us are not in such a fortunate position as to be mortgage free. I suppose if people have been living off the taxpayer for most of their lives, they would not be mortgage free.

PANSY WONG (NZ National): I am so glad that the Hon Paul Swain is in the chair during this debate, because that Minister has been holding out to be the champion of reduction in compliance costs, on behalf of the Labour Party. We now come to Part 4 of this taxation legislation, and I cannot find the compliance cost impact statement that this Minister insists any other piece of legislation should have. This Minister was in charge of the Ministry of Commerce, which has the obligation to ensure that every department has a compliance cost statement. This is very relevant to Part 4, because this single piece of legislation for a discriminatory separate tax system for Māori organisations creates a whole lot of compliance costs through various legislative changes in Part 4. I think the public has the right to listen to the Minister, the Hon Paul Swain, who used to champion the reduction of compliance costs, telling us why we have this legislation and what sorts of compliance costs will be imposed under the various changes in Part 4.

But there is a much more significant issue in this part. So apart from wanting the Minister to take a call to explain the compliance costs, or the absence of the compliance cost impact statement, we also want the Minister to take a call to give an explanation to the taxpayers who have been told by the Government, through this legislation, that they can appoint an intermediary, particularly in the area of PAYE and other deductions. They were told they could appoint an agent, an intermediate party, to pay that tax. But what happens when that intermediate party collects the tax amount from the taxpayer and disappears or faces liquidation, or the company becomes insolvent? What happens if the agent simply disappears with the money? Whose obligation is it to make good to the tax department?

Part 4 enables taxpayers to appoint an intermediate party to pay tax on their behalf, and the Minister should take a call and say what happens if, after they hand over this tax payment, the intermediate party gets caught in his or her own business situation and the tax money does not reach the Inland Revenue Department. Who can the taxpayer have recourse to? More than that, we want to know what happens if, through these unforeseeable circumstances, and circumstances beyond the control of these taxpayers, the Inland Revenue Department also imposes penalties. We have just learnt from Part 3 that the commissioner has a lot of discretion in terms of imposing penalties. Would taxpayers have relief when faced with the situation of being caught in circumstances beyond their control?

These are very fair and important questions that the Minister should answer. The Government, through this legislation, will empower taxpayers to appoint an intermediate party to pay their tax, and the Minister should take a call to explain their obligations and liabilities, and what penalties they face if the intermediate party has difficulties and the money from the taxpayers never reaches the Inland Revenue Department.

It is incredible that, just because of the single action of being able to appoint an intermediate party to pay tax, we have about four pages of legislation amending various sections.

Hon PAUL SWAIN (Associate Minister of Revenue): I want to make a couple of very quick comments. Firstly, Pansy Wong asked what happened to the compliance cost statement. As the member may know, it was attached to the bill as introduced. It goes to the select committee and then gets incorporated into this, and therefore it drops off when the bill is reported back. That is just the way it is. We would not want to have a compliance cost statement following all the way through. It is for the select committee’s use. That was the purpose and the objective. So that is another promise honoured and kept.

The second point the member raised, which is quite a good point, is what would happen if an intermediary were to go into liquidation, or something like that. If the member were to look back to clause 45—she will remember this from when she read the bill very thoroughly—she would see that anyone who wants to be an intermediary and work in this way needs to set up a trust account, and there are quite a lot of provisions about the sorts of criteria. For example, someone who has been a discharged or undischarged bankrupt cannot be an intermediary, etc. So there are certain provisions in the bill that an intermediary established under this bill has to abide by. They are on page 64 of the bill, for the member’s interest.

CRAIG McNAIR (NZ First): I rise to speak to Part 4 of the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill. I thought I would follow on from Deborah Coddington and repeat the title of the bill in its entirety.

Rodney Hide: What was in it again?

CRAIG McNAIR: I will let the members read it for themselves.

I want to talk quickly about the PAYE intermediary part of this legislation, and also about the whole issue of compliance costs, which we are all getting down to once again. Compliance costs are obviously a real concern to New Zealand First. We need to do many things to promote growth within New Zealand, and to do that we need to reduce compliance costs. New Zealand First believes that we need a Government that will provide the right conditions for activities such as exporting, for example, and an environment that innovators can flourish in.

But I wish to talk about Part 4. It is my understanding that this bill contains rules in relation to the accreditation of PAYE intermediaries by the Inland Revenue Department; requirements on employers who want to transfer their PAYE obligations to intermediaries; requirements also on PAYE intermediaries; and regulations about the trust account in which wages and deductions are held by intermediaries before being paid to employees and the Inland Revenue Department respectively. There are also rules for the termination of the arrangement between employers and intermediaries.

It is really good that the Minister of Revenue is in the chair. I seek clarification from him about how the Inland Revenue Department intends to administer access rights to PAYE information for intermediaries. I also feel that a question needs to be asked about the equivalent of tax agents’ linking rights for the PAYE accounts they manage. I am sure the Minister is very knowledgable on that subject.

Getting back to the whole issue of compliance, I also want to bring out the point about organisations that are not Māori organisations, and therefore do not enjoy the benefit of a preferred tax rate. New Zealand First has said that it is very concerned about that provision. Part 4 of the Taxation (Annual Rates, Maori Organisations and Taxpayer Compliance and Miscellaneous Provisions) Bill includes compliance costs, and that is what we are talking about.

Hon Dr Michael Cullen: Oh! Aagh!

CRAIG McNAIR: The Minister knows what I am talking about. When businesses or authorities have a slightly competitive advantage over others, that will obviously cause a bit of havoc. As we were going through the select committee process in the Finance and Expenditure Committee, which I am on, we asked the submitters questions about a whole range of issues. I want to talk specifically about issues that pertain to Part 4—such as asking the submitters whether their clients were worried about any of the elements of that part.

BRIAN CONNELL (NZ National—Rakaia): I want to deal with clause 146, which deals with PAYE intermediaries. Other members have picked up that clause, as well. In particular I want start by turning to the commentary, which goes along these lines: “The bill contains provisions allowing employers to engage an accredited intermediary to assume the employer’s PAYE obligations.” That appeals as a good idea, although a number of submitters were concerned about the viability of some of those intermediaries. What happens—because I do not see anything in the bill that covers it—if one of those intermediaries goes belly up? In particular, I want to know—and maybe the Minister in the chair, the Hon Dr Michael Cullen, can tell us—who would be responsible. Can members imagine the grief and the finger-pointing that would go on if that event were to take place.

I suppose the Minister might be able to tell us, as well, what the compliance impact statement is. The Minister who was in the chair just prior to this Minister, the Hon Paul Swain, said it was attached to the bill, but we cannot find it. I am asking the Minister in the chair to educate the Committee by taking a call and telling us exactly what it is. What protection would the employee, or the person who owed the tax obligation, have if that person had paid it to the intermediary, and the intermediary went belly up? Would there be sufficient funds in the trust account to cover that liability and the penalty, as well? Maybe the Minister could also take a call on that.

The downside of this legislation, of course, is that it will introduce a new layer of compliance. Others have touched on that issue, as well. I turn to a compliance statement that I have picked up. It is an analysis undertaken by Business New Zealand. It is quite independent, and it tells us that a medium-sized business in this country will face an extra $43,000 in compliance costs. That business has had those costs foisted on it by this Government in the last 12 months. That is a staggering amount of money, and, when one understands the expense-to-income ratio of about 1:7, it is enough to send most small businesses under. If this Government could do something about reducing compliance costs, it might not have to put in place this type of racist tax regime.

The CHAIRPERSON (H V Ross Robertson): Order!

Rodney Hide: I raise a point of order, Mr Chairperson. I think the Chair is ruling that to call a tax regime racist is somehow out of order. It certainly is not. One is not allowed to accuse another member of being racist, but one can certainly call a policy racist.

The CHAIRPERSON (H V Ross Robertson): That is not what I was doing, Mr Hide. I refer the member to Speaker’s ruling 7/1 in the Supplement to Speakers’ Rulings, which refers to judging whether a word is appropriate in terms of whether it might lead to disorder. I was just cautioning the member to be careful.

Rodney Hide: The member said it, and people were accepting it. It has been said all the way throughout this debate, and there has been no disorder. I think that the member’s point has been accepted as fact. I do not see how the Chair can rule that word out when it has been said in a way that has not caused any disorder.

