Tuesday, 14 June 2005

Tuesday, 14 June 2005

Tuesday, 14 June 2005

Madam Speaker took the Chair at 2 p.m.

Prayers.

Visitors

South Africa—Portfolio Committee on Finance,National Parliament of the Republic of South Africa

Madam SPEAKER:I have much pleasure in informing the House that members of the Portfolio Committee on Finance from the National Parliament of the Republic of South Africa, led by Dr Robert Davies MP, are present in the gallery. I am sure that members would wish that the delegation be welcomed.

Obituaries

Sonja Davies

Madam SPEAKER: I regret to inform the House of the death on 12 June 2005 of Sonja Margaret Loveday Davies, member of the Order of New Zealand, who represented the electorate of Pencarrow from 1987 to 1993. I desire, on behalf of this House, to express our sense of the loss we have sustained and our sympathy with the relatives of the late former member. I now ask members to stand with me and observe a period of silence as a mark of respect for her memory.

Honourable members stood as a mark of respect.

Points of Order

Government Notice of Motion No. 2—Presence on Order Paper

GERRARD ECKHOFF (ACT): I raise a point of order, Madam Speaker. I wish to raise with you a point of order about Government notice of motion No. 2, which has sat on the Order Paper for something in the order of 6 months. I note that a member of this House can have a notice of motion on the Order Paper for only 1 week before it is removed or debated. Can I, through you, ask the Leader of the House when that motion will be debated and for an assurance that, in fact, it will be debated before the election.

Hon Dr MICHAEL CULLEN (Leader of the House): At the request of the Hon Jim Sutton the notice of motion was removed from the Order Paper last week, and does not appear on the Order Paper today.

Madam SPEAKER: The matter has been removed. It is not on the Order Paper at this stage.

RODNEY HIDE (Leader—ACT): I raise a point of order, Madam Speaker. Can we take it from the Leader of the House that the Hon Jim Sutton is not prepared to have that debate with Gerry Eckhoff, and that once it was drawn to Mr Sutton’s attention that a debate would be called, he quickly removed the notice?

Madam SPEAKER: That is not a point of order.

Questions for Oral Answer

Questions to Ministers

Child Poverty—Reports

1. GEORGINA BEYER (Labour—Wairarapa) to the Minister for Social Development and Employment: What reports has he received on child poverty in New Zealand?

Hon STEVE MAHAREY (Minister for Social Development and Employment): The latest findings on poverty levels in New Zealand show that poverty rates have declined in New Zealand since 2001 as a result of a rise in real incomes for low-income families. After tax and housing costs, low-income families now have more money in their pockets each week than they did back in 2001, and income levels continue to improve across the board. This is evidence of a steady improvement in social well-being under a Labour-Progressive Government.

Georgina Beyer: How does this compare with the trend in previous years?

Hon STEVE MAHAREY: The proportion of children in families that earn below 60 percent of the median wage has declined significantly, from 27 percent in 2001 to 21 percent in 2004. This compares with a peak of 34 percent in 1994, which shows the impact of benefit cuts, market rent policies, and the Employment Contracts Act at that time. The improvement over the last 3 years has been largely the result of more people in jobs, as a result of the recent economic boom, and income-related rents for State housing. The Working for Families package will have the effect of further dramatically reducing child poverty by up to 70 percent.

Rod Donald: Has the Minister seen any reports of policies that could reduce expenditure on family support, housing, health care, and education, which could make child poverty worse than it already is?

Hon STEVE MAHAREY: I have seen reports on an approach that would cut taxes so that the funding would not be available to adequately provide for childcare or for key policies like maintaining income-related rents. In particular, I have seen reports that the National Party would cut short the Working for Families package, with massive impacts on child poverty, in order to fund tax cuts that can only make those who are well off even better off.

Hon Peter Dunne: If it is correct that one of the focuses of the Government’s policy has been on the income of a household so as to benefit the children of that household, what is the Minister’s reaction to the OECD’s findings about the difficulties faced by second-income earners in New Zealand households, and is he prepared, therefore, to consider a policy of allowing people to split their incomes for tax purposes; if not, why not?

Hon STEVE MAHAREY: I am always willing to consider exciting new policies from United Future, but having had a look at these policies, I would say that my opinion at the present time is that the work we are doing on the marginal tax rates and the further work we are to do will be a better way to address that issue.

Georgina Beyer: Can the Minister remind the House which policies are being put in place to put more money into the hands of low to modest income, hard-working New Zealanders?

Hon STEVE MAHAREY: Almost all families with incomes below $45,000 will benefit from the Working for Families package, along with a substantial number with incomes up to $70,000. Families making $25,000 to $45,000 a year will be, on average, $100 a week better off. To achieve that via a tax cut would cost almost $9 billion.

Prisoners—Employment Programmes

2. Dr MURIEL NEWMAN (Deputy Leader—ACT), on behalf of STEPHEN FRANKS (ACT) to the Minister of Corrections: Why did the Budget cut provision for inmate employment by nearly $5 million to $30 million, when inmate numbers are growing, and do the published measures properly report the effectiveness of corrections inmate employment programmes?

Hon PAUL SWAIN (Minister of Corrections): I am advised that—

Hon Dr Nick Smith: They don’t believe in work.

Hon PAUL SWAIN: About time to see the pharmacist again! I am advised that the $5 million—[Interruption] Have I not seen your brother on a Telecom advertisement? I am advised—

Rodney Hide: I raise a point of order, Madam Speaker. I am not commenting on the interjections, which I thought were very reasonable and witty. But it is unacceptable that a Minister should bring your brother being in a Telecom advertisement into his answer, and he should apologise to you and to this House.

Madam SPEAKER: When there are interjections, then, as members know, there is likely to be a response. I am sorry, I have ruled on that, Mr Hide. Is this a new point of order?

Rodney Hide: Yes. I raise a point of order, Madam Speaker. The accusation was not against a member of the Opposition; it was actually against you.

Madam SPEAKER: I am sorry, I did not take offence at it.

Rodney Hide: I did.

Madam SPEAKER: I am sorry, you may well take offence on my behalf, but I did not. I appreciate your concern for me. I do, however, wish the Minister to proceed with his answer. Thank you.

