Tuesday, 30 March 2004

Tuesday, 30 March 2004

Tuesday, 30 March 2004

Mr Speaker took the Chair at 2 p.m.

Prayers.

Points of Order

Finding of Contempt—Hon Dr Nick Smith

Mr SPEAKER: I hereby present a communication I have received from the registrar of the High Court regarding a finding of contempt against the Hon Dr Nick Smith.

Hon RICHARD PREBBLE (Leader—ACT): I raise a point of order, Mr Speaker. The House would be interested to know, if you have had a report from the registrar, whether that report is a report under the Electoral Act, suggesting that Dr Smith has been convicted of an offence carrying a sentence of more than 2 years.

Mr SPEAKER: Any member can see the copy of the report, and it is here for anyone to get a copy of.

Hon RICHARD PREBBLE: Do you not know the answer?

Mr SPEAKER: This is a report—[Interruption] I am sorry. I am not entering further into that argument.

Member’s Notice of Motion No. 2—Wording

Rt Hon WINSTON PETERS (Leader—NZ First): I raise a point of order, Mr Speaker. You will be aware, as we all are, that questions in the House are approved by the Clerk’s Office and that notices of motion come through a similar system, as well. Appearing on page 6 of today’s Order Paper is a notice of motion that is a gross affront and insult to all of Parliament. With the greatest of respect, I do not know how it got through—or whether there is a grammatical problem with the National Party and its leadership—but clearly, I do not think a member can allege that this House has a gross lack of knowledge of the Standing Orders. I think it could be said that we, collectively, are the experts, and that we do not exhibit a gross lack of knowledge. That being the case, what remedies does a member of Parliament have when he or she reads such a notice of motion?

Mr SPEAKER: I agree with you that the way it is expressed does give rise to two interpretations. In fact, the grammar is completely wrong. It was submitted correctly. It can be put down as a notice of motion. That is a way it can be done; but then, of course, it is a matter for debate.

Finding of Contempt—Hon Dr Nick Smith

GERRY BROWNLEE (Deputy Leader—National): I raise a point of order, Mr Speaker. I notice you have indicated to the House that you are tabling a report from the registrar of the High Court relating to the conviction of Dr Nick Smith. With regard to that, I call your attention to a news release put out at about half past 12 today by the Prime Minister, in which she states in a very categoric way that Nick Smith’s Nelson seat is not in jeopardy. Last week you gave a statement to the House that you thought there was no problem in the meantime and that at some further point you may have to make some reconsideration of that. Dr Nick Smith wrote to you on 29 March, asking for a clear ruling and noting that there is no need for you to wait until sentencing.

The reality is that the Electoral Act makes clear that you call all the shots in this case. Most worrying for us is your reply to Dr Smith that you cannot make a ruling until early next week, after the Clerk has made a report to you. We would like some clarification. If the Prime Minister is wrong, we would like you to state in the House that she is wrong, and make it clear that these sorts of statements are not helpful to her, to Parliament, or, in particular, to the member concerned. Further, if she is right, why can you not deal with Dr Smith’s issues now, and declare his seat safe for him? It seems—and you are perhaps unwittingly being drawn into this—that there is a programme by the Government to tell the nation there is no need to have a by-election, when the reality is that because of the time you wish to take to consider Dr Nick Smith’s position, there is a considerable amount of uncertainty about his seat in the House. That is not fair to him or to the people he represents in Nelson, and I suggest that the Prime Minister’s actions are not fair to you, either. It would be easy to suggest that the Prime Minister is attempting to usurp your position by convincing the public that there is nothing to worry about here. Dr Smith has been through this for quite some time—

Mr SPEAKER: The member has made his point. Could he please come to it quickly.

GERRY BROWNLEE: My point is simply this: if the Prime Minister is wrong, please tell her so. If the Prime Minister is not wrong, then please deal with Dr Smith and make his seat more secure—in fact, totally secure—immediately.

Mr SPEAKER: I cannot stop members from making such statements as they wish outside the House. We do live in a democracy. Any judgment I have to make under the Electoral Act will be uninfluenced by them.

GERRY BROWNLEE (Deputy Leader—National): I raise a point of order, Mr Speaker. Are you suggesting that any statement made outside the House can never in any way be considered to be a contempt of the House?

Mr SPEAKER: No, of course I am not.

GERRY BROWNLEE: Well, what is the heart of the issue we are going to? It seems fundamentally unfair—

Mr SPEAKER: The member mentioned the word “contempt”. The proper way to have that dealt with is by writing to me, as contempt is a matter of privilege. Any member can do that if he or she wishes to do so. As far as I am concerned—and I repeat—I cannot stop members from making such statements as they wish outside the House.

Questions for Oral Answer

Questions to Ministers

Environment, Minister—Confidence

1. Dr DON BRASH (Leader of the Opposition) to the Prime Minister: Does she have confidence in the Minister for the Environment; if so, why?

Rt Hon HELEN CLARK (Prime Minister): Yes, because she is a hard-working and conscientious Minister.

Dr Don Brash: How can she maintain confidence in the Minister, when in 2000 the Minister rejected any substantial reform of the Resource Management Act and ditched National’s bill to reform the Act, saying that it was “beautifully written and beautifully crafted”, and when we have now seen that very same Act force Meridian Energy to pull the plug on its planned 570-megawatt Project Aqua, a move that could ultimately plunge the country into another power crisis?

Rt Hon HELEN CLARK: I note that Meridian Energy gave a whole raft of reasons for why it decided not to proceed with the application, and did not single out the Resource Management Act as an overriding contributor to that decision. What has confused me is not being able to discern, from a variety of conflicting statements from the National Party, whether it wanted the process rushed or not.

Jim Peters: Is the Prime Minister aware that the Canterbury Regional Council, the operative regional body, had no existent water plan, and that the reviewed bill before the House that deals with the Waitaki catchment provides for, and is, an equitable outcome framework plan?

Rt Hon HELEN CLARK: Yes. I agree entirely with what the member has said. There was no water allocation plan existent in the Canterbury region, and the Government certainly felt, with the support of a number of other parties in the House, that it was important that there was such a plan before there was further progress with decision making.

Jeanette Fitzsimons: If the Resource Management Act was the problem for Meridian, can the Prime Minister explain why Meridian would have developed Project Aqua, given that the Resource Management Act had been in place for many years before Aqua emerged; and was it not, rather, that the amendment bill closed an existing loophole by requiring a proper minimum flow regime to be set for the river before Aqua consents were considered, and that that was the reason Meridian withdrew?

Rt Hon HELEN CLARK: Certainly Meridian would be very familiar with the Resource Management Act. What the Government took into account, though, was that there did need to be a proper water allocation plan before a whole raft of applications could be considered, and it has to be remembered that not only was Meridian desirous of using water but so, also, were many farmers, for irrigation purposes.

Hon Richard Prebble: Is the reality not that, after 4 years of a Labour Government and, as she puts it, “a whole raft” of reasons, the country now faces power shortages, and why should we not hold her Minister and herself accountable?

Rt Hon HELEN CLARK: Far from it. Project Aqua was not due to come on stream, had it succeeded, until 2009-12. Its early notice now gives plenty of time for other generators to come up with the extra capacity needed.

Gordon Copeland: Has the Prime Minister had any recent discussions with the Minister for the Environment regarding proposals to streamline the Resource Management Act to assist with future projects of national significance; if so, what was the outcome of those discussions?

Rt Hon HELEN CLARK: Virtually before the ink is dry on any resource management amendment bill going through this House, the Government, the Minister for the Environment, and other Ministers start looking at what other changes might be desirable, and that process has been going on for some time.

Dr Don Brash: Will the Prime Minister now be recommending to the Minister for the Environment the need for substantial reform of the Resource Management Act, including concepts like direct referral to the Environment Court, limiting objectors to only those actually affected by projects, and abolishing legal aid for objectors—a feature introduced by Labour in 2000—if not, will she take responsibility for the increased power prices, increased blackouts, and increased traffic congestion that this failure to act decisively will cause?

Rt Hon HELEN CLARK: The early notice given by Meridian of its change of plans enables both it and other generators to get on with ensuring that the necessary capacity is put in place. It is worth mentioning, also, that the Government has set up the Electricity Commission to ensure that there is security of supply for the future. I also entirely agree with Dr Brash when he said in Timaru recently: “It is important to ensure that the law respects those affected by Meridian’s actions.” I assume he meant by that that he agreed with Dr Nick Smith that there should be a robust process and that “a rushed decision would be a poor decision.”

Hon Ken Shirley: Why does the Prime Minister continue to express support for the Minister for the Environment, when she failed to implement the 10 recommended streamlining changes to the Resource Management Act developed by Simon Upton, given that the business community of New Zealand last week identified the Resource Management Act as the biggest obstacle to development in this country, and given that it is a prime reason for Meridian’s pulling out of Project Aqua?

Rt Hon HELEN CLARK: As the member knows, it is not the prime reason. I certainly never expressed confidence in Mr Upton, and the incoming Labour Government in 1999 expressly said there were changes that would have to be made to his draft bill.

Jeanette Fitzsimons: Will the Prime Minister give an assurance to the House that her Government will not introduce any legislation to further weaken environmental protection and public participation under the Resource Management Act?

Rt Hon HELEN CLARK: In issues of resource allocation and planning law the question is to get the balance right, and Parliament from time to time will want to address whether the balance is right in the law as it is being interpreted at the present time.

Dr Don Brash: Is the Prime Minister confident that under the current Minister for the Environment, Transpower will be able to get the resource consents necessary to upgrade the electricity grid around the entire country and gain the consents at reasonable cost, given that the Resource Management Act scuppered Project Aqua and that the consent process was reportedly costing Meridian Energy $4 million per month?

Rt Hon HELEN CLARK: It would be downright silly for me to prejudge the outcome of any planning application. What I do agree with is Dr Brash’s comment that the real issue is to ensure the decision-making process for Project Aqua was robust in ensuring the law was appropriate.

Auckland Transport Package—Reports

2. CLAYTON COSGROVE (Labour—Waimakariri) to the Minister of Finance: Has the Government made any announcements in respect of the financial implications of the Auckland transport package; if so, what were they?

Hon Dr MICHAEL CULLEN (Minister of Finance): Today’s announcement confirms the main elements of the package announced in December: additional Crown funding amounting to $1.62 billion over 10 years from 1 April next year; changes to governance, including a new single transport entity; and changes to key planning documents. Details announced today also set up a clear pathway to improved transport outcomes in Auckland. A bill giving effect to those changes has been tabled, and is supported by both the Greens and United Future.

Clayton Cosgrove: Will the Auckland package have financial implications for the rest of the country?

Hon Dr MICHAEL CULLEN: Yes. For Auckland, the transport package means an additional $1.62 billion over 10 years for investment in transport initiatives, made up of $720 million from increases in road-user charges and excise duty, and a further contribution of $900 million from the Crown. For the rest of New Zealand there will be an additional $1.35 billion over 10 years, from increases in road-user charges and petrol excise duty, for devotion to road transport issues.

John Key: Why did the Minister not reveal in the December transport package the decision to increase petrol excise duty each and every year by the rate of inflation; and can he confirm that this latest “stealth” tax will cost the average Kiwi motorist half a cent per litre?

Hon Dr MICHAEL CULLEN: The answer is that the release in December was structured very much around Auckland and on the initial moves around Auckland. In fact, there was an oversight in that regard. The matter had been discussed with other parties, who supported the measure. Indexation is necessary, because otherwise the excise duty will lose real value, year by year, in terms of roading. All the additional amounts will go into road transport, because only the portion—

John Key: There won’t be any additional amounts.

Hon Dr MICHAEL CULLEN: If the member would be quiet, he may learn something. Only the portion of the excise duty that goes on road transport will be indexed, not the portion that goes into the Crown account. If the member wants to have more roads, he has to learn to pay for them—that is the way life works in New Zealand.

Keith Locke: Can the Minister confirm that the joint officials group on Auckland transport showed that investment in public transport and demand management were critical to fixing Auckland’s congestion problems?

Hon Dr MICHAEL CULLEN: It is clear that public transport and demand management will play a very significant role in the management of Auckland’s transport problems, but, given the nature of the shape of the city and the nature of traffic flows within it—which are not simply flows from the perimeter into the centre—it is also important there are major improvements in roading in Auckland.

Hon Peter Dunne: Will the Minister confirm that a critical part of this package is the introduction of a diversion of the petrol excise duty into direct roading costs over the next 10 years—which will be the most significant diversion to occur in the history of the country?

Hon Dr MICHAEL CULLEN: Yes. All the 5c-a-litre increase announced for next year will go into road transport, and the indexation applies only to the amount that goes into road transport. So progressively over time the proportion of the total excise duty going into road transport will rise, as it has already done under this Government.

Spring Hill Prison, Waikato—Iwi Consultation

3. RODNEY HIDE (ACT) to the Minister of Corrections: Who is conducting the inquiry to produce the report he has commissioned into how the Department of Corrections spent $1.3 million on iwi consultation for the proposed Spring Hill prison, and what are the inquirer’s terms of reference?

Hon PAUL SWAIN (Minister of Corrections): Inquiry is not the right term, and I have never used that word in this House in relation to this matter. I have asked the chief executive to report to me on, among other things, the consultation costs of Spring Hill, Otago, Northland, and South Auckland women’s prison. I have also asked about proposed consultation commitments in the future.

Rodney Hide: Will the Minister of Corrections ask the Auditor-General to investigate, given that the lands trust chief executive officer, Mr David Gray, wrote to the board on 7 June 2002 stating that the only interest in the Department of Corrections contract being protected were the interests of former staff member and Department of Corrections employee Haydn Solomon and a couple of his mates; if not, why not?

Hon PAUL SWAIN: No. The letter that the member refers to talks about a whole wide range of issues with that person’s employment, not just about the Department of Corrections. The correct place to have this sorted out, and to see whether the consultation process was fit and proper, is at the Environment Court, which meets in May.

Rodney Hide: I raise a point of order, Mr Speaker. To clarify for the Minister, I never mentioned anything about the letter. This is a memo that David Gray wrote on 7 June.

Mr SPEAKER: That is not a point of order. The Minister certainly gave a direct answer to the member’s question.

Martin Gallagher: Can the Minister spell out to this House why he believes that comprehensive community consultation is critically important in the development of any new prisons?

Hon PAUL SWAIN: For a start, consultation is mandatory under the Resource Management Act. Beyond that, I think it is important with a project of this size, which has significant impacts on landscape, water, sewerage, traffic, and so on, that the wider community—be it Māori or non-Māori—has the opportunity to have a say. The Environment Court hearing in May will be the big test of whether the consultation process has been robust.

Hon Tony Ryall: How does the Minister explain that Mr Haydn Solomon, a former Department of Corrections staff member, is also listed on the schedule of those individuals who received substantial public moneys acting as consultants on this project?

Hon PAUL SWAIN: I am advised that at the first part of the consultation process, before any contracts had been entered into, a number of people, including that man, were employed as Department of Corrections staff in order to get the consultation going. Once the contracts for consultation were entered into he stopped being a Department of Corrections employee and, as I understood, took up a position as part of the contract.

Jim Peters: Why has there not been extensive inquiries made by your ministry, the Department of Corrections, into the extensive cost of consultation at Ngawha, and particularly in regard to the fact that there was an alternative prison site available for much less at Motatau?

Mr SPEAKER: The Minister can reply to everything except anything that refers to me.

Hon PAUL SWAIN: There was considerable investigation into which was the appropriate site in the north, and that member could well know that. The reality is that there has been a lot of consultation going on here. I do want to say this about the involvement of Māori: Māori have been prepared as a community to work in partnership with the Department of Corrections to make sure that Māori—and Māori make up 50 percent of our prison population—are able to be reintegrated back into the community. They are showing superb leadership in this and I am hoping that other parts of the community will follow their lead.

Ron Mark: If the Minister places so much importance on the consultation process with iwi, why has no one to date from either the Government or the Department of Corrections consulted iwi about the ending of the private contract for the management of the Auckland Central Remand Prison, or is it simply because he does not want to hear what they have to say because it is totally at odds with what he and his Government want to do?

Mr SPEAKER: This question was originally about Spring Hill prison. It is quite wide but if the Minister wants to make a brief comment he can.

Hon PAUL SWAIN: Because it is Labour Party policy.

Rodney Hide: Does he now accept that his own department took advantage of this trust board, which was in disarray, to pay Haydn Solomon and a few chosen Māori to provide a report to the Department of Corrections that said, on behalf of 35,000 Tainui: “Sure, put the prison in our backyard.”; if not, why not?

Hon PAUL SWAIN: No, because it is not true. The point is that at the Environment Court I understand there are only four objectives. One marae, out of over 130, has put in an objection. The Environment Court is the one that should work out whether those objections in the consultation process have been correct.

Employment Relations Law Reform Bill—Amendments

4. Hon ROGER SOWRY (National) to the Minister of Labour: Is the Government currently considering any changes to the Employment Relations Law Reform Bill; if so, what are the details of those changes?

Hon PAUL SWAIN (Minister of Labour): The Employment Relations Law Reform Bill is currently before the Transport and Industrial Relations Committee. I will consider any changes the committee recommends in due course. In the meantime I am meeting with employer and employee representatives to discuss the issues arising from the bill.

Hon Roger Sowry: What changes to the Employment Relations Law Reform Bill was his colleague the Minister for Small Business, the Hon John Tamihere, referring to when he told the National Business Review last week: “… we’ll see what Swainey and the boys can get up to now the girl’s out of the way for a little while … when ERA Bill gets reported back.”; and has he had any discussions with the Prime Minister, the Minister for Small Business, Mr Tamihere, and the previous Minister of Labour, Margaret Wilson, regarding those comments?

Mr SPEAKER: The second part of the question is in order. The first part relates to what another Minister might have done, but the member may comment.

Hon Roger Sowry: I raise a point of order, Mr Speaker. The question was very carefully worded, and I am happy to repeat the wording for you.

Mr SPEAKER: Did the member say “reports”?

Hon Roger Sowry: I asked what changes he thought the Minister for Small Business, Mr Tamihere, was referring to when he said in the National Business Review: “… we’ll see what Swainey”—which I presume is the Minister—“and the boys can get up to now the girl’s out of the way for a little while”—

Mr SPEAKER: I will allow the Minister to answer the question.

Hon PAUL SWAIN: Yes, I have seen the comments from the Minister for Small Business. I can advise that some of the first changes that “Swainey and the boys and the girls” may well be looking at are the provisions relating to vulnerable workers, given that the Minister for Small Business’s name may well be added to the schedule, following his comments last week.

Peter Brown: Is the Minister aware that Lianne Dalziel implied to submitters in Christchurch last week that clauses that the Council of Trade Unions objected to are likely to be withdrawn; couple that with the Hon John Tamihere’s remarks, why does the Minister not pull the bill now and put the whole thing to rest?

Hon PAUL SWAIN: I am not aware of those comments, because I, clearly, was not at the meeting. I am waiting to hear the report from the select committee, which I understand is due to report back in June.

Sue Bradford: Will the Minister consider changes to the bill that take into account the recommendations of the employment equity taskforce, once it reports back, and when is that report-back due?

Hon PAUL SWAIN: I assume that is another matter that will be considered by the select committee, and I will look at its recommendations in due course.

Hon Roger Sowry: Is the Minister prepared to guarantee now that there will at least be major, substantive changes to the Employment Relations Law Reform Bill, or its total withdrawal, in light of statements made by his colleague the Hon John Tamihere about the Government being “all ears” on the bill, and about “the overwhelming weight of displeasure being displayed with the bill” by submitters to the select committee?

Hon PAUL SWAIN: No. Firstly, the bill will not be withdrawn, but I sat on select committees for 9 years, and I do not recall one single bill coming back to this House without some form of change.

Hon Roger Sowry: Will the Minister be asking the Ministry of Economic Development to release the reports it produced on the Employment Relations Law Reform Bill, given the statement made by his colleague the Hon John Tamihere that “When the OIAs come through, you’ll see a whole range of issues that were on the table.”; if not, why not?

Hon PAUL SWAIN: I presume that when Official Information Act requests come through they will be released according to the Act.

Hon Roger Sowry: I raise a point of order, Mr Speaker. The question actually asked whether the Minister would seek the release of those reports, because those Official Information Act requests have come through—well outside the time frame, now—and we are told that the Minister is the person who is holding them up.

Hon PAUL SWAIN: Speaking to the point of order, I am happy to look into the matter on behalf of the member, but I do not recall that. If Official Information Act requests are done according to the provisions of the Act, then the release has to meet the provisions of the Act.

Mr SPEAKER: That seems to clear up the matter for the member.

Security—Residency and Citizenship Legislation

5. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: Can she give any assurances, given that citizenship and passport laws are currently being reviewed, that permanent and temporary residency laws will also be reviewed consistent with concerns over national security; if so, why?

Rt Hon HELEN CLARK (Prime Minister): The Immigration Act and policy have safeguards that provide for the decline of residence or temporary entry permits where there are character or security issues. The Act also provides for the revocation of permits if character and security issues emerge after the person is already in New Zealand, which the New Zealand Immigration Service was not previously aware of. The Government does not presently have these aspects of the law and policy under review.

Rt Hon Winston Peters: Why would anyone have confidence in what the Government is doing, or proposes to do, when we have here a man called Zaoui, who, in the criminal chamber of the High Court of France—far superior to any authority that has been heard in this country—was, firstly, convicted of being accomplice to the falsification of administrative documents; secondly, possession of stolen goods; and, thirdly, participation in an association of criminals with intent to prepare a terrorist act; and if that is the case, and having regard to the article 1F(b) of the 1951 UN convention, what on earth is this man doing in our country?

Rt Hon HELEN CLARK: The member could also have added to that list the fact that the Swiss Government felt sufficiently strongly about Mr Zaoui’s presence to deport him to Burkino Faso, having, I understand, chartered a plane to do so. The facts around Mr Zaoui are quite well known. He was detained when he arrived in New Zealand, and he is still detained. A security risk certificate was issued against him, and it would be rather nice if the inspector-general was able to be in a position to get on with the review so that decisions can be made.

Dr Wayne Mapp: Will the Prime Minister be ensuring that the Minister of Internal Affairs briefs the National Opposition, as he has been requested, given the importance of this legislation in the war against terrorism and the need for a bipartisan approach on such matters?

Rt Hon HELEN CLARK: I am sure that the Minister would be happy to brief the member and other interested members in due course. The matter is still being discussed within the Government, but it would seem certain to me that some changes will need to be made to legislation. Changes are being considered not only for issues around national security but also, I think, around last year’s publicity about people deliberately targeting New Zealand as a place to come on temporary visas to have babies and get them citizenship, which also raises questions of whether that sort of behaviour should be targeted in our law.

Keith Locke: Why, in the legislation just referred to, will it be possible for a passport to be taken away from a New Zealand citizen on national security grounds even when that New Zealand citizen does not have a criminal record and no charges are being offered against that person?

Rt Hon HELEN CLARK: There are grounds in the law now for revoking passports, and the issue the Government is considering is whether those grounds need to be widened. I might point out that in Australia there is a provision for the refusal and cancellation of passports where the Minister of Foreign Affairs is satisfied that the person might prejudice the security of Australia. Similarly in the United Kingdom, the Secretary of State can exercise his discretion on grounds of national security as to whether someone is entitled to have a passport. I also point out that the European Convention on Human Rights recognises national security as a ground for restricting the rights to freedom of movement.

Rt Hon Winston Peters: Why would we have any confidence in what is about to be done by Government, when the fourteenth chamber of the Court of Appeal in Brussels—again, a far superior court to any that has heard any case in New Zealand—found that this man was guilty of being the head of a criminal association, possessed two blank passports and a Danish passport, all falsely, and convicted him; and when the article in respect of the 1951 convention, for Mr Robson’s sake, clearly states that where a refugee claimant has committed a serious crime outside the country of refuge before being granted refugee status, then he should not be entitled to refugee status? Why is this man still in our country and costing us hundreds of thousands of dollars?

Rt Hon HELEN CLARK: The member is correct in asserting that the decision by the Refugee Status Appeals Authority to regard Mr Zaoui as a refugee is not in itself grounds for him remaining in New Zealand. That decision must be judged alongside a decision yet to be made by the Inspector-General of Intelligence and Security—because he cannot get to make that decision with all the litigation—as to whether the security risk certificate should be upheld.

Keith Locke: I seek leave to table the 213-page report of the Refugee Status Appeals Authority, which answers all the points that Mr Peters has just raised.

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

Social Development and Employment and Women's Affairs, Ministers—Confidence

6. SIMON POWER (National—Rangitikei) to the Prime Minister: Does she have confidence in the Minister of Women’s Affairs and Acting Minister for Social Development and Employment; if so, why?

Rt Hon HELEN CLARK (Prime Minister): Yes, because she is a hard-working and conscientious Minister.

Simon Power: Is it acceptable for the Minister of Women’s Affairs to call another woman an “irresponsible tart”, and what confidence should the New Zealand public have in a Minister who makes what the Prime Minister herself has termed “gratuitous and silly comments”?

Rt Hon HELEN CLARK: The word “irresponsible” was acceptable. The word “tart” was not, just as it was wrong when National Party bosses were reported as using that word about me at a party conference 2 years ago.

Dr Muriel Newman: If it is not acceptable for a Minister to call a member of Parliament a tart, is it acceptable that a situation has now arisen whereby, because the Minister’s comments have been broadcast so widely, she has brought not only all Ministers of the Crown into disrepute, but all parliamentarians as well; and does the Prime Minister not believe that the only honourable course of action for the Minister to take is for her now to apologise to this Parliament for the embarrassment and offence her comments have caused?

Rt Hon HELEN CLARK: I understand that the Minister has sent a letter to the select committee, and she has repeated in that her apology personally to the member. Needless to say, I did not get such a letter from the National Party 2 years ago.

Simon Power: How can she have confidence in a Minister of Women’s Affairs who falsely accused another member of using the word “scrubber” to describe women, but was quite happy to use the word “tart” to describe women?

Rt Hon HELEN CLARK: The use of silly and inappropriate words by members of Parliament would not be restricted to just those two. Unfortunately, it is quite a regular occurrence and, I imagine, will be as long as we have a democracy in a Parliament in this country.

Schools—Funding

7. BERNIE OGILVY (United Future) to the Minister of Education: Is he satisfied that schools receive sufficient funding; if so, why?

Hon TREVOR MALLARD (Minister of Education): Never.

Bernie Ogilvy: Is he satisfied that the total operating deficit of schools that are in the red has increased by over 50 percent, from $21 million in 1998 to $33 million in 2002, covering a massive 40 percent of all our schools, and that the average debt per school has increased from $24,000 to $32,000 over that same period; if he is not, why not?

Hon TREVOR MALLARD: I think the member will find that those numbers are relatively small differences in large amounts. Many schools now have an operating turnover of over a million dollars, and, frankly, being $5,000 over or under does not make much difference.

Lynne Pillay: What additional support have schools received since 1999?

Hon TREVOR MALLARD: Quite a lot. There has been about $193 million, or 28 percent, more operational funding in schools in 2004, compared with 1999. Taking into account roll growth and inflation, the increase in that figure in real terms per pupil is 10.1 percent. There has been other funding such as an extra $57 million for laptops for teachers, $128 million a year for teachers over and above roll growth, $43 million in targeted literacy programmes this year alone, $87 million extra in teacher professional development, and in the coming financial year tens of millions of dollars for high-speed Internet access through Project Probe. This Government has been putting an enormous amount of extra funding into education, to the extent where the “member for Dipton” says that some schools are awash with cash.

Hon Bill English: Why did the Minister do a deal with the Post Primary Teachers Association to increase non-contact time for teachers but refuse to pay salaries for the teachers needed to fill the gaps, with the effect that many secondary schools are starting late 1 day a week, finishing early 1 day a week, illegally taking an extra day in mid-term break, and increasing class sizes significantly in order to cover the gap that he has left?

Hon TREVOR MALLARD: The Government has put approximately a thousand extra teachers into secondary schools in order for them to focus on contact time, amongst a number of other issues. Some schools have chosen to run down their class sizes; some schools have chosen to have higher class sizes—

Hon Bill English: Increase it, not cut it.

Hon TREVOR MALLARD: No, some have chosen to run down their class sizes—to decrease their class sizes—and to offer fewer options. That is a call for the schools to make; it always has been.

Hon Brian Donnelly: Will the Minister confirm that in the Government’s response to the Education and Science Committee report on decile funding, it is stated: “Links between any resources and educational outcomes are difficult to identify and measure.”, and that it is therefore really not possible to claim, one way or the other, whether schools are receiving sufficient funding?

Hon TREVOR MALLARD: I would not rely entirely on that response, but I notice the Minister of Finance is nodding.

Bernie Ogilvy: What does the Minister expect the total deficit for schools in 2003 to be, noting there has been a downturn in foreign student numbers and, as he has pointed out, an increase, for instance, in the cost of information technology upgrades and in support staff salaries, which, together, will put further pressure on the financial position of schools?

Hon TREVOR MALLARD: I want to indicate that I am never satisfied with the amount of funding, and that I will keep on working to get more and more funding, because I do believe it is appropriate that we, wherever possible, better resource our schools. But I think the member has to be a little careful with his facts. In 2003 the number of foreign fee-paying students in State secondary schools went up significantly, compared with 2002.

Accident Compensation Corporation—Ethical and Legal Practices

8. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister for ACC: Is she satisfied that all of Accident Compensation Corporation practices are ethical and within the law?

Hon RUTH DYSON (Minister for ACC): The Accident Compensation Corporation is reviewing all programmes where provider discretion is permitted in the implementation of its programmes, because it is imperative that any such discretion is appropriately exercised. If the member has specific instances where he believes this may not be the case, I would be happy to look into it. Subject to that, yes, I am satisfied that the corporation’s practices are ethical and within the law.

Rt Hon Winston Peters: Is the Minister aware that the LTD and the car she has are because she is a Minister, and it is not my job to do her job for her, and that being the case, why is Mr James Sowman, a pseudonym, writing to an accident victim, and why is her department denying that victim the Official Information Act request for the true identity of the so-called Mr James Sowman, and claiming that there is no public interest involved, when plainly they are involved in deceit?

Hon RUTH DYSON: I understand that that particular employee of Catalyst Injury Management Ltd used that pseudonym because he was afraid for his own safety.

Lianne Dalziel: What improvements has the Minister made to ensure the corporation’s practices are responsive and appropriate to claimants?

Hon RUTH DYSON: The development of the Code of ACC Claimants’ Rights, which took effect on 1 February last year, is one such measure. The code enshrines in law the requirement for the corporation to have high standards of service and fairness when dealing with claimants.

Rt Hon Winston Peters: If the Minister thinks her statement in response to my supplementary question is correct, why was that not said in the Seymour letter to the victim concerned, and are we to look forward to dealing with “Mrs Get Well” from the Ministry of Health and “Constable Stay Safe” from the police force, because there are no public interest factors supporting their revealed identity, as the Accident Compensation Corporation explained?

Hon RUTH DYSON: We do have a responsibility to ensure the ongoing safety of all public servants, and I support what would otherwise seem to be quite unusual measures to back that protection up.

Rt Hon Winston Peters: I seek leave to table a document relating to a James Sowman dated 5 March 2004, where no such claim is made with respect to—

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

Energy—Project Aqua Cancellation

9. JEANETTE FITZSIMONS (Co-Leader—Green) to the Minister of Energy: What additional steps will he be taking to promote energy efficiency, energy conservation, and renewable energy following the cancellation of Project Aqua?

Hon PETE HODGSON (Minister of Energy): Several steps. The National Energy Efficiency and Conservation Strategy is being ramped up, and further details will be announced in the Budget. Second, the climate change projects mechanism has been highly successful in bringing on cleaner and renewable energy projects, and I will announce results equal to a little over a third of those of the Project Aqua later this week. Thirdly, details of a second, larger tender for projects to reduce emissions will be in the next Budget.

Jeanette Fitzsimons: Why does electricity consumption need to rise at all over the next decade or two, when numerous assessments show that at least 20 percent of current electricity use could be avoided with the use of cost-effective energy-efficiency technology?

Hon PETE HODGSON: I am sure it is true that we could improve our energy efficiency across the economy by about 20 percent; that is precisely the target that the Government sets. However, under the auspices of this Government, and particularly the Prime Minister and the Minister of Finance, the economy has been consistently growing at greater than 2 percent, and is likely to continue to do so.

Mark Peck: Is the cancellation of Project Aqua a set-back in the development of renewable energy in New Zealand?

Hon PETE HODGSON: At this stage it does not seem that the cancellation of Project Aqua will make it more difficult to achieve the Government’s renewables target, as most of the alternatives to it between now and about 2012 are renewables—namely, geothermal, wind, and small hydro.

Hon Roger Sowry: Does the Minister think it will be easier for wind turbines to obtain the necessary resource consents, given that the company Windflow Technology, with Mrs Fitzsimons as a shareholder, is facing objections from environmentalists to its Christchurch wind turbines on the basis that they are too noisy?

Hon PETE HODGSON: I draw the member’s attention to the largest wind project undertaken in New Zealand, a 90-megawatt programme behind Palmerston North. The application was lodged on a Monday, the hearings were on the Tuesday, the cross-examinations were on the Wednesday—all of this last year—and the consent was awarded on the Thursday.

Peter Brown: Is the Minister aware that there are billions of tonnes of coal in New Zealand, and that clean-coal technologies being developed here, in the USA, and in other places make coal much more environmentally friendly; if so, why does he not encourage greater use of coal to generate electricity and put New Zealanders’ minds at rest?

Hon PETE HODGSON: The answers are yes, yes, and because, on average, it is more expensive than alternatives.

Gordon Copeland: Is the Minister prepared to explore the possibility of a win-win situation for both conservation and energy at the Dobson hydro project, in an area of high rainfall and forecast high electricity demand?

Hon PETE HODGSON: I invite the member to give up his preoccupation with favoured sites and favoured technologies, and to look at the fact that if that project were to proceed, it would give us an increase in our electricity sufficient for about 5 months. What would he do after that?

Jeanette Fitzsimons: Will the Minister tell the country clearly that claims of clean coal are still a myth because no proven technology exists to reduce, let alone eliminate, the accelerated climate-change effects of burning coal?

Hon PETE HODGSON: Clean coal tends to mean two things, depending on which sort of audience one has. The clean coal that some people speak of is to do with sulphur, nitrous oxide, and particulates, and we do have clean coal - burning technologies available to us. However, the member is right that no one has even begun to invent how to get carbon dioxide out of coal combustion.

Gordon Copeland: Is the Minister prepared to cut some slack to line companies to enable them to invest in local generation plants and schemes without limit, and to sell that electricity directly to customers in their own areas, thus providing some much-needed competition for the large electricity generators?

Hon PETE HODGSON: I draw the member’s attention to a bill before a select committee at the moment in which existing thresholds for lines companies have been increased fivefold. If the select committee thinks that is a bit limited, then it may want to make it tenfold.

Jeanette Fitzsimons: What is the total expected time frame for Meridian Energy’s Te Apiti wind farm to be built and commissioned, now that it has received its resource consent—in just 4 days—and how many such wind farms could be built and operating by the time Project Aqua would have generated its first unit?

Hon PETE HODGSON: I think that a little less than 15 months is the correct answer to the member’s first question, and that a good deal is the correct answer to the second.

Unemployment Benefit—Trends

10. MOANA MACKEY (Labour) to the Associate Minister for Social Development and Employment: What trends have been identified in the number of people receiving the unemployment benefit?

Hon RUTH DYSON (Acting Minister for Social Development and Employment): There has been a nearly 50 percent drop in the number of working-age New Zealanders needing the support of an unemployment benefit since 1999. There are now under 79,000 working-age people on the unemployment benefit and the unemployment benefit hardship—the lowest level since 1987. This reflects New Zealand’s historically low unemployment rate of 4.6 percent—the sixth equal lowest rate of unemployment in the OECD.

Moana Mackey: What factors have contributed to the reduction in numbers receiving the unemployment benefit?

Hon RUTH DYSON: A strong labour market, Government support for job-rich growth through regional economic development, and a dedicated focus on quality case management and real job placements by Work and Income have all contributed to the near 50 percent drop in unemployment benefit numbers. That is in stark contrast to jurisdictions that have implemented work-for-the-dole and time-limited benefits, like Wisconsin, where benefit numbers have gone up by almost 30 percent in the last 3 years.

Katherine Rich: What trends have been identified in the number of people receiving the sickness and invalids benefits, and can the Minister explain why the number of people receiving them has dramatically increased under this Government?

Hon RUTH DYSON: The total number of working-age people on a benefit has dropped by over 55,000 since 1999. That means that total working-age benefit numbers have dropped by a number equivalent to the entire population of Napier. That is a real, total drop across all working-age benefits—unemployment, sickness, invalids, and domestic purposes.

Mr SPEAKER: I think the Minister should address the specific question that was asked. She can comment on that quite comfortably. The question can be repeated.

Katherine Rich: What trends have been identified in the number of people receiving the sickness and invalids benefits, and can the Minister explain why the number of people receiving them has increased dramatically under this Government?

Hon RUTH DYSON: As I indicated in answer to the previous question, the total number of working-age people across all benefits has decreased. However, there has been an increase in both sickness benefit and invalids benefit numbers, primarily due to improved diagnosis of mental health conditions—a strong contributor—and to our ageing population. That is exactly comparable to all other Western countries.

Judy Turner: Has the Minister considered making eligibility for an unemployment benefit for those under the age of 25 more consistent with student allowances by assessing them on the basis of their parents’ income; if not, why are students being treated differently by this Government compared to those on the dole?

Hon RUTH DYSON: No, that particular consideration has not been made.

Peter Brown: I raise a point of order, Mr Speaker. I want to draw your attention to the fact that Katherine Rich asked her question twice, and the second answer was quite different from the first. Had the Minister not been pushed to answer it correctly the second time, we on this side would have been working on a totally wrong assumption. We would have made the assumption that sickness benefits had gone down. In fact, the reverse is the case.

Mr SPEAKER: That is not a point of order.

Peter Brown: That is quite frustrating on this side of the House.

Mr SPEAKER: That is not a point of order.

Family Court—Openness

11. JUDITH COLLINS (National—Clevedon) to the Minister for Courts: Does he agree “that the persistent labelling of Family Court proceedings as ‘secret’ was misleading and irresponsible.”, and “There is nothing secret about the Family Court at all,” as stated by Principal Family Court Judge, Peter Boshier, on 26 March 2004; if so, why?

Hon DAVID BENSON-POPE (Minister of Fisheries), on behalf of the Minister for Courts: The Minister understands that Judge Boshier was responding to criticism that consistently portrays Family Court judges as insisting on “secrecy”, rather than merely following longstanding legislation that requires family proceedings that are of a personal nature to be kept private to the parties that are actually involved. To the extent that the criticism creates that misleading impression, the Minister agrees with him.

Judith Collins: Does the Minister also agree with the statement: “Its proceedings are open to scrutiny right now in a number of respects.”; if so, can he explain to the House what scrutiny Family Court proceedings are under right now?

Hon DAVID BENSON-POPE: Yes, I do, and I do not think I can do better for the questioner than echo the statement of Judge Boshier that judges have operated the court, as they have been required to do, to afford privacy to separating parents, particularly with young, vulnerable children. That is what Parliament has required of the Family Court, and that is precisely what the Family Court has endeavoured, to the best of its ability, to do.

Judith Collins: I raise a point of order, Mr Speaker. The Minister made no attempt to answer my question, which was about what scrutiny the Family Court is under in relation to the matters. The Minister gave absolutely no answer at all in respect of that.

Mr SPEAKER: I disagree. I think the Minister did address that particular question.

Georgina Beyer: What consideration is the Government giving to whether the Family Court could be made more open?

Hon DAVID BENSON-POPE: The Care of Children Bill, currently before the Justice and Electoral Committee, gives some consideration to what changes might be made to the legislation governing some proceedings before the Family Court. In addition, the recent Law Commission report Delivering Justice for All also makes recommendations on this issue. The Government is giving careful consideration to the Law Commission’s recommendations and will respond in due course.

Stephen Franks: I ask the question again: does the Minister agree with Judge Boshier that: “There is nothing secret about the Family Court”; if so, why, given that no one outside the case that the Hon Nick Smith got involved in has been able to see the Family Court decision, despite claims that it vindicates that court’s order; and what is that if it is not a secret judgment from a secretive court?

Hon DAVID BENSON-POPE: The current balance in existing legislation between protecting the privacy of sensitive and emotional family disputes and recognising the public interest in those disputes was determined by Parliament when the Family Courts were established in 1980. This is longstanding legislation, and the Family Court itself should not be criticised for adhering to legislation enacted by this Parliament.

Stephen Franks: I raise a point of order, Mr Speaker. May I ask the question again, as no attempt was made to answer it?

Mr SPEAKER: The member can ask the question again, and I will then examine the answer. I remember what the answer was.

Stephen Franks: My question was a repeat of the original question: that is, does the Minister agree with the Principal Family Court Judge Peter Boshier that: “There is nothing secret about the Family Court at all,” when, in fact, the Family Court’s judgment in the case in which the Hon Nick Smith became involved has never been seen by anyone outside that case, despite claims that it vindicates the order of the court; and what else can it be but a secret judgment from a secretive court?

Hon DAVID BENSON-POPE: Yes, I do agree. There is a considerable difference between the word “secret” and the appropriate privacy that should be accorded to the proceedings of that court.

Rt Hon Winston Peters: How does the Minister think it helps public information and debate when, in the case of the judgment in respect of the Nick Smith Nelson case, the court decision does not disclose a very fundamental fact, and that is that the boy was subject to extreme violence, which is the reason he did not want to be returned to his parents? That is a fact.

Mr SPEAKER: I do not know that that question is the responsibility—

Hon DAVID BENSON-POPE: I am certainly not prepared to comment on the particularities of the case, but I would like to make one other comment to the questioner, and that is, simply, that the openness or otherwise of the Family Court will be considered subsequent to the release of the select committee’s report on the Care of Children Bill and as part of the Government’s consideration of the report of the Law Commission.

Judith Collins: Does the Minister agree that the Family Court should be required to make available meaningful statistics on the number of cases delayed; if so, why has he not required that to be done, despite his 4½ years in the position?

Hon DAVID BENSON-POPE: Not at this time. [Interruption]

Mr SPEAKER: Did I hear the member say: “Not at this time.”? That is an answer to the question. Whether members agree with it is another matter.

Male Students—Underachievement

12. Dr ASHRAF CHOUDHARY (Labour) to the Minister of Education: What steps is he taking to address boys’ underachievement in schools?

Hon TREVOR MALLARD (Minister of Education): This Government is committed to ensuring that all our children achieve to their full potential in education. We know that at secondary level boys are not doing as well as girls are. That is why I have put in place a programme to identify solutions for lifting boys’ achievement at secondary school. It includes research to identify programmes that result in improved achievement by boys, and the establishment of an external reference group of experts in boys’ education.

Dr Ashraf Choudhary: What information is available to schools and teachers to help them to identify and address areas of student underperformance?

Hon TREVOR MALLARD: There is actually an enormous amount of material available now: data from the literacy and numeracy test asTTle, from the National Certificate of Educational Achievement, and from the National Education Monitoring Project. The New Zealand Qualifications Authority and the Ministry of Education both have international data available. There is quite a lot of existing research analysis. The research shows some really interesting patterns. There is not much difference in achievement up to the end of primary school, but subject-based differences occur as boys and girls go through secondary school. It appears that the results start to come back together again at university.

Urgent Debates

Energy—Project Aqua Cancellation

Mr SPEAKER: I have received letters from Gordon Copeland, Jeanette Fitzsimons, and the Hon Ken Shirley seeking to debate under Standing Order 373 the decision by Meridian Energy that it will not proceed with its planned Project Aqua development. This is a particular case of recent occurrence, and it involves ministerial responsibility. Given the significance of the decision, I consider that it requires the immediate attention of the House. I therefore give priority to the first application I received, that of Gordon Copeland. I call upon him to move the motion.

GORDON COPELAND (United Future): I move, That the House take note of a matter of urgent public importance. I move that motion because Meridian Energy’s bombshell announcement yesterday that it will not be proceeding with Project Aqua creates new and significant risks for the New Zealand economy, and, in consequence, for all New Zealanders and their households. A cheap and secure electricity supply is critical to all businesses and households in this country. I saw a graph, presented to me last year, that indicated that New Zealand could face a significant primary energy gap from around 2007, now just 3 years away—[Interruption]

Mr SPEAKER: When the House grants leave for an urgent debate to take place, that indicates the matter is important. I am talking to Mr Mallard. I know that some members have to attend select committees, but I want to hear this speech in silence, apart from the usual sorts of comments. There can be the odd interjection, but there is too much noise. I have not deducted time from the member’s address.

GORDON COPELAND: I was making the very vital point that I was presented with a graph last year that indicated New Zealand could face a significant primary energy gap from around 2007, now just 3 years away, because of the rundown in gas from the Maui field and the problems associated with the use of Waikato coal for electricity generation. The graph presented to me was truly frightening. It illustrated that without Project Aqua, a gap between electricity supply and demand may begin in 2007 and rise to a massive 11,000 gigawatts by 2017. That forecast should be of concern to all New Zealanders, because it clearly indicates that unless we can bring additional generating capacity on stream within the next 3 years, we will face an electricity shortage.

Simply stated, the cancellation of Project Aqua is an issue of very critical importance to New Zealand businesses, going forward. We have a “wall of wood” to process and many new irrigation schemes coming on stream. We have new roads to build in Auckland, and growth in the dairying industry. All those situations, and all the other plans for expansion in the next few years of other New Zealand businesses—thus to grow the economy—are dependent upon electricity for that to happen. That is why I say this issue is of critical importance to our economy. Along with security of supply—that is, electricity being available when needed, businesses need cheap electricity. New Zealand is a long way from its markets, and at the moment, by world standards, we have a comparative competitive advantage from being able to use not just electricity but cheap electricity. The switch that I think we are now forced to make from renewable energy sources, such as hydroelectricity, to energy sources such as coal—a switch that seems inevitable, given the decision taken yesterday—means that we will not only go to something less environmentally friendly but also to something significantly more expensive. That has the capacity to erode New Zealand’s competitive economic position with regard to the rest of the world. My own vision, however, for the New Zealand economy is that it should grow, and grow quickly, so that we can deliver to New Zealanders and their households the material well-being and the good health and educational services we all desire, going forward.

I want at this point to address a few comments to Meridian Energy itself. I do so as a shareholder in that company, for all New Zealanders are shareholders in Meridian Energy. I ask the company to be open to the possibility of seeing at least a residual hydro scheme proceed on the Waitaki River. I ask the company at least to work through the new water allocation framework that will come into being as a result of the passage of the Waitaki catchment legislation. It seems to me that even if Meridian Energy were not successful in obtaining the amount of water flow it would have ideally liked for Project Aqua, it is still possible for it to see a smaller-scale project go ahead. If Meridian Energy is not willing to do that, I think other major electricity generators in New Zealand should step into its shoes and look at that possibility. At the end of the day, the situation that faces us as a nation is so critical that we cannot afford to say no to any significant low-cost way of generating electricity.

I will also address some comments to the Government itself. I hope it will take heed of this development and ensure that there are now no ideological or regulatory barriers to allowing hydroelectricity schemes in New Zealand of all shapes and sizes, together with schemes using steam, wind, coal, or whatever else, to proceed and proceed quickly, so that we can have some of them on stream in time for the projected electricity shortage from about 2007 onwards. I specifically ask the Government to look again at the Dobson hydro scheme on the West Coast of the South Island. The Government’s position on that scheme is that it should not proceed because it will do damage to the conservation estate of this country. The Government says that the scheme will reduce the area of the conservation estate. My response is that the people of Greymouth have offered the Government Mount Buckley by way of exchange—a larger area—so in actual fact the conservation estate would increase, not decrease, if the scheme went ahead.

The Government has said that the Dobson scheme would involve the loss of some kahikatea trees in the 500 hectares—and that is all we are talking about—that would be flooded by the new dam, which would create a beautiful lake in a bush setting. If the Government were to ask TrustPower, I believe that the company may well be prepared to buy some existing private kahikatea trees and gift them to the nation’s conservation estate. The Government says that there are birds living in the 500 hectares that would be flooded—an area, by the way, that is part of approximately 1.8 million hectares of conservation land on the West Coast, just to put it into some sort of perspective—that need to be protected. I agree entirely with that, and I say that if the Government were to speak to TrustPower it may well be that TrustPower would be prepared to cooperate with it, with the Department of Conservation, and with the people of Greymouth to create a bird sanctuary where our birds could flourish and increase in large numbers, instead of having to compete daily for their very survival under the gaze of rather hungry stoats, weasels, feral cats, and possums.

The Dobson hydro scheme has strong local support. A few minutes ago, in response to a question of mine, the Minister of Energy said that it would provide only about 5 months’ supply for New Zealand. I think that answer misses the point of what my party has been saying in relation to those kinds of schemes. We believe there is potential for a number of hydro schemes to be developed on the conservation estate throughout New Zealand. It is time to start to think outside the box, and for the Government to give away the false dichotomy that it has erected, for ideological reasons, between conservation on the one hand and hydroelectricity on the other hand. It is completely unnecessary. As I have pointed out, there is a way through the projected electricity shortage, and I was hoping very, very much that Dobson would become a prototype for many other similar schemes right up and down this country that would continue to supply electricity to this nation at an affordable price, using a source of energy that is renewable and sustainable in the long term. I say to the Government it is time to put aside the straitjacket. We can no longer afford the luxury of caving in to the kind of ideology that defies common sense.

I will also bring up another point at this time—again, something that I alluded to during question time—and it is the very strong submissions that the Electricity Networks Association of New Zealand has brought to my attention concerning the rules that presently prevent it from investing in new local electricity-generating projects. I think we need to give that matter very careful consideration. The situation arises from what I believe were the somewhat ill-advised reforms made by Max Bradford when the National Party was in Government. I cannot understand, therefore, why a Labour administration, coming into that situation, would be prepared to allow it to continue. The Minister makes the point, and I agree with him, that some new flexibility has been given. Local lines companies—and I want to stress here that those companies are owned by local communities, are sensitive to local needs, and are able to invest local money for the benefit of local communities within New Zealand—are saying we should take off the Max Bradford restraints, let them invest in new electricity generation, and give them the ability to supply that electricity directly to their customers. They want to know why they should be taken out of the retail loop, and I believe that is a legitimate question. I believe that the Bradford reforms did not correctly understand competition law or the way that competition works. Allowing local lines companies to invest in new electricity generation would indeed provide the major electricity generators with some much-needed competition. Apart from that, it simply makes sense. Why should we try to relay electricity all the way from Waitaki, say, to Whangarei, with the significant loss that occurs in the transmission process, when there is a lines company based in Whangarei that would love to get going and build a scheme to supply the people of Whangarei with electricity in their own backyard—with minimal loss on the way through.

In 2002 the people of this nation, by quite a significant majority, elected the Labour Party and the current Government to be our Government and to provide leadership for this nation. With the cancellation of Project Aqua, and given the critical issues I have outlined in my speech concerning not only the security of electricity supply but also the actual price of electricity and its importance in keeping the New Zealand economy going forward, we now look to the Government to provide some real leadership in this situation. If the Resource Management Act is holding things up, let us change it. If the Conservation Act is holding good schemes up, let us change it. If the Max Bradford package of so-called reforms to create competition within the electricity sector is not working correctly, let us change it. It will diminish the legacy of this Government in the eyes of future generations of New Zealanders and, in fact, of New Zealanders 3 years from now, should we—and I suggest today this is a very likely scenario—encounter situations where we have to close down our factories and switch off lights in our homes, which is beginning to happen. People will ask why on earth the Government did not act, and act more quickly.

But I want to go one step further than that, and make this point. We need those kinds of ideological and regulatory restraints to be removed, and removed now. It is now that alternative energy projects need to be planned, and it is now that decisions need to be made, because of the lead time it will take to construct the new electricity projects needed in New Zealand so that we can continue to grow our economy strongly, based on steady, reliable, cheap electricity, and can provide the living standards, going forward, that we all expect—and, indeed, should expect—from this Government or any other Government.

Hon PETE HODGSON (Minister of Energy): I want to thank the member who has just resumed his seat for what I thought was a really thoughtful contribution on what is an emerging issue of some consequence. There is no doubt that this country faces a challenge in the security of its electricity supply or, as the member more correctly puts it, its primary energy source of supply. That was created in part by the earlier rundown of Maui gas, and in part by the fact that for the past three decades this country has had an ability to rely on one of the largest gasfields in the country—and I am sorry to say, with the wisdom of hindsight, to squander that—and it is now augmented by the fact that Project Aqua will not go ahead.

As Minister of Energy for the past couple of years, I have lived with two possibilities—one that Project Aqua would proceed, and the other that it would not proceed. My position, the Government’s position—the position we held right through that time, until now, until we knew—was as follows. Firstly, if Project Aqua is to proceed, please let it proceed on time and not 5 years after the event. People need to know with certainty what new generation is coming on, and roughly in what new year. Secondly, if it is not to proceed, could we please know as soon as possible? Meridian’s somewhat surprising announcement yesterday has certainly achieved the second of those two aims.

We have the ability as a country to rearrange the generation projects that are on the drawing boards—to bring to the front-burner those projects that were on the back-burner until yesterday. I am sure that over the next 12 months—in fact, quite possibly over the next 24 hours—we will see various statements by various people as to what they intend to do. It is of critical importance to the economy that we have a reliable supply of electricity and a reliable supply of energy. It is critically important to any economy. The problem of not having a reliable supply has faced California, a number of South American countries, Western Australia, a number of European countries—including Germany, France, and Italy—North America, and Canada in recent months with a transmission outage, and so on. Modern economies require a modern, reliable, high-quality security of supply for energy, and for electricity in particular.

The member went on to say that this country needs cheap energy. I suggest to the member that cheap energy is a good idea, but it is not necessarily possible within the framework of security of supply. That is to say, it is not possible to continue to build electricity generation and not have the price go up, because the best sites and options have already been exploited. That is in the nature of the industry.

I do not think the member is suggesting that the taxpayer should subsidise the electricity user. No, he is shaking his head. I think we have to have fairly priced electricity. I do not think we should put up with anything that resembles overpricing of electricity, or even the possibility of overpricing, but I think we are starting to move beyond the idea of cheap electricity, which is something that existed in this country in earlier times—probably in the second half of last century.

In other words, we have seen an increase in the last 4 or 5 years of, from memory, a little under 10 percent real. I think we are likely to see an increase of that ilk over the next 10 years or so as we move from being the very lowest in the world to nearly the lowest. That would be my best guess. It may be that some states in Canada will come under us, that Queensland will come under us briefly as it moves into a relative oversupply situation, but cheap electricity over the long term is, I think, unlikely.

In respect of the Dobson scheme, I will make two brief comments to the member. First, it is an ecological area and the member needs to decide whether he thinks drowning ecological areas is a plausible idea. Secondly, the larger area that was offered up is itself not threatened. So there is no gain.

In respect of coal, I decided to front coal because I am sure every ACT party member, National Party member, and possibly New Zealand First Party member will want to know why we cannot be nice and bad and dig a whole lot of coal out of the ground and set fire to it. I say that we are burning a lot of coal in this country at the moment at Huntly. Thank goodness, because Maui has a shortfall. The Huntly power station is dual-fuelled, and I am grateful for the fact that we are able to burn coal when we need to, especially in wintertime.

Further, there are plans for more coal and electricity production all over the place. I have heard of them in Buller, Canterbury, Southland, at Marsden Point—in fact, I have heard of about three at Marsden Point—and in Huntly again. I say to members who will be asking why no new coal generation has been built that the answer lies in price. Generally speaking, South Island coal, which is a little cheaper than North Island coal, is none the less a little more expensive, with or without a carbon charge, than other alternatives. North Island coal, which we are using a little in extremis at the moment, is more expensive still.

It is true, and it needs to be said nice and openly, that some people disagree with the figures the Ministry of Economic Development has put out. Those people who have an interest in coal say that those figures are no good. I say: “Go and build the station.” We have very large amounts of coal in this country, but the truth of the matter is that renewables are cheaper. When the carbon charge comes on, that will put up the price of coal again by about 1.5c, but think about the flipside of that. The idea of having a carbon charge through the economy is that it augments renewables, but not only that, one can use carbon credits to augment them further.

Indeed, that has already happened. Later this week I will announce the results of 4 billion tonnes of carbon dioxide going out as carbon credits. In fact, I draw to the attention of the House that in the last Budget—for the first time—we had two currencies, one was the New Zealand dollar and one was carbon credits. Those 4 million carbon credits were used to bring on a lower carbon dioxide future—for example, through renewables—than we would otherwise have, using plants that would not otherwise have been built because they are not economic, because we have not internalised the externality of environmental damage. A great deal of generation will occur as a result of that project. I will announce the details later this week, but roughly speaking we are talking about one-third of Project Aqua from 4 million tonnes of carbon dioxide. What is more, we will do it again next year, because I hope to secure further tonnes of carbon dioxide in the form of carbon credits in the forthcoming Budget.

For those people who think that there is no energy resource in this country, I refer them again to New Zealand Energy Outlook to 2025, produced by the Ministry of Economic Development. It states that we have an awful lot of resource available—that is to say, not in conservation estates and in areas where one is unlikely to get the go-ahead. For example, in the hydro arena about 1,600 megawatts still remains to be developed, excluding Project Aqua, mostly in small hydro stations.

In the geothermal area, the estimate from the Ministry of Economic Development is 5,200 megawatts. We use only 8,000 now. Not all will go ahead—I acknowledge that this is potential. In the area of wind, a further 4,000 megawatts can go ahead, so this country can look forward to a renewable future without having to go to the new technologies of wave, tide, photovoltaics, and on it goes. There is no need to do that, at least no need yet. By the time those prices come down, this country will be able to augment its energy needs as necessary.

The other thing I want to talk about is electricity demand, and say in a fairly matter of fact way that California, which ran into very serious problems across two summers—with blackouts right across one of the most advanced pieces of civilisation on the planet—has, subsequent to that event, achieved all its gains by conservation, efficiency, and renewables. I am advised that not one non-renewable plant has been built in California since then. That is a really interesting prospect, because it means, as the leader of the Green Party said during question time, this country could improve its efficiency, we think, by about 20 percent. What is good about the inefficient use of energy? Is it remotely useful to waste the stuff? Regrettably, we do. Why is that? It is because of a lack of a regulatory framework, it has been cheap, and we have not paid attention. There are all sorts of reasons, so there are very significant gains to be made there.

That said, this country will always need more supply. Each year, for as long as I can foresee, there will need to be some supply. It is true that we currently think we need 150 megawatts. We should check the figures to see whether 150 megawatts a year is coming. In the 12 months ending this winter the new addition will be 220 megawatts. We need 150 megawatts, and 220 are coming. Before next winter we will need 300 megawatts and 350 will come. If we go out 4 years, we will need 600, and a total of 800—not including Aqua—will come, already consented, fuelled, and on the front-burner. We need not be concerned about the immediate future, but we should always think further out. If we think further out, this country has many resources. However, they will not be available cheaply.

In respect of the reforms by Max Bradford, I say to the member in relation to his comments that I have signalled, very clearly, that the threshold should come up. I have suggested five-fold. If the member wants to raise it ten-fold in the select committee, I am open to that. That would become a select committee decision. In respect of gas exploration, within a month this Government will answer the following question: should we, or should we not, further induce gas exploration? It is increasing quickly, but it probably needs to increase more.

This debate will no doubt degenerate before too long, so let me get under way. In relation to Project Aqua, Bill English said: “National cautiously supports Project Aqua.” Nick Smith said: “National opposes the special Project Aqua legislation.” Don Brash said: “No political party should be saying yes or no.” Those are the viewpoints of the National Party, none of which has come from Roger Sowry. I have pages of National Party quotations. I learn that the Opposition spokesperson on energy is Mr Sowry, but we do not have a quotation from him. We had hardly a question from him, and in case Mr Shirley decides to get to his feet later on, Mr Shirley said earlier that the Government’s “appalling” attempt at fast tracking the project was akin to its National Development Act Repeal Act. Believe it or not, Mr Shirley said yesterday that for political reasons shareholding Ministers had directed Meridian Energy to drop Project Aqua. What sort of a viewpoint does that member have that lasts for about 5 minutes? Not much at all! We are talking about a 180-degree turn.

I thank the member for introducing the debate to the House, and I thank Mr Speaker for allowing it. It is an important debate. The Government is aware that the energy future of this country needs to be paid close attention to. It is being paid close attention to, and I invite other members to take part in the debate—I hope without reaching for the calamity word, or the hoary old chestnuts that have dogged the debate so far. Hope does spring eternal.

Hon ROGER SOWRY (National): Why is it that the Minister of Energy seems to be the only person with knowledge of the sector who thinks that everything is OK? He is the only person who says that it is all right. This morning on Morning Report I heard him say: “Well, Project Aqua has fallen over, but listen, Sean, we’ve got lots of little bits that will come together, and if you add up all the little bits, then we’ll be OK.” No one in the sector believes him—not a person, not an energy company, not the Government’s own State-owned enterprises, not the private sector, not the gas industry, and not the coal industry. No one believes this Minister.

This Minister is showing no leadership. He has absolutely no plan for the future supply of electricity or energy for this country. This Minister is being dragged along by the select committee. The National members on the select committee are saying: “Let’s have a serious look at some of the limits that the bill imposes on lines companies around generation”, and Minister is saying: “Well, if you want to double it, quadruple it, so be it. Make a decision.” There are no decisions from this Minister. He never makes any decisions, at all. He is being dragged along on gas exploration. After 4 years he has realised that no one is doing anything, so he is out there saying: “We might do some drilling. I’ll make an announcement next week, and we can have another look at it.”

It is the same with the Resource Management Act. This project was scuttled because of the Government’s own refusal to address the Resource Management Act and the constraints that that piece of legislation puts on any major project. The Government and the Prime Minister were in the House today. She got up and said: “No, it wasn’t the Resource Management Act; it was a whole lot of other reasons.” I went back to my office, and what did I see? I saw that there was a Government announcement today at 3.12, and it states that the Government has appointed a Minister to review the Resource Management Act. At 2.12 today, in response to question No. 1, we were told that it was all OK and that the Resource Management Act was not a problem. One hour later the Government had appointed a Minister to review the Resource Management Act. Unfortunately, the Government is not that serious about it—it has appointed David Benson-Pope. So it is not taking this issue very seriously, at all.

Mr Benson-Pope has been put in charge of the Resource Management Act matters specifically—not the Minister in charge of the Resource Management Act, the Minister for the Environment. The Government has not used her. This is another case of the girls not getting the jobs. They are using Mr Benson-Pope. They are putting him in charge of a Resource Management Act review when, just an hour beforehand, the Prime Minister had told the House that it was all OK, and that there was no problem with the Resource Management Act, at all.

Also, I want to tell this Government that the problem with energy supply will not be just around Project Aqua. This country is also facing a huge problem with the transmission of electricity around the country. Transpower is facing huge problems as it goes about trying to upgrade the lines around the country, because of the Resource Management Act. Transpower has been to the Government, and has talked about it at the select committee. It is a major issue, and the Government has done nothing. Today must be a happy day for Mr Parker. He is so strong—as the MP for Otago, he has been resolute for the last 12 months not to be on any side on this issue. He has been neither for it nor against it. That might have seemed really smart, but I have to tell Mr Parker that our polling shows it was pretty stupid, and the member will see that coming next year. There is a train coming down Mr Parker’s track. He will stand in the middle of the track not knowing whether he is for or against it, and it will bowl him over.

This is a serious situation. Project Aqua was going to meet somewhere between 4 to 6 years of growth in electricity demand in this country. Without that the Minister needs to come off the fence urgently and decide where we will get the electricity that we need to grow. The Government needs to be upfront and honest with New Zealanders about its plan. Is it the Government’s plan to get rid of Comalco and feed that 15 percent extra into the economy? Is that the plan? The scuttlebutt around the Government departments is that that is the unwritten agenda coming from this Minister and, ironically, from the Minister for Industry and Regional Development, Jim Anderton. Will Mark Peck’s last act be to see the Comalco contract not signed and that company leave this country, just like he is seeing his schools closed in that part of the country? Is that the grand plan for the future, or is there a grand plan around extra development and extra supply? If there is, we have not seen it. We are not seeing it with exploration.

The Government has said no to the Dobson hydro scheme, and the Minister reaffirmed that today. No, it will not allow that hydro scheme to be built. So companies are saying: “Well, the Minister was agreeing this morning on radio, saying we are going to see more boutique hydro.” Perhaps the Dobson scheme is too big to be boutique. Are we allowed only little, wee uneconomic hydro schemes now? Is that what will supply us? What about coal? The Minister has been very anti-coal when he talks to people around the industry—very anti-coal. He is adamant that it is not the way forward. Well, I say to the House that National will not be imposing any carbon tax on coal. National will repeal any carbon tax that Labour imposes because we do not believe that placing New Zealand industry at a disadvantage with artificial taxes, such as the carbon tax, is the way forward to encourage a strong, growing economy.

Is it any wonder that companies do not take up the Minister’s challenge when he says: “Go and build a station.”? That is what he said about coal in the House today. He said: “Go and build a station and see how uneconomic it is.” Well, of course, no one will build a station. The Government has not even determined the level of the tax. We are told it is about 1.5c. How can anyone plan 20 years out? They cannot even plan 2 years out in the energy sector, because the Government is determined that we will not have coal and the Minister is determined that he will make it uneconomic. So we come back, then, to a Government that is simply sitting there without a plan. It is putting all its eggs in the wind basket. It is basically saying that we need a lot more windmills around the country, and that will solve the problem. But everyone we talk to in the energy sector— even the State-owned enterprise Meridian Energy, at the breakfast it hosted a few weeks ago—was at pains to say that wind was not the answer. They are engaged in it, but they are at pains to say that it does not, will not, and will never provide for all the growth in demand.

Hon Annette King: Who said that?

Hon ROGER SOWRY: Keith Turner said that. The Minister of Health should listen a bit. She did not come to the breakfast. It was for Wellington MPs, but she was obviously far too busy to attend a breakfast like that, and it would have been useful. In fact, I do not think there were any Labour members at the breakfast, which just shows how contemptuous they are of the whole energy sector. They do not do anything at all to plan for the growth we need if we are to build a strong economy and have a reliable, reasonably costed source of energy. This Minister has done nothing to provide that for this country.

JIM PETERS (NZ First): Just over a year ago New Zealand First, along with other parties in the House, wrote to every council, every chief executive officer of territorial and regional bodies, and several major institutions and businesses in New Zealand, seeking from them support for a review of the Resource Management Act. We in New Zealand First believed that after a decade of the Act, in law and in practice, the time had come to review it. The answer from the Government and its associated parties was: “No dice.”

I was therefore absolutely amazed when I picked up Mr Copeland’s press release, because last year, in committee and out of it, United Future stated unequivocally—and that was not the only occasion; I will mention another one later—that support was needed to reform and review many of the issues covered by the Resource Management Act. However, at that time we had no support from United Future. When I read the statement made by Mr Copeland that: “Not least, there is a very clear need for an urgent overhaul of the Resource Management Act.”, I was quite amazed. Last year, United Future members sat on the select committee and in this House and had the opportunity to be part of a renewal and rethinking of the Act for the next decade, but they did not take it.

Secondly, with regard to the Resource Management Act, I also found some problems with the recent comments made by the current Leader of the Opposition, Dr Don Brash, about the issue that has caused this debate—namely, the demise of Project Aqua and the associated power generation in the Waitaki valley, particularly the lower valley. When Dr Brash was down in that region on 10 March, he said he was very concerned that the Government was bypassing the normal consent process under the Resource Management Act. He said that a framework was needed so that competing demands for water could be evaluated, achieving a balance that would maximise the wealth of the country. That is what he said when he was down there at the beginning of this month. Over the last 1½ months I have seen from my friends on the right consistent swings in attitude to the Resource Management Act and Project Aqua. That statement made by National’s leader was but one.

The issue really is that the Resource Management Act should by now have been in the last stages of review. That Act was not the reason for the demise and fall over of the project. In fact, a month ago I was aware—and it has been mentioned in the statement made by Dr Turner—that the project, having recently completed geotechnical investigations, has provided information that requires design changes for the project, with an adverse impact on project economics. “Adverse” is the right word, because that is exactly what was being found down there about 6 weeks ago. But the real reason for the fall over is not that, and since about 10 past 3 yesterday there has been a rush of information from various people and parties about why the project fell over.

Let me state what the real reason is. People from the Aoraki Water Trust, and Mackenzie Country farmers, know the reason, and this one was volunteered yesterday to the Timaru Herald by Meridian Energy spokesperson, Alan Seay, who said: “The High Court action taken last week by the Aoraki Water Trust and the Timaru and the Mackenzie district councils was the catalyst for the canning of Project Aqua …”. Dr Turner said that the decisions made in the High Court last week, with regard to litigatory judgment sought by Meridian—and it was unsuccessful—highlighted the “significant uncertainty around the nature of water rights which could be battled on for years to come”. He said: “Either side of that case is likely to appeal the findings of the High Court and it could take years to resolve.” That is the reason, I was told in Otago last year, that this would go through two elections. The real issue that has caused the fall over, along with the other reasons enunciated by Dr Turner yesterday, is that the uncertainty of water-use rights on Lake Tekapo has produced a remarkable change of mind. One can understand that uncertainty. There are other reasons as well, all relating back to the economies, the timing, and the work already done.

I pause for a minute to pay tribute to that taxpayer-owned company, and to the fact that it has, in this case, exercised prudence and care, despite having spent millions and millions of dollars on investigative work on behalf of the New Zealand taxpayer and hydroelectricity consumer. Sometimes we in this House forget what that means. This project was not started yesterday; neither was it started last year. Meridian worked on this project and developed it over a long period. I commend, firstly, the board, which was headed by Dr Small, and, secondly, Dr Turner and his staff for the work they did. We have heard comments in recent weeks about the nature of Dr Turner’s work. We know that Dr Turner, having worked for ECNZ, and having found there was a need for certainty with regard to the central North Island supply—which had been made uncertain because of court decisions—made the very realistic and proper decision in 1990 to seek certainty for his company.

The next matter I would like to raise in the House, and which concerned the committee, my party, and me greatly, relates to the rights of existing consent holders. The bill we brought to the House last week properly reflected the need to recognise the rights of existing consent holders, and it set up a framework to examine and carefully consider the rights of all potential and present water users. In other words, the framework took into account the river. It took into account present users and potential future users. Contrary to what has been said about Mr Parker, that the committee—and particularly Mr Parker, the deputy chairperson of the committee—achieved, in relation to Project Aqua and its demands, a reasonable result for the people of the Waitaki catchment, that was not the impression I gained last week. It is not proper for it to be debated in the House, and my colleague Peter Brown will pick up on matters of energy, which were thought to be the matters for this debate. It is not proper for members in the House to maintain that the Resource Management Act was the answer. The Act applied in respect of the consents in Waitaki, and would have resulted in the priority right for Meridian Energy. That is the actual result. Whatever one has been told, that is what would have happened in practice, and that would have been particularly unfair to farmers in North Otago, and in the Mackenzie country and lower Waitaki valley, as well.

The approach we took on the matter—and I did not have time to say this last week so I am pleased to say now—is that the overall needs of the community in the Waitaki catchment area, particularly the farming community, and its ability and potential to reticulate and use water, was of prime concern to us. That is why New Zealand First, having worked alongside our friends from the National Party and ACT last year in relation to the potential form of the Act, took a stance along the middle line—that is, the framework, as enunciated, and the input of local authorities. It is very, very unfortunate that just a week later the prime catalyst for this whole operation—namely, Meridian Energy’s applications—is not being considered. However, 70 applications are still to be heard. Therefore, there is ample cause for this House to proceed with the bill.

Last of all, and most important, within the bill is the genesis of a potential change to the Resource Management Act. To that degree, although we commend a belated attempt by the Government to set up a junior minister in charge of the Resource Management Act, the power not being there is of concern.

JEANETTE FITZSIMONS (Co-Leader—Green): New Zealand’s largest braided river has had a reprieve, and so have the people of the Waitaki valley. The Waitaki is one of our grand rivers. When one goes down it in a boat, one senses its awesome power. It is home to a number of species of endangered wildlife. It has considerable wetlands of ecological value along its margins. It is an international fishery, virtually the only one in New Zealand that has all species of trout and salmon in the same river, and tourists come from the other side of the world to fish it.

But there are some whose whole mission in life is taming nature. It is time we accepted that whenever we want more we cannot just carve another slice off the finite environment. Project Aqua would have taken 73 percent of the water in that river completely out of the river channel into a canal. It would have reduced it to a shingle bed with a trickle. The same runoff going into the river, diluted with 73 percent less water, would have seriously deteriorated water quality until it was unfit for human contact. Worst of all, Aqua would have produced nothing in a very dry winter, because there would have been nothing left to go into the canal, leaving us even more exposed on security of supply. We cannot continue to put all our eggs in the same basket of hydro from the same catchments. Aqua would have encouraged the building of back-up coal-fired power stations for winter at considerably increased cost and discouraged the building of wind generation, which needs to be able to sell its product year round. Aqua would have produced nothing at all, not a single unit, before 2009, and possibly much later.

Renewable energy is getting a better press these days than it used to, and that is good. However, the next step is to understand that although water that falls from the sky is renewable, braided rivers are not. The Green Party has been publicising this latest assault on a spectacular river, and later today I will seek to table 111 copies of our leaflet on Project Aqua and the Waitaki River, so that other members in the House may understand why it was important to stop this project, and the raft of other opportunities we have instead. So we celebrate its withdrawal. We congratulate Meridian, which has always prided itself on being a renewable generator, on its determination to seek other sustainable options that will come onstream much faster than Aqua could have.

It is said that Aqua fell over because of the Resource Management Act, but the Act had been in place for years before Aqua was ever planned. It is quite clear that Meridian Energy thought it could get Aqua though the Resource Management Act, and that is partly because of a loophole. There was no water plan, and therefore there was no minimum flow set for the river. It is clear that the Waitaki bill, as amended by the Local Government and Environment Committee, with a high level independent authority setting an environmental base flow to protect the river ecology and the values of the community, would never have allocated 73 percent to Aqua—nor should it.

I pay tribute to the local community, which generated more than 6,000 submissions on the applications of Meridian Energy to take water. I think that response may also have warned Meridian that this was a project that just did not have community support. Fortunately, Meridian has reacted quickly and it has happened in time for New Zealand to make other plans. We are facing serious issues of balancing electricity supply and demand, and I put it that way very deliberately. For 25 years we have relied, to meet all possible shortfalls, on very cheap energy from the Maui gasfield. Because it was cheap it was squandered on wasteful, inefficient uses, in just 30 years, when actually it was large enough to have lasted us for 100. We also face the prospect of reduced rainfall in the current hydro catchments.

This decision has, of course, been welcomed by the coal industry and by its cheerleaders—United, National, and ACT—as a green light for coal. It is not. The world has got enough accessible coal to raise the carbon dioxide content of the atmosphere tenfold. Scientists tell us that if the carbon dioxide content of the atmosphere even doubles, we are in for serious climate change. We have to get to grips with the idea that just because the coal is there, does not mean it is safe to burn it. New Zealand has got enough coal deposits to generate power for generations—if we turn a blind eye to the huge environmental damage it causes. We should not. Clean coal is a myth. Sure, one can reduce the sulphur and reduce the particulates, and that has been true for some time, but one cannot reduce the carbon dioxide; one cannot reduce the climate-change effects of coal. Just replacing Maui gas with coal, without any growth or increase, would double the greenhouse emissions from electricity. Meeting our current electricity growth with coal makes our Kyoto Protocol commitment unachievable, it holds back new technology for decades, and it positions us in the 19th century, instead of the 21st. But it is not just the emissions; it is the mining damage, the acid mine drainage, the land subsidence, and all the other environmental effects that go with coal mining.

The Green Party will continue to challenge the “Black parties” on coal. We will challenge the “Big Coal parties” of United, ACT, and National. We will challenge the “Little Coal Party” of Labour, and the Green Party will be the “No-new-coal Party”. New Zealand can meet its needs without either coal or Aqua.

I want to refer back to what I said about challenging the balance between electricity supply and demand. We know that for 30 years there has been the science of “gap-ology”—the gap that is always supposed to be opening up between demand and supply, because demand keeps on growing. We have to address both sides of the equation. Remember it was only back in the 1970s we were told that if we did not have a nuclear power-station built by the late 1980s we would be freezing in the dark in the 1990s. Well, it did not happen. One needs only live where one is responsible for generating power to realise fast that investment in efficient lights, fridges, and computers is far, far cheaper than investment in more supply. That is also true for the country.

New Zealand is rich with opportunities to invest in energy efficiency. Many assessments show that 20 percent of our total electricity can be saved—cost-effectively. When I put that question to the Minister at question time he interpreted that as a 20 percent improvement in the uptake of energy efficiency. That is the National Energy Efficiency and Conservation Strategy target—but I have never supported it—that gives us only 2 percent a year. Instead we should aim at a 20 percent reduction in the energy per unit of gross domestic product.

The opportunities in commercial lighting and air conditioning are huge. Energy audits of businesses like sawmills regularly find that 30 percent savings are possible. How many motorways out in the country, miles from anywhere—no houses, no pedestrians, no cyclists—have full-scale lighting down both sides of the motorway for miles and miles? Yet motorcars have lights. Some end uses of electricity are simply not worth the environmental cost they cause. Then there are all the supply options, when we have dealt with demand—for example, direct solar use of heat in new buildings, direct use of solar heat for water heating. The Minister said that wind generation could provide another 4,000 megawatts. That is a huge proportion—about 50 percent of our current electricity. It is much faster than Aqua and it is cost-effective. The “wall of wood” coming towards us from the maturing pine forests contains within it enough waste, not usable by the forestry industry, which contains energy equivalent to half a Maui gasfield—80 petajoules a year. That is useful in industry for co-generation of heat and electricity.

The options are there. Cheap energy is a myth. Cheap energy is like a flat earth. Cheap energy we have had for decades, and because of cheap energy we have wasted it and we have built up a culture of energy inefficiency. It is not actually cheap at all. We have paid for it in sickness. We have paid for it in loss of our environment. We have paid for it in climate change. It is time we changed our pricing structures. It is time we changed our balance of supply and demand. It is time we went for a sustainable energy future, and, although I do not agree with the current Minister on everything, I congratulate him on being the first one New Zealand has ever had to try to tackle that challenge.

Hon KEN SHIRLEY (Deputy Leader—ACT): Meridian Energy’s announcement yesterday to can Project Aqua has certainly focused the attention of most New Zealanders and highlighted the looming energy crisis that this country is facing. Project Aqua represented the first significant investment in new generation since the Clyde Dam some 20 years ago. We know, and the experts remind us increasingly often, that our demand is expanding at over 2 percent per year. That is, as has been pointed out, not 150 megawatts; it is actually more like 200 to even 300 megawatts per year, and that is just to keep up with the expanding demand of a growing economy.

I believe that New Zealand has three comparative advantages over our global trading partners. The first is our temperate cool climate and abundant rainfall. That allows us to be a major, efficient agricultural producer, and the key factor is the relatively benign climate that we enjoy in our temperate region. The second key factor, though, and one often forgotten, is a reliable supply of internationally competitive energy—specifically, electricity. In terms of all our production, we often forget that we are not so much exporting milk-powder and wood product; there is often more energy, in the form of electricity, in those added-value finished products—which create the wealth for this country and the jobs for our people—than raw product. A particular example is a tonne of milk-power. To dry that takes more value in electricity than the value of the milk input. The Whirinaki mill in Napier is an example. We are actually exporting electricity there. There is more value in the electricity in that finished pulp than there is in the wood going into it.

We must continue to have an abundant, readily satisfactory supply of appropriately priced electricity. I am not talking necessarily about cheap electricity, but it must be cheap relative to our trading partners. That is what concerns me about the policies of this Government. It is going down a path whereby it is abandoning our key comparative advantages and it wants, for its own mantra, to drive up the price of electricity, so it can justify the winners that it sees in terms of wind generation and what it calls “renewables”.

Regarding wind generation, the point has already been made that the most efficient, state-of-the-art wind generator does 0.8 megawatts. To meet our expanding annual demand, we would need to build 200 to 300 such windmills every year, forever. What the Danish, who have become heavily dependent on wind generators, have found is that the wind sometimes does not blow. Denmark finds that 37 percent of the time there is no generation. At least water, although it can be unreliable, is seasonal and can be predicted. Wind is totally unpredictable, and although it may be part of our future mix, it is certainly not the answer this Government pretends it could be.

The other disturbing thing with this Government’s policy is its foolish adherence to the fundamentally flawed Kyoto Protocol. New Zealand is the only Southern Hemisphere country to have ratified with an obligation. Our key trading partners, Australia and the United States, have had the sense and presence of mind not to bind themselves into that fundamentally flawed process. But, oh no, this Minister sees it as a way of driving up the price. He would put a carbon tax on things like coal and fossil fuels so that his precious little windmills would then become more efficient. That is nuts. It is taxing the most efficient and lowest-cost option in favour of a higher cost option, and somehow pretending it is now a cheap option because one has taxed its competitors. That is “loony tune” economics, but they are the messages we are getting from this Government.

I am deeply alarmed with the process the select committee got into over Project Aqua, and the Resource Management Act amendment, which was the allocation model, because, on the one hand, the Government was at pains to say it was not rushing through this “think big”, national development - lookalike legislation specifically for Project Aqua. “Not at all”, it was saying. Yet, on the other hand, the Government said the legislation had to go through urgently, there was a very truncated select committee process, and during the second reading, just last week, Minister Marian Hobbs said: “It is essential that we pass this legislation as soon as possible.” My question to the House is: why is it not on the Order Paper for the urgency motion this Government will take later this afternoon? If it was true last week that the Government had to pass this legislation as soon as possible, why will it not include it in the urgency motion so it can go through its final stages this week? It makes one think that perhaps the Government knew that Project Aqua would have the plug pulled on it this week. It certainly raises that question. Could it be that the real concern of the Government was political, and that we are seeing all this incredible crashing of gears and U-turns as it screeches to a halt to try to pretend that everything will change? There has been a whole run of U-turns this past month.

Project Aqua was looming to be another Save Manapouri campaign. Those of us who are old enough will remember the Save Manapouri campaign and the political fallout from that. I predict that this Government saw it was heading for a Save Manapouri type of situation at next year’s election, so it directed those shareholding Ministers to give a direction for Meridian Energy to pack it all up and pull the can on that project, even though it had already spent $45 million or $50 million on all the scoping for it. One would have to think there has been political intervention to get that extraordinary result, because, unquestionably, we need the energy Project Aqua would have brought. It could have produced energy at about 4c a kilowatt hour, which is way below the average, and certainly would have added to New Zealand’s energy mix.

There have been other extraordinary policies from this Government. Mention has already been made in this debate of the Arnold River power scheme, where TrustPower wanted to upgrade an existing dam and generator from a small 5 megawatt station to a 65 megawatt station. It was not a big block of energy relative to Project Aqua, but it was certainly very significant, and sited on the West Coast within a rain-abundant area. It made sense. It would have made the West Coast self-sufficient in power. It would have obviated the need to put two large upgraded transmission lines into the West Coast, and there would have been additional power available for export to the national grid. But what did this Government do? It said it could not upgrade a small alpine valley, add to the dam size, and flood a small area, which was substantially broom and gorse, because the Department of Conservation would not approve. That is the nonsense of this Government.

This Government has no strategy for energy planning. It has nationalised our generators, instead of allowing market principles to operate, so that about 70 percent of our electricity is now in State regional monopolies, with Genesis Power, Mighty River Power, and Meridian Energy. Our national grid is totally nationalised and run by the Government. It is not the market causing the problem; it is actually a lack of market and too much Government. That is the problem. I predict that, as this energy crisis deepens, this Government will continue with its panic policies and we will end up in an incredible mess, which will be bad news for the New Zealand economy.

There was a foolish decision in recent months from the Minister of Energy. He threw $150 million of taxpayers’ money at a Whirinaki site for a single-cycle gas generator, in the hope that we never have to use it, and in the knowledge that if we ever do, it will be the most power we ever use. It is essentially a 747 jet engine that is bolted down on a stand and requires its own storage bunker of fuel at Napier wharf to supply it. It was a foolish decision, but the Minister did it for political reasons. What we are seeing across the board in the energy sector is an increasing politicisation and bad decisions coming out of that process.

BRIAN CONNELL (National—Rakaia): This is a project that was never going to fly. We have all heard the different price tags. As little as 6 months ago, it was reported that Project Aqua was to be built for about $0.9 billion, and now the last report has said there is a price tag of about $1.2 billion. When I quizzed Mr Turner about this at the select committee a couple of weeks ago, he confirmed that it would not be built for $1.2 billion. He had no confidence that it would be built for that price tag, at all. He did not say it, but my best guess is it would be more like $2 billion - plus. The project was not even tendered internationally, and the reasons are either that it could not be built for $1.2 billion and the Government knew it or—and this is probably more likely—that no international bidder would look at it for that type of money, in particular under the types of constraints that Meridian Energy would be putting them under through this Government. Much has been made of the fact that Project Aqua would provide cheap power. But I put it to the House that if the cost model was wrong, then the price model must also have been wrong, because the cost of capital must flow through into the price model. What that suggests to me is that, at $1.2 billion, this project was so marginally priced that, in the end, not only could it not be built for that figure but Meridian Energy just said “No way!”.

There is absolutely no doubt that this country needs more electricity generation. That has never been in doubt, and the National Party has never argued that Project Aqua was not worth its merits on the basis of generating more electricity. What we were concerned about was the way it was being cherry-picked by this Government to rush through legislation, because it would not address the real issue of the Resource Management Act. In my view, Project Aqua, notwithstanding the fact that it would have solved a short-term problem, was not going to be a long-term solution, and there is no doubt that it would have done damage to one of our last great rivers. One year in three there would still have been a crisis, given that that is when there would be dry years. Given that the project would have taken at least 5 years to build—if it ever got consent in the first place—demand would have already outgrown supply by then, and the question would be: “What do we do now—dam another river?”. Well, I for one was not keen on that, nor was the Government, despite the fact that there was a reasonable alternative on the West Coast.

The Minister took a call before and told us that Dobson was not a goer because it was a pristine environment. The reality is that what has been protected is not a pristine environment, but is gorse, scrub, and lupin. That is what the Minister is trying to protect, and that is why he would not even look at this area.

Hon Brian Donnelly: Wouldn’t even look at it.

BRIAN CONNELL: Would not even look at it—would not even go there. He did not even leave his Wellington office. He is just too petty to consider this even on a commercial basis. What are the alternatives? Wind? Mr Shirley has already addressed that issue and exposed some of the shortcomings. I would add that some of the technology is still to be proven. Gas? The supplies of gas are limited. Coal? It is really the only other alternative. The Minister knows that, which is why he tried to steer the conversation away from coal in the first instance.

New Zealand has over 1,000 years of coal reserves, and we will simply have to use them. Burning coal, using new technology, is doable. Yes, there are some emissions, but we can reduce those dramatically. If we want a secure, profitable, cohesive nation, then we must guarantee generation supply, and this is the only way we can do it. Better still, if we burn coal, we can site the constructions exactly where we need them, and we will not lose huge amounts of coal from transmission losses. For example, the Christchurch to West Coast railway line—and we have huge amounts of coal on the West Coast—is only 36 percent utilised. The infrastructure for getting coal where we need it is already in place in some places. Coal is affordable. If we backed out of the stupidity of the carbon tax that this Government imposed on us by rushing in to sign and ratify the Kyoto Protocol, then coal would be affordable and, more important, would guarantee a constant supply of generation.

Let us be clear. The real reason, besides the cost, that Project Aqua fell over is the Resource Management Act. Meridian Energy said in its own press release that one of the reasons it walked away from this project was uncertainty concerning resource consents—in particular, whether Meridian Energy could secure a consent, what the conditions of any consent might be, when the consent might be available, and how much water the consent would provide. Meridian Energy had absolutely no surety that the Resource Management Act would deliver this project for it. The Government has belatedly accepted that it has to do something about it. At least, I thought it would do something about it. It transpired that the Government put Mr Benson-Pope in charge of this. People will stop in their tracks when they hear that press release. When that goes over the sound waves of New Zealand, people will stop, think about it, and say: “Wow, electricity issues are solved now. Bring it on!”. I can tell members that this Government has suddenly lost all semblance of credibility.

The other person in the House who has been a big winner today, the person who is most relieved, is—wait for it—Mr Parker. He has showed absolutely no leadership whatsoever on this issue. In fact, people in the Waitaki valley can never find him to take on a leadership role, or to ask his opinion on this. They have actually coined a nickname for him. They call him the “Parker pimpernel”. That is what they call him. They search for him here, they search for him there, but they can never find that dastardly “Parker pimpernel”. That is what they are saying about him down there. I am relieved because he is in the House, and I know that he will get up, take a call, and tell us exactly what we need to do now in this country to guarantee a constant supply of electricity generation. If we believe his press releases, we know he is the one with all the answers. I cannot wait to see this guy get on his feet to take a call.

The other reason that Project Aqua fell over was the attitude that Meridian Energy displayed toward the local community. It really adopted a “bull in a china shop” mentality, and, in particular, its attitude towards local farmers was nothing less than appalling. Meridian Energy wanted all the water for itself. That should have told us something in the first place about how marginal this project was. Meridian Energy would have us believe that of the 73 percent of water that needed to be diverted down those canals, it needed at least 95 to 97 percent to make the project fly. The local farming community had news for Meridian Energy. By Order in Council the community protected 15 cumecs of water that were guaranteed for irrigation.

Meridian Energy thought it could thumb its nose at those folk, so the people got coordinated. They got organised. They got a legal opinion from one of the leading legal firms in the country, which said: “You guys have a very strong position.” Meridian Energy was essentially outmanoeuvred. In the end, Meridian Energy, because of the costs, the Resource Management Act, and its attitude to the local farming community around Kurow—the community said it had to be more reasonable—threw up its hands and said it was all too hard.

That we must secure a supply of energy is not in doubt. It is absolutely essential, but we need to plan for it long term. We need to use a strategic approach and look at the resources we have in abundance—which is coal. I cannot abide the fact that we will continue to dam rivers willy-nilly. We need to use a strategic approach, use our resources, and use the technologies available to us if the electricity crisis that we are now facing is to be avoided.

DAVID PARKER (Labour—Otago): Mr Connell has done it again. Whenever he or other National members get up to talk about this issue, do they deal with the substance of it? No, they attack me. I hold the electorate of Otago—having taken that formerly safe National seat at the last election—because the electorate knew that the Labour Party would treat it fairly, and so it does. We have had two contributions from National members today. First of all we had Roger Sowry, who, amongst his inventions, suggested that he first learnt today that the Government appointed David Benson-Pope responsible for a review of the Resource Management Act. All the rest of us in the House know that that was tabled on 26 February, when Mr Benson-Pope was appointed Minister, and his delegations announced. Sorry, Roger Sowry, wrong again!

Then we heard from Mr Connell again. Mr Connell last rose to attack me, soon after he had put out a press release claiming that I had not been to any of the meetings in the electorate that Ministers had called in relation to these Project Aqua issues. I actually chaired the meetings. Obviously, he was not there. Obviously, he did not read the newspapers either, because they reported that I chaired the meetings.

Then, on the one hand, we heard that Mr Connell thought the project had been pulled because the cost had, in his opinion, ballooned to $2 billion, yet 30 seconds later we heard him say that it was all because of Resource Management Act problems. What a load of cobblers! Project Aqua was a massive project. It was a $1.2 billion project, would have had a 60-kilometre canal—virtually all of which would have been in my electorate—and would have had six hydro stations about the size of the Beehive. The 60-kilometre canal would have been as wide as this building, including the batter. Up to 70 percent of the Waitaki River would have been put through the canal, and 32 million cubic metres of earth would have had to be moved. This was a big project.

John Key: So?

DAVID PARKER: So Resource Management Act principles ought to be applied to decisions like this. I am absolutely proud of the position the Government has taken. The Prime Minister said it well yesterday. She said we are not in an era when Governments legislate for specific projects. We do not “think big” them. Who would? Despite its claims to the contrary recently, National would. Last year Gerry Brownlee said the Resource Management Act ought to be truncated so that there were no delays before Project Aqua went ahead. So did Gerry Eckhoff from ACT.

John Key: That’s true.

DAVID PARKER: Mr Key says that that is quite true. So they do now acknowledge that, despite the seriousness of this project, they would have truncated proper Resource Management Act processes and let the interests of my electorate just be overridden in favour of the national interest. I am proud my Government did not do that.

I pay tribute to the members of the community who have participated in processes to date. Small communities facing applications like this are always challenged. There is an element of unfairness in that, which is in the nature of any big decision. I take my hat off to those who stood up and shouldered those responsibilities on behalf of their community. Many in my electorate are pleased that Project Aqua is off. Some are disappointed, but the vast majority of people—be they for or against it—are satisfied that the Government listened to their concerns and did not override due process. They are grateful that the Government did not “think big” this project—as National at times proposed it should.

In terms of the decision to call Project Aqua off, the Otago Daily Times summed it up pretty well today when it stated that, basically, Meridian’s hand has been forced by growing uncertainty about the project and increasing costs—costs that Meridian, understandably, did not foresee when it began its investigations. Then it went to state something that I would like to record: “To give Meridian its due, it has usually played with a straight bat.” That is true, and I agree with Mr Jim Peters’ comments earlier that Meridian has behaved honourably throughout this, and that it has complied with its obligations at law.

I also say that I defend and applaud its decision to take a decision now to proceed no further. It has spent $45 million on the project, in addition to some of the land acquisition costs—it will largely get the land acquisition costs back when it sells the land, if it does. The $45 million spent on planning the project and engineering advice etc. is equivalent to 3 percent, at most, of the project cost. That 3 percent was wisely spent, and I ask listeners and members to consider that, compared with the last time a Government approached a big project, which was the Clyde Dam. Hundreds of millions of dollars of taxpayers’ money was wasted because there was inadequate planning at the time, in addition to years of delay in the commissioning of the dam, which had consequences in terms of the availability of electricity from the project.

The Minister of Energy is being totally upfront when he says that the most important thing to him, in terms of energy planning, was getting a decision early rather than late, so that alternatives could be pursued in the event that Project Aqua did not proceed. The worst outcome here would have been 2 further years of planning for Project Aqua, and then Meridian deciding not to proceed with it because of the costs at that stage. Had that happened, we would have lost 2 years in terms of the creation of other sources of generating capacity.

I want to say something about energy generally in New Zealand. When the Hon Pete Hodgson took over this portfolio about 4 years ago, we had come through Max Bradford’s so-called reforms. Since then, of course, the Government has had to intervene through the regulation of natural monopolies—the lines companies—and we have also had to intervene in terms of reserve capacity. We have also done some central planning of likely demand for electricity. There is a very good document that is available to people on the web, at www.med.govt.nz, under the energy section, which looks at the New Zealand energy outlook to 2025.

Reading that document dispels a few myths. Firstly, we are not yet at crisis point for electricity generation. Secondly, there are a number of alternatives. Thirdly, coal is one of those alternatives that is being considered but, at the moment, it is more expensive. No one is prevented in New Zealand from building a coal-fired power station. A company can apply for and get a resource consent, if it thinks it can make money from doing so. Companies do not think they can make money from doing so, as evidenced by the fact that there have been no applications for such stations. It is not the fault of the Resource Management Act that Project Aqua, or other coal stations, have not proceeded.

That is evidenced by some of the large consents that have been granted under the Resource Management Act. For example, there are gas plants at Stratford and Otahuhu C that have been consented under the Resource Management Act. Various smaller hydro stations have been consented in my own electorate. There is also the wind farm near Palmerston North that has recently been consented. There is the Tauranga bridge and the pipeline. So it is not the Resource Management Act that has got in the way of Project Aqua, it is the underlying economics and risks—as Meridian has said—in the upper catchment, concerning whether other people can get some of the water that is already going through those dams, which would threaten the viability not only of those dams, according to Meridian, but also of Project Aqua. Those are uncertainties that were not created by the legislation recently promoted to try to deal with planning deficiencies in the Waitaki, but were consequences of the underlying law.

In terms of the question that has been asked of me as to whether we will see any large-scale hydro in the future, I think the jury is out on that. One of the things that became evident from Project Aqua was that there is change in the relative value of water for hydro, compared with other uses like irrigation. For the first time in New Zealand, we have a widespread water shortage. Produce prices have pushed up land prices. The economics of irrigation, in comparison, have improved. Technologies have changed through the likes of K Line irrigation, making irrigation of rolling country now permitted. At the same time, we have seen a narrowing of the gap between hydro and other sources of electricity like wind, which has meant that there are choices for renewables that were not there 10 years ago.

I am absolutely confident that the Government has the future energy needs of our country under control. I am sure that the Minister is dealing competently with managing demand-side issues so that we do not waste our energy, as evidenced by the fact that we have a target over the next decade of increasing energy efficiency by 20 percent. I am confident that we will not have blackouts or brownouts. I am confident that this Government has properly protected the interests of my electorate against the calls for “think bigging” Project Aqua that were made by other parties.

The debate having concluded, the motion lapsed.

Bills

Income Tax Bill

Instruction to Committee

Hon DAVID CUNLIFFE (Associate Minister of Revenue): I seek leave for the Committee stage of the Income Tax Bill to be a single debate on all the provisions of the bill, and for the preliminary provisions, parts, and schedules to be put as one question at the conclusion of the 3-hour debate.

The ASSISTANT SPEAKER (Hon Clem Simich): Is there any objection to that course being followed? There appears to be none.

In Committee

Clauses A1 and A2, Parts A to Y, and Schedules 1 to 23

JOHN KEY (National—Helensville): I rise on behalf of the National Party to address the Income Tax Bill, which National is supporting. National started the genesis of this work back when it was in Government in the 1990-99 period. I doubt I will be the only speaker to mention the sheer size of this legislation, which is thousands—

Hon Member: Over 2,000.

JOHN KEY: —over 2,000 pages—the largest bill introduced to the House. It is an absolutely enormous bill, and an enormous amount of work has gone into it. I want to pay tribute to the advisers who have been helping the Finance and Expenditure Committee, and the officials who have worked very hard on it. The simple idea behind the bill, of course, is a rewrite of the Income Tax Act 1994 and to put into simple language—if there is such a thing—the tax code that operates in New Zealand and the basis under which New Zealand taxpayers will be required to adhere to tax law.

There are some interesting elements of the bill to which I want to make reference, but I want to make one very simple comment. The size of the bill, and the huge number of clauses contained within it, in some part are of the Labour Government’s own making. I say that because the top personal tax rate was increased when the Labour Government came into office in 1999 from 33c in the dollar—a fair, reasonable level of taxation, if I do say so myself—to a 39c rate. Why was the top personal rate of taxation increased? It was not because the Crown accounts required it. Last year alone, the operating balance excluding revaluations and accounting changes was $5.6 billion; this is truly a Government awash with cash. It was simply because there was a degree of envy—the Labour Government felt it was inappropriate that the entrepreneurs of New Zealand should enjoy such a lower level of taxation, so it increased the top personal tax rate.

Lo and behold, once the Minister had scuttled off to Cabinet with that wonderful idea of increasing the top rate of personal taxation, he was then besieged in his office with mountains of paper on how to address that change, and we now see it reflected in the Income Tax Bill. There are literally hundreds of clauses that have to reflect all the complexities added to our system by an increase in the top personal tax rate. All sorts of areas will be addressed during the debate this evening, no doubt, by numerous speakers on the concept of what impact that increase will have—for instance, on the split-rate fringe benefit tax and the like.

I want to draw a reference for the Committee on one point, which is that in the 1999 Labour credit card, one of the claims made by the Labour Government was that by increasing the top rate of personal taxation, only 5 percent of taxpayers would be affected. Well, we know that that has proved to be incorrect. Figures now released by the Inland Revenue Department show quite clearly that one in five full-time taxpayers now pay the top rate of personal taxation, and bracket creep—or fiscal drag as it is otherwise known; the situation where inflation drags people into a higher level of taxation—has caught out so many New Zealanders who maybe earlier on had not thought they would be affected by it.

Clayton Cosgrove: Where is the member on this bill?

JOHN KEY: I will come to that in a moment, but this is a long and drawn-out debate so let us enjoy it while we are in the early stages. That is quite an amazing statistic—that one in five full-time taxpayers will now be caught by the increase in the top rate of personal taxation.

This is a very wide-ranging debate, and I want to spend some time in talking about tax rates in New Zealand. They are applicable, because Part B of schedule 1 talks about the basic tax rate. Very interestingly, on Friday that wonderful international accountancy firm KPMG listed its world tax survey. It made very interesting reading for those who like to look at that type of data. The first thing I noted from that survey was that at the time the National Government left office in 1999, the average company tax rate paid in the OECD—that is right, by the top 30 rich nations of the world—was around 35 percent. Former treasurers in that National Government like Bill Birch and Bill English can look back and reflect on what a wonderful position they left New Zealand corporations in, because the company tax rate at that time was 33c in the dollar. We can compare that with the average company tax rate in the OECD, as shown in the KPMG survey, of 35 percent.

What was released on Friday in that report was very interesting. The average rate of company taxation in the OECD now is 29.96 percent—that is, it is under 30 percent. What is the average rate of company tax in New Zealand? It is still 33 percent. So under a National-led Government, business had a competitive advantage with other countries in the OECD; under a Labour-led Government, business is at a disadvantage to other OECD countries. It is a pretty simple message, and it is one of the reasons Don Brash boldly went out and told the business community a few weeks ago that we would lower the rate of company taxation when we regained the Treasury benches in 2005. That statement was greeted with such a warm response from companies because they know that company tax is a withholding tax, they know that company tax pays a significant role in encouraging investment in New Zealand, and they know that company tax is a cost on a business.

Secondly, when we look at that rate of company taxation we note a very interesting fact that 87 percent of all companies in New Zealand are small businesses. When those businesses are built, the building cannot be done with easy equity issuing on the stock market. They rely on their own capital and their own hard work, and on the reinvestment of profits that are earned in the business. So to allow New Zealanders to keep more of that income in their businesses, and to grow their businesses, we are allowing them to take an entrepreneurial spirit—to take a progressive approach to building a brighter and fresher New Zealand. I, for one, am quite happy to declare that I would like to see the company rate of taxation in New Zealand even lower than 30c in the dollar.

Darren Hughes: What rate? Give us a number.

JOHN KEY: The lower the better, I tell the member. That is what I would like to see for the rate of company taxation in New Zealand; the lower the better. Let us look at Ireland, which boldly took the step of reducing the rate of company tax to 12.5 percent, and what have we seen? The Irish miracle—the Gaelic miracle! It has been unbelievable. I suggest that in one of Mr Hughes’ long recesses he wanders off to Dublin and has a look at the economic miracle that has taken place through that great and bold step. If New Zealand could look at doing that, I suggest that the New Zealand business community would be so much better off, so I want to make particular reference to it.

I further want to make reference to the Minister of Finance’s comment when National declared that it would lower company taxes to 30c in the dollar: he was very scathing. I was quite surprised. Rather than welcome that as a wonderful and progressive idea for building a better New Zealand, he told the people of New Zealand that it would simply deliver all the benefits off shore. Of course, he was talking about foreign ownership of New Zealand companies. Quite surprisingly, when I sent him a couple of parliamentary questions that asked why he thought all the $600 million that would be released into the economy by the reduction of the level of company taxation from 33c to 30c in the dollar would take place off shore, he came back to me and told me that less than half would go off shore—and that it is not clear that even half would go off shore, because so many foreign owners of businesses in New Zealand want to retain that income in their businesses, and want to grow even stronger and better businesses in New Zealand.

So I think that that is quite a spurious argument. It really just goes on to tell us that the general fundamental belief under a Labour-led administration is that higher taxes are better—they allow more redistribution—and there is no progressive agenda along the line.

The next point I make is in relation to company taxation, and why company taxation rates should be coming down. I know that Mr Hughes is a bit confused about the fact that taxes actually can go down—

Darren Hughes: What number? Give us a number.

JOHN KEY: When one grows up in an environment where taxes only go up, of course one will think they can only go up. But we on this side of the Chamber have seen people who have taken the bold step of believing that any form of taxation can be lowered. I know that it has not actually happened on that side of the Chamber, but it has certainly happened on this side. We believe in, and have demonstrated, a lowering of the tax rate. Sixty percent of all New Zealand businesses earn under $38,000, and therefore are paying a higher level of taxation by paying the company rate than they would pay if they were taxed on a PAYE basis—and they themselves are over-taxed. That is another very good reason why the rate of company taxation should be lowered in New Zealand.

When we look across the specifics of this bill, and look at the general impact of taxation on New Zealand, we see that a very interesting question is raised about whether New Zealanders are over-taxed. I do not think it takes a helluva long time to work out the answer to that, when we look at the size of the surpluses the Government is running. Why is the Government running such significantly large surpluses?

Hon David Carter: Greed.

JOHN KEY: That is right.

Hon RICHARD PREBBLE (Leader—ACT): The ACT party has voted against the Income Tax Bill we are now debating in its Committee stage, and let me give members 2,307 reasons why the ACT party is opposed to this tax bill. The first is the number of pages of tax law that we are about to implement—2,307 pages of law are required for this Government to collect income tax. Why do we need so much law? The reason is quite simple: the Government is now taking 40 percent of everything produced in this country. The citizens of New Zealand would never voluntarily hand over 40 percent of everything earned, so we need 2,307 pages of what really are police State measures in order to be able—

Clayton Cosgrove: Oh!

Hon RICHARD PREBBLE: The member says “Oh!”. Under this bill the Inland Revenue Department can enter private property; it does not need any sort of permit from the courts. It can open up a person’s records. These most certainly are police State measures. The ACT party is opposed to the Government taking that amount of tax.

But let me give reason No. 2,308, and it can be found on page 2026, which states: “The basic rate of income tax for the taxable income of a Maori authority is 19.5 cents for every $1 of that taxable income.” The rate of tax for a non-Māori company is 33c, so not only do we have two laws in New Zealand but we have two different tax rates, depending on race.

Hon Harry Duynhoven: The rate of tax and the average rate of tax.

Hon RICHARD PREBBLE: I ask the member who is interjecting to run in New Plymouth on the basis that Māori ought to pay a lower tax rate than the general population, and see what happens to his majority in the next election.

Hon Harry Duynhoven: Mr Prebble, you know that is a fallacy.

The CHAIRPERSON (Ann Hartley): If the member speaks across the cross benches, it is very hard for the member to hear.

Hon RICHARD PREBBLE: I say to Mr Duynhoven that he should read page 2026, and he will see that I have quoted the bill accurately to him.

But if he would like to turn to page 2029, he would see the next reason that we should vote against that. It says—and I will read it to him given that he says this issue is a fallacy—that the rate of tax for every dollar of taxable income, on so much of the taxable income as is more than $60,000 a year, is 39c. That is the so-called “envy tax”, and is the way that this Government has increased income tax that it said would not be increased. Labour promised: “No rise in income tax for the 95 per cent of taxpayers earning under $60,000 a year.” Twenty percent of all full-time workers are now paying the 39c tax rate. The “envy tax” was never needed. We have had a surplus every year, yet the Government tells us that it is not its priority to cut income tax, and, unfortunately, so does National.

I say to this Committee that that rate of income tax should be cut and should be cut right now. One of the reasons for that is it is the investment rate; it is the rate paid by people who are actually investing, and creating the jobs and the growth that the two major parties say they want. The jobs and growth come from people investing, yet this Government hits those people with a 39c tax rate.

The ACT party makes no apology for pointing out that people on $60,000 a year are not rich; they are on a middle income. We also point out, as Don Brash did before he was an MP, that a couple on $100,000 a year, with children, pay 100 times more in tax than a couple on $25,000 a year who qualify for family support. Who thinks that is fair? Obviously, the Labour Party does.

CRAIG McNAIR (NZ First): There were some submissions that the Finance and Expenditure Committee felt would enhance the Income Tax Bill. I will share with the Committee just one or two of the submissions that were very important to me, and that I am very happy to see accepted and taken on board.

I will share just one submission with the Committee this evening, and that was the one from Business New Zealand, PricewaterhouseCoopers, the Institute of Chartered Accountants of New Zealand, and the New Zealand Law Society. They submitted that a transitional provision should indicate that the provisions of the rewritten Act must be interpreted in the light of the corresponding provisions of the Income Tax Act 1994 and associated judicial interpretation, other than intended policy changes. They submitted that the transitional provision should also make clear that the rewritten Act is not intended to change the meaning and effect of the Income Tax Act 1994.

The officials agreed that the bill should contain transitional provisions and indicate that no change in the effect of the law is intended. Where the meaning of a provision in the rewritten Act is unclear or gives rise to absurdity, the old law is to be used as an interpretive guide to ensure that no unintended changes in law occur. Transitional provisions should not apply to notified changes in law arising in the rewrite, nor to subsequent amendments to provisions in the rewritten Act. The officials agreed with this approach, as it ensures that the plain words of the rewritten legislation have full effect from the commencement of the new Act. In conjunction with the Government wanting to promote retrospective legislation to correct unintended changes, these further transitional provisions will provide the level of protection sought by practitioners. I believe that was a critical provision in order to give certainty, and that the old law should be an interpretive guide in some way, shape, or form.

In speaking in the Committee stage of the Income Tax Bill, I will take a moment to mention, in relation to the last couple of speeches, the amount of time we have sat in the Chamber listening to different parties—namely, the National Party and the ACT party—say that income and company tax cuts are basically the answer to all of our problems in this country. I say to those members, John Key and Richard Prebble, that I believe that their way of thinking is just a little bit lazy. As a nation we have exports of roughly only US$3,600 per person. Mr Key mentioned how much of a success story Ireland is, but that country has an export strategy as well, and that is something we do not have and we need. So we need to look at Ireland’s US$19,000 per man, woman, and child and at Singapore’s US$34,000, and I say that because we need to have tax incentives for exporters, rather than always thinking that the answer to our problems is tax cuts for the rich. I firmly believe that.

I have to ask myself, after hearing John Key and Richard Prebble, whether the National Party and the ACT party have a vision.

Clayton Cosgrove: No.

CRAIG McNAIR: Members of the Government say they do not have a vision. I believe that the only vision the National Party and the ACT party have—mainly the National Party, because this is what its leader said once—is to have 10 million people living here in New Zealand, and to sell the rest of our State-owned assets, the last that we have. One asset that I am talking about is Kiwibank. New Zealand First has a bigger vision for New Zealand than that. The National Party needs to think about tax incentives for exporters, rather than just chopping the highest tax rate from 39c to 33c—and it does not even really want to do that. We want to encourage this Parliament and this Government to think outside the box. Instead of just thinking about tax cuts for the rich, let us give a 20 percent tax rate on new export net profit.

With regard to National’s thoughts on tax cuts for the rich and not helping the Kiwi battler, I will read a question that National’s associate spokesperson on finance asked the Minister of Finance. He said to Dr Cullen, in respect of Kiwibank: “… why does he not just admit that the people most happy with New Zealand Kiwibank are the other banks in the New Zealand system, which have managed to give that bank the poorest, most unprofitable, worst accounts?”. I agree with Dr Cullen, when he said: “That was certainly a very revealing question. New Zealanders who do not have large wealth and large incomes—according to the National Party’s deputy finance spokesperson—are people not worth having in one’s business.” I say that New Zealand First members have a better vision for the New Zealand Kiwi battler—not the Kiwi battler with three Jaguars in the garage, but the Kiwi battler who is earning $50,000 a year—and we have a better vision for this country as far as our tax system and our tax laws are concerned.

In closing, I say that New Zealand First does support this bill. One would have to question whether, with more than 2,000 pages, the bill is simplifying the legislation, but it is; tax legislation, obviously, is so complicated. New Zealand First supports the bill.

JOHN KEY (National—Helensville): I want to go back to the point that Richard Prebble first raised in his speech. It was the very interesting issue about the special rate of taxation applied to Māori trusts, at 19.5 percent. We live in a world where the Government wants us to believe that there is one rule for everyone. Well, I have been flicking through all 2,307 pages of the bill, looking for the rate of taxation for another sort of New Zealand business, at 19.5 percent. I have looked at clause after clause and I cannot find it, because the rate of taxation for a company in New Zealand is 33 percent.

When someone sets up a company in New Zealand, the Inland Revenue Department does not ask: “What do you think your average income will be?”. The department does not come to someone and ask: “Do you think you will be earning less than $38,000 a year, and therefore your income might be less?”. The department does not come to someone who sets up a personal trust, and ask: “Excuse me, Mr Key, do you think you will be earning less than $38,000 a year in your trust, and therefore the rate will be a different rate from 33 percent?”. No, the Inland Revenue Department taxes a company, whether it is small or large, a trust, whether it is small or large, and a partnership, at 33 percent. Readers of the bill may be just a little bit shocked at why there is a special, unique rate of taxation for Māori trusts, at 19.5 percent, and that is a very good question. I ask Mr Cosgrove why that is the case.

Clayton Cosgrove: You’re telling a story.