The CHAIRPERSON (H V Ross Robertson): I thank the honourable member. I have been listening to the debate, and I am concerned about the context in which the word was used. The member should not question the ruling. The ruling has been made.

BRIAN CONNELL: I was making the point that this bureaucracy and those compliance costs have been foisted upon small businesses because of the introduction of this racist tax. It is something that will do immense damage to our international reputation. If we want to grow our economy—as we do—we need to attract foreign capital, and we need to embrace those hard-working Kiwis who are prepared to invest their life savings in starting a business. I expect, and I think they would expect, to be treated exactly the same way as all other New Zealanders.

Part 4 deals with the amendments to other Acts. I understand that some of those amendments are necessary, but I submit that if it were not for the Government’s intention to introduce this type of legislation, they would not be necessary. The select committee was given good advice. Maybe the Minister could take a call to explain why he rejected the advice the select committee was given that this legislation was discriminatory and against the New Zealand Bill of Rights Act. Surely the Minister is not going to shake his head and say that people such as Geoffrey Palmer—a former Labour Prime Minister, funnily enough—do not know what they are talking about. Geoffrey Palmer is revered as one of our most special constitutional lawyers.

The question we have to ask ourselves is how much governance we want in our lives.

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 71

Noes 47

Motion agreed to.

Labour 52; Green Party 9; United Future 8; Progressive 2.

New Zealand National 27; New Zealand First 12; ACT New Zealand 8.

A party vote was called for on the question, That Part 4 be agreed to.

Ayes 71

Noes 47

Part 4 agreed to.

Labour 52; Green Party 9; United Future 8; Progressive 2.

New Zealand National 27; New Zealand First 12; ACT New Zealand 8.

The Committee divided the bill into the Taxation (Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill, the Taxation (Annual Rates of Income Tax 2002-03) Bill, the Student Loan Scheme Amendment Bill, and the Child Support Amendment Bill, pursuant to Supplementary Order Paper 60.

Bill reported with amendment.

Bills

Wool Industry Restructuring Bill

First Reading

Hon Dr MICHAEL CULLEN (Acting Minister of Agriculture): I move, That the Wool Industry Restructuring Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Primary Production Committee for consideration, and that the committee present its final report on it before 16 June 2003, and that the committee have the authority to meet at any time when the House is sitting, except during oral questions, and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, and outside the Wellington region, on a day when the House is sitting, despite Standing Orders 193, 195(a) and 196(1)(b) and (c). Having said that, I am confident that under the excellent chairmanship of Mr David Carter, and given the wide support for this bill, it probably will not prove necessary to use most of those powers to get the bill considered by 16 June. I do not think there will be many submissions in opposition to this bill.

The bill is the culmination of many years of debate amongst woolgrowers on the means to improve net returns from the sale of their wool. This debate has covered the structure of the New Zealand wool industry, and those activities that should or should not be funded by growers by way of a compulsory levy on wool. The bill is also the outcome of a number of reviews of the industry, of which the one by McKinsey and Co. in 1999-2000 is the latest. McKinsey was commissioned by the Wool Board, with the support of growers, to review the performance of the wool industry, and to make recommendations on how to improve the profitability of wool to growers. The McKinsey report was presented in June 2000, and among its recommendations were the dissolution of the board and the disbursement of its assets. McKinsey also recommended the establishment of separate new commercial and industry-good structures.

Separation of commercial activities from industry-good activities, such as research and development, and technology transfer, should facilitate commercial activities being profit focused and subject to commercial realities. Growers would also be able to decide what industry-good activities they are prepared to fund through a compulsory levy.

In August 2000 a referendum was held in which growers overwhelmingly endorsed by over 90 percent the McKinsey recommendations. Following that, the board, with the assistance of an implementation project team, refined the McKinsey proposals and developed the detail necessary for their implementation. This process resulted in the establishment of the grower-owned commercial companies, Wool Equities Ltd and Merino Grower Investments Ltd, and in the establishment of the industry-good body SheepCo. These three organisations are referred to in the bill.

There was another grower referendum in May last year on detailed proposals. In this referendum, again, the vast majority of growers—over 90 percent of participants—a supported the winding up of the Wool Board and the apportionment of its assets to growers on the basis of sheep numbers. A significant majority of growers who voted in the referendum favoured restrictions for the first 2 years, on the tradability of growers’ shares in Wool Equities Ltd and Merino Grower Investments Ltd. The bill is based on the reform proposals put to growers for the referendum, and reflects the views of grower participants. It also recognises the contribution that a profitable and vibrant wool industry can make to growth in the New Zealand economy.

The bill provides for the dissolution of the board and the allocation of its assets to growers. The board will be converted from a statutory body to a company incorporated under the Companies Act. This company is to be called the Wool Board Disestablishment Company. This company will take over the assets and liabilities of the board and will be responsible for dealing with the board’s residual liabilities and commitments, as well as the allocation to growers of the board’s assets. During the transitional period, ending no later than 30 June 2004, the disestablishment company will collect a levy on wool for industry-good activities. If a levy on wool under the Commodity Levies Act does not come into force by 1 July 2004, wool will cease to be levied from that time to finance those activities.

Provisions in the bill for the transitional levy are similar to those of the Wool Board, but there are a couple of notable differences. The transitional levy will be able to be spent on a smaller range of activities than the current Wool Board levy, and the disestablishment company will have to consult SheepCo on how the levy is to be spent. Further, the basis and rate of the transitional levy will be the same as that of the Wool Board’s levy at the time the bill comes into force.

The bill requires the board to prepare a restructuring plan. The plan will specify the restructuring day on which the board will be converted to the disestablishment company. The plan will specify that a portion of the board’s assets will be allocated to Wool Equities Ltd and Merino Grower Investments Ltd. The restructuring plan will also provide for payments to be made to SheepCo to assist it to seek a levy under the Commodity Levies Act. The plan will include further plans for the allocation of shares to growers in the disestablishment company, in Wool Equities Ltd, and in Merino Grower Investments Ltd. During the period specified in the share allocation plan growers will have the opportunity to cash in their redeemable preference shares, or to convert them to ordinary shares in Wool Equities Ltd or Merino Grower Investments Ltd, depending whether the grower filed for merino or other sheep. The Minister of Agriculture must approve the restructuring planned, including the plans for share allocation, before its implementation can commence.

The Wool Board has already started, through its grower registration scheme, identifying those growers eligible to receive shares, and collecting other information such as the numbers of merino and other sheep farmed by those growers, the purpose of the preparation, and implementation of the share allocation plans. As far as possible, normal tax laws will apply for the allocation of shares to growers, and they will be in accord with those employed for previous producer board reforms—in other words, to leave basically a neutral position post-reform, compared with the pre-reform position.

It is the Wool Board’s desire that the bill be enacted as soon as possible, to enable the finalisation of approval of the restructuring plan to take place in June, and the restructuring day to be 1 July this year. I commend the bill to the House.

Hon DAVID CARTER (NZ National): The National Party supports and welcomes this bill. After 4 long years this Government is finally prepared to do something that will help New Zealand farmers. Producer board deregulation has been a long, slow, and often tortuous process. Tonight I want to acknowledge the work done by my former colleague the Hon John Luxton, who quite courageously started this process in 1997.

For the sheep farmers of New Zealand this has not been an easy process. Those charged with leading the debate about how we best restructure and present our wool industry have been faced with two quite significant challenges, firstly by the vocal statements of various sectors, which, although small in number, were very inclined to push their own interests at the expense of the industry as a whole. Secondly, and more important, most farmers are notoriously apathetic when it comes to getting themselves involved in issues surrounding the governance of their own industry. I hasten to add that that is understandable for people who have been out working from daylight to dusk to then come in and have to wade through piles of mail and rural papers so that they can at least try to get themselves up to speed with this issue.

Having said that, and as noted by the Minister in his introduction, I point out that the sheep farmers of New Zealand have voted overwhelmingly for the dissolution of the New Zealand Wool Board. As an industry, sheep farmers have collectively and loudly said that it is time to move forward. Of those eligible to vote, 96.9 percent—[Interruption]. I tell Ian Ewen-Street that it is pretty hard to know the opinion of those people who do not vote, and that is the very point I am making. However, 96.9 percent of those who did vote said they are in favour of winding up the current system.