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

Madam SPEAKER: Is this a new point of order?

Rodney Hide: When a Minister or an MP stands up and brings the Speaker into the debate by referring to “your brother” being on a Telecom advertisement, that is actually a reflection on the entire House. He should not bring you into the debate, and he should be pulled up accordingly.

Madam SPEAKER: I agree with that point. Now would the Minister please proceed with the answer.

Hon PAUL SWAIN: I am advised that the $5 million difference the member refers to is not a cut to the inmate employment budget. It represents an internal transfer in 2004-05 to offset, among other things, a commercial loss caused by difficult trading conditions, particularly in the timber processing industries. Overall, there is a planned 14 percent increase in the hours of inmate employment between 2004-05 and 2005-06.

Dr Muriel Newman: How can the public have any confidence in the honesty of the research produced by this Government, when emails between Department of Corrections managers show that the research report “to build the case for further employment training” will “be highly skewed, as we are looking for our top inmate performers, people you thought would be most likely to get a job post-release.”, and is this not another example of the Labour Government cooking the books to make their soft-on-crime policies look good?

Hon PAUL SWAIN: Quite a lot, and no.

Tim Barnett: What plans does the Minister have to increase the effectiveness of inmate employment activities, and to meet demand?

Hon PAUL SWAIN: The inmate employment and training strategy is currently under review. The department is working on a number of initiatives to increase the effectiveness of inmate employment activity, and to meet demand. They include extending vocational training activities and better aligning these with industry needs, joint initiatives with the Ministry of Social Development to place prisoners in work on release, and further developing the numbers and relevance of New Zealand Qualifications Authority unit standards delivered in prisons. These initiatives will form part of the strategic plan for inmate employment, which is due for release in the first quarter of this year.

Gerry Brownlee: Will the Minister be taking any action over what appears to be a growing culture within his department for departmental officials to fudge the figures showing the numbers of ex-inmates getting a job, and can he also confirm that his department is also fudging the prison numbers?

Hon PAUL SWAIN: There is no such culture as the member says. The Government acknowledges, of course, that the numbers of inmates are rising, because this Government has got tough on crime, unlike the previous Government, which did nothing for 9 long years, as was shown by the referendum in 1999, which was a referendum on the National Government’s inactivity on law and order for 9 years.

Dail Jones: Why should the Opposition have any confidence in the Minister’s answer to that question, bearing in mind the evidence put forward to the Minister that there appears to be an effort within his department to distort those work-related figures to the best types of workers, and bearing in mind that in the past the Minister has not been able to have confidence in his department—for example, as in the “goon squad” inquiry?

Hon PAUL SWAIN: The point is that the issue of inmate employment is really critical. People are now indicating to us that there are job shortages in New Zealand. I am very determined to make sure that inmates get proper education and vocational skills training, so they can meet those needs. The department is highly focused on that at the moment.

Dr Muriel Newman: Does the Minister expect civil servants to skew research reports by selecting “the top 10 inmates” and declaring that to be a representative sample; if not, will he tell the House that civil servants cooking the books in that way is unacceptable?

Hon PAUL SWAIN: I have not heard of the allegation until now, and that is not what I would describe as cooking the books. I am indicating to the member that the Government and the department is very, very focused on trying to make major improvements on inmate employment and training. This is the time to do it—a time of labour shortages—and it is really critical that we make improvements in the best interests of not only inmates but also communities within which they will work.

Rodney Hide: Will the Minister now just front up to the House and say that it is unacceptable for the data of his departmental officials to be “highly skewed” in order to make the case for another soft-on-crime policy; or is it the case that what officials are doing—skewing the data to make results look good by choosing only the top inmate results—is exactly what this Government expects in every department: police, health, and corrections?

Hon PAUL SWAIN: It is hardly a get-soft-on-crime campaign when we now have the biggest number of inmates New Zealand has ever seen. That is different from the time, actually, when the ACT party supported the previous National Government, which did nothing for the 3 years during which ACT supported it. This Government is determined to make improvements in employment training and education. We are going to make some changes, and those changes will be announced in the first quarter of this year.

Rodney Hide: Does the Minister find it acceptable that his manager, Win McDonald, sent an email on 25 May copied to his boss Royden Motu, saying that they had an opportunity to “demonstrate the corrections inmate employment training results” in order to make the case for more funding, and that “the report output will be highly skewed, as we are looking for our top inmate performers”; is it acceptable that his managers do skew and cook the results—yes or no?

Hon PAUL SWAIN: I am always highly, highly suspicious of allegations from the ACT party, but I will look into that.

Rodney Hide: Would the Minister, if it turns out that those emails are correct and that his corrections managers are skewing results by choosing a non-representative sample in order to increase their budget, just tell the House whether he finds that acceptable; and what action he will take?

Hon PAUL SWAIN: I will make no comment until such time as I have seen the evidence. That is clear, because it is not the first time that the ACT party has got a whole pile of things very, very wrong.

Dr Muriel Newman: I seek leave to table the series of emails that show that those Department of Corrections officials appear to have been cooking the books.

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

Hon PAUL SWAIN: I seek the leave of the House to table the results of a referendum in 1999 about National’s inactivity on law and order for 9 years.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? There is; it will not be tabled.

Logging of Indigenous Forests—Crown Land

3. JEANETTE FITZSIMONS (Co-Leader—Green) to the Minister of Conservation: What conservation goals led the Government to end the logging of indigenous forests on Crown-managed land?

Hon CHRIS CARTER (Minister of Conservation): The Government protected indigenous forests on Crown-owned and managed land to help meet the goals of the New Zealand biodiversity strategy. These included maintaining and restoring a full range of remaining natural habitats and ecosystems to a healthy, functioning condition.

Jeanette Fitzsimons: Does the biodiversity strategy also apply under the sea; if so, will he agree that the same goals should apply to the equally ancient underwater forests of tall corals and their multitude of associated species, and what discussion has he had with his colleague the Minister of Fisheries about ways of protecting them?

Hon CHRIS CARTER: Indeed it does, and, in fact, in 2004 the Government adopted a strategy to protect deep-water biodiversity.