JOHN KEY: Yes, I am telling a story and I will be turning the pages, as well. I will tell members the reason. It is because it is deemed that the end-users of those trusts are unlikely to have income greater than $38,000 a year. Therefore, it is deemed that in the hands of the receipt holders it is pretty likely that their rate of taxation will be 19.5 percent. Rather than make them go through the hassle of having company tax withheld at 33 percent, and therefore having to make a claim on the Inland Revenue Department at 19.5 percent and receive the benefit, we may as well just get on with it and tax them at 19.5 percent in the first place. That sounds pretty logical to me. It is logical if it is a Māori trust. It is OK to assume that Māori trusts will earn less than $38,000 a year and therefore be taxed at 19.5 percent. But if I wander down to the Inland Revenue Department, in my home seat of Helensville, and say: “Can I please be taxed at 19.5 percent?”, they will laugh. They will show me the door. They will say: “Mr Key, yours is not a Māori trust. You can’t have a special rate of taxation. We’re not in the process of dishing out special rates of taxation to anybody who wanders in the door. If you were a Māori trust, then you could be taxed at 19.5 percent.”

When the Coordinating Minister, Race Relations, the Hon Trevor Mallard, does his review, I wonder whether this special rate of taxation will be on his radar screen. I predict that when this is exposed for what it is, as it truly will be—for the unusual position, shall we put it that way, compared to other trusts in the country, including other community trusts—I suspect that a very sensitive Labour Government will change the position. That is my prediction. If we start setting rates of taxation on what we believe the final end-user to be—incorporations and trusts—that is fine. I do not necessarily disagree that that cuts down on the paper work, the administration, and the hassle, but I say let us have it for everyone. Let us have that for the John Key family trust, if he thinks that that rate of taxation will be lower than 19.5 percent. [Interruption] I am happy to pay my fair share of taxation. But if my earnings will be less than $38,000, then I welcome the opportunity to tax myself at 19.5 percent.

Jill Pettis: One ornament on your mantelpiece would keep us in clover.

JOHN KEY: I am sorry; I cannot hear all the screeching that is coming from the other side of the Chamber. There is a whole lot of noise going on. What did Mrs Pettis say?

Jill Pettis: I have seen a picture of your mantelpiece in the paper.

JOHN KEY: I am sorry but the Inland Revenue Department does not tax mantelpieces. That is not what it looks at when it is taxing things.

CLAYTON COSGROVE (Labour—Waimakariri): That was an astounding speech from the member. I thought the member was better than that. I think that, in National Party terms, he is the moderate branch of the National Party. But we saw in that speech that his boss has pumped him up and punched him full of research notes, and he has made a speech that he does not really agree with in his heart of hearts. They pumped him up, punched him out there as the Opposition associate spokesperson on finance, and told him to run the race line, which he did. I am a bit disappointed because I think that bloke is not the worst National Party member in the Chamber. I think there are a helluva lot who are worse than him, but he disappoints me. If he does not know why the Inland Revenue Department would not accept a tax return in which he claimed 19.5 percent on his income alone, then he should not be Opposition associate spokesperson on finance. I think the Lexus, the BMW, and the mansion in Helensville, or wherever it is, would put paid to that.

Let me dispel the usual National Party line. Its members tried to raise this argument in the debate on the Taxation (Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Act, when they talked about why it is that Māori authorities are taxed at 19.5 percent. They ran an argument, as did Mr Prebble, that this was outrageous, that it should be changed, and that they would change it. Why has the National Party not changed it since this scheme of arrangement has been in place since the 1950s? How many National Governments have been in place since the 1950s? There is silence. Who was in power during most of that period? The National Party. There is silence again.

I will tell members why that scheme of arrangement was put in place in the 1950s and endorsed by National Government after National Government. It is because the assets of a Māori authority, unlike a private or public company, are communally owned. Māori authorities are restricted in terms of their activities. They cannot sell those assets. They are restricted in what they can do with them. Also, 90 percent of the recipients, as Mr Key pointed out, are on the lowest rate of tax. But the National Party would have the listeners in this country believe that any recipients of dividends from a Māori authority pay only 19.5 percent, and if they earn extra income and go up into the top bracket, they pay only 19.5 percent, whereas the rest of us have to pay a different tax rate. That is not true. If they get a dividend from a Māori authority they pay 19.5 percent, and if they earn extra income and move to a higher tax bracket, then, like any other Kiwi, white, yellow, black, or brown, they pay the same rate of tax at the end-of-year wash-up—the same as everybody else. That is the truth for the benefit of Mr Prebble. That is the truth for the benefit of the National Party. I make this point again: it has been around since the 1950s, because it acknowledges the special arrangement, the communally owned and restricted arrangement, that Māori authorities have over their assets. So that put paid to that little bit of spice from the National Party corner.

As chairman of the Finance and Expenditure Committee, I want to pay tribute to committee members. I see that Dr Lockwood Smith is in the Chamber. He was on the committee throughout this tax bill, which, I believe, is the biggest bill to come before this Parliament, if not Parliaments in the Commonwealth. It seeks to do something that is relatively logical in taxpayer terms—that is, to simplify. I acknowledge Mr Prebble’s point, though. It is a bit ironic that we get 2,000 or 3,000 worth of pages of tax law that is designed to simplify, but it is. It does not rewrite tax law in terms of new policy. It does not attempt to promote any new policy areas. It attempts to simplify and make things easier for taxpayers.

I want to quote from that venerable tax commentator from PricewaterhouseCoopers, tax partner John Shewan. He likens the process to repiling a 100-year-old house. He said: “Sooner or later the old framework has to be rebuilt as it just doesn’t cope with current circumstances. That is the position the old Income Tax Act had got to. While the new Act will be a shock to fully depreciated tax advisers, it is a necessary exercise.” I think it is a necessary exercise. The process predates this Government. The process, I believe, to rewrite these tax laws, to make them simpler, and to give some certainty was started in 1994. The committee’s recommendation that the bill come into force on 1 April 2005 instead of 1 April 2004 was in order to give some transition and certainty.

Dr the Hon LOCKWOOD SMITH (National—Rodney): The Committee stage of this bill is very, very important for New Zealand. I am not 100 percent sure people will have gathered that yet. This bill is a complete rewrite of our Income Tax Act; some 2,000 pages of it. This particular bill deals principally with Parts C, D, and E of our Income Tax Act. Part C of the Income Tax Act sets out what income is, Part D of the Income Tax Act spells out the deductions that are allowed from income prior to payment of tax, and Part E of the Income Tax Act spells out the rules in respect of timing of income, because, obviously, decisions have to be made as to whether income relates to this year, next year, last year, or whatever. So this is hugely important.

This is a huge, fundamental rewrite of our Income Tax Act, and there have been many changes. I guess that hundreds of thousands of words have been changed in our Income Tax Act. If any of those changed words produce a different outcome in a court of law, our taxpayers may be caught out. This rewrite of the Income Tax Act started under the previous National Government, but Parts C, D, and E, which are fundamental parts dealing with income deductions and timing, have been dealt with by this Labour-led Government. If the thousands upon thousands of changed words change the Act’s meaning, then there are serious consequences for New Zealand taxpayers.

The Finance and Expenditure Committee heard from major submitters, including the Institute of Chartered Accountants and the Law Society. The committee heard that both those major organisations were deeply concerned about unintended changes to our law. They explained it this way. Let me try to make sure that the Committee understands what I am getting at. Let us say a taxpayer relies on this new bill when it becomes an Act. If that produces a different result from the previous Act that this replaces and the Government enacts retrospective legislation to change it back—because the Government has said that it does not intend to change any of the meaning—what happens to that taxpayer? Will the taxpayer face penalties? Will the taxpayer face use-of-money interest requirements? What will happen to the taxpayer if he or she relies on this new Act, as passed by this Parliament, with all the hundreds of thousands of word changes in it, and in fact it produces a different outcome from that which the old Act would have produced? The Government, I understand, has made a commitment that it will act retrospectively to change it back. But there is a further complication. This Parliament cannot bind a future Parliament. So who can give the taxpayers of this country an ironclad assurance that there will be retrospective legislation? If, after the next election we have a different Parliament here, how can—

Hon David Carter: And we will have.

Dr the Hon LOCKWOOD SMITH: I am sure there will be a very different Parliament here. Half the members opposite, those Labour, Progressive, Green, United Future, and New Zealand First members will be gone. That is pretty clear.

Let me come back to the very serious issue. I see Minister Duynhoven is now the Minister in the chair, and I would like him to comment on this. It was the specific concern of the Institute of Chartered Accountants and of the Law Society, and it is this: if taxpayers rely on the new law that will pass through Parliament—not tonight, but once it receives its third reading—to establish their tax liability, and if in fact it is different from the old law, the Government has said that it will retrospectively make an enactment to change things back to the old law. A prudent taxpayer may therefore say: “Well, hang on, I’d better not use this new Act, because if this new Act, according to my lawyers, changes things, the Government has promised to change it back to what it was. If I use the new law I may face use-of-money interest charges. I may face penalties it if takes a couple of years to sort out the issue.” So the prudent taxpayer says to his lawyers: “We had better use the old law.” That does not solve the problem either, because this Parliament cannot bind a future Parliament. So no matter what this Government has said about retrospective legislation to take things back to the old Act, in fact we cannot bind this Parliament.

I would like the Minister in the chair—I see that Minister Cunliffe is now back in the chair—to explain how a taxpayer should handle that dilemma. I will repeat it for him. The taxpayer is faced with using this new law, and his lawyers say that, in their view, it changes the requirements from the old law that this replaces, but in fact the lawyers say: “Hang on, the Government has said that if it does change the outcome it will retrospectively legislate to change it back to the old law.” But then the wise lawyer says: “But hang on, I can’t advise you that because obviously this Parliament cannot bind a future Parliament. So maybe the law won’t be changed back.” What law does a prudent taxpayer use? This new law, or the old law? I would like the Minister to explain how the Government plans to overcome that dilemma.

Secondly, I would like the Minister in the chair to address this particular issue. According to my notes, on 14 May last year, in front of the select committee, the Inland Revenue Department agreed to a schedule of intended changes. There are a limited number of changes that are intended that this bill should make to the tax law. According to the notes I took that day at the select committee, the Inland Revenue Department agreed that it would establish a schedule of the intended changes. I accept that it may have been done and I have not been able to find it. I have looked through Supplementary Order Paper 195, but it might be buried somewhere in the final version of the bill before the Committee. I would like to see exactly where it is so we can clarify for taxpayers the schedule of intended changes under this law.

The third point is that the major submitters—the Institute of Chartered Accountants and the Law Society—believe it would make sense to establish a formal committee to assess whether the law was changed; to try to establish, with experience, a consensus as to whether this bill that we are debating in Committee tonight has changed the law—because there are big changes. There were also last minute changes.

If we look at the bill as it was introduced, and the way it treats income compared with the bill finally before us tonight, we see there are big changes. The bill, as introduced, talked about counted income. We were told that counted income was a hugely important way of simplifying it all. Counted income is now gone out of this final version we have before us tonight. Now there is just income under subpart BD 1. There is just income—nothing to do with counted income. And now we have a whole extra range of steps in sorting out what income of a taxpayer will actually be taxed. All those changes were made at the select committee.

The argument of both the Institute of Chartered Accountants and the Law Society that a formal committee should be established to examine unintended consequences, I thought, made a lot of sense. I think that no members of this Parliament intend that this bill should change the law beyond those specific changes that are intended—the limited number of specific changes. The dilemma for taxpayers is that they need to know exactly what those intended changes are. I want to know where the schedule of those intended changes is in the bill. I want to know what has been done to establish this committee that would be able to form a consensus of the unintended consequences of the complete rewrite of the Act.

But I come back to the first point I made a moment ago, and that is, I believe, the dilemma a prudent taxpayer is in, for two reasons. I want to make sure that Minister Cunliffe can explain what should happen. The taxpayer is caught with the dilemma: does he or she use this new Act or the old Act? We are told the new Act is not intended to change anything, yet it might, and a court of law must, presumably, use the new Act. It was suggested that there should be a transitional provision. It was suggested, for example, that a simple transitional provision would state that, as a matter of statutory construction, the words and meaning of the 1994 Act can be used as an aid to interpreting the provisions of the new Act. This point, I believe, is very serious for taxpayers. If there is no such transitional provision, as was suggested—I think it was KPMG who suggested to the select committee that wording I used a moment ago; that as a matter of statutory construction the words and meaning of the 1994 Act can be used as an aid to interpreting the provisions of the new Act—how do legal advisers advise their taxpayers in using this new Act?

I want to be clear that this is understood. The dilemma is this: they have to use the new Act because that is the Act the courts will use in determining whether, ultimately, they are complying with the law. If, in fact, the new Act does change something, the Government has said it will introduce retrospective legislation to change it back. So legal advisers may say: “Hang on, if this looks like it’s changed things, use the old Act, because the Government is going to change it back anyhow. So we should base it all on the old Act, because if you use the new Act and don’t pay enough tax you’ll face penalties or use-of-money interest.” But the dilemma is, the lawyer might say, that the Government may not change it back, because this Parliament cannot bind a future Parliament.

How can the Minister in the chair assure taxpayers that they are protected, when this Parliament cannot bind a future Parliament? When these matters come into being next year, most of this Labour Government may well be gone, and this Parliament cannot bind a future Parliament. So taxpayers really must use this Act, and they face that jeopardy of use-of-money interest, penalties, and that kind of thing. I see no way around that. I think the Minister is prepared to answer those serious queries, because they are serious for taxpayers. I am very happy to sit down, if the Minister is prepared to answer those serious concerns.

Hon DAVID CUNLIFFE (Associate Minister of Revenue): I am pleased to rise and take a brief call at this point. Firstly, on behalf of the Government may I congratulate the Finance and Expenditure Committee on its extensive consideration of this bill and note that its recommendation to the House was indeed unanimous—all save the ACT party, and we look forward to hearing some more from ACT members as to their reasons. But the object of the bill has certainly been agreed.

There is no doubt that the original bill, going back to the last century and early part of this century, is vastly outdated. In its initial form it was only 200 pages long; it is now over 2,000 pages long. It has been layered over like the seabed being laid down by the tides, and its structure has become somewhat tortuous. So I think it has been accepted all around this Chamber that this exercise is not before time. It represents a very, very major input of expertise by officials and tax professionals, bringing us to the point we are at today.

I will reply in two groups to some of the issues the Opposition has raised, and I begin by addressing the points raised by my colleague Dr Lockwood Smith. The first question he raised was: what would happen if any word was different in this Act that would lead to a different outcome from the intent of the original Act? I note that the select committee has really done its work on this point, because there are a number of protections for taxpayers here. The first one is that the transitional provisions that have been implemented by the Government guarantee that, in an area of ambiguity, the intent of the old Act will prevail and should be read in by the courts. Secondly, that clarity, in terms of any intended policy changes, has been set out in the schedules, and I refer the member, with regard to his second question, to schedule 22A. The third point is that this whole bill has been scrutinised by an independent group of experts, and unanimously approved—and they are experts of some standing. They include the Institute of Chartered Accountants of New Zealand and the New Zealand Law Society—a panel chaired by no less than Sir Ivor Richardson.

So the Government is comfortable with that assurance that no legal loose ends remain. However, in case anything has slipped past this panel of independent and reputable experts, we have made several additional guarantees on the basis of the recommendations of the select committee. The first is that no penalties shall apply to any taxpayer who is disadvantaged. The second is that we would retrospectively change any inadvertent difference in meaning so that the original intent prevails. This is a “tidy-up” bill; it is not designed to change policy. Finally, we would ensure that there is an appropriate education programme so that the industry is fully conversant with the changes that have been made.

Dr Smith, of course, raised that old chestnut that no Parliament can bind its successors, and he is quite right. Under our constitutional conventions no Parliament can bind its successors, and that is true of the Westminster system from which this House springs. But there has been nothing new in that across successive Parliaments. Those are the constitutional constraints under which the previous Government operated, as well as this one. What is material here is that we have a near unanimous select committee report. We have support from all around the Committee, save one increasingly minor, soon-to-be extinct party. That gives a very good basis of assurance for members of the public looking forward—that our assurances repeated here today from the chair shall be upheld.

There are a number of other issues that have been raised by Opposition members, and this brief intervention allows me the opportunity to address some of the more egregious of them. Mr Key mentioned the fact that Labour’s pledge card in 1999 stated that only 5 percent of taxpayers would pay the top rate of 39c in the dollar. That was certainly true based on the data available at the time. I think it was 1997-98 data, which was the most recent available to us. Then Mr Key went and dropped himself right in the proverbial by saying that one-fifth of full-time taxpayers now went over that threshold. Now that was not the Labour pledge was it—full-time taxpayers? That excludes beneficiaries, and it excludes part-time workers. So I am afraid that it is no counterargument to take a completely different data set from that to which the pledge applies and then to assume that one has rebutted it. Mr Key will have to do a whole lot better than that as he continues his apprenticeship.

Mr Key then went to the next argument that the Opposition has been trotting out; that this debate is really about tax rates, not about the simplification of the Income Tax Act. Well, the presumption is wrong. This bill is, in fact, a simplification of the Act. But let us take the rates argument for a moment, just as those members have said. The latest OECD tax wedge data shows that for the average full-time worker we have the third or the fourth lowest combined tax wedge. That is a very interesting point, because it rebuts the presumption that we were, as Mr Key suggested, at an advantage when National left office and are now at a disadvantage. Quite the contrary, we are still at a considerable advantage. It is also interesting to note that in seeking to drop the company tax rate from 35 to 30 percent of tax, we are advised that the net effect would be that about 75 percent of the tax rebate would go to offshore investors. Now why should New Zealanders, who need that money for schools and hospitals, end up providing a cross-subsidy to foreign investors? I cannot see the point in that.

Of course, the fiscal cost of $500 million would need to come from somewhere. I am intrigued to know from Opposition spokespeople, as this debate goes on, where indeed it will come from by the time they have paid for that strike aircraft wing, scrapped the New Zealand Superannuation Fund, and done everything else they have been talking about. I think it was Mr Sowry who wanted to build a motorway from Auckland to Wellington. Just exactly where will their numbers balance? It remains to be seen. Mr Key also said that 60 percent of all New Zealand businesses have a net profit of less than $38,000, so the incentives are wrong. I am afraid that that is quite incorrect. The data shows that 60 percent of all New Zealand individuals earn less than $38,000. He has his numbers wrong, as usual, and he will have to do a lot better than that.

We moved on to an intervention from Mr Prebble. He argued that the tax burden was 40 percent of gross domestic product (GDP). I am informed that in fact the net tax burden is 32 percent of GDP excluding rates, or 34 percent including rates. It is good that we are having this debate. However, I would just urge the Opposition if it could use reason and evidence to support its arguments, the public listening in would be able to get further with its arguments. There is no point in accusing the Government of imposing a 40 percent of GDP tax burden, when in fact it is only 32 percent. As National said, there is no point arguing that we have a higher-than-average tax burden, when in fact ours is near the bottom of the OECD. Could we please stick to the facts if we are to indulge in the area of general tax policy debate?

I conclude with the point about Māori trusts. My colleague Mr Cosgrove has pretty well answered that; that this issue has been around since the 1950s. I warrant it was brought in by a National Government. Certainly it was endorsed by successive National Governments, and the last one did nothing about it. Now, in these post-Orewa days, National is having an attack of “holier than thou”. That is absolutely fascinating. National did nothing about it when it was in office, because it is there for very good reason. Ninety percent of Māori taxpayers earn on the 19.5 percent rate. The compliance costs of dealing with them as if they were on the 33 or 39 percent rates would be prohibitive. However, the 10 percent of beneficiaries not included will pay the full rate of tax just like anybody else when it comes to the end-of-year wash-up. There is no tax discount to Māori beneficiaries. There is no benefit to Māori taxpayers that any other taxpayer does not enjoy. Let us be specific: the Māori authority Dr Smith refers to has its purposes limited by the fact that it holds assets on trust. Therefore, the distributions that the authorities make to beneficiaries are quite rightly treated as a special case, and it is the net income of beneficiaries that counts for the end-of-year tax wrap. So we are agreed on the structure of the bill. We are agreed on the policy.

RODNEY HIDE (ACT): The ACT party rises to oppose this huge Income Tax Bill. I have to say that the one bit I do like is on page 2026, schedule 1, which states that the basic rate of income tax for taxable income is 19.5c for every dollar. That is a good policy; let us have it. It would be good to tax everyone at 19.5c, down from 39c, and down from 33c. The bit that gets me is that when members read that, they will suddenly realise that only Māori authorities get 19.5c. My question to Harry Duynhoven, who is not prepared to take a call but has plenty to say, is that if 19.5c is good for Māori, why is it not good for the rest of us? Year in and year out Michael Cullen has said that tax cuts were not a good idea for the economy and were not good for business.

Hon Harry Duynhoven: Are you suggesting raising the rate with a whole lot of associated compliance costs, because that’s what you’re suggesting—unless you have that. The Minister just explained it.

RODNEY HIDE: Poor old Harry Duynhoven, all the way from New Plymouth—

Hon Harry Duynhoven: No, not poor old, I’m not even old.

RODNEY HIDE: He is old; look at him.

The CHAIRPERSON (H V Ross Robertson): Order!

RODNEY HIDE: If he interjects on me and takes up my time, I am allowed to have a wee whack at the old man from New Plymouth. Harry Duynhoven asked about the compliance costs. If we all went to 19.5c and had a flat rate of tax, what do people think would happen to the compliance costs? This bill would go from 2,500 pages back to 200 pages, would it not? I ask Mr Duynhoven whether that would be fair.

Hon Harry Duynhoven: If you believe in a flat tax system.

RODNEY HIDE: He says it would.

Hon Harry Duynhoven: If you believe in a flat tax system, yes.

RODNEY HIDE: It would be fair if one believed in a flat tax system. Now we have the Chair telling Harry Duynhoven to pipe down and not to speak. I tell the Committee that I agree with that clause; it is great. I would just like it expanded to every authority and to every person being taxed in New Zealand. I ask the Hon Harry Duynhoven and the Minister in the chair, the Hon David Cunliffe, what is wrong with taxing at 19.5c in the dollar.

Hon Harry Duynhoven: You want a flat tax?

RODNEY HIDE: I want a flat tax.

Hon Harry Duynhoven: Well, that’s your view; that’s fine.

RODNEY HIDE: Harry Duynhoven said that it is fine to have a flat tax. Is it not fair that if a person earns twice as much money, that person should pay twice as much tax, not four or five times as much? In fact, it is quite odd that if a person earns twice as much, that person has to pay twice as much tax. That does not happen when a person buys his or her groceries. That person is not asked how much he or she made last week and is then charged double his or her grocery bill. But let us say that it would be fair that if a person earned twice as much, he or she would pay twice as much tax. I would like the Minister in the chair to explain why a person who earns twice as much should pay three times as much income tax. Harry Duynhoven, the Labour Government, the National Party, New Zealand First, and United Future all say that we should have a progressive tax system; that as a person earns more, not only does he or she pay more tax, but he or she would pay proportionately more tax. The ACT party says phooey to that. I tell Harry Duynhoven that we agree with a flat tax, or it could be called a proportional tax.

Brian Connell: What about flat Earth?

RODNEY HIDE: I do not know about taxing a flat Earth, but if Helen Clark hears that there is a flat Earth, I am sure she will tax it. They have taxed everything else, including my little cow that was farting, which was going to get a tax under this Government—flat, or otherwise. Why not have a proportional tax that is the same, no matter what income a person is paid?

CRAIG McNAIR (NZ First): I want to share with the Committee a little bit of background on the 19.5 percent tax rate for Māori organisations. Last year, during a debate on finance legislation, New Zealand First put up a Supplementary Order Paper proposing that the 19.5 percent tax rate specific to Māori trusts should be available to all New Zealand organisations. We were the only party to do that. The National Party is the one that implemented this tax regime back in the 1950s.

Rodney Hide: Ha, ha!

CRAIG McNAIR: As has been said earlier, the National Party has supported it year in and year out—[Interruption]

The CHAIRPERSON (H V Ross Robertson): I just remind members that, as longstanding members here, they know the convention about interjecting across the cross benches. It muffles the microphone, and I am having difficulty hearing the honourable member.

Rodney Hide: I raise a point of order, Mr Chairperson. The member is talking about the National Party of the 1950s. His own mother was not even born then.

Hon Harry Duynhoven: I think you are absolutely right, Mr Chairperson, and your ruling should be enforced. Mr Hide cannot have it both ways. He cannot mention me in the debate, challenge me, then raise a point of order when I answer him, then interject complaining to you, then interject on Mr McNair. He simply cannot have it both ways.

The CHAIRPERSON (H V Ross Robertson): Politics, as we all know in this place, is the art of the possible, and the possible that we will explore this afternoon is good order. There are over 400 Standing Orders and Speakers’ rulings that we have to work with, and I am craving the indulgence of members to understand that.

Rodney Hide: I raise a point of order, Mr Chairperson. You are quite right about the 400 rules—comparable to this Income Tax Bill—but I think we may assist matters in this way. If people want to call out and interject, and all the rest of it, there is an expectation that they should take a call rather than try to make a speech by way of interjection. Maybe you should point out that we are on a 3-hour slot and that Mr Duynhoven can stand up at any time, take a call, and explain his views on income tax.

The CHAIRPERSON (H V Ross Robertson): I thank the member. He is absolutely right, and Speaker’s ruling 56/1(3) applies. If members wish to take a call they can do so.

CRAIG McNAIR: I remind Mr Hide that though I was not born in the 1950s I can look at history, and that is what history tells me. I point out that, year in, year out, when National Governments have been in power they have supported this tax regime. National also started the treaty grievance industry of today. I remind the people of New Zealand that the National Party is a party that would sell the last of the State-owned assets—

Lindsay Tisch: I raise a point of order, Mr Chairperson. The member should concentrate on the issue under debate and not comment on National’s position, because he is way out of line. He does not understand what has gone on of recent times. We are debating the Income Tax Bill, and it is appropriate that you invite him to concentrate on the substance of the debate. That is what we are here for.

CRAIG McNAIR: Speaking to the point of order, Mr Chairperson, I outline the fact that I was reminding this Parliament and the New Zealand public who are listening—

Jill Pettis: You’re not allowed to refer to the listeners.

CRAIG McNAIR: Thank you. I was reminding the Committee of what the National Party is really like; I am talking about something that a National Government implemented.

The CHAIRPERSON (H V Ross Robertson): The member was OK in the point he made initially, but he started to stray when he brought the National Party into it. I ask the member to come back to the debate.

CRAIG McNAIR: Basically, I want to outline the fact that New Zealand First was the only party that last year put up a Supplementary Order Paper to make that specific 19.5 percent tax rate for Māori trusts available to all New Zealanders.

Hon DAVID CARTER (National): I accept the challenge made by the junior Minister in the chair, the Hon David Cunliffe, that National should front up with examples showing that if the New Zealand company tax rate were lower than Australia’s, it would affect the behaviour of international companies looking to come to New Zealand, and the behaviour of current New Zealand companies looking to go to Australia to take advantage of its lower company tax rate. I can give no better example than Air New Zealand, and I would be very grateful if the Minister would take this up with the Hon Dr Michael Cullen on the 7th floor, at the 6 o’clock tea break. Air New Zealand is a very good example of the way that companies adjust their business and where they operate. The Minister of Finance is now an 85 percent shareholder in Air New Zealand. Mr Cunliffe should be aware that Air New Zealand is currently involved in a tax dispute—it has been signalled on the front pages of all business papers in New Zealand—with the Hong Kong authorities.

Lindsay Tisch: He doesn’t read them.

Hon DAVID CARTER: Well, the member should read these papers, because the majority of Air New Zealand is now owned by the taxpayers of New Zealand. Following some very poor decision-making by Dr Cullen in not accepting interest from Singapore Airlines, the New Zealand taxpayer is now saddled with Air New Zealand. Air New Zealand restructured its affairs and based a company to lease aircraft in Hong Kong, for one reason only—namely, a tax advantage.

Dr Wayne Mapp: 15 percent.

Hon DAVID CARTER: There is a 15 percent tax rate for the company leasing aircraft in Hong Kong, and that is why Air New Zealand structured its business affairs that way. I tell Mr Cunliffe that is just one example of a company adjusting its affairs to make sure it gets the most advantageous tax rate it can. For Mr Cunliffe to argue that that will not happen if our tax rate is set at or below the current corporate tax rate in Australia is ignorance in its extreme.

I also want to pick up on the special tax rate for Māori authorities. I heard Mr Duynhoven interject across the Chamber saying it is a fallacy. I want the member to open the bill at page 2026, where it talks about the tax rate for policyholder income being 33c in every dollar, for trustee income being 33c in every dollar, for companies being 33c in every dollar, and for trustees of group investment schemes or funds being 33c in every dollar. Yet when we look at Māori authorities it reads as follows, for the benefit of Mr Duynhoven: “The basic rate of income tax for the taxable income of a Maori authority is 19.5 cents for every $1 of that taxable income.” Nothing could be clearer, for the benefit of Mr Duynhoven, or Mr Cunliffe, or every other member of the Labour Party, that this legislation cements in place a tax rate that is advantageous to Māori authorities. Nobody can argue against that.

But the question I have of the Minister in the chair, as I look through the 2,000-odd pages of the tax bill, is that I do not find a definition—

Hon Harry Duynhoven: Quote the next sentence I said, if you are not that ignorant.

Hon DAVID CARTER: Mr Duynhoven can take a call if he wants. What I have said is absolute fact, and if he had bothered to study the bill he would know that. I know that the bill is big, but he should look at page 2026. My question to the Minister is where in this tax legislation will I find a definition of “Maori authority”. I have looked for it and cannot find it, but I did not have the opportunity of working on the Finance and Expenditure Committee, and I accept that it may be in the bill. But it would be advantageous to have that answer.

BRIAN CONNELL (National—Rakaia): I am exhausted just looking at this bill, let alone reading it. I have to admit that I did not have the strength to carry it all down here—2,307 pages of it—but I was compelled by Mr Hide’s argument, so I looked at the page, and Mr Carter has also brought it to our attention as well. Mr Hide said the rate of tax for Māori authorities was 19.5 percent, which is a flat rate. I thought that was a pretty good idea. If Mr Hide said it, I thought that was good enough. Then Mr Carter said it, and I thought I had better look for myself. So I went to page 2026 and looked at Māori authorities in Part A, “Income tax”, of schedule 1, and I do not know what the debate is about. I do not know why Mr Duynhoven is calling out, because clause 2 states—and I will read it for Mr Duynhoven and others; it is quite clear—“Maori authorities. The basic rate of income tax for the taxable income of a Maori authority is …”

Rodney Hide: 19.5.

BRIAN CONNELL: Thank you. Mr Duynhoven also confirms it, so he knew about it all the time. So he concurs. The provision continues: “… 19.5c for every $1 of that taxable income.”

This legislation really is an epic. I was looking through some of the background notes before I came here, and I see that not only is it a huge undertaking, but it started with a rewriting of the Income Tax Act of 1976, and the first component was finished in 1994. I assume that was under a National Government.

Hon Harry Duynhoven: So was 1976.

BRIAN CONNELL: I thank Mr Duynhoven, because he has just called out what I was going to go on to say. The second stage was completed in 1996, but—

Hon David Carter: Good days—they were good days. They’ll come again.

BRIAN CONNELL: They were good days, but in the intervening time it has not been done. Now we are getting to the third stage and, hopefully, we will try to bring it to a conclusion.

I congratulate the Labour Government on introducing legislation that will have a flat tax of 19.5 percent, provided it applies to everybody. The Minister might want to take a call and clarify that point. I am sure that is what he meant when he shook his head in acknowledgment, saying it would be for everybody.

Hon David Carter: The Minister’s agreeing with it.

BRIAN CONNELL: He is agreeing with it. I think that would be an outstanding outcome.

Hon David Carter: An amendment should be made. Move an amendment!

BRIAN CONNELL: Oh, no—the Minister can clarify that. I will not need to.

I go on now to see that the key aim of the rewrite of the project is to produce tax legislation that is clear, uses plain language, and is structurally consistent. That sounds pretty good; I concur with that. I do not think there is much argument in the Committee about that: our tax legislation, and the wording around tax, is extremely confusing. It is so confusing that a huge number of people become non-compliant because they are either ignorant of our tax laws, or they simply do not understand them. What this creates is an industry for lawyers and accountants to work a vortex system, where a lot of activity is going on in a sub-economy, which is not growing this economy for the folk of New Zealand.

In framing this legislation, I also see the Government saying that it has been involved in public consultation. If that were the actuality of this Government’s process, then I say that that is sensible and timely, but I have severe doubts about this Government’s commitment to consultation. It says it consults, but the reality is that in most cases it is found wanting. I have found press release after press release from business community interests saying that this Government has not consulted them, when it says it has.

I see that the bill rewrites Parts C, D, and E and aspects of Parts A and B, and I have a genuine question for the Minister, as the commentary states it “re-enacts” but does not “rewrite” the remainder of the Act. I really do not understand what that means. Maybe the Minister in the chair could take a call and explain to us exactly what he means by that. I just find that a little confusing.

I notice that the Act will come into force on 1 April 2004, and I hope that is not an April Fool’s Day joke. If the Minister says it will happen on 1 April, I believe it will. The bill applies to income derived in the 2004-05 tax year, and in later tax years, or in the corresponding period. The explanatory note goes on to state: “Care has been taken in the development of the bill to ensure that it has the same outcomes as the current Act.” This is a very important issue.

Hon DAVID CUNLIFFE (Associate Minister of Revenue): I do appreciate the support of members opposite, including the National Party members. The only thing is that when they give support, they sometimes have a funny way of showing it. I understand that they will be voting for this bill, and I appreciate that, because the content is worthwhile. But I guess that also means they will be voting for the provision on Māori trusts—and why would they not? They did not change it the last few times they were in power. It has been around since the 1950s.

Hon David Carter: What is the definition of a Māori trust?

Hon DAVID CUNLIFFE: I really wish Mr Carter would read the bill for himself, but it is on page 1878 in clause OB 1.

But let us get back to what is really being said here. I am afraid it is another example of “Brash disease” spreading throughout the Opposition caucus. It is really another attack on Māori, and I must say I am getting rather sick to death of this. People are using very generic legislation, and even legislation for purposes with which they agree and provisions for which they will be voting, but it does not stop them attacking people because of their ethnicity.

Now, if we are talking about who is actually paying tax and who is not paying tax, then I think we need to be talking about—

Rodney Hide: I raise a point of order, Mr Chairperson. I just ask you to caution the Minister. I think he has broken the Standing Orders already. He has talked about the “Brash disease”. I do not think you would allow us to talk about the “Clark disease”, which is far more virulent and dangerous. I do not think you would allow us to attack members of Parliament for attacking people on the basis of their ethnicity. That has not happened here today, but what Mr Cunliffe is doing is accusing us on this side of the Chamber of racism by using cute words to get around it, and I ask you to caution the Minister in the chair against going down that chute. In fact, my speech was that I loved the 19.5c; I just wanted it for everyone.

The CHAIRPERSON (H V Ross Robertson): I thank the honourable member for his contribution. I had been thinking along those lines, so I am glad he drew it to my attention, and it has been drawn to the attention of the Minister.

Hon DAVID CUNLIFFE: This Government does believe that the same rates should apply to organisations in the same situation. There is no parallel for the situation of Māori trusts, whose uses of the funds they hold in trust are limited. There is no parallel for the fact that 90 percent of beneficiaries have an income that is in the lowest tax rate. That is why they are being treated appropriately, and at the end of the year people pay the full tax wash-up.

If the ACT party wants to talk about who is and who is not paying full rates of tax, then they might wish to think about some of their own supporters. They might want to think about things like trust funds, or complex tax structures using series of shelf companies. I would be quite interested to hear Mr Prebble come back to the Committee and tell members about complex company structures that might not provide full information about people’s tax liabilities.

I would be interested to hear someone talk about how much tax the major banks are paying, for example. I would not want to say anything that was taxpayer-specific, but I would be very surprised if any of them were paying 19.5c in the dollar, and that is a matter that the Government—as Dr Cullen has said—has under investigation.

Before members start talking about Māori—and members opposite have mentioned the foreshore—let us remind ourselves about the substantial holdings of coastal land that some very high-wealth Pākehā individuals have.

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

PANSY WONG (National): I am glad to see the Minister of Finance in the chair, because I am sure that he will be very happy to enlighten us on a few questions. We are here to debate the 2,000-odd pages of the rewritten Income Tax Bill. Not only is that the case, but Supplementary Order Paper 195 has also been tabled. I would like the Minister of Finance to take a call to address some concerns that I did not originally have, until during one question time the Minister said that the Inland Revenue Department was conducting a tax investigation into some New Zealand trading banks. We were assured that this bill, which the Finance and Expenditure Committee members put a lot of work into deliberating on, would not change taxation policy, but obviously the implication of what the Minister of Finance said during question time a few weeks back is that some of the income tax provisions we are now currently debating may, in effect, not be watertight. If that is the case, should the House hold back from passing the 2,000-odd pages of this bill?

Why waste a golden opportunity to make some changes to the legislation? After the Minister raised the issue of a tax investigation into the trading banks, I think it cast doubt in the public’s mind as to how watertight our income tax legislation is and how law-abiding our trading banks are. I think that to be fair to both the public and the trading banks—and apparently our Inland Revenue Department has been carrying out the investigation for a year—the Minister should take a call to persuade the National Party as to why it should continue to support this bill. Dr Cullen promises that the bill will not change taxation policy, but at the same time it seems to me that the Minister and the department have some doubts about the activities of the trading banks, in terms of whether they have been paying their proper tax bill. I think that is quite a serious issue, and that the Minister should take a call to tell us why the legislation is being rewritten, and to reassure us that the bill is not intended to change taxation policy. Some doubts are being cast on whether the provisions of the legislation are adequate to ensure that New Zealand taxpayers are getting good value, and on whether our trading banks are observing the tax legislation.

The Minister may also like to take a call to address this legislation in the light of the cancellation of Project Aqua by Meridian Energy. We heard representatives of the petroleum industry say on the news that they are very happy to come in and help in this situation by taking up more exploration activity, and will look to the Government for some encouragement to do so through a fiscal or tax provision. I wonder whether the Minister will take a call to say whether, in light of the looming energy crisis that faces New Zealand, the Government is to miss that golden opportunity to address some of those issues.

I took this early call firstly to ask the Minister to address, in particular, my first question relating to the investigation into trading banks in New Zealand—when that investigation may be concluded, and whether this legislation will be subject to very early amendment. Should we rush to pass 2,000 pages of tax legislation or wait for further amendments to come? But I have another question that the Minister may want to address. One of the provisions in this legislation relates to film production. I guess it relates to the very famous producer Mr Peter Jackson, and to The Lord of the Rings. There has been some debate in public between Mr Jackson and the Minister of Finance with regard to how generous a tax concession Mr Jackson’s company received. I have read the provision that relates to the film industry and to film production, and I want to know what is deductible within it. I want the Minister to address that, and say whether the current provision within this tax—

Hon David Carter: You’ll get another call.

PANSY WONG: Exactly. I will continue to take calls and ask these serious questions, until the Minister stands up to address them. Mr Jackson reckons that the tax concession given to his film production company was not very generous. I want to know whether the Minister can assure us that the provisions relating to film production in this bill apply to everybody, and can tell us how generous they are.

The Labour Government always loves to claim credit—

Hon David Carter: King Kong.

PANSY WONG: Yes, he is King Kong. I want to know whether this legislation will be an encouragement for Mr Peter Jackson, who has started to work towards his next Oscar award, with regard to King Kong. The Labour Government has claimed much credit for the success of New Zealand films, so has the provision been generous or was the tax concession —as Mr Jackson has said it was, as far as he was concerned—really chicken feed?

I remind the Minister that I have asked two questions. I have a third one, so it is really worthwhile for this Minister to take a call. My third question relates to Māori authorities. We know that last year the National Party voted against this, yet—

Dr Wayne Mapp: We voted against it.

PANSY WONG:—none the less, the Government, with the help of United Future, passed legislation to allow Māori authorities to claim a tax rate of 19.5 percent. The 19.5 percent was meant to apply only to Māori authorities, because there were restrictions on what they could do with their assets and on the way they could distribute profit. But I have been told some people believe that wholly owned subsidiaries of Māori authorities, which were not supposed to be entitled to claim the 19.5 percent tax rate, were restructured to take advantage of it. I say to the Minister that that is a very serious issue, because wholly owned commercial subsidiaries of Māori authorities are competing on a commercial basis with other private enterprise, and if they are claiming that tax advantage then it is not a level playing field. I think the public deserves to hear from the Minister that the 19.5 percent tax rate is applied only to Māori authorities, and he should categorically assure the public that wholly owned commercial subsidiaries of Māori authorities cannot take advantage of that rate. If they do, then it is not fair to other private businesses that have to pay income tax at the 33 percent rate.

My fourth question—this is why it would be worthwhile for the Minister to answer my questions—concerns the Minister’s championing of one economy between New Zealand and Australia. Maybe he would like to take a call to tell us why it is not desirable for New Zealand’s company tax rate to be the same as that of Australia.

I am pleased to see the Minister of Finance diligently scribbling things on his writing pad. I am sure that the public will be delighted to know that he will indeed take a call to address the four questions that I have raised. After all, we are debating a tax bill that is over 2,000-odd pages long, and I would like to think the Minister appreciates hard-working members asking appropriate questions in order to get his reassurance that this bill will not change any taxation policy.

Hon Dr MICHAEL CULLEN (Minister of Revenue): I want to respond to one or two of the matters raised. I outline the fact, as Mr Carter will be aware—and I am very grateful to him, as one of my predecessors, for the work that was started under the previous National Government in terms of this rewrite programme, and to Mr Dunne, who was also a part of it—that there has been a very clear rule applied by successive Ministers that the kinds of issues the member has raised are not dealt with in the rewrite programme. If we wait to try to deal with every taxation issue that somebody wants to have addressed by way of legislation before we do a rewrite, we will never do the rewrite. Indeed, a large part of Supplementary Order Paper 195 actually incorporates the last taxation bill passed into the rewritten Income Tax Bill. The purpose of that is to make life easier for taxation practitioners, who will have access to one up-to-date full version of the legislation.

I will just take up a couple of points that the member raised. On the last point, as I have said many times to some leaders of business, if they want New Zealand to have a lower company tax rate—much lower than Australia’s—they should give me the other parts of the Australian taxation system, which they do not want to pay, either. For example, the Commonwealth of Australia has a 6 percent payroll tax. If we had a 6 percent payroll tax in New Zealand, we could probably halve the company tax rate. If we also had the Australian state payroll taxes, we could more than halve the company tax rate in New Zealand. That is without counting the capital gains tax, the inheritance tax, and the various other taxes that Australian businesses have to pay directly or indirectly. Of course, New Zealand business wants to just cherry-pick one little bit here, and leave all the other bits off. The offer is open; it is on the table for New Zealand businesses. They can come and talk to the Minister of Revenue, and if they want to have a really low company tax rate they have to give me the other bits that are paid in Australia. I have to say that, in terms of tax design, they are not as good as our system is. The design of our taxation is better than Australia’s in that respect. But if that is what is really important to businesses—if that is the teddy bear they want to take to bed with them at night—then they have to give me the little eyes and the funny nose to put on it as well, in order to make the thing up and make it look proper when they go to bed with it.

I will also deal with the issue of films. I am not allowed to know the total tax deduction that the financers of the film, not Mr Jackson, received. The financiers actually got the tax deduction, which is why Mr Jackson may well not know the total value of it—it was not his company that received it. All I know is that when National introduced legislation to remove that taxation loophole by grandparenting the existing provisions—it was then amended by the select committee, of which I had the honour to be a member—the Inland Revenue Department advised that the cost of the grandparenting provisions was between $300 and $400 million. The largest part of that is almost certainly in relation to The Lord of the Rings. When I see the Oscars lined up, I see about $30 million for each of them. Will King Kong benefit? That film will not benefit from the taxation loophole, because it was wiped out in 1999 by Mr Carter, myself, and various others. But King Kong will benefit from the Large Budget Screen Production Grant Scheme, which is much easier to control than the taxation loophole, I must say, in terms of its cost. Probably, without the Large Budget Screen Production Grant Scheme we would have King Kong without the ape, so to speak, and without everybody else appearing within the film. [Interruption] The start will be the hard bit to do, really. I suppose the BNZ building—“Darth Vader’s tower”—is the most appropriate place to do that in Wellington.

In terms of the banks, that matter is all under the existing law, and remedial measures are not, and should not be, part of this bill. If we were to mix up remedial legislation, base protection legislation, and other changes with the income tax rewrite, we would never get the income tax rewrite done.

Hon PETER DUNNE (Leader—United Future): I was not going to take a call in this debate, but I listened very carefully to the member who spoke immediately prior to the Minister. One of the things she said that aroused my attention was that she was concerned this bill was being rushed. I should tell the Committee that this bill’s genesis goes back to the time when Robin Oliver, who is sitting to the right of the Minister in the chair, Michael Cullen, was a callow youth. Many of us have aged considerably during the genesis of this legislation. I was the Minister 8 years ago, and it was on my work programme at that stage, so it is hardly rushed legislation that we see in the Chamber this evening. In fact, if one thinks back over the tax reforms that have been made over the last 20 years, one realises this rewrite—which is, effectively, a rewrite of legislation first passed in 1913—is long overdue. [Interruption] It goes back to the genesis of income tax in this country in 1913, and the legislation has been repeatedly amended. This is the first substantive, plain-English rewrite in the history of that legislation. By my calculation, it is some 80-odd years since income tax began, so claims that this is rushed legislation are ever-so-slightly exaggerated.

I want to speak briefly about the issue of film tax. The Minister made some comments about that, and I recall the situation in 1999 particularly well, because I was the chair of the Finance and Expenditure Committee at the time. I recall the claims made to that committee by a variety of people in the film industry that, if we dared to tamper with the existing regime, which provided for the most generous write-offs previously known to humanity, then the film industry in New Zealand as we knew it would die. The select committee was, to put it mildly, somewhat sceptical about those claims. We called together the representatives of the film industry, of the Inland Revenue Department, and of Treasury. Mr Oliver and others—Dr Cullen, certainly—will recall that we had a round-the-table morning when we actually sorted out, with the Minister’s concurrence, the regime that we have now. All the dire threats that that would be the end of investment in films in New Zealand look a little hollow today, when we celebrate the success of Peter Jackson and The Lord of the Rings, because that was at the time that The Lord of the Rings project was getting off the ground. The issue being raised was not just related to The Lord of the Rings and the grandfathering provision, but to the message that it would send thereafter. Since that time we have had The Last Samurai, and we are talking about King Kong. I see there is talk now of The Lion, the Witch and the Wardrobe, which has been announced in the last couple of days as being another film likely to come to New Zealand.

The point I am making is that the film regime we now have may not be perfect, but it is a vast improvement on what we had previously, and there is certainly no great evidence—contrary to the member’s claims—that it acts as a disincentive to investing in New Zealand. In fact, the evidence is quite to the contrary of that. All the evidence we see and hear—at the Oscars in Los Angeles, and from other producers—is that New Zealand is a very attractive destination in which to make movies. That has nothing much to do with the tax system, and a lot to do with the scenery, the cost of labour, and the expertise of our film makers. So I think that that argument is a little spurious, as well.

Pansy Wong made some other points that I do not intend to go into. But I do find myself having to rise to defend the honour of a variety of past Ministers, including my immediate predecessor, the Rt Hon Wyatt Creech, who—I am sure—would be horrified at the accusation that he was party to rushed legislation in the Chamber tonight, given that he ceased to be the Minister in charge of the bill about 9 years ago. This is a long overdue rewrite. Our taxation laws were a mess, because of the complexity of the changes that have been made over recent years. The fact that the law and the drafting of it have not kept up with changes in style and form, and the fact that we could have arguments about form and substance in another context, all demonstrate that the rewrite is long overdue.

This bill has been through the Finance and Expenditure Committee; it has been considered ad nauseam. A Committee of the whole House process of this type is not unreasonable. The myriad number of taxation practitioners and those who follow these matters with interest will be desperately keen to see this project, which has had a “mists of time” feel about it, finally enacted. We are embarking on that process this evening, and I am delighted, at last, to see work that I thought would never be completed coming to fruition.

DEBORAH CODDINGTON (ACT): I will follow on from the Hon Peter Dunne, because he brought up the subject of The Lord of the Rings. I ask the Minister to take a call and tell us whether, at the time, he actually supported that arrangement for The Lord of the Rings. We all know that the true story about the financing of that trilogy has yet to be written, and I remember the Minister—I am sure it was the Minister at the time—saying something like: “Every New Zealander should get a free ticket to this movie, because it was made on the backs of New Zealanders. We were very lucky it was a success, because if it had not been a success, we would have been taking a bath.” There are a number of questions to be answered, and the Minister knows exactly what I am talking about. Was the film signed off in the correct time frame in order to be entitled to those tax breaks? There are a number of things—

Darren Hughes: This is from the sleuth journalist.

DEBORAH CODDINGTON: Those members over there on the Government benches might jeer, but the Minister knows what I am talking about. He was not in favour of that. Of course we are all pleased about The Lord of the Rings. Peter Dunne said that it is nothing to do with tax breaks that movies are made here. If that is the case, why has Peter Jackson lobbied this Government so hard for more tax breaks for film makers? Why does he say he will take his films somewhere else, if it has nothing to do with tax breaks? If that Minister is so informed on economic matters, why does he think that incentives do not work? Of course incentives work. Everybody knows that. One needs only half a brain to know that incentives work.

The ACT party is not supporting this bill, because we cannot support legislation that has in it such an “envy” tax—such ideological tax rates as that of 39 percent for any income over $60,000. There was no need to bring in that rate when this Government came into power. There was no need for that extra money in the coffers of the Government—as we have well seen with the operating surplus. It was just a way for this Government to say: “We will punish you because you are successful.” If people work hard, the Government will punish them instead of rewarding them and celebrating them. If people run a company that is doing well, the Government will not celebrate that, either. Why does the Government not give everybody a tax cut, right across the board? Why should there be a progressive tax rate, at all, if not just to punish the successful—those who work hard?

There is, however, one clause I can support—that is, clause 2 in Part A of schedule 1, “Maori authorities”. I applaud the Minister for that provision: 19.5c for every dollar of taxable income. That is a really good start, a very good start. I urge him to take that rate and apply it everywhere else. The Minister, when he took a call before, based his argument on the status quo of spending, but he has not taken into account the fact that this Government is spending far too much already. We have huge spending on “Nonsense Castle”. How many people are employed by the Ministry of Education? There are 360 Māori employees, for a start, and they are just 12 percent of the total number of employees in that ministry. Why on earth do we need to have as many people as that on the payroll at the Ministry of Education when we can give funding directly to students and pupils? We should let parents choose, and let communities decide and take the bulk of funding, which, after all, is taken from taxpayers to educate children. We should let the bureaucracy have what filters up through the system, rather than the other way around as it is at the moment, where the Government hands out all the money to the bureaucracy, and what is left—what filters down through the system—reaches the schools and the children who need the education.

Why should there be a Ministry of Women’s Affairs? If this Government supports that ministry so much, why does it not have a “Ministry of Men’s Affairs”? Why not? If a Ministry of Women’s Affairs is so good, why not have a “Ministry of Men’s Affairs”? It is, of course, just to keep people on the bureaucracy payroll. Women have gone so far now, we do not need to be pandered to, thank you very much, with a Ministry of Women’s Affairs.

Dr WAYNE MAPP (National—North Shore): Listeners tonight will be interested to know that National is supporting this bill. The reason we are doing so is that it is a consolidation and rewrite of the legislation. That is an important project. For instance, a former colleague of mine, currently teaching about tax, has written a book of some 1,200 pages—I have written a small portion of it—and he will be incorporating the outcome of this legislation, which I presume will have its third reading next week. So the professional community—accountants, lawyers, tax specialists, and tax agents—are looking forward to the passage of this bill. I am certainly conscious that it has been the work of many, many years to bring it to fruition.

Mr Dunne referred to the fact that it is the outcome or outgrowth of legislation from 1913. I must confess that I was under the impression that legislation went back to the 1890s for the first income tax Act. But the remarkable thing is that that early legislation had about 100 clauses and was about 30 pages long. Today we are faced with two massive volumes of well over 2,000 pages, yet every tax practitioner would be able to tell us that the core of the Act is still contained in just 20-odd clauses at the beginning of the legislation.

However, just because we are supporting the legislation, that support should not be interpreted—as the Government is most unjustly doing—as supporting its unreasonable and irrational policies. I refer members to an example of that. I was, frankly, amazed to hear the Minister of Revenue trumpeting about why New Zealand’s corporate tax rate had remained at 33 percent. That is quite remarkable at a time we have a surplus approaching $6 billion. Some might indeed liken the Minister of Finance to Scrooge, sitting on his piles of money unwilling to let any part of it go and wanting to amass and accrete more and more. Is he considering, perhaps, an $8 billion surplus next year but is unwilling to let any part of it go?

I have news for the ideologues of the left—those people represented by the personage of Dr Cullen—it is not the Government’s money; it is the product of hard-working New Zealanders, firms, and businesses, and the money the Government takes off those firms and businesses is money not available for investment. Now, the Minister of Finance says that people can have their 30 percent tax rate, provided they have every other part of the Australian tax system—capital gains, and so forth. He has forgotten about the accelerated depreciation allowances, which I can tell him many people would like to have.

But the real point is that the Minister is completely unaware of the concept of comparative advantage. Why does the Government not give New Zealanders and New Zealand companies a head start? Does it not realise that in many respects we are disadvantaged in New Zealand? We have a smaller economy, a smaller market, and a location further away from our markets—all of those things add costs to New Zealand businesses. Why not give those businesses a head start? That is the way to growth. The Minister must surely know of the experience of Ireland, which gave precisely that advantage to its businesses. Ireland is off the coast of Europe, isolated, and having to deal with the disadvantages of that, so the answer was to give people a special advantage, and if the 30 percent rate leads to an advantage for New Zealanders over Australians, frankly, I say: “Well and good.” That is actually what New Zealand business needs to sustain investment, jobs, and growth. I urge the Minister to take the message on board.

Hon DAVID CARTER (National): I will take the opportunity while Dr Michael Cullen is the Minister in the chair to get some answers to questions that I asked earlier when his junior Minister, David Cunliffe, was in the chair before the dinner adjournment. My issue was around this argument that has just been developed very well by my colleague Dr Wayne Mapp: the advantages of a tax rate of 30 percent, which is at least as good as Australia’s. David Cunliffe challenged us to give examples of why that would affect the behaviour of various companies.

He argued, it seemed to me, that if there were a difference in the tax rate, then companies would not be inclined to make decisions that mean they accept the generosity of Australia. Of course, I do not think that is right and I quoted to Mr Cunliffe an example, which I think the Hon Dr Michael Cullen might also like to comment on.

My simple question is why his airline, Air New Zealand, established its leasing arrangements in Hong Kong if it was not simply to gain the advantage of a far better tax rate. Would Dr Cullen like to explain to the Chamber tonight why Air New Zealand took the opportunity to establish its leasing company in Hong Kong, if it was for any other reason than that it saw it as tax advantageous? If he accepts that that is the reason, and I cannot see how even our Minister of Finance could argue that it was for any other reason, then it is surely logical that there are companies now in New Zealand that are considering Australia as a base for production because of advantageous company tax rates and, equally, that there are Australian companies that might be tempted to come to New Zealand if we had a similar tax regime.

The second question I want answered relates to the definition of “Māori authority”. We had quite a debate before the dinner break on the advantageous tax rate that is available to Māori authorities, with Harry Duynhoven initially interjecting that this Income Tax Bill did not give an advantageous tax rate to Māori authorities. That is clearly wrong and I think Harry Duynhoven has accepted that. I then asked the Minister to point me in the direction of where “Māori authority” is defined, and I thank him for pointing us to page 1878. As I read it, a Māori authority means a person who has made an effective election under clause HI 3, “Election to become a Maori authority”. I have to say, not having had the opportunity to work through the select committee, that I am none the wiser as to who has the ability to elect to be classified as a Māori authority and therefore enjoy a substantially advantageous tax rate.

I refer to my own area and the performance of Ngāi Tahu, and I would be grateful to know whether its commercial entities could be classified in an advantageous way to be described as a Māori authority. I certainly think that if that is the case, we need to have an understanding of where this definition extends. For instance—and I see the Minister taking an interest in this—Ngāi Tahu has just been involved in a full takeover of a publicly listed company, Shotover Jet. I would be horrified if that particular entity were now able to structure its affairs so that it was paying tax at 19.5 percent when a similar operation on the Kawarau River, for example, was facing a corporate tax rate of 33 percent.

The final point on which I want clarification from the Minister is that I note in the report from the select committee—and I acknowledge that I was not at the select committee and I have not been through the 2,300 pages in detail—that the work took place through 2003. At that time the Minister, whether or not he wishes to recall it, was part of a Government that was promoting the “flatulence tax” and I just want to make sure that nowhere in these 2,307 pages is there hidden away the wonderful idea that Mr Hodgson came up with regarding the “flatulence tax”.

Hon Dr Michael Cullen: Open it up and have a sniff.

Hon DAVID CARTER: I hope it is never to be seen again, and I look forward to the Minister’s comment and his confirmation of that.

Hon Dr MICHAEL CULLEN (Minister of Revenue): On the member’s last point—yes, I can assure him about that. On the other point he raises, I will look into that and come back to him on the question of the subsidiary because I do not have that information to hand. I thank the member and indeed all colleagues for their cooperation on this bill. It would otherwise have been impossible to get this bill through, and the huge amount of work that has been done by successive Ministers, the department, the Parliamentary Counsel Office, and others would really have been for nothing.

Dr MURIEL NEWMAN (ACT): I take a call with regard to the Income Tax Bill and in particular I will draw the Committee’s attention to clause CB 1, which deals with the amount of money that people derive from a business. In particular it states that the amount that a person derives from a business is regarded as income of that person. There is an exemption for amounts of a capital nature. The Minister in the chair, Dr Michael Cullen, can correct me if I am wrong, but this is the clause where, if section 2, which is the exclusion, were removed it could be used to introduce a capital gains tax, as I understand it. The exclusion is there, so this clause does not include capital and therefore this bill does not introduce a capital gains tax.

But I will use this opportunity to talk a little about the fact that when a rewrite bill like this Income Tax Bill is in front of Parliament it is an opportunity for people to put up ideas and suggestions. A little while ago, under the Official Information Act, we asked the Minister whether anybody had been recommending capital gains taxes, or any other such mechanisms. We received a response indicating that Mr Copeland from United Future had written to the Minister of Finance to suggest that a capital gains tax on residential rental properties would be a good idea.

At the time, Mr Copeland was very concerned that people’s investment in rental properties was crowding out their investment in other business opportunities, so he suggested that the Minister of Finance might like to consider the idea of introducing a capital gains tax on rental properties. That would, of course, be of enormous concern to hundreds of thousands of New Zealanders who invest in rental property these days, often as part of their superannuation investments to help fund their retirement.

I am pleased to say that when the Minister’s advisers at Treasury looked at this request from Mr Copeland and considered the pros and cons of introducing a capital gains tax, they said it would be difficult because it would be quite hard to establish whether, when somebody invested in a rental property, he or she was investing in the long term—in other words with no intention to sell it—or in the short term, with a desire to turn it over, realise the capital gain, and maybe reinvest that money; in effect to trade in property. So the officials advising Dr Cullen suggested to Mr Copeland of United Future that at this stage a capital gains tax was maybe not the right thing to do.

But then they did go on to say that the depreciation rate on properties might be a more fertile area for the Government to look at, if the Government was going to consider trying to gain more income from the rental property investment market. So I understand that the Minister is looking at depreciation rates. He is now looking at halving depreciation rates on rental property investments—the amount they can claim back. I wonder whether the Minister wants to comment on whether this was partly stimulated by Mr Copeland’s suggestion, but I am pleased to see, as this very large Income Tax Bill goes through, that the spectre of a capital gains tax has been put in the coffin. Mr Copeland might like to reflect on whether raising these issues is sensible, given that it is discoverable under the Official Information Act.

GORDON COPELAND (United Future): I was somewhat surprised suddenly to find Muriel Newman talking about correspondence with Michael Cullen and subsequent Treasury advice, in the context of the Income Tax Bill. However, I think I probably should take a right of reply, just to cover some of the misinformation that is contained in the remarks she made.

First of all, let me say I think it would be a very sad day if people came to this Parliament with completely predetermined positions on tax issues. If we are endeavouring, as I am, to create a situation in New Zealand where we do not have investment distortions, where we do not have tax-driven investment coming into the economy in the wrong places—into places that are not productive—versus places where, according to market signals, that money should be going, then it is quite right and proper, and responsible, for a member of Parliament to raise those issues with the Minister of Finance.

I might say, to put the record straight, that United Future has no policy in relation to bringing in a capital gains tax on residential rental properties. I do think, though, that capital gains tax on share schemes, on share investments, on various trust funds, and on various insurance policies should be revisited if we are to get some kind of level playing field and to avoid investment distortions in terms of where people put their money.

I would like to make something else clear. The claim has been made, not only in this Chamber but also to the media and to property investors in this country, that somehow my letter to the Minister of Finance resulted in the Inland Revenue Department deciding to undertake a review of depreciation rates. The release given under the Official Information Act to the ACT party made it very clear that that was already on the Inland Revenue Department’s work list, prior to my correspondence coming in, and I do not think the two are directly connected in any way.

It is important to clear up that little matter and to say that the problem, however, still remains—that in my view we do have great investment distortion in this country. New Zealand’s economy and its companies could benefit if the existing anomalies around capital gains tax on investments on the stock exchange could be removed so that we could see a greater proportion of the nation’s savings going into that area. That is just a brief comment, but I thought it would be good to clarify those issues.

The question was put that the amendments set out on Supplementary Order Paper 195 in the name of the Hon Dr Michael Cullen be agreed to.

Amendments agreed to.

A party vote was called for on the question, That clauses A1 and A2, Parts A to Y, and Schedules 1 to 23 as amended be agreed to.

Ayes 111

New Zealand Labour 52; New Zealand National 27; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 9

ACT New Zealand 8; Independent: Awatere Huata.

Clauses A1 and A2, Parts A to Y, and Schedules 1 to 23 as amended agreed to.

Bill reported with amendment.

Third Reading

Hon Dr MICHAEL CULLEN (Minister of Revenue): I move, That the Income Tax Bill be now read a third time.

Mr SPEAKER: The debate is interrupted and set down, as an agreement from the Business Committee, for resumption on Thursday, 8 April, 2004.

Debate interrupted.

Urgency

Urgency

Hon Dr MICHAEL CULLEN (Leader of the House): I move, That urgency be accorded the introduction and first reading of the Police Complaints Authority (Commission of Inquiry into Police Conduct) Amendment Bill, the first reading of the Charities Bill, and the passing through the remaining stages of the Education (Disestablishment of Early Childhood Development Board) Amendment Bill, the State Sector Amendment Bill (No 3), the Maritime Security Bill, the Crimes and Misconduct (Overseas Operations) Bill, the Radio New Zealand Amendment Bill, the Telecommunications (Interception Capability) Bill, the New Zealand Symphony Orchestra Bill, and the Sale of Liquor Amendment Bill (No 2), and of any bills into which those bills may be divided. This motion is moved first of all to enable the Police Complaints Authority (Commission of Inquiry into Police Conduct) Amendment Bill to proceed to its first reading and to a select committee, without the standard 3-day separation. In relation to the other matters, the motion is moved to ensure that they are dealt with before the House rises for the Easter adjournment.

A party vote was called for on the question, That urgency be accorded.

Ayes 62

New Zealand Labour 52; United Future 8; Progressive 2.

Noes 58

New Zealand National 27; New Zealand First 13; Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Motion agreed to.

Bills

Police Complaints Authority (Commission of Inquiry into Police Conduct) Amendment Bill

First Reading

Hon MARGARET WILSON (Acting Minister of Justice), on behalf of the Minister of Justice: I move, That the Police Complaints Authority (Commission of Inquiry into Police Conduct) Amendment Bill be now read a first time. It is my intention to move that the bill be referred to the Law and Order Committee for consideration, with a report-back date of not later than 3 May 2004, 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, despite Standing Orders 191 and 194(1)(b) and (c).

The commission of inquiry into police conduct has been given the task of inquiring into the adequacy of investigations carried out by the police on behalf of the authority, with regard to complaints alleging sexual assault by members of the police and their associates. An urgent legislative amendment is required to the Police Complaints Authority Act to allow the commission to fulfil its terms of reference.

Investigation files held by the Police Complaints Authority are currently subject to blanket secrecy provisions. This is likely to include information gathered by police conducting investigations on the authority’s behalf. These secrecy provisions in the Act exist for good reason and must be retained. They allow the authority to obtain frank information from members of the public and the police during its investigations. Information that might be self-incriminating, personally embarrassing, or be feared to invite retribution might therefore be withheld if confidentiality was not assured. However, it is the view of the Government, the police, and the commission of inquiry itself that the commission’s task will be hampered by its inability to consider authority files. It is vital for public confidence in the commission, the police, and the authority, that this impediment be removed.

The extent to which the Police Complaints Authority Act secrecy provisions may hinder the commission is to be the subject of a hearing on 8 April. However, the Government has decided to introduce this bill ahead of this hearing in order to provide an assurance to the public that the commission will be able to carry out its mandate in full. It is also important to prevent any possible delays in the inquiry—delays that would not be fair to the complainants who need to see these matters concluded as quickly as is reasonable. This bill, therefore, provides an exception to the secrecy provisions to enable certain types of information to be disclosed to the commission. The public will be able to consider this bill through a select committee process, including any potential privacy concerns. Necessity dictates that the select committee period be truncated to allow the commission access to this information as soon as possible. As I have already said, it is important to avoid possible delays in the inquiry. The privacy interests of the individuals, police officers, members of the public, including complainants in cases of alleged sexual offending, who have provided information must be taken into account.

Commissions of inquiry have the same powers as are available to courts to protect witnesses. These powers may be able to be exercised to address the privacy interests of individuals. The bill will be limited in scope to allow for evidence to be provided only for the current commission of inquiry into police conduct. It will not apply to any future commissions of inquiry. The bill will come into force on the day after it receives the royal assent, and expire 1 year after the commission finally reports to the Governor-General. The expiry date will cover any possibility that further material is required for any subsequent proceeding, such as a redirection from the Government back to the commission.

Part 2 sets out the exception to the secrecy provisions to allow the authority to disclose any matter other than a restricted matter, to comply with the direction from the commission. A member of the police who was involved in investigating a complaint is also able to disclose any matter other than the restricted matter in evidence before the commission. The existing prohibition on the authority and any staff member from appearing in any proceedings of a judicial nature remains. In conclusion, the objective of this bill is to amend certain provisions of the Police Complaints Authority Act to ensure they do not prevent the current commission of inquiry from gaining access to information needed to carry out its functions. It is vital there is public confidence in the commission, the authority, and the police. This legislation assists in achieving that. I commend this bill to the House.

Hon TONY RYALL (National—Bay of Plenty): Before I address the quite serious substance of the bill, I would advise that the Opposition parties are disappointed that the Government did not see fit to brief us on the contents of the bill with sufficient notice. The National Party received a briefing that was emailed to our senior whip late afternoon and forwarded to us. At 20 minutes to 8 tonight we still had not actually sighted the bill the Government proposed. It was only when our junior whip approached the Leader of the House, Dr Cullen, that we were given the generosity of an advance copy of this bill.

Hon Paul Swain: You never did that when you were in Government, I suppose.

Hon TONY RYALL: I have to observe that on a bill of this import such a courtesy would have been extended to the Opposition because the Government would have wanted to have multiparty support, and it is important for multiparty support that the parties feel as though they were appropriately briefed. Don McKinnon was quite clear that bills of such import should be given in advance to the Opposition. So I comment on that disappointment.

We believe it is vital that this bill be referred to a select committee. The bill makes substantial changes to the nature in which evidence is given to the Police Complaints Authority. Currently, police officers are compelled to make statements and to give information to a Police Complaints Authority investigation. Every other New Zealander has the right to deny the police a statement—in fact, Ministers have denied that previously, I understand, although I stand to be corrected. The point is is that every other New Zealander has a right to deny making a statement to the police. However, when it comes to Police Complaints Authority investigations police are compelled to make a statement—even a self-incriminating statement—in order to assist the Police Complaints Authority in its investigations.

Police make those statements knowing that their evidence cannot be used against them, and that is part of the process. What this bill seeks to do is uncertain. It is unclear what the status is of that evidence that was given and how it can be used. I do not think the House objects to a clear indication that those who were involved as investigators for a Police Complaints Authority matter should be able to answer questions of the commission of inquiry, but we would like to pursue in the select committee the status of the evidence that was given by police officers to the commission.

This has the potential to set a quite uncomfortable precedent, in that police officers may believe that the evidence they give to the Independent Police Complaints Authority may be used against them or come to public scrutiny in a level that they had been assured would not happen. Those are the sorts of matters that we seek to discuss further in the select committee process. My colleague Richard Worth will be talking about further concerns we have in respect of this bill and some conclusions we have drawn.

The National Party in Opposition fully appreciates the concerns that the commission of inquiry may have about this. We are prepared to work with the Government to facilitate appropriate disclosure to the commission. We, too, believe it is fundamental to the integrity of the New Zealand Police that the public sees that inquiries were conducted appropriately, or if they were not, what can be done to remedy those concerns. Finally, I repeat that with a bill of this nature we would have expected an advance copy, because the advice we received by email in the late afternoon was not sufficient to draw the conclusion that we would be willing to support the bill. However, having read the bill, the National Party is prepared to support its referral to the select committee.

MARTIN GALLAGHER (Labour—Hamilton West): As the chair of the select committee to which the bill is to be referred, I have listened very, very closely to the previous speaker and to his concerns. Obviously, there will be very rigorous questioning of officials during the select committee process, and we will want to expedite that reasonably hastily. Notwithstanding that, I will also be discussing with and seeking leave from senior members opposite in terms of the ability of the select committee possibly to meet for 5 minutes during an appropriate lunch hour in order to start the advertising process for submissions. My understanding in terms of some advice is that I may need leave from the Opposition to do that, as we had resolved not to meet this urgency week. I will obviously meet with the Hon Tony Ryall to pursue that particular item.

Certainly we will, as a select committee, do our very best. Obviously, we will want not only to afford all members of the committee the opportunity to thoroughly scrutinise this bill and then meet the appropriate report-back deadline but also to give adequate opportunity for submissions to be made. I think the Minister has more than adequately gone through the details of the bill in terms of its content and why we need it. My role, as chairperson of the select committee, is to work with all members, particularly the senior members opposite, to see how we can work through the processes of the bill, and to meet the report-back deadline, as has been proposed to the House.

KEITH LOCKE (Green): The Green Party will be supporting this bill, but I would like to echo the complaint of Tony Ryall that this legislation is too rushed. Just because we are now moving into an urgency week is not a good reason to short circuit the normal process whereby a bill is deposited in the House and time is allowed for members of the House to come to grips with it, talk with colleagues, check out some of its deficiencies, and look at its main and subsidiary purposes so that we can come to this first reading debate somewhat informed.

It is just not good enough that we are discussing this bill with the ink hardly dry—it having appeared only a few hours ago, at most. I do not think there is any need for that. Sure, we all want the commission of inquiry into the allegations against the police to get into its work as quickly as possible. We do not want to hold it up, that is true. But we do not need to panic in this way, introduce a bill, have the first reading during the urgency period, and avoid the normal procedures, particularly when the issue behind this—the issue of the commission of inquiry—is one of justice being done and investigations being done thoroughly. The legislation is about thoroughness and getting justice at the end, and we should set an example, as a Parliament, in treating the legislation relating to that commission in the same spirit of doing a thorough job. That cannot be done if the first reading is rushed in this way. Rushed justice is not good justice. There was a case, a couple of years ago, in urgency, of I think—

Mr SPEAKER: Would the member please come to this bill.

KEITH LOCKE: I think the context of this bill being introduced does qualify the extent to which we can discuss it—

Mr SPEAKER: Not very far.

KEITH LOCKE: Given the huge problems that this wrong procedure has led to, I will discuss the bill as best as I can.

The purpose of the bill, which is to enable the commission to have adequate evidence, is quite important because one of the issues at the heart of the inquiry is the inadequacy, or seeming inadequacy if we go by the press reports, of the investigations back in the 1980s, particularly those of Mr Dewar. If one looks at the press reports of that police officer with regard to how he dealt with the inquiry—and he was working for the Police Complaints Authority—it seems that he did not do a proper job and that his report was ticked off without proper consideration by the people at the top of the Police Complaints Authority at that time. The Independent Police Complaints Authority legislation that is before Parliament now has been put on hold while this commission is taking place—and as we deal with this legislation we want to improve the workings of the Police Complaints Authority so that it does not rely so much, in my opinion, on police investigators, but has its own independent investigators and is much better resourced to conduct its activities.

I think that the purpose of this bill—to give the commission more information from the Police Complaints Authority inquiries into the incidents it will be considering—is very important. It means, as I read this bill, that police reports as part of those inquiries will be brought before the commission. That is very good. There are a couple of definitions in the bill—about what are called restricted matter—that exclude matters from this commission. The first one seems to make sense. It is that the communications of the people who are holding office with the authority are still privileged. I think there is a reason behind that, although I would be willing to be challenged on that question. I am for as much openness as possible.

I am a little more concerned about the second part of the restricted matter definition. The bill states in clause 4 that restricted matter also “(b) includes any communication by a person to the Authority—(i) in which that person made a complaint or raised a concern about the conduct of the police, or any member of the police; and (ii) in respect of which, that person has not agreed that it may be disclosed to the Commission.” I think the purpose behind that is not to disclose the identity of somebody who may have been in a very difficult situation at the time and does not want to be harassed or to have the public attention that might flow if his or her identity was disclosed in the proceedings of the commission. So I think there is a good reason there, but I think the basic principle is keeping the identity hidden and that maybe information provided by that person can still be provided to the commission without that person’s identity being disclosed. That would be a good thing to happen.

I think that perhaps some amendments can be made to this bill as it goes through the select committee, and I hope it will have enough time to do so. I have not even got to grips so far with the time that the select committee will have to discuss this bill, but I think it has to have adequate time to seriously look at these matters. They are difficult matters: considering confidentiality; how the commission operates; how it can be as public as possible; and how to get to the bottom of the matters concerned, which are very serious matters.

DAIL JONES (NZ First): New Zealand First is alarmed that it has received this bill so late in the process. It is such a serious matter that one would have thought the Government might have been in contact with us much earlier, and that we could have seen the legislation a lot earlier. But finally, when we look at what is happening out in the public arena, and particularly my reaction, I do not want to see the legal process abused. On the face of it, there might be an abuse of legal process here. As a lawyer, it really goes against the grain to allow the legal process to be abused. On the other hand, public concern has been expressed on this issue, so from the point of view of allowing the bill to go to a select committee, New Zealand First will agree.

At the select committee we expect that members of the public who are associated with the evidence at issue might be forthcoming and give us some indication of the basis on which they made the evidence available—which was about 16 years ago—and what their attitude would be to that evidence being regurgitated all over again before the commission. It suggests in many ways that no one can quite remember what happened 16 years ago, and the best evidence is what might have been recorded 16 years ago. I can hardly remember what happened this time last year. Of course, being a member of Parliament, I find it hard to remember what happened this time last week, let alone what might have happened 16 years ago. I was almost a member of Parliament 16 years ago, but I cannot remember whether I was or not—it is so long ago. In 1984 I was a member of Parliament.

I may be making a joke of it, but that is really how serious it is—to have the commission going now, and then have people trying to remember what was said all those years ago. As a lawyer, it is very hard to cross-examine somebody on evidence as old as that. At the same time, lawyers would have been advising the people who gave evidence in 1986, and would have told them that their evidence would be protected under the Police Complaints Authority legislation.

As the bill states in the explanatory note, the provisions of the Police Complaints Authority legislation “… are designed to facilitate the free flow of information essential for the effective conduct of investigations in compliance with the statutory functions of the Authority. Members of the public are able to approach the Authority in confidence with matters that may be personally sensitive or embarrassing if made public. It also enables the Authority to obtain free and frank information from members of the police regarding complaints. Secrecy is important to encourage witnesses to be frank by providing a climate in which evidence can be given without fear of self-incrimination, retribution by alleged offenders or associates, or defamation proceedings.”

That is the basis on which lawyers would have advised people to give evidence to the Police Complaints Authority—the basis on which people would have gone there—and now it is all being overturned by this one-off piece of legislation. The explanatory note quite properly sets out that “It is necessary for the Commission to have access to that material in order to complete its task. Accordingly, it is vital for public confidence in the Commission, the police, and the Authority that this uncertainty be removed.”

When one looks at it all, one wonders whether any human beings will be called to give evidence, and whether the files will just be read as they existed all those years ago. What weight will be given to those files, and what weight will be given to human evidence? It will create quite a lot of problems. New Zealand First will be very interested in the select committee process.

I appreciate Mr Martin Gallagher, the chairman of the Law and Order Committee, talking to me about this matter. He indicated the helpful way in which he intends to proceed in the select committee, and that is most appreciated. New Zealand First will take that into account as well. We must make sure that all people are protected, particularly the person who has laid the complaint that is now the subject of the commission of inquiry, but also all those people who might have expressed views one way or the other. There might be people whose names have not come before the public, and who have been shielded up until now.

On balance, New Zealand First will support the legislation to a select committee, and we look forward with considerable interest to what will happen there before we finally make our decision on this matter. We have a great deal of support for the New Zealand police force. We look forward to the submissions that no doubt will be coming from the Police Association, and will be very interested in the way the public conducts this matter in the select committee.

MARC ALEXANDER (United Future): This bill is deemed to be required so as to allow the commission of inquiry into police conduct to fulfil terms of reference that, amongst other things, include the scrutiny of any investigations carried out by the Police Complaints Authority. In every sense, the bill is an evaluation of the adequacy of a process that represents the very means by which the integrity of the Police Complaints Authority must be assessed. It goes to the heart of how the public can have confidence in our police.

The bill is aimed at liberating—and I use that term euphemistically—files that are held by the authority and, under section 32(1) of the principal Act, are subject to blanket secrecy. Those files include information mostly gathered by police conducting investigations on behalf of the Police Complaints Authority, access to which is necessary if the commission is to inquire into the operations and processes of the Police Complaints Authority.

We have heard much, particularly recently, on alleged police activities that have not been investigated to public satisfaction. Rape allegations against police, seemingly dismissed by initial evaluations, do nothing for public confidence and nothing to reinforce the police ethic of service to the community. The real point is that without this enabling bill the commission would in all probability be stymied in carrying out its much-needed function. In short, access to Police Complaints Authority files is a necessary condition to the fulfilment of the obligations of the commission.

Although it might seem that the bill is at least 1 week premature, given that the question of the extent of the Police Complaints Authority Act secrecy provisions is to be heard on 8 April, it will nevertheless allow the select committee to address speedily the inevitable privacy and Bill of Rights concerns. Invariably, those concerns will be raised by those who, for the most part, want to protect the guilty over the legitimate rights of the innocent. The privacy interests of those who can provide valuable information—be they complainants or police officers—should not hinder and blind us to ascertaining the culpability of those police who have abused the public trust.

I understand the reasons for the bill. I also understand why its review through the Law and Order Committee needs to be truncated, but why has the bill taken so long to get to the House and deny other parties the ability to look at it as it was presented? In itself, it is hardly a rival for War and Peace; at 7 pages, it would not break one’s foot if it were dropped on it. Why was this bill not brought to the House sooner so that there could be fair examination by other parties? It could have been introduced in tandem with the commission. The Law and Order Committee would then have had a bit more time to consider the bill before returning it to the House. That fault lies firmly at the feet of this Government.

Nevertheless, United Future will support the introduction of the bill, not only to empower the commission to do its work, but also to help restore public confidence in both the Police Complaints Authority and the police. But we give that support advisedly, and only to the extent that the bill be passed over to the Law and Order Committee. After that, all bets are off.

Dr MURIEL NEWMAN (Whip—ACT): I rise on behalf of the ACT party to speak on the introduction of the Police Complaints Authority (Commission of Inquiry into Police Conduct) Amendment Bill. I add our party’s voice to the complaints that have been raised in this debate about the shambles of the Government’s introduction of this bill. This is the sort of bill that the public of New Zealand expects a Government to have talked to other parties about. It is not a bill that parties vote for on political lines. It is one of those rare bills—I might add—that all parties usually agree on, because it is in the best interests of the country that we agree on some parts of our law. But this Government did not even have the courtesy to inform Opposition members that the bill was coming or provide us with an advance copy. In fact, I picked up my copy when the Acting Minister of Justice stood up to make her speech. That is a total disgrace.

One of the things that Parliament operates on is goodwill between parties. We see it at the Business Committee every week where all parties agree on how the business of the House will be conducted. In general, we do see that goodwill on bills like this. I would like to find out whether that situation was because the Minister’s office is in a complete shambles. I see that the bill is under the name of the Hon Phil Goff, although the Hon Margaret Wilson moved the motion, so I do not quite know which Minister is responsible.

The other point is that we have just heard from United Future, and although the member did not spell it out, it sounds to me as though United Future was given an advance copy of this bill. So why on earth was this bill introduced under urgency? Why was it not given the normal period of 3 sitting days to lie on the Table, so that the parties have a chance to look at the bill, take it back to their caucuses, seek advice on it, and come to this House and debate the real issues in an informed manner? This bill is one of the worst examples of disorganisation by the Labour Government in my time here while Labour has been in power.

I share the disappointment expressed by other members. When we see such a shambles going on, either we have to realise there is a shambles—in other words, the Government is not governing properly because it is too disorganised—or we have to be sceptical about its motives in including this bill in the urgency motion and avoiding giving it to members until the debate had started. That is the real worry, and I stand here right now not knowing the answer. Is it because the Government is in a shambles, or is it because, for some reason or other, it wants to ambush the Opposition parties? I do not know the answer, and it is a real shame for New Zealand when a bill like this has to be questioned in such a way.

This bill has been drafted because of the Commission of Inquiry into Police Conduct with regard to sexual assault cases. The bill will allow the commission to have access to files that are held by the Police Complaints Authority. This is actually a really profound piece of legislation, because all those people who gave evidence to the authority would have done so knowing that their confidentiality was absolutely assured. It was like their evidence would be taken from them and put in a steel box, which would be locked with a big key and buried in the ground somewhere, and the key would be thrown away. That is how people have viewed the Police Complaints Authority. They have known that the information cannot be used against them, that the information can never find its way out into the public arena. That has been one of the success stories of the Police Complaints Authority—the fact that confidentiality has been assured. We now have a bill that is going to dig up all those metal boxes that are buried in the ground. It will marry up all the keys that everyone thought had been thrown away, and will open up those files and make them available to a new commission of inquiry.

Because we have not had a chance to vet the bill thoroughly and understand its intention—certainly, our party was not briefed on it—we do not know where else that information will go. Who else will find out what is going on or what people have said in the past? That information, until now, has been locked away, in a confidential manner, by the Police Complaints Authority. This is another example where people out there listening to this debate may be worried about the police, worried about the Government, and worried about things like assurances of confidentiality, and we as members of Parliament cannot tell them exactly what is going to be involved in this case. So the bill undermines not only the Government and its intentions but the police as well. Why would people comply with requests made to them, when they can say they will not give evidence? Why would they comply, if the people who tell them that any evidence would be kept secret and confidential are later seen to break their word?

That is the problem with retrospective legislation, which is what we have now. We have a bill that is overturning assurances that have been made to the people of New Zealand over the years. The ACT party does not believe that retrospective law is good law, and, in general, we do not support retrospective legislation. But in this case, given the nature of the inquiry that is going on, given the nature of the concerns about the allegations that were swirling around the police, we think it is only right that we cooperate in the manner that is possible, so that we can try to put all of this behind us and restore confidence in the police. So our party will not vote against this law now, even though, given the treatment we have received, we are tempted to do so. I just remind the Government that goodwill is a two-way street in this Parliament—in fact, in life in general. We will not vote against the bill going to a select committee, because we do want to hear the advice of the officials, we want to hear the advice of the police, and we want to hear the evidence given to the select committee by the public.

We are very concerned that the actual period of time that this bill is open for submissions is very, very tight. It is just over a month, and, as everyone here knows, by the time it is advertised and the people who need to know find out that this bill is before the select committee, we will probably find that the cut-off date has already arrived, and many people will be denied their opportunity to have a say on something that could affect their whole life. We are talking about serious matters and about people who had been assured of confidentiality.

I finish by saying that, first of all, we will support the referral of the bill to the select committee, but we do expect the Government to do better. This process is simply disgraceful and shameful. It is an arrogance from this Government that it expects goodwill on a very, very serious matter and does not treat members opposite with the respect they deserve.

RICHARD WORTH (National—Epsom): With reluctance National supports the Police Complaints Authority (Commission of Inquiry into Police Conduct) Amendment Bill. I say that it is with reservation because, for reasons I will refer to in a moment, there seem to be a number of drafting shortfalls in the legislation.

But, more significant, I would assert that the Standing Orders do not contemplate the process that has been followed in connection with the introduction and speedy passage of this bill. That is quite clear, from looking at the Standing Orders. Standing Order 273, relating to the introduction of Government bills, notes: “A Government bill is introduced by the Leader of the House informing the Clerk on any working day or by 1 pm on any sitting day of the Government’s intention to introduce the bill.” That may or may not have happened in this case—we do not know—but what we do know is that just over an hour ago was the first time that National saw this bill and was able to reflect on its implications.

It is clearly contemplated by the Standing Orders that there be a space of time between the introduction of a Government bill and the bill being set down for first reading. That is made manifest by Standing Order 280, which provides that “After its introduction a bill is set down for first reading on the third sitting day following.” This bill was introduced perhaps an hour ago, and, instead of that planned 3-day pause—which may be longer than that, because it is 3 sitting days—we are now involved in the first reading of this bill.

So it is little wonder that Opposition members are concerned about the course of process that has been followed here, and it is not surprising that one of the Opposition members should say in such a bold way—if, in fact, United Future counts itself as being in the Opposition—that all bets are off. We have seen eroded an important convention that should characterise the conduct of this House, and that is that, where practicable, the process of legislation should be accompanied by a degree of goodwill and comity. That has certainly not happened here.

The work of this commission of inquiry is, clearly, important and critical work. I do not believe that, in the lifetime of most members of this Parliament, a state of affairs has occurred where significant reservations are looming large in the public mind about the conduct and integrity of the police. As all members would accept, it is absolutely critical in a legal system that there be a high measure of confidence in the police and support for their activities. I suggest that recent newspaper publicity has put that issue clearly at risk. If it is the case that the Crown Law Office, the New Zealand Police, the Ministry of Justice, and the commission of inquiry believe that the commission may be hampered in carrying out its task through inability to access material held in Police Complaints Authority files, then, quite clearly, that material should be delivered up, subject to appropriate safeguards. It is absolutely vital that the work of the commission not be impeded, and that there emerge from its deliberations support for the conclusions that follow from its consideration of the issues. But I do not believe we should have been put in the position of having to hasten this legislation through Parliament. This was a readily identifiable issue at an early stage. The moment the commission reflected on what its task was to be, it should have been immediately apparent that issues touching the work of the Police Complaints Authority would arise.

The bill itself is deceptively simple. It is in two parts, but, from looking at those two parts, I think a host of issues arise that need to be considered by the select committee. For example, in clause 4 there is a definition of “member of the police” that seems to run into an immediate drafting problem. It provides: “member of the police includes a former member of the police (other than a person who is currently a staff member or employee of the Authority)”, and I fix on that phrase “staff member or employee of the Authority”. Surely, staff members are employees of the authority. How could that be otherwise?

Then there are issues that other speakers have referred to, relating to the scope and intent of the definition of “restricted matter”. There is a sunset clause that provides that the bill expires 1 year after the commission finally reports, and that, clearly, is an appropriate provision.

In Part 2, where the substance of the bill is contained, other issues arise. It is quite clear that the two critical sections are sections 32 and 33 of the principal Act. For myself, I have no quarrel with the changes proposed to section 32, but if one looks at the thrust of the drafting of the changes proposed to be made to section 33, one finds that the same cannot be said. That particular clause, which is more concerned with aspects relating to the authority, sits singularly uncomfortably with what is planned in subsection (2A) of section 32.

There is a section in the Police Complaints Authority Act that has not been altered by this bill, and that is section 25(4). So it seems to be the case that evidence that has in the past been given to the Police Complaints Authority will not be allowed to implicate, by way of admission, the officers or persons who gave that evidence. That is not absolutely clear, and needs to be considered because, quite clearly, complainants and police officers who gave that evidence to the authority did not contemplate, on the then state of the law, that that material might be used against their interest.

Finally, could I say that, in supporting this bill going to a select committee, the National Party should not be assumed to be assenting to the details of the legislation. We take the view that it is appropriate that it go before a select committee so that consideration can be given to dealing with the excrescences in the drafting, and to aiding the commission to do what is, clearly, critical work.

Bill read a first time.

Hon MARGARET WILSON (Acting Minister of Justice): I move, That the Police Complaints Authority (Commission of Inquiry into Police Conduct) Amendment Bill be referred to the Law and Order Committee for consideration, and the committee to report back by 3 May 2004, 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, despite Standing Orders 191 and 194(1)(b) and (c).

Motion agreed to.

Bills

Charities Bill

First Reading

Hon MARGARET WILSON (Minister of Commerce): I move, That the Charities Bill be now read a first time. At the appropriate time I propose to move that the bill be referred to the Social Services Committee for its consideration.

The Government both recognises and highly values the significant contribution the voluntary and charitable sector makes to New Zealand society. Since June 2000, when my colleague the Hon Steve Maharey, the first Minister for the Community and Voluntary Sector, publicly acknowledged the importance of community, voluntary, iwi, and other Māori organisations to the health of our country, the Government has been working to improve its relationship with the sector. Following on from the Hon Steve Maharey’s acknowledgment came the signing of a statement of Government intentions for an improved community-Government relationship in December 2001. The report of the Community-Government Relationship Steering Group was published 8 months later. Last year saw the Office of the Community and Voluntary Sector established. The Government’s commitment to improving its relationship with, and strengthening its support to, the community and voluntary sector is ongoing, and the tabling of the Charities Bill in the House today is further evidence of that commitment.

This bill provides for the establishment of a new Crown entity, the Charities Commission. The commission’s primary function will be to administer a registration and monitoring system for charitable organisations and approved donees. The commission will also be responsible for educating and assisting registered charitable organisations, approved donees, and other people to comply with their regulatory obligations and duties. Also, the commission will consider, report on, and make recommendations on any matters relating to charities, will stimulate and promote research into any matter relating to charities, and will carry out any other functions the Minister may direct it to perform.

Creating a registration system will help to foster a culture of philanthropy and giving in this country, by increasing the public’s trust and confidence in charitable organisations. The bill provides that all organisations wanting to register will need to supply details of their activities and purposes. The commission will then assess those details against the requirements of the charitable purposes test, which are the advancement of education and religion, the relief of poverty, and any other purpose beneficial to the community. All registered charitable organisations will be issued with a unique registration number. That number will need to be displayed on any materials used when money is being collected from the public, so that people who make donations can be assured of the organisation’s charitable purpose and financial solidity.

Registration with the commission may be voluntary, but only those organisations that choose to become registered can continue to access tax exemptions or be classified as approved donees. Registered organisations will have to file an annual return, showing that they are undertaking charitable activities. In addition, they will have to provide the commission with basic financial data when completing their annual returns. That will also help to increase the sector’s transparency and accountability to the donating public, and to those to whom it provides assistance. All information filed with the commission will be publicly available and accessible on the commission’s website. That will increase transparency and promote good governance. The Government hopes that it will, in turn, encourage more people to support charitable organisations. The ongoing monitoring provided for in the bill will mean we can make sure that tax exemptions are being appropriately used by the organisations entitled to them.

The registration and monitoring system will also provide more information about the charitable sector. Currently, there is no general collection of information about the activities or funding sources of charities. For example, one of the main forms of assistance available to the charitable sector is the exemption from paying income tax. However, the exact extent of that assistance is unknown. The information collected by the commission will provide a better indication of the size and scope of that support in the charitable sector. It will place us in a much better position to assess whether assistance to the sector is as well targeted as it could be or whether it should be improved, and if so, how.

The establishment of the Charities Commission will also help to bring New Zealand into line with other Commonwealth countries, where registration and reporting regimes for charities are commonplace. It is also the first step towards instigating measures to satisfy New Zealand’s international obligations under the Financial Action Task Force’s Eight Special Recommendations relating to the financing of terrorist organisations through not-for-profit entities.

As I mentioned earlier, the commission will be a new Crown entity. The board will be made up of five to seven members. The responsible Minister will appoint the board members, in consultation with the Minister of Revenue and the Minister for the Community and Voluntary Sector. We will be actively calling for expressions of interest from people wanting to be commissioners on the inaugural board. That will be carried out by contacting key groups in the sector, as well as by advertising in the media. As a Crown agent, the Charities Commission will be required to give effect to Government policy. However, it will be fully independent when using its statutory powers—for example, when making a decision on whether to register a charity. The Inland Revenue Department will continue to have an audit function, and to have the authority to deny a tax exemption to a registered charity if it is not satisfied that the purposes of the organisation are charitable.

I intend to move that the Social Services Committee consider the Charities Bill.

RICHARD WORTH (National—Epsom): National is absolutely opposed to the Charities Bill, and would wish that it take not one further step. This is the second major challenge that the Government has launched against charities. The first was substantially abandoned following a discussion document dated 2001. Members may recall what the Government then proposed to do to charities. There were a number of planned steps, and a detailed time frame for the implementation of the legislation. It was planned that the trading operations conducted by charities were to be taxed in the same way as other businesses. The Government’s intention was to tax charities that put their tax-free profits back into the business, rather than distribute those profits for charitable purposes. The effect would have been to tax the retained earnings of charities. That was the first element of the plan. The second element was that charities would have had to pay fringe benefit tax on fringe benefits provided to employees.

Unsurprisingly, there was an uproar from the charities. There are 37,000 charities in New Zealand, and they range from entities like cancer research foundations and the National Heart Foundation, to kindergartens and sporting clubs. The Government backed off, but now it has come again, and I suggest that what it proposes is equally inappropriate, and is, to some extent, sinister. The latest plan is to register charities, and to collect information about their activities and funding sources. I took those words from the first three lines of the explanatory note of the bill. There is no Charities Commission in Australia. Why is it necessary to have a Charities Commission here?

There are three reasons why National opposes this legislation. The first is that it is utterly unnecessary. The Inland Revenue Department is currently responsible for the oversight of charities, and the regime it has established works well. Whether an entity has charitable purposes, and is therefore entitled to the income tax exemptions provided for under the various sections of the income tax legislation, depends on its constitution, the trust deed, or the other rules under which the entity chooses to operate. There is no statutory requirement to apply to the Inland Revenue Department to secure tax-exempt status. However, many entities choose to do so, in order to gain an assurance that they are entitled to an exemption. When entities seek Inland Revenue Department advice as to their charitable status, they provide the department with a copy of their constitution and/or the rules governing the entity. The department reviews those documents to ensure that the aims and objectives of the organisation are charitable, and that no person is able to derive any personal gain from the organisation. The department confirms, in writing, the sections of the revenue Acts that apply to the organisation. The system is working well. If it were not working well, that would be an indictment on the Inland Revenue Department. There is no suggestion that the system is in other than sound working order, so the first argument is that there is no need for a Charities Commission.

The second argument, which has been articulated by a number of people in the media, is that there is a real threat to public debate and advocacy. The Green member of Parliament Sue Bradford has said—I suggest correctly—that there is a danger that community groups performing advocacy will not be eligible for charitable status. I suggest that she asked a very legitimate question about whether this legislation is an attempt to control or kill off groups that carry out lobbying outside their service function. I assume the Government has the numbers to pass this bill. I assume this is another case where United Future, the so-called Opposition party, will lend its support to the Government to provide the necessary numbers. I commend the Greens for the principled stance they have taken in connection with this legislation, and I urge United Future to carefully consider the stance that it plans to take. As Sue Bradford said, any non-profit organisation worth its salt should be involved in advocacy. I would say that advocacy is a natural consequence of charity. It always has been; it always will be.

Why is the Charities Commission to be entrusted with a tasked function that may well see the advocacy role of charities disappear?

Lianne Dalziel: Ha, ha!

RICHARD WORTH: There was a snigger from one of the Government members in response to the comment I have just made, but anyone who has worked in charitable organisations will know it is really important to advocate for the cause. To cut off that possibility, I suggest, will further weaken the philanthropic frameworks that should be a critical part of the New Zealand system.

The third matter I would like to deal with has a constitutional aspect. If one looks at the explanatory note of the bill, one sees a very clear omission. The omission is that, for some reason, there is no regulatory impact statement or business cost compliance statement. Those statements are required by the Step by Step Guide to Cabinet processes. It is a precise and clear obligation that such statements are required to be reproduced in the explanatory note of a bill. Heading 3.36 in the guide makes that crystal-clear. It states: “The RIS/BCCS”—the regulatory impact statement or the business cost compliance statement—“will also be included in the Explanatory Note to Bills that are introduced into the House.”.

I raise the question of why the Cabinet guide has been breached in this particular case. It is true that there are a number of exceptions contained within the guideline document, but no exception is relevant in this case. The exceptions are clear on their face. This particular bill does not create an exception to the requirement, so we should have seen a statement of the net benefit of the proposal, including the total regulatory costs—administrative, compliance, and economic costs—and benefits, including the non-quantifiable benefits of the proposal. I know why we have not seen that material. The reason we have not seen it is that the Government is ashamed to publish it. The compliance costs of setting up this commission will be substantial, but more significantly, the impact for the 37,000 charities in New Zealand will be out of all proportion to the benefits that can possibly be gained.

New Zealand has not actively encouraged a philosophy of private philanthropy, in stark contrast to countries like the United States, where charitable giving is widely accepted and encouraged with a range of incentives.

DAIL JONES (NZ First): When I was recently in legal practice, I helped to create a number of trusts under the Charitable Trusts Act. As I did so, from time to time I asked myself what sort of control exists for those charitable trusts. Who knows anything about them? So I made some inquiries about what type of regulatory measure exists for charitable trusts, and I discovered that way back in 1979 there had been a Property Law and Equity Reform Committee report on the Charitable Trusts Act of 1957. I got a copy of that report in the early 1990s. Of course, I misplaced it a long time ago, but I got the library to get it for me again because I was still concerned about the way in which those trusts had been operating.

In paragraph 1, the report states: “The committee has been asked to consider the comments made by T A Gresson, J.”—Justice T A Gresson—“in the case of Re Goldwater Deceased [1967] NZLR 754. Subsequently it was suggested that the whole of the Charitable Trusts Act 1957 called for a general examination. In particular, the question was raised of the desirability of establishing more effective means of control of charitable trusts, perhaps by means of a charities commission along the lines established in the United Kingdom.” So way back in 1967 concern was being expressed in New Zealand about the way in which those trusts were operating, and the lack of control on them. Again, in paragraph 13 on page 7, the report states: “The committee was asked to give particular consideration to the questions raised by the Rev. R M O’Grady, the associate-general of the National Council of Churches, in a newspaper article in which he said: ‘The public has no protection against charities in New Zealand. It would not be difficult for a skilled promotional person to raise $10,000 or more for almost any appeal one cares to name. Simply by national advertising and a small mailing to selected persons, any charity can get itself established in a few weeks. Raising really big money for a charity requires time and planning. By far the best method is the house-to-house collection.’ ”

Concern was expressed in this report, published in 1979, with quotes from the Rev. O’Grady of the National Council of Churches, and Justice Gresson, a High Court judge, about the way in which charities were operating in New Zealand way back in 1967. All I can say on behalf of New Zealand First is that I am delighted to see the Charities Bill before the House. It is long overdue. There are far, far too many rip-offs in our society in so far as charities are concerned.

I thought I would do a little bit of research. I put “charities” into a search engine on the Web, as I am wont to do with various things, and I got the UK website. There are 1 million registered charity trustees in the United Kingdom. My friend from the National Party told us vaguely about the situation in Australia. He circumvented any reference to the United Kingdom, but I am sure his research department also checked the United Kingdom situation. There are 1 million registered charity trustees in the UK! There do not seem to be any problems in the UK with that. I have never heard any complaints about it. What is suggested in this report is that there should be a charities commission along the lines of that established in the United Kingdom. I cannot see any particular reason why there would be problems in the UK; it all seems to work well.

Richard Worth: The problems are on the Web. Tell us about them.

DAIL JONES: I am surprised that my colleague from the National Party who is interjecting now did not tell us about the situation in the United Kingdom, and I suspect the reason was that the process is working very well there, and he was unable to come up with any problems associated with it.

The Green Party issued a press statement that stated: “The definitions of a ‘charity’ are almost unchanged from the 1908 tax law.” In fact, the definition of a charity is almost unchanged from that of 1601, in the Statute of Elizabeth. That is the basis of a charity. It is for looking after the poor, their education, and suchlike. Charities have never been designed for the purposes of political parties. Political parties should not expect to get support as a charity. [Interruption] OK, the National Party is upset now that it has been exposed, but political parties should not expect to get support as a registered charity. That is very, very clear. Of course, the National Party needs some financial support. [Interruption] As my colleague said, I doubt it very much. It is well and truly established that looking after the poor, the sick, the unwell, and suchlike is the basis for establishing and supporting a charity, and has been from way back in 1601.

We had a case in the House, around 1979-80, relating to CORSO. Remember how CORSO went? It was a classic example of an absolutely wonderful New Zealand icon of a charity that looked after the poor. I remember that, when I lived in Grey Lynn and used to walk down the road towards Hobson St, CORSO had a wonderful building there where it collected clothes and sent them overseas. But it drifted away from its course—what it was set up for and intended to do—and effectively became a political organisation.

Hon Richard Prebble: A bunch of radicals.

DAIL JONES: A bunch of radicals, absolutely. They were deregistered with regard to charitable purposes, and out they went. I suspect, perhaps, that the Greens are saying they do not support that idea. That is very good. My colleagues from the National Party who are here support the Greens. Well, in this bill there is a clause stating that people with convictions punishable by imprisonment for 2 years or more should not work for charities. I think that is very, very important.

Richard Worth: That won’t rule out all the Greens.

DAIL JONES: That is a very unkind comment from Mr Worth—very unkind indeed. But he is supporting the Greens. He is working with the Greens, and cannot quite make up his mind whether he is for them or against them on this particular provision. As far as the Greens saying that people with those criminal convictions should be allowed to work for charities, and suchlike, I do not agree with them on that matter. I am consistent in my difficulty in agreeing with the Greens on many issues. Generally speaking, however, in so far as this provision is concerned, I think it is important and long overdue that people whose role is to make money available to charities have the minimal degree of registration that is required by this legislation, and that there is some degree of confirmation—

Richard Worth: Minimum of $20,000 a year.

DAIL JONES: —$20,000, yes, absolute nonsense—that charities have some degree of supervisory attention from the Government of the day, and that not any Tom, Dick, or Harry can be involved in charities. They should have a number, and suchlike, so that when collectors go by, at least on the face of it they have a number. We know that the unscrupulous will give themselves a name and number, and will still try to collect money illegally, and the like. But on the whole I think this legislation is a very good idea.

So far as the tax side of it is concerned—and I do not think my colleague has been associated much with charities—for every charity I have registered I have tried to have in its rules a provision that has been approved in advance by the Inland Revenue Department, using the wording required by that department, for the way in which the funds can be utilised in a liquidation, and for the way in which the staff of the charity can be paid. Those are the two things the Inland Revenue Department is concerned with.

To repeat for my friend on the right from the National Party, the mischief that could be done was set out by Justice Gresson in 1967. It was set out by the National Council of Churches in the late 1970s. I am sure that anyone associated with charities knows there are unscrupulous people out there who are willing to rip off the New Zealand public. Doing it by way of a charity—or so-called charity—is one of the best ways possible. This was a little hobby horse of mine when I was in practice—to have something done about tidying up the situation. All I can say is that, on behalf of New Zealand First, I am delighted that this type of legislation, which seems to have worked so well in the United Kingdom, is being introduced into the House today.

SUE BRADFORD (Green): On the surface of it, the Charities Bill is unexceptional legislation put together in response to long-held concerns by people in both the State and private sectors, as well as in the voluntary sector, that the existing law dealing with the registering of charities for taxation purposes is out of date and inadequate. The overall purpose of the bill is to establish a Charities Commission for the first time in this country, which will register organisations for tax exemption purposes and monitor the financial returns and activities of groups. The bill has been a long time in gestation, finally emerging after a 2-year review and consultation process and a drafting period, first with Treasury then with the Ministry of Economic Development. One would have hoped that after all that time and work they would have got it right, but I fear that that is not the case.

First of all, the definition of what constitutes a charity remains almost unchanged, as my colleague Mr Jones said, from that contained in the archaic 1908 tax legislation on which this bill is based—which in turn is based on very, very old law from England. I take one example from clause 4, “Interpretation”. In subclause (2) “charitable purpose” is still principally defined as that which relates to “the relief of poverty, the advancement of education or religion,”—words that will be familiar to all the poor souls who have struggled to explain to the Inland Revenue Department why their trust or incorporated society should receive charitable status, at any point in the last hundred years or so. Surely, in preparing this bill, the Government could have done more to modernise and update the wording in a political, social, economic, and cultural climate that has changed significantly since 1908—especially when there is a lot of academic and political work happening in this area, not only in New Zealand but also all around the world, on which the drafters could have drawn for inspiration.

Secondly, the Green Party is concerned that as the bill is written there is a real danger that if any community group carries out any kind of political advocacy, it will not be eligible for charitable status. That is highlighted in clause 26(1)(b), which states that an organisation can be removed from the register of charitable organisations if it “(i) has any purpose that is not a charitable purpose; or (ii) is not being maintained exclusively for charitable purposes;”. Because the bill as drafted relies so heavily on the existing legislation, and on the history of how “charitable status” has been defined and interpreted by the Inland Revenue Department up to now, which excludes political advocacy, I am therefore very wary that if this legislation was passed as it stands, it would open the way for Government to control and possibly kill off groups that carry out any kind of political advocacy, lobbying, or campaigning as part of their functions. I welcome the understanding of the National Party on that point. However, its members themselves used that sort of thing against political groups, I might say, during the early 1990s.

That danger becomes particularly apparent in an environment like the one we are in right now, with things like the threats to the funding of groups that carry out any kind of health advocacy, the Auditor-General’s report last year into the funding of groups associated with Donna Awatere Huata, the current National and ACT attacks on many community sector initiatives and individuals, and the Government’s response, which includes, for example, the clamping down on Community Employment Group funding announced today. Most non-governmental organisations do have an advocacy role, whether it is making submissions to select committees or local councils on relevant legislation or bylaws, putting out newsletters that critique Government in their particular policy areas, making statements in the local media, or taking part in a host of other activities. I would contend that those and many similar functions are an absolutely valid part of community sector work, and that the clauses that open the way for groups to have their charitable status revoked for carrying out a non-charitable function must be changed and clarified during the select committee process, so that they cannot be used as a method of political control of the voluntary sector.

Some people will say that what I am on about here does not matter, because groups do not have to register for charitable status—it is entirely up to them. They can be free of all the controls this bill will bring, if they simply choose not to apply to become a charitable entity. Although that sounds fair enough, underneath there lies a further threat. I am really concerned that once the Charities Commission is up and running, and all groups involved have their registration numbers—which they must, by the way, display on every written communication they send to anyone, ever—donor organisations will use those registrations as a shortcut to decide who will get funding and who will not. I know that funders in this country are always under pressure to take shortcuts to decide which groups they will support, and who is deserving and who is not, for their particular purposes—especially in a climate where groups are chronically underfunded and there are usually far more applications than even the most well-intentioned of donors can ever meet. My worry is that once this bill is in force donors, whether they are Government, local government, private philanthropists, or community trusts, will almost automatically exclude groups that do not have registration from eligibility for funding. Groups that do not fit the criteria under this bill, or who want to maintain their independence from Government and do not wish to register, could miss out altogether from most sources of funding, and therefore, in quite short order, die.

Thus I believe that the bill has much wider implications than might be immediately apparent. I hope every non-governmental organisation in the country will be considering the issues carefully, and making submissions to the select committee over the next couple of months. I think it is critical that even those groups that might think they will never apply for charitable status give consideration to making submissions, because of the possible implications of this legislation for them—which are substantial and threatening.

For the majority of groups, which will want charitable status under the new regime, there is a further issue to consider. It now appears that key reporting requirements under the charities legislation will actually be introduced by regulation after the bill is passed. That means that neither political parties considering the bill in the select committee and in the House, nor community groups making submissions, will know what level of compliance will be required. I am beginning to wonder whether the Government is actually using this bill as a kind of Trojan horse to bring in a very high level of financial and organisational accountability, with associated extra compliance costs to be dragged out of groups that are mostly substantially underfunded, anyway, and many of which are struggling right now for financial survival. I commend the National members for understanding this matter. It will be a perverse outcome if, with the passage of this bill, Labour introduces a compliance regime that is so expensive that it will further undermine the ability of groups to survive.

That will be exacerbated by the ongoing attitude of most funders that they will not support infrastructure—only frontline services or projects—and that organisations should as a rule of thumb meet a substantial percentage of such costs by external fund-raising, which again takes time away from the real work of the group. Ironically, on top of this, new reporting requirements could well compel groups to reveal more than they do at present about what proportion of the funds they raise themselves from the public are used for administration and infrastructure costs, thereby risking, in some cases, even more difficulty in attracting external public support.

I also question to what extent the compliance measures to be introduced in the bill and by regulation will be geared to playing a controlling role in the actual day-to-day running of organisations. There are already measures in the bill that allow the Charities Commission to examine and inquire into the activities and proposed activities of any group, into any of the people involved, into the management and administration of the group, into the outcomes achieved, and, of course, into its use of income and property. On top of this, clause 87 says that the Minister may direct the commission to perform any additional function consistent with its broad objectives. People less paranoid than me may not be worried by this, but I do urge awareness of the sensitive environment in which groups are currently operating, and recollection of the traditional hostility of Governments towards the political advocacy functions of the voluntary sector.

The way that this bill has been written and devised overall appears to fly in the face of a lot of the good work that has been done over the last 4 years through the Community-Government Relationship Steering Group, the He Waka Kotuia report, and other processes that are still happening around the country. The bill does not reflect a particularly sound understanding of the principles that have been brought out through those processes, or of how the sector works. It appears that the bill arises from Treasury and the Ministry of Economic Development, not from the Ministry of Social Development, which has actually been that part of Government engaged in the cooperative processes initiated soon after the 1999 election. I may be wrong, but I think that perhaps if the Ministry of Social Development had written this bill, it might have been a more creative, responsive, and courageous piece of legislation.

However, it is of course not too late to turn this bill round. The Green Party will be supporting the Charities Bill through at least its first reading, in the hope that during the select committee process we will be able to work with other parties to improve the legislation in a whole range of ways. We are keen to work with community sector organisations to ensure that this bill ends up having a positive, rather than a negative, impact on a sector that has been incredibly politically battered over the last 14 years, and does not need a Labour Government taking further steps to colonise and control what is left.

Hon RICHARD PREBBLE (Leader—ACT): I rise on behalf of the ACT party to speak on the first reading of the Charities Bill. The principal purpose of the Charities Bill is to set up a new Government organisation called the Charities Commission, which will register all charities and donees. [Interruption] Having given one speech, why does the Green Party member want to give another? The Charities Commission will register 37,000 charities in New Zealand, and it will then require all those charities to present annual returns. It will then educate those charities, then provide advice to the Government.

As has been observed in Parliament, charities are an important part of our community. Charitable law goes back a very long way. The definition of a charity was established some 400 years ago, and when I hear Green members saying that they have a new idea of what a charity is, I am somewhat sceptical. I say to them and to the National Party that charity, as understood by the community, is looking after the sick, looking after the poor, looking after education, and the promotion of religion. That is the core understanding of a charity.

I do not accept that the community should be financing advocacy. I am in favour of advocacy, but when it is said to be charitable, they are asking those who do not agree with those views to subsidise it.

But let me turn to the essential reason that I think the Government is putting this forward. Clearly, there needs to be some public confidence in charities. Public confidence in charities in New Zealand has been shaken. We have had some spectacular cases of people setting up charities and engaging in fraud. We know that. There have been cases mentioned in the newspapers. But that is not a new factor. There have been frauds for 400 years. How has this Parliament dealt with frauds in charities in the past? We have very strong law, and it is very old law, on how to deal with it. The Attorney-General has statutory duties to pursue corrupt charities. They are set out in section 58 of the Charitable Trusts Act.

The Attorney-General has the power to pursue people who have taken money wrongly from charities, and get it back from them. I draw it to the attention of the House that in the 4 years Margaret Wilson has been the Attorney-General she has not pursued one of those cases that members would have read about in the newspapers. Even those cases where people have been prosecuted, where people have taken money and gone on overseas trips, bought cars and other things for their friends, relatives, and girlfriends—[Interruption] The member is referring to that particular member, whose case is before the courts. The Government has not pursued that member, either. I say that the idea that the Government should set up a new bill, because it has not carried out its present law, is wrong.

