Thursday, 9 June 2005

Thursday, 9 June 2005

Thursday, 9 June 2005

Madam Speaker took the Chair at 2 p.m.

Prayers.

Business Statement

Business Statement

Hon Dr MICHAEL CULLEN (Leader of the House): Next week in the House it is the Government’s intention to take urgency. The likely business to be included in this motion will be the debate on the performance and current operations of Crown entities, public organisations, and State enterprises, the Appropriation (2004/05 Supplementary Estimates) Bill, including a second reading of an Imprest Supply Bill, both of those being, of course, time-limited debates, and the remaining stages of the following bills: the Land Transport Amendment Bill, the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill, the Taxation (Base Maintenance and Miscellaneous Provisions) Bill, the Misuse of Drugs Amendment Bill (No 3), the Overseas Investment Bill, the Terrorism Suppression Amendment Bill (No 2), and the Courts and Criminal Matters Bill.

GERRY BROWNLEE (Deputy Leader—National): Noticing that the Order Paper is not all that deep at the moment, and that of the bills the Leader of the House has just mentioned, only a couple require passing before the 30 July deadline, and they could be taken through urgency in a very short time, can he indicate to the House whether he expects urgency next week to flow through to Friday; if so, what does he expect the need for that is, given the light Order Paper?

Hon Dr MICHAEL CULLEN (Leader of the House): Government orders of the day are nearly 2 pages long. A number of the items—the time-limited debate, the land transport bill, the tariff bill, the taxation bill, and the misuse of drugs bill—are required to pass urgently. The terrorism suppression bill certainly has to pass before October; otherwise the designations of terrorist organisations will fail. Obviously, if the Opposition is indicating that the House may finish earlier, then we may look forward to an ordinary Thursday afternoon, which would please me no end.

Questions for Oral Answer

Questions to Ministers

Health Services—Waiting Times

1. RODNEY HIDE (Leader—ACT) to the Minister of Health: How much pain and discomfort does someone have to be suffering in order to get treatment within 1 year in New Zealand?

Hon ANNETTE KING (Minister of Health): Any New Zealander who requires acute or urgent treatment is dealt with within hours or days. People who are assessed by clinicians as being able to wait are treated in order of clinical priority. This was introduced through the booking system in 1998. The existence of pain and suffering is one of the important factors that clinicians take into account when determining the appropriate course of action for a patient.

Rodney Hide: What then does the Minister say to Mrs Beryl Wright, who is here today watching, whose son Alvin is suffering advanced Huntington’s disease and who suffers severe toothache because he needs 10 decayed teeth to be removed under general anaesthetic, only to be told by the dental department at Wellington Hospital that he would have to wait a year because his case was “only semi-urgent” and that others were waiting 2 years, especially in light of the fact that the chair of the Health Committee, Steve Chadwick, called out in this House yesterday that no one was queued up on the waiting list, in pain?

Hon ANNETTE KING: I am advised by Capital and Coast District Health Board that Alvin Wright was seen at the Porirua dental department on 3 May 2005 for a routine dental check-up. Following the assessment, his mother decided he should have a full dental clearance, and details were noted about what needed to be followed up in his care. I am advised that the patient notes record “no pain, no swelling, and no evidence of urgent treatment”. The assessment was that he would be booked for semi-urgent care, and that the standard advice to patients and family is that if the person’s condition deteriorates, he or she will be reassessed. There is no record for reassessment in this case.

Lesley Soper: Does the Minister consider that the total number of publicly funded operations could be increased if more surgery were performed in private hospitals?

Hon ANNETTE KING: No. As many surgeons work in both the public and private sectors, performing more operations through the private sector would mean a corresponding reduction in the number of operations performed in the public sector. District health boards already fund operations through private hospitals where it is appropriate to do so. As private hospitals do not have the facilities for intensive care units, it is not appropriate to carry out all surgery in the private sector, particularly if there is a risk of complication, so I think that those who say the answer to our problems is that we do more in private hospitals or use more private health insurance ought to rethink their strategy.

Dr Paul Hutchison: Why does she continue to deny the facts around her failure to manage the New Zealand health system, when only yesterday she denied the latest benchmark report that showed that 14 out of 21 district health boards failed to attend to serious conditions such as heart attacks, massive bleeding, and concussion within the target time frames, with the nonsensical reply: “Any patients who present with these conditions should be seen within that time, and I believe they are.”—that is nonsensical blather; why does she deny her own ministry’s facts?

Hon ANNETTE KING: First of all, I never denied the report. After all, it is on the website for every New Zealander to look at—something that was never done under a National Government. Anybody can look up the benchmark report any day of the week. If the member were to speak to clinicians, they would tell him that no person who has had a heart attack or who is haemorrhaging waits longer than he or she needs to. The way it is recorded is by recording the time on a computer when a person finally gets around to recording it. The specialists themselves say that that is a poor way to measure triage times and that it ought to be changed.

Peter Brown: Has the Minister had the opportunity to study the document I tabled the other day in regard to Mr Anthony Russell, or is she taking the same line as her colleague David Cunliffe, who, when he went to see Mr Russell, promised everything and effectively did nothing; notwithstanding any of that, when can I expect a response?

Hon ANNETTE KING: I think it is fair to say that I always take seriously issues raised with me. In fact, the leader of the member’s party raised an issue of a drug yesterday and asked when I would provide that information. I went straight back to my office and noted that I had sent a letter to Winston Peters on 10 May. I take these issues seriously and, as members know, I reply.

Peter Brown: I raise a point of order, Madam Speaker. I do not think that I asked anything at all about what Winston Peters asked the Minister. I accept her explanation, but I did ask about a Mr Anthony Russell, who is no longer on any waiting list, whatsoever. He is just one of the people who have been cast off. He has been to David Cunliffe, who apparently promised help and did nothing. I have asked the Minister and I have tabled the documents; when will I get a response?

Madam SPEAKER: When the member asked the question, he made an assertion at the end of it of a general nature, which is what the Minister replied to. If the Minister wishes to add to her answer, she can feel free to do so.

Hon ANNETTE KING: I assured the member that I will give him a reply. That is what I did, and I pointed out my record of giving replies.

Sue Kedgley: Has the Minister seen any proposals that could have the effect of reducing the amount of money going into health and, therefore, making people such as Alvin Wright wait even longer for treatment?

Hon ANNETTE KING: Yes, I believe I have. I read the transcript of a speech by Rodney Hide yesterday in which he said we ought to be putting more money into the private sector and private medical insurance. I have also seen Treasury’s response to the notion of a rebate on private medical insurance. Treasury questions both the impact of private medical insurance on the length of waiting in the public sector, and the effect of the growth in private medical insurance on spending in health. As Mr Hide quoted Treasury report after Treasury report as justification to attack Government health policy yesterday, I have no doubt he will now withdraw his latest policy announcement.

Rodney Hide: How can New Zealanders have any confidence in this Minister’s bluff and bluster about the health waiting lists when mothers like Beryl Wright know that the real truth is that their sons, daughters, husbands, mothers, and fathers are queued up in pain, despite what this Minister claims—I can assure her that Alvin is in pain, and so can Alvin’s mother, and so can Alvin—and what will this Minister do for Beryl Wright’s son Alvin, especially since the Minister seems to have plenty of money for sex-change operations, and none for a dying man who is suffering, to have his teeth repaired?

Hon ANNETTE KING: First of all, I think it is absolutely disgusting that Rodney Hide is using a person—talking about him dying—to try to make a cheap political point. If he really cared about Mrs Wright’s son, he would have pursued this issue in the appropriate way. He did not. He chose to come to Parliament to show off. I say to Mrs Wright that if her son is in pain, she should contact Capital and Coast District Health Board today, because it has assured me that if a patient is in pain he or she will be seen immediately.

Judy Turner: Can the Minister further clarify—for the House and for the district health boards, which seem unclear about the parameters in this matter—her earlier comments that there are certain conditions under which surgery can be performed in the private sector?

Hon ANNETTE KING: I do not think district health boards are unclear about the matter. For example, under the orthopaedic project a number of district health boards are having major hip and knee replacement operations done in the private sector. In cataract surgery they are having operations done in the private sector. This is done by arrangement with the private sector through the district health board. District health boards are not confused as to what they can and cannot do. There are very clear protocols. In fact, when we announced both of those projects we announced that if there was capacity in the private sector, operations could be done in the private sector.

Heather Roy: Does the Minister accept that her own answer to question for written answer No. 13655 and the September 1999 Heath Funding Authority report show that in September 1999 the total number of patients on all waiting lists was 176,000, that her own answers to questions for written answer Nos 5986 and 5984 confirm that at the end of March 2005 the figure was 181,000, and that there is no arguing that more people are waiting now than when she came to power?

Hon ANNETTE KING: One of the features of the booking system introduced in 1998 is not how many people are on a list, but how long they actually wait for first specialist assessment and for an operation. In 1999, 50 percent of those waiting for first specialist assessment had waited longer than 6 months. As of now, the number of people who have been waiting longer than 6 months is 21 percent. That is a huge drop in the waiting time for first specialist assessment, something the member likes to raise all the time. She does not understand how the system works.

Judy Turner: Does the Minister think it is acceptable that cancer patients in Wellington, who have endured anxiety and uncertainty for years about their ability to access cancer services at the one time in their lives when they need it, now face double waiting times while the Wellington Cancer Centre is relocated; and given that this is a scheduled change, is it too much to ask that there be planning to minimise this kind of disruption?

Hon ANNETTE KING: No, it is not too much to ask, and I am reassured by Dr David Lambie’s comments that this will be managed within the time frame that is expected. We are talking about a new linear accelerator—not a replacement—which is due in July next year, and I am assured that they will have it by July next year.

Heather Roy: Can the Minister then deny, in light of her answer to my previous question, that under her watch she has created the category of Active Review, a category that hides over 29,000 patients, which her own ministry defines as patients “for whom surgery is the best option, but can’t get it within the current funding, or provider capacity”; why is it, then, that 2,138 of those suffering patients have been waiting for over 2 years, and 90 of those for over 4 years?

Hon ANNETTE KING: No.

Rodney Hide: Does the Minister not think that her desperation is scraping the barrel, given that she criticises Mrs Beryl Wright for coming to see a member of Parliament to seek help for her son; this Minister simply says she should try and get in touch with Capital and Coast District Health Board, even though Mrs Beryl Wright went to Capital and Coast District Health Board, filled out all the forms, waited day after day and heard nothing, then rang after 3 week,s only to be dismissed and told that Alvin would have to wait at least a year, and then rang again but could not get any sense out of Capital and Coast District Health Board; after that, Alvin’s caregiver was so concerned as to pursue the matter, and now, finally, Alvin has an appointment on 31 July for a reassessment; why is she critical of Mrs Beryl Wright, who simply wants her son treated?

Madam SPEAKER: Before I call the Minister, it is probably appropriate to remind members of the discussion that we had yesterday that both questions and answers should be given concisely.

Hon ANNETTE KING: I certainly did not criticise Mrs Wright; I criticised Mr Hide.

Heather Roy: What reassurance does the Minister think her answers will be to the families of two men who were admitted to Wellington Hospital twice for heart surgery, were twice sent home, and who died while on her waiting list for their third attempts at operations that they obviously needed; does she stand by her statement that people are not dying of the condition that they are on the waiting list for?

Hon ANNETTE KING: Unfortunately, people who are booked for elective surgery do have their operations cancelled sometimes. They are usually cancelled because somebody has had a car accident or a heart attack, and those people take priority in terms of the theatre. Unfortunately, that does happen, and there is very little we can do about it, because we must take those people in priority order. There have always been people who have died on a waiting list, but when we looked at the numbers that that member provided to the New Zealand public, and did a search of those numbers, we found that few, if any, had died of the condition for which they were waiting for treatment—they were waiting to have cataracts or knee replacements done.

Dr Wayne Mapp: Died of old age!

Hon ANNETTE KING: Yes, some did die of old age. That is correct, because people do die when they become old. But they did not die of the condition they were on the waiting list for, as that member dishonestly said to the public.

Hon Bill English: I raise a point of order, Madam Speaker. In the answer to the first supplementary question from the ACT member, the Minister read out what must have been personal and confidential information from a patient record. I have listened to many debates about waiting-list patients over the years, and that would be the first time that that has happened in the House. I would be interested to know whether you regard it as fit and proper that a Minister of Health has access to confidential medical records of individual patients. I also ask the Minister to table the document from which she read out, so the House can see whether that was confidential, personal medical information.

Hon Dr Michael Cullen: This issue arose once before, and I think it was actually Mr Richard Prebble who gave the most complete and useful comment on it. Once a member in the House raises a question about an individual patient, presumably with the permission of that patient, then it must be presumed that permission has been given to release all details. Otherwise, the Minister cannot possibly answer the question or the accusations that have been raised.

Madam SPEAKER: I do not any more assistance, but thank you for your contributions. It is not for the Speaker to judge whether it is fit and proper for a Minister to have access to official information. I make that point to begin with. But, as members are aware, there is no privacy rule as such in this House, according to Speaker’s ruling 49/1. Whether personal details should be mentioned by any members or Ministers is, of course, a matter for the judgment of the members or Ministers themselves, and, in the context of the matter having been raised, as has been mentioned, then that has been considered to be appropriate.

Hon Bill English: I raise a point of order, Madam Speaker. I accept your ruling, but this is really a matter of parliamentary behaviour. The question is not so much whether the information can be presented to the House—it certainly can be—as whether the Minister has broken the law by having access to that confidential information. Health legislation states that for people to have access to that confidential information they have to fit a definition in relation to a public agency. If the Minister does not fit that definition, then she would be in breach of the law. The second point is that documents were quoted from, and I can therefore ask the Minister to table those documents, and then we can ascertain their nature.

Madam SPEAKER: In answer to the first point, I say that it is not for the Speaker to say whether the Minister has broken the law. On the second point, I ask the Minister whether she was quoting from an official document, and I say that if she was, it should be tabled.

Hon ANNETTE KING: No, I was not, and I tell the House that Alvin Wright’s case has been in the newspaper.

Rodney Hide: Putting aside her criticisms of me for trying to help at least one New Zealander—

Madam SPEAKER: The member will come to the supplementary question, please.

Rodney Hide: Actually, the rules are quite simple, Madam Speaker: if a Minister has a crack at someone who asks a question, then just as you ruled that the Minister can take a cheap shot back, so too can the person asking the question.

Madam SPEAKER: What is the question, please?

Rodney Hide: If you let me finish I will ask it, but I keep getting interrupted by the Labour members behind me who are trying to cover for their Minister.

Madam SPEAKER: Would the member please ask his supplementary question.

Rodney Hide: Putting aside the Minister’s criticisms of me for trying to help at least one person out of the 180,000 on the waiting list, what can she say that her great health system can do for Alvin Wright, who, I can assure her, is in pain and having difficulty eating because of his decayed teeth and toothache—what can she do for Alvin?

Hon ANNETTE KING: I can assure the member that if Alvin Wright is in pain and is having difficulty in eating, then he will be seen in the health system as soon as possible.

Heather Roy: I raise a point of order, Madam Speaker. I seek leave to table several documents. The first is question for written answer No. 13655.

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

Heather Roy: The second is a table of the first specialist assessment numbers on the waiting list in September 1999.

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

Heather Roy: The final documents are parliamentary questions Nos 5986 and 5984, confirming a number of 181,000 patients on the waiting list.

Madam SPEAKER: Leave is sought to table those documents. Is there any objection? Yes, there is objection.

Heather Roy: I seek leave to table Ministry of Health figures obtained under the Official Information Act showing the number of people on active review as at 31 December 2004, and showing the great amount of time they have been waiting in this category.

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

Heather Roy: I seek leave to table a newspaper report from the Dominion Post dated 30 May 2003—

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

Heather Roy: Nobody actually knows what this newspaper article states, because I was not given the opportunity to outline it. They do not even know what they are objecting to.

Hon Dr Michael Cullen: I raise a point of order, Madam Speaker. I am afraid that the Government takes the position that it objects to the tabling of almost all newspaper articles, on the grounds that those articles are already in the public arena. It is a waste of parliamentary time to seek leave to table them.

Madam SPEAKER: If the member wishes to re-put her point of order and describe the document she may well do so, and we will do it again. Does the member wish to do that again?

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

Madam SPEAKER: I am dealing with the first point that was raised, and then I am happy to take the member’s point of order.

Heather Roy: I seek the leave of the House to table a newspaper article from the Dominion Post of 30 May 2003, which outlines the cases of the two men who died while waiting for heart surgery at Wellington Hospital, and who were readmitted twice before they died.

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

Rodney Hide: I raise a point of order, Madam Speaker. While my colleague Heather Roy was seeking leave to table those documents, which any member of Parliament is perfectly entitled to do, you sat by and allowed Trevor Mallard and Michael Cullen to heckle someone seeking leave. They were calling out, and I am sure that members opposite will all agree with me. I am appalled that the Speaker would allow that to happen when someone is seeking leave.

Hon Dr Michael Cullen: I raise a point of order, Madam Speaker. You asked whether there was objection, and we said “Yes”.

Simon Power: Just to assist Mr Hide, he is dead right when he described the situation that occurred. While Ms Roy was trying to describe the content of the document during a point of order, the Minister of Education interjected upon her.

Hon Trevor Mallard: My recollection is that after Ms Roy started, you asked whether there was objection, we said “Yes”, and she kept on going.

Madam SPEAKER: Yes, I am sorry, that was my recollection too, and—

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

Madam SPEAKER: Yes, I am—[Interruption]

Hon Dr Michael Cullen: That comment from the member is totally out of order.

Madam SPEAKER: Would the member please withdraw and apologise.

Rodney Hide: I withdraw and apologise.

Madam SPEAKER: Thank you. What I was about to say was that I think it was a question of timing. I apologise to the member if I interrupted her before she felt she had clearly identified the article. I thought she had. She was given another opportunity to do so. The process then went on.

Dr the Hon Lockwood Smith: I raise a point of order, Madam Speaker. I do not believe that what you have described is, in fact, what we observed. I was sitting exactly opposite the Minister of Education, and while you did ask whether there was any objection, the Minister said “Yes”. But then, subsequent to that, he went on to interject while a point of order was still in process. You ejected me from the House for exactly that same offence not so long ago, and it is important for both sides of this House to be treated equally.

Hon Dr Michael Cullen: The point of order raised by Heather Roy was over at the point where you had sought whether there was objection. The point, of course, is that it is necessary to give information only sufficient to identify the document. The practice has been growing in recent weeks to try to read out the entire document for which leave is sought for tabling.