David Parker: What other actions has the Government taken to meet the conservation goals of the biodiversity strategy?

Hon CHRIS CARTER: We have increased funding for the Department of Conservation by over 40 percent, enabling it to tackle weed and pest problems better than ever before. We have embarked on the most ambitious island pest eradication programme found anywhere in the world. Large new areas of forest, high-country, and coastal land have been protected as public conservation land. Eleven new marine reserves have been created, and 2 percent of our exclusive economic zone is now in some form of marine protection.

Jim Peters: What goal motivated the Government to give the West Coast councils $120 million of taxpayers’ money to cut taxpayer-owned forests, yet that Minister denied many SILNA landowners compensation for the Government’s denial of their right to realise the economic value of the lands awarded to them by this House in 1906?

Hon CHRIS CARTER: I know that it was National that exempted the SILNA forests from an amendment to the Forests Act in 1993. By the time National was thrown out of office in 1999, it had not resolved the issues. This Government adopted a comprehensive policy for SILNA forests in 2002.

David Parker: Has the Minister seen any reports that some of the indigenous forests protected since 1999 could be at risk?

Hon CHRIS CARTER: Indeed I have. I have seen a recent report that Don Brash and Nick Smith had called for resumption of logging of the West Coast native forests, which were protected under the Labour Government.

Jeanette Fitzsimons: Is it not true that conservation goals would be assisted better if his strategy required all fishing methods to undergo environmental impact assessment, as the Greens have proposed, and what representations is his department making to advance this?

Hon CHRIS CARTER: My department—indeed, the Government—is very committed to the defence of New Zealand’s unique marine biodiversity. Different Government departments continue to collaborate closely on that issue.

Jeanette Fitzsimons: Has he seen the recent Greenpeace photos in the New Zealand Herald today, and on television on Sunday, in which New Zealand fishing vessels are shown hauling up, then dumping over the side, giant corals and rare sea creatures, and how long does he think it is acceptable for that practice to continue?

Hon CHRIS CARTER: Indeed I have seen those photographs, but I am pleased to announce that, today, my colleague David Benson-Pope, the Minister of Fisheries, announced that New Zealand, together with Chile and Australia, would lead development of a regional fisheries management agreement that will give greater protection to high-seas biodiversity.

Jeanette Fitzsimons: Returning to New Zealand’s economic zone, rather than the high seas, does he agree with marine biologist Dr Steve O’Shea, of Auckland University of Technology, as reported in today’s New Zealand Herald, who describes bottom trawling as “absolute annihilation”, and goes on to say: “There should be some urgency. For God’s sake, let’s do something practical now before it’s too late.”; if so, what will he do in New Zealand waters?

Hon CHRIS CARTER: Indeed I do agree with those comments, but as there is no international proposal at the moment for a complete moratorium on bottom trawling, New Zealand is working closely with Australia to develop a regional agreement.

Australian Shares—Capital Gains Tax

4. JOHN KEY (National—Helensville) to the Minister of Finance: If a New Zealander holds shares in an Australian company, does the investor pay any tax on any capital gains, and could this position change after 1 April 2007?

Hon Dr MICHAEL CULLEN (Minister of Finance): Possibly, and therefore possibly.

John Key: Why should New Zealanders who passively own shares in an Australian company be forced to pay a capital gains tax after April 2007, something they are currently exempt from, given that the Australian companies they invest in are in many cases no different from the equivalent New Zealand companies that invest capital, create jobs, and pay tax here in New Zealand?

Hon Dr MICHAEL CULLEN: As the member knows, I have clearly expressed a view that there is no single solution that will treat—[Interruption] Goodness me! This is from the party that admires the Australian tax system, which has a generalised capital gains tax in place.

John Key: Is this capital gains tax not just another tax grab from a Government that is spending so much that it is always looking at new ways to gain tax, whether it is through sherry, petrol, or carbon emissions?

Hon Dr MICHAEL CULLEN: I am fascinated that the member has finally read the Budget speech, where I refer to this as being potentially a capital gains tax. It has taken only 4 weeks for him to wake up to what everybody else recognised in a space of minutes.

John Key: How on earth can the Minister be serious about promoting a single economic market with Australia, when he is now proposing a capital gains tax on Australian investments held by New Zealand residents?

Hon Dr MICHAEL CULLEN: Given that Australia has a general capital gains tax, it is rather strange to suggest that a capital gains tax could not be applied to any form of investment in Australia. The fact is that if we want to simplify a system that at present distinguishes between where people invest, how they invest—whether on a revenue or capital account—and how they calculate the investment according to four different methods, there is only one way of doing it. But of course anything that is simple is beyond the National Party.

John Key: How can the Minister expect a small stock market like New Zealand’s to cope with all the offshore capital that could get repatriated as a result of his proposed capital gains tax; and is it not true that if the bulk of that capital does come home, it will just end up in the property market, something the Minister was moaning about during the earlier part of this year?

Hon Dr MICHAEL CULLEN: Given that member’s plans to give away billions of dollars a year in terms of tax cuts, I am sure he would want a lot of money to be repatriated to pay for that.

John Key: I seek leave to table the tax schedules that show the New Zealander who passively owns shares today in Australia does not currently pay tax but will do so after 1April 2007.

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

Treaty of Waitangi—Education Programme

5. DAIL JONES (NZ First) to the Coordinating Minister, Race Relations: What has been the total cost for each year since 1999 to all Government departments for providing both internal and external treaty-related courses and associated educational material?

Hon TREVOR MALLARD (Coordinating Minister, Race Relations): I do not hold information on how much each individual department has spent on treaty-related courses and educational material. If the member really wishes to obtain this information I suggest he put down written questions to responsible Ministers.

Dail Jones: Does the Minister believe that the money spent on educational programmes for State servants regarding the Treaty of Waitangi is simply feeding the—and I quote the Minister, who said this last week—“treaty industry”; if not, can he identify any positive quantifiable outcomes that have been made in the public service as a result of this spending, and would he take as an outcome the views of Mr Graham Kelly, who said, on the Māori population: “There were seven canoes that came in 740 from Hawaiki so there are seven tribes. They all held each others’ hands to stop them from sinking on the voyage. Once they got to New Zealand they started fighting and eating each other, so there have been Māori wars ever since then.”; and are the views expressed in Ottawa by Mr Graham Kelly, our high commissioner in Ottawa, an example of the positive quantifiable outcome of the Minister’s programmes?