Hon Dr Michael Cullen: Pretty good.

Hon DAVID CARTER: Yes, as Dr Cullen interjects, that is a fairly good mandate—one that members of this House can appreciate. The bill is only a step in the process that is now being initiated. This legislation will ultimately see the establishment of a completely different governance system. To fulfil the commercial activities of Wools of New Zealand, shares will be available to farmers in a company to be known as Wool Equities Ltd, or for merino producers, in a company to be named Merino Grower Investments Ltd. Further, rights to redeemable preference shares will be available. It will be interesting to see the commitment farmers show to the future of their industry in being prepared to accept that opportunity. Having said that, it will be incumbent on the prospectus and on the subsequent governance and management of Wool Equities Ltd to make sure that the company lives up to the expectation being created around it so that it maintains grower support.

I have noted the guillotine that has been given to the Primary Production Committee tonight. However, as chair of that committee, I give my commitment to the House that I will do everything I can to meet the deadline to get this legislation back into the House by 16 June, because I know that sheep farmers are waiting for it. I must say that I have been disappointed that this legislation has not been advanced earlier. It has sat on the Order Paper since last year. I know that will surprise members, but that is how long it has been on the Order Paper, and it should have been dealt with much earlier. We have approximately 12 weeks to call for submissions, to hear those submissions, and to tidy up this legislation. However, I think it is in our interests to all cooperate to do so.

I mentioned earlier that this legislation was a step towards further changes. It is ironic that in my own patch of Banks Peninsula, at Little River, a meeting is occurring as we are speaking tonight between SheepCo, very ably chaired by Mike Petersen, and Meat New Zealand, under the auspices of Geoff Grant. At that meeting they will be presenting what will probably become the next step in this process, which is the formation of a body that combines those producing wool with those producing sheepmeats and other meats from New Zealand. That is a very interesting development. I mentioned the meeting at Little River, and I want to take the opportunity of noting the work done in a rather different but very constructive way by Mr Steve Edge, who is a local identity on Banks Peninsula. He has fought with the system for some time and he can be justly proud of the progress that has been made. He is now using his skills constructively on the board of SheepCo, and I believe he is making a very vital contribution in that regard.

The other point I make in closing is that Wools of New Zealand has started a registration process whereby those farmers who are eligible will have to finish their day’s work and tackle an envelope that looks large, chunky, and complicated. If farmers bother to take the time to fill it in, then they will be eligible for shares in either of the two companies I mentioned earlier. I take this opportunity to implore farmers to do that. It will be of no use at all to come before the select committee and say that they did not know about the process and that they did not meet the deadline, which I think I am correct in saying is 2 May. That process does require farmers to make sure they register their eligibility for the distribution of the assets of the old Wool Board. Farmers must take an interest if they want to be involved.

We are dealing with a very significant industry in New Zealand. Over many generations of New Zealand farmers, the Wool Board has served sheep farmers well. It is fair to say that in recent years there have been question marks over the performance and, more important, the relevance of the Wool Board. I do not think that anybody associated with the governance of the current structures should be criticised. I think that those structures have outgrown where we are today. We are dealing with an industry in which the product usage of wool is far more immense than perhaps many farmers of this country realise. I hope that as we vote now on the process of disestablishing the Wool Board and establish Wool Equities Ltd, Merino Grower Investments Ltd, and, under their auspices, companies like Covita and Ovita, farmers will realise that there is a significantly greater potential than just the production of fibre.

I finish by imploring those farmers to open up that big envelope that has sat on their desks for weeks to check whether they are eligible for this process and for the shares in the assets that will become available. They should complete the form quickly and forward it back to Wools of New Zealand so that it can check their eligibility. I am sure they will find that the hour taken to fill in such a registration form is worthwhile.

LARRY BALDOCK (United Future): This bill is the ultimate response to the decision made by growers at the Wool Board’s 1990 annual general meeting to employ a consultant to undertake an independent review of the sector, with the aim of exploring options to increase the profit potential and the autonomy of growers. As a consequence, the McKinsey report recommended that the Wool Board be dissolved and that the commercial and the industry-good activities—for example, research and development, and on-farm training—be the responsibility of separate entities.

Growers endorsed those recommendations by 91 percent in an August 2000 referendum. Since then new commercial and industry-good structures have emerged to supersede the current New Zealand Wool Board, making it for the most part unnecessary, save for its levying and accountability functions. Following consultation on the precise nature of proposals and after some delay, a second referendum resulted in 97 percent support for the board’s dissolution. The turn-out was only 35.5 percent of all growers, but is comparable with that in other referenda conducted in the primary sector.

United Future supports the first reading of this bill, because there has been a need to address the situation for some time. Woolgrowers have been waiting for some time to rid themselves of the Wool Board. The recommendations of the McKinsey report to dissolve the board and to divide the responsibility for commercial and industry-good activities into separate entities were endorsed by the growers, not by one referenda but by two, as I said previously. United Future will look for the final evidence of growers’ support for those proposals and for the proposals in this bill to come through in the submissions to the select committee from the growers themselves.

The wool industry has been riven by conflict for some time. Perhaps the only unifying force has been a deep-seated lack of confidence in the Wool Board. There has been concern in the wool industry for several years about the industry’s financial performance, and the fact that on behalf of growers the Wool Board spent millions of dollars of growers’ levies on promoting wool, to little or no effect. With that in mind there is some concern about the board’s role in managing its own dissolution. The unpopularity of the board means that any proposal that is put up for the board to disband itself will be popular. It is our job as MPs, therefore, to ensure that the details of the transition are carefully scrutinised.

Even in the final stages of its life there continue to be concerns about the Wool Board’s finances. The board’s reserves were depleted from $160 million in 2000 to $109.1 million in 2001, and $79.5 million in 2002, and are forecast to drop to $67.3 million by the time the board dissolves. Of that, growers will receive only about $35 million in the form of redeemable preference shares in Wool Equities, with the rest of the money going towards setting up the two commercial companies and the wind-up costs of the board. Divided out amongst the 16,000 growers, that equates to an average payout of just over $2,000. It hardly constitutes a windfall for growers, and ultimately they will meet the wind-up costs of the board because those costs reduce the amount available for payouts. However, as long as the Act exists the board will be required to undertake a range of accountability and reporting functions that currently cost growers several million dollars per year.

Such is the cynicism that pervades the industry that growers might rightly ask how much of the wind-up costs will be used for golden handshakes for people who will then be re-employed under the new system. Growers are concerned that the Wool Board could reinvent itself under another name—Wool Equities and its subsidiaries—and conduct commercial activities funded by grower assets in the Wool Board. For example, why should growers’ funds be used on entities such as Ovita, the proposed biotech research company, when the industry could contract out that research? There is also concern that the Wool Board is setting up structures with growers’ money that could be on-sold at a reduced price, leaving growers selling to a cost-plus industry player.

Farmers want to be the ones who make decisions on whether to invest in wool marketing companies or biotech. It is a fair bet that many growers who did not vote in the referenda will withdraw their money as soon as it is available. The alternative proposals being put forward by the Wool Corporation must have the backing of the majority of growers if they are to be considered by the select committee. Therefore, United Future will look to see whether submissions are received along those lines, and at the support that is given to them. I share in the comments made by the previous speaker that this is a time for woolgrowers in the country to get involved in the submissions process. If they do not participate, they will not achieve the outcomes that they desire.

Growers might be arguing that given the board’s poor record of managing growers’ money, all the remaining funds should be returned to farmers, rather than being invested in companies whose likely commercial success may be in doubt. For instance, the bill seeks to achieve all the findings of the McKinsey report except on strong wools, where it recommends the establishment of an integrated structure for buying and marketing most of the wool clip. It could be argued that that was one of the main reasons that growers voted for the McKinsey report’s recommendations, but the board has not been successful in its attempts to form a successful strong wools company, as witnessed by the successive failures—Strong Wool, Growerco, and One Wool, initiated by Wrightsons. Growerco alone cost half a million dollars of the board’s reserves.

The flaw in those approaches was the attempt to control wool prices by creating a giant cooperative to control supply. The industry is too fragmented for it to be able to collect a big enough proportion of the total clip to do that without the will on the part of growers to unite. It also ignores the fundamental problem, which is not supply but demand. Strong wool holds a tiny share of the international fibre market, and virtually the sole remaining users of it are carpet manufacturers to whom the price of wool has become insignificant.