Madam SPEAKER: This matter has been dealt with.

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

Madam SPEAKER: Is this a new point of order?

Rodney Hide: Yes.

Madam SPEAKER: As long as it is not on the matter that has already been dealt with.

Rodney Hide: Of course not. What Mr Cullen just said was totally untrue. Heather Roy did not seek to read out the entire article. Of course, that would be wrong. The confusion is this. Ms Heather Roy was seeking several points of order to table several documents. Leave was denied for one document. When she sought leave to table the next document, that is when the members opposite interjected. They were not saying “No” to the previous document; they had already done that. But they continued to badger her while she was seeking a point of order, and that was the purpose of it: to badger someone because they did not believe she should be seeking that point of order.

Madam SPEAKER: I thank the member. I have ruled on the point of order.

Chinese Spy Network—New Zealand

2. Hon PETER DUNNE (Leader—United Future) to the Minister of Foreign Affairs and Trade: Has he sought an assurance from the Chinese Ambassador that there is no Chinese spy network operating in New Zealand, in light of claims that China has 1,000 spies operating in Australia; if so, was such an assurance forthcoming?

Hon PHIL GOFF (Minister of Foreign Affairs and Trade): No.

Hon Peter Dunne: Will the Minister now seek such an assurance from the Chinese Ambassador, in view of the allegations being made in Australia; or does he share the timidity of his own ministry, which seems too scared to do anything about China for fear of upsetting the free-trade negotiations?

Hon PHIL GOFF: The answer is no, and, frankly, it would be rather naive to go to any embassy and ask it whether it was involved in spying. What would the member expect the embassy to say? We have our own means of determining whether any foreign country, embassy, agency, or individual is indulging in espionage, but the Government, of course, does not comment on security and intelligence matters of this nature.

Rod Donald: In the same way that the Prime Minister did the right thing by offering Tampa refugees a home here, will the Government offer former Chinese diplomat Chen Yonglin political asylum in New Zealand, following Australia’s refusal to do so; or is she concerned—or is he concerned—that such a humanitarian act would jeopardise the Government’s free-trade negotiations with China?

Hon PHIL GOFF: Firstly, in relation to the latter point, made by both the member and the previous questioner, this matter has absolutely nothing to do with any trade negotiation. The member’s assumption is wrong: the Australian Government has not made any decision on any asylum application by Mr Chen. In fact, I will read out to the member what Alexander Downer, the Foreign Minister, said: “If Mr Chen is genuinely somebody in need of protection, then he will receive that protection.” The member’s request for New Zealand to make an offer of asylum is therefore, at the very least, premature, and would, in any case, not be the subject of public comment by me.

Hon Peter Dunne: Do I take it from the Minister’s somewhat intemperate response to my earlier question that he and the Government are satisfied that no espionage is being conducted in New Zealand by the Chinese Embassy or representatives of the Chinese Embassy, including the use of paid informers in this country; if he is so satisfied, is he prepared to give an absolute assurance of that to the House this afternoon?

Hon PHIL GOFF: No, and the member can take from my answer what I said—and it was clear what I said. In fact, my answer was not intemperate. I thought that the member, who is generally a very reasonable member, asked a question that was intemperate.

Te Wānanga o Aotearoa—Treaty of Waitangi Settlement

3. Hon BILL ENGLISH (National—Clutha-Southland) to the Minister of Education: What payments have been made to Te Wānanga o Aotearoa under the terms of the Treaty of Waitangi settlement negotiated between Te Wānanga o Aotearoa and the Crown, and on what conditions have these payments been made?

Hon TREVOR MALLARD (Minister of Education): The sum of $40 million, under the conditions of the deed, which I am happy to table.

Hon Bill English: Has the Minister seen official advice tendered to him on 23 December 2004 that stated that the additional redress of $15 million was payable only on condition of certain performance measures, as indicated in the deed, being met; and as it now appears that the payments were made in 2002 and 2003 without performance measures having been met, why did he pay millions of dollars to the wānanga when it had not met the conditions for the payment?

Hon TREVOR MALLARD: I apologise for having to go into a little bit of detail on this question. The matter was subject to Crown Law advice around whether conditions had been met. The specific condition that I am advised was not met was in relation to the proportion of students who were Māori. There was a requirement to have a minimum of 6,400 students who were Māori, as part of the deed of settlement requirements. The wānanga actually had 20,400 students who were Māori. With the proportions set out in the deed of settlement, there was a maximum of 6,800 Pākehā students. Unfortunately, there was a breach in that the wānanga had nearly 14,000 Pākehā students. I think that to withhold a payment—and, certainly, this is the advice that I have now received, confirmed by Crown Law—because too many white people were enrolled would have been unreasonable.

Hon Bill English: Why has the Minister demanded repayment of $17,500 from the Enner Glynn Playcentre in Nelson, which was an overpayment due to a ministry mistake, but he has not demanded a single dollar of repayment from the wānanga for an overpayment of $15 million that was due to his own mistake?

Hon TREVOR MALLARD: I absolutely reject the second part of the question. The advice is clear that the payment should have been made. I know there was one senior official in the Ministry of Education who questioned that. The advice from Crown Law is that it was appropriate. We do not stop wānanga having money, for having too many honkies.

Deborah Coddington: Is the Minister satisfied that taxpayers have received good value for money from the massive payments made to Te Wānanga o Aotearoa; if not, why does he continue to pour taxpayers’ money into this institution?

Hon TREVOR MALLARD: Certainly not; and a lot less taxpayers’ money is going in under our rules than went in under those developed by Bill English and his mates.

Hon Bill English: How does the Minister explain to the New Zealand public the double standard he is using when he is demanding a repayment of $17,500 from the Enner Glynn Playcentre, an overpayment due to a ministry mistake, but he has not demanded repayment of a single dollar of $15 million that officials say should not have been paid to the wānanga; and how will he explain that to the mothers at the playcentre, which will go broke if the ministry persists in demanding the repayment?

Hon TREVOR MALLARD: I reiterate my comment: I have received advice, including advice from the Crown Law Office, that this payment to the wānanga was not an error.

Madam SPEAKER: I think the member was seeking a comment on the playcentre.

Hon TREVOR MALLARD: I addressed one part of his question.

Madam SPEAKER: You did, and I am afraid that the Standing Orders do state that if there is more than one question in a supplementary question, the Minister is required to answer only part of it.

Question No. 1 to Minister

RODNEY HIDE (Leader—ACT): I raise a point of order, Madam Speaker. I accept your ruling following Bill English’s point about the Minister of Health reading out personal information, but we have got a serious situation now, because in reading out the information the Minister of Health seriously misled this House and, indeed, the public of New Zealand about Alvin’s condition and, in fact, about what transpired. I think, Madam Speaker, that you should allow me just two sentences to correct what Annette King has said, and it is this—

Madam SPEAKER: I am sorry but that is not a point of order; it is a point of privilege, and there is a process by which it can be pursued.

RODNEY HIDE (Leader—ACT): I raise a point of order, Madam Speaker.

Madam SPEAKER: Another point of order? I have actually ruled on the matter. It is a point of privilege, not a point of order. The member has a remedy.

RODNEY HIDE: I have seen how they go.

Madam SPEAKER: What is the member’s next point of order?

RODNEY HIDE: My point is that Annette King said that Alvin went to the Porirua medical centre for a check-up. That is not true. He went—

Madam SPEAKER: I am sorry, but the member knows I have ruled on this point. Would he please sit down.

RODNEY HIDE: I am sorry, Madam Speaker, but—

Madam SPEAKER: Would you please sit down.

RODNEY HIDE: I am not going to sit here and let that Minister tell lies.

Madam SPEAKER: Mr Hide, I ask you to leave the Chamber.

Rodney Hide: I will happily leave, because there is no point in asking—

Madam SPEAKER: No, the member has raised a point of privilege. You are perfectly entitled to raise a point of privilege, but not in this forum.

Rodney Hide withdrew from the Chamber.

GERRY BROWNLEE (Deputy Leader—National): I raise a point of order, Madam Speaker. One of your jobs is to make sure that the New Zealand Parliament is held in reasonable respect by the public. What Mr Hide has just pointed out may well be a matter of privilege, but how is it going to look when not only the patient affected but also his mother are sitting in the gallery, knowing full well that the information given to the House by the Minister was wrong, and when a member who wants simply, with two sentences, to correct it ends up being slung out of the House? How does that help maintain the New Zealand public’s opinion of this House—or does it, in fact, do exactly that?

Hon Dr MICHAEL CULLEN (Leader of the House): It certainly does help if the Speaker asserts her right to have her ruling obeyed and not shouted down and ignored by any member of this House, however senior. As to the issue, either Mr Hide was trying to raise an issue of privilege, which is done by a completely different method, or he was raising simply an interpretation issue, which is a matter for debate, and also is not a matter to be raised by way of a point of order during question time. I am sure everybody has every sympathy for the patient, but Mr Hide was running a stunt for the television cameras.

Madam SPEAKER: I wish to rule on this matter. This is question time. It is not a time for matters of general debate. No one actually knows the right or the wrong of the matter that was raised. Of course it is entitled to be raised in question time; it was raised, and answers were given. Mr Hide was asked to leave the Chamber because he raised, not a point of order, but a point of privilege, and when he was asked by the Chair to follow the Standing Orders and the correct process, declined to do so.

Question No. 3 to Minister

JUDITH COLLINS (National—Clevedon): I raise a point of order, Madam Speaker. When Mr Mallard was answering a supplementary question to question No. 3, he referred to white New Zealanders as honkies. Is that acceptable language in this House?

Madam SPEAKER: The matter should have been raised at the time. It was not. There is no set list of correct or incorrect terms except, as we know, someone may not be called a liar, and we do have some forbidden terms, such as “racist”. I did wonder whether someone would raise it at the time, but I do not consider myself a censor in that sense.

Hon TREVOR MALLARD (Minister of Education): I raise a point of order, Madam Speaker. I have consulted my colleague the Minister of Māori Affairs. He has told me that the term can be regarded as derogatory, and therefore I withdraw and apologise.

Madam SPEAKER: Thank you, and I thank the member for raising it.

Economy—Reserve Bank Announcement

4. CLAYTON COSGROVE (Labour—Waimakariri) to the Minister of Finance: What is his reaction to this morning’s announcement by the Governor of the Reserve Bank?

Hon Dr MICHAEL CULLEN (Minister of Finance): I note the governor’s view that the balance of inflation risks remains on the upside and that a further tightening in monetary policy may still be necessary. This reinforces the OECD assessment last month that any additional fiscal stimulus beyond that already planned could put the projected soft economic landing at risk and would need to be offset by higher interest rates.

Clayton Cosgrove: What implications does the Reserve Bank announcement carry for fiscal policy?

Hon Dr MICHAEL CULLEN: A significant loosening of fiscal policy by way of either substantial tax cuts or increased spending will produce exactly the sort of “upside surprise” in the inflation outlook that the Reserve Bank warns it will be watching for closely. This reinforces my message of recent weeks. Tax cuts result in higher interest rates unless fully offset by cuts to spending.

John Key: Why do we have the highest interest rates in the developed world under the Minister’s financial leadership?

Hon Dr MICHAEL CULLEN: Firstly, because we have had just about the highest growth rate in the developed world over the last 3 or 4 years, which means that we are at the top of the cycle and facing capacity constraints, and secondly, because New Zealanders have a poor savings record. This Government has announced a major initiative. The National Party wants to destroy both that initiative and the Government’s own savings by making unsupportable tax cuts.

Clayton Cosgrove: What, if any, budgetary implications does the Reserve Bank announcement carry?

Hon Dr MICHAEL CULLEN: I think that it reinforces the need for all parties to produce alternative budgets and to explain to the public and the bank how their policy platforms will be paid off without setting off an inflationary spiral. National failed to produce one at the last election, and I suspect that we will not see one at this election either, because National members came out of their caucus on Tuesday looking very glum, as they began to understand the real numbers.

John Key: Does the Minister agree with comments made by the Governor of the Reserve Bank, Alan Bollard, today that he considers a material fiscal impulse to be the amount of 1 percent or more, noting that Working for Families has a fiscal impulse of 0.7 percent; if he does not agree with Alan Bollard in that regard, can he tell the people of New Zealand what he considers to be a material impact of fiscal impulse?

Hon Dr MICHAEL CULLEN: This year’s Budget has a fiscal impulse of more than 1 percent of GDP. That is why, if any party wants to add any additional fiscal impulse, it will have to find savings. Secondly, 1 percent of GDP is about $1.5 billion. The member has already denied that his tax cuts will be anything like that size, and if that is true, the great majority of working New Zealanders will be horribly disappointed by the promised miserable size of the tax cuts that National is planning.

Labour Party President—Auckland Chamber of Commerce

5. Hon MAURICE WILLIAMSON (National—Pakuranga) to the Minister of Finance: Did he personally apologise to the chief executive of the Auckland chamber of commerce for the behaviour of Transit board member Mike Williams at a meeting between Ministers and Auckland business organisations; if so, why?

Hon Dr MICHAEL CULLEN (Minister of Finance): I apologised to Mr Barnett, but not in relation to Mr Williams’ behaviour in the meeting in my office. I did so—[Interruption] I think that member should apologise for her behaviour almost every day. I did so because the Government values its relationship with the Auckland chamber of commerce, and wishes to cooperate further in proceeding even faster in resolving Auckland’s transport problems. I note that the Auckland chamber of commerce has declined to sign up to the northern employers and manufacturers party political programme aimed against this Government.

Hon Maurice Williamson: Was Mike Williams present at the meeting as Labour Party president, or was he there formally as a member of the Transit board, and if it was the second, had he originally asked the chairman and did the chairman delegate it to him, or did Mike Williams just show up because he is a political crony?

Hon Dr MICHAEL CULLEN: Certainly, Mr Williams is a political something; I would not describe him as a political crony. But my understanding is that he was there to give information about Transit’s position. Whether he talked to the board chair, I have no idea in that respect.

Peter Brown: Is this the same meeting that the Auckland chamber of commerce chief executive officer refers to in his press release today, when he states that the use of borrowing will be examined to speed up the completion of Auckland’s western ring route network; if it is, has the Government genuinely taken on board New Zealand First’s urging that Transit should be allowed to borrow against future income without the use of tolls, and without any further increase in excise tax, petrol tax, or road-user charges?

Hon Dr MICHAEL CULLEN: No, what the Government has done already on one project has been to indicate that there will be the ability to borrow against a future income stream off that road. If one is borrowing against the future income to Transit, how will one build the next lot of roads?

Hon Maurice Williamson: Was Mike Williams one of the people John Tamihere was talking about in the Investigate article, when asked about the machine that existed on the ninth floor and he said: “Oh yeah, there’s definitely a ‘machine’ all right. It’s formidable. It’s got apparatus and activists in everything from the PPTA all the way through. It’s actually even built a counterweight to the Roundtable—Businesses for Social Responsibility.”; was Mike Williams one of those tentacles?

Hon Dr MICHAEL CULLEN: I have no idea what Mr Tamihere was referring to, but I can confirm there is a formidable machine on the ninth floor and it is going to flatten the Opposition in about 3 months’ time.

Peter Brown: Noting the answer the Minister gave to my supplementary question, is he telling the House there will be widespread tolling of the Auckland western ring route?

Hon Dr MICHAEL CULLEN: Legislation has already been passed to deal with the issue of tolling. We made it clear that the Albany to Pūhoi realignment project would be subject to tolling. There is widespread support in the Auckland business community, and in Auckland widely, for some tolling for specific roading projects. If Dr Mapp cares to look at his own party’s policy, there is support for that from National, as well.

Hon Maurice Williamson: Does the Minister have concerns that a board member of Transit was so ill-informed that he thought the major projects, such as the State Highway 20 extension at Mount Roskill had already begun, when clearly it has not, or does he think Mr Williams was confused by a plethora of documents put out by Transit—for example, one stating: “We expect State Highway 20 Mount Roskill to commence in September 2002 and to be completed by May 2005”, or a householder brochure sent out in August 2002 to every house in Auckland, which stated that the State Highway 20 Mount Roskill extension would commence in 2004, yet today the select committee was told the project has not yet started if so, is that the reason why Mr Williams is so confused?

Hon Dr MICHAEL CULLEN: I have no idea at all about those particular matters. What I do know—[Interruption] I do not live inside Maurice Williamson’s head, and I am very grateful for that fact. What I can say is that the roading projects under way in Auckland at the moment are worth more than ten times as much as those in the last year of the previous National Government, when it talked about roads but did nothing at all about them. Now, of course, the Opposition is big on promises, and has the ex - Social Credit finance spokesperson to front its roading campaign in Auckland.

Hon Pete Hodgson: Is he surprised to learn, notwithstanding the supplementary question previously asked by the member, that when that same member asked the Chief Executive of Transit New Zealand at this morning’s select committee meeting whether the Mount Roskill project had begun, he was advised that it has, that the tender has been let to a good Dunedin company called Fulton Hogan, that the pre-construction work is already under way, and that one does not start up bulldozers in Auckland in the middle of winter?

Madam SPEAKER: I note there was an interjection during a question. I am asked to apply—

Hon Maurice Williamson: I apologise.

Madam SPEAKER: The normal penalty is to leave the Chamber, but I know you are in the midst of asking your questions. I ask everyone to try to exercise a little control.

Hon Dr MICHAEL CULLEN: No, I would not be surprised, at all. I would not expect Mr Williamson to understand anything about Auckland roads, if he relies upon information from Mr Alasdair Thompson, the ex - Social Credit Party finance spokesperson.

Dail Jones: Does the Minister of Finance realise—and adding to what has just been said—that the tender has gone out and that it is proposed to extend State Highway 20 through Mount Roskill to the New Windsor area, to Maioro Street, and that that is common knowledge in the Auckland area to most people, although I would think most Aucklanders in that Mount Roskill - north-western area would not like tolls?

Hon Dr MICHAEL CULLEN: It is not my understanding that the proposal is to toll that particular road, but it would be quite foolish for any Government to forgo the ability to engage in specific projects related to tolling, if we wish to accelerate infrastructure development within New Zealand. At the end of the day, things have to be paid for. I am sure the member is aware that outside Auckland there is some feeling that perhaps Auckland could contribute a little more to its own roading network.

Hon Maurice Williamson: I seek leave to table five documents. The first is a Transit document dated February 2000, in which it states: “SH20 Mount Roskill will begin in 2003”.

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

Hon Maurice Williamson: The second one is a Transit media release of September 2000, stating that it will begin in late 2003.

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

Hon Maurice Williamson: The next one is a major bulletin put out in October 2004, in which Transit brings the date forward to September 2002 for commencement.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is.