Hon TREVOR MALLARD: I think it would be fair to say that the Ministry of Foreign Affairs and Trade has some work to do, as far as Mr Kelly is concerned.

Dail Jones: Why does the Minister keep on standing up in front of the House, even after a week or more, declaring that he still cannot supply us with full details of the amount of taxpayers’ money that has been spent on worthless educational courses for bureaucrats and one foreign affairs official, at least, when the public deserves to know the extent of the Government’s wastefulness in this area, and is it simply because, if the true amount were known, no amount of Government spin would be able to justify such a flagrant waste of taxpayers’ money?

Hon TREVOR MALLARD: I do accept that it would be a challenge as far as one current Ministry of Foreign Affairs and Trade employee is concerned, having known the individual for some time, but I am willing to encourage my colleagues to get the information together—not that there has been any policy change since Nick Smith was in charge of the area, as far as education is concerned. We could collect the information up, if the member puts down proper questions. If he really wants advice on how to draft an appropriate question—I think he was first in Parliament in 1975, but he does not know how to draft questions yet—I am willing to give him a guide.

Dail Jones: Despite the Minister’s failure to answer any of these questions properly until now, can he still try to tell us in what way the $6 million set aside for this Government’s Treaty of Waitangi education programme and any additional amounts will benefit New Zealanders: for example, will it reduce elective surgery waiting times, will it reduce the exorbitant school fees imposed on parents by this Government, or has it merely created more jobs and higher pay for the Labour Party’s girls and boys?

Hon TREVOR MALLARD: I think it is fair to say that there would be a debate about whether the majority of the people involved in what the member refers to as the “treaty industry” are Labour Party supporters.

Rodney Hide: I raise a point of order, Madam Speaker. I wonder whether, through you, we may ask Mr Dail Jones to table or explain where our High Commissioner in Canada made those comments, so that we can see that this is what the Labour Party MPs really think and what their appointments actually say?

Madam SPEAKER: That is not a point of order.

Land—Public Access

6. Hon DAVID CARTER (National) to the Associate Minister for Rural Affairs: When will he introduce legislation to implement the Government’s decisions on the walking access policy?

Hon JIM SUTTON (Associate Minister for Rural Affairs): A bill has yet to be drafted. I intend to introduce it when it is ready.

Hon David Carter: Does the Government’s proposed policy have the support of all departments and ministries; if so, how does he explain the advice from the Ministry for the Environment dated 22 October 2004, stating that it remains “unconvinced about the nature of the problem and the rationale for Government intervention.”?

Hon JIM SUTTON: The policy decisions that have been made to date have the support of all Ministers.

Hon David Carter: I raise a point of order, Madam Speaker. I did not ask whether it had the support of all Ministers. I asked whether it had the support of departments and ministries.

Hon JIM SUTTON: It certainly has the support of the departments and ministries for which I have responsibility. I have no reason to doubt that the ministry quoted by the member is now convinced of the need for the legislation.

Gerrard Eckhoff: What is the Minister’s response to the condemnation of his proposed legislation by recreational groups such as Public Access New Zealand, the Deerstalkers Association, the Federation of Freshwater Anglers, and also what is the significance of the review of the job of Bryce Johnson—his major advocate—chief executive officer of the Fish and Game Council, by the board of the New Zealand Council of Outdoor Recreation Associations, which according to reliable information has voted 7:5 to sack him due to his anti-rural and rural-bashing campaigns?

Hon JIM SUTTON: My understanding of the coalition of outdoor recreation associations is that its actual position is that it wants the walking policy to go ahead, even though it does not go as far as it would like.

Jeanette Fitzsimons: Why did he write to Mr Webber of South Head, Kaipara, who complained that Carter Holt Harvey had planted two rotations of pine forest on a legal paper road, denying the public access to Muriwai beach, stating that he should pursue the matter through the courts, and does the Government’s policy on public access exempt forestry companies from the law?

Hon JIM SUTTON: The forestry companies are not exempt from the law in any way, as far as I know. I have no recollection of the correspondence concerned.

Larry Baldock: Can the Minister give an assurance to the House and to the hundreds of thousands from the recreational sector that this long-awaited access legislation will be introduced before the election this year; if not, why not?

Hon JIM SUTTON: It is certainly my intention to progress the bill to a stage where it can be introduced before the election, but because I do not know the timing of the election, I cannot provide an absolute assurance.

Hon David Carter: Will the Minister confirm today that this Government’s policy is opposed by Land Information New Zealand, which says that the policy has: “serious implications for property rights”, and that it is also opposed by Treasury, which says it: “does not see the benefits of the policy outweighing the detriment”, and what is the opinion of the New Zealand Police?

Hon JIM SUTTON: I can assure the member that under this Government it is the elected members and their Cabinet who set the policy, not bureaucrats.

Larry Baldock: Has the Minister read the United Future and Outdoor Recreation NZ policy called Practical Access to New Zealand’s Great Outdoors, and if so, given its common-sense and balanced approach to the access issue and the fact that the Government will need United Future’s support for the passage of the access legislation, will he assure farmers that they have nothing to fear from the intended proposals?

Hon JIM SUTTON: As it happens, I have read the policy mentioned by the member, although I did not see anything about walking access in it. However, I acknowledge the strong loyalty of United Future to outdoor recreationists and I can assure them that in my judgment the farmers of New Zealand should, in their own enlightened self-interest, welcome that policy.

Hon David Carter: In light of his earlier answer that this matter will be decided by politicians and not bureaucrats, can he assure the House that he has the full support of the Māori caucus for his land access policy, particularly in light of Te Puni Kōkiri’s advice that Māori land should be excluded because it breaches article 2 of the Treaty of Waitangi, which provides Māori with “full exclusive and undisturbed possession of their Lands”?

Hon JIM SUTTON: I am confident I have the support of my colleagues.