Let me make this clear to the House. This commission is going to be a huge quango. It will have seven commissioners, and they will all get paid. But if the British experience is anything to go by, they will have an army of bureaucrats. There are 37,000 charities. Who is going to pay? In the first instance it will be the charities themselves. If members pick up the bill, they will see that there is a requirement for the commission to be sustainable. What is meant by that is that all the expenses have to be got by registration fees. At the moment, 37,000 charities do not have to pay a registration fee, but when this bill goes through they will have to pay. This is an extra cost. Who is actually going to pay that? It will come in two ways. It will come from the public, who thought they were donating money to a charity but will find that Margaret Wilson and the Labour Government have taken the money for bureaucrats and for their girls and boys they appoint to this commission. That is who will have to pay. Who will be the real losers? It will be the poor. It will be those who are not educated. It will be the sick. They will not actually receive the money because Margaret Wilson and the Labour Government think the money should be spent on bureaucrats.

I also object to this. Margaret Wilson said to the House that this was a partnership between the Government and the community sector. The Government is the unwanted partner of the community sector. The Government takes all the credit and none of the risk. The Government imposes all the rules and pays none of the costs. It is the unwanted partner. I have not had a single charity write to me and say: “Mr Prebble, I want the Labour Government to be the partner of my charity and to start imposing bureaucratic rules upon me, reporting requirements, that I have not been asked to pay and have not been asked for by those who donated to my charity. And I want to give the Government money for an army of bureaucrats to supervise me.” I have not received one such letter. If Margaret Wilson has received one from any charity, I challenge her to table it.

But it is a more serious problem that underlines this Government’s whole principle of Government. When we have a case of a few rogues, this Government regards that as an excuse to apply penalties to the law abiding, instead of holding those who break the law accountable. If Margaret Wilson had actively, in a high-profile way, pursued those rogues who took money from the public and then spent it on colour TVs, overseas trips, and the like, and if she had extracted the money and bankrupted the trustees, that would have done more for public confidence in charities than any other measure. The reality, we all know, is that of the 37,000 charities in New Zealand almost the entire number of them are doing good work with no assistance from the Government. They have not asked the Government to assist them, and this Government, because it will not enforce old laws that previous Attorney-Generals have had no difficulty in enforcing, has instead decided to impose its socialist views on charities.

I say to the Green Party that it is not so much my concern that the Government will start to take action against advocacy groups. I am not sure whether advocacy groups are entitled to be charities. However, I worry about the Government setting up a quango of this sort, giving it the powers to advise the Government, and then starting to mould the charitable groups to their making. I agree that it is quite extraordinary that every charity will now have to have a registration number—a sort of tattoo that will be placed on every charity and must be on every single publication they put out. We then read that if they do not do that, this commission can fine the charities $2,000. That is an abuse of power.

This bill has not been asked for. It is not needed. All that is required is an Attorney-General who is prepared to carry out her real role instead of thinking that her job is to advocate for the socialist republic of Aotearoa. This is another step on her socialist agenda. The ACT party—which believes in charity, believes in the concepts of charity, and thinks that charities in New Zealand are doing a good job—is opposed to this bill, and we will vote against it at every stage.

GORDON COPELAND (United Future): I am really delighted tonight to be able to rise to take a call on behalf of United Future on the first reading of this bill. I say that because I have now been involved in this issue for more than 16 years. My involvement began in December 1987, when, on a now rather infamous occasion, Roger Douglas and others lined up in the Beehive and, amongst other things, announced their intention to place a tax on charity. Charity is an old-fashioned word. It means love of one’s fellow human beings. So for whatever reason—a reason that I subsequently was never able to really get to the bottom of—the Hon Roger Douglas suddenly decided that it was a good idea to put a tax on love.

I might say that the response from the charitable sector was one of immediate and absolute fury. Five hundred years of division within the Christian churches, for example, was quickly swept aside, and an inter-church working-party on taxation, representing all the churches in New Zealand, was formed in short order. Two thousand years of division was put aside when the Jewish congregations then joined in. The group extended to all the voluntary welfare organisations in the country, all the major charities, and eventually to all the sporting clubs, as well, until there were so many people involved from so many sectors that when we went to visit Roger Douglas it was impossible to get all the people into his office. That is how I began to get involved in this issue.

The Government had to back down, basically, in the end. It had to, as David Lange famously said at the time, give New Zealanders a bit of a break so we could all go away and have a nice cup of tea. In the process of doing that, the Government decided it would like to kick this matter into touch, and in 1988 it appointed the Spencer Russell working-party, which reported in 1989. It recommended to the Government of the day that a commission for charities be established. That initiative did not proceed following the change of Government in 1990. During the years since 1990 until, I guess, about 2001, I trekked across to Parliament on many occasions, and spoke to all the successive Ministers of Revenue. I was seeking greater assistance for the charitable sector in terms of better tax rebates for individuals and companies, gifting funds to charities, and, in more recent years, accessibility by charities to imputation credits attaching to dividends received from New Zealand companies. However, all those submissions essentially fell on deaf ears. Successive Ministers of Revenue from both the Labour Party and the National Party made agreeable noises but continually verbalised their unease about more generous donation rebates because of anecdotal evidence that “some charities were involved in tax avoidance arrangements.”

However, undaunted, we continued to trek across to the Beehive, following the changes of Minister as they occurred over those years, and in 2000 we made our concerns known to Dr Michael Cullen. Those meetings were refreshing because they resulted in some positive go-forward. Essentially, Dr Cullen expressed a willingness to look at a more generous donations regime, the question of imputation credits, and a number of other issues, provided a means could be found to ensure that those benefits extended only for bona fide charities. In other words, he sought an assurance concerning the protection of the Government’s revenue base.

A Government discussion document on tax and charities followed in short order, and more than 1,700 submissions were received from affected organisations and charities from the length and breadth of this country. That in turn persuaded the Government to set up a working-party to look at the establishment of a registration, annual return, and monitoring system in relation to all New Zealand charities. In early 2002, prior to being elected to Parliament, I was part of that working-party. By now, all in this House are probably aware that the working-party recommended the establishment of a Charities Commission, which would have responsibility for the establishment and maintenance of a registration, reporting, and monitoring regime for New Zealand charities. The Government accepted those recommendations and has been working since, through an establishment group, to set up the commission.

This bill is, therefore, the climax, as it were, of a 16-year attempt by the charitable sector in New Zealand to bring about a fundamental change in its status within New Zealand society. United Future, of course, now supports the first reading of this bill and its referral to a select committee. I encourage all charities to take the opportunity to make submissions during the select committee process, with a view to finalising the law so that the commission can commence its operations as soon as possible. I think the target date is 1 October 2004.

All of this, in my view, represents a major step forward for the charities of New Zealand. The commission is designed to become a one-stop shop, and will adopt a whole-of-Government approach to bring together the interface between the charitable sector and the Government, something that currently involves much contact with the Inland Revenue Department and a number of other Government departments and agencies. I can speak for many, many charities when I say that their contact with the Inland Revenue Department, in trying to get their charitable status established, has been completely unsatisfactory. At the moment, it can take 18 months to 2 years and the most inane exchange of correspondence one can imagine to get that done. All of that will disappear once this commission is established.

Primarily the commission will be there to assist charities in their establishment, their ongoing operations, and, where necessary, their disestablishment. Eventually, however, tax-free status will be reserved for registered charities only. I want to clarify a situation that was mentioned by Sue Bradford, and that is to do with the definition of charities. This bill will in no way alter the current definition of charities. That will continue to be defined by the courts.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Wednesday)

Tuesday, 30 March 2004

(continued on Wednesday, 31 March 2004)

Bills

Charities Bill

First Reading

Debate resumed.

GORDON COPELAND (United Future): I believe that these measures will greatly benefit the sector. Firstly, they will enable Government to look to a more generous regime in respect of tax rates for donations and imputation credits. Secondly, they will increase public confidence in the bona fides of individual organisations. For example, charities involved in street collections, and similar, will do so on the basis that their registered number is prominently displayed. That, together with tax breaks, will motivate New Zealanders to be more generous in the support they give to charities.

Charities are the most efficient organisations on the face of the planet. Typically, they involve highly motivated people at both board and operational level, many of whom work for sacrificial salaries. They have an ethos that puts the needs of human beings at the centre of all they do. They can deal with sensitive issues such as hunger, poverty, and family breakdown in a compassionate and caring way, which is impossible in the culture of a Government bureaucracy—and they do it far more cheaply. I think all of us would quickly decide that we would rather deal with the Salvation Army, the Red Cross, or the Society of St Vincent de Paul than with the Ministry of Social Development or the Department of Child, Youth and Family Services. Research indicates that $1 of social service delivered through a charity would cost the Government as much as $2, were it to be delivered, even assuming that a similar level of quality could be attained through a bureaucracy.

The establishment of a Charities Commission will herald a new and exciting day for the charitable sector. When the commission has been established, United Future will seek a substantial and significant increase in the level of tax rebates for donations given to charities by either individuals or corporations. That would bring New Zealand more into line with comparable generous regimes in the USA, the UK, and elsewhere.

I shall give an illustration of that. A couple of years ago an expatriate Kiwi living in New York made a donation of $1 million to the Victoria University Foundation. He was able to deduct the entire amount of that gift—$1 million—from his US tax liabilities. Had he made that donation from New Zealand, his rebate on that $1 million would have been only $1,890. That illustrates the enormous gap between New Zealand and other countries.

That step would boost the income of charities by at least $60 million per annum, but would cost the Government just $20 million, and it would encourage an enormous boost in the nation’s social services.

Dr WAYNE MAPP (National—North Shore): By way of interjection I asked the previous speaker, Mr Gordon Copeland, a member of United Future, which supports the Government on confidence, whether his party’s objective of an increased deduction or tax credit would be achieved in the Budget this year. He studiously ignored that question, which makes me wonder whether United Future has any knowledge whatsoever about the Government’s programme in the Budget. Does it have anything other than a vain and pious hope that that could actually be achieved, or is the Government treating it in a cavalier fashion? Who needs to take United Future into account would be the Government’s attitude.

Mr SPEAKER: The member will come back to the bill.

Dr WAYNE MAPP: We in the National Party are opposed to this bill. The reason we are opposed is that we are asking a basic question that apparently is not being asked by the Government itself, and it is this: what mischief is this bill designed to cure? Is there large-scale fraudulent activity by charities that this bill would otherwise cure by its egregious and excessive regulatory procedures? Exactly what will the Charities Commission be doing that is not already being done by the Commissioner of Inland Revenue? We see this legislation as fundamentally spurious. This Government has an obsession to create, by excessive regulation, new institutions and new compliance costs so that it looks busy.

Apparently, a speaker for the New Zealand First Party said that this was something it had been seeking for years, but I do not recall anything in New Zealand First’s past statements that show this to be a deep and pressing concern on its part. Again, I ask what mischief does this legislation seek to cure? The reality is that there is no mischief. This legislation is simply not necessary. If there were substantial scandal in the charity sector, I would have expected the Minister in charge of this bill, or Government speakers—of which there have been precious few—to state the reasons and set out in detail that this has to be done because of those particular defaults. There is nothing whatsoever of that—just a recitation of the provisions of the bill itself.

I want to turn to some of those provisions. One of the roles of the Charities Commission will be to give effect to Government policy. That is specifically stated in the legislation and is noted specifically in the explanatory note. That is presumably an important point. The role of the commission is then to deal with proposed Government policies. It makes one wonder what the intent could be. We have a bill that, ostensibly, is about registration and not changing the definition of charities—and I note that the legislation has included the traditional definition that, as previous speakers have noted, goes back hundreds of years to the 16th century. But this Government also has a record in the past of floating papers in which it wished to change precisely that definition—the definition of the bill, for Mr Mallard’s edification—and the reality is that the Government intends expanding its tax take from charities.

People might ask what on earth that means. It means attacking companies like Sanitarium and the business operations of charities, which, of course, are undertaken to increase their wealth and cash-flow basis so that they can undertake their charitable purpose. That was the intention of the Government back in 2000. Now, 3 years later, it seeks to promote a bill that, whilst that is not contained within it, then makes reference to Government policies and proposed Government policies. I have to ask what the true motivation of this bill is. I simply do not believe that it is merely a matter of registration, which of itself is unnecessary. The Government has not provided any basis of its need, other than the fact that it will take place, so one has to wonder whether there is not a more serious issue.

Mr Jones spoke last night about a registration system in Britain. Whilst he proudly proclaimed the British system, he failed to point out whether there were any failings in our current system. The reality is that he did not. As is perhaps the wont of New Zealand First, he seemed to just like the legislation because it was legislation. One would have to say that New Zealand First has never been particularly rigorous when it comes to dealing with compliance costs. That party comes from an old-fashioned perspective of New Zealand’s economy. They think that what the Government does is always a good thing. They applaud big government and, indeed, they acknowledge that.

I want to refer to one point of merit in the bill, and that is the reference to the terrorist provisions—that a charity that has been deemed to be a terrorist entity under the terrorism and counter-terrorism legislation cannot be registered as a charity. I imagine that is a belt-and-braces exercise, because, clearly, any entity categorised as a terrorist organisation would have its members prosecuted and its activities proscribed in any event. So putting that in the Charities Bill is, of itself, not a sufficient justification for the bill.

We come back to the opening question: what actually is the mischief here? No Government member sought to describe it. They simply sought to describe the provisions of the bill, but not the underlying purpose of it. Therefore, the National Opposition sees no point and no merit in this bill.

A party vote was called for on the question, That the Charities Bill be now read a first time.

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 36

New Zealand National 27; ACT New Zealand 8; Independent: Awatere Huata.

Bill read a first time, and referred to the Social Services Committee.

Bills

Education (Disestablishment of Early Childhood Development Board) Amendment Bill

Second Reading

Hon TREVOR MALLARD (Minister of Education): I move, That the Education (Disestablishment of Early Childhood Development Board) Amendment Bill be now read a second time. This bill is one that has been sitting around for a period of time. It is one around which there is very little controversy. The Early Childhood Development agency had around 85 staff and had operated as a Crown entity since 1990. I think it is fair to say there is general agreement that it did not help with the coordination and the quality of work in the early childhood area to have it at a distance. That is not to say there was not a lot of very good work done by the board. A lot of good work was done, but it was complicated by the fact that it was quite a long way removed from the policy area.

The decision flowed from the Review of the Centre, and it became clear there were a number of anomalies. The classic one was in the delivery of Parents as First Teachers services where the Ministry of Education would contract Early Childhood Development to deliver the services. We discovered that the board would then subcontract the delivery of services—in some cases for a big chunk of it to Specialist Education Services, which was another Crown entity. However, that agency did not deliver those services. They were further subcontracted to community groups. That was something I did inherit. I looked at the transaction costs, because at each stage it went down the chain there was less money available for the delivery of Parents as First Teachers services, and that was a real complication.

I want to report to the House, because the actual integration took place some time ago. It is working well. It is clear that the Early Childhood Development staff who have come into the Ministry of Education have added a lot of value to the ministry. It is also fair to say there has been some real progress in the regularisation of some of the arrangements that were made.

Early childhood education is a major priority for this Government. We have made real progress in participation in early childhood education with a significantly higher proportion of children now having experience in the education system before they go to school. Early Childhood Development was a big part of that; the workers are an even bigger part of it now.

Dr WAYNE MAPP (National—North Shore): Readers of the commentary on this amendment bill will have noted there is a minority view, and that National opposes the disestablishment of the Early Childhood Education Board. We do so for two basic reasons. The first reason, which is essentially constitutional, is that the board was disestablished and the employees therein transferred to the Ministry of Education prior to the intended enactment of the bill. So it seems quite extraordinary—

Hon Trevor Mallard: Why don’t you let Phil Heatley speak? He knows about early childhood development.

Dr WAYNE MAPP: Because I am on the Education and Science Committee. It seems an extraordinary step for the Government to pass legislation that is, in effect, retrospective. It is its usual scant regard for constitutional principle that we are seeing in operation here, whereby the Government acts without legislative authority. They are the very sorts of things that I am sure were raised in a particular case back in 1976 where the Government of the day acted without constitutional responsibility. Here, once again, we see an example of a Government that ought to know better, because it proclaims itself as the authority on constitutionalism, yet it has fallen into the trap.

So now it is wanting this Parliament to rectify its egregious behaviour by, effectively, retrospective legislation. I find that, and so does the National Party, quite appalling, that this Parliament is called upon to rectify an appalling constitutional breach.

The second reason for our position is based on educational philosophy itself. It is not surprising that the Minister of Education is a centralist. He is the sort of man who is focused on union politics. He, no doubt, was an active member of the Post Primary Teachers Association, and the New Zealand Educational Institute—their fellow travellers. The Government’s whole style of operation is to centralise and bureaucratise. That is the way it views the education sector. It cannot stand the thought of a stand-alone unit. It simply cannot stomach the sense of some form of autonomy. The Minister wants to be able to sit in his office in the Beehive and control things from the top. That is the philosophy of education that the Minister brings. So it is not surprising the unit was disestablished. No one has ever, and the Minister has certainly not, put up a case as to why it had to be disestablished—on the basis of poor performance or something of that nature.

No, this all stems from a zealot’s approach to aggregation and centralisation. National’s view of education is fundamentally different. We say: “Trust the people.” Let the people determine how to govern the educational sector, and if that means independent and autonomous units, well, so be it. That is how it should be, because that is how one effectively delivers education in the way that citizens want.

This will be an issue that will be tested at the election: the choice will be the centralising, bureaucratic, control mentality that is such a feature of this Government; or trusting the people and letting parents decide—letting people who send their children to pre-school, primary, secondary educational institutions have the say.

Frankly, I am surprised that this kind of legislation does not have mandatory kindergarten provisions in it, because that is the sort of thing one would expect from this Government. Government members do not like the idea of private educational providers in the pre-school sector. They know full well that when people have the ability to make a choice, there is diversity, and that is why there has been such a growth in the early childhood sector away from the kindergartens. That is not a critique per se of kindergartens, but, having visited them, I would make this one observation about them. They simply lack flexibility. They simply lack the necessary flexibility that recognises the way people really live, with rigid starting and ending times. They have no flexibility about starting early to take into account that many parents have to work. One has to bring one’s child to a very particular place. That is very different to the private providers, who have understood what parents want.

I want to conclude on this point. The reality is that the Government needs to take note of the desire of people to control their lives, rather than having the centralisation and bureaucratic control of this bill, which, though in a small part only, nevertheless represents the deep-seated motivation within this Government to centralise, to control, and to stamp out initiative.

Debate interrupted.

Voting

Correction

DAIL JONES (Junior Whip—NZ First): On the last vote on the Charities Bill, the New Zealand First vote should have been 13 and not 12. I seek leave of the House to amend the vote.

Mr SPEAKER: Leave is sought to amend that. Is there any objection? There is not. The voting lists will be amended accordingly. I restate the result of the voting: the Ayes are 84, the Noes are 36.

Bills

Education (Disestablishment of Early Childhood Development Board) Amendment Bill

Second Reading

Debate resumed.

Hon TAITO PHILLIP FIELD (Minister of State): The last speaker, Wayne Mapp, is an indication of backward thinking by the National Party that proved to be disastrous in the past decade it was in power. We are supportive of this move because, contrary to what the previous speaker talked about—centralisation—this move goes towards a more effective and consistent approach to improving participation levels in early childhood education. This is critical to my communities of Pacific people, because our children have the lowest participation levels, and it is only this Government’s policies, approach, and up to date thinking that has resulted in significant improvement in those participation levels.

Under National it was around 60 percent—appalling—compared with everybody else, who had around 85 percent participation levels. This Government has significantly improved that, and it is now approaching 80 percent, which is nearly a 20 percent improvement from the situation under the National Government. So I am very supportive of this move, where there will be a more consistent approach throughout the whole Ministry of Education to work together to improve those participation levels.

I want to acknowledge the work Brian Donnelly did in this area when he was Associate Minister of Education. Unfortunately it was probably too little, too late, although it did establish some improvement in my electorate. I congratulate him on his support in the establishment of some of the early childhood education centres in my electorate. But nevertheless—

Hon Member: It was done years ago.

Hon TAITO PHILLIP FIELD: That is right, but I also want to acknowledge the work of the current Minister of Education, Trevor Mallard, because only a few months ago he set a record of over $1 million dedicated to the establishment of three pre-schools in the south Auckland - Mangere area. That is a continued approach to improving participation levels. I think that this move will significantly—

Hon Trevor Mallard: After David Tua lobbied me I had to do it.

Hon TAITO PHILLIP FIELD: But I think it was justified, despite the little bit of influence from certain prominent people in the community. I would say that this move means better coordination, better consistency, and people working together to benefit everyone, and particularly our children who are not yet at school.

Hon BRIAN DONNELLY (NZ First): This legislation, I mooted, was not going to inspire or create a lot of really inspirational speeches—certainly not if members stuck to the topic—and the member from National proved my point, because he did not talk to the bill at all. It has nothing to do with public-private partnership whatsoever.

What I do have to say, however, is that there has been quite a large amount of comment recently—most of it coming from the National Party and ACT—about the misuse of taxpayers’ funds. That in fact is what this bill is about: not the misuse, but the duplication of usage of taxpayer funding. That is the situation with Early Childhood Development, or the Early Childhood Development Unit as it originally was, and the Ministry of Education essentially doing the same task. As Early Childhood Development reported to us, the irony was that it was having difficulty recruiting staff, because the Ministry of Education was able to pay a lot more money to staff who had exactly the same qualifications and experience that Early Childhood Development needed, and this seemed to be a ridiculous situation.

The genesis of Early Childhood Development was in the reforms of the late 1980s and early 1990s, and both the larger parties were involved in those reforms. Under those reforms the Ministry of Education was to be a policy ministry. It was hands off, it did the policy making, it decided how much funding would be given, and then early childhood providers and school providers put things into practice. It was part of an ideology about how public service operated in that particular case. One Minister of Education is known to have told officials from the Ministry of Education: “Whatever you do, don’t get out there and talk to the people in the field, because it might taint your policy.” How ridiculous can one get?

Hon Trevor Mallard: Who was that?

Hon BRIAN DONNELLY: I will not mention his name, but I think it is well known by people in the educational field which Minister it was. Is there any wonder that by late 1996, there was a huge gap between the reality of people at the chalkface and the policy that was emanating from the Ministry of Education?

Early Childhood Development was set up as a separate entity outside the policy division of the ministry, to promote and support the development of early childhood education. That was the philosophy of the times, and I think both Labour and National would have agreed with that particular model of public service development. However, it did not quite work out that way. To start off with, Early Childhood Development had some difficulties in covering the full gamut of early childhood needs and aspirations. It was not really able to extend itself across the full range of the population with its diversity of aspirations. It is fitting that Taito Phillip Field spoke of the area of need with the population he serves, because Pacific Island early childhood education was not necessarily well served in the early 1990s as a result of the model that was put in place.

I have to give credit to Early Childhood Development, which made some very large changes, and grew tremendously by providing a much broader range of advice, and connecting with a much broader range of population groups. However, at the same time, the Ministry of Education never gave away its hands-on approach to early childhood education. As distinct from schools, where there was very much a split in the early 1990s, that never happened with early childhood education. The opposite occurred, in that as the 1990s moved on, the ministry became more hands-on, rather than less. So we ended up with two separate entities doing the same tasks, with a duplication of function and costs. The irony is, as I said, that the Ministry of Education was able to pay its workers more, and could attract the staff that Early Childhood Development needed to carry out its tasks as well as it could.

So the decision to close down Early Childhood Development is really a logical conclusion to the events of the 1990s, and to how they played themselves out. It is interesting that there was only one submission about this at the select committee stage. It was not as if people were marching in the streets saying that this was terrible. Early Childhood Development itself had come to the conclusion that a new way of organising the whole thing had to be found. Although employees were upset at the process, they worked constructively with the ministry, and we have to give them credit for that. Rather than being destructive or putting up obstacles, they worked constructively for the benefit of early childhood education, in order to bring about this legislation.

Those parties that will vote against this bill are really saying to taxpayers that they do not mind taxpayer money being frittered away on inappropriate models, because they want to play games with it. If they said that they opposed the bill because of Fitzgerald—as Wayne Mapp mentioned—then I would say that that is a much more solid ground than education or economic grounds. It has to be recognised that the changes we are now legislating for have already taken place quite some time ago.

Hon Trevor Mallard: Still on the board.

Hon BRIAN DONNELLY: In name only. This issue did not come to the House, and it was not Parliament’s decision to make these changes—this bill should have been through Parliament before this stage. All we can say is that it was bad management by the Government, because the Government obviously had this on its work programme, but it advanced the work programme in advance of its legislative programme. The Education and Science Committee made only one change, to the date on which this bill becomes law. The original bill was supposed to become law on 1 October 2003. I do not think it was even at the select committee before 1 October 2003. This is my first experience of legislation that was supposed to become law before it had gone through its first reading. It was untidy and messy, probably because the Minister was so busy closing down lots of schools that he could not get on with pushing forward these legislative and work programmes.

Hon Trevor Mallard: You support that work.

Hon BRIAN DONNELLY: Some of it. Nevertheless, to summarise, New Zealand First will support this bill. We think it is a logical and sensible step. We despise the unnecessary duplication and expenditure, which certainly does not further advance the cause of early childhood education.

BERNIE OGILVY (United Future): As the last speaker mentioned, this bill emerged from the Education and Science Committee with minimal changes that do not alter the whole discourse too much. United Future notes that both the National and ACT parties have signalled their opposition to this bill, saying that it represents “an aggregation and centralisation of function into the education bureaucracy”. To me, this is a statement of the obvious, when one of the stated goals of the Review of the Centre was, as I recall, to try to reduce fragmentation of public service agencies when they are essentially performing synonymous functions.

As we all know, the State sector reforms of the 1980s and 1990s led to a multiplication of agencies, and the actual State sector shrank as part of a desire to decouple the whole area of funding from providers. I am told that, in practice, we have ended up with more than 30 ministries and more than 100 Crown entities as a result of all that reform. A very real problem is that we fail to get any coordination when ministry policy shops are split from their satellite provider entities. For that very reason, United Future supports the amalgamation provided for in this bill. Early childhood education is too important not to be addressed as part of a coordinated strategy.

In addition to the Review of the Centre, it could be argued that this merger is warranted by the Government’s 10-year plan for early childhood education, called Pathways to the Future: Ngā Huarahi Arataki. According to a speech the Minister made to the early childhood symposium last July, the goals of the plan required a cohesive, streamlined approach, with all the relevant early childhood education experts in the public sector under the same roof. In the context of the State reform sector, United Future does not see much sense in continuing to run two or more agencies that operate in the same field, with the possibility that policy work and provision are being duplicated, and certainly the costs multiplied.

Since it was established, Early Childhood Development has been challenged through policy changes that introduced contestable service delivery. It has been faced with issues of financial viability and has used a number of third party contracts to support its infrastructure. Hopefully, this bill will put it on a firmer financial footing. As I outlined, United Future supports the second reading of the bill and its passage to the Committee stage.

DEBORAH CODDINGTON (ACT): The ACT party will vote against this bill, because we think the Minister has done a really bad job in bringing this bill to the House a year after he closed down the Early Childhood Development Board and brought it into the ministry. As ACT said in the minority report, that is totally unparliamentary and unconstitutional. The Hon Brian Donnelly talked about the benefits of this legislation, in that it would get rid of the duplication of taxpayers’ money. That is exactly what it will not do, because when the Minister announced he was bringing the board into the Ministry of Education he said that no jobs would be lost. We will still have a bloated bureaucracy and more people employed, even though in April last year the chairman of the Early Childhood Development Board, Michael Morris, told the Education and Science Committee that, contrary to what the Minister had said, he did expect some staff redundancies. To date, there has not been any.

There has also been little, if any, consultation with the early childhood sector. The New Zealand Education Institute was not consulted, and the Early Childhood Council—the biggest organisation that represents those who work in the early childhood sector—has not been consulted, at all. It demonstrates once again this Government’s contempt for that most important area of children’s education, the under-6-year-olds. It gets the least amount of money from the education budget, is pushed around and ignored, and is not consulted with, at all.

As I said, the reduction to one agency will enable the Minister to exercise control from Wellington, which he loves doing. In a speech to the early childhood symposium in July last year he grandly announced that his 10-year plan for early childhood education, Pathways to the Future: Ngā Huarahi Arataki, was: “…why I decided to integrate Early Childhood Development (ECD) into the Ministry of Education. The expertise of the Early Childhood Development agency staff will be critical to work on Pathways to the Future.”

Pathways to the Future: Ngā Huarahi Arataki was going to focus on the needs of groups with lower participation rates. It would increase participation and quality, and promote collaborative relationships. What has it done? It has produced a rort of bounty hunters. Talk about duplication of funding! I have lists and lists of community agencies, revealed through parliamentary questions, where two or three of them are owned by the one organisation claiming several times for the same children. What did “participation” mean, as championed by the Minister bringing Early Childhood Development into the ministry under this legislation? It meant that those organisations cruised around the neighbourhood looking for children, signing them up, and collecting the money. The bounty on those children’s heads was $1,000 per child. No checks were done to see whether they remained enrolled for more than 3 months—or even up to 3 months. No cross-checks were done to see whether those children were enrolled in two or three different centres, or to see whether they actually existed. It was just a feel-good, look-good Pathways to the Future: Ngā Huarahi Arataki. It even had a feel-good, look-good name.

The ministry had a meeting in Auckland last week as a result of the New Zealand Herald’s story on the bounty hunters. It decided to “facilitate dialogue” to try to stop the rort from carrying on. The amount of money will be reduced by $200 per child, so the agencies will get $800 instead of $200. Audits will mean that 10 percent of enrolments will be audited. I suppose that is an improvement from none being audited, but why 10 percent only? Why not audit all of them? The targets of greater participation that the Minister boasted about when he announced the disestablishment of the Early Childhood Development Board will not now be met, because the contracts have all been frozen.

I say to the member on the other side of the House who stood up and talked about how wonderful that was for his people, who would be having more of their children participating in early childhood education, that it will actually not happen, at all. Why? Because it has been stuffed up by this Minister not keeping control of what has been going on. Now, as a result of those bounty hunters, all the contracts have been frozen. The targets for 2003-04—1,278 Māori and 450 Pacific children enrolled—will not be met, and the Minister has admitted they will not be met. At the Ministry of Education’s meeting last week, officials admitted that the eligibility criterion is for people to have some Māori or Pacific Island ancestry. When asked whether they were considering extending it to other ethnic groups shown as being under-represented in early childhood education, such as Asian, they did not have an answer. That is another example of this Government’s race-based policy, when it keeps insisting that its policy is based on need.

There are people in poor areas who cannot afford the fees of early childhood education. They do not send their children to such centres. Why do they miss out? The reason is that their children are not of Māori or Pacific Island ancestry. That is the only way people can get help from this Government in terms of getting their children into early childhood education. What will the Government do? It is going to set up a discretionary grants scheme, which will mean that organisations that no bank would formerly lend money to will now get taxpayer money for new buildings in areas where there are already vacancies in existing providers.

Mr SPEAKER: The member will come back to the bill, please.

DEBORAH CODDINGTON: I am. That is why we are voting against it. The Minister brought in this bill to increase participation in early childhood education. That is what he said when he announced it, and that is why I am showing why we will not vote for it. It is not increasing participation in early childhood education. It is not even increasing it for Māori and Pacific children, because the Minister stuffed it up so much. Instead, what will he do? He will give out taxpayer money to build more buildings in areas where parents cannot even afford to send their children to early childhood education, because that Minister has raised the standards for qualifications and brought in pay parity for kindergarten teachers. That is why we are voting against the bill.

RODNEY HIDE (ACT): I raise a point of order, Mr Speaker. I did not interrupt while my colleague was speaking, but I do not think it is acceptable for the Government whip to be shouting out abuse at you while someone is speaking in the House.

Mr SPEAKER: I do thank the member, as always, for telling on somebody else in the House. I have already chided her and told her she was wrong.

DARREN HUGHES (Labour—Otaki): I rise to support the second reading of the bill. It comes from the work the Government has been doing on the Review of the Centre, to make sure Government services work more efficiently together. The key driver in this bill is to bring all the people who are working on early childhood education together in order to implement the Government’s very good strategic plan in that area: Pathways to the Future: Ngā Huarahi Arataki, a 10-year strategic plan for an area of the education sector that this Labour-led Government takes very seriously indeed if we are to give all children a good start. I support the bill. It is about getting the structure around early childhood education policy right, and I look forward to its speedy passage through the House.

PHIL HEATLEY (National—Whangarei): May I read to members the minority view stated in the commentary on the Education (Disestablishment of Early Childhood Development Board) Amendment Bill, because I think it best encapsulates what the ACT party and the National Party are saying regarding it. It states: “The New Zealand National Party and ACT New Zealand oppose this bill. It represents an aggregation and centralisation of function into the education bureaucracy. Moreover, the actual disestablishment occurred before the enactment of the legislation. It is a breach of constitutional principle for the Executive to implement a legislative policy without specific legislative authority.” I did not know, before Deborah Coddington spoke, that it has actually been a full 12 months from the time that that occurred in practice to the present, when we are passing the bill that establishes the mechanism for that to occur. I would find a few weeks disturbing, and I would find a few months of great concern, but 12 months, I fully agree, is a complete breach of constitutional principle, and is quite obscene.

I have three issues that I would like to raise in the debate on the second reading that outline in more detail the general reasons why we oppose the bill. The first issue is that we have seen a drive by the Labour Government to see its philosophical desire to have centralisation and central control. We saw it in the merger of the Special Education Service into the Ministry of Education a few years ago. There was no real reason for that, but the two were merged. The Special Education Service no longer stands alone. It is part of the ever-burgeoning Ministry of Education. Then there was the announcement, members will recall, of the merger of the Ministry of Youth Affairs and the Ministry of Social Development, creating another super-bureaucracy. Again, there was the issue of an agency, the Ministry of Youth Affairs, being off to the side, author of its own destiny, then becoming part of another superministry, looked over by another Minister building his kingdom. Lastly in that series, of course, we see the disestablishment of the Early Childhood Development Board, which also is being brought into the Ministry of Education.

The argument of this philosophical drive is that it will bring a decrease in bureaucracy, but I have never seen a decrease in bureaucracy in the term of a Labour Government since I have been on this earth, and that has been for some time. We always see an increase in bureaucracy. The Government also argues that centralisation will lower costs, yet we hear from the Minister of Education himself that he will raise the amount of money he pours into the sector and the bureaucracy. He also says this measure will remove unnecessary personnel. That is the usual argument for centralisation, yet we have seen a growing Ministry of Education. In fact, percentage-wise, the funding going into the Ministry of Education far exceeds the funding going into schools, universities, and early childhood education centres. So that is what we are seeing—a trend in the last few years to centralise and control, under the banner of a decrease in bureaucracy, lowered costs, and removing unnecessary personnel. In practical terms, we have seen an increase in bureaucracy, increased costs, and more employment of unnecessary personnel.

There are some big issues facing early childhood education, in particular the independent providers being hugely disadvantaged by this Government’s bias towards State-owned providers. We thought this merger would be used as an excuse to cut funding or divert attention from some of the big issues facing the sector. But in fact all we see is more funding being poured into the sector, but not into the front line, into educating kids; as I said before, we see more funding going into bureaucracy and unnecessary personnel. We have been watching this merger. It has gone on for some time now, and we can report back that that is certainly all that we have seen come out of it.

The second overriding issue, apart from that philosophical drive to centralise and control, is a concern that the Minister, through the disestablishment, is actually now listening to only one stream of advice: his own little people. When he has a query or a concern, whom does he run to? He runs to his little elves. He is not prepared to go to anyone else in the sector and listen to him or her. He does not get advice that is considered and he does not get advice without a bias. He talks to his own people. That is why a single, bloated bureaucracy that is the inspection and enforcement agency, the funding administrator, the provider of advice and support, the researcher, and the policy adviser can only lead to confusion, conflict, and poor decisions. There is no accountability, there is no contrary view, and no one calling in the wilderness is being listened to by this Minister, who wants to centralise and control. We point that out as one of our major concerns.

The third concern is to do with resources. The country, this sector in particular, is quite confused about the messages sent out from this disestablishment and merger. We hear from the Minister that the integration would provide more cohesive service delivery in the early childhood education sector. In fact, he said there would be more resources. In his press release of 12 March 2003, he stated that early childhood education is to be “boosted” by the merger. What did he mean by that? Did he mean more money for kindies and early childhood education centres? They do not have any more money. Did he mean more resources? They do not have those either. Did he mean more choice? He certainly did not mean that—and I mentioned that before—because of his love for public providers and his apparent hatred and distaste for private education providers.

He said there would be more money and more jobs, but, according to a press release on the New Zealand education review, the Education and Science Committee was told that job cuts would result from the Early Childhood Development - ministry merger. Early Childhood Development’s chair, Michael Morris, and its chief executive, Caryl-Louise Robinson, told the select committee that redundancies would result from the integration of the agency into the ministry. So has it been job cuts and unnecessary personnel laid off, or more jobs for the boys and girls—as John Tamihere refers to them—in this ministry? We do not know. All we know is that in the last 12 months, and even before that, we have had an ever-burgeoning Ministry of Education, with more resources going into the ministry and bureaucracy, and fewer resources going into the front line, into the teaching of our children.

That is of serious concern to us. During the Committee stage, members will hear detailed, clause-by-clause arguments on these issues, but those are the three concerns to us in the National Party, and that is why we do not support the bill.

JILL PETTIS (Labour—Whanganui): I am going to take only a very brief call on this bill, because in effect the intent of the bill is already in action anyway. It is about reflecting this Government’s desire to increase significantly participation in, and the quality of, early childhood education. Comments from members on the other side of the House that they will not be voting for the bill because of this or that reason are absolutely naive in the extreme. They are not voting for the bill because it is a Labour bill and they are ACT and National. For goodness’ sake, they should get real. This is a very, very good bill. It is about promoting one of the most important areas of education, and that is the early childhood sector, which is the platform on which education for our young people is built. It is a good bill. Let us get it passed through the House because, after all, it is for the young people of New Zealand, not for politicians’ egos.

Dr PAUL HUTCHISON (National—Port Waikato): Thank you, Mr Speaker, for the opportunity to speak on the Education (Disestablishment of Early Childhood Development Board) Amendment Bill. As my colleague says, sadly, that is exactly what it does. It is taking away something that focused on early childhood education, which is so hugely important to this country. Yet the Labour Government is prepared to have this area, which should be distinctive, absorbed into the burgeoning bureaucracy of the Ministry of Education.

There do appear to be some mild constitutional outrages in the way that the Government has done it. We have just heard that this bill is being brought in 1 year after the board was disestablished without consultation with the sector itself. I understand that neither the New Zealand Educational Institute nor the early childhood sector was consulted. That is the sort of excess we have seen from this Labour Government; it just takes things on without consulting the sector.

It is particularly an outrage when it is to do with early childhood education, because we all know just how important it is for the future of New Zealand, and how very important it is to have choice in this area of education. As an obstetrician, I am hugely aware of how important those first 5 years of life are, particularly those years between 0 and 3, where there is no State sector involvement to ensure that all our children have the chance to achieve their full potential. If ever there is an area where there should be some degree of measurement to ensure that kids get a chance to achieve their potential, it is the area of their first 3 years. We should be making sure that the outcomes of those kids are measured at that very early stage. I know of little work by the ministry, despite its size, to ensure the quality of the various programmes provided.

But I think it is important to look at what the Government is doing in terms of the axing of this board. If we go back to look at the board’s function, we see that it was “to promote and encourage the development and provision of high-quality, accessible, and culturally appropriate educational and development facilities and services for the benefit of children who have not yet enrolled at a primary school.”, in accordance with the board’s document of accountability, which the Minister must periodically negotiate. In that we have an instance of an absolutely appropriate function; a distinctive board concentrates on one of the most important areas of New Zealand’s education—early childhood education—yet the Minister wants to absorb it into the huge Ministry of Education.

There are some remarkable conflicts in terms of what the Minister has to say. I look at his first reading speech, when he stated: “Although New Zealand already has a relatively strong early childhood education sector compared with other countries, the plan provides opportunities to build on its strengths.” Well, already in New Zealand the State has a wide range of facilities that it resources. They include kindergartens, playcentres, education and care centres, home-based services, the Correspondence School, te kōhanga reo programmes, and a variety of others. They are all there already, but he is suggesting that by absorbing those functions into the ministry he will make them better. In actual fact, the chance is that the very reverse will happen. We should have a distinctive early childhood area that we can focus on and can measure, and to ensure there is continuous quality assurance and accountability, so that that very important area will only improve, rather than it being absorbed and made less distinct.

In that speech, the Minister went on to say: “I am the first to accept that the ministry has been very light in this area, especially in the areas of Māori and Pasifika early childhood education.” That is not fact, because what was set up by a very good National Government over 10 years ago—the whole variety of programmes that I talked about—was not a matter of being light in this area; it was a matter of having choice and diversity. But the Minister went on to say: “I want to make it clear that this decision in no way reflects on the work that the Early Childhood Development Board has done to promote and develop quality early childhood education.” Well, he cannot have it both ways. After all, on the one hand he is asking us to see that the Early Childhood Development Board has done a very good job, and on the other hand he is saying he wants to disestablish it.

He went on to say that the board “has had a particular focus on Māori and Pasifika communities, which I know has been very greatly appreciated by those communities. Even in the past 12 months, knowing that change was about to occur, it has kept its eye on the ball and has licensed more non-registered services than its objectives in its annual plan required. I think the board is to be commended for that.” There he goes, praising the board on the one hand, and seeking its disestablishment on the other hand. One cannot imagine anything more contrary than that! It is absolutely inappropriate.

To make matters worse, the Minister stated that during the process of disestablishment, “just to make it clear”, he would form an interim board. That is classic Labour Party complexity—“We will axe the board and we will make an interim board.” Labour is up to its old tricks: “Let’s make it complicated.”

Finally, the Minister said: “I understand that there is a lot of support from around the House for this legislation …”. Well, why was there only one submission on this bill? It is absolutely remarkable. The Minister did not consult with the early childhood sector. He did not consult with the New Zealand Educational Institute. The only response he got was one submission on this bill. How can he possibly say there was a lot of support?

This bill is an affront to the aims of the Government, in terms of it wanting to focus on the great importance of early childhood education. It is an affront to early childhood education, which is something we all believe should be focused on because of its huge importance to New Zealand, yet here we have the Labour Government doing the very opposite—absorbing this very important, distinct entity into the ever-burgeoning Ministry of Education.

A party vote was called for on the question, That the Education (Disestablishment of Early Childhood Development Board) Amendment Bill be now read a second time.

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 27; ACT New Zealand 7; Independent: Awatere Huata.

Bill read a second time.

Instruction to Committee

the Education (Disestablishment of Early Childhood Development Board) Amendment Bill that it take the bill part by part.

A party vote was called for on the question, That the bill be taken part by part.

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 27; ACT New Zealand 7; Independent: Awatere Huata.

Motion agreed to.

Hon DAVID CUNLIFFE (Minister of State), on behalf of the Minister of Education: I move, That it be an instruction to the Committee of the whole House on

In Committee

Part 1 Preliminary provisions

Dr WAYNE MAPP (National—North Shore): I turn to clause 2, the commencement provision, in particular. In the second reading, I alluded to why this was constitutionally inappropriate. The reason is that it is a fundamental principle that the legislature should not act or expend money without parliamentary authority. That was certainly confirmed in the well-known case Fitzgerald v Muldoon, which went through the High Court—which, at that stage, was the Supreme Court of New Zealand. It is a fundamental constitutional principle, deeply entrenched within our system. And, of course, a former Labour Party Prime Minister, Sir Geoffrey Palmer, made something of a career on constitutional behaviour. His first book was Unbridled Power. It was a very direct reference to the practice of Governments in New Zealand to act without legislative authority. He co-authored a book with his son some years later called Bridled Power, and the reason was that he considered that basic constitutional principles were being observed by New Zealand Governments. If only that were true.

We had the extraordinary spectacle earlier this morning of the senior Government whip making a virtue of breaching constitutional propriety. She was basically saying that the board had already been established, or disestablished more accurately, so what was our beef? It is as though the means justifies the ends—that as long as the action was done, that was all that was required and all that Parliament would be doing was acting as some sort of craven rubber-stamping body. That might be the view of the Government, and I heard an interjection that the senior Government whip would vote for Parliament acting as some sort of craven rubber-stamping body. I guess that tells us a great deal about the sort of thinking that resides within the Government—a certain contemptuousness about parliamentary procedure. So the extraordinary spectacle we see today—

Jill Pettis: Is that why that member voted for market rents?

Dr WAYNE MAPP: I would like to hear from the Minister rather than the less than knowledgable senior Government whip as to why the Government thinks it is justifiable to pass legislation after the fact. Why could it not simply have waited? After all, this is not one of the Government’s more important bills. One would have thought that the proper practice would be to simply leave the entity in existence, then pass legislation, then disestablish. What would have been the harm in that? But this is a Government that is now starting to get the sin of arrogance. It thinks it can do as it pleases, when it pleases, contemptuous of public opinion. This bill, small though it is, is merely a manifestation of that. I now draw back directly to clause 2—because this is what this is all related to—which refers to the implementation date of the bill, 1 April 2004. The reality is that we are asked in this Parliament to vote for something retrospective. The Government—

Jill Pettis: Oh, goodness!

Dr WAYNE MAPP: Again the senior Government whip says “Oh goodness!” Again she is showing that arrogance that we have come to associate with this Government. I ask the Minister to stand and justify why it is that it is appropriate to pass legislation like this.

Hon BRIAN DONNELLY (NZ First): New Zealand First, when it comes to bills like this, believes a pragmatic approach has to be taken. We believe that taxpayers work too hard for the money they have taken off them by the Government not to see that there is duplication in expenditure of that funding, and that is why we are voting for this bill. We think it is necessary. But we also believe in due process, and if there is a criticism of this particular bill, it is of the process—and particularly the timing—through which it has gone. To this extent we agree with the comments made by the previous speaker.

The Government’s intention to disestablish the Early Childhood Development Board and integrate its business into the Ministry of Education was approved by Cabinet on 10 March 2003. The integration date was set for 1 October 2003, but the legislation did not get to the House until 26 August 2003, so it was impossible for it to achieve the intention that Cabinet had set out. Cabinet had said: “Here is the work programme. Here is how we will do it. We will get it all sorted out by 1 October.” It did not even put the legislation in front of the select committee until 10 September, and the closing date for submissions was 31 October 2003. The commencement date for the legislation is 1 October 2003.

I think the public listening would have to raise some very serious questions about the inconsistencies within those dates. Obviously, members of the Opposition parties will say that this is a breach of the Fitzgerald principle, but I believe it is more purely and simply mismanagement. It is simple mismanagement by a Government that sets up a programme and then cannot commit itself to the programme because it is so poll-driven that it is jumping all over the place responding to different issues. So here we have it, and I guess in some respects it tells us all about the history of this particular Government in this Parliament.

Everything was running so smoothly when the bill went to Cabinet on 10 March 2003. There were no obstacles in front of it. The Government thought it would be able to get this through, but guess what? All those things started to go awry and what we now see is a record of things going awry with the Government. So if New Zealand First has a criticism of this bill, it is that it has been so poorly managed, and the times are so inconsistent that there are some constitutional niceties being overridden in this particular case. The question was asked: why we are bailing the Government out? We are not bailing it out; we purely and simply believe that what is inherent in this legislation is a necessity. Therefore, rather than just play political games, we will stick to our principles of doing what we believe is right under all circumstances.

DEBORAH CODDINGTON (ACT): I would like the Minister of Education to take a call to tell us why it has taken 1 year for this bill to get to this stage, and why he disestablished the Early Childhood Development Board and put it into the Ministry of Education a year ago. The chief Government whip sits over there and in her dulcet tones calls out that everybody supports the legislation, and that is why there was only one submission. But what is the point in wasting one’s own time—and taxpayers’ time—by putting in a submission on legislation when what it provides for has already happened anyway? These people out there are not stupid. The Minister knows that the Early Childhood Council opposes this legislation. He did not consult it—

Hon Trevor Mallard: Who?

DEBORAH CODDINGTON: The Minister asks “Who?”. That demonstrates exactly—he has done it himself—his contempt for early childhood education. The Early Childhood Council is the biggest representative of private providers of early childhood education. But this Minister is ideologically opposed to private ownership of any form of education at all.

He is not content with just using legislation to get the board off the playing field; he rams it through first—he does it in practice. It is a case of “Let’s suck it and see if it works, then pass the legislation.” This Committee is owed an explanation from the Minister today. He should stand and tell us why this legislation has taken so long to get through.

But we oppose this legislation on more than those grounds. I turn to clause 3(b), which says that the new organisation will still be able to behave as a funding mechanism for certain early childhood centres, to enable grants to be paid by the ministry. In other words, the same grants will come out of the ministry as came out of the Early Childhood Development Board. But there is nothing in the bill about the monitoring of those grants—whether we will still see the rort, which I brought up in the second reading, of the payment of those grants. The ministry is desperately trying to backtrack on it and is putting in place some issues to try to rectify it. I raised this issue last year. The Minister, in reply, said he was very proud of what was going on with the grants from the Early Childhood Development Board. But there is nothing being done, for instance, on the potential conflict of interest. Kōhanga reo have received over $1 million in grants under the early participation scheme. The Minister has done nothing, in terms of conflict of interest. What is there to stop a provider from acting as a bounty hunter and rounding up kids, collecting grants for those children, then saying: “Look here, there’s no competition. You will have to come to my centre.”? The provider collects all along the way. The ministry is very uncomfortable about that situation. The Minister should stand now and tell us why he will not put into place something to monitor that potential conflict of interest.

So those are just two of the reasons why ACT opposes this bill. It is a very small bill, but that does not mean to say it is not important legislation in terms of the sector. We are owed an explanation as to why this bill is coming in, under urgency, a year after it was first enacted in practice. Why have legislation if what it provides for is just going to be done anyway? Furthermore, what is this Minister doing to ensure that taxpayers’ money for this participation scheme, which is race-based no matter what he tries to say about it—

Hon Trevor Mallard: Where’s the participation scheme in the bill? Which clause?

DEBORAH CODDINGTON: I am talking about clause 3(b), which provides for the ministry to pay these grants. The Minister knows what I am talking about.

Hon Trevor Mallard: But the ministry pays the grants. It doesn’t need this to do it. What a foolish member.

DEBORAH CODDINGTON: The Minister can take a call if he wants. He sits there interjecting, as he loves to do, but there is nothing to stop him from taking a call when I have finished speaking and telling us what he means by accountability and by the monitoring of these organisations. This Minister is unable to do that.

Dr the Hon LOCKWOOD SMITH (National—Rodney): In speaking to Part 1 of the Education (Disestablishment of Early Childhood Development Board) Amendment Bill, I want to argue that the purpose as spelt out in clause 3 hides the real purpose of the bill. What is stated in this bill is not the real purpose, at all. The real purpose of the bill is the building of the Ministry of Education bureaucratic empire. There is absolutely no question as to what has been going on in the Ministry of Education, and in education, since the Labour Government took office. I did a little bit of research. I was Minister of Education for 6 years and put a lot of effort into—

Hon Trevor Mallard: 6 years or 5 years?

Dr the Hon LOCKWOOD SMITH: It was almost 6 years. I put a lot of effort into taking money out of the central bureaucracy of education to enable it to be put into the actual providers—the early childhood centres, the schools, the tertiary institutions. I want to share with the Committee what has happened since. In 1996, after I had been Minister of Education for almost 6 years, there were 482 employees in the Ministry of Education. My colleagues, my successors, the Hon Wyatt Creech and the Hon Nick Smith, might have been kinder than me, because when National left office in 1999 the numbers had climbed from 482 to 581. So there were 100 more employees in the Ministry of Education by the end of the 1990s. As of last year, there were 1,849 employees. When I was last Minister of Education there were 482 employees in the ministry, and the number has risen to 1,849 employees. That is damn near a fourfold increase in the number of employees in the Ministry of Education. If that is not empire building, I do not know what is. If the Hon Trevor Mallard can sit there and say the Ministry of Education is not building a huge bureaucratic empire, how come the number of employees has risen from 482 in 1996 to 1,849 last year?

Hon Trevor Mallard: Because Specialist Education Services has come into it.

Dr the Hon LOCKWOOD SMITH: Admittedly, Specialist Education Services has come into it, but it is all part of the expansion of the empire. If we look at what has happened in education over the years, which sectors do we find have been successful? The early childhood sector has been hugely successful. We have expanded the number of children in early childhood centres. We have seen an explosion in opportunity in that area. And tens of thousands more New Zealanders now benefit from a tertiary education. Those two sectors were not under the control of the Ministry of Education bureaucracy. There was a freedom in those sectors. The least successful sector, the schooling sector, was more tightly under the control of the Ministry of Education. It has been the least successful in adapting to the modern world. In the last 10 years we have seen far more innovation in the early childhood sector and the tertiary sector. It is the schooling sector that has lagged behind.

Part 1, which states that the purpose of the bill is to disestablish the Early Childhood Development Board, just adds to the empire of the Ministry of Education. Those figures are staggering. In 1996 there were 482 employees in the Ministry of Education, and in 2003 there were 1,849 employees. No wonder there is less unemployment in New Zealand right at the moment! I suspect that the Government bureaucracy has had by far the biggest percentage increase in employment in the last 4 years in New Zealand—a far bigger percentage than the private sector. I think the purpose of the bill should be spelt out more honestly. The purpose, quite clearly, is to build the Ministry of Education bureaucratic empire so that this Labour Government can have more control over the entire education sector, and particularly the early childhood education sector, because it does not like private providers. This Labour Government does not like private tertiary providers. It does not like private early childhood education providers. It has already given more funding to kindergartens. There is absolutely no justification for it. It is pure prejudice. This Government has already advantaged the Government sector through extra funding of kindergartens. We will see more of that, as the ministry will control the whole lot.

Hon TREVOR MALLARD (Minister of Education): I think we have heard quite a lot of drivel. All that the change that the member is getting so upset about does is give to the Ministry of Education the ability to give grants to small groups around the country. It currently does not have the ability to give grants to non-licensed centres. [Interruption] The Early Childhood Development Board has always had the power to make grants to non-licensed centres. There are, obviously, a lot of playgroups around that we would like to continue to get money. Sometimes they become licensed centres; sometimes they do not. I think the member protests too much.

BERNIE OGILVY (United Future): I would like to take a call on this part of the Education (Disestablishment of Early Childhood Development Board) Amendment Bill. During the second reading United Future pointed out that we supported this bill, and we still do support it. But one of the things we had to overcome was clause 2—that is, the commencement criteria. Like others on the Education and Science Committee, we have been concerned about the timing of this bill and how it got into place. It seems to me—and the Minister of Education might be able to correct me on this—that, as I recall, the intended change was to be incorporated in a State Sector Amendment Bill, but the Clerk ruled that it was outside the scope of that bill at that time, and, therefore, it has been dealt with as this separate bill. Nevertheless, the actual disestablishment occurred way before the enactment of this legislation, which was intended to take place on 1 October 2003—the initial commencement date in Part 1.

As the select committee pointed out, that raises constitutional issues about the ability of the executive to implement policy requiring legislation, before actually passing that legislation. We in this Committee are aware that in certain circumstances, or even in the same circumstances, with a more contentious bill, that practice could attract some legal action to halt its progress. This is not the first time we have heard of that practice, but it is certainly a surprise to me that this matter has taken place in the way that it has.

As United Future has said, we are happy to see this bill passed into legislation. It is a very practical bill, and requires passing in order to inaugurate what has already taken place. So, with that proviso on Part 1, we are happy for this bill to continue.

MARK PECK (Labour—Invercargill): I move, That the question be now put.

PHIL HEATLEY (National—Whangarei): I have sat here quite intrigued while listening to the arguments surrounding Part 1, and in particular the commencement date and constitutional issues, which, as far as I can understand, this Minister and this ministry have ridden roughshod over. We heard from Brian Donnelly, the chair of the Education and Science Committee, that this bill was presented in September, which is some time ago, and was expected to be reported back in late October. Having sent out information about submissions, the committee received, I suspect—or, at least, I hope—oral submissions in a period of only 6 to 8 weeks. That is quite appalling when one can argue that this disestablishment of the longstanding Early Childhood Development Board is very important to those involved in the early childhood development sector.

But that is not enough; I then hear that the board has been disestablished for a full 12 months, and we are passing the legislation only now. I thought there was an out for the Government. Members may recall that I asked why the Early Childhood Development Board needs legislation to be disestablished. Why do we have to pass a statute for it to be disestablished? The answer came back, and it is a fairly obvious and fair answer. The reason is that it was established under statute. It was established under statute, and it should be disestablished under statute. Interestingly enough, it was actually established under a Labour Government, and now it is being disestablished under a Labour Government.

I thought that the Government might have an out—that this disestablishment by statute might just be window dressing. I thought that the board had not been established by statute, but, through window dressing, the Government would disestablish it through statue, and in that way avoid the accusation that it was riding roughshod over Parliament by disestablishing the board in practice then, 12 months later, on the tail of that, actually providing the mechanism to do so. But, no, I discover in the purpose clause that this bill provides for the Early Childhood Development Board, “… a Crown entity continued under Part V of the principal Act,”—that is, the Education Act 1989—“to be disestablished and for its functions, assets, liabilities, and rights to be transferred to the Ministry of Education;”. In other words, the Early Childhood Development Board was established under statute. Its functions, its assets, its liabilities, and its rights were established under that principal Act. We then saw in practice out there, 12 months ago, its rights taken away without statute, its assets taken away without statute, its functions taken away without statute, and its liabilities taken away without statute. In fact, 12 months later the House got the bill that provides the mechanism for that to happen.

That is appalling constitutional mismanagement. I would like the Minister to take a call and to challenge that: to tell us why something set up under statute has to be disestablished under statute, and why that would happen 12 months after the fact—that is, retrospectively. It is appalling that that happened. The Minister may think it is a minor matter to do with a minor sector of not much interest to New Zealand, but it simply points to an arrogance that this Government is reflecting to us here in this Committee, and to the general public.

I am also interested in the other purpose of this bill—that is, to provide a “funding mechanism for certain early childhood centres to enable grants to be paid by the Ministry rather than through the Early Childhood Development Board.” The board had the power to make grants to non-registered services.

RODNEY HIDE (ACT): I am pleased that Dr Wayne Mapp pointed out the constitutional issues over which the Minister has got himself into difficulties. However, I want to talk about the purpose clause and paragraph (b) in particular. Clause 3 states: “Purpose—the purpose of the Act is—(b) to provide for other matters related to the reorganisation, such as a new funding mechanism for certain early childhood centres to enable grants to be paid by the Ministry rather than through the Early Childhood Development Board.” This is what worries the ACT party, because we have discovered that Trevor Mallard has spent some $5 million on bounties. We heard the Hon Taito Phillip Field say that Pacific Island and Māori participation had increased.

Hon Trevor Mallard: I raise a point of order, Madam Chairperson. Fairly early on in the member’s speech I would like you to rule on whether the subject of grants that have been made legally by the Ministry of Education and are not affected by this bill—and certainly not grants to licence-exempt centres, which are outlined in Part 2—are appropriate matters to be raised. This is a very narrow debate in the Committee stage and I ask you to rule on whether it is appropriate for the member to continue to highlight issues that have nothing to do with this bill.

RODNEY HIDE: Speaking to the point of order, I point out that we are discussing Part 1, and I think the Minister will agree with that. We are discussing clause 3(b), and ministry funding, and early childhood education. The Hon Taito Phillip Field has already discussed this matter. This is one of our concerns. ACT is trying to explain what is wrong with this bill. If you rule out debate on the funding and the way the early childhood system is being run, then what would we talk about?

Hon Trevor Mallard: Rodney Hide’s comments reflect the point I was making. Phillip Field spoke in the second reading, where his points might just have been appropriate, but certainly those matters are not appropriate in the Committee stage.

The CHAIRPERSON (Ann Hartley): I certainly understood the member was talking to clause 3(b), but there has been quite a bit of straying during this coverage on Part 1. It does contain the purpose clause, and such provisions allow members some latitude in the discussion of the issues across the bill. I would remind members to keep to the bill. The member was talking to clause 3(b).

RODNEY HIDE: Thank you. That was a very wise ruling, and I support the Chairperson in that. We do have concerns about this bill, and we have concerns about this Minister and the way he has gone about the business of early childhood education, particularly as it relates to the purposes set out in this bill. This is a Minister who has blown $5 million.

Hon Trevor Mallard: No, no.

RODNEY HIDE: I know he does not want that discussed in Parliament. I know he does not answer Official Information Act requests. I know he likes sitting beside the Chairperson and trying to shout down Opposition members who are raising issues. I am highlighting a problem with the Ministry of Education and with centralisation. That is the purpose of this bill, is it not?

The ministry had these contracts that involved phantom children. It also involved children who were pre-enrolled. Taxpayers’ money was used to the extent of $600 to $1,000 a person. The ministry was paying these contractors, who were ringing up pre-schools and asking for the names of the kids who were enrolled. Then the contractors were using those names to get money out of the ministry under this Minister’s contracts. He knows that. That was $1 million worth of fraud, and that Minister is guilty of a cover-up.

Hon Trevor Mallard: I raise a point of order, Madam Chairperson. I am going to have another attempt. Some activities that happened in the 2002-03 year have been misrepresented by the member. They have nothing to do with this legislation. They have nothing to do with the issues of the transfer of the Early Childhood Development Board across to the Ministry of Education. I submit again that this is a narrow, technical bill, and it is not appropriate for the member to raise matters that happened under an entirely different function of the Ministry of Education, over 18 months ago.

Dr the Hon Lockwood Smith: The disestablishment of a very significant part of this country’s education sector is not a narrow, technical matter. The purpose that is intended invites wide debate because there can be serious questions as to the wording of the purpose of this bill. The disestablishment of a very significant sector of our education system is a very big matter.

Stephen Franks: The effective date is in Part 1. We are told that the changes will create an effective date that is after this change was made. It is relevant, in that an institution that was functioning properly, as far as we know, is being transferred to a ministry that appears not to be under proper control.

Although the Minister may not like to have the performance of the ministry appraised in connection with this bill, what else should parliamentarians do when they have a bill that takes an existing organisation and merges it into another one? It is a natural debating point. These are natural questions that would occur to anyone—such as, which one is working, which one is defective, which one is under proper control, which one has a Minister who knows what it is doing? The organisation was independent before. There is no hint that it was operating with fraud or colluding in contracts that were fraudulent. We have a ministry that is tarred with that reputation, and it is perfectly proper for us to debate it on those terms.

The CHAIRPERSON (Ann Hartley): The member on his feet can raise reasonable, relevant matters. However, he needs to stick to the purpose of the bill. The performance of the ministry in previous years is not absolutely relevant, but the member can certainly discuss the ministry’s future role in carrying out its functions under this bill.

RODNEY HIDE: Again, can I say that is a very wise ruling in support of Parliament. I thank the Chair for that.

The CHAIRPERSON (Ann Hartley): The member knows he must not comment on rulings that are given.

RODNEY HIDE: What we have in clause 3(a) is that the Early Childhood Development Board is to be disestablished, and that all the functions, assets, liabilities, and rights are sent across to the Ministry of Education. That is where our concern lies. The Ministry of Education has shown itself in this area to be incompetent, incapable, and the object of fraudsters. That is what has happened. The Minister knows it, and has done nothing. That is why we like the independent board. That is why we are opposing this legislation. Four companies, and the same people applying for the money, got away with $1 million, and the silly old Ministry of Education and the Minister did not know.

If the Minister wants Opposition parties to support this bill, why does he not honour his obligations and deliver on my Official Information Act requests, instead of denying them, instead of playing games, instead of fighting the Ombudsman every step of the way? Indeed, why has he had his own officials go into the file to reorganise it to try to sanitise what has gone on? What has happened here is fraud of the highest order. We oppose this bill.

STEVE CHADWICK (Labour—Rotorua): 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

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

Noes 48

New Zealand National 27; New Zealand First 13; ACT New Zealand 7; Independent: Awatere Huata.

Motion agreed to.

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

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 27; ACT New Zealand 7; Independent: Awatere Huata.

Part 1 agreed to.

Part 2 Disestablishment of Board and associated matters

Dr PAUL HUTCHISON (National—Port Waikato): Part 2 deals with the disestablishment of the board and associated matters. I think it is worthwhile to look again at what the board’s function is. That is to promote and encourage the development and provision of high-quality, accessible, and culturally appropriate educational and development facilities and services for the benefit of children who have not yet enrolled in a primary school. What is wrong with that? What is more important than ensuring there is a distinct entity for the children of New Zealand to be given the opportunity to achieve their full potential, and that, of course, is with regard to the hugely important area of early childhood education. Yet this bill is removing that distinct entity. It is removing that distinct focus on the incredibly important function of having an independent board that focuses on early childhood education for the children of New Zealand.

It is really important to look at what the Minister said about the Early Childhood Development Board. The Hon Trevor Mallard is a man of complex contradiction. On the one hand he is disestablishing the board helter-skelter, and on the other hand he wants to make it clear that the decision in no way reflects badly on the work the board had done to promote and develop quality early childhood education. The Minister of Education wants it both ways. In the introduction debate he said the board had done a great job, but he is disestablishing it. He wants to have it both ways.

The Minister probably had quite a good education. He went to Onslow College. Maybe his early childhood education was the problem; I am not too sure. Maybe it would have been much worse if he had not had early childhood education. Whatever the case, the Minister is a man of contradiction. On the one hand he said that the Early Childhood Development Board was a worthy institution and had carried out its functions very well, yet he wants to disestablish it. We heard about the process, but in actual fact he disestablished the board about a year ago. That is a constitutional outrage, yet we are debating the bill 1 year later. Furthermore, he is wanting to absorb the board into the Ministry of Education. The education sector is absolutely fatigued as a result of restructuring done by the Labour Government. The Government has done it with the health sector and the science sector. Once again, it is restructuring the education sector, particularly in the area of early childhood education, which is so vitally important.

In the introduction debate the Minister said the board had a particular focus on Māori and Pasifika communities and that the work had been very greatly appreciated by those communities. So why is he disestablishing the board, given that he said it had done such a good job? It seems remarkable that, for the sake of his ideological bias against independent education, he will restructure and absorb that very important distinct entity into that ever-burgeoning bureaucracy—the Ministry of Education. The ministry just gets bigger and bigger with every breath under this Labour Government.

The Minister said that even in the past 12 months, the board, knowing that this change was about to occur, had kept its eye on the ball and licensed more non-registered services than the objectives in its annual plan required. He said the board is to be commended for that. Now, is that not great? The Minister is sitting there grinning away, thinking: “Yes, the board’s done a great job, but I’ll axe it.” That is the kind of contradiction shown by the Minister of Education.

Hon BRIAN DONNELLY (NZ First): Comment has been made about this legislation removing the previous rights the Early Childhood Development Board had to distribute grants to the Ministry of Education. I point out that the legislation is very specific that the rights are purely and simply those that under present legislation relate to the Early Childhood Development Board, it being the only entity that legitimately has the right to grant that money. It really relates to licence-exempt groups—basically, play groups. The Minister will tell me whether I am right, but I think it is about $1 per hour per child. It may be slightly more now, I do not know; certainly, it is not in the vicinity of $1,000 per bounty head—as it were—that Mr Hide was talking about.

Hon Trevor Mallard: I can answer the question very quickly. It’s not $1; it’s $1.01.

Hon BRIAN DONNELLY: I got it wrong—the Minister has increased the amount dramatically since he got into power, when it was $1.

We need to reflect back to the reforms that created the Early Childhood Development Board, which went across the early childhood sector and the compulsory sector. In the compulsory sector that involved getting rid of the education boards. The comment has been made that the ministry would be putting out grants that were previously put out by Early Childhood Development. People seem to forget that the money came from the ministry first. It then went to the Early Childhood Development Board and was distributed from there—just as in previous days the money went from central government to the education boards that had been established in 1877. They were the old provinces. Education could not be administered under the 1877 Act without the old provincial structures. Therefore, the situation was that funding went from central government to territorial authorities, then was distributed.

The whole idea behind Picot and Tomorrow’s Schools was to cut out one part of the bureaucratic loop. In fact, that is what this legislation is also doing. It is taking out one part of the bureaucratic loop. More money will be released to go directly to the providers. Therefore, it is inexplicable that parties like ACT are trying to defend the continuation of this particular bureaucratic loop. It is almost like their arguing that we should bring back the old education boards. The purpose behind this legislation is to take exactly the same step as Tomorrow’s Schools took when it came to primary education—that is, to take out one bureaucratic step and be able to make sure the funding is moved from the central provider to the providers of the services themselves, with no encumbrances in-between.

I also find it extremely difficult to understand why both National and ACT are critical of the Minister for not consulting fully with the New Zealand Educational Institute—in other words, for not consulting fully with the union of workers in only a part of the sector we are talking about. The great protectors of unionism—ACT and National—are critical of the Government, because it did not consult fully with the New Zealand Educational Institute! In fact, there was a lot of consultation, and this particular move had been flagged in the sector long before it came to the select committee. It was a little bit unfortunate, however, that the timing was such that quite genuine criticisms can now be made of the Minister and the Government.

Once again, we will be supporting this legislation, because, as I said—and the Minister can explain it—it will allow funding to go directly from the ministry to the providers without a duplication of service. That exists in the present system, and it existed all through the 1990s when the National Government was in power.

Hon TREVOR MALLARD (Minister of Education): Very briefly, I thank the last member who spoke for his explanation. I reiterate that when I became Minister I found there were a number of occasions when funding for early childhood services went from the Ministry of Education to a Crown entity—the Early Childhood Development Unit—and then to another—the Special Education Service—and then to community providers. The transaction costs and legal costs of all of that were enormous. This legislation involves something that is much more straightforward—

Stephen Franks: Quantify it.

Hon TREVOR MALLARD: I cannot give the member exact numbers. However, from memory something between 30 and 40 percent was going out in transaction and contractual costs. That was a total waste of money and just not acceptable.

STEPHEN FRANKS (ACT): Part 2 of this bill has the operative parts. It has a number of what the Minister has just explained as rationalisations—cutting the delivery chain short. He says 30 or 40 percent was getting consumed in transaction costs. It really must have more explanation than that. New sections 311A and 311B, inserted by clause 6, allow grants to licence-exempt centres. These exempt centres can be created by the Minister simply gazetting that a centre does not have to have a licence. When it does not have to have a licence, it appears to me that it does not necessarily comply with the stipulations that go around grants.

Ordinarily, this might be seen as something that was to give flexibility that did not matter, but we have had experience of the ministry’s very poor performance in dealing with flexibility. My colleague Rodney Hide has mentioned the rort that has been associated with chasing up and enrolling Māori and Pacific Island children. Perhaps a million dollars has gone west through failure to specify contracts properly in the first place, failure to supervise them, and failure to check that the children are actually registered and attending, or that they even exist.

Section 311 of the principal Act stipulates the administrative requirements for early childhood centres—that is, they must keep a register, keep the date of birth, keep the attendance, keep a record of all fees and charges paid, and keep evidence that the parents have regularly examined the attendance record. I wager that virtually none of those requirements is being observed by some early childhood centres, and I would be very surprised if some of the exempt centres the Minister wants to be able to favour with his ministry’s direct grants are any better administered than the contractors the Minister’s servants engage to chase down unregistered children.

When the Ministry and the Minister come forward with a proposal to replace an independent organisation—an organisation that has a board of directors who supervise, knowing that they could be personally liable for malfeasance or misfeasance—with people in a ministry that does not even know whether it will chase the fraudsters with the police; that 10 days after the story broke still does not know whether—

Hon Trevor Mallard: The story broke in 2002!

STEPHEN FRANKS: Well, why did the Minister not know more about the background and the facts? If that is 2002, why is the Minister sitting on the Official Information Act material—the file.

Hon Trevor Mallard: Because I am re-reading the old material.

STEPHEN FRANKS: If it is that hard, why has the Minister not handed it over to someone who can read it? He has had 2 years to do it.

Hon Trevor Mallard: There are four boxes of the rubbish.

STEPHEN FRANKS: The Minister has 1,890 civil servants to read it for him.

Hon Trevor Mallard: No, no—

The CHAIRPERSON (Ann Hartley): Order! The Minister will take a call. He is not to interject like that—

Hon Trevor Mallard: It’s an exchange of questions.

The CHAIRPERSON (Ann Hartley): The exchange of questions will be handled during a call.

STEPHEN FRANKS: The Minister has just told us it was 2002, which brings us to another point in this bill. The effective date is the date the bill is passed. We understand that the legal dissolution might not have occurred, but the functions have already transferred. Can the Minister tell us just how many reporting requirements and grants to licence-exempt centres have already been made, and how many the ministry intends to make? Can he give the Committee an idea of just how significant this is going to be—what kinds of conditions does he envisage for licence-exempt early childhood centres? Is this provision to get around requirements that are onerous and imposed on the private sector to advantage State-sponsored organisations that could not hack it? Just exactly what is proposed by new sections 311A and 311B? Surely that is a matter the Minister can give us clarification on, when he must know that we would have to come to this bill very suspicious of the ministry indeed.

BERNIE OGILVY (United Future): I will focus on clause 11 in Part 2, because it deals with the final report and accounts. There will be a number of unanswered questions in the minds of a lot of folk, and even in this debate today, which deserve further scrutiny. I note that neither in the explanatory note to the bill, nor in the Education and Science Committee, was there any mention of the costs of this merger. It was raised as a question, but nobody seems to know how much this will all cost—despite, we were told, the reasonable assumption of one-off expenditure associated with the integration. Unless this merger achieves some economies in the long term, there seems to be little point in it. That is the point we are questioning.

Much of the operational detail is contained in the organisational plan, which, as far as I am aware, is still secret information. Clause 11 provides that when the bill is passed, we will get a full accounting of what happened in the transfer of assets and money. We have been told that the integration is expected to be financially neutral. I have been able to look into that a little and was able to establish that the cost of transitions associated with managing the change and redundancies was expected to be somewhere in the region of $1 million to $2 million. But the Early Childhood Development Board had cash reserves of about $1.4 million to $1.7 million, which I imagine will be used in the transition costs of early childhood education delivery.

However, it is expected that overlaying the work of the two agencies will mean that some efficiency in service delivery cost may be achieved down the track. Unfortunately, this House and the public of New Zealand will have to wait until clause 11 takes effect—that is, when the bill is passed and becomes an Act. So we are still left up in the air as to the efficiencies, and whether this will be a neutral fiscal arrangement. That is the point I wish to highlight.

Dr the Hon LOCKWOOD SMITH (National—Rodney): Part 2 of the Education (Disestablishment of Early Childhood Development Board) Amendment Bill, of course, is the part that deals with the disestablishment of the board and associated matters like funding unlicensed centres.

I was fascinated by the contribution of the New Zealand First member, the Hon Brian Donnelly. It is fascinating that New Zealand First seeks to cuddle up to the Labour Government. The poll fortunes of New Zealand First are reflecting those of the Labour Government. I say: “Good luck to New Zealand First.”

This issue is serious. Mr Donnelly said—[Interruption] The Minister should not really interject when there is a live microphone in front of his mouth. He has a big enough mouth, without needing that.

Hon Trevor Mallard: But not a smile like yours.

Dr the Hon LOCKWOOD SMITH: That is true. The Minister could well do with a bit more of a smile, as he seeks to undo the mess he has created in the school sector with his mergers.

Mr Donnelly said there was advantage in removing the Early Childhood Development Board from the system because it was a funding conduit, and there was a cost associated with Government money going via the board to early childhood units. Because of the snuggling up between New Zealand First and the Labour Government, the Minister got to his feet instantly and thanked Mr Donnelly for helping explain this rather strange measure in the bill.

What is fascinating is that if that is correct and true, and that is the prime purpose of this legation—

Hon Trevor Mallard: It’s not the prime purpose.

Dr the Hon LOCKWOOD SMITH: So efficiency and saving are not the prime purpose? The Minister claimed that 34 percent of the money for early childhood funding was chewed up in the bureaucracy of the Early Childhood Development Board. Now he is saying it is not the prime purpose, and Mr Donnelly is saying it is the prime purpose. If they are snuggling up as much as they are, they should at least agree on what the prime purpose of this legislation is.

The point I want to make is that if that is a serious purpose for this legislation, why on the one hand is the Government getting rid of the Early Childhood Development Board, and on the other hand establishing a Tertiary Education Commission? In the tertiary sector the funding used to go straight from the Ministry of Education to the tertiary education providers; now it is going via a Tertiary Education Commission, which is itself a burgeoning bureaucracy.

Whereas there used to be a very small team in the Ministry of Education involved in funding the tertiary sector, there is now a rapidly growing bureaucracy in the Tertiary Education Commission that will chew up a far greater proportion of tertiary funding than the Early Childhood Development Board ever chewed up. I can see from Mr Donnelly’s and the Minister’s expressions that I am not totally wrong in that assertion. If this legislation is designed to create greater efficiency, it is hard to reconcile those two positions of this Labour Government.

What troubles me about Part 2, which disestablishes the Early Childhood Development Board, is that the real motive is more sinister. When the funding for the tertiary sector used to be done by the Ministry of Education, it was very transparent and clear-cut. The equivalent full-time student funding system did not lend itself to political manipulation. Basically, the institutions knew that the funding they would get depended on the enrolments they achieved. Maybe some of the auditing was not as good as it should have been in some cases, but it was a clear, transparent system.

What troubles people in the early childhood sector is this: with the Early Childhood Development Board there was a powerful voice for those beyond just the “State sector”, because everyone knows that the kindergarten sector is sort of a surrogate State sector. The real worry about this legislation is that with the ministry now controlling the entire early childhood sector, there is far more room for political manipulation in the funding of the system. What makes the sector nervous, in my view, is that it has already seen that. Prior to Trevor Mallard and this Labour-led Government coming into power, the early childhood sector was funded in a pretty transparent and consistent way across the private and the quasi-public, or kindergarten, sector. Trevor Mallard became Minister when the Labour Government came to power and the kindergartens—the quasi-State sector—suddenly got more funding relative to the private sector. Once the whole lot becomes part of the Ministry of Education, there is concern that it will be more vulnerable to political manipulation, and that is the worry.

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

DEBORAH CODDINGTON (ACT): I would like to carry on from my colleague Stephen Franks in talking about Part 2, “Disestablishment of Board and associated matters”. While Stephen Franks was talking to Part 2, he referred back to the principal Act, and the Minister interjected and corrected my colleague. When Stephen Franks said that $1 million might have gone astray, the Minister interjected and said: “No, it was $6 million that might have gone astray.”

Hon Trevor Mallard: I raise a point of order, Madam Chairperson. I want to make it very clear that I said $60,000, not $6 million. The member is quite wrong.

The CHAIRPERSON (Ann Hartley): Yes, all right, but that is a debating point.

DEBORAH CODDINGTON: I hope that does not come off my time.

The CHAIRPERSON (Ann Hartley): No, it does not.

DEBORAH CODDINGTON: The Minister said that he had known about this. It was not news and it had not just broken; he had known about it since 2002. Under the principal Act it says the management shall ensure in those early childhood centres that where a grant has been paid subject to conditions, the conditions are complied with, and the money is used specifically for the purposes for which it was provided. If the Minister has known since 2002, why have the police not been called in?

The Minister has never, ever given members a valid reason for this legislation at all. All members have had is press releases and announcements by the Education and Science Committee that the Early Childhood Development Board would be incorporated into the Ministry of Education. Early Childhood Development was given a glowing annual report in 2002. I say to the Minister: “If it was not broken, why fix it?”. Was there someone on the board who offended him? Was this the International Rugby Board form of disestablishment, or revenge for something? There has been no consultation at all.

I just remind this Committee what happened when this Minister announced that the Early Childhood Development Board would be disestablished and drawn back into the Ministry of Education. Sue Thorne, from the Early Childhood Council, voiced her concern that the board was performing very well, there was no need to integrate it, and disestablishment would take away involvement at community level. Jill Pettis raised questions at the select committee. She asked the Early Childhood Development management, who appeared before the committee, whether programmes that were meant to increase participation in early childhood among Māori and iwi organisations were working, and Ms Robinson said she could not confirm that was the case. That was at the announcement of the disestablishment of the board.

The only reason the Minister has given for this legislation is that it would increase participation in early childhood. That is the only nebulous reason he has given, apart from the fact that he favours centralisation. It was not increasing iwi and Māori participation at that stage. Why then did this Minister rush ahead before we had even passed this legislation, and have increased participation schemes and grants that turned into, as we have heard, money being used to enrol phantom children? Why did he persevere down that path?

One of the other matters raised at the select committee when this legislation was announced was that Donna Awatere-Huata asked whether there had been any research done on that participation.

Dr the Hon Lockwood Smith: I raise a point of order, Madam Chairperson. I ask the member on her feet to forgive me for interrupting her speech, but it is a longstanding tradition in this Chamber that the Minister in the chair does not interject. If he wishes to say something, he should take a call, because there is an open microphone next to him, and it is unacceptable for the Minister to interject. If he wishes to say something in response to speeches being made, he should stand and seek a call.

Hon Trevor Mallard: Although I have not been in Parliament quite as long as the member, it is my experience that during the Committee stage of the debate, there is generally an ability for a free flow between the Minister in the chair and the person who is taking a call. It is much less formal than when the House is sitting, and that is the tradition. There have been a number of rulings to that effect. I do not have them at my fingertips, but I have certainly been in the Chamber for them. I think members have to take care, because members are aware that there is an open microphone, but when members are being controversial and basically want some interjection to liven their speeches up, I am willing to help them.

The CHAIRPERSON (Ann Hartley): I agree with the member Dr Lockwood Smith. The Minister cannot use the live microphone to facilitate more interjections than he would somewhere else. It has to be in moderation. There are times when it is reasonable to answer a question, but there should not be an ongoing dialogue, and I would say that to the Minister.

DEBORAH CODDINGTON: I conclude by talking about this so-called research that was part of the participation rates. I remind the Chair that the reason I am bringing it up in this Part 2 debate is that it is about the disestablishment of the board and associated matters. The Minister’s main reason for getting rid of the Early Childhood Development Board is to increase participation rates. These bounty hunters had to get parents to fill in a massive number of questionnaires as to why they had not participated before, what their reasons were, and why they had not enrolled their children, and nothing has been done with those questionnaires—absolutely nothing. We do not even know how to fine-tune this policy. We do not have any information about whether it is working. We do not have any assurance that this Minister will do something by bringing in this legislation to make these sorts of grants comply with the funding section of the Act, where the money is paid over for one purpose only.

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

PHIL HEATLEY (National—Whangarei): By way of an aside, I am intrigued at how lightly the Minister took the issue over the disestablishment of the Early Childhood Development Board happening 12 months ago, and being legislated for only today. Clause 7, “Consequential amendments to other enactments”, relates to this disestablishment affecting the Official Information Act, which has to be amended. The first schedule of the Ombudsmen Act, the fourth, fifth, sixth, and seventh schedules of the Public Finance Act, and the Education (Change of Name of Education Entities) Order have to be amended. Not only does the original 1989 Education Act, which was the statute allowing the set-up of the Early Childhood Development Board, have to be amended, but these Acts—and they are important Acts—have to be amended, as well. All that is happening 12 months after the fact.

That is concern enough, but we move to clause 8, “Consequential changes to other references”. Gee, I am struggling with words today, but I am willing to acknowledge it. I notice that “Dazza” Hughes, who probably left kindergarten most recently, has not taken a call on this at all, and perhaps he should. “Dazza” might interject, but perhaps he should. [Interruption] I did not realise. We learn every day.

Hon Trevor Mallard: I raise a point of order, Madam Chair. The junior whip may not object, but I think we have to have some decorum in the House, and members should be called either by their name, or by the name of their electorate—in this case I understand it is Otaki, where the member cleaned up Roger Sowry twice.

The CHAIRPERSON (Ann Hartley): The member knows that he must address members by their correct name.

PHIL HEATLEY: I was interested by clause 8, which states: “If any other enactment or other thing refers to the Board and that reference is no longer appropriate because the Board has been disestablished, the reference must be read as a reference to the Ministry.” Given that this has been on the Order Paper for some time now—it was at the Education and Science Committee some time ago—officials would have been able to identify where this board was referred to in statute. I find it quite unacceptable that we will take some sort of blasé attitude to its reference in statute, and not identify where it does occur, and where it should be amended. I wonder why that is the case, and whether it is usual to take that approach.

I did want to point that out, but I move on to more important issues about the cost of the merger. That was raised by United Future. National members found it quite amusing that United Future members are willing to support this legislation, yet put so many questions to the Minister, were quite challenging towards the Minister’s approach to it, and questioned the costs. In other words, United Future acknowledges that it does not have all this information about the cost of the merger, and whether it will do any good, but it still supports the bill. United Future raised issues around clause 11 about the cost of the merger, the final report, and the accounting structure.

I was disturbed to hear that United Future thought there would not be a full period of accounts to be scrutinised by those in the position to do that. It has been a year since Early Childhood Development was disestablished in practice. I would have thought that over that period, we would have good insight into the costs of the merger, and into how the new system is working, so that we could compare. I would have hoped that the Minister might have brought that to the House to justify his actions all that time ago. I am disappointed that he has not. Perhaps the Minister will take a call to tell us how it is going financially, and how it is operating. It was also stated that the Early Childhood Development Board was just a conduit of funding to early childhood centres. That is not the case.

MOANA MACKEY (Labour): I move, That the question be now put.

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

Ayes 71

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

Noes 48

New Zealand National 27; New Zealand First 13; ACT New Zealand 7; Independent: Awatere Huata.

Motion agreed to.

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

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 27; ACT New Zealand 7; Independent: Awatere Huata.

Part 2 agreed to.

Clause 1 Title

Dr WAYNE MAPP (National—North Shore): This is the title of the bill. It reads: “This Act is the Education (Disestablishment of Early Childhood Development Board) Amendment Act 2003.” In fact, we know that this bill is being passed into law in 2004, more than 12 months after the board’s disestablishment. This is a wide-ranging debate under the new rules, and I want to draw attention back directly to Part 2. Clause 5 states: “On the effective date,—(a) the Board ceases to exist;”, and the effective date is the date on which the bill comes into force. We have the extraordinary situation whereby the bill declares that the board ceases to exist at the time the bill becomes law, but the board has already ceased to exist.

Hon Trevor Mallard: No, it hasn’t.

Dr WAYNE MAPP: In practical terms it has ceased to exist, and the Minister knows that. We are in the amazing situation whereby the Government, months after the board has been disestablished, wishes to address its constitutional errors retrospectively. They are taking the attitude—[Interruption]—and the Minister, in a cavalier kind of way through interjections—and are being completely indifferent, callous, and careless about the constitutional process that is occurring here. What would, one wonders, their former hero, Sir Geoffrey Palmer, think of this? Would he applaud that paragon of constitutionalism, Trevor Mallard? I suspect that no, he would not. Will this lead to a footnote in Bridled Power—the later version of Unbridled Power—to show that, unfortunately, even his former colleagues have not learnt basic constitutional lessons?

National will vote against the bill on the principle that we are opposed to retrospective legislation—legislation that is intended to perfect errors. The reality is that there was a different way of doing this. The Government could have introduced legislation and passed it into law, then gone about the disestablishment in a procedural sense.

That brings us to the second objection to the bill, in the first place. Unlike New Zealand First, we are opposed to the centralisation of power into the ministry in order to obscure the way that the sector can interact. That reduces transparency and largely takes away the autonomous entity that was the direct conduit for the sector—in short, its own board. It has been buried in the ministry.

We had to listen to the extraordinary contribution earlier in the Committee stage by Dr Ogilvy, who seemed to be of the view that that was inappropriate and wrong. Yet I would suggest that, notwithstanding that United Future speech, its members will be voting for the very thing that he spoke against. I know that the Deputy Prime Minister is looking puzzled. He is wondering whether he has United Future under control in the way that he would like to have. The reality is that it seems not. But on the votes, I can assure him, he has United Future members under control. They are his willing lapdogs on all issues, even if, in a mild kind of way, they kick from time to time through their speeches. The reality is that they are willing cohorts of the Government in that process.

Hon BRIAN DONNELLY (NZ First): It was interesting to hear from the previous speaker, Dr Wayne Mapp, that National opposes this bill on principle because it is opposed to retrospective legislation. That is somewhat different to a conversation that I had with National’s early childhood education spokesperson when this bill first appeared. The member rang me up and said: “What are we going to do with this bill?”. I said: “Well, look, New Zealand First is going to support it because we don’t believe in wasting taxpayers’ money, but you guys will probably oppose it because you’re opposed to the centralisation of power into the education ministry.” And guess what? When Mr Heatley came down to the Chamber, I heard him make a speech about how National was opposed to the centralisation of power into the ministry, and it is interesting that Dr Wayne Mapp also just made that speech. The question really has to be just why it is that National opposes this bill. I will have to give more extensive explanations next time to Mr Heatley.

However, I believe that the bill should be called the Education (Belated Disestablishment of Early Childhood Development Board) Amendment Bill. We have gone over the point. It has been belated, and there have been some costs, pretty obviously. I know they are minimal, but the fact is that members are wrong when they say that the board has already been disestablished. It is actually still there in a minimalist form, and there have to be some costs associated with it.

Dr Paul Hutchison: Who’s there?

Hon BRIAN DONNELLY: It is Labour’s form of minimalist Government. They keep those boards going but doing nothing. It is a bit like the school up at Taipuha, which was kept going for a term even though it had no kids. It could have been shut down, and the board wanted it shut down, but the Government had to pay out $30,000. So it is a similar situation to Taipuha. We have continued to have a board since 1 October last year, even though it has in fact been disestablished for all practical purposes.

I take the opportunity to congratulate and thank the members of the board. I referred, in my second reading speech, to the fact that in its early period the unit did have some difficulty in connecting with the broad range of population groups and needs in the early childhood sector. However, it recognised its lack of capacity and made some very, very genuine strides over that period of time to extend its capacities, as it were, and to ensure that the functions it had to fulfil were carried out.

When it comes to early childhood education, one of the things that National has been criticising is centralisation and the bias towards kindergartens over private sector providers. That occurred during the unit’s time. In itself and by its existence, the unit could not prevent some of the great evils, when it comes to early childhood education, that members have been told about this morning.

I finish off by saying that once again we do have to mention the mismanagement that has allowed a bill to come before Parliament calling for the disestablishment of the Early Childhood Development Board 8 or 9 months after the actual disestablishment of the unit itself. Nevertheless, we would still be supporting the bill because of the organisation that is actually functioning behind it.

DEBORAH CODDINGTON (ACT): I am speaking to the title, clause 1 of the Education (Disestablishment of Early Childhood Development Board) Amendment Bill. The Hon Brian Donnelly highlighted the issue of the constitutional problem of having the board already disestablished and then passing the legislation 12 months after it was first announced that the board was to be disestablished. He says that that is mismanagement, and the Minister in the chair, Trevor Mallard, interjected earlier, saying that he is a hard-working and overworked Minister, but those are not excuses. They might be reasons for the strange—to put it kindly—process taking place, but they are not excuses for the Government to behave in an unconstitutional way: when it does something and we then have the final reading of a bill under urgency, as we will shortly, that legitimates something that has already happened—something that has already been pushed through.

If we were really seriously and honourably debating the title “Education (Disestablishment of Early Childhood Development Board) Amendment Bill”, we would not already have seen that board pushed into the Ministry of Education 9 months ago. It is utterly outrageous that the Government is allowed to behave in that way. [Interruption] Seven months ago. I say to the Minister that it is a matter of degree. If it is 7 months, not 9 months, it is not quite as bad—Is that what he is trying to say? He should take a call to justify to this Committee how he can sleep at night, when he uses Parliament to pass legislation to legitimise what he has already done by force. It is a very, very bad precedent for this Government to be setting.

We have a unique process here in this country, where we allow people to appear before select committees with their submissions and have their say on legislation and how it should be improved. It is called consultation. The chief Government whip justified this legislation earlier on in this debate by saying that everybody supports it. She knows that that is not the case, because she was on the select committee when it was announced that this board was going to be disestablished, and she asked questions. The reason people have not submitted or appeared before a select committee, the reason they have not gone through the usual process when legislation is brought in, is that it had already happened, and it happened without consultation with either the Early Childhood Council or the early childhood sector of the New Zealand Educational Institute.

The Hon Brian Donnelly cynically asked why ACT should be standing up and backing the New Zealand Educational Institute. The ACT party does support people who voluntarily join a union. We have absolutely no problem with voluntary unions. We do support the people who are members of that union, who are involved in the early childhood sector, and who would have liked to have some say on this bill. But as they said in the Education Review magazine, they did not get a chance. It is absolutely outrageous that we are now debating this after those people have been denied their chance to put in submissions and appear before a select committee because it has already happened.

Hon Trevor Mallard: What?

DEBORAH CODDINGTON: If the Minister does not believe me, I have the articles here if he wants to read what the secretary of the New Zealand Educational Institute said at the time about consultation and about his view on disestablishing the Early Childhood Development Board.

I would like to conclude by saying that clause 2 states that in this Act, the Education Act 1989 is called the principal Act. I hope the Minister adheres to that and calls the police in.

Dr PAUL HUTCHISON (National—Port Waikato): Undoubtedly, the title of this bill is hugely reflective of how little importance the Labour Government views early childhood education as having. Clause 1(1) states: “This Act is the Education (Disestablishment of Early Childhood Development Board) Amendment Act 2003.” That reflects absolutely accurately what the Labour Government has to say about the importance of early childhood education. I can think of no other area that is more important in terms of the outcomes for our children than early childhood education, and it is important to have a special focus on it. It seems absolutely remarkable that on the one hand the Minister has praised the Early Childhood Development Board, yet on the other hand in this bill he is callously disestablishing it.

Let us put aside the constitutional aspects. Well, we should not really put them aside at all, because as my colleague Dr Wayne Mapp has pointed out, there has been constitutional carelessness on the part of the Labour Government here. He is quite right in saying that Sir Geoffrey Palmer would be wringing his hands in despair over what his former colleagues are now doing in this bill. They are disestablishing a part of the education spectrum that was specifically designed to focus on early childhood education. It does seem extraordinary that, as the Minister says, the board was replaced a year ago, and now here, finally, under urgency, this bill is being put through Parliament. It does seem remarkable how careless the Government is, how careless it has become, and how carelessness is very much a trend that we are seeing in this Labour Government. My colleague Dr Lockwood Smith says it is arrogance. That is right. We must also throw in that quality, and that is such a pity, when this issue is all about the hugely important area of early childhood education.

I was a bit surprised to hear New Zealand First’s Brian Donnelly say that the Government had behaved in a minimalist way in terms of the board. I think that is quite outrageous, because there is nothing minimalist about it. The Government replaced the board a year before bringing in this bill, and the title of the bill clearly reflects just how severely wrong it was to do that. If anything, the early childhood area should be focused on, strengthened, and kept away from that ever-burgeoning bureaucracy, the Ministry of Education. I can see the Minister smiling and he should not be, because he knows about the excesses of absolute inefficiency that go on within his ministry. We have seen that up and down the country as the Minister does U-turns and weaves his way, trying to defend the mistakes he has made over the last 3 to 4 years.

The Minister cannot even tell us what sorts of outcomes there are from the interventions he has implemented in terms of early childhood education. That is an absolute outrage in itself. We should be measuring at the early childhood stage, because that stage is fundamentally important for the children of our nation, in terms of the chances they have to achieve their potential. But oh no, the Minister intends to disestablish this board, which he earlier said had carried out its functions very well. In fact, let me repeat this: “I want to make it clear that this decision in no way reflects on the work that the Early Childhood Development Board has done.”

Dr ASHRAF CHOUDHARY (Labour): I move, That the question be now put.

PHIL HEATLEY (National—Whangarei): I appreciate the opportunity to talk on the title of the Education (Disestablishment of Early Childhood Development Board) Amendment Bill. I would like to make a suggestion that has not yet gone down by way of amendment to this clause. The title should really read the “Education (Post-disestablishment of Early Childhood Development Board) Amendment Bill”. I say “Post” because, as we know, although this statute provides a mechanism for the Minister to axe the Early Childhood Development Board, that has actually been done already, almost 12 months ago. In other words, this bill, by way of statute, lags behind what has happened by almost 12 months. We have talked a lot about the constitutional ramifications of the situation whereby a Government can go out and act, railing against legislation and regulation, and then 12 months later come in and tidy it up—in other words, make it lawful that it disestablished the board.

We have seen a lot of legislation in the last 12 months, and I, as National’s spokesperson on fisheries, have seen lots of retrospective legislation regarding fisheries matters go through this House. I know that Damien O’Connor has registered concerns about the Ministry of Fisheries supporting such legislation year in and year out, but now we see the Minister of Education getting into the same habit. A mistake is made, or a gamble is taken—in this case, the gamble was to disestablish the Early Childhood Development Board—and the Minister comes into the Chamber 12 months later and has legislation passed that allows him to do that. I do not know why, in a Western democracy, we should allow that to happen. That is why I suggest the title should be the “Education (Post-disestablishment of Early Childhood Development Board) Amendment Bill”.

I listened keenly to Brian Donnelly’s speech. He is a member of Parliament for the New Zealand First Party. I recall making a phone call to Mr Donnelly to ask his advice, because I respected his opinion. I got Mr Donnelly’s opinion. He then came to the House a few weeks later and dogged me in this House, basically mocking the fact that I had rung him and asked for his advice. Since that time, and it must be a good 6 to 12 months ago, I have not rung and asked him for advice—and I never will, again. It is a very sad thing indeed, that when a member of Parliament looks to a member of another party, asks for help, and suggests they work together on something, the member who was approached would come to the Chamber and mock the member who did that. I am quite disappointed by that, and I know that listeners to the radio broadcast of this debate and the people in the galleries will be, also. Whereas we would have been able to share information, no longer will we be able to—certainly not after today, when Mr Donnelly decided to do that again. I find that quite appalling, particularly given we both live in the same city. Working together, we could achieve much more. It makes me sad that we cannot do so. I digress, but I did want to make that point, and I ask the member for New Zealand First to reflect on it.

I go back to my original issue, which is the fact that we are passing this legislation today. National will be voting against it, for all the good reasons we have put forward previously. I wanted to highlight that particular constitutional issue, because I do not want the Minister of Education to get into the habit, in such an important area, of having policy go into action and then for him to sweep things up afterwards with legislation. It should not happen that way. We are a democracy. This is a transparent nation, and a transparent Parliament. To have him do that reflects only an arrogance that I hope is not growing in this Labour Government.

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

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 27; ACT New Zealand 7; Independent: Awatere Huata.

Clause 1 agreed to.

Bill reported without amendment.

Third Reading

Hon TREVOR MALLARD (Minister of Education): I move, That the Education (Disestablishment of Early Childhood Development Board) Amendment Bill be now read a third time. This is a good bill, and the time for its passing has come.

Bill read a third time.

Bills

State Sector Amendment Bill (No 3)

Second Reading

Hon TREVOR MALLARD (Minister of State Services): I move, That the State Sector Amendment Bill (No 3) be now read a second time. This is somewhat more controversial legislation. It essentially addresses the question of whether teachers should be paid when they are on strike. It is the view of the Government that they should not be paid, and I expect there will be some discussion of that in the House.

PHIL HEATLEY (National—Whangarei): I rise to speak on the State Sector Amendment Bill (No 3), to be read today. It is interesting that we are speaking about this bill straight after debate on the Education (Disestablishment of Early Childhood Development Board) Amendment Bill, during which we talked a lot about constitutional decisions being made and running roughshod over them. That has happened previously, and we will be inspecting this bill, particularly during its Committee stage, as to whether that has happened in this case. It is highly likely; if so, members will hear what the National Party feels about that.

The bill was examined by the Education and Science Committee. The committee recommended that it be passed, with various amendments, and I look forward to discussing some of those. The State Sector Amendment Bill (No 3) makes amendments to the State Sector Act and, interestingly, to the Education Act. The main focus of the bill is to address problems that apparently arise from the fact that the State Services Commissioner’s ability to negotiate collective agreements is currently compromised by boards of trustees retaining all those usual rights. Throughout the country we have seen boards of trustees wanting to act independently, and with a large degree of autonomy when it comes to the employment of their staff. That is because schools like a particular flavour. They may wish to employ people who provide that flavour in the school. It might be a focus on Māori education, and there is nothing wrong with that. It might be a focus on particular technical areas. When I went to school there were woodwork, metalwork, and technical drawing classes—those kinds of subjects. It might be a focus on learning the English language, and so on. As well as providing a general education across the curriculum, a school might specialise in particular areas.

Boards of trustees have rights, duties, and powers relating to them as employers, for all sorts of purposes. The difficulty, of course, is that the exercise of those rights, duties, and powers meant that the State Services Commissioner could not easily negotiate collective agreements. When those agreements were being negotiated, of course, the parties the commissioner was negotiating with would always come back to the issue that under the Education Act boards of trustees had those responsibilities. So in that negotiating process they were torn between not only two Acts but various parties—and rightly so.

So this bill is brought about to empower the commissioner to exercise the related powers of an employer when negotiating collective agreements. It requires the union bargaining for a collective agreement to give prior notice of industrial action, and that seems fair enough to us. We do not want to see strikes in this country. We certainly do not want to see the strikes that we saw in 2002 when teachers in schools all over the country went out on strike, one after another, and kids were sent home. If that is going to happen—and it certainly happened under the Labour Government, and is something that we did not see in the latter years of the National Government—we need to see the unions giving prior notice of that action. That seems fine with us.

The bill also empowers the commissioner to suspend striking employees by notifying the relevant union, rather than advising each employee separately. This type of issue is where we part with the Labour Party in supporting this bill, and it is why we will not be voting for it. The National Party will be opposing it. We find it appalling that the commissioner, in suspending striking employees, has to notify the relevant union rather than the employee. Imagine if that happened in the private workforce—outside the public sector—whereby a business owner who was laying off or employing staff did not inform that staff member of the job he or she had just won or lost, or inform the staff member about the job, how it was going, its continuation, its progress, and how the duties under that employment may develop. The owner would not talk to the individual involved—the person who woke up every morning and went to work at 8 o’clock and left at 5 o’clock, after putting in a good day’s work—but instead he or she would notify the union. It raises all sorts of concerns with us. It tells us that the Minister in charge of the State Sector Amendment Bill (No 3) has a greater appreciation for the union bureaucracy and a need to inform unions, than he does for the individual worker who might be affected by any decision in the workplace. The example I used in this case was when boards of trustees had issues with regard to their rights, duties, and powers. That ran against what the commissioner was able to do.

There are also amendments to clarify the commissioner’s powers during a negotiation. The commissioner is able to cover boards of trustees for the costs of damages, and some amendments are brought about by that. The commissioner will cover the costs of boards of trustees for damages arising out of the exercise of powers conferred on the commissioner. In other words, if the commissioner makes a decision, rightly or wrongly, costs are therefore put upon boards of trustees. They should not be penalised by having to pay those costs. The commissioner, through these particular amendments, will reimburse those costs to the board of trustees—and rightly so. There is no reason at all why decisions made by one party should penalise another.

The employees must give sufficient notice of a strike, and I spoke about that earlier. Under this bill the boards are also obligated to provide information on a strike, and there will be amendments to clarify redundancy provisions. The National Party will oppose this bill. During the Committee stage we will certainly be discussing in more detail why that is the case. I bring the House’s attention to the minority view, which I did not go over but which is in the commentary. It summarises a little bit about how the New Zealand National Party views the bill.

DARREN HUGHES (Labour—Otaki): The House is considering the second reading of the State Sector Amendment Bill (No 3) and the report of the Education and Science Committee. It seems to me that this is quite a useful bill that clarifies the role of teachers as employees, the role that boards of trustees have, the role of the Secretary for Education, and how the unions that represent teachers fit into the very unique employment arrangement that teachers have. I think this will be a useful bill for the sector, and I support its passage through the House.

Hon BRIAN DONNELLY (NZ First): Firstly, I will comment that, in terms of the report back, the process of this particular bill through the Education and Science Committee was probably the best that I have ever seen. The select committee as a whole took the bill and looked at how to make it work. It looked at the areas that were problematic within the bill, and at what it could do to improve upon the bill. As a result of that process, the bill was quite monstered at the select committee stage. Quite large sections were modified and, in fact, removed during that period of time.

What the bill set out to do—and it went beyond its initial intention—was to overcome a really anomalous situation with regard to the teaching profession over the negotiation of the conditions of, and payment for, employment. Teachers are employed by boards of trustees, but the boards of trustees do not negotiate teachers’ salaries and conditions of employment. There is a national collective, and by law it comes under the State Services Commission, which is the agent of the Government that negotiates those matters. The States Services Commission has delegated its responsibility to the Ministry of Education, as it has the right to do. So we have the Ministry of Education negotiating the salaries and conditions of employment of teachers and going through all the industrial actions, when it is the boards of trustees that employ teachers and have the rights of employers. That has led to a number of circumstances that I think most people would regard as pretty unsavoury.

For example, in order for teachers who go on strike—as is their right to go on strike through industrial negotiations—to have their pay deducted, which one would conclude was logical in any industrial setting, the boards of trustees have to write to the Ministry of Education and tell it who went on strike. At certain schools teachers have put pressure on their boards, and said the boards should show them goodwill under those circumstances and should not write to the Ministry of Education. We had one situation, during a wildcat strike, where the teachers threatened to go on strike again if the school deducted their salaries from them. Pretty obviously, that is a totally impossible situation to operate in. It certainly does not make it fair for either the Government or the teachers to bargain in good faith. If people can withdraw their labour at will but also get paid for it, then we do not have a level playing field.

Mark Peck: The old freezing works would have done well, wouldn’t they!

Hon BRIAN DONNELLY: Would they ever! The purpose of this bill is to try to overcome that particular issue, but it has a corollary benefit. One of the tactics used by secondary teachers, both in 1996 and in the most recent round of strike action, was to roster off certain classes. They would say that on a certain day they would not teach third-form classes across the whole country. So in many cases the boards of trustees were forced into a situation of telling parents to keep their children at home. Of course, the problem was how to deduct the teachers’ pay. If that occurred on a Thursday on a certain timetable, we would not know the classes that Mr Black or Mrs Brown was teaching. One teacher may have two or three third-form classes, and another may have one. Schools may have 45-minute periods or hour-long periods. In the end, it just became too administratively difficult for the boards of trustees even to send the information in to the ministry. Consequently, there was a mechanism that teachers could keep going indefinitely.

But there was a downside to that particular mechanism, which was not recognised by very many: when parents kept their children at home, they were breaking the law. The law states that when a school is open for instruction, parents have to ensure their children are in attendance. How can we put parents into that situation? Pretty obviously, the Government was not going to chase parents up and fine them $15 for every day their children were not in attendance. But many, many parents do not like the idea that they are in breach of the law when they are forced into that situation. So the bill attempts to overcome those particular anomalies.

There is another anomaly, and it is that schools, by law, have to be open for a certain number of half days—380 half days for secondary schools, and I think it is now 394 half days for primary schools. If the teachers go on strike, pretty obviously schools cannot be open for instruction. Therefore, boards of trustees would not be able to meet their legal requirement to keep schools open for instruction for a certain number of days, without asking the teachers to come back for an extra day at the end of the year. Once again, that really attacks some of the fundamental industrial rights of teachers as employees. What the bill does—and I think this is a very positive move—is to state that if the teachers are on strike, then it is deemed that the school is open for instruction.

But then the Minister tried to say that if we had too many strikes, that would cut into education too badly, so he wanted to have the reserve power to be able to extend the school year as long as he liked. That raised some questions as to the power the Government was trying to accrue to itself, which no other employer would have been able to have. So if teachers went on strike for 3 or 4 days, the Minister could have just said to count one of those days as a school day, but the extra 2 days would have to be worked at the end of the school year. If teachers went on strike for even longer than that, we could have the school year lasting until past Christmas time. The Minister was asking for a draconian power, and the select committee did a very good job of arguing that there was no purpose in keeping that particular clause in the bill. It flew in the face of fairness around industrial relationships for teachers.

A number of other issues came up as a result of this particular bill. Once again, it is believed that these are improvements. When the Employment Relations Act went through, one of the issues that came up was how much notice a union should have to give before its members went on strike. When it came to schoolchildren, there was the real problem of getting the information back to the parents that the teachers were going on strike at a certain time. During the last round of strikes, students in Auckland were stranded. Parents did not know that bus drivers were going on strike, and there was no way of getting the students home. This legislation ensures that there has to be 3 days’ notice of any strike action. We believe that is fair. We believe it is fair that schools get that information in a timely fashion, in order to be able to get the information to parents and ensure that appropriate arrangements can be made.

The final issue that we need to talk about is the power that the bill planned to give to the Minister to punish boards of trustees if they did not do what they were supposed to do. Boards of trustees are now to be required to send information to the Ministry of Education about all the teachers who did not go on strike, rather than the other way round. The ones who did not go on strike can be paid, in a rightful fashion. But the Minister tried to give himself unlimited powers to be able to punish boards of trustees that did not comply with that requirement. The punishment would have been to make deductions from their grants. The people who were going to be hurt by that would have been the students themselves, because there would have been less money available to them for their particular studies. It is fortunate that the select committee was able to argue cogently and as a group that that was an unnecessary power. The Minister already has powers to punish or penalise boards of trustees that are recalcitrant, and he certainly did not need the sorts of draconian powers that would have flown in the face of a board’s responsibility to ensure that students are getting the best possible education.

There was another little issue around technical redundancies that required the select committee to do some tidying-up. Although the committee did not change the basic principle or premise of the bill, it certainly needed to do a lot of tidying-up of the wording. I think the wording that has come back to the House is far, far clearer in stating what the Government is attempting to do to ensure that people do not double dip when there is loss of jobs as a result of the merger or closure of schools.

Finally, I say once again a very big thankyou and give my congratulations to the select committee for what I consider to be a very fine job on this bill.

METIRIA TUREI (Green): The Greens will not be supporting the State Sector Amendment Bill (No 3). We were pleased to see the changes that were made to the bill in the Education and Science Committee, because the bill as originally proposed was absolutely appalling. It was a very clear indication on the part of the Minister and the Government that they would bypass the collective agreement processes by the use of legislation. It is our view that the Government is using its position as a legislator to get out of its obligations as an employer. The Greens are entirely satisfied with the concept that those who are on strike are not paid for the time they are striking. In no way does our objection to this bill disrupt that fundamental tenet of the right to strike. But the whole of the bill, in our view, is stained with the intention of the Minster to avoid his obligations as an employer, by the use of legislation to bypass the collective agreements that take so much time and effort for all the parties involved to work through.

All credit must go to the select committee, which took a great deal of care over the bill and took out some of its worst excesses. For example, the Wages Protection Act now applies, though the ministry had tried to avoid that legislation. There is now no ability for the commissioner to directly deduct money from schools’ operations grants—for being naughty schools—if they fail to inform the ministry of those teachers who are not on strike. Another example is that the bill originally proposed that the Minister would be able to extend the number of days in a school year, to make up for those days where schools lost teaching time because of industrial action. The officials at the time tried very hard to argue that, despite the fact that they wanted to extend the number of days so that teachers would be required to work longer if they did take industrial action, the bill did not disturb the fundamental principle of the right to strike. That, of course, was ridiculous, and the select committee did a very good job in taking out those provisions.

But there remain some very serious concerns about the redundancy clauses in the bill, and that for the Greens is one of the biggest issues. In our view those clauses are really about the Minister trying to remedy the worst effects of the network review school closure process that is currently under way. The network reviews are a huge community issue; there has been enormous outrage from all sectors. The community has worked very hard to prevent those unnecessary school closures and it has succeeded to some extent, with the moratorium. But, none the less, there are still some closures set to proceed. This bill is an attempt to avoid the redundancy processes for those teachers in the schools likely to close. We do not believe that the Government is honouring its collective agreement with the teachers unions, so we are opposed to that provision, in particular. We consider it to be completely unfair that teachers will be forced to accept positions in new schools when they are directly affected by the closure of their school, in situations where the Minister decides it is an equivalent employment position.

In the current situation, when schools merge jobs are guaranteed for teachers. Where there are school closures, teachers are allowed to take redundancy if they choose not to take employment in other schools that are still operating. That is an important factor of the principle of choice for those who are employed. But this bill will change that process because it will mean that where there is a closure, teachers will be forced to take equivalent positions, rather than redundancy.

This bill does not consider the process and the decisions around what is an equivalent position. Teachers choose to work in a particular school because of the culture of that school, its philosophy, its staff, and its management structure. That is a crucial decision that teachers, as employees, make when they choose where they go to work. This bill eliminates that choice. It undermines the good-faith bargaining that underpins the whole process around collective employment agreements.

The Greens will not support a bill that is as anti-teacher as this bill.

BERNIE OGILVY (United Future): United Future supports this bill because we do not think it is fair to put boards of trustees in the kinds of difficulties and circumstances they found themselves in during, particularly, the negotiating round for the secondary school teachers contract in 2002. That put a tremendous amount of pressure on the entire system. The purpose of this bill as we see it, in summation, is really to attempt to take the boards of trustees out of the equation and to transfer their employer functions back to the State Services Commission, and also to tidy up some arrangements when it comes to the question of school closures, programmes, and mergers, which are current around New Zealand at the present time. Those two things emerged as part of the rationale for this bill. As has been pointed out, the bill as it was presented to us initially had a number of hooks and snares in it that would have been counterproductive to what the Government intended and/or the teachers would receive as a result, and, certainly, what the students and pupils at schools would incur. The purpose of the bill is really to make things a lot easier and happen more quickly.