Hon Maurice Williamson: The third one is a 2002 media release, stating: “Green light for Mount Roskill motorway given”.

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

Hon Maurice Williamson: The fourth is a media release from Transit from June 2004, stating: “Commencement later this year, by Christmas”.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is objection.

Hon Maurice Williamson: The last one is the big household brochure that went out in August 2004, stating that it would start in 2004—which it did not.

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

Question No. 1 to Minister, 31 May

Hon MATT ROBSON (Deputy Leader—Progressive): I seek leave to table three documents. The first is a statement of Mr Amer Salman made to a meeting at the Pakuranga Community Centre, taking objection to the Rt Hon Winston Peters linking him with the Saddam Hussein regime and calling Mr Peters’ statement totally defamatory and disruptive to his family and his children.

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

Hon MATT ROBSON: The second document is a statement from Mr Omar Ali, taking objection to what he said is the defamatory statement made by Winston Peters that Mr Ali was a police chief in Saddam Hussein’s regime, which caused great trauma to his family. The statement was made at a meeting called by the Iraqi community council at the Pakuranga Community Centre, which over 200 people attended.

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

Hon MATT ROBSON: The third statement is a press release from the Iraqi community council, taking objection to the statements of the Rt Hon Winston Peters that two members it holds in high regard in its community were representatives of the Saddam Hussein regime.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is objection.

Treaty of Waitangi—Education Programme

6. DAIL JONES (NZ First) to the Coordinating Minister, Race Relations: What has been the total cost across all Government agencies in the last financial year of providing internal or contracted Treaty of Waitangi - related courses and education material on the Treaty of Waitangi?

Hon TREVOR MALLARD (Coordinating Minister, Race Relations): As I said yesterday, there are over 3,000 Crown entities, and I do not intend to ask each of them to report to me on how much they spend in their staff training and development budgets or, in the case of schools, how many copies of the excellent books written by Jamie Belich or Claudia Orange they have bought. However, I have asked staff to trawl back through information held in my office, and I can tell the member that, on top of the money referred to yesterday to do with the Treaty of Waitangi Information Programme, last year we had reports from 22 agencies that spent, altogether, $413,000 between them, ranging from $96,000 in the Department of Conservation to nothing in the Ministry of Transport.

Dail Jones: Is the Minister saying, then, that the statement that exists on the website www.beehive.govt.nz in the name of the Hon Trevor Mallard, relating to the first results of a review of targeted programmes and dated 16 December 2004, has not been activated, when it states that additional funding for those projects is made up of $10.5 million per school year in decile-linked operational funding, $16.5 million in per pupil operational funding, and a further set of two new initiatives worth $11.5 million, which alone totals $38.5 million; is he now telling the House that that money will not be spent or that he has no idea whether it has been spent?

Hon TREVOR MALLARD: That is the money we gave to schools when we took away ethnically based funding.

Gerry Brownlee: When the Minister said on 25 February 2004: “There are facts and there are perceptions, and there is a perception in New Zealand of enormous amounts of dosh being tossed towards Māori. I’m not sure if that is true. It’s one of the things I want to find out.”, did he think that 15 months later he still would not know the answer?

Hon TREVOR MALLARD: There was an enormous amount of dosh being tossed around on an ethnic basis at the time the statement was made. As Dail Jones has so politely pointed out to the House, there is a hell of a lot less now.

Dail Jones: Is the Minister saying that he is not in a position to send even one email to all the schools involved in order to ask them how much they are wasting on Treaty of Waitangi education to indoctrinate New Zealand children, get replies back, and thereby assess how much the 2,600 schools in New Zealand are spending on this Labour Party indoctrination?

Hon TREVOR MALLARD: I think it is fair to say that the curriculum in this area has not changed since the time that Winston Peters was in Government. I have not made changes in this area. Schools make choices as to the material they select in order to cover the curriculum. That is right. Sometimes the material is controversial. Sometimes people get things from Mrs Turia’s mate Hone Harawira that I think is rubbish, and sometimes people get things from—

Tariana Turia: I raise a point of order, Madam Speaker. I would like to ask the relevance to this particular question of that comment about what my mates are doing.

Madam SPEAKER: I am not sure that that is a point of order. If the Minister finishes his answer, then we will get the whole context of what has been said.

Hon TREVOR MALLARD: Sometimes schools use materials from Hone Harawira and his mates that is extremist at one end. Sometimes they use material from the National Front and from other people associated with New Zealand First that is rubbish at the other end. Sometimes they use balanced material like Claudia Orange’s book, and I think that that is great.

Ron Mark: I raise a point of order, Madam Speaker. That comment from the Minister deliberately aimed to draw an association between New Zealand First and the National Front. You ignored it; I and my colleagues did not. We take extreme offence at that man, who sits among former members of the Communist Party, casting such a slur on our party. I demand that you have him withdraw and apologise.

Hon TREVOR MALLARD: I do so unreservedly.

Dail Jones: When does the Minister intend to undertake some inquiries as to the many millions that are being spent in this area, bearing in mind that it has already been 15 months since the terms of reference relating to the review of targeted policy and programmes in this area were released; and what explanation can he really give, other than by what he has just said—that it is a waste of time—and by his total neglect of his parliamentary responsibilities by failing to tell the people of New Zealand how many millions have been spent, in secret it seems, by this Government in that area?

Hon TREVOR MALLARD: My role was to do some work to make sure that spending was appropriate. A big series of reviews has been set up, and those that have been completed—over a dozen of them—are reported on the website. Another 30-odd are coming down the track. Separately, I have had some responsibility for making sure that high-quality information is available. If the member looks on the website of the State Services Commission or at the website www.treatyofwaitangi.govt.nz, he will find some high-quality, neutral information. It is not propaganda. I am getting sick of people who have closed minds. I do not agree with a lot of radicals in the treaty industry, but I do not oppose having high-quality, neutral information made available, unlike some people with closed minds.

Kyoto Protocol—Carbon Sink Credits

7. BRIAN CONNELL (National—Rakaia), on behalf of Hon Dr NICK SMITH (National—Nelson), to the Convenor, Ministerial Group on Climate Change: Has he received any reports about the amount of carbon sink credits New Zealand will have in the first commitment period of the Kyoto Protocol; if so, do those reports contain different predictions than any previous reports?

Hon PETE HODGSON (Convenor, Ministerial Group on Climate Change): I need the indulgence of the House. The answer is yes and yes. I see many reports, nearly always involving different projections and different methodologies. Two more were released today, although the one reported in the Dominion Post is a retread from last year.

Brian Connell: Does the Minister stand by his assertion at the time this Government ratified the Kyoto Protocol that New Zealand would have 6 million tonnes of credits to sell and his statement: “New Zealand would stand to make a couple of hundred million from this. Would they set fire to a $200 million cheque?”

Hon PETE HODGSON: The member will be aware that the projections on New Zealand’s net position are updated each year and are on the Climate Change Office website. I draw from that website and make statements according to the advice.

H V Ross Robertson: Does the Climate Change Office publish annual updates on New Zealand’s net position, including sinks; if so, what is the trend line?

Hon PETE HODGSON: Yes. As I said, they are on the Climate Change Office’s website, and members are welcome to go and access them. The trend in New Zealand’s net position since 1997 is downward. The two main reasons for this are both changes in methodology, but the fact that over the past 5 years New Zealand has been amongst the most successful economies in the Western World has also played a part.

Rod Donald: Has the Minister seen any new reports from reputable sources, particularly science bodies, on the seriousness of climate change and the urgent need for action?

Hon PETE HODGSON: Indeed I have, and I have one here. It is a statement entitled “Joint Science Academies’ Global Response to Climate Change”. It asserts that climate change is real and that the problem is urgent, and it is signed by the scientific academies of Brazil, Canada, China, France, Germany, India, Italy, Japan, Russian, the United Kingdom, and the USA.

Brian Connell: What is the latest advice he has seen about New Zealand’s carbon balance for the first commitment period of the Kyoto Protocol?

Hon PETE HODGSON: As I said, I continue to get reports. The next report is due to be posted shortly. I expect it to have moved through the Cabinet process over the next week or two. We will have completed all the details around it, and I will make it public, as I do each year.

Gerry Brownlee: I raise a point of order, Madam Speaker. You will give us the same old answer that we always get, but the Minister earlier told the House that if we wanted to know about this stuff, we should go to the website. Now he has just been asked what the latest information is, and he has told the House that it is clearly not on the website. He obviously knows the information, and I think it would be very much in the public interest for him to expand on the answer he has just given.

Hon Dr Michael Cullen: The original question and the previous question were about general information, and that is on the website. When the Minister was asked about the latest report, he quite rightly said that it was yet to be completed and to go through the process, and would be published. The Minister does not have to release a report until it has been through the appropriate processes.

Madam SPEAKER: The Minister did address that question.

Rod Donald: What reports has the Minister seen on the views of senior American and British politicians on the seriousness of the threat posed by climate change?

Hon PETE HODGSON: The American President holds the view that: “The issue of climate change respects no border. Its effects cannot be reined in by any army nor advanced by any ideology. Climate change, with its potential to impact every corner of the world, is an issue that must be addressed by the world.” That is President George Bush. On the other hand, another global leader said: “There are those who argue that the evidence that global temperatures are increasing is non-existent. I am one who thinks the science is still debatable.” That global leader was the leader of the New Zealand National Party.

Brian Connell: When the Minister gets his next piece of advice, should the carbon balance be negative—in stark contradiction to the key reason he used to justify New Zealand ratifying the protocol ahead of our major trading partners—will he take responsibility for that very costly error for New Zealand, and do the decent thing and resign?

Hon PETE HODGSON: The member might reflect, given that he comes from the east coast of the South Island, that the effect of climate change on New Zealand in general and on our agricultural pastoralism in particular, and on the agricultural pastoralism on the east coast of the North and the South Islands, is likely to be severe or very severe unless we can knock the worst effects of it over. This is an issue that will not go away, and the member must face that.

Brian Connell: I raise a point of order, Madam Speaker. I ask you to reflect on that answer. I asked the Minister a very specific question: if the carbon balance was negative, in stark contradiction to his justification for signing the protocol, would he do the decent thing and resign?. He never attempted to answer that question in any way.

Madam SPEAKER: No, but he did address the question.

Schools—Funding Changes

8. LYNNE PILLAY (Labour—Waitakere) to the Minister of Education: What reports, if any, has he received on possible changes to the way schools are funded?

Hon TREVOR MALLARD (Minister of Education): I have seen suggestions that all targeted funding for teachers’ salaries, teacher professional development, information and communications technology, and learning material should be abolished. School boards would be forced to negotiate individual employment agreements with each teacher, and all safeguards for quality teaching would be gone by lunchtime. Those proposals came from Don Brash and Bill English.

Lynne Pillay: What are some of the programmes and initiatives that would be at risk if such a proposal was to be adopted?

Hon TREVOR MALLARD: In short, heaps. To elaborate, there would be no laptops for teachers, no targeted literacy and numeracy programmes, no monitoring of truancy, no free software licences, no school transport for rural kids, and lots and lots of other things.

Hon Bill English: Does the Minister realise that in the education sector he is making a laughing stock of himself with his childish, aggressive strutting over policy he claims exists but never did?

Hon TREVOR MALLARD: No. When I spoke to the rural principals yesterday, I quoted Don Brash’s speech in which he said that National would move to giving a single grant to schools, covering both salaries and operations grants. If schools had a single grant, they would not have information and communications technology, Microsoft licences, or school buses in rural areas.

Biological Diversity, Convention—Māori Consultation

9. TARIANA TURIA (Leader—Māori Party) to the Minister for the Environment: What consultation, if any, occurred with Māori regarding the position that New Zealand took at the recent biosafety meetings in Montreal to consider the Convention on Biological Diversity?

Hon MARIAN HOBBS (Minister for the Environment): Prior to New Zealand’s decision to ratify the protocol, there were extensive opportunities for consultation offered to all interested stakeholders, including Māori, on the issues New Zealand would have to consider if it became a member. The Ministry of Foreign Affairs and Trade convened two further meetings with stakeholders in preparation for the Montreal meeting.

Tariana Turia: How does the inadequate consultation undertaken with tangata whenua demonstrate compliance with the Environment Act 1986, which requires the Ministry for the Environment to ensure that in the management of natural and physical resources, full and balanced account is taken of the principles of the Treaty of Waitangi?

Hon MARIAN HOBBS: I reject the statement that the consultation was inadequate.

Metiria Turei: What is the Minister’s response to the concerns expressed by the European delegates at the second meeting of the parties in Montreal, who asked why New Zealand even bothered to ratify the protocol if its only intent was to obstruct its progress; is it not the case that New Zealand delegates are just there to do the dirty work of the GE export companies, which do not have a vote?

Hon MARIAN HOBBS: The text that was proposed by some of the delegates at that meeting would have shifted the very protocol away from its purpose as an instrument to protect biological diversity to an instrument that protected and regulated certain trade. New Zealand did not support that shift away from biosafety so, along with Brazil and other countries that were not able to be present there, such as Nicaragua, we did not support the text.

Tariana Turia: Is the Government resiling from its treaty obligations, and was that supported by its Māori members or did the Government not bother even to consult them?

Hon MARIAN HOBBS: We did not resile. Consultations included notification of the consultation process directly to over a thousand interested stakeholders, including Māori. The public consultation process included notification of progress in the consultation process on the Federation of Māori Authorities’ fortnightly electronic bulletin and on its website. I have here a list of Māori authorities that were directly contacted through Te Puni Kōkiri.

David Parker: How did New Zealand officials at the Montreal meeting work to safeguard the interests of all New Zealanders, including Māori?

Hon MARIAN HOBBS: The New Zealand delegation worked to secure practical and meaningful rules for biosafety protection. The proposed final text contained measures that could have impacted seriously on our exports. Our delegation was vigilant and prevented their adoption, thereby protecting our exporters and protecting the protocol’s integrity as safeguarding biosafety protection.

Employment Law—Impact of Changes

10. Hon MARK GOSCHE (Labour—Maungakiekie) to the Minister of Labour: What changes have been made to New Zealand’s employment law framework, and what has been the impact?

Hon PAUL SWAIN (Minister of Labour): The Government has taken a number of steps to bring about a fair and balanced employment law framework. The Employment Relations Act has helped to build productive employment relationships through the promotion of collective bargaining, and by protecting the integrity of individual choice. The Government has also introduced a new Holidays Act and paid parental leave, and has improved health and safety legislation. The impact has been positive for many wage and salary earners in New Zealand.

Hon Mark Gosche: Has the Minister seen any proposals for further changes to employment law in New Zealand?

Hon PAUL SWAIN: Yes. I have seen a proposal to scrap the Employment Relations Act, followed by a statement that the business community is broadly happy with that Act, followed by another statement that it will be repealed in its entirety. Those statements come from the National Party, which seems to make a habit of flip-flops and U-turns in its policy development process.

Judith Collins: Does the Minister appreciate that this Government’s 2004 law changes have led to an unprecedented wave of strikes and stoppages this year, by allowing unions to hold employers to ransom and bully them into multi-employer collective contracts?

Hon PAUL SWAIN: No.

Peter Brown: Is it of any concern to the Minister that many restaurants, cafes and retail outlets are closing on statutory holidays because they would have to pay their workers additional pay; if he is concerned, what will he do about it?

Hon PAUL SWAIN: When that policy was introduced there was recognition that it would have an impact on restaurants. That was made quite clear. It was up to the restaurants to decide how they were to deal with it. In fact, much of the anecdotal evidence that comes out shows that New Zealanders are quite happy to pay a little bit more on public holidays, so that workers who work on those days when most New Zealanders have a holiday get a little bit more for working on those days.

Paul Adams: Does the Minister intend to review grievance and dismissal processes in light of, firstly, employers’ dissatisfaction with those particular aspects of employment law, secondly, his colleague John Tamihere’s past promotion of a 1-month probation period for new employees, and, thirdly, the practice of sacked workers claiming unjustified dismissal so that they do not face an extended stand-down period for the dole; if not, why not?

Hon PAUL SWAIN: Yes. As I have already indicated, particularly at the time of the passing of the Employment Relations Act, the issue of the procedures around dismissal is something that needs further attention and further work. In my view, it relates a lot to issues around education, and we are beginning some work on that as we speak.

Peter Brown: Noting the Minister’s earlier answer to me, does he not appreciate that we are in a lose-lose situation for everybody—tourists, employers, and employees—and does he accept that there is a relatively simple way round it, and would he like the advice of New Zealand First on how to solve the problem?

Hon PAUL SWAIN: In response to the last part of the question, no, but in response to the first part, I repeat that there were some issues related to the restaurant trade, but the fact of the matter is that during the 1990s virtually every penal payment was ripped away under the Employment Contracts Act. A very small amount has now been given back to the people who actually work on public holidays; the vast majority of people think that is fair.

Foreign Aid—United Nations Target

11. KEITH LOCKE (Green) to the Associate Minister of Foreign Affairs and Trade (Official Development Assistance): Does New Zealand have a timetable to meet the United Nations target of 0.7 percent of gross national income spent on foreign aid by 2015; if not, why not?

Hon MARIAN HOBBS (Associate Minister of Foreign Affairs and Trade (Official Development Assistance)): New Zealand has a commitment over the next three Budgets to make a planned increase in overseas development assistance from 0.23 percent to 0.28 percent. With Budget 2005, this Government has committed to the largest series of dollar increases since New Zealand became a donor in the 1960s.

Keith Locke: Can the Minister confirm that for 5 years New Zealand has been agreeing at international meetings that rich nations must set a timetable to meet the millennium development goal of 0.7 percent by 2015; if so why is there no timetable today, and when will there be a timetable?

Hon MARIAN HOBBS: I am not aware of any specific commitments by New Zealand, and I have not, on the international forum, committed specifically to meeting a timetable. But we have, in the same way as European Union countries have done, committed to an intermediary timetable.

Tim Barnett: Does the Minister believe that aid can compensate for unfair trade; if so, why?

Hon MARIAN HOBBS: George Monbiot, with whom I happen to agree, wrote in the Guardian on 31 May this year that if developing countries increased their share of world exports by only 5 percent, then “developing countries would earn an extra $350bn”—I think it is United States dollars—“a year, three times more than they will be given in 2015. Any Government that wanted to help developing nations would surely make the terms of trade between rich and poor its priority.” New Zealand does both. It works for fair trade rules, and it is increasing the amount and the effectiveness of its aid.

Hon Peter Dunne: Does the Minister see advantage in there being some form of multi-party agreement in terms of the commitment to reach the 0.7 percent goal; if she does see an advantage in that proposal, what steps is she prepared to take to try to bring it together?