Hon David Carter: I seek leave to table the Ministry of Agriculture and Forestry paper addressed to the Minister for Rural Affairs and the Associate Minister for Rural Affairs, dated 22 October 2004.

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

Gerrard Eckhoff: I seek leave of the House to table the article in the New Zealand Herald on Sunday, which clearly states that the so-called Māori caucus has huge reservations about the proposed legislation.

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

Nuclear-free Policy—Review

7. LUAMANUVAO WINNIE LABAN (Labour—Mana) to the Minister of Foreign Affairs and Trade: What reports, if any, has he received on changes to New Zealand’s nuclear-free policy?

Hon PHIL GOFF (Minister of Foreign Affairs and Trade): I have seen two reports on a bill before Parliament designed to end New Zealand’s nuclear-free status. One report shows that a large majority of New Zealanders, contrary to the intention of this bill, want their country to stay nuclear-free. This bill will therefore be an embarrassment to parties that intend to repeal nuclear-free legislation but are desperate not to make their intention clear before the election. The other report is from the Agenda programme on Saturday, which revealed that neither Dr Brash nor most of the National caucus supports a nuclear-free New Zealand but will not vote for the bill. Clearly, the National Party is the party that will suffer the most embarrassment from the bill.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. The Standing Orders are very clear that the Minister has absolutely no responsibility for the best part of that answer, and I would like to know why you did not intervene at the beginning.

Madam SPEAKER: He was asked about reports. In his answer he stated the reports he had available to him. He was not saying he was responsible for anyone else’s policy, as I heard the answer.

Gerry Brownlee: I raise a point of order, Madam Speaker. Are you saying that it is acceptable for Ministers to make comment on matters for which they have no responsibility?

Hon Dr Michael Cullen: The Minister is the foreign affairs Minister, and the legislation being referred to is a key aspect of New Zealand’s foreign policy. Certain foreign Governments would be very interested in the prospect of any change to that policy at some time within the foreseeable future. The Minister is perfectly free to comment on the likelihood, or otherwise, of any change in that policy.

Gerry Brownlee: My point is that we could not set down a question on the Order Paper about an article that appeared in the Wall Street Journal, which absolutely caned New Zealand for its non-proliferation nuclear, one might say, allies, or allegiances, that it has struck up around the world; something we know is a cause of embarrassment for the Government. Because the Minister has no direct responsibility for that issue, we cannot raise it. So the point is, if the Minister is able to use a patsy question from a member, who hardly ever asks a question in the House, to offer his opinions on some other party’s policy, then perhaps you can free us up so that we can do exactly the same when we ask questions.

Madam SPEAKER: I thank the member. As I said originally, if there had been hypothetical speculation on what might be the policy, then no, but there was a reference to specific reports. One cannot speculate on what might happen, but if there is a reference to specific reports, then that is in the context of addressing the question.

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

Madam SPEAKER: I have ruled on the point. Is this a new point of order?

Gerry Brownlee: It is.

Madam SPEAKER: Gerry Brownlee.

Gerry Brownlee: I ask you, in light of that ruling, to have a close look at Hansard, because I believe there was a lot of speculation in his answer.

Madam SPEAKER: I thank the member for that and I shall do that.

Luamanuvao Winnie Laban: Are these the only reports the Minister has seen on this subject?

Hon PHIL GOFF: No, I have, of course, seen another rather famous report in which Don Brash promised congressmen that under National, New Zealand’s nuclear-free status would be “gone by lunchtime”. The honourable member apparently could not remember that, but that is a clear case.

Gerry Brownlee: I raise a point of order, Madam Speaker. That is a completely unsubstantiated lie from the Minister. If he wants to make that statement, surely he needs to place the evidence on the Table of the House. I have already explained that we are not able to go into the issue of New Zealand aligning itself with Iran over nuclear non-proliferation, and the embarrassment that issue is clearly causing the Government. But if we have this sort of speculation from the Minister, and these mistruths put in front of the House, then we have to have the opportunity to respond appropriately.

Hon PHIL GOFF: Speaking to the point of order, I say that far from it being an unsubstantiated lie, I laid on the Table the transcript that showed that Don Brash, contrary to assertions that the member has just made, said precisely what I quoted him as saying. Don Brash could not remember, of course, whether he had said it, but we all know what he said.

Madam SPEAKER: Quiet, please. Points of order are to be heard in silence.

Gerry Brownlee: Quite apart from the fact that the Minister’s response was not a point of order, I assume now that he is calling the senators who were present at that meeting liars.

Madam SPEAKER: We are now getting into debating the Minister’s answer. The Minister said that he saw a report and that he has tabled that report. That addresses that point.

Rodney Hide: I raise a point of order, Madam Speaker. The Minister said that he had tabled the transcript of the exchange. My understanding is that there was no transcript, but that he had a report from an official. If, in fact, he has a transcript, I think it would be helpful if he did table it; otherwise I think he is misleading the House—I am not saying intentionally.

Hon PHIL GOFF: The member is quite right. It was a report from an official, who is a neutral public servant, on what he heard Dr Brash say.

Luamanuvao Winnie Laban: What is the reason for New Zealand’s nuclear-free policy?

Hon PHIL GOFF: The Government’s policy reflects a longstanding commitment, shared by the overwhelming majority of New Zealanders, that this country should remain nuclear-free and that decisions on this issue should be made by New Zealanders, according to what we think is right. Dr Brash’s behaviour suggests that he believes the opposite, but will not come clean because of political expediency.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. I refer you to Speaker’s ruling 145/5, which states: “… The Minister, in answering about the report, cannot be hypothetical about what may or may not be the effects of another political party’s policy.” I simply ask you to enforce it. The last three answers from this Minister have breached that very clear Standing Order and Speaker’s ruling.

Madam SPEAKER: They were not speculation; they were comments on a report that has, in fact, been put before the House. So they were not hypothetical. Whether those reports were accurate is not for the Speaker to determine. But there was a basis for the statement. It was not a hypothetical assumption of what might or might not be someone else’s policy.