We heard submissions from the main institutions and supports for teachers and students around the country. The New Zealand School Trustees Association presented its views on the bill as it stood, and brought out a number of issues that needed clarity. The Education and Science Committee put them into effect on its behalf in a very clear way. I want to touch on one or two of those as we go through, even during the Committee stage. The Post Primary Teachers Association also submitted quite strongly with regard to collective bargaining; it wanted to ensure that whatever goes into this bill does not affect the whole covenant it has with the State Services Commission. The same could be said about the submissions made by the New Zealand Educational Institute for primary teachers. It and the New Zealand Law Society acted as a group to ensure that any changes we make to this bill are at least in line with current law, and there are not any conflicts in it. I appreciated the input by the submitters. As a result, and as the chair of the select committee, the Hon Brian Donnelly, mentioned, the bill has come out looking like, given the nature of the Government’s own position, it will make things work a lot easier.

Sometime later on I would like to address the issue that—it is one of the contradictions of this bill—because of centralised bargaining and collective agreements with teachers, the Government has got itself into trouble, and this bill is an endeavour to untangle that. It is not a position that United Future members would have been in favour of. Many boards were very sympathetic towards the teachers’ claims in the last strike, in 2002. We know that the State Services Commission is responsible for collective agreements with teachers. The boards of trustees did not know who to lock out and who not to lock out in that particular strike, which went on, as we know, for a protracted period. This bill really focuses on untangling that, and on the whole it does so. There was a lot of inconsistency among and across schools as to whether teachers were facing financial consequences for their actions, and that created quite a lot of inequity among teachers as to who was getting paid and who was not. Of course, in the sort of befuddle that took place in 2002 with secondary teachers, there were a lot of consequences in terms of children missing out on education. Quite honestly, that is why this bill has to come in—to guarantee that they do not suffer as a result of any further strikes in the future. It sorts out who gets locked out, who gets their pay docked, and who does not.

The amendments to the bill—and I will have a look at one or two of those—are very, very useful in that they ensure that the difficult and almost impossible original bill can now be functional and work properly. It is very, very important to note that the majority of the select committee saw fit to throw out a whole provision that tied people down to irregularities that would obviously have come up when a strike was on. As has been referred to earlier, one of the provisions that was taken out allowed the Minister to deduct from a board of trustees any amount of money the Minister thought fit. With the employer function being moved from the boards of trustees to the State Services Commission, it no longer is an issue, and the Minister cannot just do that at his will.

United Future members were happy for the bill, at the end of the first reading, to go to the select committee in order to sort out these difficulties, and in our minds they have been sorted out. We are most happy to see this bill progress. United Future supports this second reading.

DEBORAH CODDINGTON (ACT): I rise on behalf of the ACT party to oppose this State Sector Amendment Bill (No 3). I do not have voting power on the Education and Science Committee, because of ACT’s disadvantage under the situation at the moment, but I did sit on the select committee and tracked this bill through.

This legislation is another nail in the coffin for Tomorrow’s Schools, it is another nail in the coffin for parental representation, and it is another nail in the coffin for boards of trustees having some say in how their schools are run. When this bill first came to the select committee it was one of the most draconian pieces of legislation I had seen. Members in this House have praised the bill and said it is workable and will tidy up the situation. It will not tidy up the situation. Yes, it has been toned down a bit, but only in one respect—that is, the removal of the powers of the State Services Commissioner to deduct funding from a school’s operations grant. That was what the Minister of Education originally wanted to do. He wanted to punish boards of trustees as he saw it—punish them by deducting money from the schools’ operations grants. Who would be the loser in that? The children would be the losers in that. The children and learning will be the losers from this legislation.

We heard from a United Future member that the measure makes the situation more equitable because now all boards of trustees will be forced to behave in the same way. What on earth is equitable about forcing sameness on every board of trustees? I was on a board of trustees when those strikes were going on. Our board of trustees discussed the issue of whether we would pay our teachers. We discussed it in a democratic way, we voted in a democratic way, and we decided not to pay them. But we remunerated them in other ways, and we had the freedom to do that. Other boards of trustees decided they would pay their teachers. Fine, we did not have a problem with that. It was up to the board of trustees of each school, because that board had been elected by the parents of children at that school to talk for them. If parents do not like what a board does, they can vote out those board members and get new ones to do what they want. They do not vote for their board members to be dictated to, on how they behave, by the State Services Commissioner.

That is what this legislation does. It vests in the State Services Commissioner the powers of boards of trustees regarding teachers’ pay. It is a typical example of a collectivist Government digging itself into a hole and trying desperately to dig itself out. When it removed the ability for schools to have bulk funding it got itself into this disastrous situation. The most sensible thing that this Government could do, which Governments in Western democracies all around the world are doing—it is not radical; it is not gasp material—is to let parents chose; to devolve the funding to the boards so that the communities, in consultation with the teachers and the parents, can decide.

But this Government does not want to let even the teachers choose. It will now take choice away from the teachers as well. It was extraordinary on the Education and Science Committee. I actually remarked that it was rare for me to find myself on the same side as the Post Primary Teachers Association and the New Zealand Educational Institute. They opposed this bill. They saw it as draconian. They saw it as removing the last vestige of choice from teachers. They will no longer be able to choose which school they teach in, under this legislation. If teachers are put by this Government in a situation where their school is closed down or merged, they will not be able to choose which school they teach in, or they will lose their compensation. It is not their fault that schools close or merge. They do not ask to be put in that situation. They should be compensated. They have a right taken away from them, a property right if one likes—their property right to earn money. They have that right taken away from them by the State, and the State should compensate them. But teachers will not be able to be compensated now, unless they adhere to the draconian terms that have been put in this bill. We will look at those terms in more detail later, but if teachers do not adhere to the directives in this bill, if they refuse an offer of a job—a so-called equivalent position, which is very loosely defined—in a replacement school or another school directly affected by the closure or merger, they also lose their redundancy. So this Government not only does not want parents to choose; it will not let boards of trustees choose any more, and it will not let teachers choose, either.

I am shocked to the core that United Future—the family-friendly party—is voting for this legislation—[Interruption] We might not always agree with the Greens, but at least they have principles. As I said, the loser here is education. It is patronising for that member to say that members of boards of trustees were put in a difficult position of not being able to decide whether they should pay the teachers when they went on strike. That is why people decide to become members of boards of trustees; they have to make difficult decisions. Every time they have a meeting they make difficult decisions about whether they will raise $120,000 for a swimming pool or an arts centre. Is United Future going to take those choices off boards too, because parents, ordinary people, cannot decide? Does it think only politicians and bureaucrats can make choices for parents, because parents do not know, even if they are elected by other parents to be on a board of trustees?

In Florida, even the liberal, lefty press is now coming out in favour of a voucher system whereby funding is not centrally controlled as it is here—and further so under this legislation. It is devolved to the students. Research has shown that that especially benefits children from very poor families on very low incomes, because they are given the opportunity to choose a school. Even if we went back to bulk funding for just those schools that want it, they would be able to make decisions themselves over whether they pay the teachers when they go on strike. Sure, the principle of withdrawing one’s labour is that one’s remuneration is withdrawn, too; that is the basic principle. But so what if another board of trustees wants to go against that principle, and decides that, because its members sympathise with their teachers who have gone out on strike, it wants to continue paying them? It should keep that choice. This bill is a sad day for learning in New Zealand, and the ACT party is vehemently opposed to it.

MARK PECK (Labour—Invercargill): Can I say to United Future that being mauled by Deborah Coddington is like being mauled by a toothless sheep. Until that particular member learns to pay her tax bills, and there are certain other words that come to mind about her party, such as “Pipi Foundation”, and “Pipitea Street”, her party has no credibility—

Darren Hughes: It was an electorate office.

MARK PECK: Well, it was the electorate office. This particular bill is quite a simple bill, and I do agree with my colleague Mr Brownlee that—[Interruption] Not Brownlee! I tell Mr Donnelly that I take it back. I do apologise for that. I do not know whose reputation suffers the most with that particular comment, but I do take it back. But can I say that despite what was said by the person whom we do not comment on because her speeches are like being mauled by a sheep, this particular bill makes sure that some of the industrial relations issues around the operation of schools are dealt with. I interjected on Mr Donnelly’s speech that the freezing workers would have very much loved a provision whereby they got paid for going on strike. No worker worth his or her salt expects to be paid when on strike. Workers go on strike—

Hon Harry Duynhoven: Some of them do!

MARK PECK: Well, I have a very strong view about that, as a unionist—a very strong view. Those who do go on strike expect that, for standing up for their principles, they will lose wages in the process. That is part of the deal. The other side of that coin, of course, is the right of the employer to lock out, which I think deals with the issue of the confusion that Mr Brownlee—I am sorry; Mr Donnelly—was talking about. I do really apologise to the member for that. Mr Donnelly was talking earlier about the employer having the right, when these particular problems crop up, to lock out. That is just the normal ebb and flow of industrial relations—end of story.

Then I come to the crocodile tears shed about the school reviews and the redundancy provisions. They are exactly that—crocodile tears. If employees are offered a position in a merging school, or in a new school in the area, and thereby are not disadvantaged—if they can continue to be employed, if their service within the industry is not affected, if they can maintain all the other positions that they are entitled to within their particular contracts—what is wrong with that? If employees decide, after having been offered a position, not to move on to it, they make their own decision not to take up an offer of employment. I do not care how good any particular tribunal or court in this land is: at that point that is a resignation—end of story.

It seems to me that the bill tidies up quite nicely an area within the State sector legislation that is a little untidy at the moment. There is no shock or horror about this bill. It is a good bill that tidies up a situation that should have been tidied up a long time ago. In future, when teachers do decide to go on strike over matters of great importance to the education industry, they know that the price of principle is their salary for that period of time. I have absolutely no problem with that, because it means that both sides of the industrial dispute compete on a level playing field. When dealing with industrial relations, I would have thought that was something ACT would agree with.

Dr the Hon LOCKWOOD SMITH (National—Rodney): If it were not so sad to hear Mr Peck trying to climb into Deborah Coddington over her speech a few minutes ago, it would be amusing. Deborah Coddington is known up and down this country as someone who stands for principle. I do not think that Mr Peck is known for anything. Mr Peck is so bitter and twisted because even Mr Benson-Pope was promoted into Cabinet over him. Mr Peck has been here for quite a few years and is so bitter that he has not made it into the Labour Cabinet. If he chooses to attack someone of principle like Deborah Coddington, he is making a grave mistake.

I now come to the State Sector Amendment Bill (No 3). This is a very important issue. No one can pretend that the arrangements for negotiating our teachers’ salaries, and the authority of boards of trustees with respect to their employment, have been satisfactory for a number of years. No one can claim that the way the system worked in the past has been totally satisfactory.

When I was Minister, the way the system worked caused me a lot of concern. However, to hear Mr Ogilvy from United Future—is that who it was?

Dr Wayne Mapp: Dr Ogilvy.

Dr the Hon LOCKWOOD SMITH: Dr Ogilvy from United Future said that this bill sorted things out. The problem is that a party like United Future in this Parliament has no knowledge of the background to the payment of teachers’ salaries, the role of the States Services Commissioner, or the reforms of Tomorrow’s Schools. To pretend that this bill sorts things out satisfactorily is a travesty. If this bill is passed, the losers will be our children and families—the people United Future claims it cares about. This bill causes children to be the losers. I invite Dr Ogilvy to think about the issue a bit more, and about what goes on in the schooling system in this country.

There is an issue around the role of boards of trustees as employers, and the role of the State Services Commissioner as a negotiator of collective contracts. But to re-empower the centre—to empower the State Services Commissioner more—is not the way to solve our problems. The big problem in schooling today is that our best people do not go into teaching, because our best teachers are not rewarded. The great collective contract means that our poorer teachers are paid far more than they are worth, and our best teachers are not paid anything like what they are worth—and everyone knows it.

That is the problem of the big collective contract when employing our teachers. When the State Services Commissioner is negotiating employment arrangements, the big State-sector union will always be on the other side. The Government had the opportunity to do something for the schoolchildren of this country and make the amendments needed.

I accept that the status quo was not satisfactory. School boards of trustees are officially the employers, yet the State Services Commissioner negotiates the collective contract on their behalf. This Labour-led Government has progressively pulled power back from boards of trustees and recentralised it, and this is just another step in that process. However, boards of trustees should have been empowered to become full employers, as they have now had the experience.

When Tomorrow’s Schools was established in 1989-90—in fact, the previous Labour Government put it in place, but as Minister I had to start making it work—maybe it could have been argued that the new boards of trustees, new in those roles, needed a period of time before they acquired the full role of employer, including employment negotiations. It was always intended that, ultimately, boards of trustees would have the role of running their schools.

If we go back to the origin of the whole Tomorrow’s Schools reform, the Picot task force recommended that all our schools be bulk funded. One of the reasons the task force recommended that was that, ultimately, it made sense for our schools to employ their staff so that they could reward outstanding teachers and manage their schools in the interests of the children of their schools. This legislation is just another step back from what the Picot task force recommended. It is a step back from the Tomorrow’s Schools reforms. It is all part of the recentralisation of education under this Labour-led Government.

United Future, of all parties, should not be endorsing that. Recentralisation and bureaucratic control of schooling is not in the interests of our children. United Future stands in this House and parrots on about the importance of families and children, and has the chance to vote against regressive legislation that takes that away. Clause 6 states that our teachers come first and our children last. If the teachers go on strike, the union comes first and children come last. If the union goes on strike, the children miss out.

At least we should give Trevor Mallard some credit. He wanted to make sure that children did not miss out. But Mr Donnelly from New Zealand First and his select committee said: “No, we can’t have a situation where the children come first. The union must come first, so they can take as many days on strike as they like”—and children will miss out on their education. This country has had enough of that. This country has to start standing up for children and not for the big teacher unions. That is what this is all about. Far from recentralising the whole negotiation of employment arrangements for teachers, this legislation should be all about giving schools the opportunity to reward outstanding teachers, because we have great teachers.

Every bit of research done on schooling shows that an important element making for a successful school is an outstanding principal. Schools used to be able to sack bad principals when their contracts expired. They cannot do that any more. This Labour-led Government has stopped that with its Employment Relations Act. Schools cannot have fixed-term contracts any more, and they cannot get rid of bad principals. The other bit of research shows us that outstanding teachers make a difference.

This bill will make it even harder. It is another step away from enabling schools to employ their teachers in ways that enable them to reward outstanding teachers and deal with teachers who under-perform. When a school has an under-performing teacher—and we have plenty of them—again it is the children who suffer. Labour and United Future claim they care about children, yet every time a legislative issue comes up, they take the union side; they do not take the children’s side. This bill was a chance to demonstrate that the children actually matter to United Future.

There is no need for this bureaucratic nonsense. It would have been very possible to give greater power to school boards of trustees. We could have had legislation by which boards ceded that power, if they wished, to the State Services Commissioner, but at least put in place a mechanism that was originally envisaged by Picot and the whole schools reform process to really enable schools to do something for their children. The principal and the teachers are the most important bit. The skill of those teachers matters, and this bill takes it all away from our boards of trustees, the parents, the community, and the teachers involved, who want to make our schools a better place. This bill just recentralises power in the State Services Commissioner.

No one can say that I do not know what I am talking about, because I was Minister for almost 6 years and Opposition spokesperson for 3 years. No one else in this House has been involved in the politics of education longer than I have. Those comments are made from hard experience.

Hon HARRY DUYNHOVEN (Minister of State): It is very interesting to hear the comments made by a former Minister of Education—a Minister who was not very fondly remembered by those of us who were practitioners in the education service at the time.

Having been a member of Parliament at the time of the Picot report and involved in those discussions, I have to say the former Minister’s memory has been a little selective. He conveniently overlooked the very good provision in the bill that requires the union bargaining for a collective agreement to give prior notice of industrial action. I would have thought that a very fair provision, because it takes account of the notice that parents and children need if there is to be any disruption. Surely, that is much better than any other arrangement. To do what Dr Lockwood Smith suggested would be to take away the normal democratic rights that workers’ groups in this country have had over long periods under both National and Labour Governments.

This bill is much fairer. It ensures that parents get adequate notice if there is to be any disruption. That is quite unlike the situation that occurred in the early 1990s when Dr Lockwood Smith was Minister of Education.

Dr WAYNE MAPP (National—North Shore): This bill is all about the philosophical approach that political parties have to education. That is precisely why the minority view in the commentary on the bill states: “We believe it reinforces the ethos of centralised bargaining of teachers’ employment contracts, and reduces the reality that the true employers are the Boards of Trustees. It would be more appropriate to move toward more flexible employment agreements, rather than increasing the powers of the State Services Commissioner.”

We recognise the Government had choices; that there was a particular issue that had to be dealt with. That is an understood point, and the Government had a clear choice. It could either centralise or it could devolve. That choice is made on the basis of one’s philosophical attitude towards education. Is it to be State-centred and State-controlled, or is it to be parent-centred and child-controlled? That is the fundamental choice that this legislation implies.

We know what the Government’s choice was, and, frankly, we are not surprised. The Labour Government has always believed in centralisation—bringing power to the centre, reducing the power of the communities. That was precisely the debate in the previous bill. It is interesting to have two bills, back to back, that are actually about a philosophical choice. In both cases the Government has taken the choice of centralisation. What surprises me, however, is that that choice would be shared by the United Future party and the New Zealand First party. These are parties that would traditionally describe themselves, irrespective of their particular positioning, as of the centre right—respecting community choice, removing power from the State. Yet in both cases they have opted for centralisation.

Hon Brian Donnelly: No, the centre.

Dr WAYNE MAPP: Mr Donnelly has said that I have got it wrong; that they describe themselves as of the centre; but surely, nevertheless, New Zealand First is a party that believes in the community rather than the Government. Or have I got it wrong? In fact, is the basic underlying philosophy of those two parties actually for centralisation? Because that is what their votes imply. They did have a clear choice in this situation.

So we are voting against the bill, precisely because it reflects the choice the Government made. There was a mischief to be dealt with. We recognise that. It is clearly not desirable for boards of trustees to simply pay teachers who are on strike. But why do they do that? They do it because there are no consequences. Because, in fact, the power resides with the centre. Surely the proper approach is to sheet responsibility and consequences home to those who are the legal employers—the boards of trustees. So that is the fundamental choice that the public will ultimately be faced with.

The Government is, no doubt, going to go out to the New Zealand public in 18 months’ time and say: “Trust us. We know best. We can make the decisions for you. Trust the bureaucrats to make the right choices for your children.” That will not be the choice that National offers to the community. We will be saying: “Devolve power to the community. Give real responsibility to the boards of trustees. Sheet home those responsibilities, and the funding to the boards of trustees.” That is the fundamental choice that this bill implies, and there could have been another way to deal with this issue. The Government has chosen not to take that way, and, frankly, that is not surprising. It does believe in centralisation. That is why we are debating these two bills today, because it is precisely what the Government believes in. We take a different view, and we say give the community autonomy.

I have heard sotto voce interjections by Mr Donnelly about bulk funding. Well, we are proud of the results of bulk funding. Certainly, within North Shore every school that had the choice made the choice. Why did they make the choice? They did that because it gave them autonomy. It gave them the ability to make choices that were right for their schools and their communities. When people have that opportunity to make those decisions, they actually want to be able to make them. That will be the choice that will be being put to the community. It is not often in the House that we get the opportunity to have a worthwhile debate on these deep philosophical interests—how we actually deal with the real choices that face this community. But this is one of those choices, and we will be voting against this bill because—

Clayton Cosgrove: What!

Dr WAYNE MAPP: We will certainly be providing choice in education. We will be opposed to the whole concept and argument of zoning. We will give autonomy to boards of trustees.

Sitting suspended from 1 p.m. to 2 p.m.

Dr WAYNE MAPP: Prior to the luncheon break, I was saying this bill essentially has within it a philosophical choice between centralisation, which was also a feature of the bill debated previously, or decentralisation. The Government has chosen centralisation. Somewhat to my surprise, both United Future and New Zealand First have unwisely decided to support that educational philosophy. That is an unfortunate choice, because there is another way. That way is to trust parents, trust teachers, and directly fund schools, so that they make the choices. That is the essence of the choice, and it is why National is opposed to this bill.

There is also another provision in the bill about redundancies. It is all there because of the Minister’s ill-starred network review, which he had great enthusiasm for. Up and down the country he was closing schools left, right, and centre, bravely fronting up—I acknowledge he did go to the various meetings—and going to the communities and saying: “This is good for you.” I saw him on television in Invercargill defending his position.

Remarkably, there was then a complete about face, and there are to be no network reviews for 5 long years. It was an extraordinary position to take, which could only be assumed to be driven by the polls. The people of Invercargill are still waiting for their answer. Why they not included in that moratorium as well?

Now there is a somewhat anomalous position. The new sections 77HA and 77HB, proposed to be inserted in the State Sector Act by clause 4 of this bill, are still in there, but in what circumstances would they now be used, other than perhaps in Invercargill? In reality the Government has taken a reverse step and done a U-turn. So during the Committee stage, we will still ask the Minister why he felt it was necessary to include or retain those provisions, given the U-turn.

I just want to close on this point. This bill involves clear choice between centralisation and State control, which is the Government’s way, or decentralisation and trusting parents and communities, which is National’s way. The public will decide that in 18 months’ time.

LIANNE DALZIEL (Labour—Christchurch East): I rise to support the State Sector Amendment Bill (No 3), and I am glad that that member finished the way that he did, because the minority view as expressed in the Education and Science Committee report made it clear the National Party wants to move to individual boards of trustees having to negotiate contracts or agreements with their employees, school by school. Those members do want to break down the relationship that has been developed over many, many years between those working in our schools, and they want to smash the State sector unions, the Post Primary Teachers Association and the New Zealand Educational Institute. That is the National Party’s position on this. It is not the Government’s position. When the State Services Commissioner has the power to bargain for collective agreements with employees of boards of trustees, it makes good sense that the commissioner has all the powers under the legislation. It is sensible legislation from an excellent Minister of Education.

A party vote was called for on the question, That the amendments recommended by the Education and Science Committee by majority be agreed to.

Ayes 75

New Zealand Labour 52; New Zealand First 13; United Future 8; Progressive 2.

Noes 44

New Zealand National 26; Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Question agreed to.

A party vote was called for on the question, That the State Sector Amendment Bill (No 3) be read a second time.

Ayes 75

New Zealand Labour 52; New Zealand First 13; United Future 8; Progressive 2.

Noes 44

New Zealand National 26; Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Bill read a second time.

Instruction to Committee

Hon TREVOR MALLARD (Minister of State Services): I move, That it be an instruction to the Committee of the whole House on the State Sector Amendment Bill (No 3) that it take the bill part by part.

Motion agreed to.

In Committee

Part 1 Preliminary provisions

Dr WAYNE MAPP (National—North Shore): I want to focus in particular on clause 3, “Purposes”, because, as referred to in the previous debate, this has the philosophy of both the major parties, and indeed all of the parties. It is a real choice. For Labour members the choice is this. They want to centralise, so therefore the clause has the words: “… to enable the State Services Commissioner, in negotiating collective agreements …”. The Government will stand in the stead of the board of trustees. The power goes from schools to the centre. That is the Labour way. We heard the Hon Lianne Dalziel talk about their love of the unions and their cosy relationship with the New Zealand Educational Institute and the Post Primary Teachers Association (PPTA), which are well-known funders of the Labour Party. That is the sort of arrangement Labour likes and that is what it favours.

The Government will give all possible powers to the State Services Commissioner to reinforce that arrangement, because the more power one gives to the State Services Commissioner, the more power one gives to the unions. That is the corollary, which is not stated explicitly in the bill like that, but it is the intent. The Government wants to empower unions, and this is its mechanism to do so. That is not in the interests of the children, and neither is it in the interests of the teachers, because it treats all teachers the same.

I worked in the tertiary sector, and one of the most important changes was shifting from a national collective contract to having essentially university or tertiary-specific contracts. When that happened there was a tremendous blossoming of diversity and a real recognition of the abilities and talents of individual people within those institutions. That is how it should be. Teachers are not some form of cloth-capped unionists marching in rank and file, although those who would belong to the PPTA and devote all their negotiating power to it would have one believe that that is the case. Teachers are responsible professionals. In the modern era of the 21st century, modern professionals negotiate with their employers. Their employer is not the State Services Commissioner; their employers are the boards of trustees. That is the relationship that should occur, and schools ought to be funded directly on that basis.

That gives real power to the boards of trustees, to the community, and to the teachers and principals in those workplaces. It strengthens those relationships. It makes ultimately for a more harmonious working relationship, because people know where they stand. They have to have that direct relationship between themselves and their employer, whereas the Government would have them hiding and buried within this collective of the Post Primary Teachers Association, which would undertake all the negotiations. That may advantage the not-so-able teacher, but it certainly does not advantage the range, diversity, and abilities of teachers throughout the school system. If we want a modern 21st century education system, we will celebrate the diversity and ability of those teachers. That way we will attract the best people into the teaching profession.

Dr Lockwood Smith, former Minister of Education, knows the importance of giving real power to boards of trustees. That is why he was such an advocate, as Minister, of Tomorrow’s Schools, which now, unfortunately, are “yesterday’s schools”, because this Government has crushed initiative. This Government would bring power back to the centre, back to the State Services Commissioner, so that the Minister could have his cosy little relationship with his mates—I guess they are former mates, in the sense of colleagues in the PPTA—and have those kinds of negotiating powers.

Hon BRIAN DONNELLY (NZ First): I can understand why the Greens are voting against this legislation, but I cannot understand why National and ACT are voting to enable teachers to continue the practice of going on strike and withdrawing their labour, and still being paid for it.

Dr Wayne Mapp: It’s a philosophical point.

Hon BRIAN DONNELLY: Dr Mapp said that it is a philosophical point. It is a philosophical point about schools having power, devolution of decision-making, site bargaining, bulk funding, and giving real power to boards and teachers. I mention to Dr Mapp that after 9 years of National being in power in the 1990s, we ended up having the centralised negotiation of collective employment contracts with the Post Primary Teachers Association (PPTA) and the New Zealand Educational Institute. That is what we ended up with after those 9 years, and now National is telling us that it will lead us to a new nirvana.

Dr Lockwood Smith criticised New Zealand First for not supporting children’s education, because of one of the amendments the Education and Science Committee has made to this bill. I ask Dr Lockwood Smith how many days were lost through strikes, and how many days and hours of teaching were lost through rostering off, in the 1996 negotiations. In the 1998 negotiations that New Zealand First was involved in with the PPTA and the New Zealand Educational Institute, not one day was lost. There was not one day of strike action as a result of those negotiations. I ask Dr Lockwood Smith who really does care about the educational well-being of students.

The point is that in this particular case, National is claiming that it wants bulk funding and site bargaining, and that that will resolve all the issues, yet National had 9 years to put that in practice, and it did not advance it. National did not advance that when it had the opportunities to do so. Lockwood Smith’s formula would never have worked, because it was based upon the average teacher’s salary—hence there was such resistance by the teachers association and the educationalists who really thought about those issues. It was only when New Zealand First came into the coalition Government and said that if there had to be a formula, we should make it a fair one—at the top of the scale—that we had something that might have made the bulk-funding situation work. But the fact is that we went way past that, and by the end of the 1990s even National was not prepared to impose the fully funded option of bulk funding. National had the opportunity to do that, and failed to do so.

New Zealand First says that if teachers withdraw their labour—and they should have the right to withdraw their labour—they should lose their pay. That is what this legislation is about. There may also be a reorganisation of schooling in certain areas, and people may be offered another job. For example, up our way in Northland three schools are being merged on one site, and the name of the school will change. Some of the teachers at one school called Punaruku—which will now be called Whangaruru—will have their jobs offered to them. New Zealand First believes that if that offer is made, those teachers should be required to take up those jobs and should not be entitled to a full range of redundancy payments.

Dr Wayne Mapp: Stick to the right part.

Hon BRIAN DONNELLY: This is the right part. I ask Dr Mapp whether he would like me to read out that provision. Obviously he has not read it. New Zealand First says that it is only fair and proper, and in line with all other industrial negotiations, that if that sort of thing takes place, people should not receive redundancy payments. New Zealand First fought in the select committee to make sure that the wording of that provision was tidied up—because there was a need to tidy it up—but it supports the principle at stake.

The only question New Zealand First really wants to ask the Minister is why he came to the House for the first reading with such a dog of a bill. Why did he not get it right, and why did he leave it to the select committee to make all the changes? Other than that, I say New Zealand First is flabbergasted at the positions taken by National and ACT. We will support the bill, because we believe that given the circumstances left by National in 1999 regarding centralised negotiations, these mechanisms are necessary to ensure a level playing field between the taxpayer and teachers.

DEBORAH CODDINGTON (ACT): In talking in the Committee stage and addressing Part 1 of this bill, I say the ACT party will vote against this legislation all the way through. We have heard a lot of argument about why we should not be opposed to this bill removing the right of employers to pay employees who are on strike. If that is the situation Labour and New Zealand First believe in, why do they not bring in legislation that would remove that power from private employers, too? Private employers can still choose to pay or remunerate their employees in some way if they want to reward them—if they have some sympathy for the reason they are on strike. They can do that. A lot of boards of trustees did not pay striking teachers. The actual figure is not available, because, as usual, this Minister does not bother about detail when he brings in legislation like this. I have tried to get details of the actual number of boards of trustees that continued to pay teachers when they went on strike, but we do not know that, so we do not even know whether this legislation is necessary.

Of course, that is not the real reason we are bringing in this legislation. The real reason is that this Minister wants to overturn Tomorrow’s Schools. He has commissioned research that shows the ideal situation is to have one board of trustees for every 200 schools. That is a de facto education board situation. Even now, parents who are on boards of trustees tell us that they are having less and less say in the actual running of their school. They are required more and more to deal with form filling, and they have to make sure that their school complies with over a dozen pieces of legislation. When Brian Picot came up with the idea of Tomorrow’s Schools, based on very sound research from a Labour Government—which is now being overturned by another Labour Government—we had the situation whereby more power and control was to be devolved to communities and parents to run their schools. This legislation will rip more of that decision making away from parents and boards of trustees.

In trying to overcome the issue of teachers double-dipping when a school is closed or merged, the Minister has got himself into a pickle. In trying to get himself out of that pickle, he is further reducing choice. To try to get away from the situation in which a teacher is made redundant because a school closes and then gets a job at another school down the road or at the newly merged school, but still receives a redundancy payment as well as being paid for the new job, he is reducing the right of schools within that locality—that is the exact wording in the bill—to be able to choose the best teacher for the job. They will be caught between a rock and a hard place. They may not take the teacher that the State Services Commissioner directs should go there, who will otherwise not be compensated for losing his or her job, because there may be a better applicant. If it is a small rural locality or provincial area, the schools will probably know the people concerned personally. They will know their families. They will have to decide whether to put that person out on the street or to take the best teacher for the job.

That is exactly why there should not be central control. People in Wellington do not know what is best for people at Blackball on the West Coast, or at Russell in Northland. They do not know what is best for those people, I say to the Minister in the chair, Trevor Mallard. The Minister does not know that, and nor do the bureaucrats. The only people who know what is best for those communities are the people who live there—the parents, the principals, the boards of trustees, and the teachers. If we could just go back to bulk funding, we would not need this bill.

BERNIE OGILVY (United Future): United Future is concerned about some of the comments with regard to Part 1 of the State Sector Amendment Bill (No 3), which is before us today. We are concerned because of the misunderstanding that exists in some of the statements that National and ACT members have been trying to argue in the Committee. I note that both parties oppose the bill because it reinforces the ethos of “centralised bargaining”, in their words. However, that can never be the reality unless the boards also have the power to negotiate employee agreements, and that is not the case. If it were the case, then taking the position that National and ACT have taken may apply, but it is not the case, so we are looking at the reality here. Otherwise, we would do as National proposes, which is that teachers should be paid while they are on strike. I am sure that is not the case. Clause 3, “Purposes”, states very firmly that teachers cannot be paid while they are on strike, and provides for a mechanism to be set in place to ensure that that does not happen. Otherwise, it will happen, and there will be confusion between the employer—the State Services Commission—the boards of trustees, the teachers, and, worse still, the children who are being taught at school.

United Future is concerned that there has been quite a misunderstanding of the purpose of the bill. To emphasise that, a recent case came to my attention that highlights the confusion surrounding exactly whom the employer is when it comes to schools. One could be forgiven for thinking that the board is responsible for employment decisions made by a school, but that is not so, according to a recent decision by the Employment Relations Authority. This is what happened. A teacher complained that his salary was reduced after his qualifications were found to be incomplete, and blamed the board for not following up on the issue of having the salary restored. But it was the ministry and its payment agent that made the decision to cut the salary, so they were obviously held to be responsible for it. The judgment was consistent with the intent of this bill, but I wonder whether it resolves some of the questions that will continue to exist surrounding the status of boards as employers.

I pointed out earlier that, due to the submissions made on the bill as introduced, major corrections have been made to the bill in order to conform to the purposes of the Act, so that it can work properly. We now have before the Committee something that is workable, something that I would like to commend, and something that United Future supports.

PANSY WONG (National): The once-proud Labour Party headed by the Rt Hon David Lange gave New Zealand Tomorrow’s Schools. Today, very appropriately, a few MPs mentioned that the current Labour Government is fast returning them to yesteryears. I am surprised that Bernie Ogilvy is concerned that National and ACT are voting against this legislation, and is confused as to why that is the case. We were hoping to see a movement towards teachers and boards of trustees being able to bargain a fair outcome for both parties, on their own terms. All that the Minister has done, with the endorsement of New Zealand First, United Future, and the Greens, is to transfer the power to conduct wage bargaining from the boards of trustees to the State Services Commissioner in Wellington.

Clause 3(c) of the State Sector Amendment Bill (No 3) actually provides that boards of trustees have to report to the State Services Commissioner on the conduct of strikes that affect their schools. Let us think of the unnecessary bureaucracy that is being introduced by this legislation. A board of trustees that is on site at a school will now have to monitor a strike situation, and report to the State Services Commissioner in Wellington. That is the person who is supposed to be able to carry out good-faith bargaining with teachers. Why introduce another layer of complication into the situation? I was quite interested to find that members of the Labour Government—which is supposed to trust teachers—today during the debate seemed to be suggesting there has been all sorts of undesirable behaviour by teachers. According to those members teachers are not to be trusted, so that is why the Government has to empower the State Services Commissioner to bargain with them.

National and ACT have taken a very consistent and logical stand, in saying that Tomorrow’s Schools was about self-governance by schools, together with parents, principals, and teachers, and with input from students, in order for schools to conduct their business in an inclusive manner. Today, this bill once again introduces a bureaucracy—a centrally controlled structure—into the bargaining process of schools. Does the Labour Government not trust boards of trustees? Does it not believe that, if empowered, they can carry out those functions? Why introduce a bureaucracy, and then have the boards of trustees continue to monitor the situation and report to the commissioner, who is based in Wellington? That simply does not make sense to the National Party.

We will certainly oppose this bill. Tomorrow’s Schools, when it was introduced, was well intentioned, and taking away self-governance from schools is a retrograde step. I hope United Future will take another look at the legislation and study it carefully, because, after all, it claims to be a party of common sense that trusts teachers and principals, and believes that people, left to their own devices, are able to come up with decisions that are acceptable to all parties.

JIM PETERS (NZ First): When Caldwell and Spinks went around the country in 1988-89 talking about self-managing schools, we in the education sector knew that that was always going to be limited, and limited for one reason—the allocation of funds. Contrary to what I have heard in this debate so far, that was always the intention, and in 1989, in 1990, throughout the total years of the National Party’s administration till 1996, and during the period of coalition from 1996 to 1999, that was so. So, looking at clause 3 of the State Sector Amendment Bill (No 3), I am finding some difficulty in understanding the arguments being pursued in the Chamber—ones of a supposed deep philosophical mind. What are they? My experience in the secondary school system and my knowledge of the primary school system do not tell me there were any changes with regard to salaries, maintenance, and the bulk of school funding throughout the whole of that time, by any of the administrations, nor are there so at the present time.

But the reality was that in 2002 there was a problem. The problem, which is reflected in this bill, was that some boards—or principals in the secondary school sector—in trying to show particularity towards their staff, did wrongfully, I am suggesting, not acknowledge that staff were not at school during some planned strike actions, while some principals took extreme care with regard to docking teachers’ pay for every absent hour of every day. That must be the rationale behind the segments of clause 3 that bring to hand the actions of the State Services Commissioner. Who else would have the ability to say to boards that deductions in respect of strike days lost should have been made, which in some cases, because of the particular atmosphere of that strike action in 2002, was not done? So my experience conveys to me that this measure is reasonable. I certainly do not concur with the suggestion made by Deborah Coddington that, somehow, taxpayers’ funding is equated with private funding, and that therefore there should be some gratis payments of taxpayers’ funds. It is an appalling idea, and if she really thinks about what she said, she would be sorry that she said so in the Chamber, because it is taxpayers’ money.

To come back to 1989 and the issue of the so-called reforms, accountability was always going to be an issue with regard to the spending of the dollar. It still is. That is not easy in the school system, when there is never enough money to go around, as the Minister said yesterday; there is not enough money today and there will not be enough tomorrow, and every dollar counts. Not least is the issue of salaries. Salaries were not, under National Party administrations or under any other administrations, paid—[Interruption] If we go to a voucher system, that may be an answer, but it will never be the total answer to week-by-week, fortnight-by-fortnight payments to teachers. It was an answer for those who are part of the support staff; it has never been so for those who are part of the teaching staff—and it was not entirely satisfactory when it was.

The second issue I want to raise as the reason for this measure is that the schools did not, in the main, have salary service agents within their own school administrations. They were centralised from the very start. In 1989 they were centralised. In 1991, under a National Party administration, they were centralised. So, again, where is the deep-seated philosophical change of heart? [Interruption] I tell Mr Power that what we have here is a cheap argument without real substance being advanced on what is a simple, straightforward, administrative bill, which clarifies what was not known, and should have been clarified, in 2002.

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

SIMON POWER (National—Rangitikei): I have sat in the Chamber and listened to the contributions that have been made from various parties. I think it is worth making a couple of points of clarification. I must say that, like my colleague Pansy Wong, I am extremely surprised by the United Future party’s decision to support this legislation through these stages. It seems to me that this bill is a sort of apology from the Minister of Education to the Post Primary Teachers Association, and an attempt—[Interruption] I have always noticed that about Mr Donnelly: sometimes he was part of the Government in the 1990s and sometimes he was not. It just depends on which piece of legislation we are debating. [Interruption] Was that from Rick Barker—“That member will never be in Government.”? Well, if the choice is doing that or signing off JP nominations, it is a pretty tight call!

Clause 3 begins: “The purposes of this Act are—(a) to enable the State Services Commissioner, in negotiating collective agreements applicable to employees of Boards of Trustees, to exercise … the powers available to an employer …”. Lianne Dalziel has contributed to the debate by saying that wages are centrally funded, so the commissioner should be able to exercise the rights of an employer during that negotiation. In a strange way, Lianne Dalziel has gone right to the heart of the matter, because that is the problem. The whole problem is that we are saying to boards of trustees that they are the employers, and will take responsibility for the running of schools and the employment of teaching staff, but at the same time we are removing the very thing that binds the employer–employee relationship, and that is the payment of remuneration. Various members have stated that the opportunity arose from time to time to remove that particular provision, and the point has been well made and acknowledged. Let me assure those members who have an interest in this matter that when the Government changes, so will some issues around this particular matter.

What is really going on here is we are removing further individual rights of boards of trustees members, and recentralising them around the funding arm, the State Services Commissioner—effectively, a de facto employer standing outside the contractual relationship that should exist directly between the employing board of trustees and the employee teacher. That fact is the difficulty we find ourselves in, in every school around the country—that there is a third party butting its nose into the relationship between schools and boards of trustees, and the teachers.

Hon Brian Donnelly: It always has been.

SIMON POWER: That does not make it right. The simple fact of the matter is that in order to give a bit of exercise to local parents and local schools, these matters should be the subject of negotiation directly between the boards of trustees and the employee teachers themselves. There is no good reason why the Post Primary Teachers Association should be negotiating directly with the State Services Commissioner over issues that are particular to each individual school and the learning requirements of individual children in that school. My colleague Dr Wayne Mapp has made the point very clearly that all that this bill is designed to do is to firm up and protect the collective bargaining arrangement that has existed for far too long between the Post Primary Teachers Association and, in this case, the State Services Commissioner on behalf of the Government, when or if this legislation is introduced. It is high time that schools were left to get on with this business on their own merits.

This is very confused legislation. On the one hand the Minister is protecting the collective bargaining arrangement of the Post Primary Teachers Association, but he is also quietly putting the slipper in, in clause 3(d)—

Hon Trevor Mallard: Quietly?

SIMON POWER: That is a fair point. The Minister does not usually do things quietly, but in clause 3(d) he is quietly putting the slipper in. To sort of make up for the G3 stuff-up, he has slipped into clause 3(d) the purpose “to preclude compensation for technical redundancies”.

STEPHEN FRANKS (ACT): We are debating Part 1 of the State Sector Amendment Bill (No 3), and from my left there has been a shrill cry of “School by school!” in astonished tones, as the honourable Lianne Dalziel tries to interrupt Mr Simon Power with what she thinks is the killer punch—school by school negotiation. What a shocking idea that boards of trustees—all 2,000 of them, or however many primary schools there are, and another 500 or so secondary schools; I cannot remember the figures—might be entrusted to sort out the terms of employment of their own teachers. That is horror for the left. That horror is what this bill is about, and that is why the purpose provisions in clause 3, with their very anodyne words, do not really say it as simply as they might. This is the coffee the Minister of Education has when he is drunk. It is a dreadful policy, and a foolish reversal of the Picot reforms. To take away bulk funding—

The CHAIRPERSON (Ann Hartley): No, the member should not say that. He will withdraw that remark.

STEPHEN FRANKS: I withdraw. If I may I will explain to the Minister, in case he felt grave offence. Sometimes when one makes a mistake and is drunk—and I think this is typical of teenagers—the way one that tries to cover it up is to drink coffee. One makes desperate efforts to look sober. What we have in this legislation is the inevitable consequence of the State Services Commissioner having to negotiate terms and conditions of employment, because the commissioner is responsible when boards will not be responsible. If they are not able to deal with their funds and set their priorities themselves, of course they are irresponsible. As a former trustee myself, I know that I would do exactly what boards of trustees do in circumstances where they do not have the power to determine the terms and conditions of employment, they do not have the power to determine wages, and they do not have the power to pay their best teachers what they are worth, and to get rid of their worst teachers, in the way that an ordinary, private sector employer can; of course they conspire with the teachers against the person who has to sign the cheques.

So we get a bill that still leaves the appearance of an employment relationship between the board and the staff, still leaves some selection power, but recentralises negotiations, and therefore plays directly into the hands of incompetent teachers and the State sector unions—the ones that contribute so much to Labour’s election prospects. The teaching unions are getting a reward. That reminds me of the reward being offered to the prison officers’ union. The only competition that really shows up the poor performance of the State prison sector is being killed off by the Government ending the private prison contract. This bill—and its purpose provisions make it reasonably plain—will make more concrete that the employment relationship between the board and the teacher is a farce. It contains the powers that the Minister needed when he ended genuine employment by school boards of teachers.

I do not think the Minister has taken a call in this debate, but I would be very interested to know just what input the State Services Commissioner intends giving to boards now. I know I cannot debate the next part of the bill, but it is very interesting that the powers that the State Services Commissioner will now have include powers to require trustees, in effect, to jump to the State Services Commissioner’s order. That is disguised in the purpose clause. Paragraph (c) is the only purpose that covers it, and it states: “to require Boards of Trustees to report to the State Services Commissioner on the conduct of strikes that affect the schools of those Boards;”. What that little purpose provision does not say is that it can also allow the State Services Commissioner to threaten boards if they do not do exactly as he says. The commissioner now has the power to decide whether they were negligent or not in their dealings.

Hon RICK BARKER (Minister for Courts): I move, That the question be now put.

GERRY BROWNLEE (Deputy Leader—National): The part we are discussing in this bill essentially talks about the purpose of the bill, which is to give validity to an appalling industrial relations situation that exists between the teaching fraternity in this country and the payers of the salaries of those teachers. It ignores the relationship between teachers and boards of trustees that, for all other purposes, are considered to be the employers of teachers. It is the sort of legislation that occurs when a Government decides that it will regulate everything in any area it chooses. I want to know from the Minister: if the Employment Relations Act is so good—the Act that was touted by Margaret Wilson as landmark legislation for industrial relations—why do we now have a bill that gives the State Services Commissioner certain exemptions from the provisions of that Act? What is the need for this bill? Why are teachers being treated differently from other employees?

Further, why are teachers not able to negotiate directly with their own boards? Why cannot they say to their boards: “Not only do I do my time in the classroom but I also do a bit of drama, I also take sport twice a week and then on a Saturday, and I think I should be paid more than someone who just does their classroom teaching.”? But they cannot do that, because the Government has said: “No. Every teacher is the same, and they must be paid on a scale.” I know that the Minister will stand up and say: “Oh, but we have put in place management units.” Right?

I ask the Minister, if he is going to stand up and give us a lecture on those management units, whether he can tell us how many teachers in this country receive their management units exclusively for sport or exclusively for cultural activity, outside the classroom. There will not be many. There will be very, very few, because the Minister knows that those management units are overwhelmingly tagged for curriculum matters as they pertain to the classroom. I want to know from the Minister whether it is necessary—

Hon Trevor Mallard: As it should be.

GERRY BROWNLEE: The Minister actually chipped in then, and I do not want to give his interjection credibility except to say that he said that that was as it should be. That is an admission from the Labour Government that sport in schools does not matter, cultural activities in schools do not matter, and that all children in schools should simply be confined to the classroom and their education delivered along the narrow lines of chalk and talk. That is what the Labour Government’s vision of education is for this country, and it reinforces that, with a bill like this that ties the hands of both boards of trustees and, for that matter, the many teachers in this country, who might want to be better off by being able to negotiate their own circumstances.

I can look at the faces of those people sitting across the other side of the Chamber and see how worried they are. They know that as they go into their dying days as a Government, some of their key legislation is likely to be undone by the very people it is supposed to affect—in other words, the many thousands of teachers in this country who will not vote for that Government because their professional integrity is just being kicked in a heap. They are being told they are a single mass who will simply take a salary for doing a job, regardless of how well they do that job.

The other fascinating point in this part is the requirement for boards of trustees to report to the State Services Commissioner on the conduct of strikes that affect the schools of those boards. What does that say? Is it saying that there are some strikes they do not have to report? Is it saying that they have to make some assessment of how well the strike went?

Hon ANNETTE KING (Minister of Health): I move, That the question be now put.

Hon BRIAN DONNELLY (NZ First): I want to bring in a new point that has not been raised yet. However, I will start by responding to a question put by Gerry Brownlee, who asked why teachers could not negotiate directly with their employers. The answer is quite simple: for the 9 years National was in Government it never gave teachers the opportunity to do so. The system was not in place for the Labour Government to take away, because it was not there in the first place.

Stephen Franks says that teachers are getting a reward. Some reward, I have to say! This legislation actually reduces the powers through collective negotiations of the teachers associations or unions. Some reward! It is National and ACT that want to retain the powers that the unions now have. The point is this: why do we have to put this through under urgency? Why are we putting this through in this timely fashion? The public needs to know, the Parliament should know, and Annette King and Gerry Brownlee might like to know too that we have collective negotiations coming up very, very soon.

Gerry Brownlee: What for?

Hon BRIAN DONNELLY: For secondary, primary, and area school contracts. I ask members to remember that we have a situation that is chaotic, as a leftover from the last set of negotiations with the secondary school teachers. The Government has a mess of the Minister’s own making. This bill tries to make sure that the Post Primary Teachers Association and the New Zealand Educational Institute do not have those extraordinary powers to utilise when those negotiations come about.

Do people want to see another round such as we saw prior to the last election? Do we want the sorts of decision-making processes where they had to go to an arbitration panel and the Minister gave them an open cheque? It created more problems for the future as well as costing the taxpayer a lot more money than the Post Primary Teachers Association would have settled for. If that is what we want, members should vote against this legislation. This is what I am asking ACT and National to consider, because what they are doing is saying that they would continue to allow the Post Primary Teachers Association and the New Zealand Educational Institute to have extraordinary powers to withdraw their labour and still get paid for it.

In this respect New Zealand First is saying that those collective negotiations have to be done between now and the next election, so why should the taxpayers’ representatives go in with their hands tied behind their backs? That is an issue that does not seem to strike home to the ideologues from National and ACT who, in their 9 years, did not do anything about this issue, anyhow.

The point is that we need to be worried that we have some untidy negotiations coming up. For the good of our children and education I hope that is not the case. I hope the Minister has learnt a whole lot of lessons from last time around, but I do not think that is the case, because he is starting off behind the eightball with a very untidy situation around the G3s. Unless that can be resolved, it will not be only the Post Primary Teachers Association that is going on strike, it will be the New Zealand Educational Institute as well. Therefore, it seems to me that it is responsible to ensure that the negotiating teams—the State Services Commission or, by delegation, the Ministry of Education—have this legislation passed so that they can negotiate on behalf of taxpayers on a level playing field. I put that to both the ACT and the National parties to consider very seriously.

Hon HARRY DUYNHOVEN (Minister of State): I move, That the question be now put.

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

Ayes 62

New Zealand Labour 52; United Future 8; Progressive 2.

Noes 58

New Zealand National 27; New Zealand First 13; Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Motion agreed to.

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

Ayes 75

New Zealand Labour 52; New Zealand First 13; United Future 8; Progressive 2.

Noes 45

New Zealand National 27; Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Part 1 agreed to.

Part 2 Amendments concerning employees of Boards of Trustees.

Dr WAYNE MAPP (National—North Shore): The core of this part is section 74AA in clause 4, headed: “Commissioner’s powers when collective agreements are negotiated”. Subsection (1) states: “the commissioner has, for the purpose of those negotiations, all the rights, duties, and powers of an employer under the Employment Relations Act 2000 in respect of those employees.” In simple words that means that all negotiations are done at the behest of the Minister by the State Services Commission with the monopolistic unions, the Post Primary Teachers Association and the New Zealand Educational Institute—the Labour Party’s very good friends and, no doubt, funders thereof as well.

It is all very well for the member from New Zealand First to talk about the past. We ask that member to look forward, because that is what this Parliament is here for—to look at the way things will be done in the future. One of the things I have always said to New Zealand First members is that they have a fond memory of New Zealand prior to 1984. It is as if the last 20-odd years had never happened. They may have a certain appeal to a group of New Zealanders who would live in the past. That is the basic appeal of New Zealand First. That is why its members are so opposed to international trade, the ending of tariffs, and the modernisation of New Zealand’s manufacturing and service industries. They are also opposed to looking forward in the area of education. So all they can do is talk about the period of the 9 long years.

Actually, it is worth recording that the Hon Brian Donnelly was an Associate Minister of Education for two of those years. It is all very well for him to talk about 9 years, while he had responsibility for one-quarter of that period. [Interruption] That is exactly the problem with New Zealand First. Two out of nine equals one-eighth, in the eyes of Mr Mark. Does that not say so much about them?

I want to return to the core point. How do we go forward? We go forward by empowering people. That means boards of trustees. That means teachers. It means basically negotiating at that particular level. That is how we empower people. That is how we deal with modern professional relationships. Why is it so difficult for the Government to get that fundamental point? Can it not see that every private sector employer is able to negotiate with employees? It does not cause trauma. It does not cause drama. People simply get on with the job and do it.

I can tell the Minister that when that change was made in the 1990s—and Dr the Hon Lockwood Smith would have been Minister of Education at that time and promoted that change: the shift from centralised bargaining towards site bargaining at tertiary level; he saw an enormous flowering of diversity and opportunity at the tertiary level. Would it not be wonderful if that could also be achieved at the compulsory education level. We on this side of the Chamber are saying to the Government that a clear choice will be put to New Zealanders. That choice will be: “Do you believe in centralised, old-fashioned, State-controlled answers of the left, or do you believe in empowering people, giving people autonomy, freedom, and the ability to develop real relationships where people work between their real employers, the board of trustees, and the community, and the teachers themselves, breaking the cycle of restrictive unionism that virtually compels people into a union?”. That is the Labour way, but our way is superior.

METIRIA TUREI (Green): The Greens have proposed an amendment to the bill, to delete clause 5. This clause sets out the redundancy changes. In our view this clause undermines the collective agreements and is an attempt to alter by legislation collective agreements with the teachers. Currently, when a school closes, a teacher is entitled to take redundancy. If the teacher subsequently gets a job in another school, after he or she has accepted redundancy, the teacher is required to refund an appropriate amount of his or her redundancy. That is perfectly reasonable, and is a process that already exists. But clause 5 takes that option away from teachers. If their school closes and they are offered an equivalent position—a decision about equivalency made by the Minister—they are required to take it, even if their original school has closed.

This is not even an equivalent process to the one for mergers, where there is at least a guarantee of employment for teachers. In the Greens’ view this is an attempt by the Minister to remedy the problems that he will face when he closes schools and builds new, flash, expensive ones, but finds that teachers in those areas are so unhappy with the process around their employment, so unhappy with the school closures, that they choose not to teach at that new school, or in some cases, not to teach at all.

How will the Minister staff these new schools? Will he listen to their calls not to close schools arbitrarily that are vital to the community, and thereby repair the relationships he has damaged? Will he offer better conditions and pay for teachers as a whole, to ensure that they are properly paid for the crucial job they do? No, he will not. What he will do, instead, is change the conditions of their employment, without their agreement, using legislation not bargaining, and strip away their choice of redundancy. The Greens’ amendment will eliminate this inequity in the bill, and we urge all members to support it.

Hon TREVOR MALLARD (Minister of Education): I want to speak relatively briefly to draw the attention of members to the amendments. I have not yet heard anyone refer to the amendments that have been sitting on the Table for some time. There are now three amendments. There is a Supplementary Order Paper in my name. There is a minor amendment to that, and there is also the Greens’ amendment. The only reason for speaking is to draw members’ attention to them so that they do not get a fright later on. I notice that National Party members especially had not quite picked up the fact that the amendments were there.

Hon BRIAN DONNELLY (NZ First): I want to make just a few comments on this part of the bill. The first is to Dr Wayne Mapp, who has been fairly critical of New Zealand First’s position.

Dr Wayne Mapp: Philosophically.

Hon BRIAN DONNELLY: Philosophically. I say to Dr Wayne Mapp that during the 20 months that New Zealand First was part of the Government, the one thing we did do at least was to get the bulk funding formula right. That was something the National Party could not get right in all those periods of time before that.

There are a few other issues that need commenting upon. The first one is to make note of the—

Gerry Brownlee: Why did you give up?

Hon BRIAN DONNELLY: We gave National the opportunity to be able to—

Gerry Brownlee: Why did you give up?

Hon BRIAN DONNELLY: Because New Zealand First had a coalition agreement with National, and we withdrew from it. We gave National the opportunity to impose bulk funding with a good formula. National had the opportunity to make it compulsory for all schools, and it did not do it during that time. That suggests that National was not committed to it in the first place.

I want to comment on the penalties for not complying, which was the Minister’s original intention. I am glad that provision has been taken out of the bill, because it was draconian. It would have led to boards of trustees being penalised over and above any other non-compliance issues. In the long run it would have impacted upon the quality of education. New Zealand First is very pleased with the part it played in having that provision removed.

I turn to the issue of technical redundancies. The bill as it came into the House was untidy, and it was not really clear which schools it applied to. I will give an example. A number of schools in the Moerewa area are under the network review, but just over the hill is Pakaraka School, which is not within the review. However, it is very possible that the decisions the Minister makes concerning the Moerewa schools could impact upon Pakaraka School. The question is whether that school falls within the compass of this particular legislation.

Hon Trevor Mallard: Not this time, but maybe next time.

Hon BRIAN DONNELLY: OK, but that was one of the issues that had to be tidied up. I think the wording has now been tidied up, but the problem is that when the bill first came in, it was not very clear whether those schools would have been captured or not captured, so we did our job on behalf of the House of Representatives.

But I also say to the Greens that teachers cannot have it both ways. One of the things teacher associations really push for is job protection, and it has always been the case that they would prefer job protection over redundancy packages. There were priority rights schemes in the past, where teachers had access to other jobs in other places and had first priority with regard to those jobs. It has always been the position of the teacher associations to protect jobs first. Whilst redundancy packages have been negotiated, the preference is still to ensure that jobs are offered to teachers as a first priority when it comes to downsizing, merging, closures, or anything else.

So teachers cannot have it both ways where, first of all, there is job protection. In other words, this bill says, first and foremost, that those jobs have to be offered to the teachers who are coming out of the schools, then at the same time the Greens say that if teachers choose not to take the jobs, they should have full access to redundancy packages. I think that is asking too much. It is wanting additions to both sides of the equation.

I think that what we have here is fair. If teachers are offered jobs, they should be required to take them. They should not be able, for example, to collect a redundancy and then pick up a job at Pakaraka, just over the hill, even when they have already been offered a job. It seems in this particular case that the Greens really want the teachers to have it both ways.

However, I want to make another point that no one has raised with regard to this particular matter, and that is the issue of principals. The bill states that when schools are closed, the principal’s job has to be advertised, which is the reverse of what is offered the teachers. There are some very sound reasons for that. In the past, for example, if several small schools were merged, the job had to go to one of the principals. But with the way the Minister was running his network reviews, if several small schools merged with a larger school and the principal of the larger school did not want the job, then one of the smaller ones had to get it, and he or she might not have been experienced enough.

DEBORAH CODDINGTON (ACT): I would like to turn to section 74AB (1), inserted by clause 4, concerning boards of trustees. It has been changed slightly from what originally came to the select committee. When we first got this bill, boards of trustees were totally liable for any financial claims for costs or damages that might arise from the exercise of powers conferred on the commissioner. That has been changed to state that in any claims or proceedings, the board of trustees becomes liable for anything the commissioner does—so if the commissioner makes a decision and does something, the board of trustees is liable for any claims. But the commissioner now must, out of money appropriated for the purpose by Parliament, indemnify the board for those costs or damages.

So far, so good, but we then go on to section 74AB(2), which states the board of trustees may not be indemnified for any costs or damages if the costs or damages have arisen out of conduct that, in the reasonable opinion of the commissioner, is not in good faith, or is engaged in without reasonable care. Here we have a commissioner doing something that places the boards of trustees in a vulnerable situation where they can be liable for costs or damages, but the commissioner then decides whether what has happened has not been done in good faith, or without reasonable care, before taking responsibility for indemnifying them for those costs and damages. That is a totally worthless and meaningless indemnity clause. We might just as well have been honest and stuck to the draconian clause that was there in the first place. At least boards of trustees would have known how vulnerable they are, and how vulnerable they will be, when this legislation is passed.

Why does the Minister not take a call to tell us what his definition of good faith is, or engaging in something without reasonable care? But, of course, it will not be the Minister who decides under this legislation; it will be the State Services Commissioner. Here we have a Minister who is both Minister of Education and Minister of State Services; therefore, he is in a perfect situation to tell the Committee what is meant by this provision, because most sensible people will read it as being totally meaningless. When this legislation is passed, boards of trustees will be extremely vulnerable in terms of costs and damages.

Who will suffer? Where will that budget come from? It will come from the school budget. It will not come from Parliament, because the State Services Commissioner will do everything he or she can to make sure that it does not come from Parliament, and that it comes back to the schools and out of the school budget. Again, learning will be the loser.

We have heard a lot of rhetoric today about the ACT party purportedly supporting the principle that if people go on strike, they should also get paid. If members were listening, they would know that that is not what we have been saying at all. I have consistently said that during strikes many boards of trustees decided not to pay their teachers at all. That is the right we are arguing for. We are arguing for those boards of trustees to retain the right not to pay their teachers, or, if they wish, to pay them in order to keep good relationships going.

This legislation will further damage the relationship between boards of trustees and their employees—the teachers. To all intents and purposes they are the employees; in reality, it is the Minister who employs them, because through the State Services Commissioner they will be told where to go and whether they should be paid. Under this legislation, the decisions that allow those boards of trustees to keep good relationships with their teachers will be taken away from them. They will be put further into a bad situation, and there is no guarantee that strikes will not happen.

Dr the Hon LOCKWOOD SMITH (National—Rodney): Part 2 of the State Sector Amendment Bill (No 3) is really the heart of this legislation. In this part, clause 4 gives the State Services Commissioner all the rights, duties, and powers under the Employment Relations Act during the period of collective agreement negotiations. This is all about big Government, big unions, and forget the children.

If I am wrong in that assertion, why does the Government not provide the opportunity for it to be tested? For schools it owns, for State schools in the State monopoly, the Government will require that the boards of trustees totally abrogate their responsibilities during negotiation of teachers’ pay and conditions—teachers are meant to be the employees of the boards, but we will forget that for the moment. Let us allow that the Government wants to do that. But if that is so right, and if that will produce such good outcomes in terms of rewarding our best teachers as they should be rewarded, and providing the opportunity for poor teachers—and there are plenty of them—to be dismissed under appropriate arrangements, why not give the choice to schools? If the Government is right, why not allow some schools to say that, no, they actually want to negotiate with their own teachers? Why not open things up to absolutely fair competition for ideas? If centralised control, where one size fits all and Big Brother Government controls the lot, and the big teacher union on the other side controls all the teachers, is so good, let it be tested. Let the Government provide real choice for parents by funding children who go to schools the Government does not own in the same manner as it funds children going to schools it does own.

Let us see which way parents choose to go. I would bet with every last dollar I had that we would see parents rushing out the doors of the great State monopoly, into schools where skilled teachers were rewarded, into schools that could employ the best, and into schools that could get rid of teachers who were not performing. That is my challenge to Minister Wilson, who has taken over from the Minister of Education in the chair: if this idea of total centralised control is so good, then the Government should allow choice. If the Government believes that it is such a good model, it should allow real choice. It should fund all children the same. When I say the same, if they are from poor backgrounds, then, OK, fund them more; if their need is greater, fund them more, but let their parents choose which school they go to. That ought to be the test of what is right. If what the Government is doing here is so right, let parents choose. We know, of course, that parents would leave the great State monopoly in their droves under this legislation, if they had real choice.

That is at the heart of this; this big nanny Labour Government thinks it knows best, and treats the public with contempt. We saw it with the foreshore and seabed issue. There was no consultation with the wider public; the only consultation was with iwi. It is such arrogance! The public is saying that it has had a gutsful of it. I say to the Minister in the chair, Margaret Wilson, that if she believes she is so right—she was Minister of Labour—if she believes that this kind of employment arrangement is so right, I accept that she may be right, but she should give parents the chance to decide whether they want this big State control and big union control. If she really believes in education for children, she should give parents the choice.

JIM PETERS (NZ First): I had not intended to stand, but I heard a most remarkable speech made by a former Minister of Education who was in that role for 6 years, until 1996. We in education understand the time lag. I heard the worst apology I have heard so far, in my short time in this House, for a former Minister’s inaction and inability to galvanise the education industry into being what it should be. He is concerned about poor teachers—and he made a comment as to how many there were—but he is one of those in this House who is responsible for that very state in the schools.

I recall, and I say from experience, that the actual issue throughout the 1990s, with regard to the issue of the State Services Commissioner today, was no different from the Secretary for Education role. At times the powers have been reversed, but the education of children has always depended upon good teaching, which that former Minister did not provide for adequately in his day. I have a word for the present Minister: it is not being provided for adequately at the present time, either. If we had not had the benefit over the last decade of overseas teachers, the secondary school system in this country would be in a very parlous state.

So it ill behoves that former Minister of Education, who had the direction and the planning of the whole of the education system in his hands, to come here in 2004 and say: “Forget my mistakes, forget the way in which I ran the education system down, and, instead, give free choice’’—supposed free choice—“to those who can afford it.” That is what it is about. I find it appalling, and I find it a shocking indictment on the former Minister that he should, so soon after his administration, be so quick to denigrate the efforts of his department, his officers, and, most of all, the teachers, who for a while had faith in him. I do not want to say anything more. That member was the Minister until 1996, and was superseded by Wyatt Creech.

I want now to turn to Part 2, because that part talks about the powers of the commissioner—the so-called draconian powers that the member talked about—which are no more, as I said a moment ago, than those at times exercised by the Secretary for Education. In the practical realm of paying teachers, that role has sometimes been that of the State Services Commissioner, and at other times it has been that of the Minister of Education, who has delegated his powers to the secretary. So there should not be any great issue made here.

The real issue is that, as a past member of the Post Primary Teachers Association (PPTA)—until the end of 2002—I am quite confident that any member of the PPTA would feel that any teacher who was not on the job did not deserve to be paid. That is all that is envisaged in clause 4. Where a teacher is not on the job, then that teacher has no right to be remunerated at all, if he or she has been suspended appropriately or has been locked out. That is all that the clause says. As a principal, and on behalf of the boards that I worked with, I say that is fair and reasonable. I say again that in 2002 some schools felt they could not do that.

Dr Wayne Mapp: How did you do the job?

JIM PETERS: I was one of the founding principals of the Secondary Principals Association of New Zealand and an intense believer in the association’s philosophies. But I come back to the point that the actual, practical situation does not much change from what it was yesterday. The bill merely makes certain that those schools that did not take appropriate action in 2002—and I say again that, unfortunately, some boards and some principals did not—would, under the directive envisaged in this clause, have to have regard to the instructions given by the commissioner. In another day, it could have been those of the Secretary for Education. The title does not matter, but the principle is that there is no ability for a member of the PPTA or the New Zealand Educational Institute to be paid for a work day if he or she was absent.

Again, I just wanted to add that little bit of further practical experience to the debate on the bill before the Committee.

STEPHEN FRANKS (ACT): I am driven to my feet, on behalf of the ACT party, to speak on this bill that gives the State Services Commission the power essentially to complete its control of negotiations with teachers and take boards of trustees out of the loop. Mr Jim Peters, who has just finished speaking, referred to the prospect that allowing funding to follow the child would end up benefiting only wealthy people. It is a shame that Mr Peters has not looked at the research. That same kind of reasoning would say that if people were allowed to pay for their bread, only rich people would get bread. What we have, in fact, is evidence from wherever it has been tried, that it benefits the poor the best. But my colleague Deborah Coddington will say more on that because it relates very closely to the alternative that should have been in this bill, and is not. We were delighted to hear the Hon Lockwood Smith so vigorously championing the real solution to the problem that Part 2 is trying to address.

I am sorry that the Minister in the chair now is the Hon Margaret Wilson because I really wanted to question the Hon Trevor Mallard, who is in charge of this bill, about clause 4 and the powers given to the commission in that clause. That is because the Minister, I believe, in his own patch of education, is making very, very sure that he is not afflicted with the kind of employment law that Minister Margaret Wilson has tried to push on to the rest of the employers of this country.

The rest of the employers in this country have very serious problems with the so-called good-faith obligation. The employer must foster good faith directly with the employee or with the employee’s agents. Here, of course, the employer is taken right out of the loop. In new section 74AA, inserted by clause 4, the commissioner has all the rights, duties, and powers of an employer under the Employment Relations Act. What possible basis for good faith can that give to boards? I would like to hear the Minister in the chair explain whether the Minister of Education had any consultation with her on this. There could not be a provision that is more directly antagonistic to the theories that the Minister in the chair has been putting into employment law for this country. Here we have a third party—someone who does not have to look the teachers in the eye, someone who does not have the concerns of the classroom, someone who does not have to worry about recruitment, someone who does not have to deal with the problems as an employer—being put in to completely usurp “all the rights, duties, and powers of an employer under the Employment Relations Act 2000 in respect of those employees.”

It may be that coming to this Chamber for the Committee stage of a bill is just a chore for the Minister, and it is possible to sit there and pretend that it does not have anything to do with the Minister. But, in fact, the Committee stage is Parliament’s opportunity to have an explanation. How does this bill fit with the Employment Relations Act? What possible basis of good faith is this bringing to the schools of this country? What possible foundation for good faith can this Government claim in relation to education, when the nominal employer is pushed out of the way, when the State Services Commission has all the rights, duties, and powers of an employer, in the most important negotiation for many teachers—negotiation on their wages and conditions in the collective employment agreement? Does this bill mean, for example, that the board can still communicate directly with its employees without the Minister’s thought police intervening? It does not say. All this bill states is that the board has to communicate with the commissioner. It does not state whether the board can go to teachers to explain the truth, which is: “Don’t blame us. Please don’t hold this against us or our children. In the negotiation, don’t hold the children to ransom. They have nothing to do with this. It’s all to do with the State Services Commission.” What sort of good faith does it show when the State Services Commission is given the power. This must have been a New Zealand First intervention—

LYNNE PILLAY (Labour—Waitakere): I move, That the question be now put.

DEBORAH CODDINGTON (ACT): I want to carry on from Stephen Franks’ speech, because he hit on a very important aspect of this bill. This bill will not correct what it is trying to correct. There is only one way to get this country’s education system out of the hole it has got into with centralised control. As the Hon Lockwood Smith said, it is to let parents choose. It is so interesting that every time this debate is brought up there are people who think that ordinary people cannot choose. It is as if they are reading directly from the script of Yes, Minister, where that very situation was demonstrated in such a comical way.

But let me draw members’ attention to what is happening in America, and this will happen soon in Britain with the Blair Government. The Prime Minister said of Tony Blair, the Prime Minister of Britain: “We are so close, you couldn’t even slip a piece of paper between us.” That is not the case, because the Blair Government has decided to introduce a voucher system to inner city schools for children of poor families, where the schools are failing them. An article in Florida in the United States stated that there is no doubt why Jesse Jackson was in Tallahassee this month, calling Governor Jeb Bush’s policies racist. He and his allies understand all too well that when poor African-American and Latino children start getting the same shot at a decent education as the children of our politicians do, the bankrupt public education empire starts looking like the Berlin Wall.

When the ACT party started talking about parental choice in 1996 it was considered mad. It is so gratifying now to hear the National Party vigorously championing the case for parents being able to choose. If we devolved the funding out to families and they took it to the school of their choice, then we would not have to have legislation like this State Sector Amendment Bill (No 3) that takes what even little power parents have, in the form of boards of trustees, over teachers who are employed and how they are paid, and removes it entirely back to the State Services Commissioner.

This is draconian legislation. It should not be progressing through the House, especially under urgency. It will make life a lot worse for those families whose children are struggling at school. I challenge the New Zealand First member who said that this legislation gives choice only to those who can afford it. Only those who can afford it right now have choice. They can either choose to send their children to a private school if they can afford it, or they can choose to move into a particular school zone if they want to, if they can afford it. It is choice by mortgage capacity. Property values are being driven up by this Labour Government in places like Epsom, Remuera, the Takapuna Grammar School zone, the Mount Roskill zone, and in places in Christchurch. If parents do not like the school that is next door to them, but they cannot afford to buy or rent in those zones, then they do not have any choice.

Tell me how giving those parents the financial equivalent of their child’s education deprives them of choice. It is not logical to deny it. It is absolutely what we should be doing. It is how we should be fixing this situation whereby the Labour Government got rid of bulk funding, stripped it away from those schools that wanted to have it, and then took it back. The Government then realised it had created a bigger problem for itself, so it has had to bring in this legislation that puts all the power for it in the hands of the State Services Commissioner. We will continue to vote against the bill.

BERNIE OGILVY (United Future): I want to take a short call on Part 2 of the State Sector Amendment Bill (No 3). In particular, I refer to new section 77HB, which relates to the appointment of employees following the closure or merger of schools. Although not much has been made of this aspect in the bill, I understand that there is also a Supplementary Order Paper to go with this. The bill deals with the matter of redundancies resulting from school mergers or closures, which is a very topical subject at this time, given the Government’s desire to proceed with some network reviews, and properly, I would imagine, they will continue.

Although each board is still a separate employer, in the case of a merger or a closure an employee may be offered a similar position by another board in the same locality, but without the need to comply with provisions in the Employment Act that require employers to advertise vacancies, and give preference to persons who are best suited to the situation.

I am very sympathetic to teachers, and indeed, all the communities, families and children, who face the prospect of school closures or mergers at the present time. However, I do believe that schools recruiting teachers should have the merit of their applicants uppermost in their minds. In the case of a merger, a teacher who has experience with one of the former schools might well be viewed as the best qualified, but on a merit basis, may not be.

If alternative employment is offered, then there is no entitlement to redundancy compensation, but the select committee recommended that that be clarified so that, among other things, employment offered in another school refers to the replacement school, or another school affected by the merger or closure. As a select committee we felt that this addition, correction, and modification to this bill would add value to all occasions where mergers and closures would take place, not only now but in the future. I just want to add this as part of our contribution from United Future.

The question was put that the following amendment in the name of Metiria Turei to clause 5 be agreed to:

to omit this clause.

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

Ayes 18

Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Noes 102

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

Amendment not agreed to.

The question was put that the following amendment in the name of the Hon Trevor Mallard to the amendment to clause 5 in his name set out on Supplementary Order Paper 200 be agreed to:

to amend proposed new section 77HA, as set out on Supplementary Order Paper No 200, by inserting in subsection (1)(a) and (b), after the word “offered” in both places where it occurs, the words “in writing”.

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

Ayes 75

New Zealand Labour 52; New Zealand First 13; United Future 8; Progressive 2.

Noes 45

New Zealand National 27; Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Amendment to the amendment agreed to.

The question was put that the amendment set out on Supplementary Order Paper 200 in the name of the Hon Trevor Mallard to clause 5 as amended be agreed to.

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

Ayes 75

New Zealand Labour 52; New Zealand First 13; United Future 8; Progressive 2.

Noes 45

New Zealand National 27; Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Amendment as amended agreed to.

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

Ayes 75

New Zealand Labour 52; New Zealand First 13; United Future 8; Progressive 2.

Noes 45

New Zealand National 27; Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Part 2 as amended agreed to.

Clause 1 Title

Dr WAYNE MAPP (National—North Shore): The whole intent of this bill is contained in the title, State Sector Amendment Bill (No 3), and the reason why the intent is contained there is that it represents the centralisation of power into the State. Although the Minister may be proud of that, and he obviously is, because that is the intent of the Government, the National Opposition is deeply opposed, because the bill represents a turning away from community power. It represents a turning away from trusting the boards of trustees, who are the real employers, or should be—at least in law—of teachers. Instead, as indeed other clauses indicate, all the power is to be vested in the State Services Commissioner under the direct control of the Minister, acting at ministerial direction, so that the Government, at all times, is the principal and sole negotiator of agreements with teachers in collective contracts.

Of course it is the intent of the Government that every single teacher in New Zealand in the public sector—in secondary schools and in primary schools—will be governed by a collective contract. I was surprised to hear one of the speakers, Mr Jim Peters for the New Zealand First Party, say he had remained a member of the Post Primary Teachers Association until 2002. Apparently, that was because at least he knew what it was doing, but, unfortunately, it lends credence to the power of the union; the power of the collective. When well-talented, able people realise that that is the pathway to mediocrity, then our teaching profession will expand and grow in the way that so many teachers—and I include Mr Peters—would actually wish it to do.

After all, as he said, he was a founding member of the Secondary Principals Association of New Zealand, and the whole purpose of that association was to break the chains with the Post Primary Teachers Association; to recognise that centralised, State-controlled, big unions, big government, were inimical to teacher quality, teacher excellence, and, of course, what that means is excellence in teaching for students, be they in not-so-good schools or excellent schools. But the real focus should be back on that relationship.

The way one does that is to empower the schools—that is, boards of trustees, the principal, the community, and the teachers who work in that school. I know that it is a fundamentally different philosophy to that espoused by Labour. I know that Labour’s pattern, which it is proud of, is State control at every level. That is its intent, and this bill recognises that intent. That is why I am so surprised that United Future is lending its support to such an approach.

The one thing that can be said about the Green Party is that at least it recognises the power of community. That is its raison d’être, in fact. So it would say that State centralised control, as represented by this bill, is the wrong way to go. That is why the Greens vote against it. For National and ACT, other parties that are making sensible votes today, we say we want to empower communities also, give freedom to parents and communities, and actually give freedom to teachers. I would have thought that United Future—a party that believes in common sense—would take the same approach. Frankly, I would have expected New Zealand First to take the same approach. I know that New Zealand First says it is taking a pragmatic approach to upcoming negotiations and so forth, but this was its opportunity to make a philosophical statement about where it stood. That is the opportunity that it has lost.

Dr the Hon LOCKWOOD SMITH (National—Rodney): In speaking to clause 1, “Title”, I take the chance to respond to a contribution made by the New Zealand First member and former principal of—is it “Bay of Islands College”?

Hon Brian Donnelly: Northland College.

Dr the Hon LOCKWOOD SMITH: Northland College. I did not mean to be in any way disrespectful to Mr Peters, but I could not, off the top of my head, remember.

John Carter: Jim Peters.

Dr the Hon LOCKWOOD SMITH: Yes, this is not about Winston Peters but his brother Jim Peters. He was—he is no longer a principal—a respected school principal and a member of the Secondary Principals Association of New Zealand, which is also a respected organisation. I take this chance to respond to his comment that he was shocked to hear a former Minister speak as though the system should allow children from well-off backgrounds to have advantage over those who are not. He interpreted what I had said previously as allowing that.

I want to make it absolutely clear what I said. The challenge I put to the Government was this: if the centralised system in this State Sector Amendment Bill (No 3) Bill is so good, why not allow a choice? I am prepared to accept that maybe the Labour-led Government is right in this respect. I do not happen to think it is, but if this centralised control over the employment of teachers and the negotiation of their employment arrangements is so good, if it is good to recentralise that and bring it under the control of the State Services Commissioner, then why not allow a choice? When I say “choice”, I am prepared to say there are certain children in this country whose education costs the taxpayers a lot more. Let us be prepared to fund that extra money for those children’s education. Let us accept that some children have greater learning needs and deserve much more taxpayer support. Let us accept that proposition for the moment.

But for goodness’ sake, why lock them into this one model? If this one model that the Government is now making totally centralised is so good, why not let other models compete with it, recognising that some children have educational disadvantage, and putting more resource into that, but surely give them the chance, if they wish to, to escape from a one-size-fits-all model. I am sure that Mr Jim Peters would know from his years of experience in education—as should his other good colleague from Northland; the other New Zealand First member who was also a school principal—that children differ enormously. It is absolute nonsense to think that one size fits all. So why not allow the opportunity for those who do not believe in this centralised control model, where inevitably the most skilled teachers will never be paid as much as they are worth? Members all know that. Where there is big government and big union, the most skilled people are never paid as much as they are worth, because big union always protects the less skilled, or the less good, if you like.

That is what history shows us. Poorer teachers in education are paid more than they are worth, and the best teachers are not paid anywhere near what they are worth. It is the big government, big union that stopped that. It has stopped it for generations. There was a glimmer of opportunity in the 1990s to break out of that, but we never succeeded in breaking out of it. I acknowledge that; we never succeeded in breaking out of that big government, big union model.

It is not just that good teachers deserve to be paid more, and freeing up the system would enable that. It is not just that. It is the consequence of keeping good teachers in the classroom teaching children that is so important, because children benefit, and that is my concern as I speak to the title of this bill. The children seem to be the forgotten people in this legislation. It is all about schooling. It ought to be all about our children and advancing their learning needs, regardless of disadvantage; helping the most disadvantaged more. It is known that the one-size-fits-all model does not work. International research shows that New Zealand’s good students do well by international comparison. Students in the bottom 20 to 30 percent are some of the worst performers relative to our best students, in the whole of the developed world. What this should be is a chance to change that.

Hon BRIAN DONNELLY (NZ First): The last two speeches have unfortunately, rather than focus upon the title of the bill, really just poured out a pile of simplistic slogans. The comment by Dr Wayne Mapp that this bill represents a turning away from trusting trustees has to be compared with the statement made by Dr Lockwood Smith that during the 1990s we failed to achieve the breaking out, because the point is that this legislation is no turn back at all from anywhere. It only modifies the circumstances that were left behind when National went out of office in 1999, when there was collective wage bargaining by the State Services Commission, with powers to delegate that to the Ministry of Education. Dr Lockwood Smith agrees with me there.

Dr the Hon Lockwood Smith: What I said was we’d never broken out—we did not succeed.

Hon BRIAN DONNELLY: There was a difference then, in the sense that some schools were bulk-funded for teacher salaries, and those schools most certainly would have made sure that their teachers’ salaries were docked if they withdrew their labour.

Dr the Hon Lockwood Smith: Topped up salaries.

Hon BRIAN DONNELLY: So that was a quite different sort of circumstance. But the point has to be made, and I think we have to make it again, that the State Sector Amendment Bill (No 3) amends the situation left behind by National. That situation was anomalous, in the sense that boards of trustees were the employers of teachers, but the State Services Commission had to negotiate their salaries. That situation created an incentive for some boards not to deduct payment from their teachers, and that is simply what this bill is about. It is also about trying to prevent that invidious industrial mechanism of rostering off, which New Zealand First claims should never have been allowed. It was immoral and unethical. We did something about it during our particular time—it was not employed during that period—because it really does not create a level playing field.

Therefore, far from being a pathway to mediocrity, this bill is purely and simply a mechanism to ensure that the forthcoming negotiations are based around the same sorts of relationships that exist in all other industrial negotiations. It may not be perfect for the future. National and ACT can talk about what is perfect for the future by going to the next election, telling people what they should have done for 9 years, and saying that they are going to do it for the next 3 years, anyhow. It is a bit like taking off the surtax, is it not? That required New Zealand First to come along and give National a little moral fortitude. But the fact is that in between times there will be industrial negotiations, and some pretty untidy legislation will have to operate if this bill does not go through. So New Zealand First says that the bill is OK. It is an amendment to the State Sector Act—as left by the previous National Government after it went out of power in 1999—but it is a necessary amendment to create the least amount of chaos in the forthcoming negotiations.

We think it is sensible to take this action, and so therefore we will be supporting the bill.

JANET MACKEY (Labour—East Coast): I move, That the question be now put.

DEBORAH CODDINGTON (ACT): We are now on to the title of the State Sector Amendment Bill (No 3). The title reminds us what this Government really thinks of teachers, in terms of being professional. What other group of professionals has to march up and down the street to get a pay rise? Why do we continue to treat teachers like this, when they have the most important job? This Government would not tolerate it if accountants or lawyers had to march up and down the street to get a pay rise. But who taught the accountants and lawyers to be accountants and lawyers? Teachers are the most important group of professionals in the country, yet we insist on treating them with a collective herd mentality by bringing them under the control of the State Services Commissioner.

Brian Donnelly said: “National left it in a bad situation, so all we are doing is making it worse.” That is like saying: “Six sleeping pills are bad for you, so go and take the whole bottle.” Why not throw this whole bill out, start all over again, and go back to removing State control of teachers? This legislation is like saying: “This is bad, but let’s make it worse.”, and it will not improve the situation at all. Members have heard speakers say that the bill will guarantee there will not be any more strikes. There will be more strikes—of course there will be more strikes. This bill will not prevent any strikes. As soon as there is unionised labour, there are strikes.

People who came to the Education and Science Committee said that when teachers were still being paid by boards of trustees who chose to pay them, it was an incentive for them to go on strike. What an insult to those teachers. As I said earlier in this debate, I was on a board of trustees that elected not to pay the teachers who went on strike. Those teachers still went on strike, because they felt they were striking for a principle. We might have agreed with it, or we might not have, but the teachers still were honourable in their beliefs and their purposes. Not being paid did not mean that teachers decided not to go on strike the next time there was a strike or a rolling stoppage.

This bill will be a nightmare. Just thinking about the rolling stoppages and the requirements under this bill for boards of trustees to inform the State Services Commission of the names of all those who choose not to go on strike is a total nightmare. It is a one-size-fits-all bill. It is the “Punish the Teachers Bill”, which has been introduced to try to reduce the fiscal risk to boards of trustees and the State, but it will not do that at all. If independent schools can take the risk, why should State school boards of trustees not be able to take the risk, too? That is why they are independent. They do not need to be brought under the control of the State Services Commissioner.

I heard someone from United Future say that this is different, because it is taxpayers’ money. Taxpayers’ money also goes into paying teachers at independent schools and integrated schools, but we are not bringing them under the control of the State Services Commissioner.

Stephen Franks: Not yet.

DEBORAH CODDINGTON: As Stephen Franks said, not yet. It is probably on its way, and I probably should not speak too loud, because they will be next—certainly, integrated schools will be. They are already under the Minister’s beady eye, to be brought into the State sector.

We trust those boards to make decisions on whether to pay their teachers if they go on strike. Why should we not trust the boards of State schools to make the same decision? It is a non sequitur to argue that it is not taxpayers’ money, because it is a certain amount of taxpayers’ money.

This State Sector Amendment Bill (No 3) that we are passing through under urgency is the Minister’s way of punishing teachers for embarrassing him before the last election. Mark my words: teachers will be out on the street again before the next election, unless we have an early one when the Government gets wind of it.

BERNIE OGILVY (United Future): I want to take a call on behalf of United Future on the title of the State Sector Amendment Bill (No 3). We have heard various things today about this bill, and I think it is very important that the title reflects what is happening. The State sector is looked after by the State Services Commissioner, and he, rather than school trustees, is being put into place to handle the elements that this bill addresses—that is, when a strike is announced he, through appointment by the Minister, can step in and do something. As it sits, the existing legislation is very untidy and needs to be fixed, and that is what this whole bill is about. As the last speaker said, if it is not fixed, then many teachers will be upset, there will be strikes, there will be difficulties with people being paid while they are striking, and there will be all sorts of dilemmas that the boards of trustees have to put up with and try to sort out. This bill is set up purely and simply to provide a clear track to sort out these difficulties, and therefore avoid the possibility of what has been alluded to. If it is left, it will become just a philosophical noise, as National has talked about. It will be a highway that goes nowhere. This bill goes somewhere, and tidies up a whole lot of loose ends. It is really a pleasure to commend this stage of the bill to the Committee on behalf of United Future, and we will be voting in favour of it.

LYNNE PILLAY (Labour—Waitakere): I move, That the question be now put.

JIM PETERS (NZ First): I rise to speak on behalf of New Zealand First and to give support to the Hon Brian Donnelly, who is our party’s education spokesperson, on what is a fairly simple, straightforward, tidying-up bill. With regard to the title, although the bill is still termed the State Sector Amendment Bill (No 3), it came back to the House in a much-revised form and much stronger than the bill that the Education and Science Committee first saw. A very quick review of the commentary tells us that the committee has clarified and made considerable changes to the bill. It is a much stronger and more work-worthy bill than the bill that members first saw.

In the course of the debate on this bill a few issues have been traversed. The first is that there is an aspect of choice. I say to the ACT party that in the 1980s I was active in looking at the principle of vouchers, and seeing whether they were a feasible way of funding. I say to Dr Mapp that I am very interested that the National Party has some brave new funding device—I will be very interested to hear what it is—that would give greater self-governing autonomy to the boards. I want to know whether it would be comprehensive; whether it would go beyond salaries and cover maintenance and all the other issues that schools have to contend with in the present day. I also say to the Hon Lockwood Smith that the issue of what makes a good school has always been the same—it has not changed. A good school is one in which the teachers, students, and parents are part of a community that deals with the issues of learning, of building a learning community, on a close, intimate basis. That has not changed.

Nothing will change, in this regard, because of the drive or purpose of this bill. This is a simple administrative bill that gives some clarity to a situation we faced in 2002, whereby boards of trustees did not always exercise prudence with regard to making deductions from teacher salaries. Some teachers could go on strike, take rolling strike stoppages, and not have their pay deducted for non-performance in the classroom. That is what the issue is. I commend the Minister of Education for picking up an anomaly. That administrative anomaly is being corrected, and I see no great need for the intense debate that some parties in the Chamber have carried through.

On behalf of New Zealand First, and particularly the Hon Brian Donnelly, I say to National, ACT, and other parties that we are more than happy—at any time, in a proper forum—to tease out and conduct a debate upon what represents a sound educational base for our children. But this has been an unusual occasion in terms of the elements that have been propounded on what is really a small administrative matter. Again, Post Primary Teachers Association members would not feel they should be recompensed a day’s wages that they had not earned, and I believe that that aspect has been taken to mind. On behalf of New Zealand First, and particularly our party’s education spokesperson, I support the bill’s third reading.

STEPHEN FRANKS (ACT): As we debate the title of this bill, I make a genuine complaint about bills whose titles do not tell anyone what they mean. When I was told that I had to assist in debating the State Sector Amendment Bill (No 3), I could not remember that this is a bill in which I had been taking an interest because of what it does to employment relationships. It would have been a very small thing for this bill to have something descriptive in its title that would mean that when people looked at the bill as it went through its stages, or saw it on the statute book in the future, they would have some idea that it effectively reinstated the State Services Commission as the employer, and shunted the boards of trustees aside, in terms of the most tense or difficult part of the negotiation of wages, terms, and conditions—the annual collective agreement round. It would have been a very small thing to have the title reflect, in just two or three words, what this bill actually does.

The title might have been something like “Bulk Funding Repeal Completion Bill”, because the bill is a consequence of the repeal of bulk funding. On a more depressing tone, it might have been something like “Teachers Indenture Bill”, but the bill does not have the kinds of provisions it ought to have if we were really going to liberate teachers from their current semi-feudal relationship with the mass employer. The title should reflect what the bill does, and that is try to cement New Zealand into a pattern whose days are numbered. The teaching “profession” should not be a profession in name only. It is a profession in name only because of the collective agreement that this bill is trying to buttress and reinforce.

No occupation that involves the application of judgment in the way that teaching does will have its practitioners respected as professionals when they are all on industrial, factory-type terms and conditions of employment. Real professions are marked by peer review and assessment. Real professions are marked by an enormous range of incomes, reflecting subtle calculations of the contribution that real professionals make. If we followed the pattern around the world, I say to Mr Mallard, and if we were trying to bring in a bill that really treated teachers as they should be treated, we would have schools with a wide range of ownership and employment. We would have schools where the teachers were all partners in ownership. We would have schools where the teachers were principals or directors of companies, and the heads of departments all had titles like “director”. We would have schools that were charities and run by trusts, as we do now. But, most of all, we would have schools where the Government had absolutely no role in setting their terms and conditions of employment. It would have a role of providing money to those schools, which would then decide how best to achieve their objectives and satisfy the parents.

That is the way that professionals work, all around the world. What profession does not have peer review? What profession has its terms and conditions of employment set by a State Services Commission? Not architects, not lawyers, not doctors, not engineers. Even doctors in our hospitals, essentially, are able to benchmark themselves against people who are in self-employment—people who are in partnerships or who are specialists, and who can therefore set terms and conditions of employment, and can experiment, free of the great clobbering machine that a Minister, unavoidably, has to supervise.

I have not put up an amendment to the title, because it would have been futile, but it should not blandly state “State Sector Amendment Bill (No 3)”. It could actually be something like “State Sector Reinforcement (Teacher Indenture) Bill”. It is no wonder at all that teachers find themselves disrespected, when the worst teacher in a particular range is treated almost the same, in real terms, as the best teacher.

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

Ayes 75

New Zealand Labour 52; New Zealand First 13; United Future 8; Progressive 2.

Noes 45

New Zealand National 27; Green Party 9; ACT New Zealand 8; Independent: Awatere Huata.

Clause 1 agreed to.

Bill reported with amendment.

Third Reading

Hon TREVOR MALLARD (Minister of State Services): I move, That the State Sector Amendment Bill (No 3) be now read a third time. I want to thank members for their readiness to stand and support me on this legislation. It is interesting that an afternoon in the Chamber is quite an educational process for people. I want to say a special thankyou to members of the Education and Science Committee in the House at the moment: Lynne Pillay and, especially, Brian Donnelly, who chaired the committee. [Interruption] And Bernie Ogilvy; I apologise. There is no doubt that the bill is a better bill as a result of their work.

I will express slight amazement at the Green Party’s voting. Their voting against the bill does not surprise me very much, but their voting against the improvements made in the select committee—lining up with ACT and the National Party on that—really surprised me. This is a bill around which some unholy alliances have been built. That ACT and the National Party voted for teachers being paid while on strike is a really interesting and novel approach, although not one that I would expect from them.

One can work one’s way right back on this bill. There was a New Zealand Educational Institute official whose name I will not mention who, when this bill was first mooted, indicated to me that this measure is what the private sector had always done, and the current position had to go some time. This bill makes it very clear that people do not get paid to be on strike. That is the proper approach, and, as a long-term trade unionist, I know that that is part of the deal.

Dr WAYNE MAPP (National—North Shore): The Minister purports to say that this bill is all about some narrow purpose of avoiding paying teachers who are on strike. Certainly, that is in the bill. But there is a much wider objective here, and the Minister well knows—because he has been listening to the debate at least some of the time—that National’s objection is much more fundamental. It is about the philosophy of the bill—of centralising the control of negotiations back to the State sector, reinforcing the power of monopolistic unions, and the control of the Minister at each and every stage over negotiations. That is the intent of the bill—the real intent. It may be disguised as having something to do with strikes. Unfortunately, New Zealand First has fallen for that, but it has ignored the real motivation. The real motivation is that centralisation of power.

I say to New Zealand First and United Future members that they should broaden their vision. They should look more broadly when they read a bill of this nature, because the real intent here has to be—I imagine, at least—contrary to the philosophy of both those parties. Surely it is the case that both United Future and New Zealand First would understand the importance of community control. The Greens are being consistent. The one thing I have always understood about the Green Party is that it does believe in decentralisation and community control. So, from time to time, it is not surprising that the Green Party ends up alongside National and ACT. It may be from a different philosophical base, but the outcome is the same—giving autonomy to people in the community.

We come from the perspective of freedom—the freedom of people to negotiate their own contracts, freed from the strictures and powers of the State. I appreciate that the Green Party comes from a different philosophical perspective, although, perhaps, if one digs deep enough, it is not that different in reality. I presume that even the Green Party believes in freedom. On the other hand, United Future and New Zealand First have hog-tied themselves to a hapless and failing Labour Government—a Government that can only ever find the answer in State control and the power of the big unions. That narrow and declining base in New Zealand is the Government’s support base.

Members will be interested to know that the number of New Zealanders joining unions is going down all the time. The only bastion of unionism left now is in the powerful State sector unions, like the Post Primary Teachers Association and the New Zealand Educational Institute. It is not surprising that so many members of the Labour Party caucus have that as their origin—like the Minister himself, in fact. He comes from that union background. So they are always going to be looking for opportunities to centralise, to increase the power of the State, thereby increasing the power of unions.

All that is against the interests of teachers, children, and the community. There is a different way to deal with this, and it is reflected in the National Party minority report. We believe that the more appropriate approach is flexible employment agreements at board level. After all, boards are, at least in theory, the employers of teachers. We say we should give the boards real power. We should let them be the negotiators, and let them have the funding—which I know Mr Donnelly actually supports—so that the true negotiation, the true employment contract, is between the board and its employees, the teachers. In that situation, we will be treating people with respect.

It is inappropriate that teachers march up and down the streets, as a form of old-fashioned industrial protest. It is not my image of what modern professionals do. Modern professionals negotiate directly, either by way of an individual contract or by way of site contracts, for want of a better term, and the negotiation occurs at that level. When it does, there are no strikes. Frankly, I believe the Post Primary Teachers Association and the New Zealand Educational Institute demean the professionalism of their members. It is not the way professional people conduct themselves. If teachers want to be regarded as professionals—and I am sure they do—they will move towards modern negotiating systems. They will free themselves from the strictures of centralised State control, and negotiate directly. That is something I am looking for in contemporary, modern approaches to industrial relations.

This bill sends completely the wrong signals. It empowers the State, it empowers unions, and increases their power. Mr Ogilvy would do well to look more at the deeper meaning of a bill like this. If he did so, his party would be voting against it, because it surely cannot be part of the philosophy of either United Future or New Zealand First to give more power to the unions.

I want to conclude on this point. This bill might be a small bill, like the previous bill, but within them they contain the deepest philosophical divide this House has to deal with. That is the nature of the relationship between the State and the people. For Labour, it will always be a case of increase the power of the State and reduce the power of the people. For National—and, I would like to think, for other sensible parties of the centre and centre-right—the reverse would apply. We believe in empowering communities and individuals to make their own agreements, and to reduce the power of the State. In 18 months’ time, or maybe less, New Zealanders will get to make that clear choice, because we on this side of the House will be offering that choice. Labour, I guess, will be offering its centralised State control prescription. I am confident New Zealanders will make the right choice, for freedom.

LYNNE PILLAY (Labour—Waitakere): I am very proud to stand and speak in support of this bill. In doing so I want to pay tribute to all who were involved during the submission process. I include in that the unions—the New Zealand Educational Institute and the Post Primary Teachers Association—which the other side of the House is so intent on bad-mouthing, and the boards of trustees that gave very common-sense, practical, and constructive advice. This bill has improved, it has been made better, and that is certainly because of the good submissions we received.

This bill deals with technical redundancy, and there is some real common sense in that. The bill recognises that the top priority in our education sector is job priority—that is the main focus—and that in a redundancy situation, people do not actually double dip. That is, they do not keep their job and get paid redundancy compensation. I also say, as a proud trade unionist, that, unlike the Opposition, I do support the idea that if people are in the position of withdrawing their labour in a strike situation they should not get paid for it. That is supported by all union members and everyone involved on this side of the House. It is quite strange that we hear contrary arguments from the Opposition.

Hon BRIAN DONNELLY (NZ First): I would like to point out to Dr Wayne Mapp one issue that he seems to be overlooking—that is, the New Zealand Law Society, which I presume he was once a member of, is in fact akin to a compulsory union. I am not too certain how the compulsion in that particular fact reduces the professionalism of lawyers. I would also like to make the same point made by my colleague Pita Paraone, who asked how come New Zealand First is defending this bill, and why Government members do not get up and try to defend their bill. So it was good to hear a little contribution from Lynne Pillay.

New Zealand First has been criticised for cosying up to Labour on this bill. That is not true at all. If it had not been for the firm and determined opposition of New Zealand First to some of the draconian measures in the bill, I doubt whether we would have been able to force through some of the changes. We are very pleased to see those changes, although I have already mentioned that it was through the real effort of the select committee working together as a whole.

Dr Wayne Mapp, once again, talks about National coming from a perspective of freedom. It must be that National has had a road to Damascus experience since 1999. As I have pointed out continuously, this bill reduces some of the powers of the unions, not adds to them, and modifies the industrial framework that was left behind when National left office in 1999.

But in this third reading I want to get on to some of the other points, because I think we have made many of the points about the legislation. No party is more supportive than New Zealand First of Tomorrow’s Schools and the concepts behind it, and of school trustees and the School Trustees Association. There are some concerns, and I say to Government members that the school trustees are feeling somewhat sidelined, not necessarily over this particular legislation, but on a number of other issues where they feel they have not been adequately consulted by this particular administration. Yet it is critical that we maintain the importance of school trustees within our schools. There are elections coming up, and I want to take the opportunity to pay tribute to the many thousands of New Zealanders who have offered their services to represent their communities, through the school trustee role, to ensure their community values are reflected in school practices, and that community priorities are reflected in the curriculum and the budgets of their schools. I believe that Tomorrow’s Schools, by introducing parents to the decision making, and creating a real partnership between the professionals and the parents’ representatives of the communities, was a very, very favourable step; it strengthened education immensely. Members might remember that I was one who worked under the old education boards, and under the new system.

I also have to mention that I am the only member in this House who was a principal of a bulk-funded school. We have heard a lot about bulk funding from all these people who know the ins and outs of bulk funding, but I can say I have had that particular experience. I can say now that I was very, very proud of that school and the condition it was in when I left. I can also say that I am still very, very proud of that school. It is amazingly successful and a very, very good school—even though it no longer operates under a bulk-funding regime.

So the question has to be asked: is it the bulk funding that created the very good practices within that school, or were there other factors? I would have to argue that bulk funding was only a very minor factor within the really important factors that make a good school—and, certainly, that have made Whangarei Intermediate a very good school. Those factors are the quality of staff, the leadership of principals, and the quality of school trustees and the way they get involved with schools and make decisions for the benefit of the students and teachers within those schools, and the parents. That is what makes a good school.

We have heard a lot of simplistic slogans—and it really worries me a little bit—about whether this is where what are called the centre-right parties are planning to go. I think it is retrogressive. I believe that if we want to achieve a high-quality education system, we have to go beyond some of the simplistic slogans of the 1990s that, when put under the test of practicalities and pragmatism, actually fall apart. We talk about vouchers. What good are vouchers to Te Hapua? We talk about zoning. In fact, it was the National Government, with the support of ACT, that reintroduced zoning. So all these so-called simplistic slogans, which are to be the magic bullets, will not be the magic bullets. I say that if that is all those parties can come up with for their future plan, when those things have been tested and found to be wanting we will have real difficulties.

In terms of the legislation itself, I believe that rather than focusing on those theoretical issues we need to focus on the issues that will drive our education system forward—and we certainly need to value our teachers. The unfortunate thing about our industrial relations is that it is in the interests of the unions to continue holding our teachers in a state of angst and unhappiness, and to have them feeling dissatisfied with their roles, so that they can utilise that hostility against the Government in the adversarial model we now use. I believe that we need to look at that adversarial model—at whether it is the sort of model we can utilise in order to have a modern education system.

How does a nation create an education system that is productive, constructive, forward-looking, and requires so much energy for the children in its care, if the teachers—the very ones who drive it forward—are kept in a state of constant hostility? Therefore, the adversarial model does need questioning. However, between now and the next round of collective bargaining, we certainly do not have the time to be able to go through that whole process. So there are practical issues involved. The practical issue, simply, is: do we maintain the structure that was left behind by the previous National Government, which has been shown to be faulty, or do we make the necessary modifications so that we can go into the next round with a more level playing field?

New Zealand First says that common sense and pragmatism say to make those necessary adjustments now. We can go through this big debate—that suddenly National wants to go into, again, after all these years—between the bargaining time and the next election. At this particular point in time, we have to look at what will occur over the next 6 months. As a result, New Zealand First supports this legislation—most of all because it will get rid of the invidious tactic, which Post Primary Teachers Association members in particular use, of rostering students off. They say they will not teach third-formers, for example, on a particular day. That puts boards of trustees and parents into the position of having to break the law. That is not fair; it is not justified. We need a model and a mechanism that certainly allows for the withdrawal of labour, but also allows for withdrawal in such a way that people lose their payment, etc., for it. It is a fair arrangement, and I think this bill takes us into a much fairer bargaining environment than we had before. Therefore, New Zealand First will support the bill.

METIRIA TUREI (Green): The Greens have not been convinced to not oppose this bill. We remain disappointed that the Committee of the whole House did not support the amendment to delete clause 5 from the bill.

The Greens also strenuously object to the inference from Government members that teachers are engaged in a form of double-dipping when they are entitled to redundancy and then find themselves employed in another school. No double-dipping is going on, and this bill does nothing about that, because it does not happen. At present, teachers who take redundancy when their schools have closed, and then later get a job in another school, are required—and have agreed in the collective contract—to repay or refund their redundancy payments. Therefore, they are not getting paid twice, but are making the best possible choices for themselves and their employment in schools around them, in the circumstances in which they find themselves. Teachers are not in any way asking for any alternative or different approach to that. No one is seeking that some form of double-dipping be allowed, and implications by Government members that teachers are asking for that are mischievous and untrue.

With the passing of this bill, the situation for those teachers is, in fact, much worse, because they will no longer have the choice of taking redundancy when their schools close. Where the Minister offers an equivalent position—and whether a position is considered to be equivalent to their current employment conditions is the Minister’s decision—those teachers will be required either to take that position or find themselves unemployed with no redundancy. In this bill, the Minister does not consider the nature of the employment teachers are taking, the culture of the schools in which they may be forced to work, and the fact that teachers are entitled to choose whom they work with and whether they go to a school with one or another management structure or cultural approach. This bill, in effect, strips away that choice and that opportunity for teachers.

It is true that this bill is much better now than it was when it first came to the Education and Science Committee, and the committee deserves a great deal of credit for the work that was done. None the less, the bill is still infected with the philosophy that the Minister is able to alter collective agreements by legislation rather than through bargaining. If the Minister were seeking to manage the consequential employment difficulties that would arise from school closures—that is, that he would not be able to find teachers to teach in new schools because of the destruction of relationships through the process—he should instead have negotiated and, by agreement with teachers, sought to find ways to remedy or find a better process when schools close.

Teachers are open to those opportunities and those discussions, but the Minister has made no attempt to do so. Instead, he has taken the same approach to this issue as he has to the network reviews—that is, he has a desire for a particular outcome and refuses to engage properly with the affected parties: the teachers and communities in the case of network reviews, and the teachers over these redundancy arrangements. Instead, he chooses to use his legislative powers to push changes through, regardless of the damage he is doing to communities and the Government’s relationship with those communities.

The Minister is prepared to exchange the potential for good-faith bargaining for a legislative quick-fix that will, without doubt, cause more problems for teachers, who are already under huge amounts of pressure, as well as the Government, which is wanting to have relationships with schools, teachers, and communities in the future. So the Greens will continue to oppose this bill.

DEBORAH CODDINGTON (ACT): I have heard no arguments today to persuade the ACT party to support this bill. All we have heard this afternoon are the same tired, old, patronising “we know best for everybody” arguments.

The Hon Brian Donnelly attacked the National Party for not doing anything. He did not actually inform the House that he was Associate Minister of Education for 2 years during that time, and I do not recall any flashes of brilliance coming from him in terms of changing things then.

This legislation is the example of what happens when more and more power is devolved to the State and taken away from communities. This is the second bill in a row today that we will be passing that enables the Minister to exercise more control over the education sector. The Minister is punishing teachers for striking. This bill is not just about the principle that teachers will not get paid while striking, and it is very simplistic for both the Minister and the bill’s supporters to allege that. Of course, that is what happened when this Government got rid of bulk funding and landed boards of trustees in the situation where they were the meat in the sandwich.

But this bill is not just about that. If it were just about that principle, as the Minister claimed earlier, what about integrated and independent schools, as I mentioned earlier? When those teachers strike, will this Government hurry through legislation in urgency, insisting that the employers of those teachers cannot pay them if they strike? What if those employers—those boards, or the boards of trustees in State schools—actually sympathise with their teachers? This is exactly what the union members said when they came to the select committee with their submissions. They said a lot of boards of trustees chose to pay their teachers in order to avoid stress—and I will get on to more of that in a moment.

This bill is the Minister’s attempt to desperately try to right a wrong that he has already created, and he is digging himself further into a hole. The boards of trustees are, in essence, the representatives of the parents of the children of that school. They are the customers, the consumers. They try to have their say on how the school is run and what sort of education is delivered to their children. We have already seen an erosion of parents’ power on boards of trustees, because the Minister has imposed more and more compliance costs on those boards. Their time is taken up more with complying with all the legislation, rather than having any sort of meaningful say in the quality of education their children receive. They have absolutely no say in how to reward good teachers and get rid of bad teachers. That is entirely removed from them.

The centre-right knows what the top priority of education is. We heard Lynne Pillay say in this House that the top priority of education was jobs. So we have this huge bureaucracy, and taxpayers have all that money taken off them, to keep people in jobs? Excuse me, but I thought education was about teaching children to learn and become autonomous and independent so that they can go out and support themselves later in life. That is what the centre-right knows education is all about, and that is why the centre-right says give parents the freedom to choose. Bring in student entitlements, vouchers, tax credits—whatever they are to be called—it does not matter.

We heard Brian Donnelly say that simplistic options do not work.

Hon Brian Donnelly: Absolutely.

DEBORAH CODDINGTON: That is typical of a politician who thinks he knows best, and that ordinary parents cannot choose and do not know what is best for their children. I do not know what is best for Brian Donnelly’s children, and he does not know what is best for my children. Politicians do not know what is best for children; parents know what is best. Families know, and they do not have that choice.

Peter Brown: Not always.

DEBORAH CODDINGTON: Yes, sometimes they do get it wrong, but they do not get it wrong as often as the Government does. I will guarantee that.

Jim Peters said he was championing the cause of the Post Primary Teachers Association. I wish he had read the association’s submission before he came into the House and said that, because I would like to tell members what the association said when it came before the select committee. It drew our attention to the fact that the Government’s explanatory note to the bill suggested that there was an ill to be remedied. To remedy that ill the Government proposed to confer on the commissioner—effectively the Secretary for Education by delegation of the Act—all the rights, duties, and powers of an employer under the Employment Relations Act. As the Post Primary Teachers Association very correctly pointed out, the Secretary for Education—the Government—already has huge powers to intervene in collective bargaining, pass regulations, and dictate to teachers what they can and cannot do. No other employer—I am not saying this, it comes from the Post Primary Teachers Association—has the full powers of the State at its disposal.

The second important issue the association brought to the select committee’s attention was the fact that the Government had said that whether teachers might or might not lose pay, be suspended, or locked out, was not an incentive for them to take industrial action. The Post Primary Teachers Association objected strongly to the use of the word “incentive” in terms of why its members decided to strike or not to strike. As it said, when making decisions about strike action, teachers are aware that their pay is at risk and that suspension or lockout could also result. Of course they are aware of that and take it into consideration, but more often than not their decisions to take industrial action are driven by the belief that the position adopted by the Government in bargaining will be to the disadvantage of students.

There may well be some teachers who are cynically opportunist, but many boards of trustees—as I have said, and as the Post Primary Teachers Association pointed out—chose to support the position of teachers rather than that of the ministry because the implementation of the National Certificate of Educational Achievement was increasing the workload on teachers. That is why teachers decided to take industrial action, and the boards of trustees, as good employers, were concerned about the stress on their employees, and they had the right to support them then. Under this bill, the rights of boards of trustees to support their own teachers is being taken away.

BERNIE OGILVY (United Future): On behalf of United Future I rise to speak on the third reading of the State Sector Amendment Bill (No 3). Firstly, I wish to thank all the submitters to this bill who came to the Education and Science Committee: the New Zealand School Trustees Association, the New Zealand Educational Institute, the Post Primary Teachers Association, and the New Zealand Law Society. I also thank my fellow select committee members and the chair, who did an outstanding job under quite a bit of time pressure, and also under the pressure of the exacting word-use needed to ensure we had this thing crafted correctly, so that we we could stand up and hand on to the nation a bill that was very effective, from the schools’ point of view—school trustees, parents, and children—and certainly from the point of view of teachers. So for that I am very grateful.

On the third reading of this bill it is good to remember the reasons it is here. There are a very simple couple of reasons why we are making this law. One is a very common-sense concept: to ensure we do not support the concept of “no pay for no work”. In other words, those who are against this bill are saying they want pay for everybody who does not work. I find that an absolute shocker. I really found it difficult to hear some of the people not supporting this bill upholding this incredibly different view. If people do not work, they should not get paid—and that is as simple as anyone should be able to place it. It is for that prime reason this bill has come into the House to become law.

Moreover, it also assists boards of trustees in times of strikes, so that they do not have to get caught up in heated arguments and conflicts with staff whom, of course, they have employed. They do not wish to get entangled in the options of whether they should pay them or not pay them, or of how to support them. This bill clearly sets out the fact that the State Services Commissioner takes on that role in an impersonal manner, and therefore frees boards of trustees from that conflict of interest. I think that that is a very, very sound process, when we consider what happens with the mums, dads, and children to whom they are responsible.

Overall, United Future is supportive of this bill. At this stage, we believe that all the bugs in it when it came to the select committee have been taken out. I thank members for the occasion to speak on the bill.

MOANA MACKEY (Labour): I am very happy to rise to support the third reading of the State Sector Amendment Bill (No 3). I also want to congratulate the select committee on the work it did on this bill. I think the amendments that have been made at the select committee are extremely useful and will contribute to the usefulness of the bill as a whole.

The bill corrects an anomaly that exists in respect of collective negotiations for teachers. I think it is extraordinarily unfair to expect boards of trustees to have to make a call or have the power to decide whether teachers are paid when they are on strike. It is often a very emotional issue. Not surprisingly, they are very reluctant to exercise that power. This bill means that striking teachers will be treated the same as any other employees who go on strike. In fact, we could say that it is “one law for all workers”, and that is why I find it very strange that National and ACT are not willing to support the bill. This bill will go a long way towards making the roles of boards of trustees a lot easier.

I support the bill and look forward to the rest of its passage through the House.

Dr the Hon LOCKWOOD SMITH (National—Rodney): Listening to the honourable member who has just resumed her seat, one could get the impression that this State Sector Amendment Bill (No 3) is purely a technical bill. I think she said that it just fixes up an anomaly to enable the better negotiation of teachers’ salaries. She made the point it was good that teachers will all come under one law.

We also heard another view during the Committee stage, and that is that the bill covers one of the more important issues in our country. This bill is about the negotiation of the employment arrangements of our teachers. It empowers the State Services Commissioner to have all the powers of an employer under the Employment Relations Act to negotiate employment arrangements for our teachers, despite the fact that the Education Act makes the employers of our teachers the boards of trustees. Far from being just a technical issue, this issue goes to the heart of our country’s education system.

Anyone who knows anything about education or schooling knows that it is great teachers who make a difference. All research shows that. Great teachers make a difference in our schooling. Therefore, if the system this legislation puts in place does not allow for the employment arrangements that enable great teachers to be employed, and great teachers to be retained—because their employment arrangements reward their efforts and reward their skills—then the legislation cuts at the heart of the schooling of our children in this country. That is why I say that this legislation is far from technical; it is actually very, very important for the future of our country’s children.