Hon MARIAN HOBBS: I would see some advantage, certainly, in an across-Parliament agreement to move forwards in terms of overseas aid expenditure, particularly given that the Leader of the Opposition has said that he does not see a need for any urgent increase in aid, or any sharp increase in aid. But what I worry about is that tying it down, percentage increase by percentage increase each year, does limit our choices in 10 years, should something of drastic occurrence hit this particular country.

Keith Locke: Does the Minister agree that at the rate of increase she has just explained—that is, from about 0.23 percent when Labour became the Government, in 1999, to 0.23 percent in last year’s Budget, to 0.28 percent in 3 years’ time—it will be about the end of this century before New Zealand reaches 0.7 percent of gross national income (GNI), and what is the Government going to do about it?

Hon MARIAN HOBBS: No, I do not agree with that assumption, and I would also like to point out that every year that this Government has been in office there has been a cash increase to our overseas aid budget. It is all very well to talk about percentage increases based on GNI; that is one way of measuring it. At the same time, we have set up NZAID, which has just been nominated by the OECD Development Co-operation Directorate as one of the most effective aid agencies in the world. That did not cost tuppence to achieve.

Keith Locke: Has the Minister seen, in the OECD report she has just referred to, the strong criticisms of New Zealand’s aid levels, including the statement that New Zealand was “capable of a significantly larger fiscal effort for ODA.”, and criticism of the lack of a Government timetable to reach the international target; and why is the Government letting New Zealand languish ignominiously near the bottom of the OECD table of aid?

Hon MARIAN HOBBS: My responsibility as Minister for overseas aid is to concentrate on being effective, particularly in the Pacific. I want to take the issue away from percentages, and actually to note that to move from 0.28 percent to 0.7 percent in today’s dollars is to increase the budget from $360 million to about $960 million.

Keith Locke: I raise a point of order, Madam Speaker. I did ask a specific question on whether she had seen, in the OECD report, the criticisms of New Zealand aid levels. She did not refer to the OECD report at all in her answer.

Hon MARIAN HOBBS: Yes, I have read it.

Keith Locke: When Tony Blair can trumpet a target of 0.7 percent of GNI by 2015, as he has done very loudly in the last few days, when the European Union is galvanised by that target, and when Norm Kirk reached 0.5 percent of GNI in the 1970s, why cannot the New Zealand Government take action now, particularly when there is so much poverty in the world?

Hon MARIAN HOBBS: I would really advocate that the member reads the article “A game of double bluff” by George Monbiot—whom he has quoted to me in this House before—when he talks about Blair playing one game with aid money, and another game behind the scenes in blocking trade through using his friend Mr Mandelson in the European Union.

Keith Locke: I seek leave to table the OECD Development Co-operation Directorate report referred to in my questions.

Document not tabled.

Keith Locke: I seek leave to table an article in the Dominion Post by Trevor Richards, dated 1 June 2005 and entitled “Sharing our good fortune”, which strongly criticises the Government policy in this area.

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

Hon Dr Michael Cullen: Is this the same OECD whose economic arm is always recommending to developed countries that they reduce the size of their government, and does she have any plans to tell the OECD to have its economic arm talk to the cooperation arm, so that they can tell the same story?

Hon MARIAN HOBBS: Not only would I like the economic arm to talk to its Development Co-operation Directorate arm, but I would also like it to talk to the environmental arm. In fact, some policy cohesion in the OECD would be totally appreciated.

KiwiSaver Scheme—Overseas Expert Reports

12. MARK PECK (Labour—Invercargill) to the Minister of Finance: Has he received any overseas expert reports on the Government’s KiwiSaver scheme?

Hon Dr MICHAEL CULLEN (Minister of Finance): Yes. The prestigious London-based Pensions Policy Institute has praised the scheme and said that it has many design features that could be useful in Britain. That follows the World Bank report last month, recommending a multi-pillar approach to pension provision—all pillars that are reflected in the policy framework introduced under this Government.

Mark Peck: What features of KiwiSaver were identified by the Pensions Policy Institute as appealing, and what might threaten these in New Zealand?

Hon Dr MICHAEL CULLEN: The automatic enrolment, the flat-rate $1,000 Government incentive, the low administrative cost, the holistic approach to saving, and the help towards first home ownership are all identified by the institute as being good design features. The biggest threat, of course, would be a National Government, as National has refused to back the scheme and said, in any case, that it would certainly dump the $1,000 Government contribution.

John Key: Why does the State sector retirement scheme not comply with the KiwiSaver vehicle, and does he intend to rectify the State sector retirement scheme so that it does?

Hon Dr MICHAEL CULLEN: I anticipate that during our third term the State sector scheme will be brought up to the level to qualify it for exemption within the KiwiSaver scheme. Of course, if National were elected, the KiwiSaver scheme would go down the tubes to pay for tax cuts.

Craig McNair: Does the Government have any intention of raising the KiwiSaver scheme to a more realistic level of assistance, instead of the very small amount proposed at present?

Hon Dr MICHAEL CULLEN: Maybe the member has been too long in this House. For many modest-income New Zealanders, a $1,000 upfront contribution is actually quite a lot.

Gordon Copeland: Has he received any overseas reports on the Child Trust Fund set up by Labour in the UK, an incentivised savings scheme designed not only to make tertiary education more affordable but also to enable young adults to use the funds to buy a house or start a business; if so, why will he not open up the proposed tertiary savings scheme to those alternatives and align it to the KiwiSaver scheme—a cradle to the grave savings scheme?

Hon Dr MICHAEL CULLEN: Yes, I have. The problem is that in terms of the proposed tertiary education scheme, we are looking for an equity element and a public contribution element, which will enable us to spread the resources more fairly. The KiwiSaver scheme is about people saving for their own future, not for anybody else’s.

Bills

Appropriation (2004/05 Supplementary Estimates) Bill

First Reading

Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Appropriation (2004/05 Supplementary Estimates) Bill be now read a first time.

A party vote was called for on the question, That the Appropriation (2004/05 Supplementary Estimates) Bill be now read a first time.

Ayes 83

New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 33

New Zealand National 27; ACT New Zealand 6.

Bill read a first time.

Bills

Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill

First Reading

Hon Dr MICHAEL CULLEN (Minister of Revenue): I move, That the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill be now read a first time. I shall be recommending later that the bill be referred to the Finance and Expenditure Committee for consideration.

The main feature of this bill is a package of tax measures, announced in the Budget and over recent weeks, designed to promote economic growth. Many of these changes take the form of reducing tax barriers and impediments to economic growth. The bill introduces changes to the tax depreciation laws that are designed to ensure more productive use of capital. That is achieved by reducing biases in the depreciation rules that distort the structure of capital investment away from the best investment opportunities—and when taxes distort investment decisions, the result is likely to be lower growth. The changes are motivated by concerns that our current depreciation rates are too fast for buildings and too slow for short-life plant and equipment, which can result in excessive investment in tax-preferred assets and under-investment in others. For this reason, the depreciation rates of buildings will decrease, while the rates for short-life plant and equipment will increase, becoming consistent with the rates for longer-lived plant and equipment. To reduce some of the compliance cost of businesses, the low-value threshold for depreciable assets will rise from $200 to $500.

A number of other changes in the bill also focus on reducing the cost of tax to business, and, generally, making the tax side of business easier for small businesses. To reduce the number of tax payment dates that businesses must cope with, the bill aligns the three payment dates of provisional tax with those of GST; both will now be due on the 28th of the month. Small businesses that want to pay provisional tax more frequently, to help with their budgeting, may choose to make six payments a year, rather than three large payments as at present. A related change will allow businesses the option of basing their provisional tax payments on a percentage of their GST turnover. This will suit businesses that have seasonal income and that want their tax payments to be more closely aligned with their income flow. The bill also introduces a new subsidy designed to encourage small businesses to take advantage of the help that payroll agents can give them in dealing with PAYE, child support, and student loan deductions, and staff wages. Payroll agents will be subsidised for up to five employees per employer, for an amount to be decided by negotiation with payroll agents.

Wide-ranging changes to the fringe benefit rules are designed to reduce compliance costs and remove anomalies that have developed since the rules came into operation in the 1980s, including the inadvertent overtaxation of some benefits. As well, improved anti-avoidance measures ensure that the original purpose of the rules—to treat non-cash remuneration on a par with cash remuneration—is not undermined.

Several of the changes relate to motor vehicles, the main source of fringe benefit tax. Employers will have the option of calculating the private benefit from an employer-provided private motor vehicle on the basis of its depreciated tax value instead of its cost—a change that a lot of businesses said they wanted. At the same time, the valuation rate applying to the cost price of a motor vehicle will reduce from 24 percent to 20 percent, which will significantly reduce the amount of fringe benefit tax paid on motor vehicle benefits. These changes will also apply to leased vehicles as part of achieving a better alignment of the fringe benefit treatment of leased vehicles with that of owned vehicles.

To reduce compliance costs in relation to other fringe benefits, several new options and exemptions from fringe benefit tax are being introduced, and the minimum value thresholds applying to miscellaneous fringe benefits are being raised substantially. As a result, many small, hard-to-measure, unintended benefits will no longer be covered by the rules.

Several other amendments in the bill are aimed at increasing our access to worldwide labour, skills, and capital. To remove a tax barrier to international recruitment, a new exemption on certain types of foreign income will be made available to migrants, or to returning New Zealanders who have been non-resident for tax purposes for 10 years. To help resolve problems associated with the New Zealand tax treatment of accrued entitlements for foreign job-related superannuation schemes, the bill introduces changes to extend the scope of the current exemption for interest in those schemes. The Government proposes to introduce in a subsequent bill, subject to further work, an exemption for certain Australian superannuation schemes. These changes should resolve any recruitment problems and disincentives arising from our current tax treatment of interest in those schemes.

The tax rules on securities lending transactions are being updated to bring them into line with the rules on other commercial transactions, and with those of countries such as Australia. The changes remove tax barriers to securities lending transactions, and make us a more attractive place for international investment while also preventing the use of securities lending for tax avoidance.

The bill allows companies that bring in new equity investors to have better access to tax deductions for research and development expenditure. These changes cater for the growth cycle of technology companies in particular, and remove a barrier to investment in research and development. Similarly, the bill exempts non-resident investors from tax on the sale of shares in companies that they have invested in, alongside the New Zealand Venture Investment Fund. The change complements earlier reforms aimed at removing tax barriers to venture capital investment in New Zealand.

The bill introduces a number of other business tax changes. For example, it clarifies the tax treatment of income from investments in what are known as foreign hybrids. The change will allow members of a controlled foreign company to access tax credits for foreign tax paid on its income. Foreign hybrids will also be eligible for the so-called “grey list” exemption, of course—for as long as that lasts. The bill extends the concessionary continuity rules that apply to carrying forward losses and imputation credits, to allow for the use of a concession when a smaller, widely held listed company takes over, or merges with, a larger one. I understand that there is some concern about the proposed application date, so I will be interested in what submissions to the select committee have to say about that matter.

The bill introduces new information reporting and record-keeping requirements for New Zealand - resident trustees of foreign trusts, to ensure that we can satisfy information requests from tax jurisdictions elsewhere with which we have a double tax agreement. It clarifies the tax deductibility of re-grassing and fertilising costs associated with farm conversions, to provide greater certainty and reduce compliance costs for farmers.

The bill also introduces important measures to protect the tax base. New tax rules on corporate migration will ensure that companies that migrate from New Zealand pay tax on their worldwide income earned while resident in New Zealand. The changes will apply from the date of announcement—21 March this year. A further measure prevents avoidance of GST by the use of third parties to import goods such as luxury cars that were offshore at the time of supply. Once enacted, that change will apply from 19 May, the date of the bill’s introduction.

Finally, the bill sets the annual income tax rates that will apply for the 2005-06 tax year.

Those are many of the changes introduced in this large, omnibus taxation bill. They and other changes proposed in the bill are described in detail in the separate, 135-page commentary on the bill that has been distributed to members of the House, and I am sure that all have read it with great eagerness already. I commend the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill to the House.

I will be fascinated to see how this debate unfolds, because this bill is full of good news for the business sector. I suspect that members opposite will choose to talk about something that is scarcely in the bill at all—almost everything else they can think up to try to make up a reason to vote against it. I want to see the National Party and the ACT party voting against this bill, so that I can write to every chamber of commerce in the country and tell them that National and ACT voted against the biggest single set of simplification measures of the taxation system for small business that has ever been introduced into this Parliament—particularly the fringe benefit tax and provisional tax changes. I will be able to write to them to say that the National and ACT parties voted against measures to align depreciation more accurately with the actual economic cost of things that businesses purchase. I want to be able to write to them to say that those parties opposed measures designed to make it easier to recruit high-value individuals to work in New Zealand for New Zealand businesses and New Zealand corporates.

I want, in fact, the National Party and the ACT party to walk into what in effect is a trap laid for them in this legislation, because they have this terrible problem when the word “tax” is mentioned. They start behaving like a collection of mad, hydrophobic dogs, carrying on and salivating madly, and trying to bite anybody in sight from the centre-left. We will see this, I am sure, this afternoon, unless, of course, we are lucky enough to have Deborah Coddington speaking on these matters, rather than Mr Hide; as we all know, she is now a happy person and fulfilled in life, and lacks the desire to be as mean and nasty as her colleagues.

JOHN KEY (National—Helensville): All I can say to the Minister of Finance, Michael Cullen, is that if this is a trap carefully laid, then he must be a hunter who has gone into the bush, laid a trap, and, like so many hunters unfortunately do, somehow got a part of his body over that trap and had the trap snap firmly on his arm.

As I picked up the Dominion Post yesterday morning I saw the grovelling apology from the Minister of Finance as he begged the country—and, I suspect, the Prime Minister—for forgiveness for laying out a Budget that was so disastrous and that backfired so badly. He had no option but to apologise, because, as the cartoon so correctly showed in the Dominion Post on Tuesday, the Prime Minister, Helen Clark, was in bed at night dreaming of ways that Michael Cullen could disappear from her Cabinet. My goodness, she has had plenty of Ministers go over the last few years, so she is no stranger to bad news when it comes to Cabinet Ministers.

National will be opposing the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill, and we will happily do so. The outgoing Labour Government will write to the chamber of commerce to beg for forgiveness and will include the apology that Michael Cullen made to the House. On the same morning that the chamber gets that letter, it will get a letter from the National Party explaining exactly the reason.

The reason is that the explanatory note very, very clearly lays out the most important thing to the Government. The explanatory note of this 195-page bill states, in respect of Part 1: “This provision sets the annual income tax rates that will apply for the 2005-06 tax year.” That paragraph can be put into any bill over the next 3 years, if this Government remains in office. The Government sent the message pretty clearly indeed that there is no room for tax changes. That is what happened in the Budget. That paragraph states that the same tax rates can apply. The drafting team at the Parliamentary Counsel Office should not bother trying to think up a new paragraph; the same paragraph applies. If the Labour Government gets re-elected with the Greens—goodness forbid!—then the drafting team can just put “ditto”. Part 1 can state: “Ditto last year.”

Brian Fallow is not somebody who is known to be an extremist. I know that Michael Cullen likes to attack every media journalist—he lashed out at TV3 wrongly the other day and had to grovel with another apology. Actually, he is getting quite good at apologies. I know that he had to grovel, and I know that he likes attacking journalists.

Jill Pettis: That’s how marriages last.

JOHN KEY: What was that? The seagull said something.

Jill Pettis: Don’t be so rude and personal.

JOHN KEY: Jill Pettis said not to be so rude and personal about Michael Cullen. I am very sorry. It is just that he apologises once or twice a week.

Let us have a look at Brian Fallow’s comments in today’s New Zealand Herald: He wrote: “There is more to that reaction than disappointment engendered by false hopes raised in the days before the Budget, although, as the Finance Minister appeared to concede on Tuesday, he blundered in not hosing those expectations down.” He went on: “It reflects a deeper sense of grievance, a recognition that bracket creep, or fiscal drag, is a kind of stealth tax increase.” That is the truth of it—the absolute truth of it.

I refer to a very well-written document from Westpac, entitled How many hands are in your pocket?. It is a very good document—Brendan O’Donovan did a good job of writing it. He writes in the document about what adjustments would be required for taxpayers if they were to get just the adjustment for inflation. We are not asking for anything special from this Government, which has collected $55 billion worth of additional taxes in the last 5 years. It is no wonder that every week 600 people are leaving New Zealand to go to Australia. They have got the message. They are the fast learners. They have learnt that this Government just wants to tax them. But let us not ask for anything special. Let us just ask for the impact of inflation—I might add, in exactly the same way that this Government asked for the impact of inflation when it indexed the petrol tax. Westpac calculated, quite correctly of course, that if the tax threshold for the middle income rate—let us say the 33c rate—was adjusted for inflation, it would no longer cut in at $38,000, as it does today, but at $46,406. That would be the threshold rate that the middle income level would hit at.

Let me have a look at what the Government is adjusting the threshold to. It is $40,324. Let me just repeat that. The adjustment for inflation is $46,406, and $40,324 is the adjustment made by the Government. Lo and behold, though, it will not happen until 2008.

The Reserve Bank governor said a very interesting thing today. He said that a material fiscal impulse on the economy happens at 1 percent. The entire tax package from the Government, generous as it is—the chewing gum Budget, if you like—is 67c in 2008. Those people who are earning $38,000 or less will get 67c extra per week. That will cost $360 million. We have a $150 billion economy. I do not have a calculator with me, but I am sure I can do the maths. I think that $360 million is a third of a percent of GDP. I happen to know that, off the top of my head.

Here we go. We have $2.4 billion of available cash, so we have no problems with cash. While we are at it, we have another $700 million that the Government is giving the Reserve Bank in actual cash, and another $724 million whereby the Government is acting as the banker for a loan to the student loan scheme that is going to be repaid to it. That is a capital item, according to this Budget. So the Government has $4 billion, give or take the odd calculation, of available cash, and Michael Cullen had the audacity to come down to the House, read out a Budget, and expect people to be grateful that they will get 67c extra in 3 years’ time. He also had the audacity to argue he could not afford it. If he cannot afford it with $4 billion of available cash, then he will never be able to afford it.

Then Dr Cullen said that it will have an impact on monetary policy. No, not according to the Reserve Bank governor. But Dr Cullen does not want to listen to market experts like Brendan O’Donovan. Dr Cullen does not want to listen to other bank economists who are market experts. Now he does not want to listen to the Reserve Bank governor, because the governor is telling him that the way it is would not have any impact at all.