Gerry Brownlee: I raise a point of order, Madam Speaker. Then how would you explain the Minister deviating from an answer to a question about the reason for New Zealand’s non-nuclear status by going immediately into what he thinks Dr Brash has meant? I point out to you and to the House that Dr Brash has said that we will not support ACT’s legislation because we have a position that does exactly as the Minister of Foreign Affairs and Trade has suggested—we would put the issue before New Zealanders before anything was even considered. The issue here is that the Minister was asked a specific question about the policy, but then immediately broke into his opinion on what Dr Brash’s comments might have meant, and, what is worse, his reporting of Dr Brash’s comments was, to say the least, inaccurate.

Madam SPEAKER: When the Minister does, in fact, say—and I think that in this instance the Minister did say—that he believes that Dr Brash said something, then that is not appropriate, because that is speculation. If, in fact, there is some evidence for the statement, then that is within the Standing Orders.

Hon Trevor Mallard: Has the Minister had any evidence of memory lapses from the official concerned, or of any lack of ability to write down what happened at the time; if not, is there anything else in the report that might explain why Dr Brash no longer remembers what he said?

Gerry Brownlee: I raise a point of order, Madam Speaker. Where on earth is this Minister’s responsibility for the psychological state of a State official whose recollection of an event has not been substantiated by most of the other parties who took part in that meeting?

Hon Dr Michael Cullen: This issue could be so much more easily settled if Dr Brash simply came to the House and gave a personal explanation stating that he never said that and that he does not believe it.

Madam SPEAKER: The question seems to me to go beyond what the Minister’s responsibility is in terms of speculating upon motive. However, the Minister is responsible, of course, for officials who are in the ministries for which he is responsible.

Gerry Brownlee: I raise a point of order, Madam Speaker. That is a very interesting ruling, because we have been trying to get the Hon George Hawkins to be responsible for officials in his department for months. We have had repeated advice from the Speaker that the Minister is not responsible for operational matters, not responsible for the direct employment of anybody in his department, and responsible only for vote allocations. How is it different for the Minister of Foreign Affairs and Trade?

Madam SPEAKER: I think we are confusing issues here.

Gerry Brownlee: No, we are not.

Madam SPEAKER: Yes, we are. The matter was about operational, administrative matters. However, I think the Minister will have to be very careful as he addresses this question.

Hon PHIL GOFF: The skill that Ministry of Foreign Affairs and Trade officials have is to sit at meetings and accurately record what was said. The official concerned had no political axe to grind. He was quite clear in what was said, unlike Dr Brash, who claimed he could not remember what he said a couple of weeks earlier.

Madam SPEAKER: That last part was unnecessary; that was speculating on Dr Brash’s state of mind.

Hon PHIL GOFF: I would never do that.

Madam SPEAKER: Stop it. That was out of order.

Hon Richard Prebble: Can I, and can the House, interpret the Minister’s answers to be that he has seen reports that have led him to believe that the majority of New Zealanders support the nuclear-free policy, and that is the real reason why the Government supports the policy; if so, does he have any fear of the issue of nuclear-powered shipping being put to a referendum, and if he does, why?

Hon PHIL GOFF: The public opinion on this issue has been quite consistent since 1987. It is not a case of the Labour Government believing in the policy because of the public opinion—other parties in the House might do that. The Labour Government has been steadfastly committed—along with the Greens and, I think, most other parties in the House except for National and ACT—to a policy of keeping New Zealand nuclear-free. Because public opinion has been so consistent for so long, there is absolutely no need for a referendum—that is already clear. The only need for a referendum is so that an expedient political party can try to get itself off the hook, which is precisely what National is trying to do, as Ken Shirley pointed out.

Hon Dr Michael Cullen: Does the Minister recall that the Hon Richard Prebble introduced the first private member’s bill to ban nuclear ships in New Zealand waters; if so, has he received an explanation for Mr Prebble’s U-turn on this matter?

Hon PHIL GOFF: I very clearly do remember that, and Ken Shirley was an adamant supporter of that policy.

Rodney Hide: I raise a point of order, Madam Speaker. How could that question possibly be in order?

Madam SPEAKER: Yes, I agree with the member.

Rodney Hide: We are quite happy to have Phil Goff speculate on it—it is no embarrassment to us—but we must have some Standing Orders applying in the House.

Madam SPEAKER: You are ahead, Mr Hide. I agree that that question was inappropriate.

Hon Richard Prebble: I am obliged to my leader, but I am actually very proud of those three bills. They brought down the Muldoon Government.

Madam SPEAKER: Thank you for that bit of history.

Hon Dr Nick Smith: I seek the leave of the House to table the Wall Street Journal article in which New Zealand is associated with Iran on the complete failure of the negotiations for the Treaty on the Non-Proliferation of Nuclear Weapons, which is a tragedy for New Zealand and the world.

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

Accident and Emergency Centres—Waiting Times

8. Dr PAUL HUTCHISON (National—Port Waikato) to the Minister of Health: Does she stand by her statement regarding accident and emergency department waiting times: “Any patients who present with those conditions should be seen within that time, and I believe they are.”; if not, why not?

Hon ANNETTE KING (Minister of Health): Yes.

Dr Paul Hutchison: Why did the Minister also claim last Thursday: “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.”, and does this not typify her failure to appreciate reality, given that the benchmark report shows that 14 out of 21 district health boards fail to meet targets and that clinicians I have spoken to this very afternoon say that her statement is utter, unadulterated nonsense?

Hon ANNETTE KING: No, it means that I believe the clinicians. I direct the member to Dr Peter Freeman, head of the emergency department at Capital and Coast District Health Board, who said that patients in triage category 1 are seen immediately. I believe Dr Freeman.

Steve Chadwick: Can the Minister confirm the concern raised in the House by Dr Hutchison on 8 June that 14 out of 21 district health boards failed to attend to serious conditions such as heart attack and massive bleeding?

Hon ANNETTE KING: No. Dr Hutchison misinformed this House on at least two occasions last week when he claimed that 14 of the 21 district health boards “failed to attend to serious conditions such as heart attacks, massive bleeding, …”. The latest report—the March 2005 report—did not show that at all. It showed that five of the 21 did not meet the benchmark. However, the waiting time starts from a patient’s first contact with a triage nurse and runs until the consultation with a registered medical practitioner. Often the doctor does not log on to the medical records system until after he or she has completed the consultation. In other words, doctors attend to the patient first, then they log on to the system. That is why Dr Peter Freeman, head of the emergency department in Wellington, said that the triage report did not accurately reflect patient care.