The way to create demand is to come up with more innovative uses for wool, and that comes down to investment in research and development. We support the continuation of industry-good activities through the reduced levy on growers under the Commodity Levies Act. In some cases the market can be relied upon to conduct research and development, but only where it sees an opportunity to generate quick revenue. It has been suggested that instead of being used on commercial activities, the board’s reserves could be used to fund research and development, by supplementing the levy for as long as those reserves last. It should be noted that the proposed levy is 2 percent of wool sales, rather than the 1 percent recommended by the McKinsey report. However, the original levy was based on the proviso that the meat industry would contribute proportionally to on-farm research costs.

We encourage the moves currently afoot to create a single pastoral organisation covering sheep, cattle, deer, and goats, funded by a single levy. This bill could be an opportunity to further that. I note the formation last year of Meat and Wool Innovation and the memorandum of understanding between Meat New Zealand and SheepCo, announcing the common goal of a single pastoral industry board. In the meantime we have fewer fears that SheepCo will become the Wool Board resurrected in drag, since it will be an incorporated society managed by six farmer-elected directors. However United Future would want to ensure that there is strong accountability to levy payers.

In closing, we would again urge wool growers throughout New Zealand to get involved in this next period of time in making submissions to the select committee and in taking ownership of their industry, in order to get the outcomes that they desire.

EDWIN PERRY (NZ First): New Zealand First will be supporting this bill. The restructuring of the Wool Board will be music to the ears of those farmers—96.9 percent of the 17,789—who responded to the referendum. The wool industry reform information document that went out was very comprehensive, and obviously the farmers responded in a positive way. I think that tells us everything with regard to the restructuring of the New Zealand Wool Board.

I want to give a little of the history of the New Zealand wool industry, and to inform some of the people who are not au fait with that industry. In 1773, English navigator and explorer Captain James Cook landed two merino sheep in the Marlborough Sounds, in the north of the South Island. Those two animals failed to adapt to the conditions. In 1814, missionary pastoral stockbreeder the Reverend Samuel Marsden introduced sheep to the Bay or Islands, north of Auckland, and the first reports of New Zealand wool sales in Australia date back to that time. In 1843 stockbreeder James Bell Wright is said to have had New Zealand’s first permanent sheep flock, after landing merinos on Mana Island near Wellington.

Until the late 19th century the merino remained New Zealand’s dominant breed, but its influence began to wane because of its slow-maturing wool and its struggle to cope with the wetter North Island country, newly cleared of forest. Then came the dual-purpose English breeds, the Lincoln and the English Leicester. They became popular as they were highly suited to foraging amongst the early cultivated pastures. An export meat industry developed, and farmers in the South Island began to search for a dual-purpose sheep suited to the drier and easier grassland tracts. From 1910 the Romney grew increasingly popular, and today it is our dominant breed in New Zealand. A distinct New Zealand Romney type has developed with strong wool and prime lamb production, and today it still leads in the manufacture of wool products—mainly carpet and wool yarn. In the 1960s the Romney made up 75 percent of the national flock.

In 1990 New Zealand had around 46 million sheep, and if one looks back to the late 1970s and the mid-1980s one sees the population of sheep was about 70 million then. We have now dropped back to 46 million, which in some ways is good, and in some ways not good. The farm stock that I have seen gives a better quality of wool. I am very confident in speaking on that issue, because my background in the early days was in farming. I farmed at a little place called Tinui, east of Masterton, where my brother still farms, and my experience in the industry has been of shearing over 400 sheep a day—

Dail Jones: How many?

EDWIN PERRY: —400 sheep a day, at the age of 17. I want to announce that quite clearly to everybody. I operated six shearing gangs in the 1980s, employing up to 60 people. There were employment opportunities in this industry in the past, and in the future sheep farming will still be one of our major employers in the primary industry area.

I want to touch, too, on the competition at the Golden Shears last year, when Parekura Horomia and Mr English tried to out-shear me. Obviously they needed to go back to the Wool Board training school, to pick up some hints on how to shear sheep.

The income from the farming industry is approximately $900 million, which, as we all agree, supports lots of rural towns like Masterton, Carterton, Wairoa, and other outlying towns. It plays a major role in employment in those places. The wool industry employs a large part of our community—stock and station agents, shearers, employees in transport companies, shipping firms, auction houses, vehicle sales, and many others that pertain to that industry.

The Wool Board has given people opportunities in the past, and no doubt those opportunities will carry through in the new restructuring. There is training for shearers, which the shearing industry relies on to bring through young shearers to cope with the industry. The Wool Board, in the past, has given a lot of Māori and Pākehā the opportunity to own their own businesses, which are now set up around the world—in Australia, Scotland, England, Norway, the USA, and South America. While I was in Adelaide 3 years ago, I saw that two Māori brothers there are now so well established, after learning their skills in New Zealand, that they fly their own aeroplanes to take their shearers to outlying farms in Australia. So I thank those people who have brought the Wool Board to this point in its history.

The other important issue is the sheep industry. I want to give a bit of background on that. The percentages of sheep breeds now in the country are: Romney 59 percent, Coopworth 10 percent, Perendale 7 percent, Corriedale 9 percent, merino 7 percent, half-breeds 4 percent, and others 9 percent. The other important aspect, as I have mentioned in my presentation, is income. About 90 percent of the New Zealand clip leaves the country in a greasy, scoured, or slip form. Currently we are still exporting to places like the People’s Republic of China, Italy, Nepal, the United Kingdom, Japan, Belgium, India, Germany, Hong Kong, the United States, Australia, and other countries. So farmers still play a very important role, and are obviously the ones who form the income from this very important industry that New Zealand relies on. The country was built on this industry and will, no doubt, rely on it in the future. Total export earnings from wool products increased 8 percent to $324.1 million in the 2001 financial year.

Turning to the bill, I say that it provides a structural reform of the wool industry by dissolving the New Zealand Wool Board, dispersing its assets and liabilities, and resolving the number of transitional and consequential issues. The explanatory note states: “There has been concern in the wool industry for several years about the industry’s financial performance”—which has been mentioned by my colleague from United Future—“and return to growers from levy money paid. In June 2000, McKinsey & Company completed a report for the wool industry that recommended the dissolution of the Wool Board and the establishment of new industry-good and commercial structures for the wool industry.” It also states, as I mentioned at the start of my speech: “In a referendum held in April-May 2002, 96.9 % of wool grower respondents voted in favour of winding up the Wool Board.” The explanatory note goes on to state that that will “provide the industry with greater flexibility for commercial activities by giving it the freedom to choose to operate under existing generic legislation, such as the Companies Act 1993:”.

In conclusion, I say that this country was built on the rural sector. Regarding the Wool Board, I say that its time has come. The wool industry must be allowed to compete on all levels in the world’s markets. New Zealand First acknowledges the part the rural sector plays in our economy, and we wish all its representatives well with the passing of this bill.

Hon CHRIS CARTER (Minister of Conservation): I rise to support this bill, for all the excellent reasons laid out by my colleague the Hon Michael Cullen.

GERRARD ECKHOFF (ACT NZ): Those woolgrowers who have tuned into the radio broadcast of Parliament tonight— and I think there will be quite a few of them—will be thanking God that at long last the machinery is being put into place to get rid of a producer board that has cost this country millions. The Wool Board’s ineptitude has lost it credibility right throughout the world. It has given very little back to farmers, yet we were forced to contribute to the structure through the levy payments. I say again that farmers will be delighted to hear that this bill is at last before the House.

I would also like to pay tribute, if I may at this time, to my former colleague and friend, I hope—Owen Jennings. As the then President of Federated Farmers, during the time when he was really active in farmer politics, he pushed for the end of the Wool Board at a time when very few others had even thought about it. Owen Jennings, along with a number of us, suffered the poisoned shafts of derision from time to time from those people who said farmers needed the huge protectionism of the Wool Board’s structure, and needed a board to look after them. Farmers were told they could not possibly manage their own industry, and that they needed the huge structure called the Wool Board to do that.

I say to those people that they should just look at Merino New Zealand today. It is the smallest group of woolgrowers in this country, with the smallest number of kilos of wool, yet it has been highly successful. Why is that? It is because its members have applied very strong controls and have disciplined themselves. They produce a top-quality product and—amazing thing—they have actually gone out into the marketplace to sell their wool. One will see merino breeders in London, in Italy, and throughout the major markets of the world, selling their outstanding product. That is something that never really happened under the old producer board structure that we called the Wool Board.