It goes on and on. This Government is so out of tune with the public of New Zealand. It is no wonder that those members over there are feeling so glum. I noticed them this morning at the select committee. I wandered in. I was feeling pretty chipper. I had been up at Ōtaki, winning a lot more votes than Nathan Guy. I was really chipper. I had been to a chicken factory. That is not a place the media would normally turn up at, but I had so many media behind me it was unbelievable. Every local paper was there—the Manawatu Standard and the Ōtaki Mail. I had to do a radio interview afterwards. The media were dying for material from the National Party, because they are sick of the member for Otaki. That member is gone, and he had such a bright future.

It is no wonder the Labour members were so sour in the select committee. They were the bunch of people who Dr Cullen relied on to tell him that the Budget would be OK. He said to the chief of the Finance and Expenditure Committee: “I’m only going to give them 67c, champ, in 3 years’ time. Will that be OK?”. The chief said: “Three bags full, Dr Cullen. Of course, you’re right. They should be grateful to get 67c. They should thank you, Dr Cullen”. And they will! They will thank him so much that they will vote in National in about 3 months’ time.

National will not be supporting this taxation bill because it robs the people of New Zealand of what they deserve. We will be very happy for Michael Cullen to write to the chamber of commerce. We are opposed to this bill.

CLAYTON COSGROVE (Labour—Waimakariri): I have to say that from time to time I have praised that member in Parliament for his motivation for being here. But I have to say that after that display, the rubber has now hit the road. I thank Mr Key for verifying the facts for us. He is the Opposition spokesperson on finance, who gave a 10-minute speech, talked about everything else but the bill, and bleated on—as does his leader, Dr Brash—about tax cuts. He then told every small business and the commercial sector that National will vote against $1.5 billion worth of tax cuts to small to medium sized businesses.

It was very apt that that member went to a chicken factory, given that we heard on the Sunday programme that he had chopped 5,000 or 6,000 staff and then had the audacity to look down the barrel of a camera and say: “I never cried.” [Interruption] He says again that he did not cry. He does not give a rat’s—I will not continue that sentence. It was very apt that the member went to a chicken factory, because Opposition members do act like a lot of headless chooks most of the time. Today he has told the commercial sector that the fringe benefit tax reductions, depreciation, research and development, payroll agents, and the alignment of provisional tax with GST is all off, under a National Government. Under a National Government the $1.5 billion worth of tax reductions for the commercial sector, which in fairness the sector has called for, for some time, will be gone—not by lunchtime, but gone today.

That is a really interesting message, especially when we look at the payroll agent issue. I have been around. I know that John Key is a big businessman. Well, 85 to 90 percent of the jobs in this economy in this country are created by small to medium sized enterprises, with five people or fewer. If we got out of the chicken factory and went around to the small to medium sized enterprises, what would they tell us? I used to be a small-business owner many moons ago and I am thankful for that experience. It taught me that if we do not work, we do not eat. If we do not get out of bed to run the business, we do not get a pay check on Thursday. Unlike that member, when he was with whoever he was with—PricewaterhouseCoopers, or whichever foreign exchange dealer it was—he could drink his Moet champagne and still get a cheque for his dividend on Thursday. If guys in small businesses, with five employees or fewer, take their eye off the ball, they lose.

If we asked most people in this country why they thought businesses go broke, they would say it is because they do not make any money. That is not true. Most businesses, and I remember this, go bust because they cannot manage their cash flow. So what does this bill intend to do? It intends to drop compliance costs. The payroll agent one is very, very interesting. We say that a business with five employees can hire a payroll agent, and the State will pay. The business just writes a cheque for child support, for the student loan, for all those bits and pieces, and the payroll agent deals with the paperwork. This legislation says to the small-business person that he or she will get to spend more time behind the counter growing his or her business and less time behind the desk—or less time that his or her partner, normally, has to spend behind the desk—doing the paperwork, the wage bill, the compliance costs. But oh no, the big fellow over there is the man who does not cry when he sacks people; the man who says that there will be no job losses under a National Government, that he will not be cutting expenditure—that he will not be cutting expenditure on health or education. Yeah, right!

On the next Tui billboard will John Key have a heart? Yeah, right! He is the man who does not cry! He has told every small business today that the rug is being pulled out from under them. He says that he wants tax cuts all right, but he wants them for the ones who earn the most. If Mr Key visited small businesses he would find that a lot of them are not rich, a lot of them are middle earners. A lot of small-business owners of engineering firms in my electorate are working their guts out every day to ensure that their cash flow is met to grow their businesses. They say that they want a break. But will John Key’s tax cut package do anything for the small to medium sized firms in my electorate or around the country? They will do zip; nothing. Let us refresh ourselves about that.

John Key is offering to get rid of this bill, which aligns provisional tax with GST. This is very important. Why? Most small businesses, when they are trying to gather the money for their provisional tax, of course, have two strategies for the three times a year that it is due. One is that they squirrel it away in the bank every week and it just becomes dead money that they are too scared to use, because they know that the big mountain of provisional tax is on the way. Most of them run around in desperation the week before provisional tax is due, trying to scrape up the money to pay the bill. The big peak and the big trough of provisional tax hammers the cash flow of small to medium sized enterprises. So what do we say? We say, very simply, let us align provisional tax with GST payments and let us flatten out the peaks and troughs so that small-business owners can manage their cash flow better.

What is wrong with that? I would have thought that Mr Key, the commercial genius, who got a damn good education from Burnside High School, would say that that is not a bad idea and would support it. But oh no, he has forgotten his roots. When was the last time he walked into a small business, or ran a small business? I know that he is a corporate high-flyer, and I respect that. He is a man of talent. But he should get out of his ivory tower and visit the odd engineering firm, the odd small to medium sized enterprise, and the small businesses that are the lifeblood of our economy. I do not mean the foreign exchange traders. Ninety-five percent of jobs are provided by small to medium sized enterprises. He should talk to them, because I have. They like the idea that we will align provisional tax with GST. They like the idea that somebody else can take over the burden of paying their staff. They just write the cheque. Somebody else can do the accident compensation, childcare, student loan, and PAYE, so that they can get back behind the counter and grow their business. I think they are good moves. They like the fact that we are moving on fringe benefit tax, that we are moving on research and development, and that we are moving on depreciation. But what we know today is that small to medium sized business has been sold out by John Key to the tune of $1.5 billion, but those on his salary, or Dr Brash’s salary, or my salary will get a nice Christmas present—so he says! For the likes of us it will be 300 or 400 bucks more a week. But what will people on $32,000 or $38,000 a year—like many small-business people and sole traders—get out of Mr Key? We will wait and see! They will get absolutely zero.

As I go around my electorate, I relish the debate over tax in respect of small to medium sized enterprises. I worked in that sector. I owned a small to medium sized enterprise, a very small one, but it taught me this: “You don’t work, you don’t eat.”; and: “If you don’t manage your cash flow, if you take your eye off the ball, if you get buried in the paperwork, then your business suffers.” So this bill attempts to provide some assistance to that commercial sector—indeed, some of the ideas came out of the sector. I will relish seeing Mr Key stand up and reinforce that he will provide a tax cut for the wealthy. But what will he do for the job creators of 95 percent of our jobs? Will it be $1.5 billion worth of tax cuts? No, those people are out the door; they are not going to be supported.

I would like to hear him say why he will not support aligning provisional tax with GST. I would like to hear why he will not support the subsidising of payroll agents for small to medium sized enterprises. Because we have not heard a lot from Mr Key, since the Budget. He said to the Governor of the Reserve Bank today, at the Finance and Expenditure Committee, that National would provide an alternative budget pre-election—he nods, so they will—and a tax cut policy. I wait to see that! Will he put up his tax policy to Treasury’s independent consultants, which he voted for originally, when the select committee put the proposition up, to cost the tax policies of all political parties? He voted for it because he was asleep, but Don Brash kicked him and he came back and protested. The Greens have put up their policy, and even ACT has put up its policy to be costed; New Zealand First did not, and that should tell us something; United Future did, and, of course, ours is out there as a Government.

Why will a man who is so proud of his alternative budget and his tax policy not put it up to be costed? I tell the House: there is a secret in there! It is a ticking time bomb for every small business and every person who is not on the salary of John Key and does not have his dividend stream coming in the back door. They get absolutely nothing. So when he puts up his alternative budget, and when we finally see the unveiling of this wonderful tax policy that he is going to come out with, but we will all be holding our breath, as most New Zealanders will, I challenge him, like the other parties of the Finance and Expenditure Committee, to put it up to the independent financial consultants for a costing. They can tell us, even if he will not—“Jack the Axe”, the man who does not cry—which sectors of our community and our society are going to have the axe put into them. Because he will not tell us, but the people of New Zealand will judge. I will join him on the stump any time to debate that one.

CRAIG McNAIR (NZ First): New Zealand First supports the referral of the Taxation (Deprecation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill to the Finance and Expenditure Committee. This bill contains a lot of material, and there will be much to talk about during the first reading debate and during its consideration by the select committee. I look forward to submissions from individual New Zealanders and companies and to hearing what they have to say. I know that many enhancements will be suggested and could be included in the bill. The bill is a very, very small step in the right direction.

We have heard both the chairman of the Finance and Expenditure Committee and the Minister of Finance rant and rave about how the world will change because of this bill and about how people will have more money in their pockets. I say to the House, and those two members in particular, that we have a very long way to go. Previous speakers have talked specifically about Part 1, “Annual rates of income tax for 2005-06 tax year”, which is the provision that sets the annual income tax rates that will apply for the 2005-06 tax year. It will also apply, we know now, if the Labour Government still has its way, which we know it will not, after the election—

Rod Donald: Aren’t you going to help them?

CRAIG McNAIR: Oh, well, we might.

Rod Donald: Aren’t you going to help them?

CRAIG McNAIR: We might. We are not saying.

Rod Donald: You just made a commitment in the House.

CRAIG McNAIR: No, I did not make a commitment.

Hon Member: That’s a bit untidy.

CRAIG McNAIR: Well, it might be a little bit untidy but I can clear it up pretty quickly. New Zealand First has always stated that it will wait until the voters have decided. So Labour might have to deal with us. Somebody is going to have to deal with us, and that is exactly what I meant. Mr Donald might try to twist what I say, but the fact is—and the people of New Zealand are starting to see it in the polls—that one of the parties in this House is going to have to deal with New Zealand First. That is what I meant. After the election New Zealand First will have a big role to play regarding this bill, whether or not Mr Donald likes it—and we know he does not like it. He is starting to come out with some scurrilous comments about my leader and about my party, which have backfired on him.

Members of the Green Party all over New Zealand are saying that the Green Party has lost its way. Even one of its own members said at their conference—and it was reported in the newspaper—that the Green Party has lost its way on environmental issues. They know it. They know they will not have any part to play in this tax bill after the election.

Rod Donald: So there!

CRAIG McNAIR: So there—that is right. I come back to the income tax rates in Part 1. If this Government is going to keep overtaxing New Zealanders, then it should at least increase spending where it counts—on social services, the elderly, and protecting our borders. This Government fails on all those counts. While maintaining income tax levels, this Government will spend millions keeping ethnic communities happy, but it will not spend one cent raising superannuation for struggling New Zealand senior citizens.

The Government delivered a Budget 3 weeks ago, and this bill, which is a development of that Budget, could have imparted vision and injected enthusiasm, excitement, and gravitas into the New Zealand economy. But this bill has done none of that. It has no vision as far as income tax is concerned. It has no vision in relation to tax incentives for exporters, or the allocation of tax deductions for research and development expenditure. It makes little tinkerings, but it has no vision. That is what this bill stands for—no vision. If we were debating Part 1 during the Committee stage, I would suggest that the title of the bill should be the “No Vision Tax Bill”.

Jill Pettis: Shush! I was beginning to think we were in church.

CRAIG McNAIR: That is what it should be, I say to the member for Whanganui. What do we have in this tax bill? There is no vision, but in 3 years the average, hard-working Kiwi will get a tax cut that could buy a stick of gum. That is all Kiwis get—one piece of gum. A stick of gum in 3 years is the Labour Government’s vision, as far as tax is concerned. That is the Labour Government’s vision for this economy—one stick of gum for an average Kiwi in 3 years. Quite frankly, we could say that that is disgraceful. We could say it is heartless. I prefer to say it is heartless, because that is simply what it is.

As far as vision, injecting a bit of excitement into the economy, and, among other things, reducing our current account deficit, are concerned, this Government could have been more creative. It could have been a bit more creative about income tax and superannuation. It could have given money back to average New Zealanders who want to save for their future. Average New Zealanders want to save for their future, but this Government has said that it does not really want to help them. It will give them $5,000 over 10 years, but, with high immigration, house prices will continue to increase by tens of thousands and that piddly little amount will be a drop in the bucket. The Government is giving them a drop in the bucket—absolutely nothing.

What also surprises me when we talk about tax policy is United Future’s tax policy, which was released, I think, last week. The United Future spokesperson on finance, Gordon Copeland, talked about how that party would fund its tax cuts by selling off 40 percent of some of our strategic State-owned enterprises.

Rod Donald: Dumb policy.

CRAIG McNAIR: What a stupid policy! Mr Donald and I do not agree on a lot, but we do agree on that.

The United Future party is trying to position itself in the centre. It says, though, that it will join National and Labour in the hall of shame and sell off State-owned assets. It wants to sell our assets to foreign enterprises, whereby the money goes straight over our borders and overseas. What do Kiwis see of it? They do not see anything of it—nothing at all! Telecom, which was sold for $4.2 billion, has made $7.2 billion. What have New Zealanders seen of that money? They have seen absolutely diddly-squat. The mates of the Labour Party and the National Party have seen a heck of a lot more of it than the average Kiwi has. New Zealand First was astonished at United Future’s right-wing, “loony tunes”, crazy tax policy. It absolutely baffled me, but it will be the reason that United Future will do very badly in the polls.

ROD DONALD (Co-Leader—Green): The Green Party will vote for this bill to go to the select committee, but it unless it is amended we may not support it beyond that. I want to make it clear, of course, that we support measures to reduce compliance costs for small and medium enterprises, such as lining up fringe benefit tax with provisional tax and providing a payroll agent. Those policies are just plain common sense.

Of course, the Green Party supports the introduction of a carbon tax. We have argued for it for at least the last 9 years, and certainly for the 9 years that we have been in Parliament. But the tax should be brought forward to 2006, and we should not wait until 2007. Its introduction should coincide with income tax cuts, especially for those on low incomes, to enable them to meet the $4 a week extra cost they will face from increased power and fuel bills. Kiwi battlers need tax relief in order to pay for the increase in their living costs through the carbon tax, and it would be even better if they could receive more than $4 a week—certainly, more than 67c a week in 2008—so that they could invest their tax cut in energy-efficient light bulbs, cylinder wraps, and insulation to reduce their cost of living and to make their homes warm and healthy.

The introduction of an excise tax on diesel should also coincide with the carbon tax. Diesel users, especially truck operators, are not paying their fair share of the total costs of road transport, let alone of the cost of building and maintaining roads. Those users are not contributing to the environmental and health costs that the country’s diesel fleet is imposing on New Zealand. Taken together, the carbon tax and a diesel excise tax would more than pay for the first year of the Green Party’s $15 per week across-the-board tax cut, and still leave some money over to help businesses make the necessary adjustments to cope with the carbon tax, which are contained in this bill. Other eco-taxes would fund the second and third years of our plan to introduce a tax-free threshold of $5,000 of income.

The Green Party is committed to cutting tax on work and enterprise and introducing taxes on waste and pollution. It is time for the Government to modernise the tax system, so that it not only generates revenue to pay for Government services but also encourages good behaviour and discourages bad. But we do not support all the goodies the Government has put in this bill to sweeten up businesses. The Green Party’s first commitment is to help those who are most in need, particularly low-income families with children. Those who are most in need would not be the only beneficiaries of our policies. Inevitably businesses would also benefit, because people who are struggling to make ends meet will spend, rather than save, any extra income they get, in order to survive. So the business community would do very well out of our income tax cuts, too.

KENNETH WANG (ACT): I stand on behalf of ACT New Zealand to speak on the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill. I would like to make some comments on the condition of the tax system in New Zealand overall, as well as to look at the specific bill.

As the Labour member just mentioned, the aim of this bill is said to be to reduce compliance costs and simplify the process, particularly to benefit small businesses in New Zealand. I seriously doubt that that will happen. Specifically, the bill deals with provisional tax calculation and the payments system, tax depreciation rules, and streamlining the taxation of fringe benefits. I seriously doubt that benefits resulting from the bill will really be delivered to businesses and to the people working hard in the front line supporting our economy.

I would like to draw members’ attention to a report in the National Business Review at the end of April, just before the 2005 Budget was released, that research and polling showed that 63 percent of New Zealanders—an overwhelming majority—wanted tax cuts. [Interruption] That is quite right. Unfortunately the Minister of Finance ignored that overwhelming wish of New Zealanders and delivered nothing to satisfy it. Everyone knows what he delivered: a pack of chewing gum.

Let me come to the bill. Regarding provisional tax, the current situation for business owners, particularly small-business owners, is that they suddenly have to pay a huge amount upfront in provisional tax. It looks as if this will be a lot more affordable when it is divided more frequently and streamlined with their GST calculations. But one must ask from day one, from the start, why they have to pay so much tax. After all, the current tax rate of 33 percent is the highest of any OECD country.

The ACT party promotes a tax rate of 25c in the dollar applying to all businesses, no matter whether they are big or small. That, for a start, would simplify the system and reduce a lot of compliance costs, not to mention that it would also reduce the tax burden.

Another thing the bill talks about is tax depreciation rules. Increasing the low-value asset threshold will assist some investors to claim expenses costs more quickly and easily, and to get their investment back better. But, overall, the cost of complying with those regulations is still high—let alone the cost of complying with fringe benefit tax.

Fringe benefit tax was introduced in 1985, and I can bear witness to the difficulty of simply trying to comply with fringe benefit tax regulations. I challenge any member of this House to tell me all the details of those regulations. If any members can tell me all the regulations that are in place today, I will give them a prize, but I doubt if anyone knows how much burden the current fringe benefit tax system places on business owners.

The bill itself does not do anything positive to help our business owners to get on with their businesses. It just shifts the burden from one corner to another.

ACT strongly opposes the bill because it does not address the problem. We strongly draw the House’s attention to the fact that ACT has constantly promoted a flat tax of 25c in the dollar for all businesses. We would heavily reduce the current compliance costs in place for all New Zealand businesses.