Dr Paul Hutchison: I raise a point of order, Madam Speaker. The Minister has suggested that I misinformed the House. I believe that she has misinformed the House by not accurately recording my entire question, which showed that 14 out of 21 district health boards in New Zealand failed to achieve the measured times that were recommended.

Hon ANNETTE KING: I will table the report, because the member is portraying it incorrectly—for political purposes, I think. It does not show what that member says it does.

Madam SPEAKER: Would the Minister care to table that report now.

Hon ANNETTE KING: I seek leave to table the latest benchmark report.

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

Barbara Stewart: What encouragement can the Minister offer to the staff and patients at Wellington Hospital’s emergency department, given that patients who present with anything less serious than a heart attack, massive bleeding, or concussion may find themselves waiting in hallways, storage facilities, or the counselling room for treatment?

Hon ANNETTE KING: I am pleased to tell the member that quite a lot has been done at the Wellington Hospital emergency department. Opened only 4½ years ago, it will have an assessment unit of 14 beds by August, which will allow people to move through the emergency department faster, and an ambulatory care zone for fast tracking of patients will be developed. It has a four-bed area that will be used for this purpose. So people in the department are doing the best they can. They are under pressure and they acknowledge that. However, the head of their department tells me that they are seeing people appropriately.

Heather Roy: Given that after-hours services have been closed or reduced at Taumarunui, Winton, Wellington, Tauranga, New Plymouth, Upper Hutt, Queenstown, and Dunedin under her watch; that several boards are considering charging at accident and emergency departments; and that the latest New Zealand Doctor polls show that half the country’s general practitioners are struggling with their after-hours situation, does she rule out allowing accident and emergency departments to charge, and how is it possible that she has such a disaster on her hands, given that she has injected an extra $3.5 billion into health?

Hon ANNETTE KING: The only people who think we have an absolute disaster on our hands are members of the ACT party, who are trying to get some sort of traction when they are 2 percent in the polls and getting absolutely nowhere. No patient is charged for an accident and emergency service that should be handled in a hospital. But for many years hospitals have offered out general practitioner services, and patients are charged the same as they would be when going to any general practitioner.

Dr Paul Hutchison: Why has she not changed the system of recording triage times, given that last Thursday she claimed it was a poor way of measuring data, even though her ministry initiated the system, and is this not just another case of an inept Minister ducking responsibility and trying to bluff and blather her way out of a very serious issue?

Hon ANNETTE KING: I thought the member, who is a doctor, would have known that triage times were not set by my ministry, but by the Australasian College for Emergency Medicine. He will also know that the college is reviewing with the ministry the way we recall the triage times, because they do not—as Dr Freeman said—accurately show the care a patient is getting.

Dr Paul Hutchison: Does the Minister agree with comments made by Helen Clark 9 years ago, when she said: “We know that winter brings an increase in health problems. It happens every year, but our hospitals must be ready to cope with the problems. It just isn’t good enough to have basic services break down.”, and does she remain in denial that the reporting of patients being treated in the corridors of Wellington Hospital and of storage rooms being used for treatment is yet another sign that basic services have broken down?

Hon ANNETTE KING: Yes, I agree with the Prime Minister. That is why, under this Government, the specialty of emergency medicine was introduced for the first time. One of the reasons Wellington Hospital is having some problems is that, unfortunately, there are not enough beds in the emergency department that was opened 4½ years ago. I wish the National Government had decided to make it bigger when they decided on its size in 1999.

Health, Ministry—Policy and Funding

9. BARBARA STEWART (NZ First) to the Minister of Health: Is she confident that policy and funding originating from the Ministry of Health are achieving their intended purpose; if so, why?

Hon ANNETTE KING (Minister of Health): In general, yes, as seen by the improvement in New Zealanders’ life expectancy.

Barbara Stewart: Can the Minister assure us that the funds allocated in the latest Budget will be used to improve the lives of those in aged care; if so, why is the chief executive of HealthCare Providers New Zealand, Martin Taylor, saying that most of the increased rest home spending will be used to meet the cost of inflation and cover existing deficits?

Hon ANNETTE KING: Yes, I can confirm that the money will be spent for the benefit of all New Zealanders, particularly older New Zealanders, and that the additional money that is being spent for aged care will go for aged care.

Dianne Yates: Is the Minister also confident that primary-care policy and funding originating from the Ministry of Health are achieving their intended purpose?

Hon ANNETTE KING: Yes. The Primary Health Care Strategy, I think, is the greatest improvement in primary health care policy for decades. It does mean that many New Zealanders now have access to affordable primary health care. From 1 July this year, the 18 to 24-year-olds will join the over-65s and the under-18s in getting access to more affordable primary health care—something that New Zealanders had until the Budget of 1991, when Ruth Richardson took away the subsidy they had for primary health care.

Dr Paul Hutchison: Why does the Minister not admit failure, when, after a further $3.5 billion has been poured into health and after massive, unnecessary restructuring, patients, including the elderly, spill into hospital corridors, a situation Helen Clark described in 1996 as “disgraceful for a public health system in the middle of winter”?

Hon ANNETTE KING: The reason is that it would be wrong. That is the reason why.

Barbara Stewart: Is the Minister confident that the recent Budget funding will provide adequate funding for the elderly who lack financial resources and require rest home care, and who depend totally on superannuation?

Hon ANNETTE KING: Yes.

Foreshore and Seabed Act—Legal Aid

10. GERRY BROWNLEE (Deputy Leader—National) to the Deputy Prime Minister: Does he remain committed to upholding his statement of 6 May 2004 in relation to the Foreshore and Seabed Bill that it “does not establish a new avenue for legal aid”; if not, why not?

Hon Dr MICHAEL CULLEN (Deputy Prime Minister): Yes.