I say again that it was Owen Jennings who had the vision in those early days to ensure that at least the machinery was started to change the structure. He brought to farmers’ and woolgrowers’ attention the need to put aside the old, worn-out structures that were returning nothing but were costing us hundreds of millions of dollars. Reports came out almost yearly, until finally the McKinsey report came along. Most of us thought it was yet another report that was costing $5 million or $6 million. But by that time the farming community—the woolgrowers—had had enough. They were prepared, when the vote finally came, to accept the recommendations of the McKinsey report.

But in reality it was a fait accompli. The board was finished. The board did not, perhaps, know it, but it was finished as far as growers were concerned. They were presented with a referendum, which, essentially, gave “take it, or leave it” options: to leave the board in place for another 10, 15, or 20 years, or to accept the recommendations of the McKinsey report. Essentially that is what happened—96 percent of those who voted were in favour of dissolving the Wool Board. That was no surprise.

But as a number of speakers have already said this evening, facets of the McKinsey report concern a large number of woolgrowers throughout this country. I was rather surprised to hear Larry Baldock bring to the attention of the House the concept of setting aside about $60 million to set up the biotechnology companies that will take the wool industry forward again. There is no question that biotechnology will take the industry forward. We have products like Karatec that the Wool Board says will really have a wonderful future. The board has finally got the scientists involved, and they have developed a product that may be one of the saviours of the wool industry.

However, we have set up at huge cost biotechnology companies, when there are already existing structures there that we could contract out to, thereby ensuring that we are not investing in bricks and mortar and not—as we will do—dragging in our own people, but using the absolute expertise of people like Diana Hill. A molecular biologist from Dunedin, she is the best in world, as I am sure Dr Cullen knows, and she is an outstanding scientist. People like her have the facilities and just need the dollars, and I am perfectly certain that within a relatively short space of time they would advance the cause not only of the woolgrower but also of the sheep industry as such.

The reality is that this is the end of the Wool Board, but I do not for a moment believe that it will be the end of the wool industry once we have finally demolished that structure. As we know, other mechanisms are starting up already. Within the industry the mercantile firms—they were once known as the Wrightsons, the Williams and Kettles, and the Pyne Gould Guinnesses—are setting up structures now that will ensure that the farmers have plenty of markets to sell to. They are getting out there and they are selling. The market demands that those people do not stay at home, but that they go out and show the world the product that we actually have. So as I said earlier, there are real concerns.

Another aspect that is of concern is that the current directors of the Wool Board are still to be left in place to oversee their own demise. There is real concern at that. A number of farmers have rung me and asked why we do not just get the receivers in. That is a good question. I recognise that there are statutory requirements that the board is obliged to fulfil. There will be liabilities—and they will funded—that the Wool Board will have to ensure are met, but I cannot see any reason that a statutory receiver could not do the same sort of thing. But there is a perception, and other speakers have alluded to it, that once the board gets involved in its own destruction, it will drag that out as long as it possibly can.

I was the only politician who was at the last hurrah, at the Wool Board’s last annual meeting in Invercargill. In his address the chairman referred to an article that he had read that morning in the Southland Times. He said it was horrendous that there was a dreadful article that attacked the board and its contribution to woolgrowers over the years, whereupon the agricultural editor of the Southland Times stood and said he was not responsible for it. That is when I stood up and said I was delighted to inform the chairman that I was there and that the article had come from me. I also received a round of applause and had my hand shaken by all the farmers there, and received some very funny looks from Bruce Munro and some of the board members, and, of course, the delegates who had been paid to attend.

There were about 130 people at that meeting, and I guess there would have been no more than 30 farmers there. If we wanted to encapsulate the contribution of the Wool Board, that meeting would have been about it. It has been one of self-fulfilment, if one likes—of ensuring that the structure is there. Proceedings were sort of “hail fellow, well met” at the annual meeting, but nothing was actually achieved. We had all sorts of accountability provided from all sorts of accountants who pored over the returns from woolgrowers over the years. The accountants said they had accounted for things, and had poured $100 million into one area, and $20 million or $30 million, or whatever it was, into another area. But when we asked them about performance we received rather bland stares, at a time when farmers were looking at receiving $2 a kilo. That has risen to $3.50. Well, whoop-de-doo! There is a heck of a lot of upside to go for woolgrowers, as far as the crossbred production is concerned.

I also make mention of my own situation as a mid-micron grower, who was told by the board and told by the McKinsey report that I have no future. I received the best prices I have ever had after listening to those experts tell me there is no future for such growers. There is always a future in every industry, if people are prepared to go out and find it. Thank goodness the woolgrowers, at long last, are doing that themselves.

LYNNE PILLAY (NZ Labour—Waitakere): This is a good bill. The reforms outlined in it are the result of many years’ debate amongst woolgrowers on means to improve the returns from wool sales. It also recognises the contribution that a profitable and vibrant wool industry can make to the growth of our economy. This bill is good for New Zealand, and I am proud to stand in support of it.

IAN EWEN-STREET (Green): I regret that I have to strike a little note of dissonance in this otherwise unanimous debate. I have some reservations about this bill.

John Carter: We have some about you, so what does it matter?

IAN EWEN-STREET: Some of that member’s best friends are sheep. While I accept that there is a need for industry reform, I am yet to be convinced that this is the right answer. It is clear to me that the Wool Board has not performed as well as it could have over the last 20 years. It is also clear to me that it has become increasingly dysfunctional as an organisation and that change is necessary, but is this format the right answer? I am yet to be convinced of that.

We heard from the Minister—that well-known sheep farmer, Dr Michael Cullen—about the intentions of the bill, and I will not repeat them. David Carter also spoke very fulsomely about them. We have a plan for structural change, and in many ways that had to happen.

My objections fall into two categories. The first is a philosophical one. I am still a member of the old school that believes in the single-desk seller. That is no longer fashionable; I accept that. I believe that having a combined front for our foreign buyers and competitors is a good thing. It is a concept whose time will come again, but at the moment we are going through all the privatisations and corporatisations, just like we did with ENZA. But I will not argue the merits of that tonight; I accept that it will be a fait accompli.

My second class of objections relates to the detail of the bill itself. First, I want to look at the referendum of farmers. The board claims that it consulted widely, and it proudly stated that 97 percent of the people were in favour of these changes. That sounds overwhelming, but it was 97 percent of the voters, and less than 40 percent of growers actually voted. I want to know what the other 60 percent want to do. Are they simply sitting at home and saying they acquiesce? Has there been any attempt—and I ask this genuinely—to find out what that 60 percent actually wants? What do those people feel about the changes? Are they supportive of this bill?

Phil Heatley: There was a vote.

IAN EWEN-STREET: No, I am talking about the 60 percent of the growers who did not vote.

Shane Ardern: They missed their chance.

IAN EWEN-STREET: OK, they missed their chance. But the point is this: were they consulted? Was it the result of apathy? Are they sitting at home feeling disempowered? Are they sitting at home quietly fuming and being totally, totally opposed to this measure? Are we going through with this bill for a minority of growers? I do not know whether that is the case, but I think we should find out. Does anybody know? No, nobody knows. We need to find that out.

Whatever way we look at it, we see the consultation with growers has been inadequate. I really question whether there was consultation. Was there really dialogue? Did people actually go out and ask every grower—or every class of grower, anyway—what growers wanted from the restructuring? No, I do not think they did. I think that the McKinsey report was put to growers, and they either accepted it or rejected it because anything had to be better than the old system. It was not good consultation.

Another area of the bill that I feel uncomfortable about is the requirement that only farmers who are registered will be eligible for disbursements from the Wool Board’s assets. That seems fine on the surface, but we have to look underneath. We see that in order to register to be eligible for those disbursements, a person must have had at least 250 sheep and have been farming on 30 June 2002. Those two figures seem entirely arbitrary to me. They seem to be based on administrative convenience, rather than on fairness. What about smallholders and hobby farmers—those people who have fewer than 250 sheep? Did they pay levies to help the Wool Board to create its assets? Yes, of course they did. So why treat those people unfairly and deny them disbursements?