I know there are some who would argue—and I think the Labour member Miss Mackey, who just resumed her seat, seemed to say—that one employment arrangement is better for all our teachers. I think that that is what she was implying, but I do not happen personally to agree with that. I think that different employment arrangements enable differently skilled people to be employed. The skills required in teaching are not the same for every child. Some children require different skills from their teachers. Different ways of teaching can work better with different children. So I am not saying that one skill is the best; I am saying we need to have a system that can employ teachers in a way where the skills that work with the children they are teaching can be recognised and rewarded.

This view is different from the one held by Labour members of Parliament. I am prepared to concede that my view, though quite deeply held, may not be right. I am prepared to concede that Miss Mackey and her Labour colleagues, United Future members, and New Zealand First members who support this legislation, which recentralises employment arrangements for teachers and gives more power to the State Services Commissioner, may be more right than I am. Maybe their view is more correct than mine, but I argue that the education of our children is too important for us to take the chance on having one system imposed across the entire school system.

I argued during the Committee stage that if the Government is so right about recentralising the employment arrangements for teachers—which is a move backwards from what was in the mind of the Picot task force that preceded the Tomorrow’s Schools reforms—and steps back from that and recentralises employment arrangements for teachers, surely it makes sense to allow some options, some choices. If the Government believes that what it is imposing on this country is so right, why not allow some options? If this legislation is so good, then allowing options will not change anything. People would automatically choose to go with this system.

I put to the Labour Minister of Education, the Hon Trevor Mallard, and his colleagues: why not allow State schools that do not like this to have choice? Some State schools, like Avondale College and Rangitoto College, did so well under the Tomorrow’s Schools regime of the 1990s and just blossomed. Avondale College was not in a high-decile area but that school blossomed, as it was able to employ and reward great teachers. The bulk funding arrangements of the 1990s, while far from perfect, at least gave that school some freedom and flexibility to employ teachers who could really make a difference with their children in that community.

If Labour believes this legislation is so right, why not amend it to enable schools with boards of trustees that do not want the State Services Commissioner to impose one employment arrangement over all their teachers to opt out of the system? Why not allow those schools to negotiate different employment arrangements with their teachers? That question goes to the heart of the success of our education system. Why not allow more freedom, more choice? All of history shows us that more freedom allows greater progress. We can look at the Soviet regimes, where they imposed control over everything—and got no progress. If we kill the spirit of freedom, we kill enterprise and progress.

I say to the Labour Government that we should not argue too much about what is right or wrong with this legislation, but the legislation should allow a choice. The Government should allow the State schools that do not want imposed on them what the State Services Commissioner might negotiate, the right to negotiate with their own teachers—within a budgetary constraint so they cannot spend endless amounts of taxpayers’ money, or any more taxpayers’ money than any other school gets to spend. Surely it makes sense to allow teachers to be employed under slightly different arrangements.

I go one step further. I say that if this Labour-led Government is so confident that what this legislation is doing is so right, why does it not allow real choice for parents. Why not allow State schools to choose to negotiate separately with their own teachers—so they can reward skilled teachers; so they can reward teachers who put greater effort into the well-being of the children—and why not also allow parents to take their children to whatever school they choose? If this monopolistic, one-size-fits-all State system is so right, why does the Government not allow parents to take the funding that we taxpayers provide to them to whatever school they choose?

I say, too, that where a child has greater educational need, let that funding be greater. There is no problem. Let us recognise that some children have more need. We should fund that need more but, when it comes to the schooling of our children, why lock them in to a system of one-size-fits-all?

It is interesting to see who is snuggling up to the Government today. On different days different parties around this House seem to snuggle up to the Government, and today it is United Future and New Zealand First. Those parties in this Parliament—United Future and New Zealand First—say: “Oh no, we’re not about children having the chance for a better education, at all.” They say: “No, no. We want a State monopolistic system of one-size-fits-all and to hell with the children who don’t prosper and learn well under that system. Let them just suffer.” That is what United Future and New Zealand First are saying in supporting Labour.

However, National says we should allow our schools to do things differently and allow them to employ teachers who work for their children. Then those schools will be different from the schools in a national monopolistic system. The employment arrangements would be different if we allowed that, but I can assure this House that we would get better educational outcomes for our disadvantaged children if the system allowed schools to employ teachers under different arrangements. If parents had real choice we would see the State system start to respond to parental needs and the needs of our children’s education. At the moment there is no pressure on it to do so, but it is time that happened.

A party vote was called for on the question, That the State Sector Amendment Bill (No 3) be now read a third time.

Ayes 75

New Zealand Labour 52; New Zealand First 13; United Future 8; Progressive 2.

Noes 44

New Zealand National 27; Green Party 9; ACT New Zealand 8.

Bill read a third time.

Bills

Maritime Security Bill

Instruction to Committee

Hon HARRY DUYNHOVEN (Associate Minister of Transport): I move, That it be an instruction to the Committee of the whole House on the Maritime Security Bill that it take the bill part by part.

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

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 36

New Zealand National 27; ACT New Zealand 8; Independent: Awatere Huata.

Motion agreed to.

In Committee

Part 1 Preliminary provisions

Hon HARRY DUYNHOVEN (Associate Minister of Transport): I want to take a very brief call to alert the Committee that I have put up a Supplementary Order Paper, which contains mostly technical amendments, plus a further amendment as a result of a small glitch we found in the bill today with regard to clause 42. A small change to a term in that clause was needed but not picked up at the time the Supplementary Order Paper was drafted. I hope that clarifies the situation for members. Those amendments are on the Table.

SHANE ARDERN (National—Taranaki - King Country): After having been away for a little while and spending a few days in the UK, it is a pleasure on my return to the House to stand for the first time in support of something, instead of in opposition—the usual role of the Queen’s Opposition. Having just returned from visiting the Westminster system, I understand the role of the Queen’s Opposition even better than I did before. So it is good to stand in support.

The National Party will support the Maritime Security Bill, particularly Part 1, for a number of reasons. The bill, as outlined by the Minister in the second reading, is necessary. I ask the Government why it has taken so long, particularly with regard to the commencement, purpose, application, and interpretation, which are all in Part 1. The Minister may like to take a call during the Committee stage to say why it has taken so long. This bill, had it not been put through the House—it is now at the Committee stage—would have ended up costing this country millions of dollars through lost trade opportunity. It has come about, as a lot of these security bills have, as a result of the 9/11 events in the United States, which were a wake-up call for the rest of the Western World as to the kind of world we live in today with regard to terrorism.

A number of people made submissions to the Government Administration Committee during the select committee process. I think 13 submissions were received, and they raised a number of issues. By and large, the committee resolved them. The Government Administration Committee is a very, very good select committee. I have not been a member of it for long, but I can already see it is an excellent committee. The main concern of the submitters was whether this bill would create too much difficulty for the normal passage of goods, people, and services at our ports. Of course there will be restrictions with regard to some of those activities. The inter-island ferry is a good example to use today. It would have been forced into a range of security measures that potentially would be nonsensical, not adding at all to the general purpose of the bill and adding only costs and restrictions to people going about their normal business. Through the select committee process, we were able to eliminate some of those concerns and make amendments.

The Minister in the chair, the Hon Harry Duynhoven, is nodding his head. I know he played a key role in that. It is good to note that my fellow “Taranaki-ite” had the common sense to accept that those submitters were right and to bring those amendments about.

The main changes to the bill were to application. The select committee recommended that mobile offshore drilling units, like rigs—which are a major concern for the member for New Plymouth, and for myself as the member for Taranaki - King Country where we have the energy capital of New Zealand—be included in clause 4. In a way, they are vessels or ships that come in and out of ports at the times they are in their mobile form, so they needed to be included.

The definition of “suspicious act” was another area that created quite a bit of debate in the select committee. I was not there for the whole time, but the committee was able to come up with what that might mean, which is most helpful to those who have to carry out the business of identifying what a suspicious act is. We see one or two of those kinds of acts in the Parliament from time to time—particularly from members on the other side—but this was something that was of concern to the 13 submitters to the committee, and it is a pleasure to be able to stand here today and say that that was clarified. Now those who have to carry out the work of security can do so with some clarity.

PETER BROWN (Deputy Leader—NZ First): I want to make it clear from the start that New Zealand First will be supporting this bill. But having said that, I say that the Government Administration Committee has not got it right. In fact, it has made some significant errors. Let me give members four words to show why this should be corrected. The four words are “Australia”, “USA”, “United Kingdom”, “Spain”. New Zealand imports and exports—

Clayton Cosgrove: That is five words.

PETER BROWN: I tell Mr Cosgrove that they are four words, and this is a serious matter, and he should listen. Forty percent of New Zealand’s imports and exports, by value, comes and goes from those countries, and I suggest that 99-plus percent comes and goes by ship. Why do I mention those four words? Because they are the countries that went to war with Iraq. Do not underestimate maritime security, folks; I was going to say “gentlemen”, but I know that the ladies are interested in this as well. I have to say, after listening to my colleague from Taranaki - King Country, Shane Ardern, that I accept that the select committee did its best. But there is not one of the committee members who would know the front end of a ship or the back end of a ship, from a motorbike. The best I can say is that David Cunliffe would know something, or I would expect him to know something, because he has a reputation for being “all at sea” most of the time.

There is a Supplementary Order Paper in my name that addresses five issues, basically, that are the shortcomings of this bill. One of them—and it is an important one, and is in Part 1—is the definition of a company security officer. This bill is based on the code I have here, the International Ship and Port Facility Security Code. I note that the Minister is shaking his head. This book, which is the backbone of the bill, refers to three types of security officer: the port facility security officer, the ship security officer, and the company security officer. The legislation that is about to be passed today in this Parliament has no reference whatsoever to a company security officer. That is a major shortcoming. I can tell members that nowadays many of the foreign ships that come to this country—[Interruption] the owners are not easily identifiable. One cannot necessarily say that that is owned by such and such. One can, on many occasions, but not every ship. Quite often the crew are put on board the ship by a management contract. They have little or no commitment to the owner of the ship. They are there only to do a job—to take a ship from A to B, and to carry cargo from A to B. But they are not necessarily concerned, in depth, with the security arrangements in this country and how they are implemented. Whilst if there were a company security officer, that would be a different matter. He or she would be obliged to consider the security of that ship, in that port, in a total scene.

I know that he or she might well be based in Hong Kong and might be out of easy contact by whomever. But I can tell members that a ship security officer will no doubt have to contact the Hong Kong office anyway. If an alert or a concern were raised of any significance, it is likely that either the master of the ship or the ship security officer would have to contact Hong Kong. This bill is downgrading the company security officer. It is telling the world at large, and the shipping fraternity at large, that these three people, who are key people in this type of legislation, are not equal. I know that the company security officer will be referred to in the regulations. I am not privy to the regulations. I have not seen a copy of them. They stand in this code on an equal footing of importance, and they should be reflecting that importance in this bill. Imagine how a shipping company in this country would feel when a company security officer is not referred to in this legislation.

PHIL HEATLEY (National—Whangarei): I am interested in this Maritime Security Bill, and members might be interested to know that, as fisheries spokesperson, I have had the industry contact me—its concern being that the 1 July 2004 deadline imposed by the United States and European Union would not be met in time in this country with the passing of the Maritime Security Bill. Their concern, of course, was that having had port plans put in place, the Maritime Safety Authority was in a position to take those port plans and give them to the authority to be approved and implemented. They are concerned, of course, that their export products, in reaching other nations, would end up being parked in some corner of Rotterdam, New York, or other ports of the world, and would have to go through long, lengthy, detailed, and unnecessary importing procedures before they could be put on the markets of those countries.

I thought that that concern was fair enough and that is why I put to the Minister a number of questions on the matter, which the Minister replied to. My first concern was whether it was true that New Zealand ports have to file security plans to the Maritime Safety Authority by 31 March 2004. Of course, that date is pretty soon, and no one is going to argue with that. Also, if they were to be lodged with the Maritime Safety Authority by 31 March 2004, what then—given that the authority was not in a position to acknowledge those plans, approve them, and have them implemented?

The Minister will recall that he got back to me to say that the deadline for implementation agreed by the International Maritime Organization was 1 July 2004 and, yes, there was a deadline to get the port security to the authority by 31 March 2004. But the Minister did acknowledge that this legislation really had to be passed to give them the authority to acknowledge those plans. You and I had a formal meeting in the corridor last week to discuss what was happening in the interim between those plans being received by the authority and its getting the delegated authority. You acknowledged that there was—

The CHAIRPERSON (H V Ross Robertson): The member has now brought me into the debate twice. If the member is referring to the Minister he must refer to him as “the Minister”. He cannot bring the Chair into the debate.

PHIL HEATLEY: I met with the Minister informally in the corridor and put this to him, and I thank him for this. I think the Minister, Harry Duynhoven, said that there was an interim authority for the Maritime Safety Authority to, in fact, accept those plans and give some sort of interim or informal nod to ports that the security plans that they had put in place were adequate, complied, and would in due course have the desired impact overseas when other ports—other countries—received goods exported from New Zealand and imported into their country.

I was able to contact the fishing industry to say: “Look, don’t be too concerned, we’ve got urgency next week. This bill is set down to be dealt with during urgency. Even if that were not the case, the Minister does assure me that the Maritime Safety Authority has interim delegated authority to approve and implement those plans.” I am not sure how formal that interim authority was and exactly what happens next after some sort of interim approval. However, I do appreciate that, and would like to thank the Minister publicly for his response to those questions.

KEITH LOCKE (Green): The Green Party is, of course, supporting this bill. We are for appropriate maritime security, although it is important, as we consider the bill and some of its consequences, which are not necessarily in the bill but supplied through regulation or by the agencies that previous speakers have referred to, that we do not go overboard in adopting a higher level of security measures than is warranted in particular situations at particular ports and on particular boats. There is a bit of danger of that in the current climate where people are super-sensitive to the dangers of terrorism, and sometimes adopt measures that are excessive for the particular circumstance.

Part 1 refers to the International Convention for the Safety of Life at Sea, and our relationship through the International Maritime Organization etc., in applying those measures and putting them in this bill. It is true that a lot of the practical detail and implementation that will follow is being dictated by the United States. It is the one country that plays hard ball and says that if we want our ships to go into its ports we have to abide by those particular provisions in terms of our wharf and boat security. So we can be stampeded into doing things a bit too much.

In terms of going overboard on the definitions in clause 5, I have an amendment on behalf of the Green Party to the definition of “suspicious act”. The term “suspicious act” was referred to by a previous speaker, and the present definition states “suspicious act does not include the lawful exercise of any right to demonstrate, protest, or strike.” My amendment is to omit the word “lawful” from the definition of “suspicious act”.

The reason for that, and it is something that is promoted by the two main unions concerned on this issue—the Maritime Union and the Rail and Maritime Transport Union—is that they are concerned that if they go on strike, and for one reason or another somebody considers it illegal, then they will be put in the category of “suspicious act” for going on strike, and treated as terrorists, or whatever it might be in the particular situation. I do not think the motivation behind the bill is to put the average group of wharfies or seafarers in that definition just for engaging in industrial action over a safety issue, or whatever it might be.

We know that often there has been a tumultuous series of relations between employer and worker on the waterfront. Sometimes one side is wrong and sometimes the other side is, but it is true that often there is a lot of dispute about what is a legal strike and what is not. I do not think the bill should get into that determination by just removing the word “lawful”, so in my view the particular clause would read “suspicious act does not include the exercise of any right to demonstrate, protest, or strike.” That would be more appropriate and I hope that members will support that amendment.

Employers and unionists are concerned how that will be applied in particular situations on ships and waterfronts. Part 1 has security levels 1, 2, and 3. Security level 3 is the highest one, and means the level for which further specific protective security measures must be maintained for a limited period of time when a security incident is probable or imminent. If we get too carried away and apply that security level 3, just because there is a bomb scare, or someone phones up, or whatever, then one of the problems could be that it becomes a hoaxer’s paradise. As it would seem to be applied—and some ship owners are worried about this—if a whole port is closed down for a prolonged period, then it could stop different ships sailing, and slow up unloading, etc. If we go overboard with security measures, that would encourage hoaxers.

PETER BROWN (Deputy Leader—NZ First): First, I understand that the Minister has taken note of my amendments. He is looking at them very seriously and I am genuinely encouraged by that. I have worked closely with the Hon Harry Duynhoven on the select committee and I know that he notes points made by members that are genuine. I know that he would be aware that if Parliament ignores the relevant points in the Supplementary Order Paper put up by myself and something goes wrong with a foreign crew and its ship’s security officer, it will reflect very, very badly on the people who ignored that. I know that the Minister does not want to be in that category. I would suggest that this method, if nothing else, is playing extra safe.

I shall talk about the company representatives in this country. Obviously, New Zealanders will be on our ships and there will be a ship security officer who can speak the language, will cooperate, and what have you. But by not putting the company security officer in the legislation, we are telling the industry at large that he is not as important as the security officer on the ship. In many ways, right at the coalface that might well be true, but we have to aim at consistency of standard over the whole fleet, and the company guy is the one who will do that. Although he will be in the regulations, he has to be in the legislation.

My Supplementary Order Paper states that “contracting Government” means a Government that is a party to the International Convention for the Safety of Life at Sea, 1974. The reason that that is in there as a definition is that we are talking about Part 1. However, it refers to new clause 19A that I suggest should go in Part 2 that outlines the duties of companies in a fairly comprehensive way. “Contracting Government” is an accepted term in the International Ship and Port Facility Security Code and in the International Convention on the Safety of Life at Sea. Therefore, I felt that a definition should go in this bill, to be able to use the term later on.

This is a very important bill for this country; it is exceedingly important. New Zealand First is determined to support it. Equally, we are determined that it should be as near perfect as we can help make it. As I said earlier on, I am encouraged by the Minister’s response at least to Part 1 of my Supplementary Order Paper. He is asking officials to look seriously at incorporating it, maybe with some modifications, into the legislation. I hope that other members of the House will take it on board. This is not an attempt to play politics. This is a genuine attempt on behalf of New Zealand First to get this legislation correct.

Phil Heatley: This is your first genuine attempt ever.

PETER BROWN: It is not my first genuine attempt, but I have to admit that from time to time we do have attempts to have a little bit of fun in this House, but this is not one of those times.

Clayton Cosgrove: Winston does, and outside the House, too.

PETER BROWN: The Hon Winston Peters has been known to have a little bit of fun at someone’s expense. This is New Zealand First being absolutely straight.

Hon Ken Shirley: For the first time.

PETER BROWN: Not for the first time. Some say I have lived my whole life being straight. I will now come back to the bill.

I cannot emphasise enough the importance of this bill to this country. The ports are very important for our exports and imports, and for the economic well-being of all of us. I point out that 99.5 percent of exports and imports come in and go out by ships. We must have a secure infrastructure in place, I would suggest, reasonably—if not urgently—

Clayton Cosgrove: Soon.

PETER BROWN: Soon; that is the term the Labour Government uses. I am a bit reluctant to use it, because when one asks the Minister of Transport about shipping, he says “soon” and it never happens.

Clayton Cosgrove: Finish the speech, so we can get this passed quickly.

PETER BROWN: If I thought that by finishing now we would get this passed, I would cut my speech right to the core. I am encouraged by the Minister’s response on Part 1. I look to the same sort of response when we get to Part 2.

Hon KEN SHIRLEY (Deputy Leader—ACT): The ACT party indicated in the second reading that we certainly support this bill, because we recognise it is appropriate. New Zealand is a trading nation and is more dependent on trade than most nations, as a proportion of gross domestic product. This bill is all about the harmonisation of global security practices and anti-terrorism measures. To that extent this country has no option, other than to ensure that our practices are in line or consistent with world best practice. Obviously, if we were at variance with it our trade would suffer, because we would have problems at the wharf with our exports and imported goods. So this bill is an important measure. But in saying that, I make the point that we are at war. It is not a war of nation State against nation State, but the war on terrorism does come with costs. Part of those costs, unfortunately, impinges on what would normally be ideal in terms of civil liberties and individual rights. That always happens at times of war, and we cannot deny that we need to take what, hopefully, are extraordinary measures that can be wound back at some point in the future in a more peaceful time.

I draw the attention of the Minister in the chair, the Hon Harry Duynhoven, to the amendment proposed by Keith Locke from the Greens in respect of the interpretation of the term “suspicious act”. The Government Administration Committee inserted a new definition in clause 5, “Interpretation”: “suspicious act does not include the lawful exercise of any right to demonstrate, protest, or strike.” I can accept that recommendation by the select committee, but Mr Locke’s proposed amendment actually troubles me deeply, because he wants to delete the word “lawful”. Therefore the definition would read: “suspicious act does not include the exercise of any right to demonstrate, protest, or strike.” In other words, one could have a whole range of illegal strikes, illegal protests, and illegal demonstrations. We can imagine what could go on under the guise of an illegal demonstration and would not be regarded, in terms of the legislation, as a suspicious act. If that is the Greens’ thinking, then the whole country should be disturbed.

I want an absolute assurance from the Minister in the chair that he will not be leveraged, shall I say, by the Greens in a trade-off situation to adopt that definition in the amendment they propose. I want to gain the attention of the Minister, who seems to be distracted for the moment. I would like him to take a call and assure all of us about that, because it is a matter of public safety and of the security of the realm. Our trade is dependent on that, and I certainly find that suggestion from the Greens to be a very foolish and a very dangerous suggestion. I do seek an assurance from the Minister that he is not entertaining doing a trade-off with the Greens, as he has done on other occasions, to accommodate them by insering that proposal into this legislation.

Hon HARRY DUYNHOVEN (Associate Minister of Transport): In response to Mr Shirley’s comments, the advice I have from the Ministry of Transport’s legal advisers is that the proposed amendment to take out the word “lawful”, as proposed by Mr Locke, neither adds nor detracts from the interpretation of the term “suspicious act”. It is neutral, so therefore I do not see any reason to support the amendment.

I turn now to Mr Brown’s amendment, which makes some useful suggestions. I received his amendment earlier this afternoon, and it went off to the officials with my view that we should look at the suggestions, as Mr Brown obviously has a huge experience in the maritime world. There is some merit, particularly, in the first amendment to clause 5, “Interpretation”, by adding “company security officer”. Unfortunately, the wording of the amendment is not the same as that in the International Ship and Port Facility Security Code, so I have asked the officials to redraft Mr Brown’s amendment. Mr Brown has agreed to withdraw his amendment at this stage. A new amendment will be here in moments, I suspect, if it is not here already, and it will have the correct wording. I propose that in the meantime we support Mr Brown’s first version of the definition of “company security officer”—not that it will add greatly to the bill, because those matters are dealt with in the regulations, but it will add a little clarity. I can add that Mr Brown has agreed to that course of action.

I also add that the draft regulations have been out in the public domain. The shipping companies and port authorities have all received them, and have worked through them with the Maritime Safety Authority. That was something that I asked for earlier on, even though the draft regulations did not have the authority of legislation. I was very mindful of the fact that the people who are involved in this industry had a very limited time, so we put out a draft regulation on the basis of our draft legislation in order to bring through the industry’s very good support for this legislation, which was begun back in about May of last year. Mr Heatley and Mr Ardern both talked about how quick the process has been on this legislation. I say to them that we used every bit of time we could on it. I commend the Maritime Safety Authority and the Ministry of Transport officials for the way they have handled the whole issue in a very tight time line. As Mr Brown said, the International Ship and Port Facility Security Code, developed under the International Convention on the Safety of Life at Sea by the International Maritime Organisation, gave us specific requirements to meet by 1 July this year. There has been some controversy in the media with regard to that, but it is very interesting to see that one of the key people who has been in the media, and concerned about it, actually sent me a congratulatory message the other day on the fact that I had moved this legislation along as speedily as could be done.

I say to Mr Heatley that he took me a slight step further than I had intended to go, in that we did not have an interim authority but we had an understanding with the maritime industry, the shipping companies, and the ports authorities. They all knew, of course, that it was my intention as Minister responsible for this bill, and the Government’s intention, that the Maritime Safety Authority would become the designated authority, and that therefore the whole issue of how this matter would be managed would be in the Maritime Safety Authority’s court. There was an understanding within the industry that everyone would work together cooperatively to ensure we could get the best possible outcome. I think that has certainly occurred. We are very encouraged by the way that right from the beginning the entire industry has worked together, to see that we had as robust a debate as possible over how the practicalities of this legislation may work. I think it was Mr Shirley who said earlier in this debate that without this legislation we cannot export products to the countries that we need to be exporting them to, which would be a huge, huge hit for exporters in this country.

This bill is about ensuring that we actually do have the possibility, without security implications, of exporting, and that we do have the possibility of getting in place all the security measures demanded by the International Ship and Port Facility Security Code for the purpose of ensuring that our exporters get maximum access to their markets. I think this bill has very rapidly come to a point where we can progress it. I am very pleased that all parties in the Committee are supportive of it, and that we have a very good understanding of the issues involved. The Government Administration Committee members themselves have really progressed and debated the issues, and the unions and everybody else involved have done a terrific job.

I do think that the Committee needs to take careful note of the various changes to the bill. There are a couple of amendments that do need to be highlighted as we get to them, and I think that when Mr Brown’s amendment is here we can move along. It could be that we can approach the matter in another way, and maybe seek leave for Mr Brown’s amendment to clause 5, which there seems to be genuine agreement about in the Committee, to be put. If this is an acceptable process and is OK with the Chair, I will cease this speech and perhaps I or Mr Brown could seek leave—or maybe I could seek leave now—that when Mr Brown’s amendment is here, his paper is withdrawn with his approval. He has given that approval now, so if his amendment is withdrawn now, may I seek leave that his replacement amendment can be tabled and dealt with at that stage?

The CHAIRPERSON (H V Ross Robertson): I will just respond to the Minister by saying that Mr Brown himself is able to seek leave for that, and I understand he will do so. The question now is that Part 1 stand part, but before I put that question there are a number of amendments to be voted on. The first one is to clause 5, and it is to do with the definition of “security officer”. I think that is Mr Brown’s amendment that we have to leave at the moment, but we can move on to the next one to clause 5. It is the honourable Peter Brown’s amendment to insert a definition of “contracting Government”.

The question was put that the following amendment in the name of Peter Brown to clause 5 be agreed to:

to insert, in its appropriate place, the following definition:

Contracting Government means a Government that is a party to the International Convention for the Safety of Life at Sea, 1974.

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

Ayes 49

New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata.

Noes 71

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

Amendment not agreed to.

The CHAIRPERSON (H V Ross Robertson): The next amendment to clause 5, also in the name of the honourable member Peter Brown, is an amendment to insert the words “and company security officer” in the definition of “port facility security officer”. All those in favour will say “Aye”—[Interruption] I have just been advised that before we do this, we need to do something. I ask members to bear with me for just a minute, please. The honourable member Peter Brown’s amendment has arrived. He needs to seek leave that we can do this now. Will the member please seek leave?

PETER BROWN (Deputy Leader—NZ First): I seek leave to do exactly as you have suggested.

Hon KEN SHIRLEY (Deputy Leader—ACT): I raise a point of order, Mr Chairperson. I am not quite sure of the process here, so can you assist us?. Are you advising the Committee that the amendment was filed late and the member needs leave for it to be considered?

The CHAIRPERSON (H V Ross Robertson): I advise the member that the honourable Minister advised the Committee that he was waiting for an amendment that had been agreed to between himself and the member Peter Brown regarding the definition of “company security officer”. Because the first vote has already been taken, the honourable member now has to seek leave for it to be voted on, and he has just done that. Is there any objection to that course of action being taken? There is none.

The question was put that the following amendment in the name of Peter Brown to clause 5 be agreed to:

to insert, after the definition of company, the following definition:

Company security officer means the person designated by the company to—

(a) ensure that—

(i) a ship security assessment is carried out; and

(ii) a ship security plan is developed, submitted for approval, implemented, and maintained; and

(b) liaise with port facility security officers and the ship security officer.

Amendment agreed to.

The CHAIRPERSON (H V Ross Robertson): The next vote to be taken also relates to clause 5. It is Peter Brown’s amendment to insert the words “and company security officer” in the definition of “port facility security officer”. Is that one withdrawn?

PETER BROWN (Deputy Leader—NZ First): The earlier amendment has a definition that is withdrawn.

Hon HARRY DUYNHOVEN (Minister of State): I just clarify, for the benefit of the Committee, that Mr Brown’s amendments to clause 5 included the one we have just passed, which was originally not in line with the wording of the International Ship and Port Security Facility Code. We have dealt with that one now. We lined the wording of that amendment up with the code and passed that particular part of the amendment, and Mr Brown has withdrawn the others. The other part was about contracting out the port facility security officer, by inserting in clause 5, “Interpretation”, the definition of “company security officer”. We have already dealt with the amendment concerning “contracting Government”, and it was lost. I hope that clarifies the situation for the Committee.

The question was put that the amendment set out on Supplementary Order Paper 194 in the name of Hon Harry Duynhoven to clause 5 be agreed to.

Amendment agreed to.

The question was put that the following amendment in the name of Keith Locke to clause 5 be agreed to:

to amend the definition of suspicious act by omitting the word “lawful”.

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

Ayes 9

Green Party 9.

Noes 111

New Zealand Labour 52; New Zealand National 27; New Zealand First 13; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Amendment not agreed to, and Part 1 as amended agreed to.

Part 2 Ship and port facility security

PETER BROWN (Deputy Leader—NZ First): There is at least one clause left on my Supplementary Order Paper that I would like to re-promote. It is new clause 17A, “Communicating with ship operators”, which deals with ships’ agents. I should confess from the word go that I have had more arguments with ships’ agents than I have had hot dinners, but nevertheless, they play a very important role in the successful operation of ships coming and going from port, and throughout port operations. They are a very competent group of people who communicate with ships, and that is not as easy as it might sound, particularly with foreign ships. The crew of many ships cannot understand our language, either genuinely or deliberately. Agents take it upon themselves to assist port operators, stevedores, and everybody involved in the successful operation of ships coming to, sailing from, or berthed at New Zealand ports. To exclude ships’ agents from this bill, when I think that most of us in the shipping industry know full well that they will have some involvement, is to undervalue their involvement.

I would like to promote new clause 17A, “Communicating with ship operators”, which states: “For the purposes of this Act, a person may give a notice or direction to, or otherwise communicate with, a ship operator for a ship by giving the notice or direction to, or communicating with, the shipping agent for the ship.” This clause is directly extracted from the Australian legislation that deals with maritime security there. It recognises the importance that agents play in the whole scheme of things. There is absolutely no doubt in my mind that they will play an important role in maritime security here.

This clause does not impose security people to go through an agent; it states that they “may” give notice. I think it is quite a reasonable clause to put in, if for no other reason than to let agents know that they are valued in the industry, and to let people know that agents’ importance will not be overlooked. The principal reason I put in the clause is to bind agents, in a manner of speaking, to maritime, ship, and port security. I cannot emphasise enough that if something goes wrong on a ship at one of our ports, we will all pay for it. A little while ago we learnt—from the access gained by the people who graffitied the Royal Australian Navy tanker—that damage can be done to a ship relatively easily, and that our maritime security people will have to be on their mettle; sometimes more so than others. I believe that security people will rely heavily on ships’ agents.

I ask the Minister to look seriously at inserting a clause that recognises the importance that agents may have to play. I think that to ignore them would be wrong, and would send the wrong signals to the whole industry. The Minister looked positively on the clause that I asked him to insert regarding the company security officer, and I thank him for that. I ask him now to talk to his officials, and ask that they consider a clause that recognises the importance of ships’ agents. I understand from talking to the officials that there is no definition of a shipping agent—everybody in the world knows what a shipping agent is—

Shane Ardern: The member from Taranaki.

PETER BROWN: The member from Taranaki? I am encouraged. I understand that there is no definition of a ship operator, but I would think that everybody knows what a ship operator is.

I urge the Minister to look seriously upon this. Ships’ agents play a very responsible role in ship operations now, and if we were to have a maritime incident they would be in the midst of it.

Hon HARRY DUYNHOVEN (Associate Minister of Transport): I thank Mr Brown for his helpful suggestions. In his handwritten amendment he has proposed a new clause 18A, which we need to complement the change that we made earlier, so I recommend we support that. I do not support his proposal to insert new clause 17A, providing for communicating with shipping agents, because they are not defined in the code. There is nothing to stop the designated authority from communicating anyway with the shipping agent locally—that is not a problem. For a variety of reasons, I am sorry that the Government does not go with the rest of Mr Brown’s amendments.

However, I want to talk specifically to the proposal to delete subclause (2) of clause 36. I am afraid that the Government cannot agree to that, because it is specifically required in the International Ship and Port Facility Security Code. It would be most unwise to take that out, in line with the consistency of the remarks that Mr Brown made previously. I draw members’ attention to the minor technical change to clause 42, which is outlined in my amendment on the Table.

The question was put that the following amendment in the name of Peter Brown to insert new clause 17A be agreed to:

17A Communicating with ship operators

For the purposes of this Act, a person may give a notice or direction to, or otherwise communicate with, a ship operator for a ship by giving the notice or direction to, or communicating with, the shipping agent for the ship.

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

Ayes 13

New Zealand First 13.

Noes 107

New Zealand Labour 52; New Zealand National 27; Green Party 9; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Amendment not agreed to.

The question was put that the following amendment in the name of Peter Brown to insert new clause 18A be agreed to:

to insert, after the heading Ship security the following new clause:

18A Appointment of company security officer

A company must appoint company security officers in accordance with regulations made under this Act.

Amendment agreed to.

The question was put that the following amendment in the name of Peter Brown to clause 19 be agreed to:

to omit the words “The master of a ship and the company must” and substitute the words “The master of a ship must act on the security level specified by the chief executive and”.

Amendment not agreed to.

The question was put that the following amendment in the name of Peter Brown to insert new clause 19A be agreed to:

19A Duties of companies

(1) The company shall ensure that the ship security plan contains a clear statement emphasising the master’s authority.

(2) The company shall establish in the ship security plan that the master has the ultimate authority and responsibility to make decisions with respect to the security of the ship and to request the assistance of the company or of any contracting government as may be necessary.

(3) A company must appoint a company security officer in accordance with regulations made under this Act and who is responsible for—

(a) the shore-based security management of the ship, including the formulation, implementation and maintenance of the ship security plan; and

(b) liaison with the ship security officer, the port facility security officer, and the designated authority.

(4) The company must appoint a ship security officer for each ship in accordance with the regulations under this Act.

(5) The company shall ensure that the company security officer, the master and the ship security officer, are given the necessary support to fulfil their duties and responsibilities under this Act.

Amendment not agreed to.

The question was put that the following amendment in the name of Peter Brown to clause 36 be agreed to:

to omit subclause (2).

Amendment not agreed to.

The question was put that the following amendment in the name of Peter Brown to clause 37 be agreed to:

to amend subclause (2) by inserting, after the words “The Port facility security officer”, the words “, company security officer,”.

Amendment not agreed to.

The question was put that the amendments set out on Supplementary Order Paper 194 in the name of the Hon Harry Duynhoven to Part 2 be agreed to.

Amendments agreed to.

The question was put that the following amendments in the name of the Hon Harry Duynhoven to clause 42 be agreed to:

to amend subclause (1) by omitting the word “company”, and substituting the words “port facility operator”; and

to amend subclause (2) by omitting the word “company”, and substituting the words “port facility operator”; and

to amend subclause (3) by omitting the word “company”, and substituting the words “port facility operator”.

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

Sitting suspended from 6 p.m. to 7 p.m.

Part 3 Preventive security measures

The question was put that the amendments set out on Supplementary Order Paper 194 in the name of the Hon Harry Duynhoven to Part 3 be agreed to.

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

Part 4 Miscellaneous provisions

The question was put that the amendments set out on Supplementary Order Paper 194 in the name of the Hon Harry Duynhoven to Part 4 be agreed to.

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

Schedule agreed to.

Clause 1 agreed to.

Bill reported with amendment.

Third Reading

Hon HARRY DUYNHOVEN (Associate Minister of Transport): I move, That the Maritime Security Bill be now read a third time. Given the pivotal role shipping plays in the conduct of worldwide trade, there is a common understanding, both internationally and domestically, of the crucial significance of maritime security.

I have been impressed by the high degree of cooperation between Governments, and between Government and industry, on this matter. It has enabled rapid progress to be made on enhancing maritime security. That was clearly illustrated in December 2002, when the international maritime community adopted a new comprehensive security regime for international shipping. The measures were the result of just over a year’s intense work by the International Maritime Organization, and the regime comes into force on 1 July this year. The Maritime Security Bill, which is in front of us today, also represents a lot of hard work by many individuals and groups, and I particularly want to thank my colleagues in the House this evening for their very speedy processing of the bill. The members who contributed to the debate, and the amendments submitted by Mr Peter Brown, made a real difference to the bill.

The bill develops a legislative framework so that we may implement the new maritime security regime in New Zealand, and to ensure that we meet our international obligations under the International Convention on the Safety of Life at Sea. Given the comprehensive nature of the regime, and the tight time frame for compliance imposed by the International Maritime Organization, implementation was always going to be a challenge. Passing the Maritime Security Bill is a key milestone towards meeting the 1 July deadline. In spite of the criticism, we can all be very proud of the very rapid progress we have made in processing this bill through the House.

The Maritime Security Bill takes the approach that the security of ships and port facilities is basically a risk management activity, and that to determine what security measures are appropriate, an assessment of the risks must be made in each particular case. Therefore, the bill requires ships and port facilities to prepare, have approved, and implement security plans. For port facilities, that means that those plans will detail security standards and procedures for normal operations—that is, security level 1—as well as contingencies for operating at a “heightened” risk—security level 2. Plans must also include procedures to facilitate the response of authorities to an “extreme” risk—security level 3.

The Government must then set the security level at which the port facility will normally operate, and approve the security plans. We recognise the potential cost to industry and the New Zealand public of imposing very stringent security measures when the threat level is low. To that end, the flexible framework established in the bill means ports will only be required to put in place security measures appropriate to the level of security threat applying. If the threat level increases, then, obviously, port facilities will increase security across the port commensurate with an increase in the risk of a security incident. Plans must periodically be audited and the Government must undertake ongoing risk assessment, and, if necessary, adjust a ship or port facility’s security level.

In keeping with the international approach, primary responsibility for operational security rests with the port facilities and ships themselves. However, should they require assistance, the Maritime Security Bill provides that the Governor-General may appoint a Government department or Crown entity as a maritime security organisation. They will undertake screening and searching to prevent the unauthorised introduction of weapons and other dangerous items. Overseeing the implementation of the maritime security requirements and ensuring effective security is being maintained will be the job of the designated authority.

The Government intends to appoint the Maritime Safety Authority of New Zealand as the designated authority. Its regulatory functions in respect of security at port facilities will include managing the risk assessment process, setting the operational security level, and approving and auditing the port facility security plan developed by a port operator. Additional functions include the provision and coordination of security information to ships and ports, and the exercise of port State control measures in respect of compliance by foreign vessels arriving here. As mentioned earlier, I have been impressed by the high degree of cooperation between Government and industry. Both the Government and the maritime sector realised very early on that much could be done in advance of the enactment of this legislation. In fact, that work has been crucial in providing as much lead time for implementation as possible. It actually began around May last year.

Risk assessments for all the affected port facilities are now complete, and most of those ports are well on the way to developing their security plans. All the parties involved have been acutely aware of the importance of getting this legislation right, and the consequences to New Zealand’s trade and tourism industry of not progressing it promptly. There are still some challenges to face as we move closer to the 1 July deadline, and I am sure that there will be some operational details that will need to be worked through. How to deal with access to sensitive areas of the port facility will no doubt be one of those challenges. Port workers may well be required to carry special identification, and sailors visiting New Zealand ports may well find it more difficult to preserve the tradition of entertaining on board. I am confident that such issues will be worked on and resolved before July.

The excellent work that has been done on the bill, along with the very constructive approach shown by all concerned, means that New Zealand is now very well placed to meet the new international requirements. The enactment of the Maritime Security Bill will mean that New Zealand’s approach to enhancing maritime security is in step with accepted international practice. Through the implementation of a consistent framework for ship and port security, it will ensure continued confidence of trading partners and tourist markets in the security of the New Zealand ports.

I would especially like to thank the chairperson, Dianne Yates, and members of the committee who have processed this bill. I would like to thank Mr Brown, and no doubt he would like to thank Frank Wall for his constructive work in preparing Supplementary Order Papers, etc. I would especially like to thank members of Parliament who took part in the debate, and particularly the officials on my left, David Corlett, Tamara Mutu, Roger Brown, and Hilary Talbot, and others from the Maritime Safety Authority and the Ministry of Transport, for their role in processing this bill very quickly and providing all the advice and information the House has needed in order to do a thorough job on this in a short time.

Debate interrupted.

Voting

Correction

The ASSISTANT SPEAKER (H V Ross Robertson): Just before I put the question that the motion be agreed to, I wish to announce to the House that the result of the vote on the third reading of the State Sector Amendment Bill (No 3) was incorrectly announced. The correct result is Ayes 75, Noes 44. It has made no difference to the overall result.

Bills

Maritime Security Bill

Third Reading

Debate resumed.

PHIL HEATLEY (National—Whangarei): It is a pleasure to rise to speak in the third reading of this bill. It is not usually my habit to acknowledge Labour Party Ministers of this Parliament, but I would like to acknowledge the Associate Minister of Transport, the Hon Harry Duynhoven, for the way he has progressed this bill through the House. He has answered our questions both formally and informally.

Hon Ken Shirley: He should be in Cabinet.

PHIL HEATLEY: The ACT member is quite right—he should be the Minister of Transport. He should be in Cabinet. He has done a brilliant job, and I acknowledge him for that and, in this case, his ministry as well.

This bill, as we heard, is to ensure that New Zealand meets its international obligations under the International Convention for the Safety of Life at Sea, which members will recall was amended in December 2002. Members would have listened to their wirelesses and heard that, so they know it did happen. That convention is to enhance ship and port security. New Zealand’s obligations, in case members are unaware of them, involve assessing security risks for individual ships and port facilities and developing security plans based on those assessments. We also have to specify security levels at which ships and port facilities must operate; maintain communications; provide protocols for ships and port facilities; prevent unauthorised access to ships, port facilities, and restricted areas; and prevent the introduction of unauthorised weapons, incendiary devices or explosives to ships and port facilities.

Such requirements—and we in the National Party certainly acknowledge this—would place New Zealand in line with accepted maritime security regulations and contribute to our role in combating terrorism. That is something most of the House is pretty keen on doing. I cannot speak for the Greens, but certainly other parties in the House do want to work towards combating terrorism.

The United States and the European Union gave a deadline of 1 July 2004 for New Zealand’s port security plans to be approved. The Maritime Safety Authority advises that it acknowledges that. It is an international deadline, and applies to all signatories to the 1974 International Convention for the Safety of Life at Sea. I was barely out of nappies on that date, but elderly members of the House, such as Jill Pettis and others, will recall it. I do not, but I acknowledge that it was that 1974 convention, when I was at kindergarten, that brought this about.

This is an international treaty obligation. The United States and the European Union, along with many other countries, including New Zealand, have clearly signalled that they will expect full compliance with the international ship and port security code. That is understandable. New Zealanders acknowledge that, and we are happy to support it. The Maritime Safety Authority advises that until this bill is passed it is not the authority designated to stamp plans that port authorities put forward, but it expects to be, and we expect to see it do that. In the interim the authority has asked ports to put forward their security plans. It will take an informal look at those and indicate whether they are appropriate and likely to be approved once it becomes the designated authority.

I am appreciative of the Minister and ministry for allowing that interim arrangement to develop and go forward. It simply means that timeliness has been met, and ports have had access to officials, the Government, and the Minister in terms of getting some sort of guidance as to what is expected. It means that from now on—after this bill is passed in the House tonight—they can move forward formally. So I acknowledge the Minister for putting that arrangement in place.

Clause 7 of the Maritime Security Bill provides that “The Governor-General may, by Order in Council, appoint a Crown entity the Designated Authority.” We all knew that that was going to be the Maritime Safety Authority. We all acknowledge that that is the right authority to have this responsibility. Port authorities knew that, and that is why in the interim they have been given the informal nod and direction. No such designation, though, can be made until this bill is enacted, so the Maritime Safety Authority and the rest of us are certainly looking forward to that. The Minister always anticipated that that would happen, and he always gave that indication. I would like to again acknowledge the fact that that information has not been kept under a bushel. It has been fairly public. Port authorities have worked with the Minister on that, and that is useful.

I have had contact from all sorts of trading sectors in our economy, and most of all the fishing industry. It is concerned that its export products, which provide huge value to our country, might find themselves parked up in little alleys, aboard ships in ports all over the world and not able to reach their export markets, simply because countries signed up to this international treaty have seen that we have not met our obligations and therefore will not import our products, or certainly not with timeliness in mind. Those have been the industry’s concerns. With the passage of this bill, all those concerns fall away, and we know we can access markets overseas.

I was concerned that ships might be parked up in Rotterdam or other ports of the world, with perishables in particular aboard. One can appreciate that the fishing industry would be subject to that, but not only that industry. If perishable meat, sheep, and dairy products were sitting in ships for long periods of time, that could hurt our economy. So it is useful to know that with this legislation passed—everything going well—we will move forward and see that our obligations are met and that that situation does not happen. It is pretty critical that we do these things, and that we meet our international obligations. We must not just meet them, but do them in a timely way.

I am confident, as the Minister is confident, that all ports in New Zealand will get the nod to implement their security plans. It is my hope that where they have not met the appropriate approval process, where they have not provided plans that are acceptable or to the high standards the ministry will demand, they will receive guidance from the Maritime Safety Authority. I seek assurance from the Minister that the Maritime Safety Authority will not just act as an approval authority, but will give guidance and help port authorities make and put forward their plans. I know that has been the case to date, but I would like to know as well that the authority would not just flick comments off to the effect that port authorities did not get approval or have plans implemented, but rather that it would also give formal guidance as to how plans could be improved.

I am unaware, as I have not heard, of whether port authorities are sharing information. The Minister nods, so that is good to know. It would be good if they sat around the table and were able to develop those plans together so that there is some consistency across the country for security measures in our ports. We would like to see that. Lots of industries and sectors export from a number of ports throughout the country and consistency is quite important.

I commend this bill in its third reading to the House. National is most certainly supporting it—not just because we think it is a smart move and good for international treaty obligations, but because we believe it is good for exporters, and we certainly want to combat terrorism where we can. I thank the Minister again for his lead on this legislation, and acknowledge his work and that of the ministry.

KEITH LOCKE (Green): The Green Party will support this bill, although it has serious concerns that the legislation might be applied in an exaggerated way in practice, compared with the needs of the actual security situation we face in New Zealand. We just need to look at the background of a little bit of hysteria and over-reaction at the time Tiger Woods came here for the golf open, when there was a huge security alert that did not seem to be based on much at all.

Just a week or two ago we had headlines in our newspapers about how Mr al-Zawahiri, the deputy of bin Laden, had been visiting New Zealand in the 1990s. They were just based on some report from a dodgy journalist, with probably no foundation whatsoever. The next day the journalist said he knew that al-Qaeda was running around the world with nuclear-suitcase bombs. That is just an indication of how people can take a little allegation of a security problem, a phone call, or a bit of powder in the mail—some hoaxers operating—and take security measures that actually cost us millions of dollars and inconvenience thousands of people. It becomes a hoaxer’s paradise, so that somebody can phone up and cause huge damage because there is over-security in terms of our procedures.

That is not to say that we should not have security plans in place, and that is why the Green Party is supporting this bill. I tried to introduce an amendment—unfortunately it failed—to take the word “legal” out of one of the provisions that would affect workers on strike, because we do not want this law to apply to any workers who might be on strike on the waterfront. That is not a security problem; it is something that has happened traditionally in New Zealand.

There has been a lot of industrial action—some of it legal and some illegal—but that is surely not what this bill is about. It is good that there have been changes in the bill as it has proceeded, so that workers on the waterfront will not be searched by their employers—the search has to be by authorised people such as police officers, independent of the employer—and so that workers do not need to stand around when there is a real high-security situation. They can leave their workplaces and do not need to put themselves in the firing line.

It has been indicated that an international security system is being put in place, and around the world at the moment—particularly in European countries like France, Italy, and Spain—workers are taking industrial action and getting upset at the more intrusive searching that is going on under such measures. On the other hand, a fleet of about 20 ships owned by the bin Laden family is apparently floating around the world with “flags of convenience” and not suffering too much at all. Of course, it is those flags-of-convenience boats from the bin Laden family and many other big business people who are trying to make maximum profit by having the worst conditions and cutting corners on everything, including biosecurity and security measures. So if there is to be any serious security problem or intrusion into New Zealand, be it through biosecurity, crime, drugs, terrorism, or whatever, then it is likely to come through those flags-of-convenience boats. It will be good if these measures actually restrict the number of such boats coming into New Zealand.

But we have to be careful that we do not go overboard on security plans. I have been talking to a shipowner today who is worried that it can get too expensive in terms of the relatively low risk. For one of the boats he owns overseas, he had to spend $20,000 on a video system and $128,000 for other security measures. Training cost several thousand dollars. For a New Zealand owner to send people to Australia to do a course with Lloyds can cost $6,000 a time. If, as a result of some of those measures, extra staffing has to be provided, then that is difficult for them too.

Just last Friday, I think it was, we experienced a security situation with the Santa Regina, one of the ferries going across the strait. A hoaxer phoned up and there was some inconvenience associated with that incident. There were complaints from workers that the police came on and wanted to fingerprint them, and all the rest of it. It was not too bad, and they did not really go overboard, but it just showed that we do not want to set things up as a hoaxer’s paradise.

Another question has concerned some people. For instance, down in Timaru there has been a discussion about closing off sections of the wharf that have traditionally been open to the public and used for fishing, and there could be a problem for Picton ferries like the Santa Regina. Picton is a very nice tourist spot, but under wharf security plans there is a danger that too much of that waterfront—from the ferry area right across—could be excluded from public access. That would reduce its tourist appeal if it happened.

Even across the street on the Wellington wharf, most of which we can walk around at the present time, there was concern the other day about somebody putting a sign on a visiting Australian warship—something about John Howard being a “US bootlicker”. I cannot remember the wording of the slogan exactly, but certainly no one was trying to put a bomb anywhere. There is not much danger of people running around like that putting bombs on visiting warships. The boat was actually moored, I think, at what is a public space. We would not want that public space closed off and officials going overboard on such minor things.

In Timaru it was reported that the Prime Port chief executive had said that current levels of access for the public would be maintained. But as this bill is applied, and mainly through regulation, we will have to monitor how it goes along, and how those regulations come out. If the pressure is put on people like that chief executive to overly restrict access to some of those regional wharfs, it would be of great disadvantage to the public, and again to tourism. In a lot of places, wandering around the wharf and having a cup of coffee, a beer, or whatever one has down at the wharf, is part of the tourist and local experience. We do not want those wharf plans to cut into that too much.

The Green Party supports this bill, but we do have those concerns. There are problems particularly on the west coast of the United States, where some workers are getting a bit upset at the way things are being applied in the wharf security area, such as having unnecessary ID. Even in New Zealand there is concern that there are too many restraints on trucks coming into the wharf areas. At the present time shipowners and wharf people pretty much know who is coming in and out. If we applied very rigid systems, we could slow down shipments into and out of the wharves and unnecessarily restrain people. So we just have to bear all of that in mind.

But we see a very positive side to this legislation if it restricts the number of flags-of-convenience boats coming in here; if it leads to a much higher standard generally on the boats, including, hopefully, the condition of sailors on them; and if it helps reduce the main security threat to New Zealand, which is biosecurity—some of those bugs, creepy-crawlies, and insects that are going to affect our forests or agriculture. We see the positive side to this legislation if we can stop those pests coming in through the range of security measures that are being brought in with the Border Security Bill affecting containers, and this set of procedures relating to wharf and ship security plans.

With those comments I would like to indicate the Green Party’s support for this bill.

LINDSAY TISCH (National—Piako): I want to say two things. I sat on the Transport and Industrial Relations Committee, and I want to acknowledge the contribution of the officials and advisers. I was always fully informed of the information that was made available, and I congratulate them on a very informative presentation of the facts and information that was asked for. National is happy to support this bill, as previous National speakers have said during this debate.

PETER BROWN (Deputy Leader—NZ First): I am glad I follow Lindsay Tisch, because he sat on the Transport and Industrial Relations Committee, and although I recognise that the select committee did a reasonable job it did not get it quite right. I am pleased to thank the honourable Associate Minister of Transport for taking seriously the New Zealand First amendment this evening. Although we did not get exactly what we wanted, we got quite a lot and we are very pleased. We thank the Minister for his cooperation.

Whilst I am thanking people, the Minister has asked me to thank on his behalf Glen-Marie Burns and Helen Hanify of the Ministry of Transport for their sterling efforts in the work behind this bill. In fact, the Hon Harry Duynhoven’s praise was so fulsome that when I see Glen-Marie Burns and Helen Hanify I will suggest that they ask for a pay rise immediately. I sincerely thank those two folk on behalf of the Minister.

This is a very important bill. It will go through this House relatively quickly, largely because the House is almost unanimous in its support of it. It is a very, very important bill and I cannot emphasise that enough. Shipping is exceedingly important to this country. I do not have to tell members that we are an island nation tucked down at the bottom of the world, miles from anywhere, and that 99.5 percent of our exports and imports come and go by ship. That is by tonnage; by value it is something in the vicinity of 82 or 83 percent, as I recall. I cannot emphasise enough the importance of shipping to this country, or the importance of ships that operate in this country operating in a secure environment.

So New Zealand First welcomes this bill. We support the International Ship and Port Facility Security Code, which this bill is based on, and we think this bill is a move in the right direction. Having said that, I suspect that in the not too distant future there will need to be some amendments. It is the sort of legislation that we have to keep under regular review. I am sure the Minister will agree with that. There will be instances, or episodes, or something will turn up that we have not thought of, and there will undoubtedly be some modification.

One part of the bill that I am interested in, and I say this somewhat tongue in cheek, is clause 45. It is headed: “Restrictions with respect to port security areas”. Subclause (1) states: “No person other than a person on official duties acting in accordance with subsection (7) may enter or remain in a port security area unless authorised by the chief executive or the port facility operator.” As a ship’s officer I used to work long hours, but now people work 24/7. I was always grateful to see the guy who came to collect the drycleaning. That might be a small point to members here, but when I saw the drycleaner come on board he was very welcome, because I could give him my suits and my uniform. I assume that this will not place any restriction on the drycleaner coming to get—

Hon Harry Duynhoven: Or on any other service people required.

PETER BROWN: I think the Minister is anticipating where I am leading. There might be a small-business man legally going about his duties to collect and deliver drycleaning, and I assume he will be authorised by the chief executive or the port facility operator. Some of my colleagues on that ship—and I emphasise that it was some of my colleagues and not me—were interested in a little bit of service from other service workers.

Judith Collins: Well, it’s legal now.

PETER BROWN: It was illegal at the time, but it is legal now. I want to know—and maybe the Minister could take a second call if he is allowed to; I would certainly support leave for him to do so—whether prostitutes or ship girls will be authorised by the chief executive or the port facility operator to go on board the ships and offer their services to those who need to partake of them. The little bit that makes me laugh is that I think in the fullness of time there will be a database—

Hon Harry Duynhoven: Security level one, I think. It shouldn’t be a problem.

PETER BROWN: But will they have passes and be allowed free access?

Hon Harry Duynhoven: Depending on the security level.

PETER BROWN: So could we end up with a database of ship girls that is under the control of the Maritime Safety Authority? I assume the Maritime Safety Authority is the designating authority, if that is the term in the bill.

Hon Harry Duynhoven: Is the member suggesting a modification?

PETER BROWN: I think it is somewhat ironic that prostitution has been quite a talking point over the last few years in this House. We used to have ladies of the night—and men, I guess—listed on a database controlled by the police. I assume they have been removed from the police database, but they are now likely to be controlled by the Maritime Safety Authority. I find that somewhat amusing.

To get back to the seriousness of this bill, it is an important bill. I compliment the Minister on his attitude and the way in which he has approached it. He has involved everybody—not just MPs. Because of my shipping background I know a lot of people in the maritime industry, and all, without exception, have told me that they are pleased with the way they have been consulted and allowed to have their say on this bill. Unfortunately, the select committee did not listen as keenly as it should have to some shipping people. Some of those shipping people made their views known to me, and that was the reason I produced my amendment.

In conclusion, I think that tonight we have done a good job in Parliament, in terms of this bill. I am pleased that New Zealand First has played a positive role. I thank the Minister and his officials for giving us a fair hearing. I thought the officials listened to me privately very, very well. I thought they did a very professional job. I will not name them because I have forgotten their names already—I am sorry about that.

This country will be all the more safe once this bill is passed. I think it will need to be amended in time to include shipping agents—and in other areas too. I will not let that matter go, because I have many friends who are shipping agents and I feel that after tonight they will all vote for New Zealand First. We will see whether that occurs. New Zealand First will support this bill, and I think New Zealand will be a safer place once it becomes part of our law.

Hon KEN SHIRLEY (Deputy Leader—ACT): It is always a delight to listen to our parliamentary colleague merchant seaman Brown reminiscing about his life at sea, often with fond memories of the antics that he and his former colleagues used to get up to—

Peter Brown: I raise a point of order, Mr Speaker. I was not just a merchant seaman; I am a qualified ship’s captain and I think I am entitled to—

The ASSISTANT SPEAKER (H V Ross Robertson): The member knows that is not a point of order.

Hon KEN SHIRLEY: I think this is one of those rare occasions where there is unanimity across the House. All parties have indicated their support for this legislation, because we all appreciate the imperative need for it. It is a matter of security and of harmonisation with our international trading partners, to ensure that our ships and ports meet required standards of security in this dangerous world that we live in. I listened with interest to the Green spokesperson, Mr Locke, in the debate. Indeed, I concurred with many of the sentiments he made; I also cherish individual rights, and civil liberties and freedoms. But the price of freedom is eternal vigilance; we do know that. There is a need for this legislation, as part of the vigilance required in the modern world and for the maintenance of security. It is an incredible irony that without freedom there can be no security, but without security there is no freedom. I think this bill epitomises that situation, as other speakers have commented during its passage. We would prefer that we did not have to have these measures—these constraints and restrictions—but I think we all accept that they are an imperative in the situation we face. With those few comments I again indicate that ACT New Zealand will certainly be supporting this bill.

MURRAY SMITH (United Future): United Future also supports the third reading of the Maritime Security Bill. In my second reading speech I talked about the importance of New Zealand remaining in step with other nations, and the importance of paying due regard to our international obligations when we are dealing with other nations, to provide the consistency that is altogether necessary, and that has developed over the last few years, in respect of security in particular. I also talked in the second reading about the need for us to be a responsible participant in the international community. That, certainly, is part of the motivation for the bill, although obviously there is a degree of self-interest. Without the bill, no doubt we would find difficulties as a nation in terms of international trade, which could be economically detrimental to us, if we were out of step with other nations that felt that our security measures were not up to the standard that international requirements dictated.

United Future is very pleased to see the balance that has developed in the bill—particularly the balance that was brought to the bill by the Transport and Industrial Relations Committee. There is a balance between freedom of expression and commercial cost on the one hand, and security of the nation on the other, and also a balance between executive power and parliamentary oversight. The amendments made by the select committee are welcome in that they, effectively, tip the balance a little further towards the parliamentary oversight aspect rather than simply pure executive power.

I do not want to dwell on the specifics of the bill as they have been repeated by the other parties in the House, but if there is one concern that I have with regard to the bill, it is the fact that it has had to be pushed through under urgency. I know that the regulations, which I assume are still to follow, will provide that security plans have to be lodged by 31 March 2004—today, in fact—and that the bill has to be in force by July. It seems to me that this rush is not desirable in terms of promoting legislation. Rushed legislation is poor legislation.

When I talked in the second reading debate I suggested that the select committee could have worked more speedily, but I see that it worked very well, and I apologise to the select committee for suggesting that it could have worked faster. I note the bill was referred to the select committee on 10 September last year, having been introduced into the House 8 days previously. Submissions closed on 17 October, 5 weeks later, and that gave a reasonable amount of time for people who were affected to get their submissions together and put them in—and I would have been reluctant to see that curtailed. The bill was reported back from the select committee on 8 December, some 7 weeks later. Given the numerous amendments made by the select committee, it seems to me that 7 weeks was not an inordinate time, and that the select committee did very well as far as that was concerned.

We waited from 8 December through until last week for the second reading debate, and that is something that could have been speeded up. I suggest to the Government that the bill could have been brought back to the House a month ago, to give a bit more time for it to be considered and, hopefully, put into its final form. That would have given time for those affected to arrange their affairs exactly and precisely as the bill provides. I understand that they have been working on this matter since April or May of last year in expectation of the bill, and it is only because of that that we have been able to get anywhere near meeting the time lines. I understand that although the date of 31 March is provided for, as there are no penalties if people do not adhere to it people will be able, effectively, to lodge plans late and still have them accepted and processed. That is a very undesirable way of operating.

It seems to me, too, that the rushed processing of this bill is evidenced in the fact that we now have a first Supplementary Order Paper that makes 49 amendments—albeit small—to the bill. That gives rise to the feeling that the officials were rushed, did not get the bill right even in the select committee, and, subsequent to the select committee process, have come up with another 49 changes that they want in order to correct deficiencies in the bill. Tonight yet another amendment has been tabled, which has had to be dealt with at the last minute. I do not think that is desirable. I think the Government ought to look at and review the time factors involved. I do not know how much time the Government had before September to bring the bill into Parliament, but, clearly, the time between September, when the bill was introduced, and tonight has proved to be inadequate in order to have the legislation passed in a timely fashion and in such a way that everybody knows exactly what the legislation does, that regulations can be promulgated based on the legislation in its final form, and that everything can be put in place in order to meet the July deadline.

That was the only concern I had about it. Certainly, the contents of the bill are something that United Future thinks is important. We are very happy to support the bill, and therefore we will be voting for the third reading.

Bill read a third time.

Bills

Crimes and Misconduct (Overseas Operations) Bill

Instruction to Committee

Hon RUTH DYSON (Minister for ACC), on behalf of the Minister of Foreign Affairs and Trade: I move, That it be an instruction to the Committee of the whole House on the Crimes and Misconduct (Overseas Operations) Bill that it take the bill part by part.

Motion agreed to.

In Committee

Part 1 Preliminary provisions

RICHARD WORTH (National—Epsom): National supports the Crimes and Misconduct (Overseas Operations) Bill, a short bill of only two parts. Its primary purpose, as the commentary from the Foreign Affairs, Defence and Trade Committee makes clear, is to enable the exercise of jurisdiction over New Zealand police personnel and civilians serving overseas as part of non - United Nations deployments. A number of features of the bill, however, are directly worthy of comment.

I would like, first of all, to refer to the definition of “overseas operations force” in clause 4, which makes it very clear that it does not include any member of the police who is part of a United Nations force and to whom the United Nations (Police) Act applies. The curious point, perhaps, about this legislation is that it was designed with a specific operation in mind—an operation in the Solomon Islands, where we have now been for quite a significant period. In that context, I just reflect on the legislative history of this bill relating to Part 1. The bill was introduced on 29 July 2003. There was no delay at that early stage, because on 5 August 2003 it had its first reading and was referred to the Foreign Affairs, Defence and Trade Committee. So the delays have set in since then. I suppose we can legitimately wonder what has happened in the interim in respect of the military operations that have occurred in the Solomon Islands—military operations, police operations, peacekeeping operations, and peace-making operations. The answer, it seems, is that there has not been a problem.

I ask the Minister: what is the mischief here? We have had an opportunity to assess the need for this legislation in an environment of danger, where the rule of law is certainly very much at risk. One of the phrases Minister Goff used was that “the Solomons is a failed state”. He said that it was in danger of becoming a haven for terrorists and drug traffickers, that it was close to anarchy, and that any police deployment would need military support. Our presence there comprised police officers, apparently some 40 senior officers, and up to 200 troops, who were added to the Australian contingent. They were armed with Steyr 5.56 millimetre rifles, light machine guns, grenade launchers, and 9 millimetre pistols.

I think we would do well as members of Parliament to reflect that when the Government determines it will not, with speed, advance legislation, then legitimate questions can be asked as to the need for that legislation. It is right to say, of course, that it is intended that the legislation have an effect in futurity, and that was made clear in the commentary; it was not only to apply to the Solomon Islands but also to future peacekeeping and peace-making deployments. Although National supports this legislation, we assert that legitimate questions can be asked on this question of need. It was also very much in the minds of members of the Foreign Affairs, Defence and Trade Committee when they looked at this legislation and heard the only submission that came to them—a joint submission from Alberto Costi, Fran Wright, and Naresh Perinpanayagam of Victoria University law school—that the police would not be armed. But that, of course, has not proved to be the case. In inviting the House to commend this bill, I note those aspects.

JUDITH COLLINS (National—Clevedon): Just following on from my colleague Mr Richard Worth, there are a couple of points I would like to make on this part. First, I note again that this is retrospective legislation. Retrospective legislation is, of necessity, something we should indulge in only when we really, really have to. I wonder why, when this bill was introduced back on 29 July 2003—5 days after it was deemed to have come into force—we are dealing with it here under urgency. Is this a situation where basically the bill has been put into urgency because the Government has nothing much else it wants to put into urgency? I have to question whether that is what is happening. There have certainly been other instances of urgency and plenty of other sitting days since the bill was introduced. I believe that the bill has the support of the entire House—it has had it all the way through so far, anyway—and I cannot see why we have waited this long for it if there were any need for it to be looked at.

One of the issues Mr Worth raised related to the Solomon Islands. Quite often our troops and peacekeepers—this only really deals with police and other peacekeeping people, not our soldiers, as I understand it—will be sent to, and are being sent to, places that are extremely unsafe for them, and where there is no adequate criminal law jurisdiction, policing, or any other court system. Consequently, the Government has decided—and, I think, with the authority of the House—that it is important that these people are subject to New Zealand criminal law if they are not already subject to the criminal jurisdiction of the place in which they are operating and criminal proceedings are not brought against them. However, this bill does not protect our service personnel and police from the jurisdiction in which they are operating. That is an interesting point, because if our New Zealand citizens are operating, at our request, in countries where, for instance, a criminal offence might bring with it the punishment of a hand being chopped off, or execution, then this bill will do nothing to help them. So this bill will not necessarily help our personnel, at all—in fact, quite the opposite. It is a bill to make sure that whatever they do will be subject to New Zealand law if they are not first prosecuted in that particular country.

As Mr Worth said, if there were any great and pressing need for the bill, it would have been passed right back in August last year. It was not, and I just wonder why it is taking so long to move through the House, particularly when every party in the House, to my knowledge, supports it.

Hon TAITO PHILLIP FIELD (Minister of State): I am happy to contribute briefly to this bill, which, as indicated by previous speakers, is supported by all parties in the House. It is a very good bill, introduced by the Minister of Foreign Affairs and Trade, the Hon Phil Goff. It acknowledges an agreement between New Zealand and the Solomon Islands on what is necessary for the deployment of personnel to the Solomon Islands. I am very proud of the fact that New Zealand and other Pacific nations are involved in the restoration of law and order in the Solomons.

I want to point out that in the agreement for that deployment, the Solomon Islands Government agreed to cede jurisdiction only if New Zealand had statute that allowed that jurisdiction for non-military personnel. This bill is necessary in order to ensure that other classes of personnel who are involved in the deployment in the Solomons are covered in terms of New Zealand jurisdiction and law if they commit an offence. As part of that agreement for deployment, it is necessary that we honour what is required under that deployment. That is why this legislation is necessary. I believe that it is well-drafted law. The select committee has done a good job. I support the bill.

RON MARK (NZ First): I want to take a very short call on behalf of New Zealand First to put on record that New Zealand First will support this bill, as we have supported its passage thus far. I also put on record that it concerns us that we have had service personnel deployed in the Solomons since 24 July 2003, and here we are under urgency today moving the legislation forward another step. That is not adequate. Despite the complimentary words that have been made to the Minister of Foreign Affairs and Trade, that is too slow. Is it any wonder that service personnel whom we send overseas sometimes believe that Parliament has forgotten them?

Probably the irony about this legislation is that, given the situation in the Solomons, it is not the New Zealand police whom we are worried about. It is actually the police force of the Solomons, which the New Zealand police have gone over to teach, train, and guide, and whose culture is quite clearly in need of adjustment. They are the people who have been perpetuating crimes upon their own citizens, and against New Zealand citizens and New Zealand businessmen, which have gone for so long untended. That in itself is a further indictment on this Government, and on past Governments, for their inaction. Probably, and quite clearly, the saving grace is that we have moved on from that.

I would give only one word of caution for those who think that this is a short-term operation—that our people are serving over there and that they will be home soon. I would simply say: “Forget it.” The situation in the Solomons is one that will be extremely fluid for many years to come, and it is my prediction that we will be required to have servicemen over there, working with the authorities in the Government, for quite some time to come. Either that, or we will do what we are becoming renowned for doing: turn our backs and let the Aussies carry the workload, which is something I would not like to see happen.

The bill is essential. It is necessary that any service personnel that we send over to such places as the Solomons, in the circumstances of being outside the auspices of the United Nations, do need to have a clear understanding as to their obligations in terms of their compliance with the law. We support the bill.

Hon KEN SHIRLEY (Deputy Leader—ACT): ACT New Zealand also supports this bill, but again we would like the Minister in the chair, the Hon Ruth Dyson, to tell us why it has taken as long as it has. That is a valid question, which has been raised now by two people in this debate. Why, indeed, is it necessary, the bill having languished for so long on the parliamentary Order Paper, for it to be rammed through under urgency? I suspect, given the support that all parties have expressed for this bill, there is absolutely no need to take it through parliament under urgency. In fact, it will probably take longer to put the bill through under urgency than it would have taken if we had done it in the normal process of the parliamentary week. Perhaps the Minister will have the grace to tell us why that is the situation, because the reason is certainly not clear.

In essence, this bill is all about the principle of responsibility under the law being based on nationality as well as territoriality. New Zealand, it seems, has not shared the expansion that other countries have had, and the bill is, of course, confined to civilians abroad: to police officers acting on Government directives, and to those people who are not covered by United Nations legal requirements. So it does seem that the bill fills a gap. Certainly the Solomons experience triggered the need for this bill, but, of course, it is not specific to the Solomons—as, indeed, it should not be. I think it is quite conceivable that in the years ahead we will have similar situations arise to that in the Solomons, particularly given we live in what is becoming a quite unstable Pacific region. ACT supports this bill, as, it seems, does every other party in the Committee.

GORDON COPELAND (United Future): I would like to take a brief call on behalf of United Future to signal our support also for the Crimes and Misconduct (Overseas Operations) Bill. It is a well-thought-out bill. I believe that it means that police and civilians serving overseas, as in the Solomons, will, in respect of crimes committed in the course of their official duties, be subject solely to New Zealand’s jurisdiction. We will have the exclusive jurisdiction over those people in that situation. That, I think, is a very common-sense safeguard so that we do not risk having our police and civilians in the Solomons and other places arrested by the locals whilst trying to exercise their official duties. In one sense it is just simply a question of saying that there has to be one line of authority for such people, and that that line of authority has to be definitely connected through the operational framework back to this nation, since they are our citizens and we have, after all, sent them into places like the Solomons to assist the locals and to bring peace to such nations.

At the same time the bill makes it clear that if those people commit crimes when they are not on their official duties, but are just in their time off—or rest and recreation—they will be subject to the jurisdiction of the local authorities. That, to me, also makes sense.

We signal our support for this bill.

Part 1 agreed to.

Part 2 Jurisdiction over police and civilian members of overseas operations force

RICHARD WORTH (National—Epsom): I thank the Committee for the opportunity to contribute to the debate on Part 2, and I am certainly looking forward—

Darren Hughes: Thank you!

RICHARD WORTH: I thank the junior whip on the Government side of the Chamber. I am certainly looking forward to the contribution of the Minister on this part, because this is where the substantive regime in respect of crimes and misconduct prosecutions is founded. A number of issues arise in connection with this part. First of all, a distinction is drawn between police officers and civilian members of an overseas operations force. I doubt whether that is, in fact, an appropriate distinction to draw. All people are equal under the law. Why should one class of person be subjected to a different regime from another class of person? I am speaking of police officers on the one hand and civilian members on the other. It is all very well to say that military personnel may be in a different class, because of the range of responsibilities their task entails. But I would not have thought that it is necessarily a logical argument to create the division that occurs in this part.

Of course, there is an aspect of protection in this part, in that no information—no charge, in other words—is to be brought against any person without the consent of the Attorney-General. It is difficult to see how the present Attorney-General would be a fit and proper person to make such a judgment, but presumably it would be founded on the view of her advisers. One would certainly hope that in the context of the decision-making roles that the Attorney-General is asked to perform, there would be well-supported advice before she made such a decision. That is certainly important, as I reflect on some recent issues that have occurred.

There is a constitutional issue, however, that is perhaps worthy of brief comment, and an earlier speaker touched on it. The issue is that, in general terms, New Zealand has taken the line, consistent, I think, with high constitutional principle, that the basis upon which jurisdiction should be exercised is not nationality but territoriality. We just need to reflect on that by testing the proposition that a New Zealander on a Belgian ship in a French river should not have New Zealand law apply to him or her. Where, however, it has been decided that the territorial principle is the correct approach to take, New Zealand has been hugely reluctant to extend that to a principle of extraterritoriality. We have made some exceptions—for sex crimes, for example—where we have seen New Zealand law reach out into the country where a particular offence has occurred. We have also seen that in the area of terrorism. But it is truly rare.

I would argue, in respect of civilians in another location, that the primary inquiry should always be about the nature of the criminal justice system in that particular country. If there is a stable legal system, should it not be the case that an offender, a New Zealander or otherwise, should be dealt with in accordance with the laws of that particular jurisdiction? I do not wanted to be churlish about these issues, of course, and as I have said National supports this bill. But when one reflects on the constitutional implications of some of the things that are planned, then I guess a degree of reservation must be entertained.

Another point relates to the New Zealand Bill of Rights Act. The Foreign Affairs, Defence and Trade Committee, which briefly considered this legislation, contemplated that there should be incorporated a New Zealand Bill of Rights Act standard. It seems to me that the commentary, which discusses the necessity of having a reference to the New Zealand Bill of Rights Act, is at the least weak. It states that the people who are dealt with by New Zealand law in foreign countries would have exactly the same protections as New Zealanders who are dealt with in this country, and it seems inappropriate to include reference to the New Zealand Bill of Rights Act. So there is an aspect of disadvantage for those people who are in foreign countries.

JUDITH COLLINS (National—Clevedon): I take this opportunity to take a short call on Part 2 of the Crimes and Misconduct (Overseas Operations) Bill. As my colleague Mr Richard Worth said, there are constitutional issues in relation to the bill that need to be considered. There is also the issue I have raised before over the actual jurisdiction.

When I looked at how the bill would operate in the unlikely event that the Attorney-General would need to make use of it, I asked myself how clauses 5 and 6 would operate. One of the issues would be the provisions in clause 5(2), which state that the jurisdiction applies when the offence has been done or omitted within New Zealand, where it would constitute an offence. I had a concern at the second reading about how that would operate if a person who is accused of an offence said that he or she was not subject to the jurisdiction, because the offence did not occur, or because he or she did not commit it. The bill does not state that if someone is accused of the offence then it is deemed that the place where the person is accused of having committed the offence is in New Zealand. I am just wondering whether that is a chicken and egg situation happening. I would query very much, if there were a prosecution, whether a defence would be that the jurisdiction did not apply until after the offence had been proven.

Clause 6, “Powers of arrest and detention”, relates only to when someone is alleged to have committed an offence. I wonder whether the Minister in the chair, the Hon Ruth Dyson, or the officials who are available could confirm that clause 5(2) would still operate on the basis of an allegation, rather than a proven situation. I am sure that the Minister is taking note of that. It is a situation where we would not want this bill—

Hon Ruth Dyson: 5(2)?

JUDITH COLLINS: Yes. We should make sure that the bill goes through in a way that it does not come back at a later stage to hit us. I see that it is certainly covered in clause 6, but that clause is about the arrest. It is just the actual jurisdiction thing. That is the main point that I wanted to make on this part.

RON MARK (NZ First): It was interesting listening to the comments raised by Mr Worth in his discussion—[Interruption] I was not listening to the comments made by Judith Collins. I am not a legal beagle and I have never really wanted to be, but to help the Committee—and I thought the Minister in the chair, Ruth Dyson, might want to comment on this—I can advise that the lack of distinction between civilians and the police members of an operation was considered and discussed. It was suggested that consideration be given to deeming civilian persons on a non - United Nations deployed mission to be members of the police. The concern appeared to be that there was insufficient distinction between the situations of the police and civilian members of an operation.

The Foreign Affairs, Defence and Trade Committee did not consider that greater distinction than at present was warranted between the two, because in reality both would be subject to prosecution for the same sorts of offences, regardless of whether they were police or civilian members of the operation. It was put that if police members have defences available to them, because of their policing role, those defences would be available by virtue of their policing role and status. The committee accepted the view that it would not be wise to take an approach that sought to treat civilian members artificially as police personnel, not least because of the different consequences that may flow in terms of the defences available to them.

I come now to the New Zealand Bill of Rights Act issues. Those issues were discussed and considered. I draw members’ attention to the commentary on the bill. There was subsequent discussion, and legal advice suggested it was arguable that the current arrest provisions may give police powers to arrest only in New Zealand. Accordingly, the New Zealand Bill of Rights Act would apply by virtue of section 3 of that Act. Section 3 provides that the New Zealand Bill of Rights Act will apply only to acts done by “any person or body in the performance of a public function, power, or duty conferred or imposed on that person or body by or pursuant to law.” The committee did not believe, however, that there would be value in clarifying the bill. So it is clear that police would also have the power to arrest overseas.

A number of changes and amendments were made. One of them was to clause 6(2), to read: “(a) the person may be arrested without warrant within or outside New Zealand,—or (b) a warrant for the person’s arrest may be issued in New Zealand and executed within or outside New Zealand,” A new subclause (4) was added, stating that “Any person arrested outside New Zealand may be detained in custody outside New Zealand for as long as is reasonably necessary to enable the person to be taken to New Zealand.” Quite a bit of discussion goes on in the interdepartmental report on the submission that deals quite extensively with the New Zealand Bill of Rights Act, and any relevance. The bottom-line recommendation made was that clause 6, “Powers of arrest and detention”, be amended to make it clear that the police would have powers of arrest overseas. The committee did not recommend any changes to include a reference to the New Zealand Bill of Rights Act. If we read the interdepartmental advice, we see that the matter is dealt with quite clearly there.

Part 2 agreed to.

Clause 1 agreed to.

Bill reported without amendment.

Third Reading

Hon RUTH DYSON (Minister for ACC), on behalf of the Minister of Foreign Affairs and Trade: I move, That the Crimes and Misconduct (Overseas Operations) Bill be now read a third time. The bill ensures that members of the police and other persons serving in overseas operations such as in the Solomon Islands are subject to the jurisdiction of New Zealand courts for offences they commit overseas against New Zealand law. The catalyst for the bill was the Status of Forces Agreement with the Solomon Islands. It provides that, in the case of offences that occur outside the course of official duties, the Solomons will seek jurisdiction only if the sending country can assert its jurisdiction overseas.

We had some discussion during the Committee stage in relation to clause 5(2), when an honourable member opposite queried the intention of the legislation with the interpretation possible, and I have confirmed advice from officials that her concerns are probably without foundation. But I appreciate the manner in which she drew them to the attention of the Committee.

New Zealand is currently able to assert jurisdiction over New Zealand defence personnel serving overseas and members of the police serving in a UN overseas operation. However, New Zealand cannot do so in respect of people serving in a non-UN overseas operation. Accordingly, if members of the police and other persons are not subject to the jurisdiction of the New Zealand courts and they are involved in offences falling outside of official duties, the only option might be prosecution in the Solomon Islands. So the bill will minimise the possible exposure to Solomon Islands law of members of the New Zealand Police and other members in the overseas operation. It will also ensure that New Zealand can assert its jurisdiction over members of the police and other persons serving in future overseas operations.

The bill will be retrospective. Once passed, it will be deemed to have come into effect on 24 July 2003, allowing New Zealand courts to assert jurisdiction from the beginning of the deployment. The issue of retrospectivity was carefully considered when the bill was vetted for compliance with the New Zealand Bill of Rights Act, as section 26 of that Act limits the creation of retroactive offences. The Attorney-General concluded that the bill is not inconsistent with the rights and freedoms contained in the New Zealand Bill of Rights Act. The retrospective application of the bill is seen as a justified limitation because of the importance of protecting New Zealand personnel from possible exposure to a legal system that may be incongruent with the standards applicable in New Zealand.

Although the bill does not contain a clause expressly allowing for waiver of New Zealand jurisdiction, no one can be prosecuted unless the Attorney-General gives consent. This requirement, in effect, gives the ability to waive jurisdiction in situations where, in the interests of fairness and justice, it would be preferable for the host country to retain jurisdiction. The bill also makes it clear that New Zealand police will have the power to arrest personnel covered under the bill overseas, and to detain them for as long as is reasonably necessary to take them to New Zealand. This complements New Zealand’s power to assert its jurisdiction in respect of such offences.

The arrest power provides similar arrest powers as are contained in the United Nations (Police) Act and the Armed Forces Discipline Act. However, it is not a generalised power to arrest overseas. The arrest power relates solely to the arrest of persons involved in those overseas operations and who commit offences while serving in an operation. An arrest under this power is not conditional on the prior determination of fact, or an assessment of evidence by a New Zealand court. The bill provides that the provisions of the Crimes Act relating to arrest will apply to the arrest of a person under the bill. So that means that a person can be arrested only in the circumstances that are permitted under the Crimes Act. However, the Attorney-General’s consent must be obtained before the prosecution itself proceeds.

The enactment of this bill will therefore ensure that our police and civilian personnel serving in the Solomon Islands in similar operations in the future enjoy the same protections as defence and police personnel serving in similar United Nations operations already enjoy under our law, which is consistent with international practice for these sorts of operations. It is for that reason, I am sure, that this bill has deservedly received such widespread support from the variety of parties in our Parliament. I commend the bill to the House.

RICHARD WORTH (National—Epsom): I am grateful for the comments the previous speaker has made in the context of the Crimes and Misconduct (Overseas Operations) Bill. National supports this legislation. There are some aspects of the legislation, however, in respect of which we entertain a degree of reservation. A principal concern would have to be the legislative process that has been followed in this case. The Minister has sought to justify, as best she could, with all the available arguments that could possibly be mounted, the reason that this Act will be deemed to have come into force on 24 July 2003. Generally, legislation is prospective. It takes effect after it has received the royal assent. There are specific provisions that provide that legislation comes into force at a future date, but not so in this case. Instead, this legislation has been backdated to 24 July 2003.

The Minister has explained to us—or tried to—the reason for that backdating. It is to mark the commencement of the deployment to the Solomon Islands, so it is a little unclear as to whether there is a swathe of charges to be laid against police officers and other civilian personnel in respect of activities they may have been involved in, in the Solomons, from the period 24 July 2003 to the present time. Let us hope that that is not the case. Let us hope that the office of the Attorney-General is not cluttered with decisions to be made in respect of multiple charges and multiple accused.

This legislation is to some extent a complement to the United Nations (Police) Act of 1964. That legislation, which came into force on 14 May 1964, has served New Zealand well and provided a measure of control and discipline for police officers engaged in United Nations service. A gap was discovered and led to the Crimes and Misconduct (Overseas Operations) Bill. This bill allows New Zealand to exercise criminal jurisdiction over New Zealand police personnel and civilians serving overseas as part of non - United Nations deployments. So the bill will allow New Zealand to exercise jurisdiction over non - armed service personnel participating in the Solomon Islands deployment.

It was a very historic step on the part of New Zealand to send troops and police to the Solomon Islands, and it might very well be the case that Taito Phillip Field will offer some comment on that. But my recollection as a matter of history was that the last time we saw an entry into this part of the Pacific was probably to suppress the Mau rebellion against New Zealand rule over Samoa. That culminated, of course, in what some commentators have described as the infamous 1929 “Black Saturday”, on which New Zealand troops opened fire with machine guns on unarmed Samoan protestors, killing nine and wounding over 50 other personnel.

I have two primary concerns about this legislation, and the first I had an opportunity of briefly touching on in the Committee stage of the bill. That is, it seems to me that, for no good reason, the select committee set its heart against the inclusion in this bill of appropriate reference to the New Zealand Bill of Rights Act. They certainly turned their minds to that issue, but I urge members of the House to reflect on the possibility that those who are charged with offences on foreign soil, under New Zealand law, should have the full rights that are available to people who are charged under New Zealand law on New Zealand soil. By not making specific reference to that legislation, a gap is created, and, potentially, an injustice is done.

Of course, it is beyond the scope of what I seek to say during this third reading debate to offer any detailed view on the New Zealand Bill of Rights Act. But I would note that under Part 2 of that legislation, a number of critical rights are given in the area of search, arrest, and detention. For example, there are provisions like section 21, “Unreasonable search and seizure”; section 22, “Liberty of the person”; and minimum standards of criminal procedure are set by section 25. I would have thought that a robust Committee, imbued with a proper sense of jurisprudence, might well have seen it as appropriate to include reference to the New Zealand Bill of Rights Act. The sophistry apparent in the commentary of the select committee I would assert is unfortunate.

The second issue that I believe is worthy of comment relates to this whole issue of territoriality and nationality. New Zealand has generally followed a practice that our laws are intended to have effect within New Zealand only. That has not been the invariable practice in respect of other countries, but from a constitutional perspective it seems sound and reflects the well-understood sovereign doctrines in international law. When there have been exceptions, they have been made with significant care, and I can see members opposite nodding in acquiescence with that comment. There are so few exceptions, but I will instance just two. Those two relate to aspects of the criminal law. [Interruption] Is it not an excellent outcome that Government members have suddenly become awake, and that on the opposite side of the House there is a fertile interest in constitutional law doctrine?

The two examples relate to the readiness of the New Zealand Government to prosecute for sexual offences committed outside this country, and the very deliberate legislative entry we have made in connection with terrorist activities outside this country.

So I conclude that there was clearly justification for bringing this legislation before the House at the start of the Solomon Islands deployment. However, the Government has disgraced itself by the slow passage of this legislation. When one asks: “What is the intended mischief?”, the answer is that the passage of time has seen no real mischief created—and why might that be? I suggest that it is because in the international arena, New Zealand punches above its weight, and that in our peacekeeping and peacemaking operations we show a commitment, a care, a diligence, and a compassion that may well not need legislation of this type. That was apparently not the view of the Government. It seems that on this occasion, as on many occasions in recent times, the Government was again wrong. So it may very well be that we can move to the early repeal of this legislation, which is a further indictment of this Government’s failure to focus on the really important aspects of legislative policy.

DARREN HUGHES (Labour—Otaki): It is a true pleasure and delight to follow the sacked Opposition defence spokesperson—the member for Epsom, Richard Worth. I just wish that when he had been the spokesperson on defence, he had used the words that we have just heard from him, because he just told the House that New Zealand punches above its weight on international commitments, and I totally agree with the member on that point. I think it is absolutely right that New Zealand has a proud record in these areas. Yet, when he had responsibility for defence, he never said those things. So I am glad we have given him the opportunity under urgency on the Crimes and Misconduct (Overseas Operations) Bill for him to come down and fess up as to his true belief in New Zealand’s great reputation in these areas. To that end, I support the third reading of this bill.

Hon RICHARD PREBBLE (Leader—ACT): I rise to speak to the third reading of the Crimes and Misconduct (Overseas Operations) Bill, which fundamentally has been passed so that in the event of New Zealand personnel serving in the Solomons committing a crime—and although the operation is not United Nations peacekeeping, it is still peacekeeping—it would be deemed to be a crime in New Zealand under this bill. Such persons can be arrested in the Solomons by New Zealand Police and tried in this country under New Zealand law for the crime committed in the Solomons, which otherwise could not be done under our territorial laws.

As it happens, I was in the Solomons when the Solomons Parliament introduced its parallel bill. It was not made abundantly clear by the Minister, but the Solomon Islands Parliament has passed a law that exempts New Zealanders serving in the military, in the police, and as civilians, and we have given an undertaking that should a New Zealander commit a crime, he or she will be prosecuted in this country. The first thing I want the House to know is that the Solomon Islands judiciary never collapsed during the peacekeeping. There are still expatriate judges and Solomon Islands judges, and if the House gets the impression that the Solomon Islands judiciary is not capable of giving a fair trial to a New Zealander, that is not so. It most certainly was the fact that at the time we intervened, the Solomon Islands police force probably was not capable of doing such prosecutions, and it certainly did not exercise proper policing functions over large parts of the Solomons, which is the reason for the intervention.

I am a little concerned that the bill is open-ended. There must come a point where we ought to say that law and order has been restored in the Solomons, and there is really no case for a New Zealander who commits a crime in the Solomons to be able to say that he or she should be tried in this country, just because he or she is serving, say, as a civilian adviser.

With the Solomon Islands having passed its part of the bill, it is now necessary for this Parliament to pass our part, but I do make a few comments about this legislation. I support the bill in the sense that I myself have made representations—not just to this Government, but also to the previous Government—that the situation in the Solomons did require intervention, and it would not be able to be healed within that country. There are complicated reasons for that, which go to the nature of the ethnic tension. I have also said to successive Governments that an intervention would be very successful, and it would not actually require a very large number of New Zealand personnel. While it has been very successful, I think the numbers we have sent are way over the top, but that is partly because we were with the Australians and they tend to be a bit way over the top. We never needed anything like that number, and I still think that the number of police serving in the Solomons from New Zealand is excessive.

I make the point to the Minister of Finance that we ought to be thinking about pulling some of those numbers back, and part of the reason I say that is that our aid vote to the Solomons is being reduced in other areas in order to pay for policing. So we ought to be conscious of the fact that we do not want to send across more of something they do not need, when that means we are not able to help them more with things that they do need.

But coming back to the bill itself, I think I should defend the Solomon Islands judiciary. I think that they held to their task when there was a civil war going on, and when the Solomon Islands police force was a large part of the problem. It was not all of the police, I have to say, but when some of the police were out of control, the judiciary themselves continued to uphold the rule of law. I think that a New Zealander who committed a crime in the Solomons would always have had a fair trial in the courts, and would have a fair trial today.

Having said that, this is the best part of the package that we agreed to with the Australians and the Solomon Islands Government. I suppose that we also agreed with the volunteers—because they are volunteers, although I do not know whether the Army are volunteers; the police certainly are volunteers, as are civilians. They were given an undertaking that this law would be passed. I think—and I am putting it slightly differently from Mr Worth—that New Zealand is somewhat overextended in the number of peacekeeping operations it is conducting. I think that we are in 22 different countries, or something like that. It is said that we are punching above our weight, and I also think we ought to look at whether that is sensible. The Solomon Islands are in the Pacific, and is clearly an area of interest to us, so I acknowledge that I call for this intervention. I believe that the Government has done the right thing. Having done that, I acknowledge that Parliament is obliged to pass this bill, so the ACT party will support its third reading.

RON MARK (NZ First): I do not intend to rotary hoe the same paddock over and over again, nor to go over much of the commentary by Richard Worth and the Hon Richard Prebble—who has far more experience in terms of the Solomon Islands than many other people, if not any other person, in this House. However, I want to touch on just a couple of points.

Firstly, as I understand it, this bill is not targeted specifically at the Solomons. It is true that it came to pass because in deploying troops, civilian personnel, and police into the Solomons, it was recognised that we had a gap in our legislation, in terms of criminal jurisdiction over those people we sent there. The question that comes to my mind is why had we not found this out some time ago. We have had peacekeeping personnel in many theatres all over the world for a great period of time. If I cast my mind back to the initial deployment of forces into the multinational force of observers in the Sinai in 1982, although the initial deployment had only military personnel, New Zealand civilians were there. It seems rather strange that it took until 2003 for people to recognise that we had a gap in our legislation and in our criminal jurisdiction, and to do something. It is even stranger that, having identified that gap on 24 July 2003, we are sitting here under urgency on 31 March 2004 progressing this bill to the third reading. I suggest that it tends to indicate an element of tardiness on someone’s part.

I feel the need to comment on a couple of comments that have been made. The historic nature of the deployment of our troops and police into the Solomons is acknowledged. I do find an irony in the fact that the main reason we sent police there was that people could not trust the Solomons police force to do its job—and here we are today. There were reports of police being involved in criminal activities and of widespread corruption. A friend of mine who worked in the Solomons for many years was flabbergasted to find that after the murder of a New Zealand businessman over there, when everybody was discussing and openly talking about who had carried out that murder, nothing had been done by the police to arrest that man. Also, stories came back to New Zealand of police driving around in vehicles that had been reported as stolen, and there were no charges. The irony is not lost on me. Here we are passing legislation to make it possible for us to prosecute our policemen, should they err, and the very reason for their being there is that the Solomons police were criminally in err.

There were comments about New Zealand punching above its own weight, and being overextended in deployments such as this. That was the very first comment I made for New Zealand First when it was announced that New Zealand was sending troops to the Solomons. My comments—and they were latterly picked up by the National Party—were that we were overextending ourselves, and that this Government in particular, in pursuit of international kudos, had no consideration at all for the plight of the service personnel that it was tasking; it had no consideration at all for the plight of the families, with service personnel just returning from one deployment and being sent off on another one; and it had no consideration or understanding of the level of commitment of our Defence Force personnel, and of how thinly stretched they are on the ground. But that did not concern the Government, because its overriding desire was to look good in front of the United Nations and the international community, to paper over the cracks, and to pretend that our deficiencies and shortfalls in personnel, and the heavy workloads, simply did not exist.

That is precisely what Minister Burton said in response to my comments. I note that those comments were not shared by senior officers in the Defence Force, and that they were later reflected in a paper that became public through the Sunday Star-Times.

Barbara Stewart: How did that happen?

RON MARK: Yes, I wonder how that happened. Only then did the public of New Zealand get the true picture. To say that we are punching above our own weight is, I think, a wee bit boastful, particularly in the light of recent medical surveys that show that the biggest threat to New Zealand’s health and wellbeing is obesity. [Interruption] Do members get that? I think they will. The point is that we can sit here and applaud ourselves all we like, pat ourselves on the back, and bestow medals, wreaths, and kudos upon ourselves, but the truth of the matter is that we are overextended.

We know that operations like this are necessary. We know that intervention was necessary. But we in New Zealand have to either come to terms with the deficiencies in our Defence Force, increase the overall staffing, and increase the authorised level of manning, or accept that we can no longer play the role in the Pacific that other nations would ask of us. That may mean a loss of face, but I suggest that in the interests of the men and women who serve in our Defence Force and police force, it would be the honourable and honest position to take. Failing that, we will continue to do what we are currently doing. We will ask captains to step up to major jobs, we will ask corporals to step up to sergeant and sergeant-major jobs, we will pay them a little bit extra for the time when they do that, and when they get back to New Zealand, we will bust them back down to the rank we can afford. We will then task them with level 2 or 3 positions, and demand that they perform to levels of training for which they have not yet been prepared. I say these things as a warning. I say these things because I have said them before. All of these things are relevant in the third reading, because they are points that were made at the time the troops were deployed to the Solomons, and at the time that this legislation was deemed necessary.

For some reason, I see that Mr—what is his name, that lawyer who defended that murderer up north? Mr Fairbrother and the two Government whips have no interest in this discussion. They sit there talking about what they will do in the weekend when urgency is lifted, and ignore constructive criticism and comment.

Hon Richard Prebble: No, they’re swapping CVs for possible job opportunities.

RON MARK: They are swapping CVs for possible job opportunities. Mr Fairbrother may have a job to go to, but I am not too sure about that other young man. The point is that they ignore these comments at their peril, and, regretfully, they ignore them at the expense of the good men and women in our defence forces and police force.

I also want to say that it is rare that all the parties are unanimous in support of legislation. I went back through the Foreign Affairs, Defence and Trade Committee report, and, without meaning to be churlish, I did not see a minority report from the National Party expressing all the concerns that Mr Worth expressed. I am not being churlish, but it is noted that if he had serious concerns, they would have been written in the bill as a minority report, and they are not, at all.

Judith Collins: He wasn’t on the select committee.

RON MARK: The fact that Mr Worth was not on the select committee does not mean a thing. He could have been, had he chosen to be. He could have asked to be subbed on, and I am sure that one of his other members would have gladly let him have a seat.

New Zealand First supports the passage of this bill. We pass on a flick in the ear to the Government for taking so long, and we ask people to note that this legislation pertains to any future operations where police and civilian personnel may be deployed. I suggest that that will be an ongoing and, regrettably, a more frequent thing in the future.

KEITH LOCKE (Green): I rise on behalf of the Green Party to support this bill and its purpose. It was motivated by the commitment of personnel to the Solomon Islands. Because of the situation of lawlessness there, we had to cover the police and the civilian personnel who went there, so that if they committed crimes they did not commit them with impunity. There is a very good purpose behind the bill—to make sure that anyone on an overseas operation, whether Defence Force personnel, police, or a civilian, is subject to proper justice.

Often in overseas operations there are situations of concurrent jurisdiction, as the commentary on the bill mentions, when offences are committed against citizens of the host country or when the offending personnel are in an off-duty situation. There are three categories of situation. Members of the visiting force can commit offences between themselves—in the Solomon Islands case, between members of the New Zealand visiting force. There is a whole system within the Defence Force, of course; if offences are committed between members of the Defence Force in an operation such as that in the Solomons, there are procedures within that force to deal with that. At the other end of the scale, if members of the force—or, in this case, New Zealand civilians, as well—are off duty and commit crimes, there is a general application of local legal jurisdiction. Then in the middle there is a bit of a grey area. If members of the visiting force in the performance of their duties are in some way reckless or criminal—driving erratically, or whatever—and offend against a person or property of the local society, there is often an overlap, or concurrent jurisdiction, and it is necessary to work out whether they should be tried locally, or back in their home country, or within the institution of the visiting force. Of course, what happens in that grey area is often the subject of a status of forces agreement, or negotiation between the parties.

Although there is talk in the commentary on the bill about concurrent jurisdiction, the emphasis has been towards the trial being held by the visiting country—in this case, New Zealand—because of the state of the judicial system, the police system, etc. in the Solomon Islands. The situation there was very difficult when New Zealanders were committed over there, and since that time many members of the Solomon Islands police force have been dismissed or are up on charges, and Government officials and Ministers have been subject to some form of dismissal or prosecution. That shows the very difficult situation that our contingent went into, and the need for a fall-back situation so that no New Zealander could get off scot-free if he or she committed what we all know to be offences and what would be offences under New Zealand law.

That being said, in a case like the particular situation in the Solomon Islands, and there may be one or two similar ones that develop internationally, we do not want to treat as the norm that the jurisdiction falls back on the visiting country—in this case, New Zealand—because we want to develop the capacity of the host country to support its own justice system and apply its own laws. That is particularly so when its property or its citizens are affected by members of a visiting force, be they defence personnel, police, or civilians assisting in governmental capacities, etc., as is the case in the Solomon Islands. We support that capacity building.

We do not really want to go down the track of the Australians in relation to Papua New Guinea recently, and get into the problems that they have got into. They are trying to commit 230 members of the Australian police over there. New Zealand is sending some police, too, although I do not think that has taken place yet, partly because of the big dispute that has occurred between the Australian Government and the Papua New Guinea Government over criminal jurisdiction. The Australians initially claimed full immunity for their police, but people such as the Foreign Minister of Papua New Guinea, Mr Rabbie Namaliu, said that that was unconstitutional and undesirable and they would not accept it. The Australians have had to move to more limited immunity, as the result of a two-way dialogue. They have moved back to a more normal situation, where there is give and take and where jurisdiction is not totally given away by the host country.

I listened closely to the points that Richard Worth made in relation to the application of the New Zealand Bill of Rights Act, and the difficulties in relation to people who are not members of the armed forces. There are well-established systems in the armed forces, not only the New Zealand armed forces but also other armed forces, in terms of prosecuting people who commit crimes. In relation to civilians such as those we have sent over to help the Solomon Islands civil service, it is a more difficult situation. This is a generic bill; it does not apply only to the Solomon Islands, and one can envisage a situation under the bill in which our civilians are not necessarily accompanied by New Zealand police officers. If a crime is committed by a New Zealand civilian official working in a Solomon Islands Government ministry, one imagines that a New Zealand police officer who happens to be there could do the arrest, do a bit of the evidential work, and do the beginnings of a prosecution, before the person is brought back to New Zealand for trial.

But one can see the problems that arise when one gets into extraterritoriality. As Richard Worth indicated, there are only a couple of areas—sex offences and terrorism—where that extraterritoriality does apply. There are good reasons for being a little bit careful about it, because, clearly, there are evidential problems in a situation like that of the Solomon Islands—particularly if the New Zealand Police were not there, which could be the case in some other commitments. How does one know exactly what is going on, or who has said what about a particular crime? When the person is brought back to New Zealand it is very hard to fully apply justice. There are difficulties in that situation, which is why it is better to have jurisdiction lie with the local force, even if the local justice system is imperfect in many circumstances. And I am not arguing that there was a proper judicial system in the Solomon Islands, particularly when we first sent the force over there.

I think we have to have some assumption that the New Zealand Bill of Rights Act applies. Whether it needs to be written into the bill, we can argue about. The argument in the advice given to the Foreign Affairs, Defence and Trade Committee, which Ron Mark mentioned, was that because the New Zealand Bill of Rights Act is not referred to in relation to the United Nations (Police) Act and the Armed Forces Discipline Act, and because those procedures operate quite well legally, we do not need to have it in this bill, although one could say that the armed forces—and the United Nations acting internationally, which we are tied into by that Act—do have quite substantial systems in place that mean there is not quite so much requirement that a reference to the New Zealand Bill of Rights Act be put in. But when we are talking about difficult situations applying to civilians overseas, where perhaps there is no New Zealand police officer on the scene, having a reference to the New Zealand Bill of Rights Act could be of some use.

I have not heard a full report on the work we have done through our civilian commitment in the Solomons, or the work the Australians have done, in terms of building some of those institutions. I am sure a lot of the work has been very good work in terms of developing some of the ministries back to competence and helping to train local personnel, but we have to be very careful when we intervene in a substantial way, as we have done in the Solomon Islands, in the civil society, particularly in Government ministries etc., in that we might have a disposition to apply our own models. I would like to see an assessment of that. For instance, the New Zealand Government approach—which is, unfortunately, a bit different from the Green approach—is towards deregulation, privatisation, and things like that, which might not necessarily apply most effectively in the Solomon Islands. In the sort of chaos that ensued in the Solomon Islands, the pressures to adopt an Australian or a New Zealand model might have been a little bit great. I will be interested to get an assessment of that, and an assessment of whether the traditions of the Solomon Islands, and the possibility of utilising them, the tribal structures, etc., were fully taken account of in our helping to rebuild Solomon Islands society.

GORDON COPELAND (United Future): I rise just to signal once again United Future’s support for the Crimes and Misconduct (Overseas Operations) Bill. It seems to me that in the end this bill has struck a very good balance. On the one hand it ensures that New Zealand police and civilians deployed overseas by our Government in peacekeeping roles, in serious situations such as they face in the Solomons, have the protection of New Zealand law, so that they are not subject to undue prosecution or arrest by people in the local situation, and therefore exposed to its volatility, when they are on active duty under orders from New Zealand. On the other hand it ensures that those people, should they commit crimes in those situations, do not escape punishment for those crimes, but are answerable to New Zealand courts and the New Zealand nation under New Zealand law.

I feel it is important that our nation pass this bill into law, as we are doing this evening, because I strongly suspect—as does Ron Mark of New Zealand First—that this will not be the last time we have to deploy police and civilians in peacekeeping roles within our region of the Pacific. Unfortunately, we live in an area of the world that is subject to a fair degree of political instability in a lot of the developing and emerging nations that surround us in the islands of the Pacific. It always seems very tragic to me that people who live in paradise, in terms of climate and surroundings, nevertheless very often do not seem to be able to bring peace and stability to their own nations and their own political systems. So it seems to me that we will probably be doing this again, and, with that in mind, I think it is very important that this law is in place so that we have a clear basis on which to go forward.

With those few remarks, I have pleasure in signalling our support for this third reading.

JUDITH COLLINS (National—Clevedon): There have been some very good speeches tonight on this bill, and it has been a pleasure to listen to some of the contributions, particularly those of Richard Worth and Richard Prebble. Even Ron Mark was interesting, and certainly I enjoyed Keith Locke’s speech. I found it very interesting, and although Mr Locke and I do not always agree on everything it is always nice to hear his view. Often he makes some very good comments.

Hon Ken Shirley: What about Mr Copeland?

JUDITH COLLINS: I am, however, stunned that Mr Copeland has told the House tonight that this bill will provide protection for our New Zealand police and non - service personnel overseas. It does not. It does not provide one scrap of protection for our personnel overseas. This bill is all about making sure that those personnel can be prosecuted, either in the country in which they are serving or in New Zealand. It does not say at all that they will not be subject to the laws of the country in which they are serving. In fact, it says quite the opposite. It says that unless they are being prosecuted in that country, they can be prosecuted in New Zealand for the alleged offence. So Mr Copeland has, unfortunately, made a very grave error. I am sure he did not intend to do so. When I see that the chairmanship of the committee was held by his own party leader, the Hon Peter Dunne, I would have thought Mr Dunne could have briefed Mr Copeland better on this bill.

This is, unfortunately, one of those instances where the bill is only four pages long but has a seven-page commentary from the Foreign Affairs, Defence and Trade Committee. That is an indication that an awful lot of talking was going on and maybe not enough listening—and certainly not enough reading, if that is the idea that Mr Copeland has about the bill.

I have to take up the point that this bill does not apply just to our efforts in the Solomons. It applies anywhere that our non-troops—police and other personnel—are serving in overseas operations involving peacekeeping, unless they are operating under a United Nations force. Quite clearly, the Government is signalling that there may be other instances, possibly in the Pacific, where New Zealand is called upon to make a contribution, even if the United Nations—that great bastion of peacekeeping but not a lot else—is not involved.

That does raise certain issues. Mr Richard Worth has made the comment that New Zealand traditionally likes to punch above its weight, and that drew some derisory comments from a member on the other side of the House, Mr Hughes. New Zealand does traditionally punch above its weight in matters international, and sometimes that means it actually goes outside its own abilities and stretches itself way more than it can really afford to do. That point was well made by Mr Mark. This bill is not something we should be rushing through tonight in urgency. It could very well have been put through by the Government in the normal course of business, as it certainly has the consent and approval of all members of the House. It is a bill that deserved to be treated in that way.

It is a travesty that tonight, on 31 March—although I note that Parliament thinks it is 30 March—we are putting to bed a bill that first saw the light of day last year after our people were moved into the Solomon Islands. I note the comments from Taito Phillip Field, who I thought was very helpful in advising the House as to why this bill was necessary—that it was part of a joint agreement between Australia, the Solomon Islands Government, and New Zealand. I appreciated that comment and I thank him for it, because I found it very helpful to know why the bill was needed, when, clearly, it has not been thought necessary before.

I was also very pleased with the Minister’s comments when she graciously noted my concerns over clause 5(2). I thought she handled that well. I am a bit concerned by the answer that parliamentary counsel gave me, which was that that matter should be covered under clause 6. I am a little bit worried about that. The lawyer in me feels there is at least a credible argument for anyone acting for a person so charged under this legislation. I think that maybe that could be looked at further, but I guess the Minister is probably thinking that, all things going well, the Act will not be needed for a long time, and, hopefully, will not ever be needed.

I take on board the concerns that Mr Worth had in relation to the New Zealand Bill of Rights Act, and the fact that people covered by this bill will not have the same rights that they would have if they were arrested and charged with an offence in New Zealand. That is a concern, because the people we are talking about are putting themselves in positions of danger at the Government’s request. They are doing so at the request of New Zealand, so that we can all take pride in the fact that our little country is able to contribute in, hopefully, a helpful way towards other countries’ stability. I believe they deserve to have at least the same protection as someone who is accused of a crime in this country.

Even though National members have those concerns about the bill, we will support it, and we will do so because it should have been put through months ago. Hopefully, we can come back at a later stage and amend the legislation, if any of the concerns we have raised do turn out to have been proven.

Bill read a third time.

Bills

Radio New Zealand Amendment Bill

In Committee

DARREN HUGHES (Junior Whip—Labour): I seek leave that the Committee stage of this bill be taken as one wide-ranging debate, and that clauses 1, 2, and 3 be put as separate votes at the end of the debate.

The CHAIRPERSON (H V Ross Robertson): Is there any objection to that course of action being taken? There appears to be none.

Clauses 1 to 3

Hon GEORGINA TE HEUHEU (National): I want to make some introductory comments about the reason for this bill and the nonsense of its introduction into the House, which the Minister of Broadcasting did some time ago now. It has been on the Order Paper for some time and, clearly, has not been urgent.

The Radio New Zealand Amendment Bill largely deals with additions to the charter, and places further responsibilities on Radio New Zealand, when in fact the charter itself has not been around for very long and the public broadcaster has had trouble delivering on it, in any event. The title is fair enough, but the National Party opposes the bill. We see no good reason for the Minister to have introduced it, particularly at a time when the broadcaster was in a state of dysfunction, of declining audiences, and of budget blowouts. At one stage the organisation was being described as so dysfunctional that internecine warfare was going on. Yet the Minister had the temerity, I would say, to bring in this bill, to create an impression that all was well—when in fact all was not well—and that this broadcaster could take on more responsibilities. We will come to that, as this Committee stage proceeds.

The bill is only a two-page bill. On the face of it one might think that, as it is only two pages, maybe it is not very important or controversial, yet in its own way it is very controversial. That is another reason why, in my view, the Minister ought not to have brought this bill to Parliament. Late last year there was a conference that brought together public broadcasters, including visiting broadcasters from overseas, to look at the place of public broadcasting. The place and role of public broadcasting are under scrutiny worldwide. Surely, it would have been better and more appropriate, and would have made more sense, for the Minister to take the findings of those discussions and to put more effort and time into clarifying the role of a public broadcaster, particularly in a multilayered, multicultural society such as ours, and in an environment where New Zealand listeners are spoilt for choice through commercial radio. The bulk of the population now is in the 18 to 35-40 demographic, so how do we get a public broadcaster to cater for the listening aspirations of that age group? How, indeed, do we get a public broadcaster to cater for a wide range of listenership? This bill adds more obligations to Radio New Zealand’s current responsibilities. How does it manage to do that when the role and place of the public broadcaster internationally are now being scrutinised?

We are here in urgency to debate and no doubt see the passage into law of the Radio New Zealand Amendment Bill—not with National’s approval, however. The Hon Steve Maharey in his thinking, I guess, decided it was necessary to add in more obligations. The legislation is controversial in that the charter is now amended by the insertion of the words “spiritual, and ethical”, which add to the obligations already on the broadcaster to deliver a very wide range of dimensions in a multilayered, multicultural environment.

BRENT CATCHPOLE (NZ First): First of all, I would like to state that New Zealand First is against the Radio New Zealand Amendment Bill. It is a nonsense; it is unnecessary. It adds some unnecessary pieces to the charter, and I really cannot understand why the Government has even bothered to bring this bill here under urgency, in order to push it through Parliament. It is ludicrous legislation. We have a situation here where, as Georgina te Heuheu has suggested, the bill adds further responsibilities to Radio New Zealand, via its charter. Well, Radio New Zealand has a big enough charter, and it is having enough difficulty in meeting its current charter obligations, without adding additional pieces like the spiritual and ethical piece. If we consider the wide range of multicultural, ethical, and spiritual facets of New Zealand society today, we can see that the charter would require effort virtually 24/7 just to cover that portion of it. This legislation adds an unnecessary burden to the charter, which is now so overloaded with the spiritual and ethical side of things that, unfortunately, there will be no room for anything else. It is nonsense legislation, and along with the other New Zealand First members, I believe that it is totally unnecessary.

There is one good point I will note. Clause 3(2), which is to amend section 7(1)(c) of the principal Act, contains the words “and a full range of age groups”. That means I am now probably catered for in this bill, whereas before, perhaps, I was not. It is also interesting to note that in clause 3(5), which amends section 7 of the principal Act, the broadcaster is required to do a survey annually not only of its own listening audience but also of the members of the audiences of other stations—people who are not currently listening to the broadcaster. I observed at the time that that was an interesting option, because there are some merits in finding out what everybody else is listening to, and trying to incorporate that into the programming of the public radio station.

But let us face it: there will not be a chance to add any other parts or interests into Radio New Zealand’s programming, because it is so overloaded and so overburdened by the spiritual and ethical side of things. This is just a nonsense bill. This Government is scraping the bottom of the barrel to even bring this bill to this House, let alone to bring it in under urgency. It is a waste of our time to have to debate it. I ask the Minister to pull this bill and do away with it now, to stop this waste of our time.

KATHERINE RICH (National): As I rise to speak in the Committee stage of the Radio New Zealand Amendment Bill, the first question I have for the Minister in the chair, the Hon David Benson-Pope, is this: why are we here under urgency to debate this bill? Why are we here to debate a bill that is only two pages long, and that actually achieves very little except to insert a few words into Radio New Zealand’s charter? I may add that they are two little words that mean very much: “spiritual” and “ethical”. I would like to hear the Minister explain to the Committee how a radio station can deliver to New Zealanders their spiritual needs or reflect their ethical needs. I do not think that is the role of a State broadcaster, and I am not even sure that a broadcaster is capable of doing that. It is very difficult to know from the bill what the Government means by “ethical needs”. Is it further social engineering, and giving an indication to New Zealanders of what they should be listening to, thinking, and eating? The sort of bill that we see here really goes along the lines of telling New Zealanders what they should do with their lives. I think the charter itself set out some very basic principles for Radio New Zealand, but now, with the further development of the charter and addition of these new words, Radio New Zealand is getting into areas that I do not think the New Zealand public wants the State broadcaster to get involved in.