GORDON COPELAND (United Future): One of the things that Part 1 of the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill does is to fix the annual rate of income tax. We do that every year in these kinds of bills, which go under different names. Every year since the year 2000 we have used the same wording, which is that the tax brackets will remain unchanged. They have remained unchanged since this Government came into power in 1999 and lifted the top tax rate from 33c to 39c in the dollar, cutting it in at $60,000 per annum. Members will remember that when we debated the equivalent bill last year, I tabled an amendment during the Committee stage and said that it was time to adjust those tax brackets for the 13 percent inflation that had occurred since 2000. My amendment, incidentally, would have adjusted them with effect from 1 April 2005. In other words, they would be applying right now as we speak, which would have made those 63.7 percent of New Zealanders who want to see tax cuts, and whom Kenneth Wang referred to, very happy indeed.

I can tell the House today that if United Future has a say in the next Government, we will be shifting the tax brackets. In other words, depending on what happens after the election, one should not assume that this clause will go through as it stands, although we will be supporting the first reading of the bill. Our policy is that on 1 April 2006—not 1 April 2008—we will shift the tax brackets by $5,000, from $38,000 to $43,000, and from $60,000 to $65,000. Why? Because New Zealanders want it, it is fair, and it is just. By contrast, of course, as every person without exception in the country now knows, the Minister of Finance, Dr Michael Cullen, decided wisely to pick up on bracket creep in order to bring to an end the rort of bracket creep that has been going on in this country since, almost, time immemorial. It certainly hit the headlines when Rob Muldoon allowed it to continue, even though inflation was in double digits. Michael Cullen decided to break the logjam, and I compliment him on that. Then, taking everyone’s breath away, he said that it would not take effect until 2008, and then for 6.12 percent only. It saddens me that the Minister of Finance, having broken the logjam and created a piece of history by being the first Minister of Finance in the history of this country to admit it was time to bring fiscal drag to an end, spoilt it by making it far too little, far too late.

There are some other good things about the bill that we willingly support. The first one relates to the changes to be made for depreciation rules. The principle of depreciation is that the cost of an asset should be matched against the revenue it produces across its useful life for tax purposes. This new policy does that, and does it by way of realignment, and therefore it is something I wholeheartedly support. However, a little increase is buried away in the low-value asset threshold. That is the threshold below which one does not actually have to record an asset in the books for depreciation. Being all heart, the Government has decided, after many, many years—I think about 25 years—to increase that amount from 200 bucks to 500 bucks. Big deal! United Future would increase that amount to at least $1,000, if not $1,500.

The bill also introduces a new tax simplification system for small and medium sized businesses. They will now pay their provisional tax in tandem with their GST, and it will therefore fluctuate with the seasons of the year. I know that will be very, very welcome to many small businesses, as Clayton Cosgrove eloquently outlined, and, in particular, by those who have a seasonal cash flow, such as farmers, real estate agents, and many other businesses that go with the seasons. I welcome that, and I am sure small to medium sized enterprises will welcome it very much. But I say to the House that, by contrast, United Future’s policy is to give a tax holiday to new small-business start-ups for the first 2 years of their life, for the very simple and sound reason that many new business start-ups in New Zealand do not survive the first 2 years because of having to pay provisional tax. They simply do not have the cash flow to both grow their business and pay tax at one and the same time. We would give them a 2-year tax holiday so that we could see more new businesses start up in this country, giving our economy a greater dynamism and helping it to grow it.

Likewise, our policy would be to pay a 1 percent commission to all of those who collect GST for the Government on the first $200,000 of GST collected and paid to the Government every year. It is really quite outrageous, when one thinks about it. The collection and payment of GST by a business does absolutely nothing whatever for that business. Businesses are, in reality, unpaid agents of the Crown for collecting taxation. Even in the days of the Roman Empire, tax collection agents got a commission. I think it is an idea whose time has come, and it will be part of United Future’s policy, as well.

I welcome the changes relating to fringe benefit tax. I think that overall they will be good for business and be very worthwhile. Something that has not been mentioned by any of the speakers in the debate so far is the new information reporting requirements for foreign trusts. I think it will come as an absolute surprise to the great majority of Kiwis to know that we have foreign trusts registered in this country that handle billions—not millions—of dollars a year. In fact, we are one of the international havens for foreign trusts. Looking after the funds of foreigners who choose to invest their funds in trusts registered here is really what keeps a lot of the lawyers and accountants in our country going. They register in New Zealand because they see this country as being a good, safe haven. So it is something that really benefits our economy immensely. But those trusts will now have to start recording and keeping information, which can, if need be, be accessed by the Inland Revenue Department, and that is a big change. We need to have that provision because of the opportunities for tax avoidance. We also need it as part of the international war on terrorism, to make sure that funds flowing through any country that are owned by foreigners are not being laundered or used to fund terrorism. I think that that is also a good move.

The Government has decided to bring in new rules about the “selling” and “buying” of assets—securities lending transactions, they are called. Again, that is a good anti-avoidance thing to do. Also, the bill increases the child rebate—the point at which the child has to start paying tax. Let me inform the House today that that would be completely unnecessary if United Future were to be in Government, or working with a party in Government, because our policy is very straightforward. It is that we would exempt from tax, entirely, the first $3,000 earned by any New Zealander. Kids would not have to pay tax on the first $3,000 they earn, even if the earnings come from interest or dividends. Students would not have to pay tax on the money they earn in order to try to subsidise their way through university—up to the first $3,000—either. In fact, every single taxpayer in New Zealand would not have to pay one cent of tax on the first $3,000 they earned. That is a very sensible policy, and it should be adopted. In that respect, the difference between ourselves and the Greens, as I have mentioned, is that we would link that to an adjustment to the tax brackets at the high levels. We would also have income-splitting for couples raising kids, and implement a lot of other very good common-sense ideas that would reduce the tax burden on Kiwis by about $2.5 billion—a very worthwhile objective.

Let me briefly say that the rant we heard from New Zealand First in terms of the possible sell-down of 40 percent of State-owned enterprises to New Zealand investors was no more than that—a lot of hot air, completely lacking in any intellectual rigour, analysis, or substance. But I have to say that that does not surprise me at all, because it is probably a description of most of the policy initiatives that come from that party, led by “Winston Le Pen”.

MARK PECK (Labour—Invercargill): I can assure members opposite that this is not a valedictory speech; that is still to come.

Hon Paul Swain: When is that?

MARK PECK: Well, that is up to the Prime Minister, really. I am fascinated to learn that the National Party is going to oppose this bill. That surprises me enormously, because the package of reform in this bill will return to taxpayers, and in particular to the business community, $1.5 billion. Let us just put that figure out there again—$1.5 billion will be returned to New Zealand taxpayers. When we have a tax-cut debate in Parliament these days, and when we have a Government that is prepared to make changes in the bill to distribute back to taxpayers that amount of money now, then it beggars belief that an Opposition party cannot see past its own party political whims—its desire to sloganise the debate—in order to do something to help the business community in this country.

So what will the Opposition vote against? I see that the member for Clutha-Southland is in the Chamber. One of the things Mr English will vote against today in this first reading stage is the set of rules that will clarify the tax deductibility of re-grassing and fertilising costs associated with farm conversions. He will actually scab on his own farmers. That is what he will do by not supporting this legislation.

Major changes are not being made by the legislation, but incrementally the changes all add up, and they will provide a regime in which business in this country will get significant relief.

I want to go through some of the changes, because there are some interesting issues there. We are going to do some very simple things to reduce compliance costs—very simple things indeed in terms of depreciation of assets, and things of that ilk, which will take the sum of the depreciable assets from $200 to $500. That does not sound like a lot of money, but there is a cost to the revenue as a result of that, and that cost is directly passed on to the business community.

We will change the number of tax payment dates for small businesses, and will reduce their compliance costs along the way. Why would a National Opposition want to vote against doing that? To me, that does not seem to make any particular sense, at all.

We will introduce a new subsidy designed to encourage small business to take advantage of payroll agents. What is wrong with that? What is wrong with providing some assistance for small businesses to be able to employ someone to take that particular cost away from them, that obligation away from them, so that they can get on with what they do best—which is to run their businesses?

The one thing that is becoming clear about small businesses in New Zealand at this point is that they are quite dynamic. They are working hard, and the issue they have now is not about survival; it is about getting the necessary staff to be able to do the work that needs to be done. That is the issue now, so if they are able to relieve themselves of some of the administrative burden by taking on—even in the area of payroll—someone to do that work, then that is a good thing. It provides business with the opportunity of getting on and doing some things that need to be done.

We are doing some work on the fringe benefit tax. It is work that has been overdue for some time, and it will provide a direct and tangible benefit to small business in this country.

The National Party is going to vote against all of this. It just beggars description. I just cannot believe that the National Opposition does not want to support business. But I suppose there is nothing new in that. We on this side of the House when in Opposition had been calling on them in Government for a long period of time to do something about the compliance rates. I see Pansy Wong sitting opposite—we do not hear much from her. When Pansy Wong was in Government she chaired the Commerce Committee that looked at compliance costs, and Paul Swain was on that committee. I actually became part of that committee at the end as well. Not one thing that Pansy Wong worked on in that select committee was ever picked up by her Government—not one thing, not a brass razoo, not a comma, not a dot on an “i”, nothing. Not one bit of the work that she did was ever picked up.

Frankly, the National Party does not care about small business. It promoted John Key—a person who visited a chicken factory and says he has no compunction about sacking people. He is the silent assassin. He is the man who will grin as he puts the knife across one’s throat. That man is not the nice, fluffy man that he is painted to be. He is, without doubt, one of the most ruthless international finance traders in this country. That is where he comes from. If anybody thinks that his intentions in the finance area will do good things for the people of New Zealand through tax cuts—think again!

I have seen the odd letter or two since John Key has been on television talking about tax—and by the way, he and Don Brash cannot agree. They cannot agree at all about the issue of tax cuts. Don Brash says maybe will have a mini-Budget before Christmas. John Key says: “No, no, 9 years.” Any workers who think there will be any change for them to have a tax cut as John Key looks at it, had better think again.

We are already delivering millions of dollars to middle and low income families right now through targeted tax changes—right this very minute. What would workers hope to get under about a $1.5 billion tax cut? National is talking about a $1.5 billion tax cut, which is not a lot of money when one distributes it across the tax base. Workers on the medium income might get about 6 bucks a week if they are lucky. Well, whoopee, strike me dead! What will they cut along the way? Well, if people vote for tax cuts, they should vote to pay for their own policeman. They should vote to pay for their own nurse. They should vote to pay for their own teacher. They should look at having more tolls on the roads, because there will be no roading packages. They should vote for their own prison officers, and they probably should put fences up around their properties. National members cannot, in any way at all, provide the sorts of tax cuts they are talking about, and maintain services. It simply cannot be done.

It was fascinating to see them troop into the House after their caucus on Tuesday, because they learnt for the first time that the numbers do not add up. When they talk about providing services and making tax cuts, they are talking so much cant. We can change some of their billboards. We can change them overnight. In talking about health: with Labour, yes, one gets health; with National, one gets cuts. In talking about education: with Labour, one gets education; with National, one gets cuts. In talking about roads: with Labour, one gets roading; with National, one gets cuts. That is the debate. To think that at this very small level now—the issue of dealing with this particular bill that brings in some employer-friendly provisions and some farmer-friendly provisions that a National Opposition will vote against—they will give out $1.5 billion to that sector of our community, I cannot believe it. I think National must have had a brainstorm, because it just beggars belief.

PANSY WONG (National): That sounds like a party that is readying to go into Opposition mode. It is obsessed with the National Party. Mark Peck devoted three-quarters of his speech to talking about National, and I thank him for that.

Before I start getting into this bill, I wish to reflect on the title. It is known as the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill. But what happened to annual income tax rates? The Hon Dr Michael Cullen, the Minister of Finance, who has that title for about 3 more months, is obviously embarrassed to talk about this bill. In fact, it is about confirming the high income tax rate. He is ashamed to even include that in the title.

Anybody picking up this bill will miss Part 1 in total. The whole of Part 1 is devoted to reaffirming the high income tax rate. This is about the ninth Budget debate we have had on a taxation bill since I have been in this Parliament, and it is the first time there has been a confirmation of income tax rates. But I am sure it is also the first time that that term has been totally omitted from the bill’s title.

I think it is very clear that the public has sent a message to Labour: they are wholeheartedly disgusted with the arrogant minority Labour Government that actually thinks a 67c tax cut in 3 years’ time is what hard-working New Zealanders are entitled to. So National is opposing this bill, because we are totally committed to cutting the tax that has been imposed on hard-working New Zealanders through both income tax and business tax.

I want to pick up on some of the statements made by Labour members about how friendly this bill is for businesses, particularly small to medium sized businesses, in terms of compliance costs. One example is the subsidy for payroll agents. Clayton Cosgrove claimed that he has been a small-business owner, although we do not know in what form or for how long. However, this measure shows that he does not understand anything about being a small-business owner.

Small businesses do not want a subsidy. They do not want to have to prepare their data to submit to payroll agents in order to meet compliance requirements; they simply want the Government to reduce compliance costs. That single initiative by the Labour Government, supposedly to help small-business agents, has resulted in about four or five pages of legislation that spells out, for example, who will qualify to be listed by the Inland Revenue Department as a payroll agent, entitled to service businesses that claim a subsidy.

For a start, I have a warning for small-business people: they should watch out for the name cards of those so-called listed PAYE intermediaries. Three pages of the legislation actually outline who qualifies to be agents, but small businesses must watch out. This is really scary stuff, because the bill also spells out the consequences when employers and listed PAYE intermediaries terminate their arrangements with each other. There are also very strict criteria stating that both the agent and the business have to claim those subsidies within 30 days. I want to know whether business owners would be penalised if the agents made mistakes. Members should think about that.

This is a typical Labour Government initiative. When Labour members say they want to reduce a compliance cost, they introduce a whole range of compliance requirements for businesses, in order for them to qualify to receive a subsidy—that is, they introduce a whole raft of more compliance costs.

The other matter I want to introduce into this debate is the change to depreciation rates. In general, being an accountant, I know that depreciation rates are introduced to reflect—[Interruption] A fellow accountant, as well. In general, a depreciation rate is meant to reflect the economic life of plant and equipment in generating assessable income. So I welcome the fact that the Inland Revenue Department is revising its depreciation rates, but I am slightly concerned that Labour members are saying that they know better how to influence business people’s decisions. Instead of saying that depreciation rates are meant to be objective, and to reflect the economic life of the assets used in deriving assessable income, the Labour Government is high-handedly moving to tell people what types of investment decisions they have to make.

During the bill’s time in the select committee I will be looking forward to the Inland Revenue Department demonstrating to us what research it has done, because it has decided to introduce a set of depreciation rates that will increase the economic life of buildings, thereby discouraging so-called rental income. I am looking forward to campaigning in Clayton Cosgrove’s electorate and telling people how he dislikes New Zealanders who happen to earn their money and purchase a second property for investment, for saving, or for whatever purpose. He is going to make sure that those people will pay higher taxes. We want to know why Labour is hell-bent on penalising people who happen to be owners of properties and may rent them out to manufacturers, etc. I shall give that member an example: owning property does have its purpose as well—manufacturing has to be carried out in buildings. So this bill is not entirely beneficial to businesses.

National will also make sure that a lot of hard questions are asked of the Government, so that it will have to explain to hard-working New Zealanders why the tax rates have not been adjusted, and why it will take 3 years to bring in a 67c tax cut.

I also want to share a piece of information that will be of interest to all small-business people. When looking at the Budget, I found that in respect of the Inland Revenue Department the personnel cost for tax collecting is going up by $33 million. There will be $33 million more for tax collecting, but the police will have an increase of only $41 million. My suspicion is that this Labour Government is more interested in ensuring that hard-working New Zealanders are subject to more scrutiny by tax collectors than in ensuring they get the protection they are crying out for. This Labour Government has seen fit to allocate more in the Budget for tax collecting, but I want to know why hard-working small-business owners applying to have a subsidy under the payroll tax are actually going to be given the run-around again.

DAVID PARKER (Labour—Otago): That speech was a sad effort, really. The reality is that this bill improves depreciation deductibility, changes provisions relating to when one has to pay one’s income tax, and reduces fringe benefit tax, as well as doing a number of other things. It reduces the taxes of businesses by $1.5 billion.

We have heard members on the other side of the House assert that members on this side do not understand business.

Pansy Wong: It’s true.

DAVID PARKER: I tell that member that I probably have more business experience than most members of her own party. I have big-business experience and I have small-business experience. My parents were small-business people. My grandparents on both sides were small-business people. I and many other members of the Labour Party have business experience, I understand our tax system, and I know that this tax bill is a good bill.

Most people in business understand that New Zealand’s business tax regime gives dividend imputation credits for every dollar of company tax that is paid. People credit that against their personal income tax. Overseas-based companies actually benefit from tax cuts in a way that does not benefit New Zealand taxpayers, because the extra tax cut given to an overseas company flows from New Zealand to that overseas jurisdiction. It does not stay in New Zealand, whereas the benefit of tax cuts at the company tax level to New Zealanders who own companies is merely one of timing, and it does not usually alter their overall tax bill when they come to pay their personal tax.

I turn now to some of the individual provisions in the bill. We have followed the recommendation of the business compliance cost advisory panel. It identified that one issue affecting small businesses is that it is quite onerous for them to complete PAYE returns. We are helping them by taking that cost from small business and turning it into a Government cost, which is what it ought to be—after all, those businesses are collecting and paying PAYE for their employees on behalf of the taxpayer, and they should not have to bear the cost of doing so. We are taking that big cost from small businesses.

We are also improving depreciation rules. At present, if an asset is worth less than $200, people do not have to depreciate it; they just write it off in the year that they buy it rather than having to put it through the compliance costs associated with depreciating it over time. We are changing that threshold from $200 to $500 so that assets up to $500 can be written off in the year they are purchased rather than have their value depreciate over time. That, again, is quite a costly measure, and this move is beneficial to business.

What else is the Government doing? Businesses sometimes have difficulty matching their income tax payments with their cash flow. One of the issues that has been raised with us is that if business people have to make their provisional tax payments three times a year, the payments do not actually coincide with the cash flow from the business. We are changing that. We are making that better by allowing people a choice. We are not forcing it on them; we are just giving them the choice. If they want to make their tax payments coincide with their GST returns and their GST return payments, they can now do so, so that their tax payments will reflect their cash flow and, therefore, their ability to pay their taxes, rather than be an artificial “one third, one third, one third” provisional tax payment.