John Carter: Because this is Parliament.

IAN EWEN-STREET: It is too hard, yes. The system proposed in the bill is convenient. I accept that trying to sort out a refund for somebody with a couple of lambs that are just keeping the lawn of the house block mowed is too hard. It is simply crazy to try to go around everyone like that. But why not use another measure? What about the weight of wool sold through a registered wool buyer or the number of carcasses that went through an abattoir? That would be a pretty simple process. I am not talking rocket science; I am talking about fairness. There have to be fairer methods than this method. If people pay their levies, surely they have to receive their disbursements. The fundamental message I want to get across is that I do not believe that matters of administrative convenience should override fairness and justice. Things simply should not happen like that.

What about the date of 30 June 2002? It is a nice date; it has a nice ring to it. It is the middle of winter, so we are talking about wintering stock and all that sort of thing, but it is just an arbitrary point of reference. I accept that because it is a date in the past there would have been a limited amount of prior knowledge of that date and so there would have been limited jockeying. At least it is better than choosing a date in the future. But the current state of assets in the Wool Board did not come about overnight. It came about over a very long period of time. Those assets accumulated gradually, so why should we pick one specific date and say that the people who were contributing at that date should get all the assets? That simply does not make sense. Surely everybody who has contributed over a period of time should be entitled to a disbursement.

Having said that, I accept that if we go back too far the whole thing becomes a nightmare. We cannot possibly track down everybody. But what about the person who has had, say, 10,000 sheep on his or her farm and who sold them on 29 June 2002? Let us suppose that the person has been farming for 50 years, and has done everything right—except for picking the wrong date to sell. That person gets absolutely nothing. But what has that person contributed? One heck of a lot! What about the converse situation, where somebody—a Queen Street farmer like Dr Cullen, for instance—might have bought a flock of 10,000 sheep on 29 June 2002? That person will get a huge disbursement for having done 1 day’s work, and has probably not even got his or her fingernails dirty yet. Do either of those examples—the person who had a farm for 50 years and sold it on 29 June, or the person who bought a farm just before 30 June—represent fairness or justice? No, of course they do not.

So how should we go about resolving that? It is not very difficult. I propose that we have a 10-year phase-in period that the Government can finish off on 30 June 2002 if it wants. We would go back to 1 July 1992 and we would say that anybody who had owned any sheep in that 10-year period would be entitled to a refund. If a person bought or sold sheep, or bought or sold his or her farm, during that time, then that person would be prorated on the number of sheep he or she had. One could use 30 June each year as the date for measuring that, because it is a nice convenient date, as I said, for the wintering of one’s stock. Again I make the point that I do not think that administrative convenience should override matters of fairness and justice. We are not talking about rocket science; it is a very simple mathematical formula. It is a sliding scale, and I am really at a loss to understand why we cannot institute it. Yes, it is a little more complicated that the proposal in the bill, and, yes, it will take a little more time. But surely that is a small price to pay on a one-off basis for saying that people deserve to get some reward for the money they have put into a board that has become increasingly dysfunctional, certainly, but has accumulated assets. I think that we should distribute those assets as broadly and as fairly as we possibly can.

I say, as a consequence of that, that the Green Party will abstain from voting on this bill. We do not want to stand in the way of progress, however that progress may be defined. But we do have reservations about some of the detail of this bill, as I have explained. I look forward to consulting in a genuine, dialogue-based manner with my colleagues on the Primary Production Committee when we come to debate this bill. I look forward to some significant changes being made to it.

LUAMANUVAO WINNIE LABAN (NZ Labour—Mana): I am delighted to stand and support this bill.

SHANE ARDERN (NZ National—Taranaki - King Country): It is always a pleasure to speak after a Government member has spoken on this legislation, given the depth of the speeches we have had tonight from Government members. We are in the forty-seventh Parliament and, once again, we are dealing with legislation that had its genesis in the forty-fifth Parliament. It is high time that this legislation passed through Parliament, and that is why the National Party overwhelmingly supports its passage.

The situation in the New Zealand wool industry is that farmers, in a very long process, have voted overwhelmingly for this legislation to proceed. After the McKinsey report, there was overwhelming support for it; in 2001, about 90 percent voted in favour of it; then in 2002, 96.9 percent voted for this process to proceed. I congratulate the leadership of the industry on steering what can only be described as a difficult process through that period. I say to farmers out there that they should get involved. It is their industry, and it does have a great future. It is still one of the primary industries of this country, and it is still the backbone of this country. It still funds all of the social policies of all Governments, but, in particular, those of the current Labour Government, which is propped up by United Future.

There is no doubt that the Wool Board had outlived its time, and that there was a need for major reform. The concept of processing wool into nothing more than some kind of garment, carpet, or other commodity-type product has well and truly served its time. I think that a new door will open in terms of what we can do with wool. I say to the Government that it should make sure that it resources the Primary Production Committee well. I know that the committee, chaired by the Hon David Carter, will do whatever it can to put the necessary changes or amendments in place.

Obviously, my very good colleague Phil Heatley, who knows a lot about the wool industry, will speak afterwards and demonstrate the depth of his knowledge. He will no doubt enlighten us. There will be a very thorough process to ensure that the legislation is given the scrutiny it needs.

It is interesting to note that the only farmer on the Government side of the House who has bothered to turn up here is Damien O’Connor—probably because he is the only farming member the Government has. There is a further irony in this: when the National Party was in power, Labour campaigned against the deregulation of all the primary industries. It continually said that it would be the downfall of all industries. But here we are tonight, under the leadership of the Labour Party—the same party that said it would be the downfall of our industries—introducing legislation that brings about the deregulation of one of our major primary industries.

The Minister is obviously in charge of far too much, because tonight he had to defer to the Minister of Finance—somebody who, as he stated in his maiden speech, has a great affinity with farmers himself. I invite people to read the Minister’s maiden speech to see what he thought of farmers in general, and sheep farmers in the Hawke’s Bay and Canterbury in particular, when he entered Parliament. I invite anybody who may be listening to read that, so that they can find out that the Minister who introduced the bill tonight clearly has their best interests at heart, and clearly is keen to see this legislation passed.

The bill provides for the structural reform of the wool industry by dissolving the New Zealand Wool Board. It will disperse its assets and liabilities, and resolve a number of transitional and consequential issues. That is really the guts of what the bill is about. It is also about having a structure in place, where initiatives such as that of Keratec can flourish. Once this legislation is in place, there is the ability for outfits that can get involved in research and development through the levy process, to develop—with a mandate from their growers—product ranges that have not yet been thought of. A number of such ranges are included in the Keratec brochure I have here, which some members may be interested in. Who would have ever expected that cosmetics and toiletries could be produced from wool? As with the dairy industry, members will find that a range of products can be produced that are well outside of traditional commodity areas.

There is no doubt that the various structures that will be put in place, such as Covita, will bring about major biotechnology changes in this industry, and will add years of sustainability to the industry and give it strength to go forward. I encourage that. Companies such as Wool Equities Ltd and Merino Grower Investments Ltd will be unshackled from the current regulation and allowed to go forward and flourish. I am sure they will do that. I suggest to farmers that they should get behind and support those companies, giving them the breathing space they will clearly need.

The initiative of Mike Peterson and Geoff Grant in trying to bring together the various woolgrowers’ and meat producers’ structures right across New Zealand is a great one. That initiative should be supported at every opportunity by farmers, the wool industry as a whole, and, hopefully, the Government—even if regulatory change is needed to get it in place. Clearly, those who farm meat and those who produce wool are often the same people. It is a nonsensical process to have the two competing against each other—often in the same structure—for resources, for research and development money, and the like. I absolutely encourage that.

It is also interesting to note that in the McKinsey report it was suggested that mid-micron wool had a bleak future. It is through the investment in research and development that fine wools, mid-micron wools, and coarse wools will develop new product ranges and a solid future for themselves, and will find a very strong way of going forward. Science and genetic research hold the answers to a lot of the problems that exist in the industry. Ovita has been another spin-off, and, once again, that move holds huge opportunities for an industry that was described 5 years ago as one that had no future. In some farming structures, wool was looked upon as a by-product.