As I said, we are here to debate this bill under urgency. One would imagine that the reason for doing that was that there was a dire need for this bill to be put in place. In fact, I think most of us in this Chamber know that there has been no groundswell of protest calling for this particular bill. Radio New Zealand itself has made no mention of this bill, nor has it required that it be driven through Parliament. I think Radio New Zealand is struggling to reflect the responsibilities of the charter already, without broadening some of those requirements. In fact, when I look for the reason for pushing this bill through under urgency, I do not find one reason why we are here to debate this two-page bill.

I think we always need to be mindful that when we put legislation through the House, an immense cost is borne by the New Zealand public. Time and time again we see this Government putting through legislation that does not actually make a difference to New Zealand life, and legislation that does not make a difference to the business or organisation for which it is intended. We are seeing a greater amount of what I would term “feel-good legislation”—that is, legislation like this, which the Government can point to and say it is a nice idea that we can now reflect New Zealanders’ spiritual needs within the Radio New Zealand charter, when there is really no core reason why the legislation needs to be put in place. Once again, I mention the huge cost to Radio New Zealand, and to the New Zealand public, in putting this legislation through Parliament.

This bill is, of course, now well out of date, and that is why we are looking at making a change to the commencement date. This Government is way behind in its legislative programme, so quite often, as we have seen with the reprinted bill here, the date when an Act comes into force is being changed. This bill is not about restructuring Radio New Zealand, giving it a bigger budget, or changing its role. In this two-page bill we see just a lot of mealy-mouthed words and tinkering that really have very little to do with the provision of State broadcasting services to the New Zealand public. I do not think people will notice any change to the quality of what they hear. I do not think this Government has in mind what the ethical needs of the New Zealand public are. It certainly does not have in mind what the spiritual needs of the public are. In fact, there was quite a debate about the word “spiritual”, because United Future, I think, wanted to put in the words “religious beliefs”, so that those beliefs would be reflected within the Radio New Zealand charter. But that amendment was ruled out.

MARTIN GALLAGHER (Labour—Hamilton West): I was waiting to hear from the previous speaker the enthusiasm that should naturally follow from this particular bill, in terms of the wonderful service Radio New Zealand provides to our country. With due respect to my good friends in New Zealand First, I was a little disappointed with their contribution. I think if they check with their own party president, Mr Doug Woolerton, they will find that he is a very avid listener to National Radio and that he knows all the programmes. They should double-check with their party president regarding National Radio.

This bill is necessary, and I will give as an example of that the recent launch of the National Radio FM service in the Waikato, which I attended. It was an absolute privilege to be part of that, because it accentuated the wonderful vitality that is Radio New Zealand today. It accentuated for me that Radio New Zealand is very, very serious about catering to a range of varied interests and age groups in our country. It is really good to see that Radio New Zealand, and particularly National Radio, is not just catering for people of my chronological age. It is very serious about reaching out to a wider audience, embracing younger New Zealanders, and looking for and fostering young talent—particularly some of the bands that can now be heard on National Radio, and that National Radio is providing an audience for and focusing on. That, frankly, is very exciting.

Lest we forget this, I remind members the shareholders of Radio New Zealand are all of us, and that is why we have a charter. The shareholders do not live in Toronto, London, or Washington. The stakeholders in Radio New Zealand are every man, woman, and child in this country. Radio New Zealand is about maintaining and preserving our culture, our nation, and our society. I think that by and large—albeit still with relatively limited resources, although under this Government the resources have been increased—in terms of what Radio New Zealand has, it does an excellent job. I am particularly enthusiastic that we acknowledge the different spiritual dimensions of our society and that National Radio acknowledges that. It is very enthusiastic about catering for a full range of age groups, so that there is not a crusty old National Radio that caters just for people like me with my very conservative tastes—and that is where Doug Woolerton and I would have a bit in common—but one that reaches out to a younger audience, and builds a younger audience over a lifetime.

I also think it is excellent that we focus on—I think this is very, very important, and I notice the Acting Minister is here in the Chamber with us, and I know that he will agree with me—the international radio service to the South Pacific, Radio New Zealand International, which may include a range of programmes in English and Pacific languages. That is a benchmarking and an underscoring of the very important role that New Zealand and our national radio service have, in terms of our immediate neighbourhood. Radio New Zealand is actually doing that, albeit it came about through Ministry of Foreign Affairs and Trade funding, etc., in a different funding stream from the usual broadcasting funding. Radio New Zealand has historically had a very proud and constructive record in the South Pacific and, of course, because it has a very significant listenership it is one of the important links between the South Pacific nations and New Zealand.

Unlike the speakers from the Opposition, I am enthusiastic about this bill. I know that it is a short bill, but I think it puts some very important, good, positive things into the Radio New Zealand charter. To those who do not listen to National Radio and Concert FM—and I am sure the Opposition members should listen to them—I say they should tune in some time, because they are exciting and diverse. I think National Radio and Concert FM are doing a very good job. I think it is important that the charter helps them. It is really wonderful to have radio that deals with the issues, looks at all sides of the issues, and does not just repeat some people’s prejudices.

Finally, I say I am enthusiastic about this bill. I will also place on record that I think the Minister of Broadcasting, Steve Maharey, has done a fantastic job in this portfolio. He has vision, and he has a passion for our national broadcaster. I wish Radio New Zealand well.

SUE KEDGLEY (Green): First of all, I say to those who were sneering at why we are considering this bill that it is my understanding the Government sought to put the provisions of this bill in a Statutes Amendment Bill. Members refused to do so, and required the debate we are now having. So we should not hear too much nonsense about why we are wasting our time here. It is because of the members of this House that we are debating this bill tonight. Also, there is a requirement in the Act that every 5 years Parliament consider the Radio New Zealand charter—and what an excellent provision that is.

So we considered the charter. Submitters to the Commerce Committee—ordinary New Zealanders—requested that we added the words “spiritual, and ethical” to the objectives. I find it absolutely fascinating that those words seem to create such anxiety and concern in this Chamber. What is wrong with considering ethical issues? Would that we did it more often, given there are so many issues to consider today. We have been looking at human-assisted reproductive technology, genetic engineering, and cloning. What are those issues? They are ethical issues that require ethical debate. Thank God that we are going to call on Radio New Zealand to provide us with some ethical debate. Thank God, also, that Radio New Zealand already does an excellent job of having discussions on religion, and so forth. I think that is absolutely excellent. It may have escaped some of the members’ attention in this Chamber that religion is a major issue of controversy and dissent in our world, and it would be great for all of us, I am certain, if we had some understanding of other religions. And if we had some debate about spiritual and ethical issues, I am sure that New Zealand would be all the better for it.

Like the previous speaker, the Green Party is extremely enthusiastic about supporting this bill. I think we have to remind ourselves that Radio New Zealand is absolutely unique in our media environment, in being a genuinely publicly owned medium. It is the only medium in New Zealand that is completely owned by the public. Television New Zealand is a strange hybrid of commercial and public service, but Radio New Zealand is genuinely a public service organisation. We should be very, very grateful for that. Thanks to the Maurice Williamson amendment in 1990, New Zealand is the only country in the Western World that allows total foreign ownership of media companies. As a result of that amendment, a handful of foreign companies own virtually all New Zealand’s media. We have Tony O’Reilly’s APN News and Media controlling most of the radio stations and the New Zealand Herald, and CanWest owning radio stations, and TV3 and C4. Rupert Murdoch owns Sky, and we have Kerry Packer and so forth. Basically all of our media are in foreign ownership. If all of our media are in foreign ownership, we have to ask why foreign owners would give a damn about New Zealand’s identity and culture. In the final analysis, they do not. Their bottom line is returning profits for their foreign shareholders.

So thank heavens that as an antidote to all the foreign-owned media in New Zealand and to counterbalance the foreign ownership of our media, we have one strong publicly owned medium, in the form of Radio New Zealand, with a charter that spells out that it must provide independent, impartial current affairs and news. We have in Radio New Zealand an organisation that is free from vested interests, and that does not always put commercial objectives ahead of its public service objectives. I think that we are incredibly lucky to have Radio New Zealand. It provides the only radio stations in New Zealand that one can listen to without being constantly interrupted by commercials. I think that is something that many, many listeners value enormously.

Hon DAVID BENSON-POPE (Acting Minister of Broadcasting): I am pleased to take a brief call. I would like to begin by acknowledging this House’s debt to my colleague Steve Maharey for his tireless and quite visionary work in this area. In that regard, I would like to thank one of the preceding speakers, my colleague Martin Gallagher, for the comments he made, and also the previous speaker, Sue Kedgley, for her enlightened comments.

I do not wish to take a great deal of the Committee’s time, but I would like to make some observations about the comments we have heard this evening. In terms of New Zealand First’s objections to this bill, in the form of Mr Catchpole, I guess the New Zealand community can only marvel at any objection to the words “a full range of age groups” being added to a charter of this kind. Like members of the Committee, I guess listeners will also ask themselves why anyone, let alone a political party, would have such an objection.

But of greater interest were the extraordinary objections from the National Party spokesperson on broadcasting. Ms te Heuheu earlier objected to the inclusion of the words “spiritual and ethical” in the charter. As a demonstration of the intellectual and moral bankruptcy of that party, I guess that is not entirely surprising. But what the Committee may be interested to share is the fact that during the discussion and correspondence around this bill, the National Party confirmed in writing that it had no objection at that time to the inclusion of the word “spiritual” in the charter. It did object to the word “ethical”, and that brings me back to my earlier comments about Mr Catchpole. Why one would object to ethical considerations in a document of this kind, or ethical considerations for a full range of age groups, one would have to wonder.

But I would like to thank the National Party for being so unaccommodating and not allowing this matter to proceed in the simple procedural way suggested by a Statutes Amendment Bill. In doing so, the National Party has allowed us another insight into its policy. It is not often that we see National Party policy, but in the same documents I am referring to, I can inform the Committee that National lodged a further objection to recommendation 9, which relates to Radio New Zealand International indicating that it would not support such a recommendation at all. For the information of those who do not have these documents, recommendation 9 recommends to the Government that the Act acknowledge Radio New Zealand International as an international radio service to the Pacific region.

I would like to thank the National Party for being so clear about its continued privatisation agenda for this service. I think New Zealanders across the country, not just listeners to Radio New Zealand, will be very grateful for yet another insight into how vast the policy gulf is between the parties in this Chamber.

DEBORAH CODDINGTON (ACT): Is it not interesting that we heard from Sue Kedgley of the Greens about all these foreign-owned media outlets in New Zealand, and the foreign owners who do not care at all about New Zealand? That must be why when picking up the Dominion Post and the New Zealand Herald every day, we see nothing of New Zealand news! It must be why when we pick up North and South and Metro every month we read nothing about New Zealand, because Kerry Packer does not care! If that is the case, why was Sue Kedgley on the cover of North and South? I think we need an explanation. Obviously, she is the favourite of Kerry Packer, or maybe it is because she is foreign-owned, too.

Hon Damien O'Connor: Some of the covers are shocking.

DEBORAH CODDINGTON: I agree with my colleague over there—some of the covers are shocking.

I would like to say why the ACT party did not agree with the word “spiritual”—not so much the word “ethical”—being included in the charter. It goes back to Marian Hobbs. In May 2002—believe it or not—Marian Hobbs wrote asking for permission to use it in the statutory amendments legislation. We all know that Parliament is meant to function and that it is not good to hold it up unnecessarily, but that legislation is meant to be used for uncontroversial matters. It is definitely controversial, whether or not we agree with it, to insert the word “spiritual” into a charter that is required to be adhered to by a State-owned broadcaster. The ACT party firmly adheres to the convention in this country that the State is secular and is not required to promote spiritual values. We already have radio stations and broadcasters that promote spiritual values. It is not the role of the State broadcaster to do that.

I would like the Minister to take another call to tell us why it is necessary to put these two words into the charter. Why is it necessary to have the words “ethical and spiritual”? We all know more or less what “spiritual” means, but what are we meant to take from the word “ethical”. In these days of relative morality, ethical can mean anything. It can mean anything goes. It can mean that anti-westernisation—taking out the Twin Towers—is just as relative and ethical as our condemnation of that sort of terrorism and behaviour. We start to get into trouble when we bring into a charter words that are nebulous and not clearly defined.

I always argue that if we want to save public broadcasting in this country, and if we believe in public broadcasting, then we have a duty as Parliament to scrutinise that public broadcaster and make sure it is delivering the conditions of its charter. Radio New Zealand’s charter has an obligation to objectivity and impartiality in its news and current affairs. A report was finished in December last year that two former directors of Radio New Zealand put their names to—John Iles and Dr Denis Dutton. It was a very thorough report, and it systematically showed that current affairs—the so-called features programmes of Radio New Zealand—were not adhering to the charter at all. They were overwhelmingly pro-interventionist as opposed to non-interventionist.

If one just takes a specific area like education—and it happens in all areas—a new policy would come out from, say, the Post Primary Teachers Association, and Radio New Zealand would run the statement without any dissenting opinion. A statement from National, ACT, the Education Forum, the Early Childhood Council, or the Business Roundtable would either be ignored or run with a dissenting voice.

That is fine. I am not saying that the centre-right view should be run unopposed, but the broadcaster should be consistent and have more voices of dissent across all ranges, because that is what we are talking about. We are talking about a publicly owned broadcasting company that has a duty to all of the public—not just the public who agree with the Government of the day.

The incumbent Minister of Broadcasting has been praised, but he did a very, very foolish thing in May 2003 when he actually used the premises of Radio New Zealand to make political announcements.

MARC ALEXANDER (United Future): I rise on behalf of United Future to support this bill, though not quite so effusively as some of the Government members. We support the charter in its present form because it appears to date to have served both Radio New Zealand and the public quite well. We do not believe it is the role of the charter to include a high level of prescription—largely because such provisions risk becoming obsolete rather quickly—and we do not think it actually does.

Some members have brought up the issue of attaching the words “spiritual and ethical”. I really do not understand why people have a problem with that. The word “spiritual”, for example, is not quite the same thing as “religious”. It is not putting forth a particular denominational line; it is simply reflecting some of the attitudes people have over and above those of the material world. Spiritual values do not necessarily encompass religious values, although the two may, on occasion, go together. The simple fact is that as a public broadcasting medium, Radio New Zealand is there to reflect public attitudes. Some of those attitudes, whether we like them or not, happen to be spiritual, and happen to be—funnily enough—ethical, although that is something that the National Party and the ACT party, for some reason, have a degree of difficulty with.

Now this is a point that also has not been considered: while the charter’s existing wording arguably encompasses spiritual and ethical development, the additional words are consonant with this clause of the charter, and Radio New Zealand’s current practice, and can be supported. This proposed amendment also reflects a recent change to the statutory functions of the Broadcasting Commission, New Zealand On Air, in an amendment to section 36 of the Broadcasting Act, and are consistent with the equivalent provision in the Television New Zealand legislation. It brings consistency to the two arms of broadcasting, and that is important. It is something that members over there seem to have forgotten, or have not included in their discussions.

Another aspect is children’s programme recommendations. Who can disagree with that? As a public service, Radio New Zealand ought to include some of our younger listeners.

Brent Catchpole: They do it now.

MARC ALEXANDER: What is wrong with having it included in the bill? What is the problem if that is part of what Radio New Zealand is supposed to do? It is one of the functions it is supposed to perform. In response to a submission from the New Zealand Writers Guild, the committee debated at some length the extent to which Radio New Zealand should be explicitly required to provide for children. In response to that, it now does.

One aspect I guess I am not quite so comfortable with is that there seems to be a problem with surveying just how well Radio New Zealand is doing in terms of delivering what it is supposed to deliver. It might sound like a small thing to the Government, but I do not think that this issue has been quite as well addressed as it perhaps could be. Section 7(2)(D) of the Act prescribes that Radio New Zealand shall take account of surveys commissioned from time to time to establish whether the audiences for the services provided by the public radio company consider that the quality and quantity of those services is being maintained.

Why does Radio New Zealand not go into the same surveys as every other radio station in this country? That is a regulatory aspect that I think this Government ought to take a look at. It ought to be part of the mix. If we expect the public of this country to put their hands in their pockets and pay for this service—and I have no problem with that—the least we should have is a transparent means of accountability to those very people. They do with every other radio station in this country, and there is no reason why Radio New Zealand should be exempt. The Government should take a cold hard look at that, because how on earth do we know how many people are listening, and whether the people who are not listening are turning off because the quality of programme delivery is not as consistent as it should be?

The accountability aspect of Radio New Zealand is very important, and I want to spend a little bit of time on it. We believe we are entitled to greater information—not just about the quality and type of programming, but also about the greatest indicator of how well Radio New Zealand is doing its job, which is audience share. It is severely disappointing that the Government has remained too timid to deal with the real issue surrounding Radio New Zealand surveys—its refusal to participate in the neutral sector surveys that determine actual audience share for all radio stations.

SHANE ARDERN (National—Taranaki - King Country): I rise to speak in opposition to the Radio New Zealand Amendment Bill on behalf of the National Party. If anybody is listening tonight, they will understand why the National Party is working so vigorously to get back on the Treasury benches. Listening to the contribution from the newly appointed Minister, the Hon David Benson-Pope, one would understand why a change of Government is necessary in this country.

Gerrard Eckhoff: It is vital!

SHANE ARDERN: It is vital for a change of Government in this country.

There are a number of questions we need to put to Mr Benson-Pope tonight, and I hope he will take a call and respond to them. What does he mean by “ethical”? Does he mean making a decision and then doing a U-turn on it? Does he mean signing paintings that they did not paint, then destroying the evidence before the matter gets to court? What does it mean?

When one looks at the legislation the Government is putting in here tonight, with the words “spiritual, and ethical”, one has to ask where this Government is going. I went back to the second reading to see what the Minister, Hon Steve Maharey, had to say. He said: “I pause for a moment on the matter of the spiritual and ethical elements put into this bill, which do not mean a religious denomination. It means that New Zealanders, in terms of programming, do have concerns about value issues, which may well be religious issues, and about issues of spirituality in the broad sense that represents the wide range of cultures that make up our society.”

Now that has made it absolutely clear, has it not? That has cleared it up for all of us. Now I understand what it means. Now we know—it is here in the Hansard. No wonder everybody is clear on this issue! Has anyone ever seen or heard so much gobbledegook about something? It is like talking about the principles of the Treaty of Waitangi. It is as vague as that. Nobody knows what it means.

If one goes to the Concise Oxford Dictionary, which my good colleague did, to try to find out what some of these terms mean, one will find that they are very accurately described. They do mean religious, and they do mean denomination. Well, maybe in the agnostic spiritual manner that is being applied here by the Prime Minister, there is a new meaning. I am sure the Minister will take a call and explain this to us, but from my perspective, it looks like social engineering. The socialists are at it again. In the only national-owned radio station, as the member from the Green Party pointed out, they are interfering in the most agnostic way. It is social engineering of the highest order.

One size fits all does not always work. What we have in this legislation now is a clause that says that it will cover the full range of age groups. What does that mean? Does it mean that in the morning we will be hearing Mickey Mouse, in the evening we will be hearing opera, and sometime in the middle we will have Heavy Metal? Is that what it means? I do not know. I know that my kids have a different taste in music to mine, and I know when they were younger they had a different taste to what they have now. I know that my parents had a different taste in music to mine, so does that mean that they will run the full spectrum of radio entertainment in terms of programmes? I do not know what it means. Maybe the Minister can take a call.

It looks like typical socialism to me—one size fits all; Parliament knows best; the Labour Government will dictate in the charter what the radio programme will do. It will not allow those who are in charge to come up with something that is sensible or ethical. It will not have anything like that—certainly not ethical. Does it mean—and I think this is a question for the Minister as well—that Radio New Zealand will no longer run any of the Labour Party spin, because clearly that is not ethical? Or does it mean that it will never ever report any comments from the Prime Minister of New Zealand, because there is a very high possibility that they will not be ethical? They will certainly be agnostic—there is a question about that.

There is one part of this legislation—I cannot go through my whole speech being totally negative, it is against my better judgment to do so.

BRENT CATCHPOLE (NZ First): It is a shame that Shane Ardern did not get his opportunity to put his positive spin on this bit! But I must thank the Acting Minister for taking a call and showing us just what this Government really does think. It is extraordinary. In fact, how ironic, how inconsistent, how bizarre, and how “Steve Maharey” this bill is. This Government and this Prime Minister refused to acknowledge grace before a State dinner. This Government and this Prime Minister refuse to acknowledge the Queen as the head of the Anglican Church.

Hon Damien O'Connor: Who cares?

BRENT CATCHPOLE: There we go—we have a member of the Government calling out “Who cares?”. This Government has put a motion to this Parliament to have the prayer removed from Parliament. I really must ask members, how ironic one can get when one has a Government that asks for the prayer to be removed from the proceedings of Parliament. There they are putting into this legislation the words “spiritual” and “ethical”. If Mr Benson-Pope thinks that that will overcome the irony of what this Government represents, then I really wonder what he has in mind for those two words. In reality this is a Government that does not recognise grace before a State dinner, it does not recognise the Queen as the head of the Anglican Church, and it does not want the prayer said before this Parliament. Yet the Government puts two words into a clause in this bill that expects us all to have an input into the spiritual and ethical side of Radio New Zealand.

It is unnecessary to put those words into the legislation. The Minister should seriously consider having those words taken out, considering the irony of this Government’s approach to the way it runs Parliament, the way it runs the State, and the way it considers the spiritual and ethical state of this country.

RUSSELL FAIRBROTHER (Labour—Napier): I move, That the question be now put.

GERRARD ECKHOFF (ACT): In coming late to this debate I am impressed, frankly, with the quality of the speeches coming from this side of the Chamber, and I say that in all sincerity. Because, as my colleague Deborah Coddington pointed out, we are meant to be, and I emphasis those words “meant to be”, secular in this Parliament. Quite clearly we are not. We say a prayer at the start of proceedings when the House sits, and some would start to perhaps question whether that is appropriate. We have many people in this Chamber of hugely differing values and spiritual beliefs. Is it offensive, therefore, for a Christian prayer to be said at the start of a sitting of this House? That is a question that I think we need to reflect on.

But I would like to ask the Minister in the chair to define for me, and the Committee, what a “value” is, as it is in this bill. We often hear the words “inherent values”—the inherent value of having a charter for Radio New Zealand. What is the inherent value there? I think that is a perfectly legitimate question, because I can tell the Minister what the inherent value of a square or a triangle is. It is very, very definable. A triangle, for example, has three sides. That is inherent, and we know that—we understand that. But to describe a value and try to implant it into legislation is a nonsense.

The Resource Management Act requires—I do not know the particular section—that we pay homage to some spiritual value of Māori. What spiritual value? That spiritual value of Māori in the Resource Management Act was bought for $1.5 million. How can one buy a spiritual value—yet it happens constantly under that Act? With my colleagues I am demanding to know what that spiritual value is.

I do know what a cultural value is in terms of radio. I am well aware of that. I would describe Hokonui Gold in Gore as having wonderful cultural values for those of us in the south and those who would tune in. Many of us are rural people, and that is a hugely cultural radio station. Jamie McKay and the team down there do a wonderful job expounding the values of the culture of the people of Gore and that region. Why is that radio station not State-owned? Why does the Minister not rush down, put a cheque on the table, and say: “Because you have these cultural values at Hokonui Gold, we have to buy you.”? It is arrant nonsense to even suggest that such things should happen. However, it is quite clear in the charter of Radio New Zealand that this socialist Government wants its tentacles to reach right into the boardroom and have a large measure of control over State-funded radio.

We all know that the Government is very left wing in its attitude. Those of us who happen to have a different point of view do not get anywhere near the same airtime as those who hold the same socialistic, and indeed, even communist, values that members of this left-wing Labour Government have. It is quite wrong to introduce concepts of spiritual values. The animist beliefs of so many of this Labour Government who talk about the mauri within a mountain or a river are arrant nonsense. The spiritual value comes from within oneself. It does not come from a rock, a mountain, or a river. It is the ability of human beings to understand and appreciate the beauty of nature. That is the spiritual value that is deep within one’s being. It is not something that can be put into a charter, and it is not for the Government to force the people of this country to adhere to such matters. It is quite wrong and a considerable amount of nonsense to try to do so.

Hon MARK BURTON (Minister of Defence): I move, That the question be now put.

PANSY WONG (National): I would like to remind the Minister at the beginning that this is a wide-ranging debate, that this side of the House has been very enthusiastic in opposing the bill, and that we have plenty more contributions. In fact, I was just about to caution my parliamentary colleague, ACT member Gerard Eckhoff, that ACT may be allocated more airtime on Radio New Zealand in future. Tonight the Labour Government is trying to introduce the word “ethical” into the charter. That means that a lot of the Prime Minister, Helen Clark’s, U-turns, spins, etc. may not be allowed to be broadcast on Radio New Zealand. Maybe that is good news in disguise, and ACT and National may be allocated more airtime.

I come back to the meaning of the new word, “spiritual”, that has been introduced into the charter. I remind the public that in the second reading debate on the bill the Hon Steve Maharey paused for a moment on the matter of the spiritual and ethical element and went on to say that “spiritual” does not mean a religious denomination. I am just hoping that the Minister will take a call to tell us when the Labour Government has taken over the task of redefining the meaning of “spiritual” as set out in the Concise Oxford Dictionary, which states that “spiritual” means “as acted on by God, divine, inspire”, so it does not quite have the same meaning told to us by the Hon Steve Maharey. I would like the Minister to take a call to clarify whether the Labour Government will commission a new edition of the Concise Oxford Dictionary.

I really want the Minister to take a call to reassure the public. The Minister Steve Maharey was really proud in saying that Radio New Zealand was forced to conduct a survey about the views of non-listeners and listeners as to what they wanted to hear on Radio New Zealand. I want the Minister to tell the public who the pollsters were who did the bad polling for the Labour Party. That company cannot be employed to do a survey by Radio New Zealand, because the pollster has been totally wrong in not telling the Labour Government that the issue that really concerns New Zealand is about separatism and race division in New Zealand. The Prime Minister, Helen Clark, was totally caught, because the pollsters failed to detect that from the survey it did. So I would really like the Minister to take a call to name the pollsters for the Labour Government and to make sure that Radio New Zealand does not go down that track and engage those pollsters. We would never find out what non-listeners or listeners to Radio New Zealand might want to hear.

The Minister also owes us an explanation as to why the Radio New Zealand Amendment Bill has been included in the urgency motion. The bill was first introduced on 23 December 2002. I guess that is pretty spiritual; it was close to Christmas 2002. It had its first reading on 1 April 2003, and we are debating it almost on its 1-year anniversary—1 April 2004—but the commencement date is not until July 2004.

What happened in the last year when Radio New Zealand did not include the words “spiritual” and “ethical” in its charter? I wonder what the listeners have missed out by Radio New Zealand not having those two words in its charter. The Minister had better take a call to explain to us, firstly, whether the Labour Government will commission a rewrite of the definition of “spiritual” that is contrary to the Concise Oxford Dictionary; and secondly, can the Minister reassure the public that he will not use the pollsters that the Labour Government used to conduct that survey?

Hon GEORGE HAWKINS (Minister of Police): I move, That the question be now put.

LINDSAY TISCH (Junior Whip—National): I raise a point of order, Mr Chairperson. I bring to your attention that this House has agreed that the debate be taken as one question on three clauses. The debate started at 10 past 9, so it has not been going an hour yet. A number of speakers wish to contribute to this debate, and I note that the Government has been moving closure motions. I ask that those speakers who have been seeking the call for the last hour be given that opportunity. I make the point very clearly. You were not in the Chair at the time, but it was by agreement of the House that this debate on clauses 1, 2, and 3 be taken as one question.

Hon Mark Burton: Speaking to the point of order, Mr Chairperson.

The CHAIRPERSON (Hon Clem Simich): I do not need any assistance on this one. I thank Mr Tisch. I was not in the Chair, but I am up with the play. I have noticed a number of closure motions from my right here. I am not to know before I call them whether it is a closure motion. If those speakers want the call, they will get the call, and I give no assurances. I will judge how the debate is going.

Hon GEORGINA TE HEUHEU (National): I certainly appreciated the Minister getting to his feet and trying to give us an explanation of the reason for these additional dimensions in the charter. But I have to say that I am none the wiser as to why, some time after the original charter was prescribed by this Government, the Minister saw fit to make additions. But, of course, the additions that have caused the most reason for debate tonight have been the insertion of the words “spiritual”, and “ethical”. So on top of an already overladen charter brought in by the Minister in the early days of his responsibility, he has now seen fit to add a dimension that, in the Opposition’s view, is totally unnecessary and entirely inappropriate.

There are three grounds on which I object to it. The first is that some obligations are being put into the charter, on to a public broadcaster that, over the last 2 years, has had extreme difficulty delivering on the charter requirements and also with delivering within budget. It has had budget blowouts. It has had an emergency request for funding, and into that scenario this Minister has put some added obligations.

Secondly, these are add-ons. If the requirement for the broadcaster to deliver programmes that cater to both the spiritual and ethical dimensions of our community are so important, why was it not seen to be important at the time the original charter was developed? Why, if they are so important, are they now being treated as add-ons? The reality is they are not important. They are not appropriate. As I said earlier, we live in a multicultural society. How is it that this broadcaster can meet the needs of the Paimarire movement? How will it do that? What about the people from Islamic countries? How is it to deliver to those people? They are living in our country. They are part of the listening audience. How is the public broadcaster meant to cater to their needs? So what it will amount to is, no doubt, a bland coverage of what someone’s view is of the spiritual beliefs of New Zealanders. No broadcaster can cater to the spiritual beliefs of the multicultural society we now have in New Zealand. That is why we say that it is totally inappropriate.

Thirdly, these are requirements that should not be in the public arena, at all. If someone were to suggest to the compulsory school sector that it has an obligation to cater to the spiritual and ethical needs of our children—and why would one not say that; if one thinks a public broadcaster has that obligation, why not a public educator—we know that that would be a nonsense in any event. That is why we say that it is a nonsense to have these dimensions in this legislation. They are not proper or appropriate.

I have listened to colleagues reminding us about the fact that we no longer say grace at State banquets. When Queen Elizabeth II visited New Zealand, 2 years ago, and no grace was said at the State dinner in the Banquet Hall, I and a small handful of Māori who were there found it very offensive. Why is it that this Government imposes on the public broadcaster an obligation to somehow reflect the ethical and spiritual beliefs of the New Zealand community when, at a very important function, those beliefs are seen to be of no value whatsoever? The Queen as head of the Anglican Church was at that State dinner, and for some reason the Prime Minister saw fit to have the prayer removed, and it has been removed since.

Hon PAUL SWAIN (Minister of Corrections): I move, That the question be now put.

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

Ayes 70

New Zealand Labour 52; Green Party 8; United Future 8; Progressive 2.

Noes 48

New Zealand National 26; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata.

Motion agreed to.

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

Ayes 70

New Zealand Labour 52; Green Party 8; United Future 8; Progressive 2.

Noes 48

New Zealand National 26; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata.

Clause 1 agreed to.

The question was put that the amendment set out on Supplementary Order Paper 176 in the name of the Hon Steve Maharey to clause 2 be agreed to.

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

Ayes 70

New Zealand Labour 52; Green Party 8; United Future 8; Progressive 2.

Noes 48

New Zealand National 26; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata.

Amendment agreed to.

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

Ayes 70

New Zealand Labour 52; Green Party 8; United Future 8; Progressive 2.

Noes 48

New Zealand National 26; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata.

Clause 2 as amended agreed to.

Clause 3 Charter

The question was put that clause 3 be agreed to.

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

Ayes 70

New Zealand Labour 52; Green Party 8; United Future 8; Progressive 2.

Noes 48

New Zealand National 26; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata.

Clause 3 agreed to.

Bill reported with amendment.

Third Reading

Hon DAVID BENSON-POPE (Acting Minister of Broadcasting): I move, That the Radio New Zealand Amendment Bill be now read a third time. This bill represents the final step in the first 5-yearly review of Radio New Zealand’s charter. The Radio New Zealand Act, which incorporates the Radio New Zealand charter, is a major part of the public broadcasting landscape. This bill and the process of its development are part of the ongoing maintenance that is so essential as we keep our sights on the objectives of that charter.

In December 2000 the Commerce Committee was asked to undertake the review of Radio New Zealand’s charter, and it tabled its report on 21 December 2001. That report was supportive of the charter, and suggested only a few minor legislative changes to assist Radio New Zealand to engage fully with the spirit of its charter. The Government considered the report and agreed with its recommendations. As not all parties supported the inclusion of the proposed amendments in the Statutes Amendment Bill (No 3) of 2003, the Radio New Zealand Amendment Bill incorporates those amendments. The Commerce Committee called for submissions on the bill, and all submissions received were generally supportive of the proposed changes. The select committee did not recommend any change to the bill except to amend the commencement date of the bill to January 2004. This date was changed again during the Committee stage we have just sat through, to 1 July 2004.

The bill proposes three areas of change. Firstly, the bill proposes changes of wording to incorporate certain concerns raised by submitters during the initial review of the charter. Those changes were supported by the committee. It adds the words “spiritual, and ethical” to existing requirements that Radio New Zealand provide programmes that contribute to intellectual, scientific, and cultural development. Those additional dimensions recognise the wider role of public broadcasting in contributing to the information needs of New Zealand’s increasingly diverse society and culture. There is also a new requirement to include programmes for a full range of age groups, designed to ensure that the needs of children are included.

Secondly, the bill proposes requiring Radio New Zealand to provide an international radio service to the South Pacific—Radio New Zealand International. That gives recognition to the importance of this service, which has been part of Radio New Zealand’s operation for 13 years.

Thirdly, the bill proposes requiring Radio New Zealand to survey the views of non-listeners of Radio New Zealand, and to inform the shareholding Ministers of the result of those surveys as part of its annual report. That will assist in assessing Radio New Zealand’s performance against its charter obligations, and inform future programming decisions that may increase the size of its audience.

During the Committee stage, many members of this Parliament and others would have been rather surprised to hear the objection of members of the Opposition to the inclusion of the words “spiritual, and ethical” in that charter. Even more surprising is the announcement in the documents that background those select committee discussions that the National Party confirms its view that it would privatise, or sell in some way, Radio New Zealand in the future.

Radio New Zealand’s charter embodies its public broadcasting remit to provide innovative, comprehensive, independent, high-quality services for all New Zealanders—public services for all New Zealanders. That remit is of even greater importance to a diverse and democratic society in a fast-changing and globalised world. Reviewing the charter periodically is important to ensure that it continues to meet the needs of New Zealanders. Recognising that the charter has served the public well, this bill incorporates minor amendments intended to enhance the charter by encompassing Radio New Zealand’s role more fully. The proposed amendments in the bill extend and embed the responsive and interactive relationship with audiences that is so essential to the role of Radio New Zealand as a public broadcaster.

Finally, I would like to acknowledge submitters on the bill, the valued work of the members of the original Commerce Committee in their thorough and considered review, and also the members of the current select committee and the Committee of the whole House for hearing and progressing this bill so efficiently.

Hon GEORGINA TE HEUHEU (National): National opposes this bill, and it does so on a number of bases, and I want to refer to some of them. As I said earlier, the addition of spiritual and ethical dimensions into the charter is in our view unnecessary and inappropriate. They are seen to be add-ons; if they were at all important, the Minister of Broadcasting in his wisdom would have ensured that they were included right at the start. They were not there at the beginning when the charter was originally legislated for, and that they have been added in now suggests this is a Government that is trying to be all things to all people. Obviously, it is not succeeding—and it certainly is not succeeding now—and in imposing that obligation on the public broadcaster it loses sight of the make-up of our society, in my view.

Hon Member: We are a multicultural society.

Hon GEORGINA TE HEUHEU: Yes, we are a multicultural society, with many dimensions to it now, and for this Government to expect the public broadcaster to cater to the needs, both spiritual and ethical, of our multidimensional, multilayered, multicultural society is beyond belief, as far as I am concerned. How does a public broadcaster cater for spiritual beliefs that, at one end of the spectrum, include Ringatū or Paimārire, and at the other end of the spectrum include the beliefs of people now living in New Zealand who are of the Buddhist faith or of the faith of Islam? How is the public broadcaster expected to cater for that wide range of beliefs, and what examples is it to take in trying to do that, particularly from a Government that at every opportunity seems to want to take out some of the spiritual things many of us think are very important in the protocols and officialdom of our society—particularly in this Parliament? I am referring to the removal of the saying of grace at State dinners, and attempts by the Government to take out the daily prayer in this House.

But at the end of the day I do not expect any public broadcaster to cater for my spiritual or ethical beliefs. Those are mine, and mine alone. Every person in this House will have a view about ethics, and those views do not necessarily coincide. If a public broadcaster is to cater for the so-called broad ethics of New Zealand society, what are they? How is the public broadcaster meant to discern them from, particularly, the goings-on in this House? So those additions are a nonsense and inappropriate, and should not be included in this bill.

Secondly, the bill, as the Acting Minister of Broadcasting has said, imposes an obligation on Radio New Zealand to extend its audience to include “varied interests”, and to encompass “a full range of age groups”. In contrast to the first obligation that is being imposed, I guess that is a laudable responsibility. But, if we think about our society, how is Radio New Zealand to cater to the Polynesian population in south Auckland, or in John Tamihere’s area, for instance? How is it meant to do that? How is it meant to compete with Mai FM, in particular, in reference to those audiences? It is a laudable responsibility to impose, but, realistically, how is a public broadcaster meant to deliver on a charter that is so wide in its objectives, is vague in some of them, and, at the end of the day, seeks to impose one size on all? It will not work. We have to wonder whether it is more of the same from a Government that is intent on telling New Zealanders how to live their lives. The Government will use the public broadcaster to somehow impose its view of the world, in all its varied and many facets, on the population of New Zealand.

On the other hand, clause 3(4) is probably necessary. It is one area of the bill that I think may be of value—but only limited value. Clause 3(4) asks Radio New Zealand to commission annually surveys of its current audience, and those who are not part of its audience, as a way of getting feedback as to how it is doing in terms of both quality and quantity. As I said, that in itself probably has some benefit, but it loses impact when we have the situation whereby Radio New Zealand does not participate in industry-wide surveys. To get a real feel for how this broadcaster sits in the scheme of things, we really need some comparative surveys. Radio New Zealand is happy enough to survey its own audience, but seems reluctant to participate in industry-wide surveys that would give the public of New Zealand—especially the taxpaying public—an idea of just where Radio New Zealand sits alongside the many other radio broadcasters in this country.

All in all, I think it is an abuse of this Parliament that this bill has sat here for nearly 18 months. As I said, it adds on things that, if they were really important, the Minister of Broadcasting—who has received a lot of praise from his colleagues this evening—ought to have made part of the original charter. He did not. Those additional obligations have been imposed at a time when Radio New Zealand has been struggling and losing audience. Although at the time of the end-of-year financial review some assurances were given that things were improving, we have yet to see that. We have also yet to see how Radio New Zealand will balance the tension between appealing to a wide audience, being interesting and innovative, and all of those things, while still delivering on a charter imposed by this Government, which seems absolutely besotted with charters. Charters cost taxpayers’ money. That is our money.

That is why the National Party will keep this organisation under close scrutiny. We must do that on behalf of the public of New Zealand. At the moment, Radio New Zealand serves a very limited part of that listening audience, and we will be watching to see whether it improves over the coming time.

MARTIN GALLAGHER (Labour—Hamilton West): I rise to support this bill. I note that the previous speaker was at the opening of the Māori Television Service. I commend her for being there, but the Māori Television Service will not be the only broadcasting entity under threat should there be a change of Government. I call on members opposite to deny categorically, right now, that they will do to Radio New Zealand what I think they want to do to the Māori Television Service. I want you also to deny that you will do to Television New Zealand what you intend—

The ASSISTANT SPEAKER (Hon Clem Simich): Order!

MARTIN GALLAGHER: I challenge the Opposition National Party to categorically deny that it will hock off Radio New Zealand, just as it will hock off Kiwibank, hock off Television New Zealand, and hock off a number of other State-owned enterprises in this country. I admire Georgina te Heuheu for at least being at the opening of the Māori Television Service. I know she believes in that service, and I know that, in her heart of hearts, she believes in Radio New Zealand and Television New Zealand, but the rest of her colleagues do not. Although we are hearing a lot of mealy-mouthed words about the Radio New Zealand charter, it is all just pinpricking. I believe there is a real threat that right now National, in its policy rooms and back rooms, is hatching a plot to hock off Radio New Zealand. This Government will save Radio New Zealand and keep it being the cultural icon of this country.

BARBARA STEWART (NZ First): It is a great honour to follow a contribution like that of Mr Gallagher. It is not often that we see a contribution like that to the debate from the Government. I rise on behalf of New Zealand First to speak to the Radio New Zealand Amendment Bill, and to tell Mr Gallagher that New Zealand First will not support this bill, despite his rendition. We believe that this bill is a backward step for broadcasting, and we can see no good reason for it, at all. New Zealand First does not believe that the charter for Radio New Zealand needs to be modified in this way, at all. We believe that the charter has been reviewed principally in order to ensure that it is a model of political correctness in every way. The bill is totally ludicrous. There is not even a definition of “spiritual, and ethical” development. The bill is a mere 1½ pages in length, and was not even changed by the Commerce Committee—including those words “spiritual, and “ethical”. I wonder how many definitions of “spiritual, and “ethical” development we will hear from Radio New Zealand. We all have our own definitions, so there will have to be many definitions. Even if the broadcaster goes 24/7, it will not meet everybody’s needs in that way.

New Zealand First believes that this bill is an absolute nonsense and a waste of parliamentary time, particularly under urgency. We have spent far longer on debating this bill tonight than it took the select committee to consider the bill. I see that the select committee took only 14 minutes. That really makes one wonder how important this bill is, particularly as it has languished on the Order Paper for months—since April 2003. It really does make one wonder. Will this bill change the lot of New Zealanders? No, not at all. How many variations of spiritual and ethical belief will we hear from Radio New Zealand? We do not know that. There is an infinite number of such beliefs. How will this bill advance the lot of New Zealanders? It will not do so, at all. This bill basically raises far more questions than it will ever answer. Also, what are the delivery outcomes for ensuring that the charter is met? It will be difficult for Radio New Zealand to even work out whether it has met the requirements of this legislation. To be fair to the people of New Zealand, all people’s views have to be met, but the reality is that those views are all so diverse that that is an impossible challenge for Radio New Zealand to meet. It is interesting to note, too, that we see those dimensions creeping in to all parts of our legislation.

This is a very sad day for Radio New Zealand. It is sad to set up an organisation to fail, despite its very best attempts. This charter is so wide and vague that it will not work. It is a balancing act at the very best of times. It reminds me of this statement by Winston Churchill: “Success is the ability to go from one failure to another with no loss of enthusiasm.” That is what Radio New Zealand has been lumped with tonight. We know for a fact that the number of Radio New Zealand listeners is decreasing, and we would be really interested to hear—and we have not heard this tonight—how the words “spiritual, and ethical” in the charter will reverse Radio New Zealand’s disastrous ratings. The charter appears to be of no value in that regard. What have we seen since its introduction? We have seen a revolt. People do not want to be told what their spiritual and ethical values are. They do not want to follow through on the charter, and they have voted with their fingers by getting up out of their chairs and changing from listening to that oh, so totally politically correct radio station. It does not matter what is put in the charter. It will not help Radio New Zealand at all, because it cannot meet the requirements of the charter.

Clause 3(4) provides, in new paragraph (d) to be inserted in section 7(2) of the principal Act, that surveys will be commissioned annually of “persons who are members of its current audience to establish whether those members consider that the quality and quantity of its services are being maintained in accordance with subsection (1)”, and new paragraph (e) goes on to add “surveys, commissioned from time to time, of persons who are not members of its current audiences.” Just from what I have heard tonight, I believe it will be far easier to carry out surveys in terms of paragraph (e)—“... commissioned, from time to time, of persons who are not members of its current audiences.”—than it will be to survey people who are actually listening to Radio New Zealand. We agree with the implementation of surveys; that is one of the few parts of the bill that we agree with. But then we must ask why the surveys are not carried out like those carried out on other broadcasting stations. The State broadcaster definitely has a totally different set of rules for its operation from anybody else.

This bill is appalling for Radio New Zealand. The bottom line is that Radio New Zealand cannot be all things to all people. We can see that from the number of listeners who are dropping off—who are not listening to Radio New Zealand. That is absolutely appalling. If it were a private radio station, we would see many changes. Heads would roll. The indicators of such a loss of audience would inspire some sort of action on the part of the directors of a private station. But do we see any action being taken by Radio New Zealand? No. It appears to be accepted that Radio New Zealand is required by the charter to provide programmes that other radio stations do not provide, and that many of those types of programmes will never generate a large number of listeners.

Does anybody really care about the loss of the listeners? It does not appear so. When we read the performance targets of Radio New Zealand, we find that they do not inspire the confidence of any New Zealander, with a goal of losing no more than 10 percent of the previous year’s listeners. How long will it take before nobody listens to Radio New Zealand? If it sticks with that target, its audience will be halved within 6 years, for a start. The loss of listeners is a big indication that there is something very wrong with the public broadcaster, and the charter will not correct that. There are impossible compliance challenges for Radio New Zealand in the charter. In fact, any organisation would be extremely brave to take this type of charter on.

The bill is not really about changing the role of Radio New Zealand. All we are seeing, as the previous speakers have mentioned, is a tinkering with the charter by adding the words “spiritual, and ethical”. A large amount of money has been spent on implementing the charter. It would have been far better spent on modernising the equipment so that people could get a better level and quality of broadcast, rather than tinkering around with “spiritual, and ethical” considerations.

New Zealand First will not be supporting this bill. We do not like to see organisations being set up to fail.

SUE KEDGLEY (Green): As I said earlier, Radio New Zealand is unique in our media landscape. It is the only medium, aside from Māori Television, that is in genuine public ownership. As I also pointed out, we have a highly unusual situation in New Zealand with regard to our media. We have no rules to limit the size of any media company or cross ownership between the different media—between television, newspapers, and so forth, so we have a lot of cross ownership—and we are the only country in the Western World that allows total foreign ownership of all our media companies. That is thanks, of course, to Maurice Williamson and the previous National Government in 1990, when they wanted to allow the complete foreign ownership of TV3. As a result of National’s contribution of allowing 100 percent foreign ownership of all our media, we basically have four foreign, multinational companies controlling all our media—virtually all our radio and television stations, except for Radio New Zealand, TVNZ, and Māori Television.

I think we need to reflect for a moment on how fortunate we are to have one radio station in New Zealand—one broadcaster—that is totally driven by public objectives rather than by commercial objectives, and that sees listeners as citizens rather than as consumers to whom it is trying to peddle things to buy. The truth of the matter is that the purposes of a not-for-profit organisation are vastly different from those of one whose objective is the pursuit of profit. That is why we have public service broadcasting. We have seen the helpless confusion in the TVNZ hybrid. We have been discussing animal-human hybrids in the Health Committee, and TVNZ is one of those bizarre hybrids—part commercial, and part public service. It cannot seem to work out which parts are which, and whether it should be pursing public-interest or commercial objectives.

To have Radio New Zealand is something to be deeply, deeply grateful for—that we have one radio broadcaster not owned by any commercial entity and that does not constantly interrupt its news and programmes with advertisements for this or that commercial product, and that we have a radio broadcaster that does not have commercial sponsorship. We do not have “Charlie’s Morning Report” or “Mitsubishi’s Linda Clark”. In fact, we have a radio station that has no vested interest—no commercial pressures—and that is a counterbalance to the incredible private ownership of all the rest of our media. We need to keep that in perspective, and to be deeply grateful for Radio New Zealand—and, indeed, for its visionary charter.

Gerry Eckhoff complained that those of us with different views do not get a look-in on Radio New Zealand. He was implying, somehow, that there was a bias against the ACT party. I think that would be extremely hard to try to prove in any way, because I truly believe that Radio New Zealand is fair and independent. But that reminded me that the other day it was revealed that the editor of the National Business Review was providing media training for Don Brash, the leader of the National Party. In any other country, that would have created an absolute scandal. A so-called independent journal in New Zealand—a supposedly credible newspaper—was providing media training to the head of the National Party in New Zealand. If this were any other country, that would have been seen as a total scandal—as an indication of the complete and total bias of the National Business Review. But there was barely any concern about that, presumably because so much of our media is in private ownership. Our media are owned by four or five multinational corporations, and we think that is normal. We do not expect to have truly impartial, balanced media in New Zealand, because the truth of the matter is that almost none of our media have a specific obligation and mandate in their charter to be balanced, independent, and comprehensive in their news and current affairs.

We have heard a lot of whimpering from the Opposition about Radio New Zealand. I guarantee that almost every single speaker tonight—and indeed, every member in this House—listens to Radio New Zealand. Members will be glued to Morning Report morning after morning. Tomorrow morning, there they will be, listening to Morning Report and everything else, yet here they are, whimpering on about Radio New Zealand. They know that it is outstanding and is one of the only organisations that provides truly comprehensive, independent current affairs and news in New Zealand. I think we have had a lot of weasel words from people who, I guarantee, spend a great deal of their time listening to Radio New Zealand.

We tend to focus a lot on television. A lot of debate goes on about television, but radio is very immediate and has a very wide reach. A dollar spent on radio goes far further than a dollar spent on television. In America, at the recent public service television conference that the member for the National Party referred to earlier in this debate, people were talking about how there has been a renaissance in public service radio in America and other countries. I predict confidently that we will see a renaissance in Radio New Zealand, which was rather savaged in the 1990s. I think it lost 20 percent of its staff. Radio New Zealand was starved of funding in the 1990s. Fortunately, it has now had some proper funding, and can do what it was set up to do, which is set out in its charter: to inform and engage New Zealanders through providing challenging and innovative radio. I would go so far as to say that Radio New Zealand is innovative and does provide a wide range of programmes.

It is good that we are adding this little dimension that has got so on the nerves of members of Parliament here, to my absolute astonishment. As a result of the submissions that were made in the Commerce Committee, we are now adding to the charter that Radio New Zealand should provide programmes that also look at spiritual and ethical issues. We have heard a lot of cant about that—that we are undermining the secular State, and all the utter drivel said in the House tonight. This bill does not undermine the secular State. All it states is that amongst the programmes that Radio New Zealand broadcasts, it will consider including ethical issues. One would think it was a radical, crazy idea to have a radio station that would consider ethical issues. We have seen the Opposition’s horror that a radio station should have to examine ethical issues. Others have made this point: is it that some members have lost the ability to understand the importance of ethics in our society?

And what is wrong with looking at spiritual issues? In a world that is riven with conflict over religious and spiritual issues, I would have thought it was a great asset that we have a radio station that, as well as doing all the other things it does, such as providing a comprehensive, balanced, and authoritative current affairs, and an independent voice, also looks at the spiritual and ethical dimensions of life. Is there something wrong with that? Is it only acceptable to be rational and logical? Are we no longer able to think of other ideas? No one has any objection to having commercial objectives, but somehow we all feel uncomfortable about and sneer at the thought of having ethical or spiritual objectives. That is very, very sad.

The Green Party does not share those concerns. We are absolutely delighted to support this bill, to support Radio New Zealand, and to support the addition of the words “spiritual, and “ethical” to the charter. We believe the Opposition members do not actually believe some of what they have been saying, and that they would agree with the Green Party that Radio New Zealand is one of the only independent voices in New Zealand.

DEBORAH CODDINGTON (ACT): There is only one radio programme worth listening to in the mornings, and that is Newstalk ZB, especially on Tuesday mornings at 8.15. It is the most informed political comment in the country.

Katherine Rich: Who is the host?

DEBORAH CODDINGTON: My colleague has asked who the people on it are. They are the Hon John Tamihere and myself. So I plead guilty. I might be the only person in this House who does not listen to State radio in the mornings. I listen to Newstalk ZB.

Do members know why private radio stations do not need a charter? They do not need a charter because they actually adhere to the objective of this charter, which Radio New Zealand does not adhere to. They are objective and they are independent, and that is because they participate in industry surveys, and they get the message very quickly, very sharply, and very painfully—because it affects them in the pocket—if they are not delivering what the customers want to hear. I would argue that the news services of Global News or Newstalk ZB were more objective and fairer, and had more voices of dissent, than State-owned radio.

I did not get to have another call in the Committee stage, but I wanted to continue talking about this report that two former directors of Radio New Zealand, Dr Denis Dutton and John Isles, put their names to. It was a survey of feature programmes on Radio New Zealand. It was a very fair survey. It did not seek to establish whether there was bias in Radio New Zealand; it just sought to establish whether there were enough diverse voices, and whether, as a public radio, it was reflecting the voices of the public. As Sue Kedgley has so rightly pointed out, it is owned by every taxpayer in New Zealand, and, through Parliament, its adherence to the charter is scrutinised. This report roundly recommended and concluded that Radio New Zealand at the moment is not adhering to its charter.

The Minister of Broadcasting has done a number of things that compromise Radio New Zealand severely, so I do not blame the people at Radio New Zealand for this; I blame the Minister. In May 2003 the Minister held a function on the premises of Radio New Zealand, and he said to the staff that they “had every reason to feel nervous, bullied, and uncertain under the previous administration”. State-owned broadcasting should be robust enough and independent enough to survive a change in Government—and there will be a change in Government, to the centre-right. Radio New Zealand must be robust enough to sustain that. If people like Martin Gallagher, who gave one of his rare but welcome vein-popping speeches—

Simon Power: It was his maiden speech.

DEBORAH CODDINGTON: It was a wonderful speech. He was passionately declaring his loyalty to save public radio. If that is the case, that broadcaster must be able to sustain a change of Government. The Minister has been compromising it. He said: “Under the National Government, Radio New Zealand struggled against political reluctance to maintain its funding, and through public pressure and its own lobbying managed to secure the continuing existence of two networks. Many of you here will have taken part in those battles, because you know that public radio is worth fighting for.” I question the wisdom of the Minister of Broadcasting allowing Radio New Zealand to be used for the delivery of such an overt political message. It is questionable, especially when concerns of political bias are levelled at that organisation.

The Minister’s theme that public radio is under threat from its political opponents does appear to have currency with the broadcaster. The broadcaster has, clearly, been influenced by the Minister to take his views on board. The website asserts that this is “a time when the whole concept of public radio is under attack”. The Radio New Zealand statement of intent for 2003-04 declares, under the heading of “Strategic Issues”, that the institution of Radio New Zealand was “eroded” during the 1990s and needed “rebuilding”. There is not a lot of wisdom in the State broadcaster putting issues like that—a criticism of the previous Government—on its website when it is required to be independent, fair, and unbiased. It is expressing a clear political and philosophical view. That is why I believe that it is not adhering to the charter at the moment, that is why I do not think we should be adding anything more to the charter, and that is why the ACT party did not support this amendment to the charter going in the Statutes Amendment Bill.

Ms Kedgley seems to miss the point there. She said that we are whinging on about the State being secular. Well, those issues of spirituality should be required to compete in the marketplace of ideas with their own funding and support, and not be supported by taxpayer funding. That is the point we make. Statutes Amendment bills are meant to be used for non-controversial issues, and we have seen from the debate tonight that this issue is far from non-controversial.

The survey that Dutton and Isles authored and commissioned showed that the voices of some sectors of the public are not aired on public radio. There are no voices of market liberals, for instance. There are very few voices of the centre-right. There are a few voices of the conservative-right, but, certainly, if one considers market liberals—the voices of freedom, the voices that are pro-capitalist—one finds they are never heard on public radio. Public radio is not representing a large number of the community out there, and probably that is the sector of the community contributing most to the taxes that fund public radio.

I say that if this Government is serious about protecting public broadcasting, and if the Greens are serious about protecting public broadcasting, then they have to face up to the fact that it is not as glorious, wonderful, and perfect as they think it is, and that it needs to be a robust and independent organisation that is already sticking to its charter, rather than more things being put in the charter, and it being put under even further pressure and set up to fail.

MARC ALEXANDER (United Future): I rise to support the third reading of the Radio New Zealand Amendment Bill. I will try to keep my voice down a little, because I know that some of us are actually trying to do some work.

Simon Power: Some of your colleagues are trying to sleep.

MARC ALEXANDER: Not some of my colleagues; in fact, some Labour members were trying to go to sleep, and now they are off to bed, I think. The bill covers three aspects of Radio New Zealand operations. Briefly, the first is amendments to the charter to encourage Radio New Zealand to contribute towards New Zealand’s spiritual and ethical development. A lot of people have a bit of a problem with that, and I do not understand why. Commercial radio stations have a charter, and their charter is money. They go after it. They provide what they need to get the ratings they need, so that they can get advertising dollars. That is their charter; that is their mandate. I think Radio New Zealand has a slightly different focus, and that is fair enough.

Secondly, there are amendments that require Radio New Zealand to feature programmes that provide for varied interests, including, now, a full range of age groups. Who can complain about that? This broadcaster is a public broadcaster. We should be looking for a public broadcaster to look at a variety of interests—ethical and spiritual, different age groups, and the like. That is something commercial radio stations frequently do not do, because that is not where their dollars are. That is not what their charter, if one can call it that—the financial incentive—covers. I am not knocking the financial incentive. I am absolutely in favour of advertising being the driving force of commercial interests, but I am suggesting that there is a place for a State-sponsored radio station to provide those things that other outlets simply cannot do.

The last amendment of substance requires Radio New Zealand annually to survey not just its existing audience but also attitudes amongst those who do not currently listen to Radio New Zealand.

Some of the charter prescriptions do seem a little bit woolly, but that is actually their strength, in some ways. They should not be seen as prescriptive. They are really just an acknowledgment of aspects of our lives other than just the material. The broadcasting mandate of Radio New Zealand is the public, and, whether we like it or not, the public do have spiritual and ethical values. Those against these provisions have the difficulty of providing a rationale against the use of the words “spiritual” and “ethical”. It is not driving a particular dogma down anybody’s throat; it is simply recognising that aspect of society, which sometimes goes unacknowledged by the market-driven providers of radio. I am surprised that those who want to place, for example, Treaty of Waitangi obligations in legislation, can possibly be against the lesser consideration of that which is spiritual or ethical. Is that not the basis of Māori Television—something we are actually against? But I do not think we can complain too much about the provision of both spiritual and ethical development; too much time has been spent debating that particular issue.

The amendment to the Radio New Zealand charter brings some consistency in terms of the programming requirements for two publicly owned broadcasting media—Television New Zealand’s charter and, now, the charter of Radio New Zealand. It brings consistency to both. Clause 3(2) requires Radio New Zealand to provide programming that caters to “a full range of age groups”, and it is particularly pleasing that that provision is included, as it will ensure that Radio New Zealand provides programming that is specific to child listeners and not just to the elderly.

One of the ongoing issues on which we have sought resolution is the issue of accountability by Radio New Zealand to its public. That is something that, for private providers, is accomplished through the market mechanism. This bill requires Radio New Zealand to survey not just its audience but also its non-audience, so that it might delineate the wishes of the rest of the radio-listening public, provide for their interests, and attract new listeners accordingly. This amendment is a commendable attempt; however, we are severely disappointed that the Commerce Committee has remained too timid to deal with the real issues surrounding Radio New Zealand’s surveys. It is, however, an operational matter; nevertheless, it should compete on a level playing field. An ACNielsen survey recently found that one in five radio listeners listened to either National Radio or Concert FM. It would be very interesting indeed to see if a comparison with the monthly commercial radio surveys showed there is consistent listenership of Radio New Zealand, yet we do not know that, because Radio New Zealand has decided not to take part in the industry’s standard surveys. Why not? It should. The select committee has gone so far as specifying that Radio New Zealand must undertake annual surveys of its audience of a quantitative and qualitative nature; it would have been easier to specify that Radio New Zealand take part in regular, industry-wide radio audience surveys. It is disappointing that the committee has not addressed that, and, accordingly, I think Radio New Zealand will continue to kid itself about its true level of public support until it faces reality and subjects itself to the scrutiny of the regular, industry-wide surveys. It is that point that I am surprised has not been picked up to a much greater extent by the Opposition.

United Future will be supporting this bill. However, that support is with some reservation.

KATHERINE RICH (National): As I rise to speak to the third reading of the Radio New Zealand Amendment Bill, I must say that it was very interesting to hear the Acting Minister of Broadcasting’s speech. Never has a Minister read so much and said so little. Basically, when we listen to what the Minister has said we are left with the impression that everything has gone along swimmingly at Radio New Zealand, and that this Government has an unblemished record. Well, I think that members on this side of the Chamber know that is not the case, because, despite a lot of rhetoric about Radio New Zealand, this Government did at one stage cut its news budget, and the company has had a long stream of employment disputes. We need mention only the names of Lynne Snowdon and Sean Plunket to remind listeners that Radio New Zealand has not been a happy place over the last 4 years or so.

We have been looking at the Radio New Zealand charter for the last 4 years, and it is interesting that we are debating what is a two-page bill in urgency. I must say that there has not been a groundswell of support for this bill. There have not been protests in the streets, and there have not even been calls, or emails, or letters from listeners demanding that we get this bill through the House. I imagine that most Radio New Zealand listeners would not even know that this bill existed, but here we are in urgency putting it through.

I think it is worthwhile looking at what this bill tries to achieve. Although the member from the Greens says it is good to have a radio station that will evaluate ethical or spiritual issues, that is not what this bill is about at all. This bill is about putting into the charter a requirement to reflect the ethical and spiritual needs of New Zealanders. The Acting Minister was challenged during the Committee stage to tell the Committee what that meant—what did the Government think were the ethical and spiritual needs of New Zealanders? I think one thing that we have established is that New Zealanders are not all the same. Certainly, not every New Zealander chooses to listen to Radio New Zealand. Some of the listenership measurements are actually quite small, and in some major metropolitan areas Radio New Zealand is lucky to get 5 percent of listeners. So a lot of New Zealanders are not choosing to listen to Radio New Zealand. We need to have explained to us how this new addition to the charter would make any difference. One of the things that we understand is that although those two words will be inserted into the charter, very little will change in terms of what programming is offered by Radio New Zealand.

It is also worth looking at the new requirements to carry out surveys. It was not rocket science, but during the select committee process we asked Sharon Crosbie and officials why Radio New Zealand had pulled out of the national survey by ACNielsen. We were told that it was too costly—it cost $100,000—and that Radio New Zealand was not competing with other commercial broadcasters. We asked how, in that case, Radio New Zealand would know what listeners want to hear and how listeners were judging it. It told us that it would do its own survey. Interestingly and coincidently, the survey cost $100,000. Rather than talk to a wide range of people, Radio New Zealand spoke to just those who listen to Radio New Zealand. We asked whether it was obligated also to interview and survey those people who do not listen to Radio New Zealand, because one of the things we are seeing with the listenership figures is that the number of people tuning into Radio New Zealand is actually decreasing each and every year. A startling thing about Radio New Zealand is that one of its objectives is not to lose more than a certain number of listeners every year. In our view, that is a bit like a turkey looking forward to Christmas.

It is not the role of State broadcasting to tell us what to think, or to reflect what our ethical values are. Mind you, if we are going to discuss ethics, it might be of use for Radio New Zealand to start giving a few messages to Labour members, such as not lying and not signing paintings that they do not paint themselves. Those may be some of the ethical issues that are addressed by this new requirement to reflect ethical needs. What we are seeing here is social engineering. It is the sort of patronising approach to radio listeners that says somehow the Government knows best, and that it can insert a requirement for the broadcaster to reflect what it thinks should be our ethics and our spiritual needs.

In terms of Radio New Zealand, I do not think there is any doubt that there is a huge amount of support for the station and for public broadcasting in this country. Government members would have us believe that they have a monopoly on interest in public broadcasting, but that is not the case. When we look at the cost of bringing this legislation through the House, I think we have to be very careful not just to bring through what is feel-good legislation. This bill is not about governance or structure, and it is not about changing the nature of the service; it is about changing a couple of words in the charter. I think it is quite clear that this Government is totally obsessed with charters. If something moves, the Government thinks it needs a charter. We have seen the way that it has constrained Television New Zealand and involved that broadcaster in what is a political debate. I think we are also seeing the same kind of thing with Radio New Zealand. It is the role of a State broadcaster to reflect a certain part of the community, but it is a sad day when we look to radio to try to direct us about what we should believe and what our spiritual and ethical needs should be. It is the sort of “We know best.” approach that we are very used to seeing from this Government.

Looking at the way that the Acting Minister, Mr Benson-Pope, has handled this particular bill through the House, I think it is not a credit to the work that Minister Maharey has done to date. Mr Benson-Pope is not even in the Chamber listening to the debate. After reading his speech he decided that that was all he was required to do. I think he drew the short straw in the Labour Cabinet. He probably felt he had the credentials to be the Minister of Broadcasting. I imagine he piped up and said that he listened to the radio, and that was probably all that was required.

We all have expectations of State radio. I do not agree with the Green member that it is always independent, but I think it is up to all members of this House to challenge what is broadcast, when required, and to hold all broadcasters to account to make sure that they do cover a wide range of views. But what we are seeing here with the Radio New Zealand Amendment Bill is just a lot of expense. A two-page bill is being dealt with under urgency, when it does little more than add a couple of weasel words to an overly bureaucratic charter.

JILL PETTIS (Labour—Whanganui): I am pleased to rise in support of this bill, because I support the changes to the charter. I listened very carefully to what the previous speaker had to say, and I am sorry she missed what is the intent of the changes to the charter. I believe they are about informing people. We in the Government like people to be informed. We like to encourage people to think and debate the current issues that are topical today, both nationally and internationally. We are lucky in New Zealand that we have a good choice of radio to listen to. Talkback does not appeal to me, but I am an avid listener to Radio New Zealand, and I support the programmes it is putting out to New Zealanders.

I bridled a little bit at the member’s comment about social engineering, and her accusation that that only ever happens when this Government is in power. I have to ask that member what she considered the policies of the former National Government were. If that was not social engineering, I do not know what is.

The international radio service that is provided to the South Pacific is incredibly important to a lot of people who are geographically isolated. That in itself is very valuable. I am pleased to support this bill, and I look forward to it going through the House quickly.

SHANE ARDERN (National—Taranaki - King Country): Finally, I get to make a contribution in the third reading of the Radio New Zealand Amendment Bill. I rise to speak in opposition to the bill, and I do so for a number of reasons. I was interested to hear the contribution from the previous speaker, and also the contributions from both the Greens and United Future. Those members talked about the importance of having an independent, State-owned, subsidised radio station. I am not sure whether I am philosophically in agreement with that, but that is not what the debate is about. The reason why we are opposed to this bill tonight is the very reason that they put forward—that this radio station is valuable and we want it to survive.

There is an old cliché that goes with socialist Governments: if it moves tax it; if it keeps moving tax it a bit more; and if it stops moving, subsidise it so we can get it moving again. This is a subsidised radio station to start with. The Government cannot apply that cliche, so what does it have here? The Government has a charter that is so convoluted, and so difficult for anybody to ever achieve its objectives, that it will strangle the radio station that way. The Government cannot tax it until it is dead, so it will strangle it with its charter.

Words fail me, but members should look at some of the social engineering and rhetoric in this charter. It could be introduced only by a socialist Government, such as the one on the other side of the House. The words “spiritual, and ethical” are in the bill, but the Minister said in the first reading that those words do not mean religious denomination. I was confused and not quite up to speed with what they mean, so I went to the Concise Oxford Dictionary to find out. They do mean religious denomination, so obviously, in the new Radio New Zealand charter, the Labour Party will recreate a new Concise Oxford Dictionary according to the principles of Helen Clark. That is what it will do.

We have had a bit of discussion recently in public and in the media about the whole issue of religion according to the Prime Minister. She says she is agnostic. Maybe one of the members on the other side—the Minister over there—will take a call and clear some of this up for us. Maybe he will, maybe he will not—there has been no evidence of it so far. Maybe “spiritual” means agnostic, but that is not what the Concise Oxford Dictionary says. That is the whole basis of our opposition. The fact is that this will create endless ambiguity around what Radio New Zealand is supposed to deliver. “Spiritual” means a lot of different things to a lot of different people.

So then we turn to Radio New Zealand. This legislation says that Radio New Zealand has to meet the needs of all age groups. So it is going to meet all spiritual needs and the needs of all age groups? I am really starting to despair. It is a bit too late, at 11.30 p.m., for those at home in Taranaki - King Country to be listening to this debate on their valve radios, but those listening to their cowshed radios in the morning will not understand for one moment what they mean by the Radio New Zealand charter. They will not have a clue what it means.

United Future surprised me when its members said in very passionate speeches that they supported the passage of this bill, and the introduction of the words “spiritual, and ethical” into the charter. I always understood that for United Future the words meant religious denomination. Obviously, the public of New Zealand are confused about what United Future stands for. I thought that is what the words meant. Clearly, they do not, so that is a revelation to those who might be listening out there.

One part of this legislation might be useful, and it is that the Government will conduct surveys to find out what both the listening public of Radio New Zealand and non-listeners think about the service. But the problem with that is that this Government has conducted many surveys in its term. It listens to the ones it wants to hear and ignores the ones that come up with a result that is not what it wants to hear. So will the Government take any notice of the responses from the survey? If the Government does take notice of surveys, can it explain to me which survey was conducted, and how that survey came up with the notion that it should introduce into the charter of Radio New Zealand the term “spiritual, and ethical”?

I do not know of any survey or any public opinion poll that suggests that that should be so. Certainly, those who made submissions on the bill had concerns about it, and raised those concerns in their submissions. Certainly, members on this side of the House who have contributed to the debate have overwhelming raised that as an issue of concern. The Government was not even going to allow this issue to be properly aired. It was going to slip it through in an omnibus-type way so that it could not be debated tonight. The fact is that those kinds of bills are supposed to be non-controversial. We cannot introduce into the charter of Radio New Zealand terms like “spiritual, and ethical” and not expect at some stage that it will be controversial. I hope that a Minister, or somebody on the other side of the House who might have a view on this issue, will take a call and explain to us what they mean by that.

The charter as it stands at the moment—as it is prescribed in this legislation—will do nothing but strangle Radio New Zealand, and that will be a great pity. There are a number of us who listen to it. There are a number of us who believe that at times it is fairly balanced. There are a number of us who participate in debates on Radio New Zealand. We do not understand, so we wish the Government would explain to us how, under this charter, Radio New Zealand will be able to live up to all these objectives.

Further on in the legislation, we see that the Government will also include in new section 7(1)(ga) of the principal Act the term “Radio New Zealand International”, which means that Radio New Zealand will have to cater for the Pacific Islands and other nations with different languages. So now we have Radio New Zealand catering to all age groups, meeting all the spiritual and ethical needs of the nation, and also having to cater for multiple languages. This station will have to work a miracle. The subsidy the Government will provide will have to increase tenfold, or it will have to double, triple, or quadruple the amount of air time the station has. I do not know what it will have to do, but it will certainly have to perform a miracle to achieve the objectives set out in the charter as prescribed here tonight.

It is interesting to note that several Ministers are here tonight, and not one of them has taken a call to explain to us in this third reading what this all means, how it will be achieved, and when they think they will be able to achieve this objective for the public of New Zealand.

A party vote was called for on the question, That the Radio New Zealand Amendment Bill be now read a third time.

Ayes 70

New Zealand Labour 52; Green Party 8; United Future 8; Progressive 2.

Noes 47

New Zealand National 26; New Zealand First 13; ACT New Zealand 8.

Bill read a third time.

Bills

Telecommunications (Interception Capability) Bill

Second Reading

Hon RICK BARKER (Associate Minister of Justice): I move, That the Telecommunications (Interception Capability) Bill be now read a second time. This has been reported back from the Law and Order Committee, which recommends that it be passed with amendments as shown. I would like to thank the select committee for the work it has done on this bill. The amendments recommended by the committee will improve the operation of the legislation.

This bill is necessary to ensure that law enforcement and national security capability are not seriously eroded by changes in technology. The bill places a legislative obligation on telecommunication network operators to be technically able to intercept telecommunications going over that network when authorised by a warrant or other lawful authority. The bill also creates a legislative “duty to assist” on all telecommunication network operators and service providers. This means they must provide reasonable assistance to the police, the Government Communications Security Bureau, and the Security Intelligence Service when intercepting telecommunications within their technical capability, and on a cost-recovery basis. The bill does not change or extend in any way the existing powers of the police, the Government Communications Security Bureau, or the Security Intelligence Service to intercept communications. If the relevant agency has lawful authority to intercept a telecommunication, technological barriers should not prevent it from doing so.

I shall now focus on some of the amendments to the bill proposed as a result of the select committee process. Concern was raised in some submissions that the bill required each network and service to have interception capability installed within it. This would impact on costs, making them unnecessarily high when the same interception capability could be achieved by an external technology used on an “as needed” basis. The intention of the bill was not to require interception capability to be installed within all networks and services. The bill was intended to set out broadly what is required to have interception capability, and to leave it to the network operator to decide how best to achieve this within the network. The committee has, therefore, recommended an amendment to the bill to clarify that the interception capability does not need to be installed within each element of the network or service, to comply with the requirements of the bill.

This freedom to choose is enforced in the purpose clause, which states that one of the purposes of the Act is to ensure network operators and service providers have the freedom to choose design features and specifications appropriate for their own purposes.

The committee also recommended some amendments around clause 8, which sets out when the duty to have an interception capability is complied with. These include recognising that in some cases the network operator, not the surveillance agency, will carry out the interception. In this situation interception is complete when the information is passed on to the surveillance agency.

The committee also recommended further limitations to be placed on the requirement to decrypt. This limitation is that a network operator will not be required to decrypt communications for products that it simply on-sells on behalf of the manufacturer, and that the customer would be able to purchase from a retail outlet. To require decryption in this situation would place the network operator at a commercial disadvantage as he or she would not be able to sell a particular product if he or she did not have the key, but the customer could go and buy exactly the same product from a shop, and then use it over the network operator’s network.

The committee also recommended two changes in respect of the “duty to assist” provision. The first was, as with clause 8, to recognise that in some cases the network operator, not the surveillance agency, will carry out the interception. The second was to lower the standard required to comply with the duty to assist. This means that network operators and service providers would have to take all reasonable steps that are necessary in respect of interception. In response to a submission from a network operator, the committee recommended changing the time required for a surveillance agency to pay an invoice, from 2 months to 1 month. This has been agreed. In light of the comments made by the Regulations Review Committee the committee has recommended that the regulation-making power in the bill be amended. These amendments include removing two regulation-making powers that were very general, and adding a regulation-making power to allow regulations for matters that are necessary for the bill’s administration, or necessary to give its full effect.

The committee also recommended removing part of the clause that stated that the failure to comply with certain requirements did not affect the validity of any regulations made. There is ability for the Minister not to comply with those requirements if urgency in the public interest requires it. In those circumstances, the committee agreed that this clause should be deleted.

The committee has also recommended amendments to some of the definitions contained in the bill to enable the bill to be given full effect. The committee also examined the issue of costs. A phased implementation process is included in the bill to provide the industry with the opportunity to implement the necessary changes in a way that is cost efficient. The Government will pay for the provision of interception capability for fixed and mobile voice networks that were in operation on 12 November 2002. Interception capability needs to be implemented within 18 months from when the bill comes into force. The cost is estimated to be $3 million.

Network operators will meet the cost of providing interception capability for Internet and email services, with a 5-year implementation period from the date of enactment. It is estimated that this will cost the industry $12 million. The committee received submissions from network operators stating that the costs were estimated to be much higher than this. Because of this variance, further consultation work took place with these network operators. The increased costs were based on operators perceiving that they would be required to have interception capability installed with all networks and services to comply with the requirements in the bill. As I said earlier, this is not the intention of the bill, which is to give each network operator the freedom to decide how interception capability is best achieved within its system.

Once this was clarified, the revised cost estimate was put within the range of $10 million to $13 million, making the original estimate of $12 million still accurate. Amendments have been made to the bill to ensure that the intention of the legislation in this respect is clear.

I have also tabled a Supplementary Order Paper that makes three minor amendments. The first is a change to the definition of “interception warrant” to take into account the passage of the Crimes Amendment Act, which was passed in October last year. The second amendment is to ensure that all legislative authorities to intercept are covered in the definition of “other lawful interception authority”. The final amendment is a drafting change to correct a wrong cross-reference. I commend this bill to the House.

SIMON POWER (National—Rangitikei): Although I was not a member of what at first glance appears to be a reasonably high-powered group on the Law and Order Committee, this evening I have found myself taking an urgent interest in this bill. I wish to raise two or three matters with the House and with the Minister in his interpretation of the bill. The Minister moved quickly through his recital of officials’ notes and perhaps did not spend sufficient time explaining to the House the fact that this bill does not change or extend existing powers. That is quite an important issue. The bill does ensure that certain technicalities by the telecommunications industry are able to be met in order to carry out the interception, as opposed to creating a whole new raft of legislative measures so that that interception may occur.

It is an important point to make, because on the one hand issues like this always balance finely issues of privacy for individuals using telecommunications devices with, on the other hand, the greater public good in respect of security issues. I have to say concerning the explanatory note to this bill referring to national security—and the Minister himself raised the issue of national security—that it is worth reading from the background commentary this point: “This legislation is necessary to prevent law enforcement and national security capability being seriously eroded because of technical issues related to telecommunications networks.”

I am sure when various officials appeared before this high-powered Law and Order Committee, the first question on the minds of those members of the select committee would have been to ask those officials: “Whatever happened to the incredibly benign strategic environment?”. No doubt, given the calibre of those members who make up this committee, there was sufficient cross-examination of those officials to simply get to the bottom of the issue. If indeed, this country still exists in what the Prime Minister has termed an incredibly benign strategic environment, then why is legislation like this necessary? I would be interested in hearing from those members of the Law and Order Committee as to what response they received from officials when they raised that issue.

The Government cannot have it both ways. The Government either believes that we live in an incredibly benign strategic environment, as the Prime Minister has stated on many occasions, or the Government believes that legislation is necessary to be brought into this House to literally twist the arm of telecommunications providers to ensure national security objectives are met. Now we in the National Party will be supporting the passage of this bill because we do believe that these measures are essential for national security objectives to be met, and in particular for telecommunications providers of both landlines, as they are so-called, and cellphones, to have the technical equipment in order that the necessary surveillance is carried out.

But the question must be asked, that if the Government’s stated foreign policy position in respect of the post - September 11 environment is still that this country is in an incredibly benign strategic environment, then how does this legislation fit into that paradigm? I do not think it is an unreasonable question for members of this House to ask, particularly when this party, and to be fair, the ACT party, have consistently supported the view that changes to our foreign policy and defence arrangements must reflect the fact that our strategic environment has altered substantially since September 11, since Bali, since Jakarta, since Madrid, and since Baghdad.

It is simply not good enough for the Government to say on the one hand “Well, no, that is just not the case, we live in an incredibly benign strategic environment, but at the same time we’re going to pass new legislation for national security measures.” I would be interested in hearing from Marc Alexander and others who sat on the select committee as to how those two objectives were met by the select committee when considering the policy statements of the Government about the strategic environment that we exist in, and how that was measured against the legislation that now appears before this House for its second reading.

Interestingly, and I have to say that this is a point that leapt out of the commentary at me as I was sitting here earlier this evening reading this bill, the fact that Australia and the United Kingdom passed this type of legislation into law—in the case of the United Kingdom 4 years ago, and in the case of Australia 7 years ago—that goes to the heart of the issue being raised by members on this side of the House, which is this. Australia and the United Kingdom took these issues seriously, long before this Government did. And it is simply not good enough to have a last-minute run at this issue when we have seen world terrorism on the global stage operating at a level that simply denies the Government its fundamental foreign policy position that we live in a benign strategic environment—because the evidence simply does not point in that direction at all.

Keith Locke: It does.

SIMON POWER: Well, I am looking forward to hearing what the Green Party, and I presume Keith Locke, has to say about this. I know that the Green Party will be concerned about privacy issues, and I will be interested to hear from them as to how those issues fit in with their view of how benign or otherwise the current strategic environment is.

I do want to raise one further point, and that is that the Government rightly will pay the costs relating to the provision of the particular interception capability, and so it should, and National supports that measure in particular, as well as supporting the wider implications of this bill. If, indeed, this bill is, as the Minister says, an issue of national security, then it is incumbent on the Government to meet those technical capabilities by way of cost to those telecommunication providers in a way that makes us a responsible international player in an environment that we believe, on this side of the House, has never been incredibly benign, let alone since September 11, Bali, Jakarta, Madrid, and Baghdad.

It is worth noting though—and I did raise this while the Minister was making his contribution—that although the Minister estimates costs to be borne by the telecommunications companies were estimated to be $12 million, in fact the submissions made to the select committee, according to the commentary, put those figures well out of line with the $23.5 million or, if one likes, $43.5 million based on all network elements that that interception capability would cost. I think the Government needs to assure the public of New Zealand that the moneys committed by the Government to ensure these interception capabilities are going to work are sufficient to ensure national security will be preserved.

Hon Rick Barker: Yes.

SIMON POWER: While the Minister says “Yes”, I hope he is right. As I said earlier in my contribution, the National Party will be supporting the passage of this bill through the House, primarily because our view that we do not live in a benign strategic environment has not altered at all in the time that I have been in this House. I look forward to making further statements in respect of this bill when we enter into the Committee stage later this evening.

RON MARK (NZ First): I think I sound like a stuck record. Given the summary that the Associate Minister of Justice so robotically read out at a thousand miles an hour, I do not think there is any sense in rotary hoeing the same paddock again. I think we pretty much know what the bill intends. But I will touch on a couple of headings.

Although my name does not appear amongst the members of the Law and Order Committee listed in its report, I did sit in on many of the submissions and on the consideration of this bill, as a result of my interest in matters of defence and security. The reasons for the bill have been quite clearly put and reinforced by Simon Power. I think one of the things the bill does make very clear is who a network operator is, who a service provider is, what is “duty to assist”, and what does having interception capability mean. The bill highlights recent overseas legislation passed by the Australian Commonwealth, in 1997, and by the United Kingdom—the Regulation of Investigatory Powers Act 2000.

The report from the select committee is worth looking at because it states that the committee received four outside submissions, three of which were opposed. The opposition to this bill came from people who believe that it is “an overreaction to the terrorist events of 11 September 2001, and an intrusion into personal privacy.” I will come back to that.

A number of things were dealt with by the select committee, and most interesting was the controversy that arose out of the original estimated cost to telecommunications companies—the cost that the companies themselves are to bear as a result of this legislation being enacted. It was interesting that the telecommunications companies questioned the $12 million cost—a figure arrived at by the Government—and quoted a much larger figure of $43,576,000 as being the base cost for compliance. After some discussions and the amendments to the bill, which have seen some limitations, it is interesting to note that the costs are back down to around the $10 million to $13 million range.

It is interesting to note also that this bill was looked at by not just the Law and Order Committee; I understand that it was looked at by the Commerce Committee, and also by the Regulations Review Committee. So the scrutiny of this bill was most definitely wide reaching.

What struck me as very interesting were some of the comments made about the bill by people who quite clearly are opposed to it, and I have absolutely no doubt that the Green Party will want to reinforce those views. I would like to raise the comments that have been made that do give me cause for concern.

Comments made by the Anti-Bases Campaign state in part: “And for what good reason are our privacy protections being progressively eroded and our private communications being open to intelligence agencies, with no effective oversight or accountability?”. I would ask every member of this House to read this legislation carefully and see where the oversight and accountability lie, because those words are lies. “No convincing case has yet been made by Government as to why so much new, intrusive power must be vested in the police and intelligence agencies. The Anti-Bases Campaign believes that the Telecommunications (Interception Capability) Bill and the several recent pieces of legislation related to it are overreactions to the terrorist events of September 11 in the United States, and are not driven by genuine and supportable law enforcement needs in New Zealand.”

Well, I find absolutely astounding that people who have the freedom and liberty to write those views, and to express them publicly internationally, are the very last people on this whole planet who will ever put on a uniform, ever pick up a firearm, ever swear allegiance to the Crown in this country, and ever fight to defend the right to express such nonsensical views. The absolutely astounding irony is that this wall around us is bedecked with memorials to men who have given their lives to allow people to say such things, and we all know that the very people who say those things would never ever do likewise. In fact, what is even more ironic is that I have never heard the Anti-Bases Campaign people, or the people who are members of such an organisation, go on about the KGB. The huge irony is that many of those people were members of the Communist Party, the party renowned for giving us Stalin, Lenin, and the KGB. So where were their cries of intrusion into privacy in those years? Where was Mr Locke? Was he out there campaigning against the KGB for its intrusion into the privacy of the life of the average Soviet person? Not on your nelly was he! He was a member of the party advocating and supporting such things. [Interruption] It had better be legitimate.

Keith Locke: I raise a point of order, Mr Speaker. The member was talking about the Communist Party and said I was a member of the Communist Party. I have never been a member of the Communist Party.

RON MARK: Oh, a Russian Pol Pot—I am sorry. But the member’s father was. Maybe I got it wrong; maybe I have the wrong Locke. But the point is—[Interruption] Was that Labour member over there a member of the Communist Party, as well?

Jill Pettis: I raise a point of order, Mr Speaker. In that interchange that just went on, reference was made by Mr Mark to connections with Pol Pot. That has been ruled out repeatedly in this House, and I would say that a mercenary attitude towards things is not applicable. Does the member know what I mean by “mercenary”?

The ASSISTANT SPEAKER (Hon Clem Simich): No, we will not get into that. I thank the member for pointing that out. No references to Pol Pot, please, Mr Mark.

RON MARK: I will not refer to any newspaper article I have ever read.

Jill Pettis: A very mercenary attitude.

RON MARK: Absolutely, there is nothing wrong with a good mercenary. I do not know what that has to do with anything on this planet. I do not know what the member means. I do not know whether it is meant to be an insult, but if she pulls out the Collins dictionary she will find that it is not. I do not know why the chief Government whip is defending the view of a party that is voting against this very legislation. [Interruption] All the reds are out from under their beds!

Steve Chadwick: I raise a point of order, Mr Speaker. I would like it clarified for the record that I have never been a member of the Communist Party. I have been a proud member of this great Labour Party all my life.

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

RON MARK: That is not a point of order at all, and the member jolly well knows it If the member wants to break up my speech to make a personal statement, then she should stand up to make a personal statement. I hope that none of that has come off my time. The member is being paid $100,000 a year to do better than that. That is pathetic. She should hand back a day’s pay.

The point is that I take great offence. Many of my fathers, uncles, and relatives from one end of this country to the other—

Jill Pettis: How many fathers have you got?

RON MARK: I have five fathers. In fact, I have six. I have a natural father and five foster-fathers, for the information of that ignorant member over there who has not read my bio.

Jill Pettis: Why would I?

RON MARK: At least my father is not a parrot. I really have got the reds out from under their beds! I make the point that there was a time when Mr Muldoon ran some advertisements about dancing Cossacks, and was lambasted from one end of the country to the other. Much comment was made about the fear of reds under the beds. I put this to members: today we have a group of people who see Feds under the beds! Wherever they go they think the Feds, or the police, or spies are watching them. I actually think they have other things on their minds, like terrorism. Yesterday 700 police in the UK busted up a terrorist ring, found half a tonne of high explosives, and arrested a whole bunch of Pakistani Brits. That is like what is happening in Manila, in Bali, in Baghdad, and all over the world. They are dealing with the real security threats to the very lives of the people here who object against their doing that. I just hope that one day some time very soon we do not face a terrorism act in this country, and that no member of the Greens has a family member who is caught up in that carnage. That will be the day that those people finally appreciate and understand the work that the New Zealand Police and the New Zealand Security Intelligence Service, and all of its agents, including Defence Force personnel of this country, have to perform, thankless though some people may be for the duties they carry out.

ROD DONALD (Co-Leader—Green): I draw the House’s attention to the time, which is close to midnight. I seek leave that the House rises, because it would be unfair on the next speaker to have his speech interrupted by the midnight adjournment.

The ASSISTANT SPEAKER (Hon Clem Simich): Leave has been sought for that course to be followed. Is there any objection? There is.

LINDSAY TISCH (National—Piako): At nearly midnight we are discussing one of the most important pieces of legislation on our national security. This legislation was first introduced in 2002. In fact, the bill was introduced to the House on 12 November 2002, and referred to the Law and Order Committee on 18 February 2003. Over a year later, and at this hour at night, we are discussing very, very important legislation about our national security. Other countries have taken national security seriously. For example, Australia has the Commonwealth Telecommunications Act 1997. The United Kingdom has the Regulation of Investigatory Powers Act 2000. What is happening in New Zealand? Here were are in 2004 and this legislation is being debated under urgency at midnight. That is an insult.

Debate interrupted.

Sitting suspended from 12 midnight to 9 a.m (Thursday).

Tuesday, 30 March 2004

(continued on Thursday, 1 April 2004)

Bills

Telecommunications (Interception Capability) Bill

Second Reading

Debate resumed.

LINDSAY TISCH (National—Piako): Last night I mentioned that National supports this bill. It is a very important piece of legislation. But what I was concerned about was that this bill had its genesis 2 years ago, when it had its first reading and then went to the Law and Order Committee, and yet it has only now surfaced again in the House, 2 years later in 2004. That is, in my view, an absolute insult, given the importance of this legislation. This is an important bill, and we support it.

Hon Dr Michael Cullen: Good.

LINDSAY TISCH: But I make the point to the member that although we support the bill, it should have come back to us at least 2 years ago, instead of sitting around. We know of the problems in the world today with regard to terrorism. In fact, if we were to look in today’s Dominion Post, in the world section we would see the headline “Foiled—the terror bombers of suburbia”. So what we see around the world, whether it be in Madrid, in Bali, or in other areas, like the Philippines, is that terrorism is at its height—and it is growing.

While we may think that here in New Zealand we are geographically isolated, and that nothing will ever happen to us, a Government that has its mind on the issue of terrorism should be protecting its citizens. The primary role of any Government is to protect its citizens, and what this bill does is to allow the surveillance organisations to be able to intercept telecommunications legally. I note the commentary on the bill, and I will quote from it because there are some misconceptions about what the bill does. The commentary on the bill, under the heading “Background”, states: “The bill does not change or extend in any way the existing powers of surveillance agencies to intercept communications.” It also states: “This legislation is necessary to prevent law enforcement and national security capability being seriously eroded because of technical issues related to telecommunications networks.” So the bill will plug the loopholes in order to make sure that we do have effective intelligence systems, and that our surveillance capabilities are the best in the world and will be kept up to date with the changes in technology.

September 11, the Bali bombing, the recent Madrid bombings, the bomb materials found just recently in London by the anti-terrorist squad, and the point I made about the headline in the Dominion Post today all show that terrorism threats around the world are growing, and they could come very close to home. I am sure that all New Zealanders will support this bill. The Government’s primary role, as I mentioned before, is to make sure we are vigilant and do have in place the methodologies needed to be able to legally intercept any communications that may be to the detriment of our country and people. The bill will allow the law enforcement agencies—that is, the surveillance agencies—to have that capability, and we need to support that. One of the problems we currently face is that some digital and Internet technologies do not permit the monitoring of communications and information, where necessary, with the interception technology that we have. Many New Zealanders have digital phones; probably every member in this House has a digital phone. They are very common, and we want to make sure they do not become a serious threat to society.

Our telecommunications industry must be able to legally intercept illegal communications. That, in essence, is what this bill provides for. The police, the Security Intelligence Service, and the Government Communications Security Bureau must have at their disposal the valuable tools provided for in this legislation to legally intercept communications. National is happy to support this bill.

DAVID PARKER (Labour—Otago): I rise in support of this bill. This bill does not make it any easier for the police or the Security Intelligence Service, etc. to get interception warrants. But it does mean that when those authorities get their warrants, telecommunication providers will have a duty to assist them and will have the technical capability to intercept calls that are passing over their networks. I commend this bill to the House.

KEITH LOCKE (Green): The Green Party will be opposing this bill, as it has done previously. We do not see the need to grant these powers to the police and the intelligence agencies at this time. No objective case has been made, either in terms of this bill or of the other bill that authorises such interceptions—the Crimes Amendment Bill (No 6), which passed through the House a year or so ago—that we would catch many more criminals, be they terrorists or anyone else, through the exercise of these powers. In our opinion, the downside is much greater than the upside. No one doubts that by having greater surveillance, be it electronic interception, cameras in the streets, or whatever else it is, we could catch more criminals. But we have to make an objective analysis of the situation. With any advance in surveillance or security powers, we have to analyse whether the downside with regard to issues of privacy and civil liberties is greater than the upside. We believe the downside is greater than the upside.

The argument being advanced so far in the debate by several speakers, including the last, is that we live in a new era of terrorism. Unfortunately, Ron Mark basically said that if the Greens were affected by terrorism, they would think differently from how they do. I thought I would start at that point. Just over 20 years ago, on 27 March 1984, I was living in Wellington, and was on my way down the Petone motorway to go to a meeting of the Wellington Trades Council, where I was a delegate from the railway workers union. On my car radio I heard about a bombing at the Wellington Trades Hall. One of the people I expected to see at that meeting was the caretaker of the hall, Ernie Abbott, whom I knew well and talked to a lot. When I arrived at the meeting, I heard that he had been blown up by a terrorist bomb.

The second incident—there have been only two terrorist incidents in New Zealand over the last few decades—occurred on 10 July 1985. Friends of mine had come in on the Rainbow Warrior. They were active in the Nuclear Free and Independent Pacific Movement, and I knew that other friends of mine were visiting the Rainbow Warrior. I was living in Auckland at that time, and when I heard that there had been a bomb on the Rainbow Warrior I was very fearful for their safety. So the idea that people in this House, and myself in particular, are not aware of the problems of terrorism and of its effects on those closest to us is quite wrong. I think what needs to be borne in mind is that those two incidents of terrorism were terrorist acts against left-wing and progressive people. The idea that people of my political persuasion are not on the receiving end of those things and do not understand them is completely wrong.

We hear talk that we are not in a benign strategic environment and that there is a whole new era of terrorism, but we need to look objectively at the situation. We need to look at Australia, where there has not been recent terrorism but there is a history of terrorism. Terrorism was much more prevalent in Australia in an earlier period—particularly that committed by some Croatian neo-fascists, who set off a whole lot of bombs. If we look at the other countries that have been mentioned, we see that there have been some very dramatic terrorist acts over the last year or two, particularly those in Spain, in Bali, and on September 11. In the cases of Madrid and Bali, because of the placement of the bombs, there was horrific loss of life, which we have all been very sad about. We have been pleased that the Bali bombers have been brought to justice, and we hope that the Madrid bombers will be, as well.

If we look historically at the incidence of terrorism in Spain, we see that in earlier periods it has been much higher than it is currently, particularly with regard to the ETA bombings, and historically in Indonesia the incidence of bombing was much greater before September 11, 2001. In Britain, the incidence of terrorist bombings was historically much greater throughout the Irish Republican Army period. Looking at Europe as a whole, we see that with the Red Army faction of the Baader-Meinhof gang, the Red Brigades, and all the rest of it, there was a much greater incidence of bombings in an earlier period. Leaving September 11 aside, the interesting thing about the United States is that the period from 1998 until now has been a historic low point in terms of terrorism, compared with earlier periods when there were the Symbionese Liberation Army, people bombing Oklahoma, and the Weather Underground Organization people, etc. So the idea that we are in a new age of terrorism is statistically false. That is not to say that there is not a problem, particularly one generated by concerns in the Islamic world and in extremist sections of the Islamic community, but the idea that one has to have these powers now is incorrect.

When talking about a benign strategic environment, one must first examine where the problem is of countries going around and invading and occupying other countries. The prime problem with the world today is that there is only one country, the United States, together with its allies, doing that. Unfortunately, New Zealand is being dragged along with the United States in one instance. The United States had invaded and occupied Afghanistan and Iraq. That is the cause of a lot of the upset that exists throughout the Islamic world, which unfortunately gives some of the Islamic extremists a degree of support for the horrific actions they carry out. One has to remove the cause of terrorism, and particularly to address the cause that has been highlighted over the last week: the continuing occupation of Palestinian lands by Israel. That has been a running sore, and has caused a lot of the terrorism we have seen over the last decades. In fact, Palestinian terrorism in earlier times was internationalised. That occurred at the Munich Olympics and in a lot of aircraft hijackings. In order to really root out the international forms of terrorism by small groups and non-State actors, one has to deal with the underlying problem in the Middle East region, rather than be part of the problem by, for instance, sending the New Zealand SAS back to Afghanistan.

New Zealand is involved in electronic surveillance already, particularly through the Waihopai Valley tracking station near Blenheim, which is part of the US-led Echelon five-nation network. What has that involved us in? It has involved us in very nefarious activities. It was exposed recently that the network had spied on Kofi Annan and other UN officials, and there were reports in the Australian media that New Zealand had received a transcript of one of those interceptions of Kofi Annan. Unfortunately, the Government has pleaded the need for secrecy on security matters as a reason for not reporting to the House whether that is true. I think what that issue and the whole issue of Waihopai, which now links up with Echelon, shows is that the use of electronic interception is part of New Zealand being an intelligence dependency of, particularly, the United States, and alongside it, of Britain, Australia, and Canada.

The explanatory note on Supplementary Order Paper 197 with regard to this bill, which has just been put forward and which members will talk about later, shows again that there is unwarranted interception through Waihopai—that is, interception without a warrant. That is explicitly allowed in this bill, and it is very dangerous because it means that we can be involved in such things as spying on Kofi Annan, or—this also became public about a year ago—the National Security Agency issuing instructions to its overseas partners, such as those in Britain and, presumably, in New Zealand, to launch spying on UN delegates—particularly on those from countries that were believed to be wavering on a United Nations resolution prior to the American invasion of Iraq. For us to be involved in that sort of thing, by using the electronic intelligence this bill authorises and puts into practical effect, would be quite wrong. We know that electronic intelligence is used for nefarious purposes, and that the intelligence agencies themselves are very untrustworthy.

There is huge debate going on in Britain, in Australia, and in the United States, in particular, about the way in which intelligence is being altered and manufactured. That can be done very easily with regard to electronic intelligence. The material coming through into computers can be altered, manufactured, and reinterpreted very easily. So that is a very dangerous road to go down, when the New Zealand intelligence agencies and, to an extent, the police are in a dependent relationship with such overseas agencies.

Hon KEN SHIRLEY (Deputy Leader—ACT): The ACT party will be supporting the Telecommunications (Interception Capability) Bill, but it is a qualified support. There are many aspects of this bill that are not desirable, and in an ideal world they certainly would not be our preference, because they do impinge on civil liberties and freedoms. But we have come to the conclusion that in the troubled world we are now in, with the international terrorism we face, these measures are, on balance, necessary, and therefore we support them. However, in supporting them we always want to be assured—and we seek assurance—that adequate checks and balances are in place, so that our freedoms and individual liberty can be upheld to the greatest extent possible.

Mr Locke from the Green Party, who has just resumed his seat, made some very interesting points. He raised the issue of the bombing at Wellington Trades Hall that killed Ernie Abbott many years ago. It was a tragedy and a murderous act, but it was probably undertaken by a deranged individual or by someone who was acting individually with malice. What we have in the world today is warfare. It is no longer conducted by State nation against State nation, but rather by determined terrorists who are highly organised and well funded, and who are deliberately attacking what they perceive as Western values and the concepts of international free trade.

The interception of telecommunications in our modern, high-tech world is important. All nations of the Western World do such interceptions, and it is important that we have cooperation and the exchange of information. If anything, I regret that this country is out of the intelligence loop and is on the fringe of it. We are out of the main intelligence loop because of this Government’s position on foreign affairs matters and security issues. That is regrettable, because it does expose us to threats that we may not otherwise be exposed to. While our Prime Minister may think we live in a strategically benign region, that is not the case. There has been the Bali bombing, and there is an unstable situation throughout Melanesia, and now in Polynesia.

I believe the measure of screening phone calls, the work that is done at Waihopai with the Echelon programme, and other actions that cause so much angst to Mr Locke are, on balance, required, and there are appropriate and proper checks and balances in place for that. We know that Osama bin Laden does not carry a cellphone any more. He is probably holed up somewhere on the Pakistan-Afghanistan border, and time is running out for him. But if it were not for the level of monitoring of cellphone information and traffic, he would still be running his operation freely, and using his cellphone to talk to his operatives around the world. So that is just one rather graphic example of the need for these forms of monitoring.

Again, Mr Locke raised the issue of the 10 July, 1985 tragedy of the Rainbow Warrior. Yes, that was an act of terrorism. It was an act of terrorism committed against the sovereign State of New Zealand by another Government, in fact. But we should bear in mind that we caught the two General Directorate for External Security operatives—from memory, I think that Prieur and Mafart were their names. Four people got away. If we had had proper cellphone monitoring—if cellphones had been used to the same extent in those days as they are now—would we possibly have caught the other four? That is the mirror image of the argument that Mr Locke put to us. Yes, the bombing of the Rainbow Warrior was a tragedy, and yes, it was an unlawful act. I think that France deeply regrets that act; it was caught and exposed for doing it. That was a criminal act by France, back in 1985.

Since that time, the stakes have grown. We have had the Manhattan bombings of the World Trade Center, and bombings in Bali, Madrid, and Baghdad. Just this week in the UK, seven people, I think, were arrested, with—I forget how many—tonnes of ammonia nitrate, obviously for a very major bombing operation in the UK. My understanding is that they were caught substantially through the monitoring of cellphone traffic. In our modern, high-tech world, we have to weigh up on the one hand the question of an impingement on civil liberties against the fact on the other hand that without security we cannot have freedom. We have the incredible irony that we cannot have security without freedom, and we cannot have freedom without security. That is the exact situation we are facing. It is really on considering that balance that the ACT party lends its support to this bill.

MARC ALEXANDER (United Future): I rise on behalf of United Future to talk about the Telecommunications (Interception Capability) Bill. But before I go to some of the substance of it, I would like to address some of the concerns raised yesterday by the honourable Simon Power, who questioned the duplicity of this Government for arguing about the requirement for such a bill, given Labour’s insistence on New Zealand’s benign strategic environment.

Simon Power: That’s right. Good point.

MARC ALEXANDER: It is a very good point. To partly address it, I would like to say that although we were given advice that, yes, New Zealand is still in a benign strategic environment, underlying that is a sense of unease about the way the world is progressing. Whether we like it or not, we will be dragged into the net of worldwide terrorism. If we look at it, it is no coincidence that it came up recently in the news media that the second most powerful member of al-Qaeda might have slipped into New Zealand on two occasions. So for whatever reason, we are caught up in the net of international terrorism. We have not yet been attacked, but I do not share the optimism of the Green spokesperson, Keith Locke, that we are living in a benign strategic environment. All I say to him is simply that we have a troubled world, and Keith Locke is probably the most appropriate person to talk about that point. In my opinion, and given his views, he is a troubled man speaking out in a troubled world.

Speaking to the substance of the bill, the bill is necessary—in fact, it is essential if we are to ensure that law enforcement and our national security capability will not be compromised due to changes in technology. The bill places a legislative obligation on all telecommunications network operators to intercept communications when authorised to do so by a warrant from a lawful authority. The bill also imposes—in concert with the technological regime of interception—reasonable assistance to police, the Government Communications Security Bureau, and the SIS. It should be noted that although the bill gives those operators the capacity to intercept communications, it does not expand the powers of the respective agencies that can make use of it. I think that is a vital point. It should also be pointed out that this legislation is not unique, but puts us on a par with other nations such as the UK, Germany, our cousins the Australians across the ditch, and the US.

A question debated at some length during the Law and Order Committee process—a high-powered select committee process, I might add, under the sterling leadership of Martin Gallagher, who, with his razor mind, corralled us into really understanding this bill—was who will pay? Although there was some debate regarding the amount, and about how the apportionment was to be considered, it will be the Government—or should I say the taxpayer—who will pay for the technological requirements imposed by the bill for existing fixed and mobile phone networks. There will be a phased implementation process to provide the industry with the opportunity to put in place the necessary changes.

I suppose the real conundrum of the bill is the inevitable clash between the issues of law enforcement and the right to individual privacy. Somewhere, somehow, a balance must be struck, and I believe that the bill, in light of the very real threat to our security since 9/11, achieves that. The simple truth is that the right to individual privacy can only be guaranteed by having the ability to enforce our security, and this bill is the means to do it. The rights to privacy that we in New Zealand value so highly should not be unduly threatened or compromised by this bill. At the same time, we must not romanticise our privacy to the detriment of legitimate security concerns.

I make mention of the other point not yet raised, and it is that putting aside the international threats to our security, one of the prime reasons that this bill is being put before us is to also combat the internal threat—the threat to security and safety posed by criminal organisations. A fundamental part of this bill now gives the technological advantage to police and security agencies, so that they can access information against, for example, gangs and drug barons who use New Zealand as a way to profit from the P epidemic at the expense of the public, and against the relationship those criminals have overseas in bringing these drugs into the country and organising criminal activities. United Future supports this bill, as it properly balances the needs of internal security with our right to privacy.

My last comment at this point is simply to suggest to those people who do not see a need for such a bill that they reflect on the fact that they now have the freedom to voice their concerns about so-called intrusions into their rights to privacy because we have put in place security measures to ensure that freedom in the first place. I find it very odd that individuals are against legislation of this sort. What would they replace it with? I am left only with the conclusion that they would replace the ability to guarantee our safety with such technological innovation with measures such as throwing psychiatrists at the terrorists and criminal organisers and looking upon them as simply misguided individuals.

That is not the way forward. This bill addresses some of the legitimate concerns we have in this country about threats of both an external and internal nature. It would be good to see all parties of this House send the very same message. Sadly, that does not seem to be the case, because the Greens have romanticised their freedom, and clearly do not see that freedom as having been hard won by innovations such as the ones that this legislation proposes.

A party vote was called for on the question, That this bill be now read a second time.

Ayes 110

New Zealand Labour 52; New Zealand National 26; New Zealand First 13; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Noes 9

Green Party 9.

Bill read a second time.

Instruction to Committee

Hon RICK BARKER (Associate Minister of Justice): I move, That it be an instruction to the Committee of the whole House on the Telecommunications (Interception Capability) Bill that it take the bill part by part.

Motion agreed to.

In Committee

Part 1 Preliminary provisions

SIMON POWER (National—Rangitikei): In the debate on the second reading, we have now had the opportunity to listen to the extensive contributions of members regarding the overall theme of the bill. It seems to me that, except for Mr Keith Locke and the Green Party, the House is more or less in agreement on the provisions of the bill. I particularly enjoyed the contribution of Marc Alexander, who gave us a bit of an insight into what went on in the minds of the members of the Law and Order Committee during the deliberations on the bill.

However, we now turn to the more in-depth and detailed analysis of the bill, which we will examine part by part. I am disappointed that the Minister in the chair, Rick Barker, was not prepared to go clause by clause, but nevertheless, we will proceed to work our way through it part by part. [Interruption] That is right. We will work our way part by part.

We begin, as it were, at the beginning, with some definitions. It is interesting that in this modern age, the definition of “number”, which we would have assumed would relate primarily to either a phone number or a letterbox number, now includes an Internet address and an email address. Telecommunications companies are being required by the bill to meet certain technological standards to ensure that the interception of messages by various surveillance agencies is forthcoming.

I am not sure whether it is easier or more difficult to intercept an email message or a telephone message, and I will certainly be interested in the Minister’s view on that. I am not sure whether Ron Mark, or perhaps the Hon Ken Shirley, could assist on that point, but I am sure the Minister will have the information at his fingertips. I do not have a clue. I am technologically inept when it comes to these things, and I would appreciate the Minister giving the Committee a guide as to whether the same technologies can be used for both those mediums. [Interruption] Mr Chairman, I can usually stick up for myself, but if this banter is going to occur across the Chamber, are we to get some order around here?

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

SIMON POWER: Thank you. I appreciate your intervention. That was very helpful. I would like to see a very quick explanation from the Minister as to whether one technology takes care of all those matters defined as a “number” in clause 3, “Interpretation”, or whether there are a variety of technologies. I simply do not know the answer to that question. I am sure that it would take the Minister only 2 minutes to advise me of that.

However, as is the custom to point out in this part of the debate, the purpose and principles of the bill in clauses 5 and 6 go to the heart of the legislation. Members either hold, or do not hold, the view—and it really is a fundamental one—that the strategic and intelligence environment we live in has altered. On one side of that argument we have every party in the House, except the Greens, saying it has changed. In that camp, we also have the Australians and the British, who passed legislation long before this House got to the issue at hand. We have the Australians and the British both saying that we need new technologies to deal with surveillance requirements in this ever-changing world.

It seems to me—not unsurprisingly—that the Greens are on somewhat of a limb here. I look forward to the further contribution, in the Committee stage, of my friend Keith Locke, who will at least give the Committee an opportunity to hear the alternative view to that of Australia, the UK, and nine-tenths of this House.

Actually, this bill gives no further powers to surveillance agencies—

KEITH LOCKE (Green): I am glad that the previous speaker mentioned the question of whether we have a benign strategic environment or are living in a new era of terrorism, because in my second reading speech I went through it objectively, country by country, and although I did not give the exact statistics the pattern is quite clear. It behoves members like Simon Power to come out with counter-statistics. There was greater prevalence of terrorism in the world in the 1970s and 1980s. That is clearly demonstrable. Particularly in the more advanced countries, the prevalence was much greater.

To deal with the other question, which was about which countries are invading other countries today and occupying them, there is one country that is leading the charge: the United States. That is the reality. In so far as there is a change in the environment, it is the danger from the United States invading other countries and occupying them, and leading to huge upset throughout the Islamic world.

To get on to the technological question, the technology is different in terms of intercepting emails. One of the problems is that one can intercept millions and millions of emails very easily, whereas in previous times the intrusion on privacy was limited by the technology—listening to phone calls, transcribing them, etc. was very time-consuming. In the Law and Order Committee, mobile probes were described, which can be put over a particular line to draw down particular emails from a particular person’s email address. One can, of course, go more broadly than that in terms of interception technology. Emails can be intercepted according to keyword systems or combinations of systems, which makes it even more dangerous.

I will deal briefly with the amendment proposed by Rick Barker, set out on Supplementary Order Paper 197, to the definition of “other lawful interception authority”, in which he goes over the authorisation for the different agencies. At least the police have a reporting procedure, and one can get the number of interceptions. There are various controls in relation to the police, and that, at least, is a step forward. The reporting procedure of the Security Intelligence Service is much more sketchy. It just has to report the number and average duration of interceptions. The Government Communications Security Bureau really has no reporting procedures, and that is particularly dangerous because, as the explanatory note of the amendment states, it covers the authority of the Government Communications Security Bureau “for foreign communications to be intercepted without an interception warrant or a computer access authorisation:”.

That question of computer access—hacking, remote access, or whatever one wants to call it—was condemned by the Privacy Commissioner in the Crimes Amendment Bill (No 6), which gave authorisations for that sort of thing to groups such as the Government Communications Security Bureau. There is no reason to grant that power. If there is reason to think someone has something dodgy on his or her computer—and it is happening a lot in terms of people involved in child sex pornography—we can go to that person’s residence, seize the computer, and look at it. One does not need that power of remote access. It is very spooky to a lot of people, including the Privacy Commissioner, that someone’s computer can be accessed remotely and files can even be altered, deleted, or changed. That is specific in the Australian legislation. It is not specific in this legislation, but it is implied. So one does not even know that the police or the security services have been into one’s computer.

The complaints procedure becomes very difficult, too. The complaints procedure in relation to electronic interception is quite difficult because how does one ever know one has been intercepted, to start with, even if the results of that interception, if they are wrongly used or mistakes are made, could very much affect one’s future life if one ends up on some database as being in email communication with some terrorist group, or whatever. It can be very damaging if that happens. That is one of the reasons why the Green Party thinks the downsides for civil liberties are actually greater than the upsides. Earlier speakers have said that any sophisticated terrorist or criminal can get round any electronic interception very easily. One uses throwaway cellphones and so on.

RON MARK (NZ First): First, I want to make it very, very clear, in what will quite clearly be a broad-ranging debate and contribution on the various parts, that I understand and accept the Green perspective and that of Mr Locke. I have admiration for Mr Locke in one respect: he is always consistent in his view, and he is brave enough to express that view, no matter the criticism that may be levelled at him by myself, my party, and other parties. There are many people in this country who have put on uniforms—and I have been one—to defend Mr Locke’s and the Green Party’s right to say the sorts of things they say. I do not think he would put on a uniform to defend my right to say what I say, but I have done it for him.

But I have to say that, in all the concerns he and the Green Party have expressed about this bill, I have not heard what the alternative is. I ask Mr Locke to table in this Committee now a Supplementary Order Paper; to put up amendments that would deal with the issues that he sees are of concern. If this man and his party believe there is an alternative to this measure for stopping international terrorism, they should table it. They should talk about it. They should tell us what it is.

The sad fact of life is that terrorism is now with us. Regardless of what we may think of this legislation and the ability of the telecommunications companies to comply with it—that is, interpreting and intercepting our phone calls—that is the price we pay in a free society if we are to guarantee that freedom. The legislation is there, in terms of the orders and warrants required and the compliance that is placed upon the Security Intelligence Service, the police, or anyone wanting access to this information, and the protections are there within the High Court.