What else are we doing? Fringe benefit tax rates are being changed. For years the National Government did not move on fringe benefit tax rates. We have the absurd situation where, if people own a car that they purchased years ago for a high amount, they pay fringe benefit tax on that high amount years later after the car has depreciated in value. At present, people have to pay fringe benefit tax on the purchase price of the car, rather than on the value of the car at the later date. We are changing that. It is another very sensible but quite expensive thing to do. We are saying that if a car bought 10 years ago cost $30,000 but its value is now $10,000, we will not charge fringe benefit tax on the $30,000 purchase price; we will charge fringe benefit tax on the decreased value of $10,000. So, in that example, fringe benefit tax would go down by two-thirds. That is not an unusual circumstance.

This is very good legislation. It decreases the tax burden of businesses by $1.5 billion, the benefits of which will be received in New Zealand and not exported overseas.

What are National members doing? They are voting against the bill because, of course, they have their very expensive tax bribe to offer later in the year, predicated on the assumption that this Government spends money unwisely. The reality, however, is that our core Government spending at present is around 30 percent of GDP, which is less than the 33 percent of GDP spent by the National Government on its core Government spending when it was in office. I am very happy to support the first reading of this bill.

Hon BILL ENGLISH (National—Clutha-Southland): I am pleased that National is opposing this legislation. Some provisions in it have some merit. I see, in particular, the changes in provisions for what are called farm conversions, which are actually regrassing and fertilising expenditure associated with significant capital activity. But, like any number of other measures in the bill, that just lines up the tax world with reality, and any Government ought to do that.

Of course, the problem for Labour members, when they look at this legislation, is that they wish it had all been different. They keep quoting a figure of $1.5 billion of business tax cuts. I bet there is not a member of that caucus who does not wish he or she was standing up here in the House to argue for changes in Part 1 of $1.5 billion of income tax cuts. It really does erode the confidence of a caucus, when its members have relied on the Minister of Finance to make all the political judgments related to the Budget and then they find that he has simply misjudged—well, not simply misjudged, but completely misjudged. Labour MPs came out of their Budget briefing feeling very chipper. They came into the House feeling even better. At the end of the Budget speech, they felt just terrific. The next day they felt sick. A week later they wished the Budget had never happened, and that it was still 2 or 3 weeks away. But, unfortunately, it did happen.

Dr Cullen made the astounding political judgment—let us look at the politics of it—that a series of changes, mostly minor, the odd one significant, to business tax was where Labour’s big hit would be for the election. Actually, he did not think it was going to be a big hit because his real problem was that he thought he had persuaded New Zealanders, particularly mainstream middle-income New Zealanders, that they ought to keep paying the tax rates set out in Part 1 of this bill. He thought he had their political support and their votes, and therefore the election, in the bag. He thought he could then try to do some tricky stuff, by being business friendly, and maybe pick up a few more votes.

Dr Cullen’s big miscalculation was that middle New Zealand decided he was taking it for granted. Those people know how much more this Government has spent. They may not know the detailed numbers, but they know there has been an awful, awful lot more spending in the last 5 years. Some of them have been voting Labour because they thought the Government was competent and the economy seemed to be going along OK. Then they found out in the Budget 2 weeks ago that Helen Clark was taking their vote for granted. Many of the middle-income mainstream New Zealanders who vote for Helen Clark are not centre-left people. They are not social democrats; they are conservative New Zealanders. They wanted a signal from the Labour Party that Labour knew it had to earn their support—that it had to repay those voters for the enormous amount of tax they have paid over recent years, which has financed Labour’s record spending increases. But Labour ignored them, took them for granted, and put up a Budget that did not even refer to them. And that is why Labour is going to pay a political price.

Dr Cullen decided to focus on these business tax cuts. Well, let us just get the story straight. Different front-bench Labour Ministers are saying different things about the business tax cuts. The major tax increase implemented by the Government in the last 12 months is the carbon tax. Pete Hodgson and Michael Cullen are saying quite different things about the relationship between the carbon tax and the business tax cuts. Dr Cullen says that the $700 million of carbon tax, over a couple of years, will be used to help to finance the other business tax cuts. His numbers say that something like $700 million in carbon tax is coming into the Government, to help pay for the $1.5 billion of business tax cuts that he is giving away. We may disagree with the story, but at least it is straight up. But Pete Hodgson, who is the convenor of the climate change group, and who needs a new suit, instead of recycling the one he has been wearing for 20 years—

Hon Paul Swain: What about your haircut?

Hon BILL ENGLISH: It is pretty awful, is it not? Pete Hodgson says that the carbon tax will be used by the Government to pay for carbon credits when New Zealand needs them. It cannot do both. If the Government is to collect $700 million in carbon tax, then either it will be used to finance business tax cuts or it will be put away to pay for carbon credits when we need them. And we most certainly will need them under the Kyoto Protocol, which is a large and looming problem.

So which story is correct: what the Minister of Finance is telling us, or what Pete Hodgson, the convenor of the climate change group, is telling us? I do not think it is competent to have a $700 million conflict in the story about the Budget. Why do we not get that one sorted out? The Government has one more speaker. That speaker can tell us where the carbon tax fits. Will it be used to finance these business tax cuts or will it be put away, to buy carbon tax credits when we need them? We need to know whether Pete Hodgson and Dr Michael Cullen are talking to each other, whether they think they are telling the same story, or whether they do not even realise that they are telling different stories.

I also want to talk about the fiscal impulse issue, which Dr Cullen has been talking about. Fiscal impulse is driven by a combination of tax and spending in the Government’s accounts and in the real economy. Treasury calculates the fiscal impulse as a percentage of GDP. It is in the additional fiscal information, on its website. What that shows is quite different from Dr Cullen’s story. Dr Cullen’s story is that there is no net fiscal impulse from what he is doing, and that any change in anything would have a bad effect on inflationary pressure. Dr Cullen does not have a smooth pattern of no fiscal impulse in front of him. What he actually has, according to this document, on page 8 of Treasury’s additional fiscal information, is a strong tightening of fiscal policy in the 2005 fiscal year. In fact, it is a very strong tightening of fiscal policy. It will be the most positive fiscal impulse for at least 6 years. That is because Dr Cullen has had a huge tax intake. That is what has happened—he has had a huge tax intake. However, after 2005, the fiscal impulse reverses quite sharply, because Dr Cullen has a huge spend-up forecast for 2006, 2007, and 2008. He will be pumping money into the economy flat out.

I invite the financial media, in particular, to look at that fiscal impulse information. They need to know that the story of this Budget is quite different from Dr Cullen’s story and that his scare tactics over National’s prospective tax cuts package are just nonsense.

A party vote was called for on the question, That the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill be now read a first time.

Ayes 83

New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2.

Noes 31

New Zealand National 26; ACT New Zealand 5.

Bill read a first time.

Bill referred to the Finance and Expenditure Committee.

Bills

Misuse of Drugs Amendment Bill (No 3)

Second Reading

Hon JIM ANDERTON (Associate Minister of Health): I move, That the Misuse of Drugs Amendment Bill (No 3) be now read a second time. The bill, with amendments made by the Health Committee, updates our law relating to the prevention of drug abuse and makes it more responsive to changes in illicit drug trends in New Zealand. In particular, the bill allows presumption of supply matters to be amended by Order in Council, subject to the affirmative resolution procedure, which, members may recall, means that the matter goes to the Health Committee, it can be vetoed there, and reported to the House. The House is still in control of its own affairs, of course, but there is a process that the House is involved in. The bill also sets the presumption of supply amount for methamphetamine at 5 grams, rather than the present default amount of 56 grams, and it removes the ability for the classification level of a controlled drug to be decreased, or a classification to be removed by Order in Council alone and the affirmative resolution procedure.

The bill adds a Ministry of Justice official to the Expert Advisory Committee on Drugs, creates new offences of importing and exporting precursor substances—that is, ingredients like ephedrine and pseudoephedrine for the manufacture of dangerous drugs like methamphetamines—creates new powers of search and seizure without warrant for ephedrine and pseudoephedrine; and allows controlled deliveries of precursor substances, which is a mechanism used by the Customs Service and the police. It moves the defence to the offence of possessing a needle or syringe from the regulations to the principal Act, and reverses the onus of proof to the prosecution. This is an unusual procedure, but it is, of course, a preventive health measure. The bill adds a new restricted substances part to the legislation. and regulates benzylpiperazine, also called “party pills”, as restricted substances.

The Health Committee has worked hard on its consideration of this legislation, especially with regard to the new restricted substances part of the bill that will immediately regulate the substance benzylpiperazine, commonly found in party pills, and restrict its sale and supply to those aged over 18 years. It will also allow in the future for the potential regulation of similar substances as Parliament deems appropriate and based on evidence as it comes to hand. I would like to thank all members of the Health Committee for that valuable work. I know that it was not straightforward and that complex issues were raised in the course of their consideration. I know that, because I was invited to meet with them to discuss those concerns, and we were able to offer some solutions to help ensure the smooth and timely passage of this important legislation.

I am pleased to see that the Health Committee saw fit to accept many of those solutions—for example, actually scheduling benzylpiperazine as a restricted substance into the bill itself. However, I also note that the committee has decided to narrow the definition of substances to be covered by the new part, as members felt that existing legislation, rather than the new restricted substances schedule, could be more appropriately used to regulate substances such as butane and other solvents that are subject to abuse by some of our young people, although they are licit or legal substances. I must admit that I am a little disappointed by that approach, but I have asked my ministerial colleagues to set a high priority on investigating how existing legislation could be used, as that is the view of the committee. If those investigations show that we have relevant existing legislation, then, of course, we should use it as soon as possible. However, whether we can use existing legislation is not at all clear-cut.

Members are likely to have read in the Christchurch Press a report of a novelty product being sold in Christchurch recently that contained a potentially fatal mixture of butane and propane. Someone decided it could be used for intoxication at a rugby match. That led to some young kids buying it and suffering potentially serious side effects from its use. My office has sought advice from the Minister of Consumer Affairs about possible action under existing legislation, given that this product is being sold as a novelty for use at rugby and other sports games. I have yet to receive formal advice on this matter. Officials are also continuing to look at other relevant legislation, because this Labour-Progressive coalition Government will act where it can to stop the misuse of potentially dangerous products.

Should the investigation into existing regulatory controls for this product and other substances result in showing that existing regulation is inadequate, then I have also asked my colleagues to consider further legislation, either as a completely separate stand-alone restricted substances Act, as the Health Committee has suggested, or perhaps in a form found in some other jurisdictions. The United Kingdom, Australia, and the United States, for example, have specific laws that make it an offence for a retailer to supply or offer to supply to a person under 18 years of age a substance where there is reasonable cause to believe that the substance will be used for intoxication purposes.

I am determined that the problem of volatile substance abuse is not put in the too-hard basket. Parliament is responsible for studying how best we should act, and then to act. Members will be well aware, I am sure, that coroners around the country have been asking for action, as they deal with a number of tragic deaths of vulnerable young people from this form of substance abuse. I am sure that everyone in Parliament is of the view that we must collectively respond where we possibly can to the community’s demand for action. I recommend this bill for further passage through the House.

Dr PAUL HUTCHISON (National—Port Waikato): Thank you, Mr Speaker, for the opportunity to speak on this very important Misuse of Drugs Amendment Bill (No 3). As the Hon Jim Anderton pointed out, there are some very important aspects of this bill related to its initial intention—that is, to restrict and control the use of serious controlled drugs. It is a shame that we no longer see Mr Anderton here, because—

The ASSISTANT SPEAKER (H V Ross Robertson): The member knows that that is outside the Standing Orders.

Dr PAUL HUTCHISON: I am sorry, Mr Assistant Speaker. What I was going to say was that Jim Anderton has finally emerged from his dinosaurian sleep to realise that people using party pills, herbal highs, and a vast spectrum of mildly psychoactive substances, should, indeed, deserve attention. But what he has done is add a Supplementary Order Paper that violates some of the basic democratic principles on which this Parliament is founded. Although the National Party certainly supports the original part of this bill—that is, to deal with presumption of supply matters, and amphetamine in particular—it creates new offences of importing and exporting precursor substances; creates powers of searches and seizures, without warrant, for ephedrine and pseudoephedrine; and allows controlled delivery of precursor substances, these which have, undoubtedly, a very strong scientific evidence base of needing attention by the Parliament.

What the National Party is concerned about is the Jim Anderton Supplementary Order Paper, which has now become Part 3 of the bill and which we believe is highly inappropriate.

It is important to understand the history of this legislation. It was realised in the late 1990s that the new amphetamines, LSD, and various other controlled drugs, were becoming a very, very serious scourge on the horizon in New Zealand. That issue was certainly made more and more apparent as we saw the P clandestine laboratories suddenly sprouting up, right around New Zealand. In fact, I think their emergence was quite prolific from about 1996, although it was not until 2000 that nine laboratories were pounced upon by the police. But by 2003, something like 146 clan-labs were discovered by the police, and it has become worse and worse throughout the country.

In fact, I was on a forum the other day where one of the police officers said that wherever one goes in New Zealand, within 10 kilometres there is likely to be an illicit clan-lab. As it turned out, where we were, in the rural part of the Waikato, two clan-labs were discovered within the next few weeks.

There is no doubt that the methamphetamines and pure P have extraordinarily detrimental aspects to them, and the problem is getting worse and worse. The objective evidence is that the use of these drugs can cause serious health effects, including paranoia, hallucinations, mood disturbance, delusions, and, potentially, death. We have seen throughout the country some really disastrous instances where people using these medications have carried out the most bizarre and serious attacks on people, attacks that have resulted in death.

It was because of this, in the 1990s, that Wyatt Creech initiated a bill whereby there could be some ready recourse to keeping up with the drug dealers and the rapid changes of formula that they had for those medications, so that they could find that on one occasion a drug could be legal but, within a month, the formulation would be changed and it would be illegal.

Hence, the affirmative resolution process was somewhat reluctantly embarked on with the original Misuse of Drugs Amendment Bill for these controlled drugs. The National Party has supported that move, and we have supported the extreme measures that the Customs Service and the police force require to track down the perpetrators who sell those drugs, particularly to young people around New Zealand. It is becoming a very, very serious problem and, in these circumstances, particularly serious responses are needed in the legislation.

But it does seem to be a great worry when, finally, Jim Anderton wakes up to the fact that party pills, herbal highs, and substances like benzylpiperazine, are causing problems around the country. In actual fact, they have been around for the last 10 years or so and, again, the objective evidence is that while they have mild psychoactive effects, they in no way come into the class of the controlled substances whereby the affirmative resolution process has been enacted.

I think that it is important to point out some of the aspects of the advice that members of the Regulations Review Committee gave to the select committee. They warned strongly against the liberal use or the proliferation of the affirmative resolution procedure. In fact, they said the amendment of primary legislation by an Order in Council is commonly referred to as a “Henry VIII” clause, and is regarded as being undesirable because it allows the executive the power to override Parliament. Such powers should be granted by Parliament rarely and with strict controls.

It is a great concern to me that Jim Anderton has suddenly woken up to the fact that there are party pills and other such substances around the country, and he is bringing in a Supplementary Order Paper that was willingly embraced by the Labour Government, even though the Regulations Review Committee made very, very clear warnings.

It said: “In particular, we consider objections can be raised to the following: amendment of primary legislation by an Order in Council, except in rare cases and with strict controls; allowing matters of significant policy to be dealt with and delegated, rather than primary legislation.”, and it goes on to state: “If a matter needs to be dealt with urgently, there are ways of dealing with primary legislation in an expeditious manner.”—and, of course, that is the case. It is quite clear that those restricted substances should have their own legislation. It should be well-thought-out, it should be well considered. The National Party agrees that this is a major problem in New Zealand, but it should not be addressed by legislation that is quite inappropriate and, according to the Regulations Review Committee, this legislation is absolutely inappropriate.

In fact, its recommendations were absolutely clear. It stated: “We are of the view that there are significant issues with Jim Anderton’s SOP, and we recommend the following: that amendments to the schedule concerned, ‘Restricted Substances’, should be made by primary legislation, not by Order in Council.” It goes on to state: “Regulations should only override the New Zealand Bill of Rights Act 1990 in rare cases in very limited terms.”

This a very important bill. It addresses a very important subject. The National Party will indeed support it, but we will not support Jim Anderton’s Supplementary Order Paper 298 substituting Part 3 of the bill, which we believe is highly injudicious.

DIANNE YATES (Labour—Hamilton East): I have just come from my office, where I have been answering emails from people who support the Misuse of Drugs Amendment Bill (No 3). They are people who deal with teenagers and with a lot of young people, and who deal with the health system. Today I have also just been interviewed by a student who asked me about the select committee processes and how members work together. I am pleased to say that, largely, the Health Committee members worked very constructively together on this bill. I particularly thank Judy Turner of United Future, who worked through some of her differences on this bill. We came to very effective compromises and showed how political parties can work together constructively for the benefit of New Zealand, and not just grandstand, which is what we have seen very recently from the National Party.

I am on both the Regulations Review Committee and the Health Committee, and I know that the Misuse of Drugs Amendment Bill (No 3) is one that does use the affirmative resolution process. It uses that process because, as Dr Hutchison knows, new party pills and new concoctions that are very detrimental to the young people who access and use them come on the market very, very quickly, and we need a very quick response to that situation. I particularly noted the submission made by the National Council of Women, which recognised the need for the affirmative resolution process that we use in this bill in the response to drugs. As Dr Hutchison said, we are talking about rare cases. There are strict controls. There is an expert advisory committee, which—as Dr Hutchison knows—is made up of medics who have expertise in the area and are well able to advise the Minister on the new drugs that come on the market, and on how we need to respond to them.

I am surprised that Dr Hutchison would want us to wait for a year, as he said in his minority report, before we respond to such drugs. I am also very interested to note that he took no notice of Dr Tonia Nicholson—

Dr Paul Hutchison: You waited a year for the bill to come in.

DIANNE YATES: Dr Hutchison has had his turn. Dr Tonia Nicholson is—

Katherine Rich: I raise a point of order, Mr Speaker. The member who is speaking continues to call Dr Hutchison “Dr Hutchinson”. I think she should call him by his correct name: Hutchison.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the member.

DIANNE YATES: I did intend to say Hutchison. I am sorry if I mispronounced it or the member heard it in that way. I am sorry that my enunciation was not clear enough for the Opposition members, but I do try to speak clearly. [Interruption] That is a waste of time. I do not wish to waste the House’s time on such trivialities.