I need to acknowledge my colleague from the Green Party, Ian Ewen-Street, because he raised a few points of detail that might get a fair hearing in the Primary Production Committee, of which he is a member. Under the “skinny sheep” policies of the 1960s and 1970s—which made struggle-mustering an art form—he certainly honed his mustering skills. We have seen some of them in the way he has been able to muster together a very desperate bunch of people in the Green Party and turn them up here to vote. It is a pity that that is the case, but that is as it is. I acknowledge him tonight; I know he will make a worthwhile contribution on that select committee.

This legislation is well overdue. I know that the Minister, Jim Sutton, is very much in favour of its passage, despite having reservations about deregulation some time ago. The Minister has done a complete somersault: he was in favour of deregulation in the late 1980s; opposed to it in the mid-1990s, when it was suggested by the National Party; and now seems to be back in favour of it again in the year 2003, as this legislation comes into the House and travels through its final passage.

Finally, I say to those farmers who have not returned their entitlement packages in respect of their share of the distribution of assets, please sit down and take the time to read the information. They need to get involved, and return the package. If they bury their heads in the sand, they stand to miss out.

DAVID BENSON-POPE (NZ Labour—Dunedin South): I am delighted to stand in support of this bill, and urge its rapid process to the Primary Production Committee.

PHIL HEATLEY (NZ National—Whangarei): I am more than happy to support this bill. I appreciate the contribution of Mr Benson-Pope, who I understand has driven past sheep in Otago, recognises sheep of the four-legged kind and, consequently, takes quite an interest in this bill. I support him and his speech of “substance”, which added to his poignant introduction.

In doing so, I also say that National supports the bill. Along with my colleagues Shane Ardern and David Carter, I acknowledge John Luxton, who started this process off in the forty-fifth Parliament. Members will recall John Luxton. He made quite a contribution during the 1990s. He had some vision, and worked with all sorts of other people in the industry to see this issue through, and it is now here in the forty-seventh Parliament.

I also acknowledge Damien O’Connor, who has worked on the Primary Production Committee. He is a member of the Labour Party whom I have seen become increasingly frustrated over this issue, as he is an advocate for sheep farmers in this country. He has been increasingly concerned about how the chain has been dragged on this bill—from its introduction to its first reading today. Farmers voted not last week, not last month, but last year. It has taken right through to Christmas last year, then right through to this point, before we had a first reading. No real heart or motivation has been coming from the Minister, Jim Sutton. I am disappointed at that, and I acknowledge Damien O’Connor for containing his frustration at this bill not coming sooner to the attention of the House in a first reading.

I acknowledge colleagues from all sides of the House, including Ian Ewen-Street’s contribution. Although misguided, I appreciate that he has thought about the issues in this bill, and I expect him to raise them in the select committee. I do not want to see him sitting in the committee like a lamb, not raising them. He is a shy, retiring type, but he has put the issues that concern him in this bill on the table. I want him to bring them to the fore in the select committee, and I will remind him of that.

I also remind him that 96.9 percent of the farmers who voted supported the changes we see in the bill that is having its first reading tonight, so the mandate is sound. Granted, just 40 percent of those eligible to vote turned out, but 96.9 percent of that 40 percent voted for these changes. A 40-percent turnout is pretty good. I know that when Mr Ewen-Street has meetings in the upper part of the South Island, he does not get a turnout of 40 percent. He would be lucky to get a tenth of that. So we have to acknowledge that 40 percent is a good turnout.

I know that those 96.9 percent of farmers have been disappointed in the performance of Woolmark and the Wool Board to this point, and particularly in recent years, because many of them have spoken to me and to others in the National Party. There has been a myriad of reasons for that, some fair and some unfair. The point is that we are here tonight to support positive changes—changes that generally come from the industry. There is a general consensus in the House that this bill should go forward to the select committee, and there we will argue out the details. I look forward to that.

The Primary Production Committee has been ready and willing to address this legislation for a long time. David Carter has certainly been ready and willing to do that. In fact, he has been a great lobbyist. I know that he has been in Jim Sutton’s ear; he has certainly been in the select committee’s ear and, along with Damien O’Connor, has been somewhat frustrated that this legislation has not happened sooner. But the vote was taken a long time ago and, as the chair of the Primary Production Committee, he has been ready and willing to accept this legislation in the select committee. As chairperson, he is now under pressure to get the bill through the select committee process. He must hear submissions, return advice to this House, and, of course, see the bill progress through the House. He should never have been put under that sort of pressure.

I am disappointed that the Minister, Jim Sutton, has tended to make choices. He is hopping around the world, addressing what he sees as bigger issues, while a critical issue in this country flounders with uncertainty. I am disappointed in the Minister, and I would like to log that here tonight. The lack of progress with this measure is also something I would like to log with the House. But be assured that as a member of the select committee, working with and helping Ian Ewen-Street, and working alongside Damien O’Connor and others, I will help to improve this bill and build on it.

The bill presently provides for the conversion of the statutory New Zealand Wool Board into a transitional company. We heard details about that tonight. It will be named the Wool Board Disestablishment Co. Ltd. The company will assume the board’s assets and liabilities. It will deal with the board’s residual liabilities, and oversee the disbursement of its net assets to growers. The bill provides for the board’s assets to be allocated to woolgrowers by the issue of exchangeable shares and redeemable preference shares in the Wool Board Disestablishment Co. Ltd on the basis of sheep numbers.

Mr Ewen-Street raised the issue that the date to be met is 30 June 2002, with 250 sheep being the number that one has to be in charge of, in order to be eligible to take a financial interest in those assets through the shares. We could argue all night about how many sheep there should be, and also about the date on which it all takes place, but that is the job of the select committee. I look forward to talking to Mr Ewen-Street and convincing him of the merit of this in that process. More important tonight is that the House gets a clear message out to farmers that now is their opportunity to take part in the industry as it moves forward into the future.

I believe the deadline by which they have to register their desire to be attested for eligibility is 2 May. So, along with David Carter and Shane Ardern, I encourage those farmers to open their folders, fill in the forms, and ensure that their people check them for eligibility well before 2 May. It would be a shame indeed for those farmers—particularly longstanding farmers, those who have had farms pass through the generations, those whose work has been built on by generation after generation—to miss out simply because a deadline has been put in place. So by 2 May, we hope that all farmers who are eligible will have put forward their claim to a share in the future of the industry. I certainly encourage them to do that.

I happily commit this bill to the select committee. The House has my assurance that I will work hard on it, along with David Carter and others.

Bill read a first time.

Hon Dr MICHAEL CULLEN (Leader of the House): I move, That the Wool Industry Restructuring Bill be referred to the Primary Production Committee for consideration, and that the committee report the bill by 16 June 2003, and that the committee have the authority to meet at any time while the House is sitting (except during oral questions), and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, and to meet outside Wellington on a day when the House is not sitting, despite Standing Orders 193, 195(a) and 196(1)(b) and (c).

Motion agreed to.

Bills

Wine Makers Amendment Bill

Second Reading

Hon Dr MICHAEL CULLEN (Minister of Finance), on behalf of the Minister of Agriculture: I move, That the Wine Makers Amendment Bill be now read a second time. The bill was introduced as Part 5 of the Wine Bill on 14 October 2002 and was referred to the Primary Production Committee for consideration. The submissions on the bill clearly supported early enactment of Part 5 of the Wine Bill, now the Wine Makers Amendment Bill, to reinforce the current export regime, pending passage of the full Wine Bill. The Wine Makers Amendment Bill facilitates the export of grape wines, reinforcing the current wine export regime, which is made up of the export provisions of the Wine Makers Act and an administrative official assurance system.

The industry, of course, is a rapidly growing and highly successful one, but the European Union passed legislation last year that requires other countries exporting wine to the European Union, such as New Zealand, to regulate conditions of use statements commonly made on wine labels, such as vintage, variety, and traditional terms. The passage of the European Union regulation has created commercial uncertainty for exporters, as it is not clear how it will be implemented. The passage of that regulation has created the need to press forward with particular provisions from the more comprehensive bill. That is because it clearly requires other countries that export wine to the European Union to regulate conditions of use statements commonly made on wine labels. The New Zealand Food Safety Authority does provide official assurance to facilitate the export of wine to the European Union and other countries.