I would say to Mr Locke that he should read today’s paper. He should have a look at page B1 of the Dominion Post. The Green Party should read what has just happened in Britain, with the discovery of 500 kilograms of nitrous oxide. They should read about the 700 police, the 24 raids, and the intention of people to hit soft targets. I know that the ability to intercept my phone calls has an impact on my life, but dare I suggest that having my head blown off and spread across three city blocks would likewise have an impact on my life. If I am to provide the people of this country with the ability to go to a McDonald’s restaurant, to go to a KFC restaurant, to go to a place that is considered a soft target but an American asset, and be safe, I have to accept that some constraints will come upon us and there will be some encroachment into the privacy of our lives.

This is not wanted. This is not ideal. This is not what the men who are represented in the plaques around us commemorating the various battles they fought saw for this country. But, sadly, this is the reality of life. When there are people who are prepared to make their point by blowing up trains full of commuters, killing and maiming thousands of people, one must accept there have to be adjustments to our way of life and to some of the issues of privacy that we might have previously thought sacrosanct.

In answer to Mr Power, yes, already there is the ability to intercept and interpret emails and faxes, and that happens now. But this issue has been with our security people for some time. Every politician in this House wants a secure cellphone so that the other parties do not pick up him or her, everyone wants a secure walkie phone in the home, but someone has to provide the means to allow our security agencies to intercept calls, on the occasions when they suspect that the individual using that device is planning or involved in terrorist activities.

This is not the ideal. This is not what we foresaw 5 or even 2 years ago as being what our country would have to do. But this is now the reality of life, and if we are to be responsible about protecting our citizens, protecting our families, and protecting this nation and the people who come here—be they tourists, businessmen, or immigrants—this is necessary.

The CHAIRPERSON (H V Ross Robertson): Just before I call the next member, it has been brought to my attention that we may have heard a cellphone ringing in the Chamber. Can I just say to members that they should give their full attention to the proceedings of the Committee. We should eliminate all unnecessary distractions from our duty. Cellphones should be switched off within hearing of the debating chamber. All members can be alerted to urgent messages by messengers or via the party whips. Any cellphone emitting sounds from the public gallery will be confiscated and the owner ejected from Parliament. I also refer members to Speaker’s ruling 16/2: cellphones are not permitted in this Chamber when switched on.

KEITH LOCKE (Green): I would just like to follow up the exchange I have been having with Simon Power. He said that the Greens and I are out on a limb because our analysis of the situation differs from that of Australia, Britain, and the United States. To argue just on that basis—that because other, bigger countries that we have had a longstanding—

Simon Power: I raise a point of order, Mr Chairperson. I apologise to the member. I realise this is probably technically not a point of order, but as a point of clarification I never mentioned the United States. I said Australia, the UK, and nine-tenths of the people in this Chamber.

The CHAIRPERSON (H V Ross Robertson): Can I just say to the member that that is out of order. There is a Speaker’s ruling about misrepresentation. If members feel they have been misrepresented in what is being said, they can take a point of order at the end of the speech and clarify it.

KEITH LOCKE: I take Mr Power’s clarification. If he did not refer to the United States I take that point, but I think he has done so on other occasions, and, in general, the people who run his line of argument pay great attention to what the United States Government says about these matters. One of the problems of this bill is that it is a bit of a reflex reaction to what other Governments are saying. We can even see it in the commentary: “The bill is similar to recent overseas legislation”—in Australia and the United Kingdom in particular. I think it is being driven by that rather than by any real domestic need. I explained the two terrorist incidents that have taken place in New Zealand, one of them 20 years ago and one of them 19 years ago. There is no indication that we are under any particular threat at the present time, and there is no objective reason, from the point of view of dealing with terrorism, for introducing this legislation at the present time.

I think the downsides are much greater than the upsides. Even Mr Mark said that we wished to have privacy with our own cellphones and electronic communications. That is very important, but if we want to have that privacy, we should not give the power to intercept to secret organisations that are largely unaccountable in the way that the Security Intelligence Service and the Government Communications Security Bureau are. We might say that they would not affect us and that we can trust them, but if we look around the world we see what has happened with intelligence agencies—their spying on dissidents of one type or another, on a whole range of issues. Material has come out, for instance, on the way that the FBI and J Edgar Hoover spied on all kinds of people from different cultures: black activists, Martin Luther King, Charlie Chaplin, Paul Robeson, and all sorts of people.

Hon Member: Commies.

KEITH LOCKE: Well, that was the problem. Everyone who was a dissenter was defined as a Commie and had to come before a committee and confess he or she was communist, name friends, and all the rest of it. People were naming other people who had no political background, just to get off the hook. It was a very dangerous situation. We can say that that situation does not exist now, and that Helen Clark or Don Brash would never do that sort of thing to us, but we have to establish our legislation, and the powers we give to intelligence agencies in particular, such that they cannot be abused by a Government that has a rather vindictive approach to political dissenters. So we do not want to go down—

Ron Mark: Don’t say that about Helen. It’s not nice.

KEITH LOCKE: Mr Mark is casting aspersions against our Prime Minister there, I think. But we do not want to go down that track of giving the agencies of Government those powers unnecessarily.

The technology matter that Simon Power referred to is very important, because it means two things. The first is that many people can be intercepted much more easily than in the past with letter opening and telephone tapping. It is actually the volume of those interceptions that creates a problem, too. There might be one or two other people in New Zealand called Simon Power, and one of them might have nefarious associations that show up in a big surveillance sweep—particularly when keywords come into it. Poor old Simon Power might be on some database, because somebody up in Whakatane who has the same name has received an email from an Islamic person in Yemen—or, possibly, even two emails. That is double trouble—that Simon Power’s name would be put on a list and all sorts of things would flow from that. All that information is exchanged internationally, so the wrong Simon Power could be put on a database in America.

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

MARC ALEXANDER (United Future): I have just a couple of quick points, really, in response to some of the comments from the Green spokesperson. There is confusion over a couple of things. First of all, the Greens seem to suggest we are living in some sort of benign world where there is no real threat to New Zealand’s security. That is clearly not the case. We are not isolated from the international community, and there has to be a means by which we allow our security services to be able to protect us, and give them the technological ability to do so. The delusion that the Greens seem to be under is that we are not important enough in the world to constitute any kind of threat, at all. If that is an inhibition on our future involvement in the world, then that is a price I do not think anyone is willing to pay—including the people who actually died for the establishment of the freedoms we currently have.

Meanwhile, back in this universe, let us talk about the threat from the internal side of things. There are criminal organisations out there accessing technology that we ought to be able to intercept when we need to. We do not want to allow ourselves to be so overly focused on the external threats—as real as they are—that we dismiss the internal threats that exist. There are gangs in this country, and criminal organisations in this country, that use technology, so if we have the legislative means to access their communication and to disrupt their criminal activity, then I say that that is the kind of legislation we need to support.

There are a couple of things also that have been missed in Part 1, and I want to pick them up. The first is that there are safeguards. The Green spokesperson seems to be of the opinion that once this legislation is passed, everybody’s communication will somehow be listened into by everybody else. That is not so. This bill is all about lawful interception, and about giving the capacity for lawful interception. Before that even occurs, there must be an interception warrant. In other words, there is a lawful process by which interception is made possible, and it can be possible only if we have the technological means to carry it out. Providing that process is what this bill does.

It also does another very important thing. With the pace of technological improvements, it future-proofs the process. It does that in a couple of important ways, not least of which is that it allows network operators to choose the mechanisms by which interceptions will be practicable. So we will not have to revisit this legislation every couple of years in order to give it teeth again. We will be able to pass this legislation in the assurance that it will have ongoing ability to access the technologies required in order for those interceptions to occur.

Hon MARK BURTON (Deputy Leader of the House): I move, That the question be now put.

Hon KEN SHIRLEY (Deputy Leader—ACT): There have been a number of contributions in this debate, and in many senses it seems as if it is the whole of the Committee versus the Green Party and, in particular, Mr Locke. But in many respects I would like to support Mr Locke, and express gratitude that he is making the points he is. They are very important points, and although the ACT party supports this legislation, let us not fool ourselves—these are draconian measures that impinge on civil liberties and freedoms. That is the view that Mr Locke is putting to the Committee and, to that extent, he is right. Where I believe he is wrong is in this issue—that in the current world in which we live, and given the security risks we face, there is a price, regrettable as it may be, that we have to pay as a society to ensure our freedom and security. It would seem, and the evidence is abundant, that without these measures we would have our freedoms and securities stripped from us.

There is an incredibly bitter irony in that situation. It is not a comfortable situation; it is one that, as a Parliament, we should monitor closely to make sure that safety measures and backups are in place to ensure that those measures at all times are exercised and used only in an extremely appropriate manner. Where they are not, we should be doubly vigilant to make sure that the authorities, if they do abuse the measures, are brought to account. There is, in principle, real concern with the measures, but undoubtedly, they are necessary and required.

In talking of security and freedoms, the irony is that the very nations Mr Locke seems to be defending are those that reject the Western values and ideals we enjoy and cherish. We only have to look at the Taliban in Afghanistan, at Mugabe in Zimbabwe, at any of the corrupt tribal dictatorships of Africa, or at the fundamentalist Muslim States to ask what freedoms and securities they enjoy, and compare the overarching freedoms and securities we enjoy in Western-type societies relative to other societies that generate such a threat.

Yes, under this bill any telecommunications network has to enable its systems to be monitored. It has to provide encryption codes and the like, and it is common knowledge that most telecommunications traffic is monitored. Things like key words, Echelon programs, and other such things are realities in the modern world, but, on the other side, what are the examples of the abuse of those things? I would put it to members that there are very few indeed.

We actually enjoy incredible freedoms that the technology gives us, but the price we must pay in the world we live in, with the terrorist threats we face, is that the very tools that we use in our daily lives, and which contribute to our freedom and enjoyment of life, can be used against us by terrorists and the like. These measures are necessary to curb, curtail, and eliminate those illegal activities and threats. It is that balance that the ACT party has wrestled with, and on balance we come down in support of this legislation.

The question was put that the amendments set out on Supplementary Order Paper 197 in the name of the Hon Rick Barker to Part 1 be agreed to.

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

Ayes 110

New Zealand Labour 52; New Zealand National 26; New Zealand First 13; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Noes 9

Green Party 9.

Amendments agreed to.

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

Ayes 110

New Zealand Labour 52; New Zealand National 26; New Zealand First 13; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Noes 9

Green Party 9.

Part 1 as amended agreed to.

Part 2 Interception duties

SIMON POWER (National—Rangitikei): Somewhat deceptively the Committee could be misled to believe that the guts of this bill was in Part 1, but there are some interesting and potentially troubling issues lying deep within the wording of Part 2, and it is worth stepping the Committee through this. We will ask the honourable Minister, David Cunliffe, to answer this question as he might have a better idea of how its interpretation is to proceed. I would be interested in his views on this issue.

Part 2 outlines the issues relating to interception duties, but more particularly, and potentially worrying, is the issue around ministerial exemptions in clause 11. As I said earlier in this debate, I was not lucky enough to be part of the select committee that considered this bill but it seems to me that the Minister may exempt any network operator from the requirements of section 7—to recap, section 7 relates to network operators and the requirement that they have to have the interception capability; essentially the guts of the bill—if the Minister considers there are special circumstances that justify granting an exemption. Somewhat unusually, when that type of provision is put in legislation, the bill gives an example of where a Minister might consider an exemption. It states: “for example,”—not surprisingly, given that it is an example—“a pilot trial of a new network or telecommunications service”.

Members should act with caution anywhere that a ministerial exemption exists. The reason for that is disturbingly contained in clause 11(2), which states that “The Minister may grant the exemption—(a) unconditionally;”. The Minister can unconditionally grant the exemption so that those telecommunications companies do not have to meet the interception capability required, or the Minister can impose any conditions he or she thinks fit. “The exemption—(a) must be granted for a period of time that the Minister specifies; and (b) may, at any time, be varied or revoked by the Minister.”

In those circumstances we are entrusting one individual with an extraordinary power to exempt telecommunications companies from holding the required capability for those interceptions to occur. At first glance, I admit, that may not seem significant. But upon closer inspection what is clear from that particular exemption is that we are creating a whole other regime for that Minister to operate within, quite independently of the legislation that this Committee is currently debating and will more than likely approve.

Our obligation as members of Parliament is to create an environment of certain and clear law, not least because then the affected telecommunications companies know the boundaries that they are operating within. This legislation states that, putting all of that aside, it will allow the Minister to do whatever he or she likes. It will allow that Minister to grant exemptions at any point, on any conditions, and for any length of time that the individual thinks fit. This is no reflection on any one Minister—that would be too easy a target. But what I ask is how appropriate it is as a drafting exercise—and the Minister in the chair, the Hon David Cunliffe, might have a view on this—to create a legislative framework for telecommunications companies to work within to create certainty, at some cost to those companies, and then say that, putting all of that aside, we will let the Minister do what he or she likes; we will create an exemption so wide that the Minister can act outside of the provisions of this legislation, should the Minister think that is the right course of action to take.

On that point I would like to say that this is an opportunity for the Minister in the chair to stand and explain to the Committee why that is. If this legislation is necessary—and apart from the Greens nobody denies that this legislation is necessary—it seems pretty straightforward that if we are to create this interception capability, then the very least we can do is give the telecommunications industry a degree of certainty. Effectively this legislation enforces that interception capability on the telecommunications industry. We can say to the telecommunications companies that this is the way in which this regime will operate, these are the costs—which we will come to in Part 3, a fascinating part of this bill—that these companies will incur, and this is how those costs are recouped.

But in amongst all of this certainty and the framework that members have worked through by way of select committee and under urgency last night and this morning, we give it all away. We give it all away by saying that the Minister can do as he or she pleases with regard to enforcing that interception capability. As a lawyer I ask only one thing from legislation. Actually I ask two things—

Darren Hughes: What’s in it for me?

SIMON POWER: No, not at all. I ask only two things. I want clarity. I do not want judicial activism. We have seen what that can do, and we do not want any more of it. We want clarity and we want certainty. I think members of the New Zealand public are quite entitled to form the view that if Parliament does nothing else—and let us face it; many members of the public question what Parliament does—it must provide clear and certain law. If we are prepared to pass through this Parliament legislation that gives the Minister such a gaping prerogative outside of the provisions of this bill, are we serving the telecommunications companies, are we serving the war against terrorism, are we serving the New Zealand public appropriately?

I see the Minister nodding. I do not think it is rough to ask him to stand and answer this simple question: “In what circumstances would the Crown envisage exercising or granting that exemption?”. There is a balance between the privacy issues that Mr Locke has raised and the security issues that I, Ron Mark, and Ken Shirley have raised, so I think the Committee is entitled to know in what circumstances the Minister envisages that the Crown would exercise the gaping exemption referred to. I do not think it is an unreasonable request of the Minister to add a small amount of clarity and certainty to the debate around the interpretation of clause 11 in Part 2.

KEITH LOCKE (Green): I was very interested in Simon Power’s comments, because he was concerned about such extensive powers being granted to one person to grant exemptions under this legislation. It just reverberated in my mind that in another very current case, that of the Inspector-General of Intelligence and Security, one person is given extensive powers, operating with secret powers that generally we do not know about, and also getting it wrong. It was only after that person had expressed some apparent bias—on three counts in the court decision—that he could be taken off that case. Now he has resigned as inspector-general. But it just shows the danger of relying on individuals to get it right, particularly in the areas we are talking about, of interceptions and intelligence. So I share some common ground with my colleague Simon Power on that question. I hope he will support the moves of the Green Party to have a greater level of accountability, surveillance, and parliamentary accountability of our intelligence services, the inspector-general, interceptions, warrant exemptions, and all the rest of it.

I hope we can work together on that, to move beyond the present situation where we have only this Intelligence and Security Committee, which is made up of the Prime Minister, the Leader of the Opposition, and their appointees. So it is not an MMP committee. It does not have any real powers. It has not had any demonstrable successes. We have the particularly bad situation in respect of the appointment of a new Inspector-General of Intelligence and Security, because it is a matter of the Prime Minister getting her head together with Don Brash to make the decision. Other parties, such as New Zealand First, ACT, United Future, and the Greens, are left out in the cold on this. So I do agree with Simon Power on that matter.

Referring back to the requirements put on network operators in this bill, any operators—be they Internet service providers, be they telecommunications companies—there is a concern amongst some of them, particularly Internet service providers, that they will be required to cooperate with this, and that not only will it cost them time and money to cooperate with the agencies in this interception but they will be, in some way, compromised by this, particularly with their clients. That is a bad situation to put operators in. There are some operators—in relation to the previous debate around the Crimes Amendment Bill (No 6) as well—such as PlaNet Internet in Auckland, or Plain Communications in Christchurch—that were worried about being drawn into this surveillance net.

In fact, one of the things that has come out of the discussion with Internet service providers is that there is some advantage in New Zealand electronic communications as being seen as surveillance-free—that is, police and intelligence agencies do not get into them. It could be an international business advantage for New Zealand communications to be seen in that light. Of course it would not stop them from being intercepted, when they depart our shores, by the CIA, FBI, National Security Agency of America, or whoever. But it would be a business advantage for the Internet service providers and telecommunications people for New Zealand to be surveillance-free and not have this sort of legislation going through.

The bill actually goes beyond the Internet service providers and telecommunications companies, and does cover, for instance, hotels with their communications networks. Hotels are, for example, required to cooperate in the interception of particular customers going through their PABX phone system, etc. So it is drawing a lot of people into the net, and I image that a lot of hotel owners do not understand they will be drawn into this.

There is some advantage in the way the encryption provision is written—that is, there is no obligation on the Internet server provider or the telecommunications provider to decrypt messages, unless they have provided the encryption devices specifically to their customers. It is good that that exists, but we have to realise that this bill is not just giving powers to the intelligence services and the police but also incorporating a lot of other people in the net, and unnecessarily intruding on the privacy of the customers of Internet service providers, and it could lead to a lot of problems.

GERRARD ECKHOFF (ACT): I want to take a relatively short call on what I deem to be an extremely important bill. As I am sure the Committee is well aware, nobody values the freedoms of New Zealanders or, indeed, speaks more about the freedoms of New Zealanders than the ACT party. We are, after all, a classical liberal party. We do not like the intrusion of the State into our daily lives. Yet when we live in a society we must also reflect and understand the times that we live in. From time to time, in order to ensure the freedoms, the democracies, and the lifestyle that we most certainly enjoy in this country, we might have to accept that the power of the State to intercept and to act on our behalf against those who would do us real harm is extremely important. Somebody once said that the price of democracy is eternal vigilance. I have possibly got that wrong, but I am sure that members understand the sentiment. For that very reason, we have to ensure that Big Brother, if that is the right expression, is eternally vigilant and does have the capacity to act on behalf of our free society. It is indeed a free society, despite what some in the Green Party would say about the influence of this bill and the powers it gives the State to intercept communications, etc.

I very much doubt whether New Zealanders who read Hansard or are listening to this debate would be the slightest bit concerned if the Security Intelligence Service listened into my conversation with my wife this morning about the euthanasia debate. I have not the slightest problem with the State intercepting my emails, my communications with my family or my friends. I am unsure as to why Mr Locke feels that if I get a call from overseas, I should be concerned if it comes from Yemen—highly unlikely! But if it did happen that I knew somebody in Yemen, I really would not be concerned about the Security Intelligence Service or anybody else intercepting that call and checking me out thoroughly—

Ron Mark: One wouldn’t know about a member of the Greens.

GERRARD ECKHOFF: Yes, that is right. Those are attitudes that, I believe, reasonable New Zealanders—indeed, 99.9 percent of New Zealanders—hold. They understand the difficulties that we in the Western World face and the need to utilise technology. It is pointless having technology if we cannot utilise it, and if we cannot give the intelligence services the opportunity to intercept on our behalf. It is worth reflecting that many, many years ago we used to erect barriers to protect our society; Hadrian’s Wall, the Great Wall of China, and the Maginot line were built. We had physical barriers in those days. But today, with technology advancement and threats, physical barriers no longer protect anybody. In fact, we need the cyberspace technologies and so on to ensure that we pick up the transmissions of terrorists, one to the other, who would seek to do us harm.

I also emphasis the point that it is not just a matter of external threats from terrorist organisations emanating from the Middle East and other areas; I personally find that there are huge threats in our society from the pervasive influence of gangs in this country. The police need interception powers to understand whatever it is that the gangs are planning to do. With the huge sophistication of the means that those people employ these days, the police must have powers to equal that sophistication, and must have the opportunity to act and reflect the concerns of our society about those internally who would do us harm. I suspect that most New Zealanders do not have a problem with that.

KEITH LOCKE (Green): I would like to take a short call to respond to a point made by Gerry Eckhoff. He said he would not have the slightest problem with his emails being intercepted. Sometimes people use the argument that if they have nothing to hide, why bother? There is a number of dimensions to the Green critique of this legislation. One of them is this straight question of personal privacy. Everyone has affairs he or she wants to remain private. We use computers and emails very extensively. Our whole life is often on our computers, including very personal stuff—love life, and all kinds of things that we do not want people intruding into. It is all very well to say: “Well, if I’m squeaky clean and nothing I’m doing in private is going to get me into trouble with the law, then I don’t need to worry about whether my emails are intercepted.”, but one thing that is true in our society is that all these agencies are operated by real people with the full range of human emotions and foibles, and everything else.

One thing struck me when a former employee of the Communications Security Establishment in Canada, which is the equivalent of the Government Communications Security Bureau here, came to New Zealand a couple of years ago. He said that a lot of this interception stuff is rather boring, so when he and his colleagues came across personal titbits, sex stuff, and what not, they would watch or listen in. It is just human reality that there is interest in personal things. We have experiences going right back to the British royal family, with the “Squidgy” tapes and everything else, of people taking an interest, wrong though it might be, in the personal affairs, sex life, etc. of others.

The problem is that the technology being authorised here involves such a large scale of interception, and fine-tuning who is being intercepted through various filters—email origin, destination numbers, keyword combinations, etc.—that the surveillance can be used in non-political areas. Up to this present time I have been dealing more with the political area of interception, but even in the non-political area of personal privacy people can pry into our lives unnecessarily. There is provision in this bill for hacking by the Government Communications Security Bureau or the Security Intelligence Service—that is, remote access to one’s computer and one does not even know. That could result in people searching around in other people’s files and taking an interest not just in political things but in very personal things. We do not need to go down that track, if it is not warranted, and the Green Party does not think it is warranted in the present circumstances in New Zealand.

RON MARK (NZ First): Although I disagree with those arguments, if I was to take them and accept them, the very first question I would ask that member is what the alternative is. What does that member offer me as an alternative that would give me cause not to vote in favour of this bill, but to support the approach that he might consider best suits our needs? The bottom line is whether we agree or disagree with the invasion of Iraq. New Zealand First made its position very clear on that issue, and I know that it surprised the Green Party. We were opposed to intervention without United Nations approval. So we have agreed on that. But the point I make is those issues are irrelevant to our dealing with the problem we have here. We have the possibility of terrorist individuals and organisations, and people involved in organised crime, using telecommunications to do their business. What is the alternative to interdiction, if we do not pass this legislation and grant these powers? I might well agree with many of the things Mr Locke said, but I am waiting for the alternative. I have a horrible feeling that when we finish up today at 6 o’clock I will still be waiting for an alternative solution.

I also want to address the points made by Mr Power, not so much to criticise him but more to prod the two Ministers who have sat in the chair and said nothing. We have had two highly paid Ministers in the chair. Mr Barker sits there doing what, I do not know. He has not offered one explanation to Mr Power. We had the other Minister, who also offered no explanation. If I might help the Minister, who is more highly paid than me, who enjoys the pleasures and luxuries of ministerial facilities, a big car, and a flash leather chair, I draw his attention to page 21 of the interdepartmental report. He might like to stand and answer Mr Power, because the answers are all there, if the Minister cares to do his job. Hello? I am still waiting. If I might prepare myself for future appointment to a ministerial position, because, quite clearly, some people do not seem very intent on doing their job, I draw Mr Power’s attention to the telecommunications interception capability departmental report dated 11 August 2003. He should go to page 21. The issue of the Minister granting exemptions is very well covered there in clauses 11 and 12. It states clearly that the Minister may exempt any network operator from the requirements of section 7. It goes on to talk about the Minister granting exemptions unconditionally or subject to conditions, and the period that they may be granted for, which the Minister must specify. But it goes on to further state that before granting, verifying, or revoking an exemption the Minister must consult with responsible Ministers.

Simon Power: No one in that Cabinet!

RON MARK: I say to Mr Power that if he had a bank of Cabinet Ministers headed by Don Brash, would he be confident that, in consultation with those Ministers, his Minister could capably give an exemption? We are saying that the Minister will not have that power on his own; he will be required to consult.

The National Council of Women—surprise, surprise—supports the exemption clause. It said that the clause appeared to be fair to all parties. The Telecommunications Carriers Forum supports the exemption clause, and said that it thought the bill should provide some guiding principles around special circumstances, rather than provide an example. It went on about some examples in particular, and said that further exemptions should be included in that provision. It submitted that exemptions should be provided where it is not cost-effective or practical to provide an interception, or where it would damage the reputation or purpose of the product or service, and that another exemption should be where a trial or limited network or service was being provided. The comment was made that it is appropriate to keep wide the grounds for granting an exemption, to allow the legislation to be future-proof, and that providing guidelines as to special circumstances might inadvertently limit those circumstances. The recommendation that was accepted by the committee was that there be no change to the clause.

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

Ayes 110

New Zealand Labour 52; New Zealand National 26; New Zealand First 13; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Noes 9

Green Party 9.

Part 2 agreed to.

Part 3 Miscellaneous provisions

The question was put that the amendment set out on Supplementary Order Paper 197 in the name of the Hon Rick Barker to clause 19 be agreed to.

Amendment agreed to.

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

Ayes 110

New Zealand Labour 52; New Zealand National 26; New Zealand First 13; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Noes 9

Green Party 9.

Part 3, as amended, agreed to.

Clause 1 agreed to.

Bill reported with amendment.

Third Reading

Hon RICK BARKER (Associate Minister of Justice): With pleasure, I move, That the Telecommunications (Interception Capability) Bill be now read a third time. We have had a useful discussion in the House, and it is pleasing to see that in the Committee of the whole House members agreed 110 to 9, which means there is general agreement in this House on this piece of legislation. It is eminently sensible legislation. It does not, as some people have tried to characterise it, extend the powers of the police, the Security Intelligence Service, or other Government agencies to intercept material. What it does do is put obligations on the telecommunications providers to facilitate interception, and to be technically capable to intercept communications going through their networks.

The bill is not prescriptive in the way in which interception is to be undertaken. There was nervousness and some apprehension on the part of the telecommunications providers that they would need to have technologies embedded in their systems. The bill is clear that that is not the case. Telecommunication providers will have the opportunity to determine what technologies they deploy, how, and when, and will be able to reduce their costs accordingly. What we are interested in is an outcome, not necessarily a technological solution. This bill does that.

I want to praise the good work of the Law and Order Committee. It has managed to bring together a number of amendments, give assurance to the industry, and resolve a number of issues. I am very pleased about that; it was excellent work. I think the House has had a very good debate on this legislation, and we are well and truly agreed on the merits of this bill.

SIMON POWER (National—Rangitikei): On behalf of the National Party I would like to commence the third reading of this bill by saying—as we have through all stages of the bill—that we support the Minister’s legislation. I am pleased to hear the Minister say that we had a robust and reasonably good debate on the issues contained in the bill. I think that is true. I am a bit disappointed that the Minister did not take a call during the Committee stage, when members raised two or three issues of a technical nature, in particular, around the ministerial exemption. But putting that aside, I think it has been a debate that has, at the very least, put on the record a range of concerns and views that various parties have had over the passage and the content of this bill.

Just by way of recapping some of those issues in the third reading style, I think it is worth saying that legislation like this is finely balanced. It is a fine balance for members to pass legislation that, on the face of it, appears to interfere with the privacy rights of individuals and their ability to communicate directly with each other via telecommunication devices such as landlines, telephones, email, and the Internet. But that is not what this bill does, because, as the Minister rightly pointed out—and those are not words that fall easily from my mouth—this bill does not increase the powers of various surveillance agencies. It requires telecommunication providers to meet certain standards in respect of interception capability.

A number of issues have been raised in the bill about the costs of those interception capabilities. Issues have been raised about whether the Minister should have powers to grant exemptions at various stages throughout that process. I refer to the comments made by my colleague and friend, Mr Ron Mark, who said: “Well, Mr Power, don’t worry, there’s a panel of Ministers, who have to be consulted.”—a panel of what the legislation describes as responsible Ministers, who have to be chatted to when these decisions are made.

I say to Mr Mark that that does not satisfy me. If members look at who the responsible Ministers will be in light of the current Government, they will see that the Minister in Charge of the New Zealand Security Intelligence Service is one, and the Minister Responsible for the Government Communications Security Bureau is another. Presumably, that is just the Prime Minister. Lastly, and this is the really concerning bit, I see that one of the responsible Ministers includes the Minister of Police. It gives me no confidence that the Minister in charge of this bill, acting alone, will be curtailed by that “panel of Ministers”, as Mr Mark described it.

There are some other matters contained in Part 3 that members did not debate at any length, but are interesting issues that relate to the matter of costs, and where those costs are picked up for those particular surveillance agencies and telecommunications companies. Clause 18(2) specifies that a surveillance agency must pay the costs referred to—that is, the costs incurred by the network operator in conducting a surveillance—on “a date no less than 1 month”, and I see that the select committee changed the period from 2 months to 1 month, “after the date of the invoice or other appropriate document”.

I am pleased to see the razor sharp minds of members on the Law and Order Committee picking up on that. Had that point slipped by the chairman and his diligent team, network communication providers might have been out of pocket for 2 months. Lord knows it is unlikely that those companies would have been able to sustain that in their cash flows, but I see that the costs are now required to be paid within 1 month. Well done to the select committee and its chairman for picking up on that point! It will be helpful to the telecommunications industry.

More important though—and I think this is quite interesting, because it is a Government-driven requirement that the standards of surveillance must be met—the select committee has deemed it appropriate to retain a clause in the bill that deals with the resolution of disputes over costs. I would have thought that that was slightly unusual. I would have thought that legislation that included such a clause was slightly unusual. Presumably, the usual common-law remedies would be available to a telecommunications network company in the event that a surveillance agency did not meet its debts on time. However, in this case we see that the select committee has deemed it appropriate to place in the legislation a particular provision relating to the resolution of disputes over costs.

I guess the overall theme of the bill, and what the House and the Committee of the whole House spent most of their energy on, was whether the Government’s implementation of a bill such as the Telecommunications (Interception Capability) Bill and the framework contained within it, being that of national security, was consistent with the assertions of the Prime Minister, the Minister of Foreign Affairs and Trade, and the Minister of Defence, pre- and post-September 11, that New Zealand continues to live and operate an incredibly benign strategic environment. I know that many members in this House from the United Party, New Zealand First, the ACT party— and to be fair, the Green Party—addressed this issue during their second-reading contributions.

But the Government cannot, at a policy level, have it both ways. It cannot assert, in face of the evidence of Baghdad, Spain, Jakarta, Bali, and New York, that we live in an incredibly benign strategic environment. It cannot deploy troops to Afghanistan and Iraq and still tell New Zealanders that we live in an incredibly benign strategic environment, and then tell them that it needs legislation to help it collect information for national security. It cannot cut both ways. If we do not live in a benign strategic environment—which is what the National Party has asserted from a position long before September 11—then legislation like this would have been necessary back then as well.

When it is clear that we do not live in a benign strategic environment any longer, it seems to me that the Government needs to take stock of the way it produces its foreign policy statements. The best manifestation of that assertion is the bill before the House itself. If we did live in an environment where terrorism was not a reality, then presumably the fears that Mr Locke brought out about the provisions of this bill and its workings would not be valid and this bill would not be necessary. In fact, this bill is very necessary. National has supported it from start to finish, and will continue to do so through the third reading.

MARTIN GALLAGHER (Labour—Hamilton West): As chairman of the Law and Order Committee, I rise to take a very brief call—obviously to acknowledge the necessity of this bill, but also to be mindful of the appropriate checks and balances. Although the bill is essentially very technical, in my view it is a profoundly significant and important one.

I take the opportunity to acknowledge the good work of the committee—in particular, the deputy chairperson, Marc Alexander. I know that the previous speaker would join me in acknowledging the good work of the Hon Tony Ryall, Brian Connell, and of the Government members on the committee. I also thank Edwin Perry for his contribution and acknowledge his good work on the committee. He has now been replaced by Ron Mark.

Finally, this was in many ways—and I say it with sadness—an absolutely necessary bill. This is the reality of the times in which we live. We hope we have it right. We believe we have it right, and I commend this bill accordingly.

RON MARK (NZ First): I rise on behalf of New Zealand First to support this bill in its third reading. I have to say that the debate and discussion we have had has been somewhat passionate. In general, the views of members in the House are not shared by the Green Party, and I want to put that on record. The one thing I love about this country of ours is that we are a democratic nation. We are free to express our views and to have our say. We are free to stand up for those views in the highest court in the land and to express them without any fear whatsoever that our ability to do so will be interdicted, our lives threatened, or that we will be trampled on by the boot of the State in order to silence us because what we are saying is not popular, well-received, or liked.

In that respect I have to say that it is a good thing that we have parties in the House like the Greens. I probably will not be thanked for saying that by some of my political colleagues, but it is. Because at least there is that voice out there warning and cautioning people as to the loss of privacy and rights. However, I have to say that my views are somewhat different from theirs. This legislation has come about because of a need. What is that need? The need is based on the fact that we have organised crime in this country, simple burglars who have the technology to defeat our law enforcement agencies, and people who can roam around in cars at night. Take boy racers. The technology that boy racers have, courtesy of the telecommunications industry, is such that they give the police a very difficult time tracking their movements and curbing their unlawful activities. That is at the low end of the scale.

At the higher end of the scale we have burglars who would break into one’s home and steal one’s possessions. They are able to carry out their unlawful business because they can monitor the police airwaves. Why? Because our police force does not even have secure communications. How ridiculous is that? I will not use the word that comes to mind. I would say that it is extremely ridiculous. It is exceedingly ridiculous that the criminal fraternity can intercept the police’s communications but the police are not in a position to intercept theirs. What does that do? It hamstrings law enforcement agencies and does not assist law-abiding citizens who have had crimes committed against them.

Then there is the gang situation. Gangs are dealing, in an organised manner and on an international basis, in the trafficking of drugs. They pose a greater threat to our community, particularly to our children, and, as we are hearing more and more frequently, to young, vulnerable women, whom young male predators would exploit through the use of drugs—drug rape. The case involving Mr Isherwood is an example.

But at the top end of the scale, terrorism threatens our very existence, let alone our lifestyle. Sometimes we have to swallow a dead rat and accept that legislation such as the Crimes Amendment Act (No 6), the Terrorism Suppression Act, and now the Telecommunications (Interception Capability) Bill need to exist if we are to guarantee safety and security to our people, our children, and our country. Everyone knows that this will not solve all the problems. Terrorists, by their very nature, are extremely adept at subverting systems and at ensuring they remain undetected. But when we have reports that a person who is No. 2 in al-Qaeda may well have visited this country, at least twice, one has to consider that he might have brought a cellphone with him, that it might have been a secure cellphone, and that even if the police or the telecommunications companies had known he was here and had moved to intercept him, they might not have been able to do so. That is a silly situation to allow to continue.

Mr Power’s concern and lack of confidence in a future National Government Cabinet really gives me great concern. The fact that he does not believe he has confidence in future National Ministers, led by Don Brash, to review an exemption proposal being proposed by a Minister gives me great cause for concern. I would simply say to him that under a New Zealand First - led coalition Government, he would not have those same concerns. I am pretty sure the clauses dealing with exemptions that the Government is passing could well be handled inside a Government that we are part of, or leading. I understand his concerns about lack of confidence in Mr Don Brash—

Hon Annette King: Where is the National Party?

RON MARK: Yes, where is the National Party? It is a shame that Mr Power is not able to listen to me here in the House, but hopefully he is by other means. But I would tell him to take heart. He may not have confidence in his colleagues in a future National Government to exercise with confidence the duties and responsibilities under clause 11, and he may not have confidence in Don Brash, in Tony Ryall, or Nick Smith. But help is on its way: his party could always form a coalition with Labour. I am sure there is enough skill on that side of the House to overcome those deficiencies.

I am somewhat distracted, Mr Speaker, because I have never in my entire time in this House been here when one party chooses not to be represented. I do not know whether that is outside the Standing Orders, but it certainly has to be outside the Standing Orders in the eyes of the public for there not to be one National Party member in this Chamber—not one. So when the press is looking for an Opposition, I tell them that they can come to New Zealand First. We are standing here representing the Opposition. We will handle the workload on our own. We do not need to hide under the skirts of the National Party. We are quite capable of representing the opposing views of New Zealanders. If Don Brash does not want to do the job, then I am ready to step in with my leader, Winston Peters, to do it for him. It seems that he does not just run from debate—

Mr SPEAKER: The member will come back to the bill.

RON MARK: He does not just run from this Telecommunications (Interception Capability) Bill. Not only have I not seen him representing his views, but his entire caucus seems to be absent without leave.

I finish by saying that we should focus seriously on the need for this bill. If members of the House have any concerns, may I mention a few names: Riyadh, Istanbul, Manila, Bali, Baghdad, Australia—the various plots there—and Great Britain. If people are still in any doubt having listened to those names, they should consider the tens of thousands of victims and then read section B1 of today’s Dominion Post.

I said a long time ago after the attacks of September 11 that one needs to be very, very careful of the people we are dealing with internationally, when there are people who openly state: “Why kill a tiger if you can kill a lamb?”. That gives one an indication of the mentality and the drive behind the things they do. New Zealand is not a benign country. For anyone who wants to make an impact on the United States or Britain, there is no softer target than New Zealand. I sincerely hope and pray that we never see the day when we have people come into this country determined to make an impact, a political point, by killing Americans, Australians, or Britains on sovereign New Zealand soil. I simply say to people who would oppose such legislation that they should think about those things, because not only will Americans, Australians, and Britains be killed, there will be collateral damage that will involve innocent New Zealanders.

Members may think that my thoughts are a little far-fetched, but I know these people. I lived and worked in the Middle East for 6 years. My job was in the Defence Force. My speciality was inside a special force, and I worked with some very, very good people who dealt with these issues on a day-to-day basis. We are not a benign little country. We are part of the global community, and we are as vulnerable as anyone else to a terrorist organisation that may seek to make a point, regardless of the consequences involving innocent bystanders and people who played no part in the situation that they, the terrorist organisations, find themselves in.

KEITH LOCKE (Green): The Green Party will be opposing the third reading of the Telecommunications (Interception Capability) Bill. We have said all along that the capacity to intercept emails will catch a few more criminals, but the serious criminals will all be able to get round the interception systems by using anonymisers, encryption, code words, Internet cafes, hotmail addresses, throwaway cellphones, or whatever it might be; it is very easy. All the big fish, whether or not they are terrorists, will get round the systems. However, millions of people will be affected because of the scale of the interception—even Waihopai intercepts millions of communications—and it will affect the privacy of many. As I said earlier, everyone has some very private aspects to their lives—be they personal, family, friends, sexual, or whatever—that they do not want intruded upon. We have so much on our computers and in our emails that is very private to us.

Also, large-scale electronic interception leads to a lot of mistakes. There have been plenty of examples of identity confusion in the big security scares in Europe involving bombs on planes. Recently a plane was stopped because of a 9-year-old kid on it, who clearly was not a terrorist. He just had a similar name to somebody on a huge database that presumably got out of control. Another way mistakes are made is when people use email. They do it very quickly, using irony, saying the opposite of what they mean, and using extreme language. Things can easily get out of context. We can see that with intelligence agencies, even in the case of Ahmed Zaoui.

The tape the Security Intelligence Service produced in evidence in that case is clearly just the tape of a tourist. He has himself on it. He did not mail it off to al-Qaeda. He brought it with him in luggage to New Zealand when he applied to the Immigration Service under his own name, knowing he would be interrogated. I will lend it to any member who wants to look at it. Obviously, the Security Intelligence Service has got it completely wrong in describing that as a “casing” video. That indicates that people can get the context completely wrong, and that applies in the area of emails, likewise.

There are examples from around the world. There is one from the Communications Security Establishment in Canada in terms of interception. One Canadian was put on a database because of two emails that were intercepted. In one she referred to her son’s play, “bombing”. The word “bombing” was picked up in a keyword search. She used a similar word in another email, then she was put on a high-security database. The way that this sort of mass interception operates and the way the results are recorded are very dangerous. We all receive hundreds and thousands of emails from people, and if we receive two emails from those who are believed to be suspicious people on a database, rightly or wrongly, then we could be put on a particular list. There is no real control over what use is made of those lists and who might have access to them, or over where they go around the world and over who uses them in the wrong context—using those errors, effectively against us, perhaps when we travel.

The consequences of these mistakes can be hugely inconvenient. I mentioned the case of the airline. A lot of inconvenience was caused to passengers when the airline got a person’s identity wrong. We can look at the example in Afghanistan last year, when the Americans claimed that a particular alleged terrorist, or Taliban member, was deemed to be in possession of a certain cellphone. So the Americans fixed the location of that cellphone when it was turned on, bombed the place, and killed nine kids. That was a very bad incident, and even the idea of bombing someone on suspicion of being the person with that cellphone or email address or whatever is very dangerous, and it shows how out of control some of those agencies are in reality.

The other point is in relation to crime fighting. It is actually quite inefficient and a wrong use of resources and a wrong set of priorities to concentrate on electronic intelligence to the extent that is happening in America, Australia, and now, it seems, New Zealand. The budget of the Government Communications Security Bureau, the electronic interception agency in New Zealand, is much greater than that of the Security Intelligence Service, and that is a waste because the idea that we can really get to the bad people just through this huge expenditure on electronic interception of cellphones, emails, or whatever, is wrong.

We see examples of that day to day with the Americans themselves, who, presumably, in Iraq have electronic surveillance across the whole country. But can they actually track down the people who are letting off these bombs across the country? I have not seen much evidence that they have been able to. A reliance on electronic interception for crime fighting, rather than on people on the ground doing the hard yards in the traditional way, leads to a false sense of complacency, particularly when the agencies doing this are largely unaccountable and have political biases.

That is the problem. Behind these walls of secrecy, there are political biases, which have been disclosed in some of the debate that has taken place in America, Britain, and Australia today. There have been cases recently, such as when Colin Powell went to the United Nations before the Iraq war and had all those pictures of mobile biological warfare labs and everything else. Even though Hans Blix and others were saying at the time that it was all wrong, they went ahead with it. Now it has been proved that it was all fictional and that there was no proper checking. It was creative intelligence for a political purpose, and that is what is happening today.

Unfortunately, New Zealand, by following along with this legislation, under the impetus of pressure from the United States, Australia, and Britain is part of our being an intelligence dependency and getting it wrong. I think this has come out in the Ahmed Zaoui case. It came out in the court judgment yesterday, too, in a quote from the director of the Security Intelligence Service, where clearly the Security Intelligence Service was most worried about getting offside with these overseas intelligence agencies. Accuracy or the rights of Ahmed Zaoui come second to that.

The quote from the Security Intelligence Service director in the court decision yesterday was: “If Mr Zaoui, with his public record, were allowed to settle here, that would indicate that New Zealand has a lower level of concern about security than other like-minded countries. That would impact adversely on New Zealand’s reputation with such countries and thus on New Zealand’s international wellbeing.” The fact that Ahmed Zaoui has been framed in overseas countries and those lies have been circulated by overseas intelligence agencies is secondary to the consideration, whereas the Refugee Status Appeals Authority actually analysed all that evidence, provided now by the Security Intelligence Service, and showed those cases to be frame-ups. So that is the problem we can get into when we get into this area of dependency on overseas intelligence agencies.

The material is all classified, and it is a circle of secrecy. Every country says: “We won’t give you information unless you keep it absolutely secret.’’, so the public of those countries, including New Zealand cannot even find out what is going on. We saw a case of that recently when I asked the Prime Minister whether media reports were true that New Zealand had received transcripts of interceptions of conversations of UN Secretary-General, Kofi Annan, we were told that it is all secret and we could not be told.

There is a problem, too, of this interception authorisation being extended in two bad ways. At the present time, it is just origin and destination numbers of one particular person that interception is to be focused on, but we could quite easily get into a system like the American Carnivore system, or extend what happens at Waihopai, where a combination of key words is put into the system, and a lot of people get caught in that net.

The other dangerous proposal that is coming up—and it has come up in Europe; there were references in the Guardian last October—is the demand that records of all the emails and phone calls be stored by the telecommunications agencies and Internet service providers for a year so that the agencies can look back over a whole year of people’s private lives, as reflected in those records.

So I think we must vote against this bill. It is an intrusion on our privacy. It is giving extra and unwarranted powers to intelligence agencies that have been found wanting, and we do not need it in our situation. We are not seriously subject to terrorist threats. We have not seen terrorist incidents, other than that carried out by the French intelligence agency in 1985 and the bombing of Trades Hall in 1984, and I do not think it is envisaged that these powers would result in the interception of French intelligence communications.

MARC ALEXANDER (United Future): I rise on behalf of United Future in support of the Telecommunications (Interception Capability) Bill at its third reading. This bill ensures that technology is not a barrier to effective national and international security standards. Amongst other things, it essentially fixes a loophole in the Act passed in 1987 that allows for only voice messages to be intercepted by the authorities. This predated the widespread use of the Internet and email and so was grossly out of date. The bill places a legal obligation on network operators to have the technical capacity to intercept and monitor communications when an interception warrant is issued by the High Court and authorised by police, the Government Communications Security Bureau, or the Security Intelligence Service and has the agreement of the communications company. There is a process in place.

Network operators will be required to have the capability to isolate and intercept communications authorised, obtain relevant information about the cause, intercept unobtrusively while protecting the privacy of other communications, and obtain the information in a usable format.

There will also be a legislative duty to assist all service providers to provide reasonable assistance to the surveillance agencies in executing an interception warrant within their technical capability and on a cost-recovery basis. Network providers have indicated some concerns over not being able to fully recover costs or compensation incurred with an interception warrant, as their own staff may be required to provide technical assistance and that would take them away from their normal duties, not to mention the use of premises and systems. The Government has indicated that it will pay for interception capabilities of existing fixed or mobile voice networks implemented within 18 months of the legislation being enacted, not for Internet and email services, at a cost of up to $3 million. This applies only to those networks in operation as at 12 November 2002, the day the bill was introduced.

A 5-year phase-in period for other networks is aimed at helping to reduce the impact on the industry. If undertaken with general upgrades, the transition time will allow network operators to continue to choose systems, designs, and specifications for their own purposes. Compliance costs have been estimated at $12 million over the next 5 years, and a submission to the select committee from telecommunications companies, although disputing the estimated cost of compliance, upon further consultation with a number of other providers found that the original figure was confirmed as being reasonably accurate.

The theory is that whenever a periodic upgrade occurs in the future, the requirements established by this bill will be considered by providers as a matter of course. However, if such requirements prove difficult to achieve, then they might serve to inhibit the introduction of new technologies. The committee amended the bill to make it clear that network operators and service providers have the freedom to choose where and how they provide interception capability.

There are concerns that by creating higher barriers to entry to the industry, this bill will impinge on product design, development, and innovation. Although this is addressed in clause 5, “Purpose”, in the context of the New Zealand telecommunications environment competitors already find it difficult to compete with the monopolistic advantages held by Telecom New Zealand. In this respect, the good news is that the US, European countries, and Australia are seeking international user requirements that would require interception capability to be a standard design feature of new technology, and it is difficult for manufacturers to ignore the consumer muscle those markets can flex.

It is worth remembering that the surveillance agency is liable to pay for the costs in each instance of assistance provided by a service provider. The select committee amended the bill to require surveillance agencies to pay the bill within 1 month rather than 2 months, to lessen the financial burden on operators. The Law Commission initially suggested that those costs be recoverable through the District Courts, but I am pleased to see that the onus to recover costs is clearly spelt out without the need for this kind of action.

It is also relevant to point out that similar legislation in Australia, under the Commonwealth Telecommunications Communications Act 1997, and in the United Kingdom, under the Regulation of Investigatory Powers Act 2000, require network operators to cover the costs of ensuring ongoing interception capability.

The select committee heard submissions in support of the bill from the Police Association, and even representatives from the telecommunications companies that supported the intent of the bill, recognising the need for interception capability to keep pace with technical advancements. United Future gave conditional support to this bill on first reading, subject to scrutiny by select committee. It was our concern that this bill must not alter or increase powers of surveillance agencies at the expense of protecting individual human rights. In this legislation the High Court warrant is intended to allay concerns about protection of privacy. Because of the need for police to seek a warrant to gain access to a network each time, the bill is not likely to encroach on existing privacy laws. We would be more concerned if surveillance agencies were continuously listening to communications traffic without needing warrants to do so. The interception capability requirements also specifically refer to privacy, including the ability to exclude communications that are not authorised to be intercepted.

Having said this, the bill is clearly a response to the increasing threat of terrorism in the wake of September 11. In the case of the Bali bombing, we have already witnessed the use of modern telecommunications by conspirators in the form of text messaging. This bill would bring us into line with the legal requirements for interception capability already in place in a number of countries including Australia, the United Kingdom, Germany, and the Netherlands. But this bill avoids some of the draconian measures in some of those other laws, such as the British Act for example, which forces the surrender of encryption fees on threat of a 2-year jail sentence. Nevertheless, passing the legislation adds further weight to our claims that we are contributing to the war on terror.

Information is one our most powerful weapons in the fight against terrorism, as we saw earlier this week in the pre-emptive raid carried out by authorities in the United Kingdom. There will be many conspiracy theorists, and the Greens are amongst them, I suspect, who will see this bill as increasing the powers of police and other law enforcement and security agencies to undertake surveillance, and this was reflected in some of the submissions to the committee as well. However, the bill does not extend in any way their existing powers; it merely enables them to keep pace with future technological changes.

I think members also need to keep the implications of this bill for domestic crime uppermost in their minds. This is something that I reiterated during the Committee stage. A member of the police electronic crimes unit described the current ability to access only some channels of communications used by criminals as being like police being allowed to breath-test only people driving white cars, while people in coloured cars can simply get away. They are unable to capture evidence and bring it to the courts, simply because they cannot get their hands on such evidence.

Non-voice communications were not the only problems for police. In 2001, the Government signalled that it would require public telecommunications networks to be interception-capable, but it emerged that Vodafone New Zealand did not have this capability, and police said that their ability to combat crime was being seriously eroded because of that. The value of interception capability to police cannot be underestimated. Even without the ability to intercept Internet, email, and some voice traffic, in the year to June 2000, police obtained 32 interception warrants, and 132 people were prosecuted for crimes where evidence of intercepted communications was used. Most electronic crimes investigated are of the old-fashioned kind such as drugs, fraud, sexual offending, and indecent publications, but which have an electronic component.

United Future welcomes the bill and supports it wholeheartedly and unreservedly in the fight against both the external threat to our security and the internal threat to our security from crime organisations.

Hon KEN SHIRLEY (Deputy Leader—ACT): Very briefly, I say the ACT party will be supporting this legislation—certainly not unreservedly, though, and I do not believe any member of Parliament who has studied this bill should accept it unreservedly. In an ideal world we would not favour these measures, because they are an intrusion by the State into what we regard as basic freedoms, civil liberties, and privacy. But on balance we have come to a firm view that we do not live in an ideal world—certainly not in these times—and it is for those reasons that this bill is necessary. The bill is certainly not accepted without reservation; it is accepted with considerable reservation. But we will be voting for it.

Mr SPEAKER: The question is, That the Telecommunications (Interception Capability) Bill be now read a third time. Those in favour will say “Aye”, of the contrary opinion will say “No”. The Ayes have it.

METIRIA TUREI (Green): I raise a point of order, Mr Speaker. Please excuse my failure to realise what was going on. The Greens are voting against this bill. Is there a second vote to be had?

Mr SPEAKER: We have actually passed the bill, but I can take the leave of the House that we have a vote. Is there any objection to my restating the question? There is.

DARREN HUGHES (Labour—Otaki): I seek leave for the vote to be taken again on the third reading of the Telecommunications (Interception Capability) Bill.

Mr SPEAKER: Leave is sought to take it again. Is there any objection? There is not. I will return, then, to the situation where I state the question. I ask members to please pay attention. The question is, That the Telecommunications (Interception Capability) Bill be now read a third time.

A party vote was called for on the question, That the Telecommunications (Interception Capability) Bill be now read a third time.

Ayes 110

New Zealand Labour 52; New Zealand National 26; New Zealand First 13; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Noes 9

Green Party 9.

Bill read a third time.

Bills

New Zealand Symphony Orchestra Bill

Second Reading

Hon JUDITH TIZARD (Associate Minister for Arts, Culture and Heritage): I move, That the New Zealand Symphony Orchestra Bill be now read a second time. This bill enters a cultural environment that has been strengthened by the additional resources allocated to it by the Government and Parliament over the past 4 years. We made that investment in order to ensure that New Zealand’s cultural infrastructure is demonstrably robust and sustainable. With that knowledge and commitment, we celebrate the institutions and people who enrich our culture, as well as enable New Zealanders to participate in our culture and to have access to the many strands that make it up. Our commitment to the creative sector saw an injection of funding in 2000 to place some of our most cherished national cultural institutions on a secure footing base—in many cases, for the first time.

The New Zealand Symphony Orchestra is one of this country’s flagship cultural institutions, in which New Zealanders have taken great pride and pleasure for nearly 60 years. A suite of excellent regional orchestras complements the role of the New Zealand Symphony Orchestra, thus ensuring that a wider New Zealand audience has ready access to orchestral music of very high quality. New Zealanders are very well served by our orchestral institutions, but the New Zealand Symphony Orchestra has not always been well served by the financial and legal parameters imposed on its operations. Since it was established in 1988, there has been very little change to those parameters. The capital funding of $3 million allocated to the New Zealand Symphony Orchestra in 2000 established a more stable financial base for its functioning. At the same time, this Government allocated an extra $1.4 million annually, to ensure that the orchestra would be adequately resourced. With this bill, we address the legislative platform of the orchestra’s operation.

The New Zealand Symphony Orchestra is currently a Crown-owned, limited liability company. It is operated within a commercial framework, in keeping with the provisions of the Companies Act. However, as the owner and principal funder, the Government does not necessarily expect the orchestra to achieve operating surpluses. Although the orchestra is required to remain financially viable, its prime responsibility and role is to deliver world-class performances of orchestral music to New Zealand audiences throughout New Zealand. In doing so, it helps to build a distinctively New Zealand cultural environment.

In 2000, the current company structure of the New Zealand Symphony Orchestra was reviewed, in the context of the State Services Commission’s programme of reforms of Crown entities. The purpose of establishing the orchestra as a limited liability company had been to use the provisions of the Companies Act as an incentive to the board to act prudently in its financial management. Those provisions have had little effect on the orchestra’s operations. Moreover, the company structure does not reflect this Government’s primary interest in the orchestra, which we have already described. Therefore, one of the primary purposes of this bill is to change the status of the New Zealand Symphony Orchestra from a limited liability company, established under the New Zealand Symphony Orchestra Act, to an autonomous, non-company Crown entity. That structure will ensure that robust accountability requirements and the obligations of the board to act prudently in financial management are maintained. However, it does not in any way imply that Governments or Ministers could direct the choices made by the orchestra.

An important principle underpinning this bill is that of artistic freedom. The bill will ensure that the New Zealand Symphony Orchestra operates without ministerial direction in all artistic matters. That reflects a well-established principle that cultural sector Crown agencies operate at arm’s length from the Government, without ministerial direction. That principle is embodied, for example, in the Museum of New Zealand Te Papa Tongarewa Act and in the Arts Council of New Zealand Toi Aotearoa Act. It empowers those cultural agencies to pursue their objectives and perform their functions, while promoting and maintaining freedom of artistic expression, with no direct political intervention. Robust governance and accountability requirements are included in the bill, and the board will be accountable to the Government through the collective and individual duties imposed on its members, and through its reporting requirements under the Public Finance Act.

The principal Act does not prescribe the orchestra’s purpose and functions, nor does it spell out the Government’s or Parliament’s expectations of it. Therefore, the second primary purpose of this bill is to clarify the orchestra’s role as a touring national orchestra, by establishing in legislation its principal objectives and functions. The principal objectives and functions will provide a common understanding about the orchestra’s responsibilities and scope. The principal objectives describe in broad terms the leadership role that the orchestra is expected to take in the New Zealand cultural environment. The orchestra will provide New Zealanders with symphonic music performed to international standards, and encourage the development of New Zealand music, musicians, and composers. The functions expressed in the bill reflect the high-level expectations of the orchestra. They include ensuring that the orchestra presents a broad repertoire of orchestral performance, including New Zealand works and recent works, encouraging the development of New Zealand musicians, and encouraging the development of New Zealanders’ knowledge and appreciation of music.

The New Zealand Symphony Orchestra’s board and management have been actively consulted during the development of the bill, as has the general public. Creative New Zealand and the four major regional orchestras have been briefed on the bill’s contents and progress, and all relevant cultural and artistic agencies had the opportunity to make submissions on its content during the Government Administration Committee hearings. The bill was first read in February last year, and was referred to the Government Administration Committee. The committee received 15 written submissions, and heard five oral submissions. I thank the select committee for its excellent work. Some issues were quite hotly argued, and I am sure that the debate in the House will reflect that.

Submitters strongly supported and endorsed the general intention of the bill. The issues that they raised focused, in particular, on the objectives and functions set out in clauses 8 and 9. That those clauses attracted the most attention was to be expected, as they specify the orchestra’s purpose and function for the first time in legislation. Given the orchestra’s very high profile as a flagship performing arts organisation, there was high interest amongst the submitters in general—in particular, amongst those from the music sector—in the Government’s expectations of the orchestra, and in the nature of its contribution to the cultural life of New Zealand. It was reassuring that the proposed amendments to the orchestra’s principal objectives and functions generally sought to provide an extension or a refinement of, or to give greater emphasis to, the existing provisions of the newly drafted bill, and did not propose fundamental changes to it. I thank all the submitters who took the time to look at the bill.

Some submissions on the principal objectives provided textural amendments that became overly detailed and potentially proscriptive. Those amendments were rejected. The objectives and functions are articulated at a sufficiently high level to allow the New Zealand Symphony Orchestra executive and board to develop the orchestra’s strategic and business plans independently, and to agree to a statement of intent with the responsible Minister. Accordingly, the select committee did not recommend any amendments that would limit the orchestra’s flexibility in that area. We will go through the amendments as we go through the Committee stage, so suffice it to say at this stage that the committee made four major recommendations for changes to the bill. I thank the committee for that excellent refinement of this legislation.

I add one further point. I am aware that in considering the role of the New Zealand Symphony Orchestra in the bill, the select committee had its convictions in relation to the vital part played by New Zealand’s regional orchestras confirmed. This legislation does not necessarily affect those orchestras, but I share the committee’s view about their vital place. The New Zealand Symphony Orchestra is extremely important to New Zealand, and to New Zealanders. So, too, are the regional orchestras, and I am confident that that importance will be acknowledged by the support they receive through Creative New Zealand, and by the collegial support they will receive from the New Zealand Symphony Orchestra.

The Government is particularly pleased to see the performing arts community, including the regional orchestras and the New Zealand Symphony Orchestra, responding so positively to the intent and spirit of this bill. The community recognises and respects the invaluable service that the New Zealand Symphony Orchestra has provided to New Zealanders during its very long history. It is an irreplaceable feature of our cultural landscape. As Associate Minister for Arts, Culture and Heritage, I look forward to seeing our national symphony orchestra flourish within the appropriate legislative framework, and to its continuing, wonderful performance as an artistic institution. I am confident that the ongoing cultural benefits that accrue from the Government’s commitment to the orchestra will benefit all New Zealanders. I thank the individuals and groups that made submissions on the bill, and I am grateful to the members of the select committee and the other parties in the House for working so constructively on it.

Dr PAUL HUTCHISON (National—Port Waikato): Mr Speaker, thank you for the opportunity to speak on this unnecessary New Zealand Symphony Orchestra Bill. I must admit that the very thought of the New Zealand Symphony Orchestra fills me with great enthusiasm. National very much supports the New Zealand Symphony Orchestra, and very much supports the concepts of artistic independence and artistic excellence, but we do not support a Labour Government bill enshrining the orchestra in unnecessary legislation. It is quite ironic that the Prime Minister, Helen Clark, praised the New Zealand Symphony Orchestra, saying it is iconic—and so do we—yet she wants to enshroud it in all sorts of unnecessary legislation, and to prescribe its functions and objectives. The question really is when is a symphony orchestra not a symphony orchestra, and the answer is when its functions are enshrined in Helen Clark legislation. Just what is it in the genetic make-up of the New Zealand Labour Party that makes its members unable to resist the temptation to involve State control in every piece of legislation they can think up?

In this particular case, the Government has the gall to suggest that it is in the name of artistic independence. The policy statement in the explanatory note of the first reading copy states: “The primary purpose of this Bill is to change the status of the New Zealand Symphony Orchestra … from that of a limited liability company established under the New Zealand Symphony Orchestra Act 1988 to a non-company Crown entity. … The New Zealand Symphony Orchestra Act 1988 does not prescribe the Orchestra’s purpose and functions, nor government’s expectations of it. As a limited liability company, the Orchestra operates within the requirements of the Companies Act 1993. Consequently, it is expected to carry out functions that are commercial in nature.”

What is wrong with that? Why prescribe the functions and objectives of an organisation that thrives and flourishes when it is given the ability to do so? It is quite, quite ironic that the Prime Minister of New Zealand, who so enthusiastically praises the orchestra and its past successes, now wants to destroy them.

When one looks around at some of the world’s greatest orchestras, it is quite obvious that those with some of the finest artistic performers and with absolute, quintessential creativity have organisations that owe their very existence to obeying commercial principles. I think of the London Symphony Orchestra, the London Philharmonic Orchestra, the Chicago Symphony Orchestra, the Cleveland Orchestra, and the Berlin Philharmonic Orchestra. They are all orchestras that exist on being absolutely responsive to the public—not to a Government prescription, which is exactly what the Labour Government wants. Here in New Zealand, we have only to think of the Auckland Philharmonia Orchestra. That is a very successful orchestra that operates extremely successfully with no legislation and with a cost, in terms of Government help, of about 15 percent per year of that of the New Zealand Symphony Orchestra.

Some of the world’s finest orchestras are in America, and this is the prescription that encapsulates them: “An organisational structure that canonises the music director, a volunteer support system that creates serious tension between the art of music making and the business of orchestral management, and a reliance on community sponsorship that juxtaposes popular taste with the moral virtues of serious art.” It is quite extraordinary to look at the principal objectives and functions that the Labour Government has dreamt up for the New Zealand Symphony Orchestra. I go immediately to clause 8(c), which states: “to be a leading New Zealand performing arts organisation with a role in the development of a distinctively New Zealand cultural environment:”. What does that mean and why does it have to be prescribed in legislation, when we have had a New Zealand Symphony Orchestra that performs extremely well? The Government admits—in fact, it cries from the rooftops—how well it has been performing, but, oh no, the Labour Government wants it to develop a “distinctively New Zealand” cultural aspect.

It gets worse. The functions in clause 9 include: “(f) to carry out any other functions consistent with its principal objectives, as agreed to by the Minister after consultation with the Orchestra:”. The Minister has to be brought into those objectives and functions. The Government just cannot help itself. On the one hand, we have the Labour Government saying what a great orchestra it is under its present structure. But, oh no, the Government has to enshrine and entangle it in prescriptive legislation. It cannot help itself.

There has been a little bit of debate about the board structure itself. Again, there is an enormous irony there. There has been quite a lot of thought about putting a player on to the board. There are many orchestras around the world that do that. But, no, the Labour Government says: “Let’s be pure on governance when it comes to the $10 million Symphony Orchestra, but when it comes to the $8 billion district health boards, oh no, we have to have a majority-elected system. We have to have a majority-elected system when it comes to $8 billion, but when it comes to the New Zealand Symphony Orchestra, we are going to be pure.” The Labour Government has perpetrated some awful confusion on us, and at times it is very hard to keep up with it. The very cost of the legislation—$1 million—surely would have been far better put towards the musicians themselves, but, no, let us drag it through the House and the select committee for the cost of $1 million.

I want to recall an experience I had listening to the Shanghai Orchestra that visited New Zealand 20 years ago. In the first half of the concert, it played the Yellow River Concerto and Taking Tiger Mountain by Strategy. It was an awful, plodding, boring experience. But in the second half of the programme, it played traditional Chinese music that had been generated and had evolved through thousands of years of experience, and was played with a whole range of orchestral instruments. It was pure magic. The clear contrast is that of State-controlled music versus that of an orchestra given its head. This bill that the Labour Government is perpetrating is most unfortunate. The Government praises the orchestra as it is, yet it wants to shackle it quite unnecessarily. The New Zealand Symphony Orchestra is carrying out a superb job as it is. The National Party wants it to flourish and we wish it all the very best, without this unnecessary legislation.

DIANNE YATES (Labour—Hamilton East): As chair of the Government Administration Committee, which heard the submissions on this bill, I wish to support it. I particularly want to thank the members of the orchestra who set a very enjoyable precedent by playing a little mini-concert for the committee. We thank them for that, and it was a pleasure to have them at the committee. The bill does not mandate that a member of the orchestra be a member of the board, but it distinctly states, in schedule 1, that the board should include a balance of members with financial and artistic awareness.

DAIL JONES (NZ First): It is my pleasure, on behalf of New Zealand First, to speak once again to the New Zealand Symphony Orchestra Bill. I have had the opportunity to read the report from the Government Administration Committee. We do not have a regular member on that committee, so I have had to keep in touch with what is going on. In reading the report, I am pleased that the committee has given such broad recognition to the submissions that have been made to it. As the previous National Party speaker said, this bill restructures the orchestra from being a company under the Companies Act 1993, but he did not quite make it clear that it now becomes an autonomous non-company Crown entity, and the existing limited-liability legislation is brought to an end. As the commentary indicates: “In becoming an autonomous Crown entity, the Orchestra will be subject to the reporting requirements set out in the Public Finance Act 1989.” That is important for us all as members of Parliament; if the taxpayer is going to make money available to the orchestra, there should be a mechanism by which the taxpayer has some opportunity to consider the way in which the money is being spent, and in this case it will be in terms of the Public Finance Act.

The select committee is quick to point out, and New Zealand First supports this view: “Notwithstanding these requirements, in artistic matters the Orchestra will be able to operate independently and without ministerial direction.” That is clear from the functions provision of the legislation, as well, although that does not seem to have been quite recognised appropriately by the previous National Party speaker.

All the regional orchestras around New Zealand will be pleased that on page 2, under the heading “Recognition of professional regional orchestras”, the select committee has taken the trouble to refer to the work done throughout the country. I think recognition should be given. The committee states: “We note that the bill does not provide any recognition of New Zealand’s professional regional orchestras such as the Auckland Philharmonia and the Wellington and Southern Sinfonias. The Auckland Philharmonia commented that the bill’s lack of recognition of other professional orchestras could be interpreted to mean that the Orchestra is the only professional one in New Zealand. The Philharmonia expressed its concern that such an interpretation could preclude government support and recognition of professional regional orchestras.

To address the Philharmonia’s concern, we would have supported the inclusion of a preamble in the bill to provide for the formal recognition of New Zealand’s professional regional orchestras. However, as the bill was introduced without a preamble, one’’—unfortunately—“cannot be inserted by way of amendment to the bill. We therefore wish to offer our support and recognition of New Zealand’s professional regional orchestras that serve New Zealand audiences so well. Our intent in providing this recognition is to ensure that enactment of the bill does not see the preclusion of government support and recognition of our professional regional orchestras.”

I would expect that all the professional regional orchestras in the country should bear that in mind if there is ever any problem with regard to recognition and appropriate financial support from time to time. This House greatly appreciates the work they do. I seem to recall that in my first reading speech I mentioned in particular the Auckland Philharmonia, the Wellington Sinfonia, and the Southern Sinfonia, and I am pleased the select committee has taken the matter forward.

The bill contains a functions clause, and slightly more emphasis should be given to it than has been given. The functions are set out in clause 9. In particular, paragraphs (a) to (e) look at the actual work the orchestra does, and ensure it is given independence in so far as those functions are concerned. Any involvement by the Minister is set out in paragraph (f). Paragraphs (a) to (d) ensure that the orchestra presents a broad repertoire, and encourages the development of New Zealand musicians, the appreciation of orchestral music, and the development and expansion of the orchestra’s audience, which is perhaps one of the most important things—to make sure there are bums on seats when the orchestra comes to town. In general, from all the advice I get, the orchestra is especially appreciated in the regional areas of New Zealand—more so, sometimes, than in Auckland, for which I can speak with some degree of authority. Paragraph (e) describes the function of providing a touring orchestra.

All those functions are performed without any advice from the Minister, because paragraph (f) states that the orchestra is “to carry out any other functions consistent with its principal objectives, as agreed to by the Minister after consultation with the Orchestra:”. So, presumably, if the orchestra wants to go off to London, it has to consult the Minister about that before it comes to that decision. Equally important, in paragraph (g) is the function “to co-operate with other institutions and organisations having objectives similar to those of the Orchestra.” That brings us back to those regional orchestras and suchlike, and perhaps to some of the smaller ones. The Bach Musica, which meets often at Auckland’s St Matthew-in-the-City, is one of those that, I am sure, would be taken into account, as well.

In looking at the principal objectives of the orchestra, New Zealand First is concerned that not enough recognition is given to the orchestra being a full-time, professional orchestra, and we propose an amendment to clause 8(b) at the Committee stage. Clause 8(b) just says that a principal objective of the orchestra is “to provide an orchestra that—”. Some of the submissions have indicated that that does not necessarily mean a full-time orchestra, and one can take that point. All sorts of interpretations come up when we look at legislation after it has been passed, and the opportunity to amend the legislation and make it abundantly clear is here and now. The Hon Brian Donnelly proposed to move an amendment. Unfortunately, he is not here today, so I am doing it on his behalf. We intend to delete the words “an orchestra” and insert in their place the words “a full-time professional orchestra”. The insertion of the word “full-time” will put the matter beyond doubt. I hope we will have the support of the Government and the House.

The other amendment we have is to clause 9(g), which reads “to co-operate with other institutions and organisations having objectives similar to those of the Orchestra.” After the word “Orchestra” we would like to have inserted “to the extent that it does not compromise the Orchestra’s ability to fulfil its other obligations”, which is a fair enough statement. So New Zealand First will be moving those amendments. We see other amendments with regard to a players’ committee, meaning a committee of players in the orchestra established for the purpose of fair representation, and we do support the concept of fair representation. We will be supporting amendments along those lines.

There has been some criticism of the Government by the National Party with regard to the nature of this bill. Of course, that is fair enough. That is what Parliament is all about. We are here to criticise each other and find out what others’ views are. I look forward to the next National Party speaker telling us whether it is a National Party proposal to sell the New Zealand Symphony Orchestra in the event that the National Party should become the Government. I go slightly further: one of the vehicles that carries the New Zealand Symphony Orchestra’s playing is Radio New Zealand, which includes Concert FM, and I would like to know, as an avid Concert FM listener, whether the National Party has a policy to sell Radio New Zealand, or perhaps to curtail Concert FM. National may regard it as a station that is not needed in society. So will Concert FM go if there is a National Party Government? I would not support that, at all. I do that from purely selfish personal interest. I wake up to Concert FM in the morning and I go to bed with Concert FM at night, and I declare my conflict of interest, my personal interest in the matter, straight away. If National Party members criticise the Government and other parties, which is fair enough, it is beholden on us in New Zealand First to ask the National Party whether we will see the end of the New Zealand Symphony Orchestra if National becomes the Government. Will we see the end of Concert FM if National becomes the Government? Its members are silent now, but I expect we shall hear something from them on this issue before the debate is concluded.

MIKE WARD (Green): The Greens will be supporting this bill. It is good legislation. To prescribe that a principal objective and function of the orchestra is support of New Zealand music and composers is an important part. For a long time, New Zealanders have had the idea that the bit of our culture that distinguishes us is the bit that the tangata whenua bring to us—we take great pride in that—and that has been our culture. In fact, we have a very strong artistic culture from our European heritage, too, and the orchestra is an important part of that.

It is a very good orchestra. It not only gives strength to the best of our music but also gives strength to our up-and-coming musicians. In the space of the last month I have been to two orchestral performances in Nelson, one by the Nelson Symphony Orchestra and the other by the Youth Orchestra in Nelson. Both of those orchestras contain very young musicians who are looking for a career pathway, and the New Zealand Symphony Orchestra provides that goal for them.

In terms of the membership of the board, we have some difficulty with the exclusion of player membership. In fact, although there is the possibility of a player being appointed, it is fairly clear that the management of the orchestra is not keen on that, and the Minister in charge of the bill does not seem to be keen on it, either. It seems to me that with the level of expertise, memory, and experience contained in the orchestra, it makes very good sense to have orchestral membership on the board. The Greens will be putting forward an amendment to substitute a subclause that makes provision for player membership on the board. For those who suggest that, perhaps, the interests of the players might override the broader interests of the orchestra, I would suggest to them that the requirement that board members play a lesser role when considering issues with which they have an interest greater than that of the public at large probably means that in fact that would not be possible—that a player member would have to take a lesser role on issues that affected the orchestra’s members.

I would suggest, too, that the orchestra have a single member on the board. That member would be one member out of five to eight members; if that member wants to convince the rest of the board of the virtue of his or her ideas, he or she would have to put up a pretty persuasive case. Such a member would bring unique knowledge, not only of the music but also of the practical implications of the decisions that are made and their effect on the day-to-day running of an orchestra. For that reason, it is important that the board membership includes a player member of the orchestra.

It has been suggested that another amendment would make it possible for the Minister to appoint both the chief executive and a player member. It would be unusual for the chief executive to be a member of the board. The chief executive will always be there, and, although not having a voting role, will have a very great influence on the deliberations of the board.

We will support the bill, but with that amendment.

DEBORAH CODDINGTON (ACT): The ACT party is not supporting this bill. We do not see that it is necessary, and we are not quite sure why the Minister is putting it forward. We are not sure what she is trying to fix—what is broken. On reading through the legislation, it appears to me that we are actually making the situation worse than it is at the moment, especially when we see it being brought in under urgency.

If we look at the history of this legislation, we see that there are some very serious anomalies in the bill, and there are some serious omissions from it. On reading the history of the legislation, I see that some of the most important submitters to it—the player representatives themselves—have been ignored. I wonder why that is so. I wonder why the Minister is so averse to having a representative from the actual orchestra on the board. Is there an assumption that because one is creative and artistic, one therefore has no knowledge of governance and financial matters? That is an arrogant assumption. There is no evidence that just because somebody can play a musical instrument to the standard of being in a national symphony orchestra, that person does not have the ability to sit on a board and take part in the daily, indeed annual, running of the orchestra.

The primary purpose of this bill is to turn the orchestra from a limited liability company into an autonomous Crown entity—in other words, as my colleague Heather Roy said during the first reading, so that it cannot go broke. One would doubt whether any Government would let the orchestra go broke, because even if they do not like going to listen to the symphony orchestra, everybody in New Zealand likes having it there. If their children learn musical instruments, membership of the orchestra is something for them to aspire to. Indeed, as a parent who has forked out thousands of dollars for musical lessons, I know it is an incentive for urging one’s children on to practise.

If we take the annual report of the symphony orchestra for the year ended June 2002, we read that the chief executive stated in his overview: “In most months of the 2001-2002 year we recorded better than budget income and lower than forecast expenditure. This reflects sound management, underpinned by sure-footed artistic decisions that have resulted in significant increases in audience numbers through the country.” If we take that on its own, we have to wonder why we are bringing in this legislation.

If we go a bit further, we see chairman Selwyn Cushing lamenting the fact that sponsorship has been dropping off. I think that two of the main sponsors, Air New Zealand and Telecom New Zealand, did not continue their sponsorship. Maybe that is what the Minister is trying to fix with this new legislation. If the organisation cannot go broke, maybe corporates will be more prepared to sponsor it. But I would argue that the reason that corporate sponsorship is dropping off from organisations like the New Zealand Symphony Orchestra, Opera New Zealand, etc. is because companies in New Zealand—small and medium, as well as big companies—are facing increasingly high compliance costs. They are spending more of their profits on having to comply with legislation that we put through this House, in urgency and outside urgency.

We have only to look at what has gone through in the last 18 months to see legislation that has forced companies to spend more of their profits not on sponsorship of things like the symphony orchestra but on things like health and safety, stress management, and now increased holiday pay. That had already been built into wages over the years, but now it has to be added on top. We will see more and more sponsorship of those sorts of organisations drop off, unless we get serious about improving the economy in this country and let companies and individuals keep more of their own money so that they can become donors or sponsors. Simply passing legislation to turn something into a Crown entity will not solve that problem.

If we take clause 8, we will see what the principal objectives of the orchestra are. The orchestra will be required to perform music “to an international standard”. Says who? Who will police that? What will happen if it does not? Will they take out the piano player and shoot him? Will they sack the lead violin? Why are we legislating for those sorts of things? Another objective is to provide an orchestra that has “strong community support”. It already has strong community support. How do we legislate for an “artistically imaginative” orchestra? It is ridiculous that we are introducing those sorts of terms into legislation.

Being “artistically imaginative” is something people are born with. They can develop it through hard work, they can hone it, they can improve it, but we cannot legislate for it. A symphony orchestra is simply made up of a number of individuals, all of whom have artistic imagination. We cannot pass legislation and, by law, order a group of musicians to have artistic imagination. It seems to me that this Government is reaching new heights in ordering and bossing people about and telling them what it expects them to do.

I come back to the issue of board membership. We will be supporting the Supplementary Order Paper introduced by Mr Marc Alexander of United Future because it seems to me that—despite the Minister standing up and saying that she supports artists, and everything, in this country—by not having a representative of the artists of the orchestra on the board, she is not supporting the artists at all.

The players committee made submissions, which were very well set out, on why there needs to be a representative of the permanent players on the board. That has been totally ignored. I would like the Minister to take another call and explain to us why she has deliberately left that provision out of the legislation. Why is she so adverse to it? It is not simply an oversight; it seems to me to be a deliberate slight to the players in the symphony orchestra.

The Minister would obviously rather read her newspaper than consider how the players in the orchestra feel. Perhaps if one of them were good at knitting, he or she would get on the board. I would argue that we cannot have the board of a symphony orchestra without a representative from the musicians on it, and that is why we will be supporting Marc Alexander’s Supplementary Order Paper when it comes to the vote.

Hon GEORGINA TE HEUHEU (National): I do not mind at all having a little bit of an opportunity to sing the praises of the New Zealand Symphony Orchestra. I am an avid follower of the orchestra. I think it is rightly recognised as one of the leading institutions in the arts sector, and we should all be singing its praises. National supports artistic excellence and artistic independence, and the New Zealand Symphony Orchestra has shown itself to represent the best of that. The opportunity to sing its praises is certainly welcomed.

However, the time of this House is being taken up with a bill that is overly prescriptive and overly controlling of an institution that is being asked to maintain its artistic independence and artistic integrity. That, in my view, is rather unfortunate and totally unnecessary. I recall some words that Minister Maharey said when the bill first surfaced. He said that nothing in the legislation would diminish the Symphony Orchestra’s artistic independence or integrity. He said it would continue to act without ministerial, or indeed, parliamentary direction in artistic matters. He said it would be required to seek to contribute to the development of a distinctly New Zealand cultural environment—whatever that is. This Government is great for adding provisions to legislation that seem to indicate that the one-size-fits-all concept is right for New Zealanders. New Zealand has a multilayered, multicultural environment, and one has to have a little bit of sympathy for any organisation or institution that has that as its primary objective.

This is a Government that applauds the artistic independence and artistic integrity of the New Zealand Symphony Orchestra, yet after reading clauses 8 and 9, which set out both the principal objectives and functions of the orchestra, we have to wonder if this Government means what it says about maintaining the artistic independence of our cultural and artistic institutions. This bill is very prescriptive. It brings more State control into an area where we want to encourage creativity and artistic imagination. Even though the Minister was at pains to reassure New Zealanders that there would be no ministerial interference, again we have to wonder. Because if the Government means to be this prescriptive—and I would echo the comments of Deborah Coddington—what happens if the orchestra does not deliver on the prescription? What do we do about the orchestra if that does not happen?

The bill states that one principal objective of the orchestra is “to provide the public of New Zealand with live and recorded performances of symphonic music performed to an international standard.” Who measures the international standard? How do we measure that? If, in someone’s view, it does not reach the international standard, do we then “can” the orchestra? These sorts of provisions in legislation, in my view, are stupid. They are a nonsense, and they become meaningless because there is no way of measuring whether such music is being performed to an international standard. That is mostly because somebody has to make a judgment on that, and the judgment of Helen Clark may be different from my judgment.

This bill is an overkill. It purports to be a supporter and a maintainer of artistic independence and integrity, yet in its establishment and powers it sets out some pretty prescriptive provisions. National certainly does not support that. If we want artistic creativity to fly, then we have to have a supportive framework and some provisions for financial accountability—because taxpayers’ money is involved in the Symphony Orchestra. But those provisions should be as few as possible, otherwise the board scurries around worrying whether it is applying the prescription, and always with the Minister hovering over it.

Even though clause 14 relates just to governance, where does governance begin and end? We are not sure with this Government most of the time. Clause 14 talks about the role of the Minister. It says that the Minister may review the operations of the orchestra, even though clause 16 states that the orchestra is independent in all artistic matters. We cannot trust that sort of thing when the bill is laying down a prescription for the artistic activities of the institution. This legislation is a bit of a worry—it is a bit of an overkill. It is typical Labour Government State control, and typical Labour Government State prescription. What happens when the prescription is not followed? Who knows? How do we measure it? Who measures it? We cannot measure it. These provisions are entirely unnecessary and inappropriate. National opposes this bill most strenuously.

The other point I want to make in that regard is that there is probably some reservation on the part of our regional orchestras about the closeness of the relationship that will develop under this bill between the Minister, the Government, and the New Zealand Symphony Orchestra. As we all know, we have some wonderful professional regional orchestras. I remember a concert that the Auckland Philharmonia Orchestra held about 5 years ago in Rotorua’s redwood forest. It was absolutely marvellous. I am pleased that the select committee was of a mind not to give the Symphony Orchestra recognition that would seem to give it favoured status over and above the regional orchestras. I think that is very important.

Overall, though, this bill has taken up the time of the House, which it should not have done. We last debated it in urgency, and here it is again. If we mean what we say about wanting to encourage creativity, imagination, and artistic integrity in the arts sector, then our watch over those things should be minimal. This bill is way over the top and is not appropriate in any way.

I applaud the New Zealand Symphony Orchestra. Of course it knows it needs a certain amount of accountability, but outside of that it should be left to do what it does best, and what it has done in the past—that is, continue to favour New Zealand audiences with symphonies and music of the highest order.

MARC ALEXANDER (United Future): I rise on behalf of United Future to make a contribution on the second reading of the New Zealand Symphony Orchestra Bill. The introduction in the commentary on the bill states: “The main purpose of the New Zealand Symphony Orchestra Bill is to clarify the New Zealand Symphony Orchestra’s role as a touring national orchestra by prescribing in legislation its principal objectives and functions.” Well, that is wonderful. I have never thought there was anything wrong with its role. I echo some of the comments made by the ACT member Deborah Coddington, who said there was nothing broken about it, at all. We knew what the role of the orchestra was, and I guess it is a traditional role that did not need to be defined particularly. But if the orchestra’s role needs to be defined, that is fine.

The commentary on the bill also states: “The bill intends that the Orchestra will operate in a responsible manner”—we are all grateful for that—“and maintain its financial viability while meeting its principal objectives in performing its functions.” The orchestra’s financial viability is determined by the amount of money that, basically, the taxpayers have to fork out for it. So what will the orchestra do for the taxpayer dollar? The fact that the orchestra performs its functions of touring and allows the New Zealand taxpayer to access the considerable talents embodied in it are matters that we would definitely like to see entrenched as part of its role.

It was an election policy of United Future in 2002 to ensure that the national orchestra is put on a sure, long-term footing. I believe this bill addresses that issue. A Crown entity is a better structure in which to situate the orchestra than the present governance arrangements, so we are pleased about that, as well. More generally, ensuring the long-term survival of the orchestra by prescribing its functions and obligations in legislation is important, because as the national orchestra the New Zealand Symphony Orchestra is an important part of New Zealand’s culture and identity. The Symphony Orchestra plays a valuable role in projecting New Zealand culture to an international audience by capitalising on symphonic music as an international language, while presenting something uniquely Kiwi in composition and performance. The orchestra also plays a vitally important educational role in fostering the development of young performers at home.

One of the problems that we have always had with regard to this bill concerns board membership. United Future has tabled two Supplementary Order Papers that ring-fence a position on the board for a player from the orchestra. If we have a quick look at clause 13, which sets out the role of the board, we see that three provisions stand out. Firstly, the board has the authority in the name of the orchestra to exercise the powers and perform the functions of the orchestra. We have no complaints with that. Secondly, all decisions relating to the operation of the orchestra must be made by or under the authority of the board. We have no problem with that, either. Thirdly, the board has all the powers necessary to carry out its function. Again, we have no problem with that. But one of the most important aspects of the role of the board is to truly represent the orchestra, so as to allow members of the orchestra, or at least a voice from the orchestra, to sit alongside the other members of the board and push for their case—whether artistic, management, or otherwise. That would be reasonable and democratic. I find it astounding that this Labour Government is trying to deny players the ability to voice the concerns that members of the orchestra will have from time to time, and that orchestra members will not be able to take part in board decision-making processes. So United Future has tabled two Supplementary Order Papers, with a slight variance, that ring-fence a position on the board for a player from the orchestra.

It is vital for the good of the whole of the New Zealand Symphony Orchestra as an entity that players be represented on the board by at least one player. Let us face it—it is their orchestra. It is both New Zealand’s Symphony Orchestra and the players’ orchestra. It is the way that the players express their life—through their music, and through their instruments. They ought to have a voice on the board. In order to ensure that the clarity of the players’ position is made fulsome through the board management, we should ensure that the board always contains at least one person who knows orchestral life from the inside. It is all very well to have a bunch of managers sitting there, but if they are not in tune with the players, and if they do not understand and appreciate the manner in which the orchestra actually provides the music in terms of its charter responsibilities, then how on earth can the players’ interests be well represented? Currently, over 30 personnel and management lie between the players and the board of governance. How are the players supposed to be heard through all of that? I suggest they are not being heard at all, which is one of the reasons why we are pushing so hard to have player representation on the board.

I cannot for the life of me understand why the Labour Party, which prides itself on trying to give voice to every minority group it can find under any rock in this country, is declining the opportunity to give voice to the very people it is to have governance over in this legislation: the players themselves. That makes absolutely no sense whatsoever. I look forward to the support of some of the other parties in the House for either one of my two Supplementary Order Papers. The consultation provisions and practices provided for in the bill are clearly inadequate. The present situation does not allow time for detailed discussions, and the board may be unaware of the fact that a player’s perspective would be important or useful on other issues not raised in the half-hour, monthly consultation meetings. In other words, the players are overlooked. If the orchestra members themselves are allowed to participate on the board as of right, it will match successful overseas practice—for example, in the Sydney symphony orchestra. Why do we want to be so out of tune and out of step with other orchestras around the world? Why do we think that our players are incapable of actually thinking, being on the board, and contributing to board decisions?

We know that a player member of the board would face many challenges from both sides of the organisation. However, providing the right kind of player representative, one who is well briefed on governance responsibilities and who understands the need to act in the best interests of the orchestra, is not beyond the capability of the players. If the players are smart enough to be as good as they are at playing an instrument, members should trust me when I say they have a brain! Players’ brains and vocal chords ought to be used to articulate their concerns. Information would be able to flow not just to the board but also from the board. That would mean players would have greater understanding of board decisions—something that does not take place at the moment. It is almost as though we do not want members of the orchestra to participate on the board, because we want to keep them in the dark, just like mushrooms—and we all know what mushrooms grow in! Conflicts of interest may arise for a player representative, particularly around wage negotiation time, but that is not an insurmountable problem. It is successfully traversed in other orchestras by having the players’ representative stand down during that period, and I do not see why such a practice could not operate here.

Contrary to the Government’s opinion, I say having a players’ representative on the board would not be a disaster. It has not been a disaster for other orchestras around the world. It would add to the experience and integrity of the board. It would also greatly improve player-board relations, and encourage greater representation from the people for whom this bill is supposed to matter most: the people of New Zealand and the players themselves, who provide their artistic endeavours for the public.

A party vote was called for on the question, That the amendments recommended by the Government Administration Committee by majority be agreed to.

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Question agreed to.

A party vote was called for on the question, That the New Zealand Symphony Orchestra Bill be now read a second time.

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Bill read a second time.

Instruction to Committee

Hon JUDITH TIZARD (Associate Minister for Arts, Culture and Heritage): I move, That it be an instruction to the Committee of the whole House on the New Zealand Symphony Orchestra Bill that it take the bill part by part.

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

Ayes 71

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

Noes 48

New Zealand National 26; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata.

Motion agreed to.

In Committee

Part 1 Preliminary provisions

Dr PAUL HUTCHISON (National—Port Waikato): Clearly, Part 1 of the New Zealand Symphony Orchestra Bill is very important, because it includes both the commencement date and the purpose of the legislation. I want to make just one point about the commencement date. If one looks at the legislative history of this bill, one can see that it was introduced on 10 December 2002. Once again, one does wonder why this Labour Government would dawdle its way through such an important bill that is to do with a national icon, take 2 years about it, and then rush it through under urgency. The Government certainly conforms to a pattern of doing that. As my colleague said, the Government should learn how to manage its workload a hang of a lot better than it has managed it over the last 4 years.

Far more important than that is the purpose of this bill, which is to establish the orchestra as a body corporate under the New Zealand Symphony Orchestra Act and as a Crown entity for the purposes of the Public Finance Act. It would be very useful for the Minister in the chair, the Hon Judith Tizard, to take a call to explain to the House why for years she has said that the New Zealand Symphony Orchestra has attained some of the finest performances around the world, has become an icon in New Zealand’s history, and has achieved both artistic excellence and independence under the present legislation, when she has now turned round and said no, the Government is to destroy that model and bring in classic Labour Party command and control. That seems ironic. Hopefully, the Minister will explain that—or was she not really sincere in her comments about the New Zealand Symphony Orchestra over the last 10-15 years?

The New Zealand Symphony Orchestra started in 1946, and it has an extraordinary record. As I have said before, the National Party absolutely supports it. We want to see it flourish in an atmosphere of independence. After all, one of the strengths of the present legislation is, indeed, that as a limited liability company the New Zealand Symphony Orchestra does not require prescription as to its purposes and functions, nor as to the Government’s expectations of it. That is a great quality. Why is this Labour Government so insistent on wanting to bring in a whole set of prescriptions?

Further down in the purpose of the legislation, I notice the question of providing for the governance of the orchestra, for the duties of the board, and for administrative matters. I have pointed this out before, but I think it is worthwhile emphasising. If, indeed, the Labour Government was to be consistent—and heaven help us, it has a legacy of being very inconsistent—

Clayton Cosgrove: Tell us about Don’s tax rates!

Dr PAUL HUTCHISON: I ask Mr Clayton Cosgrove to tell us why, with an $8 billion budget for the health system, he insists on majority-elected health boards, yet when it comes to the $10 million budget of the New Zealand Symphony Orchestra he wants a pure governance model. We are not against that, but we think the Government should be consistent. We think that the Government should have appropriate experts dealing with an $8 billion budget, just as it has with a $10 million budget.

Again, I say it would be very helpful if the Minister would take a call to provide us with an explanation of why this Government is not being consistent in terms of its view on managing an $8 billion budget, compared with a $10 million budget.

Hon GEORGINA TE HEUHEU (National): I welcome the opportunity to take a call in the Committee stage of the New Zealand Symphony Orchestra Bill. Part 1 sets out the commencement and the purpose of the Act. I have previously described this bill as an overkill, and my colleague Paul Hutchison demonstrated that pretty concisely. I took cognisance of Clayton Cosgrove’s interjection, when Paul Hutchison was talking about taxpayers’ money. He is certainly right; this is $10 million worth of taxpayers’ money. We have a whole lot of taxpayers’ money going into the district health boards. The governance structure of the orchestra is set out in a way that just makes for a laugh at the way that the Government has structured the district health boards. There are majority-elected boards in the health sector, and here in this bill there is little provision at all for a similar sort of representation on the orchestra’s board. So I think my colleague did ask the Minister in the chair, the Hon Judith Tizard, a good question, and I am sure she will answer it when she thinks it is the appropriate time to do so.

The purpose of the bill is to establish the orchestra as a Crown entity under the Public Finance Act. This Government, in its judgment, came to the conclusion that the orchestra’s previous structure under the Companies Act was not, in the Government’s view, meeting the commercial framework, and that it appeared to have had minimal impact on the orchestra’s trading performance. However, I wonder whether this new structure will contribute to the overall purpose of the bill, which is, as I understand it, to propose a framework that will encourage artistic independence and artistic integrity. I wonder whether it was necessary to make the changes that are proposed in this bill.

The purpose clause also sets out the principal objectives of the orchestra, its functions, and its powers. We will come to that in a minute. But the National Opposition has already signalled that those matters are overly prescriptive. In my view, if one states a prescription, one should do something if the prescription is not delivered on. When debating the functions and the objectives of the orchestra, members will see that in essence, although it may be easy to be prescriptive, it is not as easy to figure out what one may do if the board cannot deliver on that prescription. We will come to that issue in due course.

New clause 3(d), inserted by the Government Administration Committee, states that one of the purposes of the legislation is to: “provide for the governance of the Orchestra, the duties of the board, and for administrative matters”. We have said already, and we will be saying this again when we come to part 2, that all that those purposes demonstrate is that this certainly is legislation from a Labour Government. It is about State control and State prescription, and there is room for ministerial direction. Clause 3 states that ministerial direction is only to be in relation to governance. But when one is prescriptive about the objectives, then clearly it is envisaged that if there is a view that the objectives are not being delivered on, then there will be ministerial intervention. I have no doubt about that, particularly under a Labour Government, because that is the way that this Government has behaved in all the years it has been in Government.

It is clear that the New Zealand public is getting sick of that. The public is getting sick of the nanny State—of State control, and of the State prescribing everything. Now we are prescribing how we expect the Symphony Orchestra to perform, and that just will not do.

DEBORAH CODDINGTON (ACT): We now have moved on to the Committee stage, and we are talking about Part 1—clauses 2 to 5. This part deals with the purpose of the bill. I would say that the purpose of this bill was to totally stuff up the New Zealand Symphony Orchestra and, as Georgina te Heuheu said, turn it into a State-controlled orchestra. In the Minister’s haste to turn it into a State-controlled orchestra she is totally ignoring the importance of the duties of the board of the orchestra, and she is ignoring the interests of the players in the orchestra—people who have spent a lifetime getting themselves to the stage where they can be chosen and have the honour to play in a symphony orchestra. I cannot help wondering that if this orchestra were the New Zealand hip-hop orchestra made up of hip-hop performers, the Minister would give those performers a lot more regard and respect than she is giving the first violinists, leading flautists, and soloists with the Symphony Orchestra. We spent $26,000 on sending a—[Interruption] I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Ann Hartley): I ask that member to tone down her interjections.

DEBORAH CODDINGTON: I do not mind interjections, but I thought running commentaries were out of order.

The CHAIRPERSON (Ann Hartley): Yes, they are.

DEBORAH CODDINGTON: I call on that member to take a call if she has got something constructive to say; she says she will—good. I ask the Minister to stand up, in these times of cultural relativity, and tell us why hip-hop performers are deemed to be more important than players in a symphony orchestra. The Minister laughs; well, that is the respect she holds for players in the Symphony Orchestra. She has laughed them off the board. They are not allowed any representation on the board. It is the arrogant, “We know best.” attitude that an artist or creative person cannot think and cannot be involved in the governance of the Symphony Orchestra. It is a shame. It is a disgrace that we are not going to allow creative people to be members of the board.

I question the National Party’s wisdom. Its members have indicated they will vote with the Labour Government not to allow a member of the players’ committee to be represented on the board. I think the National Party should take another call and explain its reasons for not allowing that. ACT members do not support this bill—it will go through, anyway—but we do support the amendments of two of my colleagues from United Future and the Greens that state that the Minister must appoint a players’ representative on to the board; otherwise, we will end up with a Symphony Orchestra board made up of people who are great at running a company, or very well versed in kaitiakitanga, the tangata whenua, or the principles of the Treaty of Waitangi—if they did know what the principles of the Treaty of Waitangi were, they would probably be the only people in New Zealand who did—but have no knowledge about the creative direction and creative purposes of a symphony orchestra.

I do worry about that, because elsewhere in this bill the orchestra is required to play to an international standard, required to promote New Zealand music, and required to promote New Zealand musicians. There will be no one on the board who knows about all those things, who knows about international standards, who knows about New Zealand music, who knows whether New Zealand music is good or rubbish. It is no use playing music just because it is New Zealand music; if it is not good music, the audiences will simply stay away. The purpose of this bill is to turn the orchestra into a Crown-owned entity as opposed to a limited-liability company, so it cannot go broke, even though it does still have to be financially accountable. But if the audiences stay away, what will the Minister do when she has no one on the board who knows about the actual musical creativity of the orchestra? The Minister still has not given us a reason why she is so averse to players being on the board, and I ask her to do that.

MIKE WARD (Green): It is difficult to understand why player representation is not wanted on the board. It might be argued that player representatives could put the interests of the players ahead of the broader interests of the New Zealand Symphony Orchestra, but that is unlikely to happen. When the interests of the players are greater than the interest of the public at large, their representatives would have to declare that interest.

It could be argued that such representation is not a common thing to do, but that does not stand up, either. If we look at the boards of tertiary institutions, we see they have both student and staff representatives, and that works very well. I might add that most of our tertiary institutions have much broader interests, much more diverse interests, and much larger budgets to administer than the New Zealand Symphony Orchestra.

It is in the interests of all board members to work collaboratively. Each is a minority, and his or her views will be adopted only if he or she can convince the other board members of their merit. Regional orchestras have player representation. Australian orchestras have player representation. Who else is likely to bring the same combination of passion and knowledge about the core business of the New Zealand Symphony Orchestra? Who else is able to bring the same level of experience, or memory, of the practical implications of decisions?

Board membership is not a position for just any member of the orchestra, but with 90 educated, intelligent, experienced, and passionate players for the Minister to choose from, I have no doubt that it will be possible to come up with a musician with a mix of experience in the areas of administration, governance, the community, and the arts that complements the contribution of the other board members. Members of the orchestra are parents. They are members of the community. They will have been on school boards of trustees. They will have held other administrative positions. I know a number of those people. They are extraordinarily intelligent and educated individuals with a broader knowledge than just simply the knowledge of playing in an orchestra. They are the kinds of people that I would have thought were wanted on a board. They would bring a level of expertise that nobody else could bring. They would bring a level of experience that nobody else could bring. I would have thought that that experience and expertise would be vital to good decision-making.

I have been on decision-making committees and I have noticed that when decisions are made for people who are not represented, those people are resentful. I suspect that a measure of resentment would grow around a decision to exclude the players. When I think of the flare with which the players presented their submission to the Government Administration Committee, I think it is the kind of flare that the orchestra could do with. They came and played; they gave their submission with a bit of flare and with a bit of buzz. If we fail to pass an amendment, that will undermine the effectiveness of the board. If we pass it, it will bring about a new measure of trust between the board members and the players. The legislation is good, and on everything else in it I would say “Go to it!”. It will enhance the position of the orchestra.

That the orchestra is to enhance and promote New Zealand music is a plus. There is an idea, from the way that others have spoken, that somehow New Zealand music is not worthy of being listened to and will not be popular. In fact, any good orchestra will put together a concert mix that brings the kinds of people it wants to have in its audience—namely, all New Zealanders, including people who want to listen to New Zealand music.

The Greens will be supporting the bill, but we make a strong plea for the addition of player representatives on the board. The National Party’s amendment states that both may be appointed. “May” is not good enough. If we are not willing to put player representatives in there, is it likely to happen? I suspect not. It is simply about making the board more democratic. “May” is not good enough. The amendment I have put up reads to omit subclause (2) of clause 12 and substitute the following clause: “The board must consist of not”—

The CHAIRPERSON (Ann Hartley): The member’s amendments are to Part 2.

MIKE WARD: OK. Thank you.

The CHAIRPERSON (Ann Hartley): The member has more time, but I just make that point.

DAIL JONES (NZ First): Part 1 is the part to which the amendments from Marc Alexander on Supplementary Order paper 199 apply. The first inserts the definition of a “players’ committee”, which means “a committee of players in the Orchestra, established for the purpose of player representation”, and the follow-on amendment to schedule 1 requires that “the Minister must ensure that the membership of the board includes at least 1 person nominated by the players’ committee.” New Zealand First supports that concept. I am rather surprised that the Government, which usually tries to have a union representative involved in various boards and suchlike, has opposed that view. I look forward to hearing the Minister indicate whether she supports or opposes the concept. In particular, if she does oppose it, would she give us a reason for doing so?

The question was put that the amendment set out on Supplementary Order Paper 199 in the name of Marc Alexander to clause 4 be agreed to.

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

Ayes 41

New Zealand First 13; Green Party 9; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Noes 78

New Zealand Labour 52; New Zealand National 26.

Amendment not agreed to.

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

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Part 1 agreed to.

Part 2 Establishment, structure, and powers of Orchestra and related matters

Dr PAUL HUTCHISON (National—Port Waikato): Thank you for the opportunity to speak on Part 2. Clearly, it is the main area of the bill that deals with the offensive parts— the principal objectives and functions of the orchestra. Our side of the House has made it very clear that they are quite unnecessarily prescriptive and will only lead to huge confusion. In particular, clause 8(c) requires the orchestra “to be a leading New Zealand performing arts organisation with a role in the development of a distinctively New Zealand cultural environment”. We hope the Minister will take a call to tell us exactly what that means. Surely it is far preferable to let that distinctive New Zealand cultural environment evolve spontaneously without prescriptive legislation.

If one looks around the world at the great independent orchestras such as the Berlin Philharmonic Orchestra, the London Symphony Orchestra, the London Philharmonic Orchestra, and the Cleveland Orchestra, there is just absolutely no doubt that all of those are independent orchestras that have demonstrated the highest pinnacle of artistic endeavour, and none of them have been enshrouded with this sort of prescription.

Let us go on to clause 9, “Functions of Orchestra”. There we see the requirements the Labour Government wants us to put in. They include: “(a) to ensure that the orchestra presents a broad repertoire of orchestral performance …”. Has it not been doing that for years and years? They go on: “(b) to encourage the development of New Zealand musicians:”. Once again, the orchestra has a clear track record of doing exactly that. Part of the reason for the orchestra’s existence is to do exactly that. The orchestra has been a shining example of achievement, because without this unnecessary legislation literally hundreds of young New Zealanders have been able to develop and evolve their skills—not only for the benefit of all New Zealanders, but also in terms of their international contribution.

The functions continue: “(c) to encourage the development of New Zealanders’ knowledge and appreciation of orchestral music:”. One could continue going through the list, only to find that these things are all happening anyway. Why have the legislation? Hopefully, the Minister will take a moment to explain to us what the difference is, and tell us whether the orchestra has been carrying out these functions. I say it has, and I challenge the Minister to say anything to the contrary.

We should bear in mind that the function under paragraph (f) states: “to carry out any other functions consistent with its principal objectives, as agreed to by the Minister after consultation with the Orchestra:”. If we look at the current situation, we will see that no such requirement is needed. The orchestra has flourished without it; it is quite clearly unnecessary.

However, when we go to the provisions relating to the board, again we have the dilemma that has been discussed already. It is terribly important to have a clear governance role in respect of the orchestra. There are all sorts of practical difficulties that can occur, particularly where the Government is the main contributor to the funding of the orchestra. In this case it is $10 million a year, and the box office and corporate collections amount to about $5 million a year. There is no doubt that conflicts of interest will arise—if indeed there are difficulties—if employees are involved in the governance of their own organisation in this set of circumstances. That does not mean to say that in future sets of circumstances it would not be inappropriate.

DAIL JONES (NZ First): This is a disappointing day for the Opposition parties in Parliament, because if it had not been for the National Party cuddling up to the Labour Party, we would have had an amendment through to make sure that there is a player representative on the board of the orchestra. Why the National Party wants to cuddle up to the Labour Party is beyond me, but we have seen a clear demonstration of that here today, and it has prevented a player from having a position on the board.

We had the Labour Party cold on this one. All the other Opposition parties, the Greens, ACT, and New Zealand First, plus United Future and the Progressive Party—and I must congratulate them on giving their vote to us—voted to have a player representative on the board of the orchestra, but the National Party said it did not want that and it stymied the amendment. What a shame! What has got into this National Party? Is it part of its plan to sell off the orchestra because there is no need for it any more? That is the National Party policy, is it not—to spend money on the basis of need? But here we have the National Party killing an initiative of all the other Opposition parties. What a shame! What a disgrace!

As far as the amendment from Mr Hutchison is concerned, I suggest he reads the bill—in particular, clause 39(2) of Part 4 in Schedule 1, which makes it clear that the chief executive must not be a member of the board. He seems to want the chief executive to be a member of the board, but it was a clear consideration of the legislation that the chief executive should not be a member of the board. I am looking forward to a ruling from the Chair at some stage indicating whether his amendment is in order, because it is clearly inconsistent with the rest of the bill and does not take into account my reading of clause 39(2) in Part 4 of Schedule 1. Needless to say, New Zealand First cannot support that amendment.

New Zealand First has moved a couple of amendments to Part 2. We want to make it clear in clause 8(b) that the orchestra is not just an orchestra but a full-time professional orchestra, so there can be no doubt in the mind of the public and the Government in dealing with the orchestra that that is the case. We have another amendment to clause 9(g).

Dr Hutchison made some comments about why there are changes and suchlike. Clearly, where public money is involved, the bill provides, as I have said already, that the reporting requirements should be as per the Public Finance Act. That is one of the reasons for this legislation.

I do not intend to take any more of the Committee’s time, except to repeat how disappointed I am that the National Party should cuddle up to the Labour Party and prevent a player representative from being on the board of the orchestra.

MIKE WARD (Green): I share Dail Jones’ disappointment. I wonder how the Minister thinks the players will feel about her rejection. Who else has a greater interest in the success of the orchestra? It is their professional status that is on the line. Let the Government reflect well on that status. Players are going to make good decisions—the kinds of decisions that ensure that the orchestra is regarded well in the community. They have every interest in working cooperatively with the board to make sure that the decisions made are in the best interests of that board.

Who has a greater investment in the orchestra? I do not know how many members know of any young musicians, but I imagine that most of them have experience of young people growing up with a passion for music. It is all-absorbing and takes up a vast amount of their lives. Those who end up in the New Zealand Symphony Orchestra are the cream of these. I have taught such young people, and they are not just musicians; they are extremely intelligent, able, capable individuals who play a full part in the life of their schools.

Including players as members of the board is essential to the proper functioning of the board. Not only that, it would bring a flair and an excitement to the board that would not otherwise be there. I have served on an arts council, and I have chaired a community arts council with other artists. These people bring a passion and commitment to their work, and knowledge that others cannot bring. They also bring a creative flair to that work. It is not just about making businesslike decisions—that is extremely important, and there will be board members who will ensure that happens—it is also about bringing a creative skill to the work, and that makes their presence highly desirable.

My amendment to clause 12 is: “To omit subclause (2), and substitute the following subclause: (2) The board must consist of not fewer than 5 members and not more than 8 members (including the chairperson), appointed by the Minister. One of these members must be a permanent player of the orchestra, appointed by the Minister after consultation with orchestra players.”

As I said before, the inclusion of the chief executive on the board would be unusual. The chief executive has a very large say in the running of the orchestra. That person is the one employee of the board, and will have a great deal of influence in advising the board and providing information to it for many of the decisions it makes. That influence is very keenly felt at all times. The influence of the board members is less likely to be felt.

We will continue to support the bill. It is a good bill that supports a very grand and important cultural institution in this country. But it is really important that a player representative is included on the board. We will be disappointed—and I am sure the players will be bitterly disappointed—if they are once again rejected. I would like to think, however, that since the Minister can appoint, she will take into account the submissions of New Zealand First, ACT, United Future, and the Progressives in support of this amendment.

Sitting suspended from 1 p.m. to 2 p.m.

DEBORAH CODDINGTON (ACT): Part 2 is the main part of this legislation. I would like to guide the National Party, if I can. What we have here today is MMP working. We have United Future, New Zealand First, the Green Party, and ACT all agreeing that there must be provision in this legislation for a representative from the players in the orchestra to be on the board. It is really important that we do not have a board that is concerned only with financial and governance matters. Sure, they are important—they are vitally important—but the players’ committee submitted to the select committee that they wish to be on there, because that is how this legislation will be put in place. We must have someone there who knows about the artistic and musical objectives of the orchestra. They need to know what is of an international standard and what is good New Zealand music, but the National Party and the Labour Party are united in their opposition to having a representative from the players, the actual people in the orchestra, on the board.

I am puzzled as to why that should be. All I can imagine the reason as being is that they think that because some people are artistic and can play a musical instrument, they have absolutely no knowledge of financial matters, and that it should all be left to the people who know best. This is what MMP is all about, and I would urge the National Party to change its stance. Why is it that we cannot have a player on the board? Is it because the Prime Minister does not want a player on the board and wants to have total control over the orchestra?

This bill is about control. It is overly prescriptive. It goes into excessive detail as to what the New Zealand Symphony Orchestra must and must not do. For instance, it must be artistically imaginative and must play to an international standard, and the board is required to make sure that these things happen. How can the board ensure that these things happen without having someone on the board who is actually part of the orchestra—an actual player in the orchestra who is down in the orchestra pit at the cliff face doing what really matters to get those people into the venues and listening to the orchestra? Without it, it just ain’t going to happen.

What happens if these board members do not meet the principal objectives, which I have just spelt out, a few of which are so prescriptive? If they do not meet these objectives, the Minister has the power to remove them from office. So here we have an impossible situation set up—absolutely impossible. The New Zealand Symphony Orchestra is being set up to fail because National and Labour will not allow a representative from the orchestra to be on the board to ensure that the principal objectives are carried out, the principles that only a member of the orchestra can be fully knowledgable about. Only an orchestra member can be fully knowledgable about how we get to those principal objectives and how they are carried out. Only a member of the orchestra can do that.

The Prime Minister does not want one on the board, we know. She wants to control the orchestra, and the National Party does not want one there, and I would advise them very strongly to think very carefully about the way they vote, and I would also remind people that this is why they need the ACT party in Parliament. If the National Party is in Government next time, it will need ACT there to remind it about how MMP actually works. That is why we will be supporting the amendment that has been put forward by Mike Ward of the Greens to clause 2. His amendment states: “The board must consist of not fewer than five members and not more than eight members, including the chairperson, appointed by the Minister. One of these members must be a permanent player of the orchestra, appointed by the Minister after consultation with orchestra players.” We are not dealing with a State-owned enterprise. The orchestra is a Crown-owned entity. There is a difference.

There may be an objection that there is a precedent to be set. Well, if we are going to have legislation that controls and rules how our Symphony Orchestra operates—an organisation that is, by its nature, made up of a number of creative individuals—then the orchestra must have a representative on the board.

Hon GEORGINA TE HEUHEU (National): I am pleased to take a call on Part 2 of the New Zealand Symphony Orchestra Bill. I am not sure whether the Minister has taken a call, but I would like the Minister to take a call and explain to us why it is that her Government—or the Minister, really; I know she puts a lot of effort into arts and culture—has seen fit to be so prescriptive, and I will refer to the prescriptive nature of the bill in a minute or two. I have had the good fortune to be able to spend some time in that sector, as well, but I have real difficulty with the situation that we are seen to be promoting cultural artistic integrity and artistic independence on the one hand, but on the other hand loading the orchestra up with these very prescriptive objectives and functions. I see the Minister writing some notes, and I do look forward to her taking a call to explain that tension.

There certainly is a tension. I have already said I think this bill is an overkill. It is extremely important that there is a framework to ensure accountability for taxpayers’ money—$10 million. In some respects $10 million is not as much as the bulk of funds that go to other organisations, but $10 million is still $10 million. I certainly can see the point in ensuring a proper framework for financial accountability, but I personally cannot see the point of objectives that spell out things like the those set out in clause 8, “Principal objectives of Orchestra”. Clause 8 states: “(a) to provide the public of New Zealand with live and recorded performances of symphonic music performed to an international standard: (b) to provide an orchestra that—(i) is highly skilled and artistically imaginative; and (ii) has strong community support: (c) to be a leading New Zealand performing arts organisation” and so on and so forth.

Has not the orchestra been doing all that anyway, and without having it prescribed in legislation? I want the Minister to take a call and tell us what it is that has been missing in the activities and the performance of the orchestra in past years that makes it so important for this House in urgency to spend an inordinate amount of time on this bill that sets out, piece by piece, what it is that we expect this orchestra to do.