We are dealing with very serious issues to do with young people’s lives. I thank Dr Tonia Nicholson, an expert who works in the accident and emergency department at Waikato Hospital, for her submission on the bill and for advising us about the great seriousness of the problem. She would actually ban all these drugs altogether. She pointed out, as Dr Hutchison has not done, that the problem is not just party pills. It is when drink and party pills, or an upper and a downer, are taken together that we end up with young people in Waikato Hospital on a Saturday night. So it is very, very important that we process this bill. As a member of both the Health Committee and the Regulations Review Committee, and considering that we are passing legislation that concerns the lives of young people and that we want to protect them in the very best ways possible, I advocate that we pass this bill as quickly as possible.

BARBARA STEWART (NZ First): On behalf of New Zealand First, I rise to support the second reading of the Misuse of Drugs Amendment Bill (No 3). As the Associate Minister of Health, the Hon Jim Anderton, has stated, this bill has some very important aims. It will create new offences of importing and exporting precursor substances. It will create powers of search and seizure without warrant for ephedrine and pseudoephedrine. It amends the presumption of supply. Importantly, it regulates the selling of benzylpiperazine and other party drugs. It also adds a Ministry of Justice official to the membership of the expert advisory committee, among a whole list of other aims.

All of these measures are absolutely essential. We in New Zealand First recognise the harm that is caused by drugs, particularly methamphetamines. It is a growing and increasingly serious problem. We quite often read in the newspapers that the police are dealing with an increasing number of labs for the manufacture of methamphetamines. That is simply the tip of the iceberg. Far more of these labs have not been found. Despite the number of prosecutions and the dismantling of labs, this continues to be a thriving industry. Unfortunately, we have people who profit from other people’s addiction, and they are the people who own many of the labs. We must praise the pharmacists in Rotorua who have gone out of their way not to stock pseudoephedrine at all, in an attempt to ensure that it is unavailable in their town, and we must acknowledge all of the other pharmacists who have taken these products off their shop shelves and put them out the back so that they can carefully monitor their purchase.

There has been a big increase in the usage of methamphetamines, both those manufactured here and those imported into this country illegally. Currently, there is no offence relating to the import or export of precursor substances for the manufacture of illicit drugs. Customs officers who discover these substances cannot take much action at all under the current law. We on the Health Committee were told that the only charge that can be laid is a charge of possession, because this is an area where the law has not kept up with the influx of designer drugs that are now available. This is further complicated by the fact that possession is impossible to prove in cargo and mail interception, because no person is in physical possession or control of the particular substance. It is absolutely essential to close these loopholes, and that is what this bill does. We need to ensure that customs officers and the police have the powers to detect effectively the presence of controlled drugs and take the appropriate action.

It is time this House faced up to the fact that there is a tremendous amount of illegal and illicit drug use here in New Zealand. Drugs are illegal and illicit because they do incredible harm and no good whatsoever. They have no benefits for the people who use them. Instead, these people become trapped, and any control they have had over their lives is absolutely lost. What is the point of taking a trip and never leaving one’s room in one’s house? It is a total waste of time and money, and worse still are the lasting after-effects. We in New Zealand First definitely do not subscribe to the view that illegal and illicit drugs are good for us; they simply are not.

We definitely support the regulation of benzylpiperazine and other party pills that can be developed by these smart operators. The rapid expansion in the availability and use of these drugs requires urgent attention. We believe that Mr Anderton’s Supplementary Order Paper does not sufficiently address the problems created by the increasing use of party pills. We believe that this group of substances should be treated in exactly the same way as all other controlled drugs, and included on the appropriate schedule. We believe that party pills should be classified as controlled drugs. We ask why we would want to test the water with both feet. There has been insufficient research into the long-term effects of party pills. It is extremely difficult to see how a substance used as a treatment for internal parasites in cattle can be beneficial to humans. Such substances cause an increase in heart rate, blood pressure, and body temperature, hallucinations, convulsions, and respiratory depression. Why should these types of substances be classified as low-risk substances? They have no known nutritional or therapeutic use for humans, so how can they be considered beneficial? They are definitely not dietary supplements in any way. We need more information on these particular party pills and their effects. We believe that greater caution is needed. We do not want to see a whole sector of New Zealanders, 10 or 20 years down the track, harmed by these party pills.

The Health Committee saw some information from the customs area. Mr Williamson, the manager of drug investigations for the New Zealand Customs Service, said that the pills are central nervous stimulants, and there is evidence becoming available now that suggests that they are toxic in content and damaging to the brain at high doses. Why are we ensuring that they are available to our young people in New Zealand? We have all read the stories of young people having adverse reactions to those substances. Some have mixed alcohol with them, others may have taken their usual prescription medicines with them, and others may have had more than the amount recommended on the packet. No one is really sure what has actually happened in some of those instances.

The worst of it is that the lack of manufacturing requirements means that anything and everything can go into their manufacture. Like many other MPs today, I received a letter from the Social Tonics Association. That organisation has stated: “There are a small number of operators, particularly in the Christchurch region, who do not value community safety. These operators are exploiting the currently unregulated market and producing low-quality products containing between 500 and 700 milligrams of BZP without labels or warnings. The level of BZP is two to three times higher than the dosages outlined as potentially dangerous by the Expert Advisory Committee on Drugs.” So they do not have a good effect on humans.

We read in the newspapers of many negative experiences from benzylpiperazine. We read of a Christchurch schoolgirl who had been experimenting with these party drugs who has joined calls for a total ban. She was hospitalised and took a long time to recover from the effects of those drugs. We are concerned about the long-term effects of those drugs, as there has been no research at all into those effects. Until the drugs can be guaranteed to be completely harmless, we do not believe that they should be legally available for sale. We look forward to the expert advisory committee completing some further research into the particular harms associated with using these pills, and we will also put forward a Supplementary Order Paper calling for these substances to be put on to a controlled schedule. We know that they are pouring into the country, and we do not want to see harm resulting from them.

HEATHER ROY (ACT): I stand to speak to the second reading of the Misuse of Drugs Amendment Bill (No 3). For a variety of reasons, ACT New Zealand is opposing the passage of the bill as reported back from the Health Committee. We would have liked to be in a position to support the bill for the contribution that it could make to the control of the possession and supply of dangerous drugs, and, in particular, of the methamphetamine drugs using ephedrine and pseudoephedrine bases. Other members have highlighted the dangerous nature of those drugs and the effects that they have on people’s lives. Certainly, we would have liked to be able to support the bill for that reason. Parts 1 and 2 of this bill are the relevant parts here.

But we have before us today a very untidy piece of legislation. Supplementary Order Paper 298 in the name of the Hon Jim Anderton came to the select committee, so that it could undergo the submission process. Of course, that was right and proper, and it is what should happen with regard to all legislation. Unfortunately, we now have that Supplementary Order Paper tacked on to the end of the very sensible Parts 1 and 2, as Part 3 of the bill. Parts 1 and 2 are about the control, possession, and supply of dangerous drugs, and Part 3 is about drugs of a very different nature—at the moment, benzylpiperazine-related drugs. The other problem with that Supplementary Order Paper was that it came to the select committee with a blank schedule. Just about every member of the committee was very unhappy with the fact that a schedule with absolutely nothing on it was to be attached to legislation, with no guidance as to what may go on that schedule. In the interim, the benzylpiperazine family of drugs has been added to schedule 4 of the bill.

It was interesting to hear members of the various parties—and I think everyone who has spoken so far has done so—stand up and say how terrible it is that those party pills are on the market and available, and say that their regulation needs to happen. Interestingly, when I wrote a letter to the select committee in September 2002, soon after being elected to Parliament, highlighting the fact that benzylpiperazine-based drugs were being sold to minors in Star Marts and service stations around the country, there was absolutely no concern from a single member of that committee—neither from Dianne Yates, who was on the committee at the time, and who has stood up now and told us what terrible things those drugs are for Hamilton youth, nor from anybody else. Many of those committee members have now moved on to other committees, but none of them were in support of my concern. My letter was sent to the Expert Advisory Committee on Drugs—just as a formality really, to pacify me—and it too wrote back stating that it had absolutely no concern about the drugs. The whole concern was dismissed completely out of hand. Two and a half years down the track, we are suddenly very concerned about these substances, although I suppose it is better late than never. My concern about them is that they are available to minors, and the regulation that will be applied to them in that regard will, in fact, be a good thing. But this legislation is not the right place for that, and for that reason ACT will oppose the bill.

We also oppose the widespread and proliferating use of Orders in Council through the affirmative resolution process. When bills come before the select committee, we often have submissions from the Regulations Review Committee, which usually gives very sensible and sound advice. That was certainly the case with regard to this bill. Committee members noted that they were unhappy about the use of the affirmative resolution process, and warned that that should not proliferate. I am in complete agreement with them on that point. They noted that the affirmative resolution procedure allows a truncated legislative process, but considered that that had considerable drawbacks. In particular, the procedure allows significant matters of policy and principle to be dealt with in delegated legislation as opposed to primary legislation, where they felt those things would be much better dealt with. The process also allows only a limited time for select committee scrutiny. One of the beauties, as I have often said in this House, of our select committee process is that as we go through the submission process, the public have a great opportunity to come before the committee and submit, and we hear a wide range of views as a result of having that thorough scrutiny. The Regulations Review Committee said that it was worried that a truncation of the system would lead to insignificant access for the public to be consulted or insufficient time for substantial consideration of policy rationale—and I certainly agree with those comments.

The Regulations Review Committee also considered that there should be compelling reasons for applying the affirmative resolution process when primary legislation was being amended in respect of serious offences. It noted that the affirmative resolution process is justifiable in only limited and exceptional circumstances, including those where there is a need for expeditious change or where significant matters of health and safety are at issue. The Order in Council process, using the affirmative resolution process, certainly does not qualify in this case, when my highlighting the matter to the select committee in 2002 did not actually come to anything for 2½ years. That is hardly an urgent matter requiring expeditious treatment. At the end of the day, to my great consternation, the Regulations Review Committee’s advice has been largely ignored in this instance, and ACT New Zealand would like to voice its vigorous disapproval of that.

One thing that the bill does do, by having the benzylpiperazine-based products—the herbal highs, the party pills, or whatever one wants to call them—in the same legislation as the more dangerous drugs such as methamphetamines, is to promote draconian powers in relation to substances such as the benzylpiperazine-based products, which, at the moment anyway, appear to be little more insidious or addictive than alcohol, nicotine, or the many other harmful but not necessarily catastrophic substances. This bill has not weighed the costs properly against the benefits. The normal process of legislative change is a safeguard to ad hoc hysteria and is one of the reasons that we have a very thorough parliamentary process.

With regard to new section 4(1AA) inserted by clause 5 of the bill, ACT finds it bizarre that people’s liberties will be able to be removed by ministerial decree, although all the machinery of Parliament will be needed to reduce regulation. So things can be put on a schedule at the whim of a Minister, yet in order to have anything removed from a schedule someone will have to go through the slow, laborious process of Parliament. That is absolutely bizarre and ridiculous and, if anything, it should have been around the other way. The provision was, of course, intended to pacify the United Future party in relation to its concerns about cannabis—nothing more, nothing less. ACT New Zealand contends that the proper parliamentary scrutiny for all this legislation should be gone through, and that the Regulations Review Committee’s concerns about the Order in Council process should have been taken much more seriously and weighed more heavily.

ACT is opposing this bill, because it is very untidy, very messy legislation. It was rushed through the select committee. There was a lot of pressure on the committee, particularly to add Part 3 when many members favoured having Parts 1 and 2 stand apart. ACT New Zealand would have supported the bill had it remained that way; Part 3 should have been looked at completely separately. The policy work should have been done on it. The officials were under a great deal of pressure to move quickly, in order to have Part 3 ready in time to join Parts 1 and 2. That has been totally inappropriate, and for those reasons ACT New Zealand will oppose this bill.

NANDOR TANCZOS (Green): The Green Party will support the bill and the Supplementary Order Paper that will be incorporated into it. Unlike the previous speaker, we actually think that it is very good that the Supplementary Order Paper introduces a new schedule to the Misuse of Drugs Act, because we believe that drug policy should be consistent, should be integrated, and should be evidence-based. We believe that having one piece of legislation to deal with psychoactive drugs is important, although we acknowledge the member’s concerns that it is a hastily drafted bill. It is poorly put together. The substantial policy work has been done inadequately, so we think it is unfortunate that the quality of the bill is such as it is.

Nevertheless we do support it, because we think that it is a significant step forward. We think the Supplementary Order Paper is the most significant change, both in the long term, and in terms of its immediate effect. The Supplementary Order Paper enacts a new schedule to the Misuse of Drugs Act to allow some psychoactive substances to be restricted without being criminalised. That is a significant change in law in the way substances are regulated. It is designed to address the current free-for-all that exists around party pills, and in particular, piperazines such as benzylpiperazine.

“Is the law needed?”, some members may ask. Well, the industry has, to its credit, recognised a problem, and sought, through its industry body, Social Tonics Association of New Zealand, to introduce a voluntary code of practice. However, the association has, itself, called for legislation to cover its products as it currently has no ability to bring retailers and manufacturers into line who choose to simply ignore the code, because it is not enforceable.

It is a significant problem. While most places deal pretty well with it, and there are not many problems in most places, there are a number of cowboy operators, particularly in Christchurch, who do act irresponsibly and seem to have no recognition of their social responsibility. I was in Christchurch just this last weekend, and I visited a number of premises to see what they were selling, the nature of the sales, and what their marketing techniques were. I was disturbed to see a number of retailers selling little bags of pure benzylpiperazine powder. The labelling was there but it was so fuzzy that I could not read it, and the labelling was totally inadequate. Yet at the same time there are other products, such as this one I have here, which is very well labelled. The labelling is extremely clear, it is thorough, and it actually does the job that the industry voluntary code of practice requires it to do.

I think that the Health Committee saw a real advantage in creating enforceable and sensible restrictions such as an R18 limit, such as restrictions on how these products are advertised, such as labelling requirements, maximum dosage, and even manufacturing quality standards. What the bill does not do, and cannot do, because of the way the select committee has amended the definition of a substance, is regulate some of the other products that the Minister had hoped he might be able to regulate, such as nitrous oxide. The Minister has since had Crown Law advice that says that nitrous oxide is illegal to sell without a pharmacy licence. However, I think it is fair to say that the Crown Law advice is questionable. It is a grey area of the law, and is yet to be tested in the courts.

But it does seem to me to be crazy that if people are going to inhale nitrous oxide, they can go into a supermarket, buy it off the shelf, as long as they pretend they are making whipped cream out of it, and they can get no information about safety issues around inhaling it, apart from: “Don’t inhale it.” But what people cannot do is go to a shop and say: “Look, I’m going to be sucking this stuff up, and do you have any advice for me if I’m going to do so?”. That is now illegal, according to the Minister. It just shows the difference in approach between a punitive and a harm reduction approach.

However, we support the approach in this bill in terms of regulating benzylpiperazines. In fact, the Greens were the first parliamentary party to call for such regulation. When Australia and the United States banned benzylpiperazine, because in their countries they found that people were going to dance parties, taking it, and enjoying it, it was interesting that both the National Party and the ACT party immediately called for a clamp-down. The Expert Advisory Committee on Drugs was asked to examine piperazines, and when it reported it repeated the same thing that the Green Party had been saying for some time. There is no statutory basis on which to ban these products. There is simply no evidence that they cause any particular harm. Moreover, the current law is inadequate, in that it provides no way of restricting them in any sensible way. The committeet said, as we had, that the law should be amended.

To its credit, the Government took up the Green Party’s suggestion to introduce a class D drug, and Supplementary Order Paper 298 is the result. It is a significant move by this Parliament, because it is a recognition by Parliament that just because people enjoy taking something is no reason to make them criminals. Just because they enjoy it is no reason to ban it. It is important also to recognise that the criminalisation of a substance can, in some circumstances, create more problems than the substance itself.

So we are pleased to support the bill. However, we recognise that it has a number of real problems. We tried to address them in the Health Committee, but we got no interest from its members, in general. There were some exceptions. I think Heather Roy expressed some concerns and solidarity, as did some others, as well, and I welcome that. But I think it fair to say that the majority of the committee just were not interested.

The first thing I would like to touch on is section 60, under the heading “Enforcement powers”, in the new Part 3 added by proposed new clause 32 in Supplementary Order Paper 298. It states that if an enforcement officer—that is, a health officer, or a member of the police—has reasonable grounds to believe that an offence under this provision has been, is being, or will be committed—if there is some reason to think that an offence may be committed in the future—then that person can go into the premises and seize any restricted substance, any document or record of any kind, or any other article relating to a restricted substance. Such officers can say that they think that a shop is about to commit an offence, so they can go in and seize all the products off its shelves, all its computer records, and all its advertising. What is more, there is no requirement that they ever have to give it back. They do not need a search warrant; they just need to believe that an offence is about to be committed. There is no requirement that after even a year they have to either press charges or give the property back. No, they can just hang on to it indefinitely.

I am highly critical of Crown Law advice, which did not even raise that as an issue in relation to the New Zealand Bill of Rights Act. We were told that the courts will, of course, apply New Zealand Bill of Rights Act standards. That is just not good enough. We believe that this is an issue, and I will move an amendment during the Committee stage to address it. It will provide that a search warrant is required and that there is some limitation on how long the substances can be held.

The other thing is that there is no requirement for either the Expert Advisory Committee on Drugs or the select committee, when classifying a drug, to consult the wider public. They can do, but there is no requirement on them to do so. We think that that needs to be changed.

Another thing is the irrationality of having separate criteria, so that when the Expert Advisory Committee on Drugs is looking at a drug in order to schedule it as a class A, B, or C drug, there is one set of criteria; and if it is to be scheduled as a D class, those criteria, plus additional criteria, apply. That says that it is already predetermining what it will recommend, before it has even looked at it. That is totally illogical. It makes no sense at all. Obviously, we should have one full set of criteria under which any substance is looked at, then the recommendation drops out of that. It is so obvious and logical that of course it was not supported by the select committee.

The final issue I would like to touch on relates to a last-minute amendment on behalf of the “UFO Party”—that is, the “United Future and Out-door Party”. It is an amendment not to the bill or to the Supplementary Order Paper but to the primary legislation. No notice was given to the public. It had no opportunity to make submissions. There was no opinion from the Expert Advisory Committee on Drugs, because it had no opportunity. The reason was that the Supplementary Order Paper was introduced on the day the committee was supposed to deliberate. The amendment is to totally remove any evidence-based criteria from the way drugs are rescheduled. United Future has just launched its policy on drugs, in line with this, and it is the first policy I have ever seen where a party explicitly promises to ignore any evidence that does not conform to its preconceptions.

Debate interrupted.

The House adjourned at 6 p.m.