Currently, the issues that are required to be addressed under the regulation are not provided for in the Wine Makers Act, and New Zealand’s current official assurance system for wine exports is administrative. Therefore, New Zealand wine might face import restrictions from the date that the European Union regulation first applies to imports. That date was to be 1 January 2003, but on 25 November last year the European Union deferred application of its regulation to imports until 1 August this year. This bill is still necessary to overcome the hiatus that would otherwise occur from 1 August 2003 through to the commencement of the Wine Bill, which is intended to commence on 1 January 2004.

I thank the Primary Production Committee for very rapidly considering Part 5 of that bill, because initially it was thought necessary to pass it before the end of the year to meet the 1 January deadline. As it is, we have had somewhat longer to address the matter. I think it is still very desirable to pass this bill as quickly as possible to give a lead-in time to the new regulation coming into force on 1 August this year.

Hon DAVID CARTER (NZ National): It seems tonight that the Government has finally realised who the people are who create the real wealth in New Zealand. Having just dealt with a bill that will dramatically change the Wool Board, we now move to another bill that has been sitting around for some time—the Wine Makers Amendment Bill. I say at the outset that this is one of those strange pieces of legislation that New Zealand has little choice but to enact if we want to continue sending our superb wines to Europe. That just goes to show the sorts of constraints we are up against in exporting our produce. We have to be prepared to meet the rules and regulations imposed on us by other countries.

The history of this amendment bill is intriguing, in the sense that it was presented to the Primary Production Committee as part of a far wider bill. Because of the requirements at that stage to pass it, we thought, by the beginning of this calendar year, Part 5 was split off and handled very rapidly, but with the support of the wine industry. I know that our senior whip, Mr Carter, is working to make sure that this legislation is passed with alacrity. He realises its importance, and on this occasion the National caucus is only too happy to cooperate with the Government and see this legislation passed as quickly as possible. That will allow our superb produce to continue to be marketed throughout the world and doing something great for “New Zealand Incorporated”.

DAIL JONES (NZ First): New Zealand First supports the passing of this bill, and equally supports its being passed with alacrity. The bill arises as a result of the European Commission’s new labelling regulation 753/2002. We want to see the New Zealand wine industry protected as quickly as possible, and we will support this bill through all its stages tonight, if necessary.

IAN EWEN-STREET (Green): The Green Party will support the speedy passage of this bill through the House. I want to make a couple of very brief points. First, we note that New Zealand wine exports have not suffered any lack of demand overseas, even at the premium prices we receive. Compare that with some of the prices being fetched by American and South American wines, which, I believe, are now as low as $2 a litre. It is interesting that the demand for high quality remains, and that should be an object lesson for all our primary production. That lesson is that we should stick with quality.

The second thing I want to mention briefly is the idea that, as Mr Carter said, we are basically doing this for the European market and not for ourselves. We are being compelled to do it. We constantly seem to be looking for free-trade agreements, yet this is the very antithesis, almost, of a free-trade agreement. This is a market that is putting non-tariff trade barriers in place. We need to get away from that. Look at what is happening in America, as well. It has $400 billion worth of subsidies. Hello! Do they want free trade? Do the Europeans want free trade? They talk about it, but when it comes down to it, they do not do it. We need to be very cautious about what we are doing there. I think that is all I need to say.

GERRARD ECKHOFF (ACT NZ): The wine industry is a relatively young industry in this country, although I think Mr Assid Corban was one of the first. In a real sense it is a young industry, although there have been those who have been involved in this industry for a heck of a long time. But we have got to the stage where exports are now absolutely essential for this burgeoning young industry. And, of course, we know that in most countries the bureaucratic structures that abound constantly demand that we comply with those structures. In many cases, they are construed more as tariff barriers than being concerned with the content of a particular food or wine, or whatever other product it happens to be. But we have to comply, and that is taken as read. If we cannot export our product, we are indeed troubled, and Europe is such a hugely important market to us.

Europe, of course, is the home of wine. The French wine industry is the one that most countries aspire to reach. The level of most of its wine is absolutely first rate. Perhaps not many members of this House are aware that most of the wine one drinks in France actually comes from Italy, where it is much cheaper. It is sent over in casks, and when one is strolling down the Champs Elysées and enjoying a glass of wine at a roadside café, it is dollars to donuts that one will actually be drinking Italian wine. Now that is just an interesting little aside that I thought the House would be terribly thrilled to hear about.

But I think it is important that we have truth on the labels of our wine in this country—that is, that a Riesling is a Riesling, or a blend is a blend. Many, like Mr Ian Ewen-Street and myself, have sophisticated tastes. Mr Ewen-Street comes from that rather interesting wine-growing area of Marlborough. I, of course, come from Central Otago, where some of the finest Riesling that I have ever drunk comes from. It is very important for somebody from overseas to know that he or she is buying Central Otago wine, or Marlborough wine, or Hawke’s Bay wine, or wherever it might come from. But what happens if we get to the stage where we cannot blend? That is happening too. We are getting wine from Hawke’s Bay, and Gisborne, and down into other areas. We are putting 10 percent in with the local product just to up the sugar, or add a bit of flavour, or whatever it might be. That is necessary for the wine as well.

When this bill was before it, the select committee recognised that it was essential to maintain the ability of exporters to ensure that the requirements placed on them by the European Union were on the label, so that they could carry on with the business of exporting our quality wines right through Europe and to the Americas, as well, where our products are becoming increasingly respected for their excellence. That is why, as I mentioned earlier, we must have some sort of truth in the labelling of our wines.

As I mentioned earlier, many would argue that tariff barriers are the reason behind why we have to comply with these bureaucratic structures. I remind this industry that we were guilty of doing the same thing to Chilean wine some years ago, when the wine industry was hugely concerned about the flood of very cheap, and in many cases very good, Chilean wines coming into the country. Somebody found some additive he had heard of, or read about, that caused some sort of problem, so he rang the Ministry of Health, and Chilean wines were taken off the shelves. It was nothing to do with the quality of the wine, or a safety issue. It was everything to do with a tariff barrier that we placed against Chilean wine. At the stage that happened, the wine industry in New Zealand was still struggling to get a good base for itself, so we are not as squeaky clean as some would have us believe. So we are guilty, as well, as I said earlier, of those non-tariff trade barriers.

When playing a round of golf with the Chilean Ambassador at the diplomats and MPs match just recently, I was delighted to discover that he was a wine drinker. During that round, we discussed the pleasantries of a wine called Cousino Macul, which he knew very well. It is an excellent wine, and he was delighted that he could buy it in New Zealand. A free-trade agreement—which, I am sure, is supported by the Minister of Finance—would ensure that such opportunities abound into the future, so that we can all enjoy those wonderful wines.

I mentioned earlier, and I say again, that problems do exist if we become too constricted, too constrained, and too bureaucratic. The burgeoning young wine industry got there without the help of Jim Anderton’s $100 million—or, I should say, the taxpayers’ $100 million. In recent times, no taxpayer input has gone into the wine industry. It has developed extremely well by itself, and it does not need the plethora of bureaucratic structures it will get. The submissions that the select committee has received in recent times have expressed huge concern that the Wine Makers Amendment Bill is going from about three or four pages long to 100 pages long. That will place some real compliance costs on the industry, and the industry has a very real concern that it cannot afford them.

New Zealand does not just have huge wineries like Montana or Corbans—which are some of the well-known ones—it also has little boutique wineries. Many accountants will tell us that much of the industry is actually struggling. One cannot make a fortune selling wine at $10 or $12 a bottle; one has to get right up to $30 or $40 a bottle and beyond to be profitable, so the compliance costs within that industry are of major concern to small wineries that produce not much more than 2,000 or 3,000 cases a year. That output does not give them the large volume that would ensure some sort of economy of scale, so it is very important that compliance costs are kept to an absolute minimum. We look forward to addressing that issue in the near future when the full bill is considered by the select committee.

LARRY BALDOCK (United Future): I begin by stating that New Zealand can be proud of the achievements of its wine industry, and the recognition it continues to get around the world for producing high-quality wines. United Future supports this legislation, because while there is opposition to the imposition of European Union regulations, there is an acceptance of the need to meet the requirements of those regulations, in order to maintain continued access to the important European market.

United Future supported the first reading of the Wine Bill, from whence this bill came, and which has now received 111 submissions. We look forward to the select committee process that will deal with the major issues confronting the wine industry, but this particular bill should proceed expeditiously through the House. We therefore have pleasure in supporting it tonight.

Bill read a second time.

The House adjourned at 9.55 p.m.