Clause 9 sets out the functions of the orchestra, and this is like telling the orchestra how to suck eggs, in my view. The orchestra is the New Zealand Symphony Orchestra. It has shown its creativity, its imaginative approach to its tasks, in former years, and in clause 9 its functions are set out. It must have a “broad repertoire of orchestral performance”, and it must “encourage the development of New Zealanders’ knowledge and appreciation of orchestral music:”. It has been doing that. It must “encourage the development of New Zealand musicians:”. The orchestra has been doing that and it will continue to do that. It does not need any of those functions set out in legislation.

Another function listed in clause 9(f) is “to carry out any other functions consistent with its principal objectives,”—and here is a bit that deserves special mention—“as agreed to by the Minister”. Now what does that mean? So clause 9 (f) states: “to carry out any other functions consistent with its principal objectives, as agreed to by the Minister after consultation with the Orchestra:”. As if clause 8 and clause 9 do not have enough prescription! There is room in clause 9(f) for the Minister to have some more say.

I am not sure about what, but then I guess it is not surprising when there is a Government like the current one, which thinks it is necessary to have a nose and an arm and a leg and everything in all that these institutions do. In particular, it thinks it is appropriate to do that in an institution that we all want to fly with artistic integrity.

MARC ALEXANDER (United Future): I just want to make a couple of observations as this bill progresses, and one is this. The Labour Party, which traditionally has always stood by the working man and working woman of this country, refuses to stand up for the rights of the representation of the working people of the orchestra—the players themselves who have been denied a voice by this Labour Government. Why, one has to ask? They are talented individuals who ought to have representation on a board. They are not a bunch of idiots whose sole claim to fame is the fact that they can play beautiful music. They have brains and they have the right to have representation.

For a party that prides itself on giving voice to minorities to now turn around and deny that voice to the players, it reeks—it absolutely reeks. How National can come aboard and jump into bed with Labour on this, I have absolutely no idea. When all the other parties are trying to work constructively to allow the very players to have their right to be represented on the board, why deny representation? That is what I ask National. Who is National answerable to in terms of support—is this where it is coming from? Are those members scared of somebody on the board—is that who they are answerable to, and is that why they want to deny representation to the players? Who are they afraid of, that they would rather climb into bed with Labour than work constructively alongside all the other parties? It is absolutely shameful.

The players would add quite a lot to the board. They would provide a players’ perspective and a voice for the legitimate concerns that players want addressed. This would promote understanding of orchestral issues. Giving players a voice on the board would allow them to advance artistic experience from an artistic point of view, which is something Labour is deciding not to provide, and something that National—for some obscure reason—is deciding to go along with Labour and agree with it on.

The one question I have to ask both parties is why they do not trust the players. Why do those parties not trust players to have a voice on the board to allow them to say what needs to be said for their own interests? Those members want to hear their music, but they do not want to hear their voices, and that is utterly shameful of both of those parties.

Hon JUDITH TIZARD (Associate Minister for Arts, Culture and Heritage): I rise in this debate to answer some of the questions and assertions that have been made. The role of the board of the New Zealand Symphony Orchestra is to run an orchestra that in the 2002-03 year reported turnover of about $15 million; only $10.124 million of which came from the Government.

It is the biggest performing arts organisation in New Zealand. This legislation will change it from a Crown-owned company, a limited liability company under the Companies Act of 1993, to an autonomous, non-company Crown entity, because the Government recognises that the role of this organisation is to run a world-class New Zealand touring orchestra throughout New Zealand, providing the best board support, the best management, the best players, and the best music. New Zealand deserves that, and we need it to express our culture here in New Zealand.

The players have absolute rights to be heard at an artistic level in terms of the operations of the orchestra, and indeed the players’ committee meet regularly with the management and the board, and provide a wonderful contribution at every level. However, the fact is that this orchestra is being brought into line with other Crown-owned entities, so that there is clear accountability, clear performance requirements, and clear outlines for everyone involved.

Clause 14 in schedule 1, “Administrative provisions applying to board and further transitional provisions”, talks about conflict of interest. If a player or, particularly, the chief executive officer, were put on the board, those people would be put in a position where they would be in conflict of interest, because they benefit from the decisions the board makes, like terms and conditions of their employment. The board needs to make the decisions it needs to make, and this Government is very passionate about workers. The rights of the players are absolutely protected and encouraged, and the present board is doing a wonderful job raising corporate sponsorship and raising the visibility of the New Zealand Symphony Orchestra.

I am truly delighted to see ACT members being such staunch advocates of the workers, and I will be looking for their support in holidays legislation and labour legislation. But of course, it is crocodile tears, because those members oppose the bill—as does National. Paul Hutchison has asked us why we are putting up detailed legislation. Let me tell National and ACT members, it is because the music community and the public of New Zealand are scared that if there were ever a Government with National or ACT in it, it would destroy the New Zealand Symphony Orchestra. I take it from the speeches that National and ACT have made in this House today that they would destroy the New Zealand Symphony Orchestra. They would withdraw the Government funding and see the New Zealand Symphony Orchestra destroyed, taken out of New Zealand’s culture, and I want absolute assurances from those parties that that is not what they intend. I am deeply concerned by the tone of the ACT and National speakers, and I say to them that the New Zealand Symphony Orchestra is absolutely vital in New Zealand to music across the board. I am disgusted at those members’ approach. They say they care about the orchestra, music, and the players, but no one in those two parties cares at all.

The role of the New Zealand Symphony Orchestra is a very broad one. I say that all of the amendments on the Supplementary Order Papers are not possible in terms of the work of the New Zealand Symphony Orchestra. For example, one of the amendments put forward by Brian Donnelly wants the orchestra to be described as a full-time, professional orchestra. Right, well, the New Zealand Symphony Orchestra right now contracts its players for 25 hours a week. Members in this House will say—as will, I am sure, those who are attacking hip-hop and everything else that is happening and is good and energetic in New Zealand culture—that it is outrageous that the New Zealand Symphony Orchestra players play only 25 hours a week. Well of course, they do not—they teach. They are mentors. They are involved in chamber music and string quartets. They are involved in schools and universities, in opera, and in the vast range and full variety of music in this country, including wonderful contemporary music and including hip-hop. What I say is that if we had a definition that all of the orchestra must be made up of full-time professionals, presumably that would mean that we would not let students in at all. This is a ridiculous set of amendments that should be rejected by the House.

HEATHER ROY (ACT): I rise to speak to Part 2 of the New Zealand Symphony Orchestra Bill. That was quite a rant and a rave that members have just heard from the Associate Minister for Arts, Culture and Heritage. I would like to contest some of the points she was making.

Dr Paul Hutchison: It’s called a crescendo.

HEATHER ROY: That is right; it was a crescendo. We will come to the musical terms in a minute and see who knows some of them. She says that New Zealanders deserve the best and she is quite right—we do deserve the best. But this bill will not provide the New Zealand Symphony Orchestra with the best environment in which it can thrive.

The clear fact of the matter is that the Government does not trust the players. Mr Alexander was quite right in the comments he made, and the members from other parties who support Mike Ward’s amendment were also quite right. There is a very clear reason for a player not being part of the board—unless we can persuade the National Party to join our ranks over here—and it is that the players are not trusted. Quite why that is, I do not know. The boards of trustees for schools have student representatives. Many boards have representatives of the people they represent, and they are the best people to provide the good advice that the boards need. Nobody disputes that that advice is needed. The Minister said the players meet with the board, anyway. Nobody gives better-quality advice than somebody who has voting rights on a board. If the Minister were honest with herself, she would admit that.

Clauses 8 and 9 in Part 2 are another indication that the players are not trusted. Clause 8 discusses the principal objectives of the orchestra. Clause 8(a) states: “to provide the public of New Zealand with live and recorded performances of symphonic music performed to an international standard:”. I ask the Minister how on earth we can legislate to reach an international standard. Will the Minister take responsibility for judging that? Will she say whether the first violins’ vibrato is vibratory enough? Will she say that the flautist is playing pianissimo instead of piano? What will she do to the pianist who inadvertently mixes his upper and lower mordents? Will it be the Minister in the chair who decides that? The definition of “Minister” states: “the Minister who, under the authority of any warrant, or with the authority of the Prime Minister,” so perhaps the Prime Minister will decide whether the upper mordent was played correctly, or whether it should have been the lower. Maybe she does not know the difference. It would be nice to know who will determine that. It is clearly unrealistic to legislate that the orchestra play to an international standard.

Clause 8(b) states: “to provide an orchestra that—(i) is highly skilled and artistically imaginative;”. I notice that there is no definition of “artistically imaginative”. Perhaps the Minister would like to tell us what exactly that means. No, she does not know. If it cannot be defined, why has it been put in the bill as a principal objective that the orchestra must reach?

Clause 9, “Functions of Orchestra”, is just as absurd as the principal objectives. Clause 9(a) states: “to ensure that the orchestra presents a broad repertoire of orchestral performance including New Zealand works and recent works:”. Will we have a quota? Will we have a 25 percent New Zealand music quota in the same way that radio stations are supposed to play that amount? The Minister yawns. I ask her whether New Zealand music is not up to scratch, or whether 25 percent is not the right level of quota that, she is going to tell us, we need to hear. Another function is “to encourage the development of New Zealand musicians:”. I contend that the people who pay good money to go and listen to the New Zealand Symphony Orchestra want good-quality music. Sometimes they like to hear New Zealand music, but they want to go along and hear good-quality symphonic music. We know already that it is to be of an international standard.

The ridiculousness of those two clauses is really beyond belief. The power of the Minister—from the definition of “Minister”, the Prime Minister could be involved, too—leaves this measure wide open for political interference, as is much of the legislation that has come before this Parliament of late. The ACT party will not support this part of the bill. It will support the amendments.

DAIL JONES (NZ First): New Zealand First has a couple of amendments to Part 2 before the Committee. One amendment is to delete the words “an orchestra”, and insert in their place the words “a full time, professional orchestra”. One of the reasons for that is set out in the submission of the players’ committee to the Government Administration Committee. The players’ committee made the point that if the legislation does not specify that the orchestra is full-time, future Governments may attempt to achieve the objectives with a part-time orchestra. It is essential that the orchestra is full-time, if excellence and the orchestra’s other objectives are to be achieved. The phrase “full-time professional” occurs in the New Zealand Symphony Orchestra’s mission statement. If it is good enough for the mission statement, why can it not be in the legislation? It is as simple as that.

Another amendment is about ring-fencing a board position for a player. That amendment is in the name of Mike Ward. New Zealand First will support Mike Ward’s amendment. We are astonished that the National Party should not want to support such an amendment. It shows that the National Party and the Labour Party are up to their old tricks, and are still playing the old game of working together to stop other parties, in an MMP environment, from exercising their views. It is such a simple little amendment, and is supported by even the Progressive party. United Future, the Greens, ACT, and New Zealand First also support it—what a combination, from the left to the right! We are prepared to support Mike Ward’s amendment, but the National Party is again cuddling up to the Labour Party, and does not want to do so. The National Party did the same at the time of the confidence vote at the beginning of this year. It really has not changed its spots.

In clause 9(g), New Zealand First also wants to add, after the word “Orchestra”, the words: “to the extent that it does not compromise the Orchestra’s ability to fulfil its other obligations”. We do not want the orchestra to be too bogged down by some of the provisions set out in the legislation. We want to make sure that there is a ring-fenced board position for a player, who will provide a useful perspective and a range of experiences and skills in all board deliberations and activities. That will match overseas practice. What is wrong with our orchestra going about it in exactly the same way as overseas orchestras? Dr Hutchison has mentioned overseas orchestras from time to time. Why should our Symphony Orchestra’s legislation not match overseas practice, as well?

I am terribly disappointed that Dr Hutchison withdrew his amendment. Perhaps he realised it was totally out of order, being in conflict with Part 1 and clause 39, but it was very disappointing that on the one hand he gave some indication that he might support the United Future amendment or the Green party amendment, but in the next breath he decided to pull out altogether. It seems to be a very unusual state of affairs on National’s part. I request the support of members of the Chamber for New Zealand First’s other amendments.

The question was put that the following amendment in the name of the Hon Brian Donnelly to clause 8 be agreed to:

to omit from paragraph (b) the words “an orchestra”, and substitute the words “a full time professional orchestra”.

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

Ayes 39

New Zealand First 13; Green Party 9; ACT New Zealand 8; United Future 8; Independent: Awatere Huata.

Noes 78

New Zealand Labour 52; New Zealand National 26.

Amendment not agreed to.

The question was put that the following amendment in the name of the Hon Brian Donnelly to clause 9 be agreed to:

to add to paragraph (g) the words “to the extent that it does not compromise the Orchestra’s ability to fulfil its other obligations”.

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

Ayes 30

New Zealand First 13; Green Party 9; United Future 8.

Noes 87

New Zealand Labour 52; New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Amendment not agreed to.

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

to omit subclause (2) and substitute the following subclause:

(2) The board must consist of not fewer than 5 members and not more than 8 members (including the chairperson) appointed by the Minister. One of these members must be a permanent player of the orchestra, appointed by the Minister after consultation with orchestra players.

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

Ayes 41

New Zealand First 13; Green Party 9; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Noes 78

New Zealand Labour 52; New Zealand National 26.

Amendment not agreed to.

The question was put that the following amendment in the name of the Hon Brian Donnelly to clause 12 be agreed to:

to amend subclause (2) by adding the words “, one of whom shall be representative of the permanent players of the orchestra”.

Amendment not agreed to.

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

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Part 2 agreed to.

Schedule 1 Administrative provisions applying to board and further transitional provisions

The question was put that the following amendment in the name of the Hon Brian Donnelly to clause 1 be agreed to:

to insert, after the word “governance”, the word “, artistic”.

Amendment not agreed to.

The question was put that the amendment set out on Supplementary Order Paper 199 in the name of Marc Alexander to add new subclause (2) to clause 1 be agreed to.

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

Ayes 39

New Zealand First 13; Green Party 9; ACT New Zealand 8; United Future 8; Independent: Awatere Huata.

Noes 78

New Zealand Labour 52; New Zealand National 26.

Amendment not agreed to.

The question was put that the following amendment in the name of Marc Alexander to add the following new subclause to clause 1 be agreed to:

(2) In addition to the criteria set out in subclause (1), the Minister must ensure that the membership of the board includes at least 1 person nominated by the players’ committee.

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

Ayes 41

New Zealand First 13; Green Party 9; ACT New Zealand 8; United Future 8; Progressive 2; Independent: Awatere Huata.

Noes 78

New Zealand Labour 52; New Zealand National 26.

Amendment not agreed to.

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

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Schedule 1 agreed to.

Schedule 2 Amendments to other enactments

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

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Schedule 2 agreed to.

Clause 1 Title

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

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Clause 1 agreed to.

Bill reported with amendment.

Third Reading

Hon JUDITH TIZARD (Associate Minister for Arts, Culture and Heritage): I move, That the New Zealand Symphony Orchestra Bill be now read a third time. This legislation once again demonstrates this Government’s commitment to ensuring the ongoing availability—and excellence—of the arts, culture, and heritage of this country to the people of New Zealand and everyone who visits us. The New Zealand Symphony Orchestra, a flagship performing arts organisation, makes a vital contribution to the development of New Zealand’s unique cultural environment.

We had some comment during the course of the debate about the need for the breadth and depth of New Zealand culture to be reflected, and I was recalling the absolutely wonderful concert that the New Zealand Symphony Orchestra played during the recent International Festival of the Arts. Tan Dun, probably the pre-eminent Chinese composer of symphonic music, conducted a performance that every New Zealander, whether or not interested in symphonic music, whether of Chinese, European, Māori, or any other background, would have found the most uplifting and exciting bit of contemporary music he or she had heard for a long time. It was an example of the excellence, the breadth, and the depth of the New Zealand Symphony Orchestra.

This orchestra was founded in 1946. It gave its first public performance as the National Symphony Orchestra of New Zealand in 1947, and has continued to maintain its status as New Zealand’s greatest orchestra. For 57 years New Zealanders have had the pleasure of the New Zealand Symphony Orchestra’s performances of, primarily, symphonic music, which are of international standard. The board is sure of that, the management is sure of that, the players are sure of that, and the public affirm that. This legislation now acknowledges that level of excellence, and requires it to be ongoing. The legislation specifies for the first time the Government’s expectations of the orchestra by setting out the orchestra’s principal objectives and functions. The New Zealand Symphony Orchestra Act 1988, which will be repealed on the commencement of this bill, did not prescribe the purposes or the functions of the orchestra, nor the Government’s expectations of it.

I find it deeply concerning that the National Party and ACT oppose this legislation. I think it is the first time in history that we have seen this sort of split between the Government and the Opposition on a national institution of this sort. I am deeply concerned, and I want absolute assurances from the National Party and ACT that if they ever get into Government again, they will not set out to destroy this orchestra, because that is what I take from their opposition throughout the Committee stage and throughout the course of this bill. I believe they are threatening the existence of one of the most important cultural institutions of this country. It is the first time ever that we have not had bipartisan support for the New Zealand Symphony Orchestra. I am deeply concerned, and my concern and the concern of the rest of New Zealand results in the need for a bill with this sort of detail—so that the next Bill Birch or the next Don Brash coming into this House does not destroy the absolute foundations of our culture.

The primary purpose of this legislation is to change the status of the orchestra from a limited-liability company to an autonomous non-company Crown entity, which will ensure the orchestra can fulfil its functions in both artistic and cultural terms, and can be efficient, effective, and accountable in financial terms. I believe that it is a much better format and structure for the New Zealand Symphony Orchestra. This legislation also clarifies the orchestra’s role as a national touring orchestra by explicitly specifying its principal functions. Although its principal objectives and functions are aspirational, they do require some subjective decisions to be made and some subjective views to be held. I am deeply concerned that this is the first time we have ever had National and ACT opposing the New Zealand Symphony Orchestra across the board, across the whole of this legislation.

Those objectives and functions emphasise the orchestra’s leadership role and its central role in New Zealand’s cultural landscape, and also require the orchestra to promote and encourage New Zealand symphonic music and composers, and the performance level across New Zealand. When I think of the work that the New Zealand Symphony Orchestra has done to promote people like Gareth Farr, probably New Zealand’s finest composer today, wonderful composers like Jack Body, and Douglas Lilburn’s work, and its promotion of New Zealand and New Zealand music, I consider it has excelled at every level. I do not understand why the National Party and ACT want to destroy this fabulous organisation. This legislation will give the New Zealand Symphony Orchestra some measure of protection so that any Government coming in cannot destroy the orchestra without bringing its intentions to Parliament and making really clear what it is doing.

In meeting those objectives, of course the orchestra must operate in a financially responsible manner, retaining its financial viability. This bill will require it to do that. It will also require it to have regard to Government policy on matters of general administration that are consistent with the principal objectives and functions. It is indicating a degree of autonomy for the orchestra right across the artistic area, while also defining its relationship with Ministers and the Government. In all artistic matters the orchestra will be empowered to operate independently and without ministerial direction. That provision reflects the well-established arm’s-length principle for funding cultural agencies that operates in New Zealand and internationally.

In the policy development of the New Zealand Symphony Orchestra Bill, player representation on the orchestra’s board was considered. Player representation was also raised as an issue in submissions. The players have a central and vital role, of course. Without the players there is no orchestra, and the players committee will continue to be consulted actively, frequently, and ordinarily by the board and the management. Of course the players are there, but the crocodile tears we have seen shed by National and ACT, saying they support the players while opposing the whole existence of the New Zealand Symphony Orchestra, are outrageous. I have much more respect for the other parties that have supported player representation being written into the bill in solid form, but also have supported the legislation as a whole. They do not want the New Zealand Symphony Orchestra destroyed, but National and ACT do. It is a general principle that special-interest groups are not represented on the board.

I believe that the board is doing a wonderful job. I thank the board, the management, the players, the friends of the orchestra, and the public who support the orchestra. I believe that this legislation will support its independence, artistic range and excellence, clear accountability, and the good use of public money. I say now to the New Zealand Symphony Orchestra that we should get on with the music and make sure we protect the orchestra from the attacks of people in this Parliament who want to see it destroyed.

Debate interrupted.

Voting

Correction

Mr SPEAKER: I advise members that the vote on Mike Ward’s amendment to clause 12(2) of the New Zealand Symphony Orchestra Bill was incorrectly announced. The correct result is Ayes 78, Noes 41.

Bills

New Zealand Symphony Orchestra Bill

Third Reading

Debate resumed.

Dr PAUL HUTCHISON (National—Port Waikato): Thank you for the opportunity to speak once again on the New Zealand Symphony Orchestra Bill—an orchestra that the National Party believes should flourish and thoroughly supports. But we thoroughly support it in a climate of artistic independence and artistic excellence, not in a shroud of prescriptive State control, as the Minister wishes.

For a moment in the Minister’s third reading speech, it was quite refreshing to think that she was going to stay in lente pianissimo mode. But, no, she wound up to an absolute cadenza of excitement, with variations on a theme of Mount Egmont, perhaps, erupting, but certainly not to be compared with that wonderful Egmont overture with its hugely wonderful emanations of magnificence. But no, this Minister of the Labour Government unfortunately could not contain herself. She could not recall that she is one of a Government that has kept on saying what a great orchestra the New Zealand Symphony Orchestra is—under the present legislation that has allowed it to flourish. That legislation has allowed young New Zealand musicians to flourish, and it has allowed the orchestra to become one of the world’s great orchestras. But no, this Government Minister wants to enshroud it with functions and objectives that will only curb its freedom.

I was quite fascinated to hear my colleague Pansy Wong say that when the title was discussed, she suggested—in consideration of the way the Prime Minister and Government are wanting this enormous amount of prescription—that the name of this bill be the “Comrade Symphony Orchestra Bill”. That is the very sort of artistic decrescendo this Labour Government, sadly, is descending into.

Earlier on, I brought up the experience I had of the Shanghai Symphony Orchestra coming to New Zealand some 20 years ago. I said that the first part of the concert—the Yellow River Concerto and Taking Tiger Mountain by Storm—had been such a dull, boring performance. I wonder whether what we might be seeing now is the New Zealand equivalent—so maybe “Helen and the Dreamers Take Mount Taranaki by Central Control”, or the “Hutt River Concerto”, or the “Michael Cullen Piano Minuet”. But maybe that could be a little pretty.

Undoubtedly, it is a matter of great shame for the Labour Government that it has decided to shackle this treasured national orchestra of ours with such ridiculous functions and objectives as outlined in this bill. Why is it necessary for the State to say that this orchestra must have a role in the development of a distinctively New Zealand cultural environment? The Minister was not able to explain what that is. Surely, the public of New Zealand would wish that that distinctively New Zealand cultural environment was something spontaneous that could sustain itself from the spontaneous wishes of that public.

When one goes on and reads in clause 9, “Functions of Orchestra”, that the Minister must consult the orchestra and has a very pivotal part in carrying out “functions consistent with its principal objectives”—as agreed to by that very same Minister—one is very concerned indeed. The structure of the existing limited-liability company is one in which the State has absolutely no expectation of what the orchestra plays or how it plays it. As my colleague from ACT Heather Roy pointed out, before too long the State will dictate how the violins play. It is absurd, but it is the sort of thing that could happen under this Labour Government, and New Zealand’s national orchestra is far too precious for that to occur. That is why the National Party of New Zealand is so deeply concerned at the way this Government is trying to shape and mould one of our artistic icons.

There has been a fair amount of discussion and concern about the board’s structure—[Interruption] The member is quite right—and once again I think it is important to point out this Labour Government’s inconsistencies. Here—and quite rightly, Mr Cosgrove—the Labour Government is being pure in terms of its governance structure. There is a $15 million budget, but when it comes to the 21 district health boards with a budget of $8 billion, the Government insists on boards elected by majority. When it is the big picture, the Government has no concern for the financial disciplines that are so hugely important.

Certainly, there are whole variations in the structures of orchestras around the world, and in some of the most successful orchestras, such as the London Symphony Orchestra, founded in 1904. It is an independent orchestra that has deserved its tremendous reputation by being supported entirely by the public, with no Government help. It is absolutely sensitive to the public, and absolutely insensitive to Government control. What do we have in New Zealand? We have the Labour Government making one of our icons more and more unresponsive to the very important disciplines of being both commercial and responsive to public concerns about the sort of music it plays. Oh, no! What the Government wants to do is prescribe the music. That is anathema to what musicians and music lovers want.

It is interesting that through the committee structure the orchestra has at present, it has consistently met the board prior to every meeting, so there is a two-way exchange of views between the board and the musicians. If one goes to the criteria for appointing board members, in clause 1 of schedule 1, one sees it is important that: “In making appointments to the board … the Minister must, in particular, have regard to the need for members to have, among them, an appropriate balance of governance and financial skills and an awareness of artistic matters, relevant to the role of the board.” So it is very clearly spelt out.

This bill has certainly come from deep within the minds and genes of the New Zealand Labour Party. The essence of the question is should the ability of an orchestra to flourish and pursue artistic independence and excellence be curbed by unnecessary State-directed functions and objectives? The Labour Government says “Yes”; the National Party says “No”. This bill is off-key, out of tune, and even if the Labour Government flatly denies it, its shrill crescendos of fortissimo make no difference to the fact that it is prescribing State control.

JILL PETTIS (Labour—Whanganui): This is a good bill that has had considerable debate in the House during this urgency process. The important principle underpinning this bill is that of artistic freedom. The bill will absolutely ensure that the New Zealand Symphony Orchestra can operate without ministerial direction in all artistic matters. We are incredibly fortunate in New Zealand with the calibre and quality of the Symphony Orchestra.

I am pleased to support this bill. It has had huge discussion during the urgency motion. I think the best thing we can do now is move it on and have it passed so that New Zealanders can continue to enjoy the high-quality music we have come to expect from the orchestra.

DAIL JONES (NZ First): This legislation transforms control of the New Zealand Symphony Orchestra from that of a limited-liability company to an autonomous, non-company Crown entity. It allows the Crown, which spends about $10 million on the New Zealand Symphony Orchestra, to have some reporting requirements as set out in the Public Finance Act of 1989. It has been quite interesting, in the last few weeks and months in this House, to hear members of especially the ACT party criticise the way in which public money is spent. Time and time again there is criticism of how this money is spent, where it is going, and what is being done with it. Here we have a bill that allows the House to have more say over how public money is being spent, yet the ACT party opposes it, as does the National Party. There is a real inconsistency about the way in which they go about their business. Or is it because this is a New Zealand Symphony Orchestra and they want to criticise it? They do not want to get too involved with it, and other people are more easily attacked by the National Party and by the ACT party.

Regardless of that, this bill will now allow greater criticism of Government expenditure by this body. In so far as control is concerned, anyone who cares to read clauses 8 and 9(a) to (e) can see quite clearly that the Government can have no control over the provisions in those clauses. The only way in which the Government can have any involvement is with regard to carrying out any other functions. If the Government is going to do something other than as set out in clauses 8 and 9(a) to (e), only then can it become involved. Clearly, if the Government does become involved, everyone will be informed because that is the type of country New Zealand is.

We wanted more involvement of the players in the decision making, and in the ability to make comments on what was going to happen. One would have thought the ACT party would support that, and of course it did. One would have thought the National Party might support that. But, naturally enough, when it comes to something that might get through this House, from the point of view of other parties, National opposed it. It cuddled up with the Labour Party in the Committee stage and prevented players from having a representative on the board.

One would have thought that if the National Party were concerned about the way in which the board might act, the way in which it might be interfered with by the Government, and the way in which the board might be required to follow up Government policy, the National Party would want a player on the board. But no, no players on the board for the National Party! It opposed that entirely.

It was disappointing to see the Progressive party, the United Future party—the United Future party put up the amendment in the first place—the Greens, ACT, and New Zealand First all prepared to support an amendment to put a player on the board of the new organisation, and the National Party opposed it. The National Party had its own amendment at one stage, along those lines. One thought that perhaps the National Party wanted only to support its own amendment and be churlish and not support someone else’s amendment. In the end, finally, National withdrew its own amendment as someone realised that perhaps National had made a mistake and was possibly doing something that might improve the bill. It is very disappointing to see the National Party working in with the Labour Party in this way, and obviously all concerned will take notice of the situation.

New Zealand First moved a number of amendments. We wanted to make it clear that the orchestra was going to be a full-time orchestra. That was not successful. We put together a number of other amendments, which had been supported by the players committee of the New Zealand Symphony Orchestra, but unfortunately they were unsuccessful.

This is the third reading of the bill. Overall, the bill has passed through the House. New Zealand First goes along with the legislation. It brings everything up to date. There are provisions in the bill that ensure the Minister cannot have absolute control, and we look forward to the New Zealand Symphony Orchestra continuing as it has done so well in the past.

I use the word “continuing” of course because we know from the policy of the National Party that it would be the first to sell up or close down the New Zealand Symphony Orchestra if it became the Government. As we know, the National Party is working on the principle of need. Is there a need for the New Zealand Symphony Orchestra? I say that Dr Don Brash would say immediately: “No, there is no need for the New Zealand Symphony Orchestra.” Brian Connell seems to agree that there is no need for the New Zealand Symphony Orchestra. If he does not agree with me he is being very inconsistent, because it seems that “need” is a word that is used as defined in the minds of certain National Party people, not in the way it appears in the dictionary. That is even more dangerous than simply just acting on the basis of need.

As someone who enjoys listening to Radio New Zealand and Concert FM, I say that I am also concerned that the National Party will sell off Radio New Zealand because there is no need for a State-owned radio station that runs things like Concert FM. Mr Connell is quiet now, so that suggests to me that the sale of Radio New Zealand is very much on the agenda for Dr Don Brash and his party. I would like to hear the next National Party person who takes a call deny, because he or she has spoken to Dr Brash about it, that National will sell Radio New Zealand if it becomes the Government. Overall, we are very pleased to support this legislation.

MIKE WARD (Green): I know that Judith Tizard cares about the New Zealand Symphony Orchestra and this bill is an expression of that care. Who could doubt the Government’s commitment to the arts? Having spent a good deal of my life in the arts, made a living as an artist for 25 years, and spent a great deal of my time with artists, I understand that they are a particular breed of people. They think differently, they do things differently, and they are, by and large, among the cleverest people I ever taught. I can recall the number of times that I had arts students who went on to do fine arts, and the other teachers would ask why they did not do science, geography, or something else—they could do any of those things.

Among the artists and the artistic community, and I would say among the orchestral community, we have people of very great skill, very great ability, and very great breadth of ability and skill. It is the kind of skill and ability that the New Zealand Symphony Orchestra in particular needs, because an orchestra is not like any other Crown-owned entity. It is a special kind of organisation that thrives on creativity and flair. Most organisations thrive on creativity and flair, but orchestras in particular do so. It would be a pity if this orchestra did not benefit, in a very intimate way, from the musicians being there as the board decisions are made.

That is not provided for explicitly, although it is in the bill that the Minister may appoint members of the orchestra and I am hopeful that she will do that. As I said, I do not doubt her passion for the arts and her commitment to this orchestra. I am hopeful she will take advantage of the provisions in the bill to appoint members of the orchestra on the grounds of their ability—not simply because they are players, but because they have the mix of skills needed. As I said before, artists are normally integral parts of their community.

I know a number of these musicians and I know of the roles they have played in other organisations in the community. They have governance skills, they know about organisation, they know about finances, and they know about making music. The special flair they bring is an intimate understanding of the rigours of life in an orchestra. That is the kind of intimate knowledge that needs to be there as the board’s decisions are being made. It is not something that should be called on from time to time; the musicians should be in there and making their input as those decisions are being made.

I do not share the Minister’s concerns that maybe National or ACT will demolish the orchestra should they get into power. Nor do I think the Opposition’s concern that Labour will dictate how the first violinists play is warranted, either. I am sure we all have the best interests of this orchestra at heart, and I believe that this bill will enhance the interests of the orchestra. As I said before, I am hopeful that the Minister will look at the skills and background of the orchestral players who are nominated for the board, and make the appointments on the basis of those skills. We will be supporting this bill. We are delighted to see it here, and I know that it has the support of the majority in the House.

HEATHER ROY (ACT): I rise to speak on the third reading of the New Zealand Symphony Orchestra Bill. We do, of course, find ourselves in the ridiculous situation of debating this bill in urgency. It is hardly a hugely urgent matter that requires all 120 members of the House to stay until midnight for several nights to debate it. Plenty of members on the other side were yawning before, so they are obviously feeling the strain. Urgency should be used for matters requiring urgent attention. ACT New Zealand will not be supporting this bill, as we indicated in our speeches in the first and second readings.

This bill restructures the New Zealand Symphony Orchestra from a limited liability company, financially responsible for itself, to a non-company Crown entity. That is the fundamental matter that the ACT party and, I believe, the National Party are opposed to. In the introduction debate Minister Maharey said that the bill is to ensure the orchestra’s financial viability. If we look carefully at that, it means that the Government will not allow the New Zealand Symphony Orchestra to go broke, or go under.

Minister Tizard, however, in the Committee stage, talked about how well things were going, that the orchestra was doing well financially, and said that only a little of its overall spending came from Government funding. If that is the case, it raises the question as to why any action is required. When I was preparing my introduction speech, I looked at the 2001-02 annual report of the New Zealand Symphony Orchestra. It said that it had recorded a better than budget income and lower than forecast expenditure, and that reflected sound management, underpinned by sure-footed artistic decisions that had resulted in significant increases in audience numbers throughout the country. So why is it deemed necessary to change the formula at all? I contend that this legislation is not necessary.

The symphony orchestra has been very worried about sponsorship. Many members of the House will remember, as I do, the very successful tours the National Orchestra used to undertake to the provinces. We have not seen many of those of late. The orchestra put on successful summer pops concerts, and they were very well attended by the public at large. It was able to do that because it had very good sponsors. I think BP Oil sponsored those tours.

Clause 9 lists the functions of the orchestra, and one of them is “to encourage the development of New Zealanders’ knowledge and appreciation of orchestral music”. I cannot think of a time when the symphony orchestra did this function better than when those summer pops concerts were held around the country. Not only did lovers of symphonic orchestral music go along but they were able to take their children, because the music was wide ranging and had broad appeal. That cannot be said of many of the ordinary concerts that people go to.

My children love going to the orchestra when they hear something they recognise. They cannot, however, sit through a 2-hour performance of very highbrow music. Some of the snobbery that exists, I think, in society today does not sit comfortably with the requirement in paragraph (c) of clause 9 “to encourage the development of New Zealanders’ knowledge and appreciation of orchestral music”.

I turn to another issue in the commentary—that is, the recognition of professional regional orchestras. There are several professional regional orchestras doing an extraordinarily good job. The Auckland Philharmonia is one, and the Wellington Sinfonia and Southern Sinfonia are others. In fact, the Wellington Sinfonia regularly plays for the Royal New Zealand Ballet when it comes to town. It is a very well-thought-of and respected sinfonia.

The Government Administration Committee reported: “We note that the bill does not provide any recognition of New Zealand’s professional regional orchestras such as the Auckland Philharmonia and the Wellington and Southern Sinfonias.” It describes why that is not going to happen, and concludes: “We therefore wish to offer our support and recognition of New Zealand’s professional regional orchestras that serve New Zealand audiences so well.” I am sure that will be of significant consolation to those orchestras!

This bill is another example of the Government picking favourites. In this case it is the New Zealand Symphony Orchestra. Far from setting out to destroy the symphony orchestra, as the Minister stood up and ranted at us, with claims that ACT and National are trying to destroy the symphony orchestra, ACT pleads guilty only to trying to provide a level playing field for all professional orchestras in this country that provide enjoyment and entertainment for New Zealanders. The Minister is just scaremongering when she repeatedly says we are trying to destroy the New Zealand Symphony Orchestra.

When we look at the principal objectives and functions in the bill we see they are overly prescriptive and clearly unrealistic. How can anybody legislate for music to be played of an international standard, and who will determine whether the music reaches that standard? And how is it possible to legislate for artistic imagination? What do we mean by “artistic imagination” and how can we legislate for that?

I want to make brief mention of how particularly disturbing it is—and the ACT party, along with United Future, New Zealand First, and the Greens made great mention of this—that there is no place for player representation on the board of the New Zealand Symphony Orchestra. ACT supported the amendments that were put forward in this regard, as we felt very strongly that the players should be represented and be represented seriously by giving them a voting right on the board of the New Zealand Symphony Orchestra. I will not go on to explain this in detail, as the other parties have done it very well.

The question arises of why the Labour Government supports this bill so vigorously. Well, this bill is a symbol. It is a symbol that is reminiscent, I think, of the Titanic. The Labour Party is a bit like the sinking of the Titanic. We have before us a sinking vessel; it is going down slowly, but the Government is standing up and saying: “Don’t worry. Listen to us. Do as we say, and everything will be all right.” This New Zealand Symphony Orchestra Bill is being debated under urgency. The symphony orchestra is coming under greater State control, being instructed what to do and how to play to international standards and with artistic imagination. Yet indeed the ship is sinking. But New Zealanders can rest assured in the knowledge that the band will play on. ACT New Zealand does not support this bill.

MARC ALEXANDER (United Future): I rise on behalf of United Future to speak on the third reading of the New Zealand Symphony Orchestra Bill, and to reiterate that it was a United Future election policy in 2002 to ensure that the national orchestra was put on a sure, long-term footing. I believe that this bill will accomplish that. A Crown entity is a better structure in which to situate the orchestra than the present governance arrangements. That is a big plus in this bill but unfortunately there are some quite large minuses, and I will get to them shortly.

The New Zealand Symphony Orchestra offers employment for many musicians in this country, a cultural richness that comes from having musicians in the community, and an essential support to other art forms—like opera, ballet, film, and so on. It symbolises excellence and dedication in an artistic endeavour, and it is evidence of cultural depth and maturity. It is a cost-effective way to provide symphonic performances of an international standard—something all New Zealanders can be rightfully proud of, and have easy access to.

The New Zealand Symphony Orchestra, as the national orchestra, is an important part of New Zealand culture and, of course. of our national identity, as well. The New Zealand Symphony Orchestra can play a valuable role in projecting New Zealand’s culture to an international audience, by capitalising on symphonic music as an international language while presenting something uniquely New Zealand. That is something we should all be rightly proud of.

The New Zealand Symphony Orchestra players committee wanted support for a player to be a member of the New Zealand Symphony Orchestra board. That is not much to ask for, really, considering it concerns the governance of the members’ lives—how they express themselves musically and how they live day to day. For them not to be able to have a voice on the board is something this bill ought to have addressed and had the opportunity to address, but, because of the infamous coalition between Labour and National, that opportunity has now been denied. The suggestion that the board should be redesigned, with a wider governance structure developed to better bring the interests of musicians, board management, sponsors, and Government into harmony so they pull together to secure an agreed objective for the orchestra, was not too much to ask for. Unfortunately, that has been overlooked and denied by this Government, and by its supporting partner, the National Party.

New Zealand has a small economy and population, and it needs to concentrate its resources into one internationally recognised national orchestra. The New Zealand Symphony Orchestra provides a quality benchmark for regional orchestras to aspire to and, in turn, regional orchestras provide a valuable training ground for future New Zealand Symphony Orchestra players. We do not have the luxury that other countries have of a large enough economy or population base to be able to fund more than one symphony orchestra at a time and to the extent it deserves.

One of the things I stressed earlier about board membership for a New Zealand Symphony Orchestra player is that such membership is needed to provide a useful perspective and a range of experience and skills, and to ensure the board always contains at least one person who knows the job from the inside. That absolutely makes sense. If one were to have a board running around talking about plumbing issues, one would think that it would make good sense to have a plumber on the board. That is exactly the kind of argument I would push. ACT, New Zealand First, the Greens, and even the Progressives also agree that that should be the case. It would also—and this is the important bit—match successful practice overseas.

I suppose the most damning indictment of this Government’s view, and its intransigence over the possibility of opening up the board to representation by players, can be summed up by correspondence from a Sydney symphony orchestra board member: “It is particularly valuable for other board directors to hear of issues from the player’s perspective, and then for the player to understand and explain the issues from the board’s perspective to colleagues in the orchestra.” It works overseas, and it can work over here. For the life of me, I do not understand how this Labour Government, a Government that has a longstanding tradition of fighting for the rights of groups to be able to have a voice and to speak up for themselves, can now in a very autocratic manner deny this group that right—the opportunity to voice its concerns. It is downright arrogance to assume that the players who provide so much in terms of musical talent should be denied the ability to embody that talent, in a voice on a board that has everything to do with what they do and how they express their lives.

Even more stunning is the fact that National has climbed into bed with Labour over this very issue. I want to know who got to National members? What personal relationship on the board of the New Zealand Symphony Orchestra are they worrying about so that they will not agree to represent the players, who ought to have a voice? That is what I would like to know. Where is that coming from? What are they afraid of?

Lastly, I would like to say that this is an MMP environment and we have a range of opinions throughout the House. I find it incredible that out of all the parties represented here, United Future, ACT, New Zealand First, the Greens, and even the Progressives are all saying the same thing—why deny the right of the players to have a voice on the board? Then we have the two old parties—Labour, which has gone back on its tradition of giving people a voice, and National—both saying no. With their numbers, those two parties have overruled a thoughtful, articulated point of view from all the other parties. That is absolutely anti-democratic and anti-MMP. I think two parties should take a good, long, hard look at themselves and try to explain to the public why they are on the same side on this issue, denying the right for people to have a say on the board. That is absolutely shameful, particularly when we know that that representation can work very effectively overseas, and does work well overseas. We are definitely behind in this game.

A party vote was called for on the question, That the New Zealand Symphony Orchestra Bill be now read a third time.

Ayes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Bill read a third time.

Bills

Sale of Liquor Amendment Bill (No 2)

Second Reading

Hon RICK BARKER (Associate Minister of Justice): I move, That the Sale of Liquor Amendment Bill (No 2) be now read a second time. The bill has been reported back from the Commerce Committee. I would like to thank the members of the select committee for the work they have done on this bill. In most respects the bill is identical to the Sale of Liquor Amendment Bill (No 3) that was introduced in 1999. While the original bill proposed a complete deregulation of licensing trusts, removing all monopoly trading rights, this bill takes a different approach. It allows, but does not require, licensing trusts to reconstitute as community trusts. The Government’s approach recognises that some communities may want to retain their existing licensing trust arrangements until a majority of the trust’s electors vote in favour of competition.

The main purpose of this bill is to provide licensing trusts with the option of reconstituting as community trusts. It gives community trusts freedom to operate in industries other than the hospitality industry, while ensuring that their activities remain accountable and transparent. Community trusts have a broader community focus and, unlike licensing trusts, their activities need not require them to be engaged in the sale of liquor. The members and electors of each licensing trust will determine whether the trust becomes a community trust. The process can be initiated by a resolution of the trust’s existing members. Electors will also have the option of calling for a poll on the issue, as well. The residents of the former licensing trust district will elect the members of the community trust. Elections will be held at the same time as the triennial general elections for other local authorities.

The bill also contains provisions that are designed to improve the financial performance and accountability of all licensing trusts. Those provisions will apply irrespective of whether or not a trust restructures itself as a community trust. Local licensing trusts will be able to carry out business outside their area without the need to first hold an expansion poll. All licensing trusts will be required to disclose in their annual accounts the remuneration paid to employees and senior managers. Licensing trusts will be required to hold annual meetings to account to electors for the effectiveness of their performance.

There have been some amendments to the bill through the select committee process. After considering submissions on the frequency of elector polls, the committee has recommended that it would be fairer for the polls to be held less frequently. The committee has changed the bill to ensure that an elector-requisitioned poll cannot be held within 3 years of an earlier poll. That is consistent with the regime in the Act that governs competition polls. The change does not in any way limit the ability of licensing trusts members to initiate a reconstitution of the board by resolution on an annual basis. Electors will continue to have the right to call for a poll whenever the members pass a resolution in favour of reconstitution.

The committee also recommended the addition of a provision to clarify that a licensing trust would lose its exclusive trading rights upon its reconstitution as a community trust. It would be unfair for a community trust to hold a monopoly right within its district, while being able to trade freely outside that district. The committee has therefore amended the bill to clarify that monopoly rights do not transfer to the new community trust. In response to a submission from the Auditor-General, the committee has also amended the financial reporting provisions for licensing and community trusts. That change will improve the accountability of licensing and community trusts, by requiring their financial statements to comply with generally accepted accounting practice.

Part 2 makes a number of changes to the principal Act that are not related to licensing or community trusts. The bill incorporates amendments to the conditions applying to off-licences, so that wineries can sell their own wine on Easter Sunday if they either grow the fruit or grapes on site, or make the wine on site. The intent of this aspect of the bill is to reintroduce an earlier provision of the principal Act that allowed wineries to sell some of their own wines on any Sunday, including Easter Sunday. Wineries will have to hold an appropriate off-licence to take advantage of that provision.

Submissions to the select committee proposed that the bill be changed to allow wineries to sell the full range of wine produced under their labels, regardless of where it is made or grown. However, the committee considered that if that were permitted, wineries would have a new, broader right than they had previously enjoyed. The purpose of the provision is to aid local tourism, and the committee considered that an extension of the nature proposed in submissions may erode the restrictions Parliament approved when it considered off-licence sales in 1999. The committee has therefore made no change to that aspect of the bill.

The bill contains an important amendment to the principal Act to provide a legislative basis for controlled purchase operations. The amendment will ensure that the police can continue with those effective enforcement operations. The police, district licensing inspectors, and public health officials currently join forces to conduct enforcement operations to test whether bottle stores and other liquor outlets are complying with the Act. Those operations catch liquor outlets that break the law by selling alcohol to young people under the age of 18. Under-age volunteers go into licensed premises at the request of the police, and attempt to purchase alcohol. Under-age volunteers are fully briefed by the police beforehand, and only take part in the operations with the agreement of their parents or guardians.

Controlled purchase operations have been conducted fairly widely throughout the country for the last 3 years. They are a highly effective method of assessing compliance with the Act. The police also obtain evidence from them for prosecutions and other enforcement actions. However, a recent District Court decision has raised a concern that the young people who assist the police with these enforcement operations may be inadvertently breaking the law by purchasing alcohol. To address that concern the bill amends the Act to specifically provide that under-age volunteers who purchase alcohol at the request of a police officer during an enforcement operation do not commit an offence under the Act.

The bill also contains an important technical amendment to provide for the staggered introduction of the requirement for a general manager of licensed premises to hold a prescribed qualification. The amendment is needed in order to provide for a transitional period during which general managers can obtain the qualifications they will need to comply with the general manager requirements introduced by the Sale of Liquor Amendment Act 1999. Submissions to the select committee generally indicated strong industry support for managers to be qualified. Concern was expressed in a few submissions over the content of the prescribed qualification, and the possible consequences of the changes for existing trainers and their training programmes. The qualification itself is to be prescribed in regulation, and is not a matter that is dealt with in this bill.

The Hospitality Standards Institute, which is the industry training organisation for the hospitality industry, developed the Liquor Controller Qualification in 2000. I understand that the Hospitality Standards Institute consulted widely when it formulated the units that currently make up the Liquor Controller Qualification. The qualification is registered with the New Zealand Qualifications Authority, and is now widely recognised across the industry. However, the Hospitality Standards Institute, in its submission to the committee, proposes a review of the prescribed qualification, to ensure that it is still fit for its purpose. In view of the time-lapse since the development of the qualification, further consultation concerning its content should take place in the course of developing the regulations prescribing the qualification. Consultation over the content of the regulations will allow the concerns raised with the select committee over aspects of the content of the qualification, the status of existing trainers, and their training programmes to be considered.

Finally, I understand that the committee also received a number of submissions on the restrictions that prevent supermarkets and grocery stores from selling Asian cooking wine and other food condiments containing alcohol. Asian cooking wines are prepared for culinary purposes and have been rendered unsuitable for drinking, normally by the addition of salt. At present there is uncertainty as to whether supermarkets and grocery stores may sell Asian cooking wines and other food condiments containing alcohol. Although the committee was not in a position to address that issue, I signal my intention to put forward a Supplementary Order Paper during the Committee of the whole House that will allow supermarkets and grocery stores to sell those products under an off-licence.

I commend this bill to the House.

BRIAN CONNELL (National—Rakaia): This is not a complex bill; it essentially falls into four parts. But I have to foreshadow that there is devil in the detail, and it is somewhat unfortunate that the bill is constructed in the way it is. I am one of those members who sat on the Commerce Committee and foreshadowed our concern as noted in the commentary.

The first part retains the existing monopoly rights of licensing trusts, and makes minor changes to the powers of district-licensing agencies. I do not particularly have a problem with that component of the bill, and will not be revisiting it. The second part permits wineries to sell their own wine on Easter Sunday. I strongly support that component of the legislation, and will come back to that throughout the course of this debate. The third part provides exemptions for under-18-year-olds, to assist police during controlled-purchase operations by ensuring that they do not commit an offence. That aspect of the bill does trouble me, and I will argue against it. The fourth part establishes in statute that general managers must hold prescribed qualifications. On the surface that appears reasonable, but I have some reservations that I will also address during the Committee stage of this debate.

Clause 14 deals with Easter Sunday selling of wine. As I have foreshadowed, I strongly support that. Essentially, as the Associate Minister of Justice pointed out, it will enable wineries to trade on Easter Sunday if they choose. As members can imagine, it is strongly supported by winemakers across the country. The clause essentially reinstates a provision that was operating prior to the passage of the sale of liquor reforms of 1999. It was eliminated by a drafting mistake, and this bill simply attempts to correct that error. Before 1999, Easter Sunday trading by wineries operated without public outcry; in fact, the contra-position really did prevail, as can be witnessed by the huge number of people who visited our wineries.

Probably the most compelling reason why this part of the bill needs to be supported is that it facilitates tourism. This Easter many Kiwis will visit some of our most productive wine regions: Central Otago, Hawke’s Bay, Gisborne, Nelson, North Canterbury, and. in case the good folk of mid and central Canterbury are listening, those two areas are budding wine areas as well. Imagine going to a region over Easter and not being able to visit one of our world-class wineries! It would take the shine off the visit entirely. I see Mr Speaker is nodding, and I am sure he and I agree very strongly on this issue. If this aspect of the bill is not supported, then there will be 2 days over the Easter period when tourists will not be able to visit a winery, and I believe that will have a negative impact on tourism. Tourists will simply go elsewhere, and that, I believe, will be a tragedy. The impact on local tourism, as I have foreshadowed, will be significant. Tourists will become frustrated with our wineries and their owners. Tourists will not understand the machinations of our legislators. They will simply talk the industry down and, by implication, will talk the New Zealand tourism industry down.

Clauses 25 and 26 are drafted to allow under-18-year-olds to purchase liquor on licensed premises at the request of the police—that is, during controlled-purchase operations. I am a very strong supporter of the police, but on this issue I draw the line. It is nothing less, in my view, than entrapment. If under-age drinking is a problem, then let us fix that issue. If we have to reinstate a drinking age of 20, then let us do that, but let us not turn hitherto law-abiding citizens into lawbreakers by simply entrapping them. That, in my view, is neither fair nor reasonable.

Some submitters to the select committee argued—and, I have to say, very reasonably, articulately, and intelligently—that the damage from alcohol-related problems is immense, and I believe them. I have seen it with my own eyes. But sending in children to trap people into selling them some grog—people who otherwise are extremely busy and law-abiding citizens—is simply not on. Sure, some people will sell anything to anybody, but the majority of our people in this country who work in this industry are responsible. Let us not punish the 99 percent of people who do a good job and try their utmost to uphold the laws of this land. A 17-year-old female who has gone the whole 9 yards in terms of putting on make-up and dressing to look older than she is—who is dressed to kill—could look anywhere between 20 and 30 years of age, and I for one would not want to try to pick that person’s age. Such operations are simply not the answer. An owner may be vigilant, and I am sure most owners are, but they cannot be everywhere. I know a number of publicans. Ashley Johnston in Rakaia is one publican I know who drums into his employees that they must be careful. But mistakes will be made, and it is unreasonable that publicans then get belted up, regardless of their efforts to ensure that those mistakes do not occur.

If we are really serious about this issue, let us make proof of identity and age compulsory for everyone who is involved in alcohol purchase. Let us put the emphasis on the buyer, and not just on the seller. Throughout the course of this debate I will be moving amendments to delete clauses 25 and 26.

Clause 21 substitutes a new section 117A of the Sale of Liquor Act that requires general managers to hold a prescribed qualification. A number of submitters thought that was necessary, but an even larger number thought it was overly bureaucratic, unnecessary, and extremely expensive. I am somewhat persuaded by the latter group. I will deal with it in more detail in the Committee stage; suffice it to say that I think the third unit that is being prescribed is big on theory and does not do much for common sense and good old-fashioned management in this industry. Experience and common sense count for a lot in my book, and I cannot help but think that this matter is just another example of legislation and qualifications for the sake of them. No wonder compliance is eroding the very soul of our commercial workforce!

Through the course of this debate I will canvass a number of issues that I strongly support and some I simply cannot. As we go into the Committee stage I will be looking to the Minister in the chair to listen to my concerns and try to accommodate me so that I can vote for this legislation, but as it is drafted at the moment I simply cannot.

JILL PETTIS (Labour—Whanganui): I shall make a brief contribution on this bill. As always, the quicker we get this bill through the House, the better it will be for the people involved in the sale of liquor in our country. The bill will provide more certainty for many of those within the sector. As has been stated, the main purpose is to provide licensing trusts with the option of reconstituting themselves as community trusts, if they so wish.

I shall comment very briefly on Mr Connell’s comments about identification for people wanting to purchase alcohol. If I were on the other side of the counter and unsure of somebody’s age—and I agree that sometimes it is very hard to tell exactly how old people are—my policy would be: “No ID, no alcohol.” It is as simple as that.

As I said at the beginning, let us get on and get this bill passed so that we can provide some certainty for those who are involved in the sale of liquor.

BRENT CATCHPOLE (NZ First): I would like to deal with two main aspects of the bill: first, providing existing licensing trusts with the option to reconstitute themselves as community trusts; and, secondly, the amendments to the conditions applying to off-licences so that wineries can sell their own wines on Easter Sunday.

Let us look at the first provision, which gives licensing trusts the option to reconstitute themselves. Licensing trusts set up under earlier Acts of Parliament have continued to go before the electorate to find out whether people wanted them to continue as licensing trusts. Some licensing trusts have reached a point whereby they want to change their trading aspects and reconstitute themselves as community trusts. A community trust has a much wider means of trading and also has the ability to trade outside its limited area.

Unfortunately, an anomaly exists in this part of the bill. The principal Act, the Sale of Liquor Act, has a list of existing licensing trusts in its third schedule. That list will have to be amended once a licensing trust on that list reconstitutes itself as a community trust, and that is one area we will concentrate on during the Committee stage.

Let us now look at the amendments to the ability of wineries to trade on Easter Sunday. The bill simply reconstitutes a situation that existed prior to an amendment in 1999 that, for some reason, suddenly dropped the ability of wineries to sell alcohol on Easter Sunday. That is a sad situation because, as a previous speaker mentioned, wineries are a huge attraction for tourists in this country. At this time of the year there are a lot of tourists, and particularly over Easter local people will also travel—effectively becoming tourists in different areas. They will want to try the different wares of the wineries. Unfortunately, under the current Act, wineries are precluded from selling wine on both Good Friday and Easter Sunday, which means that tourists in this country do not have an opportunity to try the very, very fine award-winning wines of many of those wineries. The restriction put on by the Commerce Committee is that wineries must sell their own wines. That includes wines made from grapes grown on their properties but sent out for processing and brought back to the wineries. Those wines will be OK. We will explore that area further in the next stage of the bill.

Another area I would like to look at quickly is the matter of young people being sent into pubs to try to trap publicans into selling them wine when they are under age. I must admit that that is straight-out entrapment. Unfortunately, this bill has missed a golden opportunity to rectify a major problem in this country. We should have taken the opportunity in this bill to raise the drinking age and restore it back to 20. That would raise the age of young people found drinking on the streets. It is a shame that 12 and 13-year-olds are out on the streets drunk, and it is a pity that this bill will not in any way rectify that situation.

I agree with the amendment on the Supplementary Order Paper with regard to food condiments that contain liquor. It is an anomaly, and the practice has grown. I warn that many so-called food condiments, particularly those used by Chinese restaurants, are purely wines. They do not necessarily contain salt additives, as the Minister suggested. We need to ask the Minister to have the labelling of some of those condiments checked, because it is an area where there could be a major problem.

I have an amendment with regard to the reconstitution of licensed trusts. The bill contains a provision that when licensing trusts reconstitute themselves as community trusts, they must notify the public. Notification is important, because it signals a complete change of a trust’s structure. The amendment I have tabled reduces the percentage of electors requesting a poll from 15 percent to 7.5 percent. New Zealand First feels that it should be made easier to hold a poll, because 15 percent is quite a large number of local people to get a poll running and 7.5 percent would make it easier. We feel that 7.5 percent is the figure that should be substituted in the bill. I will raise that matter again during the Committee stage.

In summary, the provisions in this bill that enable licensed trusts to reconstitute themselves are sound, but we should be aware of the need to have the percentage required to hold a poll lowered. In respect of the ability of wineries to be able to sell wine on Easter Sunday, the bill corrects an anomaly that should not have occurred in the first place. Finally, we do not think the situation is satisfactory whereby children under the age of 18 are sent into pubs by the police to entrap those selling liquor.

RODNEY HIDE (ACT): The ACT party rises to oppose this legislation, and asks the House some basic questions about its attitude towards liquor licensing, the consumption of liquor, and the sale of liquor. Would we not have thought, in this day and age, that we in this House would well understand the dangers of a monopoly? Why is it that we are entrenching in this bill monopoly licensing trusts for the sale of liquor in New Zealand? Is it not time we recognised that monopolies are bad? They do not look after the customers or the community, and they do not provide a good service. Why do we carry on with the myth that a licensing trust, elected and with a monopoly, somehow protects people from the debilitating effects of excessive alcohol consumption? Are we in this House going along with the pretence that by having a licensing trust, and a monopoly, we are dealing with a serious problem? I do not think that any member in this House who votes for this bill believes that monopoly licensing trusts are the answer to any problem. In fact, I would be very interested to hear a member in this House stand up and say that a monopoly and a licensing trust fixes the problem of X—and I would like to know what X is. How is it that in some areas we can get away without having a monopoly, but in other areas we have to have them? Of course, it is just raw politics, pure and simple—no principle, no philosophy, and to hell with the consequences and effects of not doing the right thing.

There is another problem this bill alludes to: our crazy rules and, I say again, our attitude towards the purchase and consumption of alcohol—as if banning the sale of wine or allowing the sale of wine from wine shops at Easter will solve any problem, real or imagined. What is going on in our parliamentary colleagues’ minds if they think that, hitherto, not allowing wineries to sell wine on Easter Sunday has served a good purpose? We commend the move to allow that sale, because at the end of the day it is up to the person who is buying the wine to make the decision to buy it and the person selling the wine to sell it. But does this exemption not underscore a problem we have with the minutiae and the detail we get into when we start looking at—the phrase of the bill—the sale of liquor.

Here is another problem. How smart is it to prevent Chinese supermarkets from selling cooking wine, and to have the time of the House taken up with the subject of whether a Chinese supermarket or a minimart can sell cooking wine? I look across at the Labour Party and ask its members whether they think a good purpose is served by preventing Chinese minimarts from selling cooking wine? Not one person’s hand has gone up. Then we have those members saying: “Oh, it’s technically very hard to define what is cooking wine and what is not cooking wine.”, but is that not the problem?

Here we are in Parliament trying to divine these minute rules. What problem is our sale of liquor law trying to address? I listened to the Hon Rick Barker when he introduced the bill. He told me what the bill was about, and I appreciated that. He said there were some moves forward, and I appreciate those. But I did not hear once from him an explanation of what the amendments to the Sale of Liquor Act are to do and how successful they will be—not one. So what we have is a crazy set of rules that has grown like Topsy, and there is no inspection by this Minister or this Government of its underlying rationale.

Can we not trust people with some freedom? Can we not trust people with some responsibility? Can we not let the Chinese supermarket sell Chinese cooking wine? I have not seen the boy racers, who so exercise the minds of members of this House, out there sucking on cooking wine before going off on a drag race.

John Carter: They’re pretty oily.

RODNEY HIDE: Well, I do not know about that member’s electorate, but that is not so in my observation. Again, what is the problem we are attempting to address?

Let me go to another concern—[Interruption] It is always good to have Jill Pettis interject on a speech, because whenever she gets up to speak we discover she has nothing to say. But when anyone else in this House gets up to speak we discover she has a lot to say. So I suggest to that member, Jill Pettis, that she do her work, stand up, and give a speech on the bill rather than sit on the side and interject.

There is concern over the prescribed qualifications for general managers. What a lot of nonsense that is! It means more costs, more requirements, and more bureaucracy, and the Minister never got up in this House to explain the problem he is attempting to address. It is just more expense. Here we have a Minister who is led by the nose by his officials to come up with more rules and more regulations.

Do members know what we heard at the Commerce Committee? We heard the view that those regulations and requirements were put to this Parliament to favour one group of trainers over everyone else. I go back to the point, made right at the start, that that is to retain the monopoly. So why has this Minister allowed himself and this House to be used by a legislative process to give advantage to some trainers and to disadvantage others. Listen to this—this is unbelievable. I am reading from the commentary on the bill: “Concern that existing trainers and training programmes could be penalised by requirements that trainers be NZQA accredited will also be considered in the course of developing the regulations.”

When that work has not been done, does that not tell us this bill is wrong? Yet we are to take the Government on its word that, yes, it will do this and, yes, they will take on board those concerns. The ACT party is against this bill and will be putting forward some amendments to help this Parliament and to help New Zealand fix it.

NANDOR TANCZOS (Green): The Green Party is supporting the Sale of Liquor Amendment Bill (No 2). Despite some of the comments made by members in this House, we think it is a relatively non-controversial and straightforward bill that simply tidies up a number of regulations in bits of legislation around liquor sales that are well due to be tidied up.

There is a saying about people who swallow camels and strain at gnats. Sometimes I think that is what happens in this House. I have seen some quite draconian pieces of legislation pass through this House unremarked upon by most parties, but a piece of legislation like this seems to occupy a lot of members’ time, attention, and concern. So I was quite curious.

Before I get to the specific clauses, I would like to address some of the comments made by the previous speaker, Mr Hide. He told us that ACT would oppose the bill, and he complained about a whole lot of different things—things that the bill is exactly intended to fix up. So it is quite curious to hear him say he that would vote against the bill, and then moan about the things the bill is actually intended to remedy.

It was also curious to hear him talk about the interjections made by Jill Pettis. I did not hear any interjections from Jill Pettis. I think the House has been remarkably quiet today, but, of course, Mr Hide is the king of interjections. It was curious to hear him complaining about interjections, and spending a lot of time talking about Jill Pettis and her contribution. That clearly indicated that he did not have a lot to say about the bill itself.

I move on now to the bill, which does a number of things. It retains the existing monopoly and privileges of licensing trusts, and Mr Hide talked about that. The Green Party supports those aspects of the bill. Mr Hide said that, in his opinion, those licensing trusts offered nothing to the community. He said they did no good service and were a hindrance to the community. But the issue is that the community chooses to have them, and communities have the right to vote these things out. Some communities choose to do that and some do not. The issue is really about community decision-making when it comes to licensing trusts. That is what the Greens support, and that is what this bill will continue to maintain in place—as opposed to corporate decision-making, which is what the ACT party stands for.

Clayton Cosgrove: They’re mates.

NANDOR TANCZOS: That is quite right. One of the things the bill does is tidy up an inadvertent change made under the previous legislation that stopped wineries selling their own wine on Easter Sunday. Brent Catchpole talked about that, and we agree with his position on it. I have to say that the Green Party is usually opposed to extending the commercialisation of our public holidays. We think it is important that people have shopping-free days to spend time with their families and communities, rather than simply—

Rodney Hide: What about marijuana-free days?

Mr SPEAKER: Mr Hide knows he should not interject against the member in front of him.

NANDOR TANCZOS: I do not know if Mr Hide wants to smoke marijuana, but that is his business and not anyone else’s.

Usually, the Greens are opposed to the commercialisation of these things. We think it is important to maintain shopping-free days, because they are actually about enhancing relationships in the community. But this particular clause is just fixing up an inadvertent change that happened when the previous bill was passed, so of course we will support that. If there is a case for shopping to happen on Easter Sunday, I think that a vineyard is most likely to make that case.

One of the areas of concern—and the Green Party considered this a lot—is the issue around controlled purchase operations. This basically provides an exemption so that the police can conduct sting operations for alcohol, as they do for tobacco. There are concerns about the use of entrapment, and there are a number of areas in the law where entrapment is used. It is quite a serious civil rights concern, but we do not think it is a concern in this particular example. We think the benefits outweigh the costs in this regard.

The reason we took that position is that when this Parliament voted to lower the drinking age to 18—something I personally supported, although I was not a member of Parliament at the time—the key thing was that that change should have been accompanied by strict measures to ensure that the age limit was actually adhered to. That can be done in two ways. One is to have good messages out in the community, education about what is moderate use, and re-enforcement of the idea that there is an age limit, which is 18. But we have to police that age limit as well. When that legislation went through Parliament, we saw the introduction of drinking-age ID. At the time, I was concerned about that, because we very quickly see how those kinds of things can become a de facto general ID that people are required to carry with them at all times.

It is a curious thing, but it seems that in this country we now need to carry ID for just about everything except buying alcohol. Those ID cards are being used for all kinds of purposes, but because there is no policing of the sale of liquor to under-age people, they become essentially meaningless in that area. So we think it is important to allow the police to check that people who are selling alcohol from licensed premises are actually adhering to the law and to their obligations—both legislative and ethical—to ensure that they are not selling to under-age people.

The other point I will touch on quickly is the issue of district licensing agencies. Again, this is just about fixing some rigidities that exist in the current legislation, so we think that is a good thing. This bill does not address a number of other issues where some of the provisions need to be extended, and things like that. We think that some of those questions are more properly placed in a different bill, but in terms of what this bill is trying to achieve, we think it does the job.

The last thing I will touch on is the issue of rice wine—the Chinese culinary cooking wine—that Mr Hide again made quite a lot of. He criticised this bill because it did not address that question. Mr Hide will know, if he bothers to look on the Table, that a Supplementary Order Paper has been tabled by Mr Barker for consideration in the Committee, and that it specifically addresses that question. So it is rather disingenuous for Mr Hide to complain that the bill does not address the question when he knows that Supplementary Order Paper 198 is on the Table to do that very thing. I leave it to members of the House, and to people listening to this debate, to form their own views as to the integrity of those comments.

PAUL ADAMS (United Future): Basically, United Future is pleased with most aspects of this bill. We had a major concern in the early stages of the drafting of the legislation when the Liquor Licensing Authority had the ability to review the hours that each of the clubs might operate in when it reissued licences. We could see that it would be a real burden for clubs, but I am glad to see that that provision has been removed.

I was fascinated by Rodney Hide’s speech about how bad monopolies are, yet communities themselves are not monopolies. A community can choose how it will operate under this legislation. Therefore, if a community wants to have a community trust, it is free to do so. I found that very interesting, because sometimes viewpoints can be very narrow. If only those who owned businesses had rights to do everything, all the time, and anywhere, I do not think that would be a good society.

Coming back to this bill, I personally do not have a problem with the selling of wine from wineries on Easter Sunday, yet I do not support open Sunday trading, because I think that there are days in a year that need to be special—days that one needs to be able to put aside and take rest. I remember speaking on different legislation, where I likened a year without any special days to a city without a park. Only the other day I wandered up the top of the hill to the rose gardens, and I saw people in the midst of a very busy city, Wellington, just taking time to sit in a park where there was no commercial activity, and they were indeed smelling the roses. I think we would be unwise to allow business to become such a focus in our calendar year that people had to go through the whole 365 days without any days that were different.

We are also putting an amendment in the name of the Hon Peter Dunne to clause 14 of the bill that tidies up section 37(2) of the Sale of Liquor Act with what we believe is just another common-sense approach. I would encourage members who have perhaps not read that amendment to get one from the Table before we go into the Committee stage. Once again, I think it makes sense, and I like legislation that makes sense. I think it is unfair on wineries if they are not able to sell their wine on a day when they are open and having people come through, while other similar facilities are already operating on that day.

I pick up on Brian Connell’s point with regard to underage drinkers. I personally support the drinking age being raised again, but when we have a law, I think we have a responsibility to make it simple for those who are policing it, so that they can operate effectively. I hear where Mr Connell is coming from—about the police sending in minors to check whether the licensee is selling to minors, rather than taking the responsibility of just checking whether they have identification. For example, if one is pulled up in a motor vehicle and the police think one is underage, one does have to show ID to prove that one has a licence. I think it makes sense that the ones who purchase liquor should also have to show their ID.

But I do not want to hinder the police in their work. I think there are enough challenges in trying to police the laws we have. I think we have too many laws in this country, and in many cases the police have a great challenge in trying to enforce them. So if this bill makes it easier for them, I support it. For example, we in the motor industry have to show all the paperwork for everything required for a warrant of fitness on a car, whereas I would prefer them just to come in with a car that had a defect, and if we did not pick up the defect as a warrant of fitness inspector, then deal with us on that case. So there are two sides to that argument.

Basically, United Future thinks that this bill is just tidy-up legislation. It is sensible legislation, and again I would encourage members to pick up the Hon Peter Dunne’s amendment from the Table. It is a typical United Future amendment; it is just common sense and makes legislation work better, and that is what we are here for. We are the friends of the nation, and I thank you for being able to speak during this second reading.

Mr SPEAKER: The question is, That the amendments recommended by the Commerce Committee by a majority be agreed to.

Amendments agreed to.

JOHN CARTER (Senior Whip—National): I should have asked this before, but I seek leave that the National Party cast a split vote.

Mr SPEAKER: Leave is sought for that. Is there any objection? There is not.

A party vote was called for on the question, That the Sale of Liquor Amendment Bill (No 2) be now read a second time.

Ayes 105

New Zealand Labour 52; New Zealand National 21; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 13

New Zealand National 5; ACT New Zealand 7; Independent: Awatere Huata.

Bill read a second time.

Instruction to Committee

Hon RICK BARKER (Associate Minister of Justice): I seek leave that the Committee be able to consider the Sale of Liquor Amendment Bill (No 2) as a single question, except that clause 14 be taken as a separate vote.

JOHN CARTER (Senior Whip—National): I raise a point of order, Mr Speaker. Mr Dunne has an amendment that would also need to be taken as a separate vote as a conscience issue, and it should be included in the motion, I think.

Mr SPEAKER: Leave is therefore sought accordingly, and to emphasise to people what that means, it is one debate, but when there is a vote, Mr Dunne’s amendment relating to clubs, and clause 14, are to be taken as separate votes.

Hon PETER DUNNE (Leader—United Future): I raise a point of order, Mr Speaker. Both my amendment and the other amendment relate to clause 14. I think therefore that we can simply take one debate, and then recognize that on clause 14 there will be separate votes.

Mr SPEAKER: I will just say that again, so that we know what we are doing. We are seeking leave for a separate question to have one debate, and I will take that leave first. Is there any objection? There is not. Now I will seek leave of the House for the Committee to have the provisions of clause 14 relating to Easter Sunday wine sales and the amendment of the Hon Peter Dunne relating to clubs taken as separate questions when we come to do the voting. Is there any objection to that course being followed? There is not.

In Committee

Clauses 1 and 2, and Parts 1 and 2

Hon RICK BARKER (Associate Minister of Justice): There are several things that I would like to draw to members’ attention. The first is a Supplementary Order Paper in my name that seeks to deal with the sale of Chinese rice wine or cooking condiments. It has been accepted for quite some time that these types of wines are undrinkable. They have not attracted excise duty, because, in customs terms, they are denatured, which means that they have had substantial amounts of salt added to them that therefore renders them undrinkable. Because they are undrinkable, they are not excisable, and because they are not excisable, people did not think that they were covered by the Sale of Liquor Act. However, investigations by some others have determined that they are covered by the Sale of Liquor Act. They are not a medicine, and cannot be considered a medicine, so the Sale of Liquor Act has to deal with them.

In Supplementary Order Paper 198, I propose that these condiments can be sold as part of an off-licence under section 37(3), and that they can be sold in the likes of supermarkets. This is a similar amendment to that which Pansy Wong also foreshadowed, and therefore we are talking along similar lines. I recommend my Supplementary Order Paper to members.

The second amendment in the name of Pansy Wong seeks to extend the sale of these condiments to a broader range of shops. This falls foul of a second problem for us, concerning the Lopdell v Deli Holdings Ltd decision. I recommend to the Committee that we oppose this amendment. There is some confusion in the Sale of Liquor Act about people having the ability to sell liquor. In the past, people have been granted liquor licences when their principal business is food but their shops are not supermarkets. This is an issue, and the court has ruled that where the principal business is food and the place is not a supermarket, people cannot sell liquor. There are some complex issues at the back of this that I do not want to go into at this stage, but I signal to members that it is my intention to come back some time later with a bill that will deal with those issues. I do not wish to deal with them today. Because the second amendment in Pansy Wong’s name goes into this area, I propose that we vote against it.

There is another amendment in the name of Brian Connell. He is seeking to knock out the provision that will deal with controlled purchase operations. I have heard that the basis of the amendment is the ACT party’s view that this is entrapment. But in my view, the ACT party does not quite appreciate that Parliament has already passed legislation that has a similar arrangement in it—the smoking legislation. For a long time, police have sent people who are underage into liquor establishments to see whether liquor would be sold to them, as a means of testing whether the law is being complied with.

Similar things have been happening with regard to smoking, but in the case of smoking, it is provided for in legislation. When one of these cases came before the court, it was argued that by the police using—without the authority of the law—someone underage, they were aiding and abetting the breaking of the law. The court said that that was wrong. This change in the law seeks to give police the ability to have a controlled purchase operation to ensure that people are selling liquor correctly to those who are aged 18 years and over. Let us be clear that if people vote for Brian Connell’s amendment, they will take from the police a very powerful tool for enforcing Parliament’s wish. I say to members unequivocally that I am totally opposed to Brian Connell’s amendment, and I support the bill as it stands.

There are a couple of other issues. The first is that there are two other minor amendments that seek to change some of the dates on which these provisions come into effect. One will be the date on which the bill receives the royal assent, changed to 1 April, principally to enable the provision that will allow wineries to sell their own wine on Easter Sunday, from this Easter. I think that that is a good idea. This amendment will give effect to that.

The other amendment in the name of Mr Catchpole is to delete “15 percent”, and reduce it to “7.5 percent”. I recommend to members that we vote against that amendment, for two reasons. Firstly, the current competition poll is set at 15 percent, and I see no logic to have one poll at 7.5 percent, and the other at 15 percent. Secondly, in the very next new section, 219F, there is another threshold whereby the number of electors requesting a poll has to pass 15 percent, and it is remaining unaltered. If we change one threshold to 7.5 percent, as recommended by Mr Catchpole, and have all the other thresholds at 15 percent, we will simply create anomalies in the legislation for no useful purpose.

I have one last point to make, in relation to the comments made by Mr Hide. He has a couple of amendments that basically set out to de-license licensing trusts. Mr Hide has argued that Parliament should not make decisions about these, that this should be simply a matter of principle, and that we should let the market decide. On this side of the Chamber—and I recommend this to the Chamber, as well—we believe that the public should decide. Licensing trusts are set up by a public ballot, and the provisions make it very easy for the public to exercise a ballot for trusts to either maintain their monopoly licence, or to lose it. On two occasions, the Waitakere Licensing Trust has gone to a ballot, and the people of Waitakere have made their decision. They want a licensing trust to be in the area, and for it to have exclusive rights. A similar thing has happened in Invercargill. My view and the Government’s view—and, I hope, the rest of the Committee’s view—is that if the public want a licensing trust to have monopoly rights, then the public should decide. Mr Hide and the ACT party should not tell the public what they can and cannot have. That is the Government’s view on that. Labour supports the legislation as it stands.

PANSY WONG (National): I have tabled three amendments. First of all, I welcome the Minister’s Supplementary Order Paper with regard to the sale of Chinese cooking wine, even though it is very belated. I was upset because that issue occurred in November 2002, and this current legislation was introduced last year. At some time during the first reading, I alerted the Minister to the problem it was causing council officials, who knew that it was nonsense to ask Asian supermarket owners to remove all Chinese cooking wine from their shelves. Can members imagine advising customers that if they want to buy a bottle of Chinese cooking wine, they have to get it from a bottle store? Nobody thinks of going to a bottle store to get Chinese cooking wine. The Minister did not see fit to foreshadow that he would bring in an amendment, so all this time, store owners and officials have been put under undue stress.

I point out that when the New Zealand Herald ran a story on Chinese cooking wine in February this year, it concluded the article by stating: “Police and council staff in greater Auckland were unable to give examples of underaged drinkers being caught with Chinese cooking wine.” I was also interviewed by BBC Radio wondering what was happening in New Zealand that there was such a crackdown on the sale of Chinese cooking wine. Imagine stir-fried beef without Chinese cooking wine! I welcome the Minister’s amendments set out on Supplementary Order Paper 198, but I wish he had shadowed it a lot earlier so that it would not have caused that stress—and that would have saved me tabling an amendment, as well.

I want to take issue with the Minister about the amendment to clause 13 that I proposed. It was not to do with extending the privilege to other operators. Nowadays, we have corporate gift operators and ethnic stores that make up gift baskets for festivals, etc., that include a bottle of alcohol. In the past, that has been handled by those operators getting an off-licence; that is, if the Liquor Licensing Authority sees fit, it can grant them that licence. But that practice can no longer happen, because of a court decision. The court reckoned that the last amendment to the legislation that Parliament passed provided that supermarkets etc. cannot get an exemption to sell alcoholic beverages other than wine or beer.

I do not think those other corporate gift operators have that in mind. That is why I proposed the amendment. It was basically to inject back some common sense into the Liquor Licensing Authority—to give it that discretion to allow those small ethnic stores and corporate gift operators to do that.

My third amendment, to clause 21, which I hope the Committee will see fit to support, relates to training. The bill repeals section 117A of the principal Act and substitutes new section 117A, “General manager must hold prescribed qualification”. Members of the industry informed the Commerce Committee that there was no consultation, and the training manual that is now imposed on the industry is draconian. I have tabled an amendment stating that that particular requirement should not come into effect until the content of the qualification has been consulted on fully with the industry. It should also include only the unit standards 4646 and 16705.

It is time for Parliament to support the industry in trusting it to be able to come up with common-sense solutions. After all, we have demonstrated in the last amendments to the legislation that we passed that we did not do a good job with regard to the fiasco over Chinese cooking wine, and we have removed a lot of the common-sense discretion given to the Liquor Licensing Authority. I certainly think that the industry as a whole has come to more maturity in terms of knowing what type of qualification and what sort of training is appropriate for it. I hope the Committee will support all my amendments.

RODNEY HIDE (ACT): I say good on Pansy Wong for moving those changes, especially the changes relating to the transition to the training programmes. But why have the training programmes? That question has not been asked. Let me go through, if I may, the changes that I will be recommending through my amendments. There are three major ones. I have proposed a change to clause 13, because there is an anomaly whereby if one is giving a corporate gift basket and one puts a wee bottle of sherry or something in it, that is actually against the law. I have tabled an amendment to allow that to occur. How sensible is that? It is a good amendment, and I look forward to Mr Barker and his colleagues reading it and supporting it.

I am pleased to see that the Minister in the chair, Rick Barker, has decided to allow Chinese cooking wine to be bought and sold in minimarts. I have an amendment here to do the same, but he has obviously foreshadowed my move. I hope the Minister’s drafting is as good as mine, because the officials advised the Commerce Committee it was not possible to draft such an amendment. That is what they told the committee. But suddenly, after Pansy Wong and Rodney Hide both did it, the honourable Minister Rick Barker said it would not be very hard to do so, and has done it himself. I just worry that his amendment is not as good as Ms Wong’s and mine.

I come to another amendment that must concern the Minister. Heaven knows how he keeps a straight face when he is paid each fortnight, because what has he done? He has come along with a bureaucratic nightmare for the training programme for managers. It is loopy. Most liquor licensees and outlets are small businesses. The Minister is putting a requirement on them to get a different form of training, which will cost $250 or $300 or so for the qualification. The Minister has not established a case that it is needed. There are thousands of managers of liquor outlets in New Zealand. They have all been trained; they all have certificates. What is the problem? Those required to hand their licences in are 0.1 percent. But oh no, the Minister has come along with a high-cost, bureaucratic process for giving out those certificates that, I have to say, favours some trainers over all the rest. I can only look at that Minister and wonder why that should be the case. He says he has consulted with the industry. Quite frankly, he has not. He might have talked to his mates who like this bill, but he has not spoken to the industry.

I say to the Minister that he should imagine how dumb it is that someone who is out there successfully managing a liquor outlet, and who has his or her manager’s certificate, has to retrain because of this legislation. That person has to get another certificate at an estimated cost of $150. It is a money grab by the private trainers. That is the problem. Those are the people who have been talking to the Minister and helping him, rather than the Minister talking to the industry.

Hon Rick Barker: Ha, ha!

RODNEY HIDE: Rick Barker likes to laugh, but he has not got off his chuff and gone and talked to the industry, as the ACT party, the National Party, and New Zealand First have. They know what is going on. They know that there is no problem that needs to be fixed by making that change.

I beg the National Party, New Zealand First, the Greens, United Future—and I look across to Labour Party members—to support my amendments and vote against excessive bureaucracy. I ask them to vote against a grab by private trainers for money, with the help of that lazy Minister, and to vote against legislation that is before the Committee for no good purpose. I would love the Minister to get up and explain the problem.

The CHAIRPERSON (H V Ross Robertson): I call the honourable member Brent Catchpole.

Hon Paul Swain: Don’t shout!

Rodney Hide: The useless Minister of Corrections too, while we’re at it.

Hon Paul Swain: Stop shouting.

Rodney Hide: Hopeless Minister! $1.3 million down the tubes.

The CHAIRPERSON (H V Ross Robertson): Order!

Hon Paul Swain: Where’s that electorate office money?

The CHAIRPERSON (H V Ross Robertson): Order!

RODNEY HIDE (ACT): I raise a point of order, Mr Chairperson. That shows exactly what the trouble is in this Chamber with regard to order. Ministers can call out, and there is no problem.

The CHAIRPERSON (H V Ross Robertson): Come to your point of order, Mr Hide.

RODNEY HIDE: I am coming to it. When members of the Opposition respond to Ministers who call out, the Chair jumps on them. The Chair called “Order!” twice—we all heard him—the Minister carried on interjecting, and the Chair did nothing. We ask you to protect every member in this Chamber—

The CHAIRPERSON (H V Ross Robertson): I ask members to desist from calling out. Chaos may be the parent of creation, but in this Chamber I will have order. I recognise what Mr Hide said, but I did call the Minister to order. I asked him to desist from calling out, and it was my understanding that he did desist.

BRENT CATCHPOLE (NZ First): I would just like to express my disappointment in Rick Barker for suggesting that the House vote against my amendment. New Zealand First feels that the threshold for a poll should have been lowered. It should have been made easier to call for a poll. I take the point that there are several different figures within this bill, and we note that yes, when a licensing trust has decided, through its board of trustees, to reconstitute, it does have to tell the public. The bill is quite clear that the trust must notify the public and its trustees. But the bill then opens up a situation whereby the trustees and the public have to call for a poll themselves, in order to be able to overturn the ruling of the board of trustees. We believe the threshold for that is too high, and therefore we requested a lowering of that figure. I do express my disappointment that the Minister, without allowing the debate to go forward, has already signalled that he would like to see that amendment thrown out. I am disappointed in that.

It all comes down to the basis of a licensing trust converting to a community trust. This bill allows that process to happen. The licensing trusts were set up with a definite restricted area in which they controlled every aspect of the sale of liquor, excluding liquor sold by any supermarkets that moved into those areas. There was a case in Auckland during the last election where the supermarket chains set out to try to overturn the licensing trust. They regarded the financial disclosure requirements of the trusts as inadequate, because they could not identify exactly what was the financial part of the liquor sales. So they wanted to separate that out. I am pleased the Minister did not allow that to happen, because it would have set up a process whereby the supermarket chains would target trusts where they saw there were substantial gains to be made in liquor sales. That is an area we feel was important.

I would now like to touch on the subject of wine being sold by wineries on a Sunday. This measure is just a means of bringing the situation back into line with what was the case prior to the 1999 amendment of the principal Act. We are in favour of that measure. It is to do with tourism. A large body of tourists moves around the country and has the opportunity to try our world-class wines. If tourists are in the country from a cruise ship for just a day or two, they do not get that opportunity, and it would be a sad moment to realise that New Zealand had lost a golden opportunity to promote its world-class wines. I would like to highlight a survey that was done by New Zealand Winegrowers. It surveyed 459 of its members, from which it received 149 replies, which is quite a high percentage when we consider that other surveys consider 1 or 2 percent to be a pretty good response rate. This was a very high response rate, and of those wineries, 138 agreed with allowing wineries to open on Easter Sunday. That is a clear indication that the wineries want that measure.

Hon PETER DUNNE (Leader—United Future): I want to take just a brief call, because I know the Committee is keen to make progress on this measure. The United Future members will be voting in favour of the Minister’s amendments to clause 14, regarding Easter Sunday wine sales, and also relating to the issues he raised in relation to Chinese cooking wines.

I want to speak briefly to my own proposed amendment to clause 14, which makes some changes to section 37 of the principal Act, regarding off-licence sales at clubs. The best way I can illustrate what I am seeking to do is by an example. I see my friend the Minister of Labour is standing in the lobby, and I will just use “Swainy” as an example. If I were to go to the Johnsonville Club with “Swainy”, who was a member of the Petone club, we could both consume alcohol on site with our meal. But when we were going back to “Swainy’s” house to watch the rugby, if I decided we should buy some supplies to take with us, I could buy off-licence from the club but “Swainy” could not, even though he is a member of a reciprocal club.

The CHAIRPERSON (H V Ross Robertson): Order! The member will use the member’s proper name.

Hon PETER DUNNE: I am referring to a mythical colleague.

The CHAIRPERSON (H V Ross Robertson): No. I refer the member to Speaker’s rulings 26/7 and 26/8. A member’s proper name is to be used.

Hon PETER DUNNE: I accept your ruling. I would simply say that the Minister and I have been friends for years longer than I care to remember, and I hope this does not alter that greatly.

The point I am making is simply that my amendment extends a provision that currently relates to on-site consumption to the off-licence situation. It is simply a logical move, and I would commend it to the attention of members of the Committee. It does not actually change the situation very significantly, because of the reciprocity issue that is at the heart of the club movement. I think that is probably the only explanation I should give. I suspect I now need to go and talk to the Minister of Labour, but I do hope that members will support the amendment when it comes up later on.

BRIAN CONNELL (National—Rakaia): On the table are two amendments in my name that call for the deletion of clauses 25 and 26 of this bill. I raise these concerns because I simply believe that these are entrapment clauses and they are fundamentally unfair. The hypocrisy of the argument that says we can break the law to enforce the law is not lost on me. I do not believe there would a publican in the country who will not be trapped by these clauses if the police are determined to trap him or her. That is my major concern. I ask the Minister in the chair to reflect on the following situation. A 17-year-old female who has the whole 9 yards of make-up on and is dressed to kill goes into a busy bar. She is shoulder to shoulder with other punters. The person behind the bar, who is stressed, tired, and has others waiting to be served, simply asks what she wants and then does it.

Brent Catchpole: ID please.

BRIAN CONNELL: That is true, technically. But the reality is that it just will not happen like that. We are going to turn otherwise law-abiding citizens into lawbreakers. Is that what the Minister really intends? I do not think that is what he intends, but that is what will happen. It is fundamentally unfair, which is why I have proposed the amendments, and why I ask members of the Committee to consider these amendments. We will be turning law-abiding citizens into lawbreakers.

I know publicans, licensees, and bar managers across the country who sit down with their employees and say, “Look, be careful. Be careful that you don’t serve people who are under age.” But the reality is that it just does not happen like that. People come into a bar and I know what has happened. I know that situations have arisen where the police have had orchestrated “stings”, and they have got their person. They have kept going back, despite the fact they know the publicans concerned have sat down with their staff and said: “Look, make sure you are careful.” Most of the people behind bar counters are just children themselves. They are 18, 19, 20-year-olds, with their first job. They do not really care whether the publican or licensee gets hit for a $10,000 fine, but that is what will happen. Instead of those young individuals having any responsibility, it falls on the shoulders of the licensee or publican.

That is why I ask members to reflect on that. They must look into their hearts and ask whether that is fair and whether that is enforceable? The answer is no. The law is stupid law if we cannot easily enforce it. If we really want to deal with the issue, we should at least have a discussion or debate about increasing the drinking age, or say that if anyone wants to buy booze, then proof of age and identity are compulsory, regardless. We should put the emphasis back on the purchaser and not on the seller. If the Minister were to move such an amendment, then this legislation would have wide support right across the nation. I ask him to reflect on that. I ask him to think about how this legislation, if it goes through in this guise, will be accepted across the nation. He will do his party immeasurable harm, because the law will not be enforceable.

Damien O’Connor from the West Coast must be having kittens when thinking about this legislation. Someone in a bar down on the West Coast will walk in and say: “I want a beer.” The question will come: “How old are you?”. Well, I cannot repeat the type of exchange that would take place, because it would probably be very unparliamentary, but I can tell members that this legislation is just not going to be enforced. So I repeat my request to the Minister that he thinks about this legislation. Essentially, it is not common sense.

The other issue I want to address while I am on my feet concerns the regulations. I must say Mr Hide summarised that pretty well when he said the majority of people in the industry describe the legislation, with regard to the regulations, as a waste of time and money. It is repetitive, because we already have two units that are reasonably well respected in the industry. This legislation simply loads that responsibility on to the publicans, etc., when hitherto it was carried out by police and liquor licensing inspectors. It is simply not wanted.

It is argued that the legislation requires a person to learn to deal with drunks, assess when people have had too much booze, and therefore refuse to serve them. But the training will take place in sterile environments. It is easy to assess someone else, when sitting in an office, where a makeshift bar has been created. Someone from the bar staff walks in and says: “Oh, by the way, my script says: ‘Are you drunk?’,” and the other person says: “Oh, yes. I’ve had a few.” The staff person says: “I’m sorry, I can’t serve you.” “That’s OK.”, says the other person and walks out. That is role play. It will not happen in reality, will it?

I used the example before of a busy bar. Would members imagine this situation? The music is blaring, the bar is going off, there are people shoulder to shoulder at the bar, and someone stands there and says: “I want a drink.” The judgment call by the bar staff is: “Are you drunk? Are you too drunk for me to serve?”. Most of the time they will not even be able to hear the patrons, let alone use judgment as to whether they are drunk.

There is no better example of the impracticality of this issue than a Target programme shown on TV3 last May. An actor walked into 10 bars, and nine out of 10 served him liquor when he was acting drunk. When asked why he was served, bar staff answered that they thought he was clowning around—and that is the reality of it. No one will be able to determine whether someone is clowning around drunk, too drunk, or not drunk enough. It probably suggests that the actor involved was not too flash, either.

Another area concerns me, and it is really an issue I should address to Rick Barker, the Minister in the chair, because I have a letter he sent back to some constituents. The paragraph in question is this: “I understand that the Hospitality Standards Institute undertook a wide consultation process to formulate the qualification, and that key stakeholders included members of the liquor industry, the Sale of Liquor Act national trainers, the Hospitality Association of New Zealand, the Alcohol Advisory Council, the Liquor Licensing Authority, some district licensing agencies, and the police.” I point out to the Minister that when I contacted those people they said that no one had spoken to them, at all.

I spoke to Swain and Associates, who are major corporate trainers in this field, and they told me they have large corporate clients, including a supermarket chain. Many of them have up to 30 or more certified managers. According to their research, none of those groups had been consulted.

The Hospitality Association of New Zealand, formerly known as the Hotel Association of New Zealand, had this to say: “Our information is that the association has about 1,800 members. If they claim the Restaurant Association has another 250 members, it gives them a total of about 4,300 members.” I tell the Minister that the total number of current licences operating in New Zealand is 15,435.

Hon RICK BARKER (Associate Minister of Justice): There are several matters I want to raise. Firstly, I should have mentioned earlier the third amendment put forward by Pansy Wong, which makes specific reference to course numbers. She thought the numbers needed to be in the legislation to ensure the industry was consulted. I agree with the intention of her amendment, but I do not agree with its form. The Government’s intention is that once the legislation is passed, regulations will be drawn up; and of course those regulations will go before the Regulations Review Committee.

One of the requirements of regulations is that industry must be consulted. It may be that the hospitality industry training organisation will change the course numbers, or make other changes. If we were to put course numbers in legislation, it would be impossible to have the law comply. It would be complicated to get a law change in order to alter course numbers in an Act of Parliament. It is much better to have that dealt with by regulation.

I have talked to the Hotel Association, to the Beer, Wine and Spirits Council, and to others about it, and explained how the process will work. It will be done in consultation with the industry so we agree on what the standards are and how the designations will be made. It will then be done by regulation. So if the course content and other circumstances change, we can update the regulations, which is much easier than getting an amendment to the Sale of Liquor Act. So although I agree with the intent of Pansy Wong’s amendment, I think the process should be by way of regulation. I have given the industry my assurance that we will consult to make sure that that is what happens.

Mr Connell claims there has been no consultation with industry over that training. I say to him that is not true.

Brian Connell: That’s not what they’re saying to me, Minister.

Hon RICK BARKER: Well, I say to the member that, as one example, I have personally talked about this matter, on three occasions that I can recall, with the Hospitality Association. If that is not consultation, I do not know what is. If the association is saying it has not had consultation, I would be surprised about that.

The second matter I want to raise concerns the need for regulations. This is not being done to duplicate anything. The law was changed before to make manager’s certificates appropriate, but we do not have a transitional process. This legislation will allow us to transit to the circumstances we have all agreed to. I think we do have to have some industry training. Mr Hide says “No”, but I think we do. I do not have as dismal a view—

Brian Connell: We have two units now.

Hon RICK BARKER: We are going to have those two units. I do not have as dismal a view as the member about industry training. I think that people are well trained and this provision will be well supported.

The third matter is about gift baskets, which Mr Hide referred to. He makes it sound very simple—a gift basket with some alcohol put in, and that can be sold everywhere. But that is not the case. What people are looking at in the industry is to be able to sell other sorts of food with beer: slabs of pizzas with beer, and so on, to order as takeaways. If that is the case, it is well beyond what Parliament intended with the change in the Sale of Liquor Act. That is what is at the heart of the Lopdell decision and it is the issue that I want to come back to, so that we can have a clear steer on what the options are for dealing with those anomalies.

I raise a point of order, Mr Chairperson. Before we put the questions, I understand the whips have agreed that instead of having personal votes they wish to have split votes. I seek leave that on the question of the amendments in the name of the Hon Peter Dunne to clause 14, and the amendment in my name, that notwithstanding Standing Order 144(1)(b) the votes to be cast by a party on a party vote are to include votes cast, Ayes, Noes, and recorded abstentions, so we have split votes.

The CHAIRPERSON (Hon Clem Simich): Leave has been sought for that course to be followed. Is there any objection? There appears to be none.

GERRARD ECKHOFF (ACT): I came back rather late and I am not fully conversant with exactly what is happening, but I do want to take a call on this bill. It seems to me that it is just more ill-conceived and bad legislation that will affect a large number of people.

The bill allows for the retention of licensing trusts. The real question is why. If we are going to reform this industry, as it has been reformed, why are we allowing the retention of monopoly rights—to be more correct—for licensing trusts? If a community wishes to have some sort of trust running, whether it be a liquor store, a hotel, or indeed a grocer’s shop, then I have no real problem with that. What I, and I am sure my party, have real problems with is the monopoly provision that no one can set up in opposition to this publicly owned entity. The real question is why. Is the trust such a fantastic commercial model that it is the only option or measure of success we can look at?

I am led to believe that the return on capital of an institution such as the Invercargill Licensing Trust, which has been around for yonks and has had total monopoly rights in that area, is a return of just 1 or 2 percent on its capital. Most industries would go broke on that return, yet that trust can charge its patrons in Invercargill whatever it likes, and there is no option if one lives within its boundary. It is an outrageous situation. The Invercargill Licensing Trust will not become a community trust and lose its monopoly power—that will just not happen.

There is another rather insidious aspect to some of these monopoly trusts. The reality is simply that much of the money these trusts disperse to charities comes from gambling—from one-armed bandits and slot machines, etc. The money they make from their liquor sales and so on is because in many cases those hotels are saying to the clubs—the cricket club, the bowling club, the chess club, or whatever it might be—that they will disperse the moneys to the clubs as long as the clubs buy their alcoholic requirements from them. That is well established and anybody in the industry knows that it occurs. If somebody else, perhaps the local bowling club, buys its product from somebody else it is told in no uncertain terms by the trust: “OK, you’re buying your liquor from the Jeff Connell liquor store in mid-Canterbury, so we will disperse our charitable funds to another club because you no longer support us.” Essentially that is blackmail, and that is what this bill allows. It allows for continuous—

Rodney Hide: It’s like what Paul Swain does in corrections.

GERRARD ECKHOFF: It is pretty much like it. In the limited time I have left I turn my attention to the question of entrapment, which I am sure many speakers have spoken about already. I ask the Committee to imagine the situation where three young people walk into a bottle store—two are 17 and one is 18. They put $10 each into the kitty, walk up to the bottle store person, and say they want to buy $30 of liquor—a couple of dozen cans, or whatever it is. Who then is the purchaser?

Hon Rick Barker: The person who hands over the cash.

Gerrard Eckhoff: Absolutely; I would agree entirely with that. But if the police had been watching those two 17-year-olds handing over the money, it seems to me that there is a really grey area there that this bill has not addressed at all. If there were a rugby match at Carisbrook and those young people were in the bottle store 5 minutes after the game when there was a huge rush, then the poor old bottle store owner would get whacked. He would be fined very substantial sums of money because the staff were rushed off their feet. That is wrong and it is inappropriate in every aspect.

If we are really looking at society and its alcohol problem, we have to address the issue of the fivefold increase in the number of outlets. That is the single biggest reason why we are having this problem today. We should not blame the guy who is rushed off his feet in a hotel bottle store, or the bottle store owner who makes a mistake because a 17-year-old comes who looks 25. If the youth is asked for his identity card he says that he does not have it but that it must be there somewhere. He looks near enough in age, and behind him the next person is clamouring to get his or her supplies and be away. Why are we blaming that bar person, bar owner, or whoever it might be, for the problems we face in our society? It is not their fault, and I am totally and utterly opposed to that concept.

Another issue that Pansy Wong and my colleague Rodney Hide have introduced is the problem of the Chinese wine and cooking condiments. What is sherry if it is not a cooking condiment? When a ham is roasting in the oven with a bit of sherry poured over it, or a trifle, for goodness’ sake, has a bit of sherry in it, is sherry not a cooking condiment? Members might think that these sorts of arguments are quite trivial, but I am illustrating these points because, as my colleague Rodney Hide pointed out, the principle behind the whole concept is fundamentally flawed. It is wrong, and that is why we start to get all those anomalies about Chinese cooking wine and sherries when we get into the ridiculous situation of trying to license and control the sale of liquor. It is wrong.

We made a major mistake in this House just recently by imposing a “sherry tax” on the elderly. That was never the intention of this Parliament, yet the Minister in the chair, Jim Anderton, rammed that through and we got a major problem out of that. That is all I have to say at this time, but I regret deeply the thrust of this bill.

The CHAIRPERSON (Hon Clem Simich): In accordance with leave of the House a separate vote is to be taken on the provisions of clause 14 relating to Easter Sunday wine sales. In accordance with leave also granted this will be a split party vote.

The question is that the provisions of clause 14 relating to Easter Sunday wines sales be agreed to.

A party vote was called for on the question, That the provisions of clause 14 relating to Easter Sunday wine sales be agreed to.

Ayes 104

New Zealand Labour 44; New Zealand National 21; New Zealand First 13; Green Party 9; ACT New Zealand 7; United Future 7; Progressive 2; Independent: Awatere Huata.

Noes 11

New Zealand Labour 5; New Zealand National 5; United Future 1.

Provisions of clause 14 relating to Easter Sunday wine sales agreed to.

The question was put that the following amendment in the name of Brent Catchpole to clause 8 be agreed to:

to amend new section 219E(2) of the principal Act by omitting the expression “15%” and substituting the expression “7.5%”.

Amendment not agreed to.

The question was put that the following amendment in the name of Pansy Wong to clause 13 be agreed to:

to insert, after subclause (1), the following new subclause:

(1A) Section 36(4) of the principal Act is amended by omitting the words “or any other premises on which the principal business is the sale of food or groceries”.

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

Ayes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Noes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Amendment not agreed to.

The CHAIRPERSON (Hon Clem Simich): An amendment to clause 13 in the name of Rodney Hide is out of order as the question has already been decided.

There is an amendment to clause 14 in the name of the Hon Peter Dunne. In accordance with the leave granted this will be a split party vote.

The question was put that the following amendment in the name of the Hon Peter Dunne to clause 14 be agreed to:

to add the following new subclause:

(2) Section 37 of the principal Act is amended by repealing subsection (2), and substituting the following subsection:

(2) It is a condition of every off-licence granted to the holder of a club licence that liquor be sold or supplied pursuant to the off-licence only to—

(a) any member of the club; or

(b) any member of any other club with which the holder of the licence has an arrangement for reciprocal visiting rights for members of the club.

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

Ayes 98

New Zealand Labour 38; New Zealand National 21; New Zealand First 13; Green Party 9; ACT New Zealand 8; United Future 8; Independent: Awatere Huata.

Noes 16

New Zealand Labour 11; New Zealand National 5

Amendment agreed to.

The question was put that the following amendment in the name of Pansy Wong to clause 14 be agreed to:

to add the following new subclause:

(1A) Section 37(3)(a) of the principal Act is amended by inserting, after the word “Wine”, the words “intended for consumption as an alcoholic beverage”.

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

Ayes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Noes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Amendment not agreed to.

The CHAIRPERSON (Hon Clem Simich): An amendment to clause 14 in the name of Rodney Hide is out of order as the question has already been decided.

The question was put that the following amendment in the name of Rodney Hide to clause 21 be agreed to:

to omit all the words after “by repealing section 117A”.

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

Ayes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Noes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Pansy Wong to clause 21 be agreed to:

to insert in new section 117A of the principal Act, after subsection (2), the following subsection:

(3) This section will come into effect when the content of the qualification has been agreed by all in the industry and shall comprise existing proposed unit standards 4646 and 16705 only.

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

Ayes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Noes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rodney Hide to clause 21A be agreed to:

to insert, after clause 21, the following clause:

21A Repeal of sections 122 and 123

The principal Act is amended by repealing sections 122 and 123.

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

Ayes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Noes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Amendment not agreed to.

The CHAIRPERSON (Hon Clem Simich): The amendments to clauses 22, 23, and 27(1) in the name of Rodney Hide are out of order as the amendment to clause 21 was not agreed to.

The question was put that the following amendment in the name of Brian Connell to clause 25 be agreed to:

to omit this clause.

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

Ayes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Noes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Brian Connell to clause 26 be agreed to:

to omit this clause.

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

Ayes 35

New Zealand National 26; ACT New Zealand 8; Independent: Awatere Huata.

Noes 84

New Zealand Labour 52; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the amendments set out on Supplementary Order Paper 198, in the name of the Hon Rick Barker to clauses 9 and 14, and the following amendments in his name to clause 2, be agreed to.

to insert, before subclause (1AA), the following subclause:

(1AAA) Section 5 and section 4 (so far as it relates to section 5) come into force on 1 April 2005; and

to amend clause 2(3) by omitting the words “1 April 2004” and substituting the words “the day after the date on which it receives the Royal assent”.

Hon Dr Michael Cullen: I raise a point of order, Mr Chairperson. I seek leave that we have a split party vote on this vote.

The CHAIRPERSON (Hon Clem Simich): Leave has been sought—

John Carter: We already have leave.

Hon Rick Barker: But you don’t have leave to do so.

The CHAIRPERSON (Hon Clem Simich): Yes.

Hon Rick Barker: But only on the other one.

John Carter: I sought leave at the end of the second reading for our party votes to be taken as split party votes right through this voting, and leave was granted.

The CHAIRPERSON (Hon Clem Simich): I thought the member had, so I thank him. I call for a split party vote.

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

Ayes 113

New Zealand Labour 52; New Zealand National 21; New Zealand First 13; Green Party 9; ACT New Zealand 8; United Future 7; Progressive 2; Independent: Awatere Huata.

Noes 6

New Zealand National 5; United Future 1.

Amendments agreed to.

A party vote was called for on the question, That clauses 1 and 2, and Parts 1 and 2 as amended, be agreed to.

Ayes 105

New Zealand Labour 52; New Zealand National 21; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 14

New Zealand National 5; ACT New Zealand 8; Independent: Awatere Huata.

Clauses 1 and 2, and Parts 1 and 2 as amended, agreed to.

The CHAIRPERSON (Hon Clem Simich): I thank members of the Committee for their perseverance and patience.

Bill reported with amendment.

Third Reading

Hon RICK BARKER (Associate Minister of Justice): I move, That the Sale of Liquor Amendment Bill (No 2) be now read a third time. I thank the House for the passage of this bill, and I thank the Leader of the House for giving it time.

Easter Sunday trading was moved originally by Jeff Whittaker, a former member of Parliament from Hastings. It was knocked out in 1999. After 4 years we have restored it, and I thank him very much for that.

We have also managed to tidy up provisions relating to the sale of rice wine, and to transitional provisions for training. We have improved accountability for trusts, and we have improved their democracy and efficiency.

This is a very good liquor bill, and I thank the House for its overwhelming endorsement of it. I encourage all members to turn up to Hawke’s Bay on Easter Sunday and enjoy a tipple of fine Hawke’s Bay wine, as this bill enables them to do.

BRIAN CONNELL (National—Rakaia): I start by clarifying an issue that I spoke about during the course of the Committee stage. I think I gave the impression to the Committee, and to the Minister in the chair in particular, that the Hospitality Association of New Zealand had not been consulted. That, in fact, was not the case. The point I was trying to make is that the association represents a minority position, not a majority position, as the Minister would have us believe. My point was, and still is, that there has not been wide consultation about the regulations aspect.

I find myself in a position where I cannot support this bill, yet there are components that I very strongly support—in particular, Easter Sunday trading for wineries. But I find myself in a very difficult and complex position. I had to vote against the controlled purchase operations because I am more strongly opposed to the issues of entrapment. Despite my suggesting amendments to enable these provisions to be deleted, the Committee saw fit not to agree to them. I accept that is the democracy we work in.

I am concerned about how that aspect of the bill will operate. I have sent out a loud warning that I feel that some people in the industry and across this country will be victimised by the police. I want to put it on the record that I am a very strong supporter of the police, but on this occasion I think this legislation goes too far. The ability of people in the industry to deal with the issues of entrapment I now think have been taken out of their hands, and I believe we will live to regret this day. The Minister had his opportunity and decided that it was not of sufficient concern for him to take heed of what I was telling him, and change his vote.

The practicality of trying to enforce this legislation will result in it simply not working. Law-abiding citizens across this country will be turned into lawbreakers, and that, I have to say, disappoints me immensely. Who amongst us can say that he or she would be able to tell someone’s age without proof of identity? I still beseech the House that we should have considered lifting the age limit, or at least making sure there was compulsory proof of age, when people go into hotels to purchase liquor. That would have taken the onus completely away from the owners, and would have put the onus on the person buying the liquor. With those comments, I thank members for their indulgence.

BRENT CATCHPOLE (NZ First): I would just like to take a quick call in this debate. I said most of what I wanted to say in the second reading and in the Committee stage. But I would just like to highlight the fact of licensing trusts being able to reconstitute themselves as community trusts. That is an acceptable way of changing their business practice. We were disappointed that we were unable to get the threshold for the poll lowered, but we accept that democracy is the key there.

On the point of entrapment that Brian Connell has been going on about, we expressed some concern at the beginning, but if there is any opportunity to stop the blatant misuse of bars selling liquor to under-age people, then we say that every effort should be taken to prevent that practice. We go further to say that the age limit should have been raised in the bill. There should have been a clause that reinstated the age limit back to 20 years, and that would have reduced a lot of the under-age drinking problems of drunken kids in the streets.

There is already a requirement to check for IDs. There is also a requirement that the age limit is strictly enforced, and it is up to the bars to follow that process. If there is the slightest bit of doubt people are asked for proof of age. Even if a person looks a little bit over age, he or she should be asked for ID and proof of age. So it is up to the barkeeper and there should be no out for those bars that blatantly flout the law.

On the subject of the wineries being able to trade on Easter Sunday, that is just a reinstatement of an error that took place in the last amendment legislation of 1999, and that gives the opportunity for wineries to open on Easter Sunday and provide a service to the tourism industry. Tourism is a huge industry in this country and this change is just bringing it back into line with what it was prior to 1999.

NANDOR TANCZOS (Green): The Greens are pleased to support this bill through its third reading. We are pleased to be able to support the passage of the bill to this stage. I will not go into great length about the different clauses of the bill. I have already canvassed those issues during my second-reading speech, and other members of the House have spoken at some length about them already, and I am sure other speakers will continue to do so.

We are pleased to see that a couple of sensible amendments have come out of the Committee stage. The first concerns reciprocal visiting rights around clubs put up by the Hon. Peter Dunne. It was good to see something sensible come from Mr Dunne in that regard, so I thank him for that amendment. The other issue concerned culinary wines, rice wines, and so forth. Amendments were put up by different members, but the one put up by the Minister had been properly drafted and should proceed. It is good to see that finally cleared up. We think the bill is better for those amendments and we are pleased to see it go through its final passage.

RODNEY HIDE (ACT): As I said earlier, the ACT party opposes this bill. I was interested to hear from members who said that a monopoly is a choice that people make. That seems to me to fly in the face of cultural diversity and recognising that minorities have a right and a view. If we say that voting 51 percent makes something right, then I think we in this country are in for a rather rough old spin. It seems to me that not everybody in an area wants to buy their alcohol from a licensing trust. It seems a bit tough that the majority can impose that will on them. I would have thought that Māori members opposite in particular would recognise the fact that rights cannot be taken away just by a vote.

I am pleased that the rice wine issue has been addressed. However, I do worry about the Minister who never bothered to address it, until Pansy Wong and the ACT party introduced amendments in the Committee stage and made it an issue. The Minister had the opportunity to fix that issue a long time ago. We have to say that sometimes we overprescribe what New Zealanders can, and cannot, do in order to enforce morals, better behaviour, and the way in which we think people should live their lives. When we get down to defining what is a supermarket, a Chinese supermarket, what is Chinese cooking wine, and what is not Chinese cooking wine, then fundamentally we should rethink some of the ways in which we go about our legislation.

I am very disappointed that the Minister managed to persuade Government members to vote for training of general managers of liquor outlets. It is an unnecessary bureaucratic measure. It will impose costs on people to the advantage of particular trainers, and no problem has ever been identified that this particular legislation is addressing. I heard the Minister say that he will develop training programmes in consultation with the industry. That is recorded in Hansard and I hope that he is as good as his word and that his concept of consultation is better than the consultation he has delivered in developing this bill.

Certainly, it is a lot better than the $1.3 million worth of phoney consultation the Minister of Corrections, Paul Swain, got himself involved in. So I hope that his consultation is a whole lot better than the $1.3 million of fake consultation with the Tainui people that, unfortunately, has seen a fallout with the Tainui people today. I believe that the Department of Corrections took advantage of a difficult situation with the Tainui people. I do not blame the Tainui people. I blame the Department of Corrections that has caused untold mischief in the Waikato and amongst Tainui. The fact that Minister Paul Swain can make light of it and laugh at it is a disgrace.

Hon PETER DUNNE (Leader—United Future): I take a very brief call to support the third reading. We welcome the amendments that have been passed, particularly those clarifying the situation on Easter Sunday and those regarding rice wines. I was particularly grateful to the House for the support it gave to my own amendment regarding off-licence sales to reciprocal members of clubs. I think that will be a positive step forward.

The only other observation I want to make, and I am sure the House will indulge me very briefly to make it, relates to a comment made by Mr Catchpole, suggesting that lifting the drinking age to 20 would curb under-age drinking problems. It reminds me of a visit I made to the electorate of the member for Otaki when I was a member of the Government in the 1980s, to discuss the Government’s economic changes, and someone got up at a meeting and said: “We’re all in favour of the Government’s economic changes. Why couldn’t the Government have waited until all the old people had died first before we brought them in?”. I think of the same argument in the context of Mr Catchpole’s point that if we raise the drinking age, we resolve all our under-age drinking problems. The issue is far more complex than that. I do not have the time or the interest to go into it this evening. I think this bill is a good one. We should support it and then we can all go home.

JOHN CARTER (Senior Whip—National): I raise a point of order, Mr Speaker. I understand that there is some uncertainty as to whether the leave that was granted carries on to the third reading. National has a split vote, so I seek leave for a split vote on the third reading.

The ASSISTANT SPEAKER (H V Ross Robertson): Is there any objection to that course of action being taken? There appears to be none.

A party vote was called for on the question, that the Sale of Liquor Amendment Bill (No 2) be now read a third time.

Ayes 105

New Zealand Labour 52; New Zealand National 21; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 14

New Zealand National 5; ACT New Zealand 8; Independent: Awatere Huata.

Bill read a third time.

The House adjourned at 5.42 p.m. (Thursday)