Gerry Brownlee: Can the Deputy Prime Minister confirm reports from Judge Joe Williams, Chief Judge of the Māori Land Court, that six new appointments to the bench of that court are imminent; and can he also confirm that Treasury Budget documents state that most of those new appointments will be the result of the Foreshore and Seabed Act?

Hon Dr MICHAEL CULLEN: It is expected that additional appointments to the Māori Land Court will be required to deal with applications, though I think so far there have been only about two applications to it.

Gerry Brownlee: Then can the Minister tell us why Cabinet has approved six new appointments to that bench?

Hon Dr MICHAEL CULLEN: It is in anticipation of their being required to deal with applications. Of course, should those applications not eventuate, then that may have an impact on requirements in the future.

Dail Jones: Can the Minister confirm that those appointments were indicated by the Court of Appeal in the Ngāti Apa case, when it indicated that the new jurisdiction and the extra work that would arise would require further appointments to the Māori Land Court; and that the Government is merely following the Court of Appeal’s recommendation?

Hon Dr MICHAEL CULLEN: That is correct. Those who did not support passing legislation in relation to the Ngāti Apa decision would have been left in that position, in any case.

Gerry Brownlee: Has the Minister participated in discussions that have resulted in a commitment for the Labour Government, should it be returned to the Treasury benches, to support Nanaia Mahuta’s bill that allows foreshore and seabed claimants access to legal aid?

Hon Dr MICHAEL CULLEN: No.

Apples—Australian Market Access

11. RUSSELL FAIRBROTHER (Labour—Napier) to the Minister for Trade Negotiations: What progress, if any, can he report in the battle to get access to the Australian market for New Zealand apples?

Hon JIM SUTTON (Minister for Trade Negotiations): The Government has decided to inscribe the Australian apples issue on the agenda of this month’s meeting of the World Trade Organization Committee on Sanitary and Phytosanitary Measures. We have been trying hard for many years to get a fair deal for New Zealand apple growers. We consider that the science is clear but, regrettably, the whole Australian process has dragged on too long.

Hon David Carter: Why has it taken the Minister so long to act; and was it just because of the threat of another embarrassing protest on the steps of Parliament next week, like that over the “fart tax”?

Hon JIM SUTTON: Multilateral action is not something any country should take lightly. It has never before had to be resorted to by either Australia or New Zealand against each other. Our objective is to get access for our apples, and we have now decided to take a significant step in the World Trade Organization process. Unfortunately, although we appeared to be on the brink of success in 1990, the then incoming National Government let the matter drop and did not reapply until 1999.

Dail Jones: Bearing in mind that this question follows many questions by New Zealand First in recent times, can the Minister confirm that he is actually taking this dispute not to the World Trade Organization but only to a committee; and when will he do something about it and take it to the World Trade Organization Dispute Settlement Body immediately?

Hon JIM SUTTON: To go to the Dispute Settlement Body would be time-consuming and costly. Inscription will be faster. It has worked for us before with other countries. We note that the disputes panel some time ago found in favour of the US in a very similar case it took against Japan, although no apples have yet flowed as a result. A ruling in a subsequent dispute over compliance with that first ruling is expected shortly. This will be an important precedent for litigation between New Zealand and Australia, and the present move will improve our chances of success, should we have to go to that extent ourselves.

Dail Jones: Does the Minister agree that his answer is really no help, at all, to apple growers in New Zealand, because taking this matter just to the Committee on Sanitary and Phytosanitary Measures adds another delay in the whole procedure and, inevitably, the Australians will make sure that the matter ends up at the World Trade Organization Dispute Settlement Body; so why do we not take it there now, as all the apple growers of New Zealand are demanding, instead of caving in to the Australians once again?

Hon JIM SUTTON: The answer to the first question is no, and the answer to the second question is that I have consulted with the leadership of the New Zealand apple industry and it supports the actions being taken.

Crimes Act—Repeal of Section 59

12. JUDY TURNER (Deputy Leader—United Future) to the Minister for Social Development and Employment: Does he still stand by his statement with regard to parental discipline that “The truth is that the Government is working through the issue and has not yet arrived at a conclusion.”; if not, why not?

Hon STEVE MAHAREY (Minister for Social Development and Employment): Yes, I do. This Government is concerned to prevent family violence, but Government measures must support parents by giving alternatives to physical discipline, and avoid criminalising ordinary parents who may smack a child. Whether that is best achieved by repealing or amending section 59 is still an open question that can only benefit from debate in the wider public arena.

Judy Turner: How does the Minister reconcile his statement made at the Plunket Society conference over the weekend that the Government does not yet have a policy on repealing section 59 of the Crimes Act, with the Prime Minister’s indication yesterday that she believes it should be repealed; and whom should parents believe on this issue?

Hon STEVE MAHAREY: The Prime Minister has made it clear that that is her personal opinion on the matter. It is clear, as we have been stating for some time, that we chose to invest in parenting programmes, and that we will revisit the issue. As I have mentioned, we are very clear on the notion that Government measures must support parents to provide alternatives to physical discipline, but we want to avoid criminalising ordinary parents who choose to smack a child. And, of course, this issue is best opened to wide public debate.

Helen Duncan: What initiatives has this Government put in place to prevent family violence?

Hon STEVE MAHAREY: Heaps. Family violence is a critical issue for this Government, and we have established a number of policies: the Te Rito Government strategy oversees the policy; $10.8 million for Strategies with Kids—Information for Parents, which is a positive parenting programme; Family Violence Funding Circuit Breaker teams; the community collaborative initiatives fund for prevention of family violence; the Child, Youth and Family Services Everyday Communities programme; New Zealand Family Violence Clearing House; family safety teams; advocates for children witnessing family violence; and a Family Violence Intervention Programme in Work and Income offices from July this year. It is a great deal.

Jeanette Fitzsimons: Does the Minister agree that beating children with riding crops and lumps of wood, as allowed by the courts under section 59 of the Crimes Act, is unacceptable in a civilised society, and does he also agree that describing Sue Bradford’s bill as banning smacking is confusing and trivialising the issue?

Hon STEVE MAHAREY: In answer to the first question, yes. In answer to the second question, my understanding of Ms Bradford’s bill is that it seeks to repeal section 59 of the Crimes Act, not to ban smacking. I do not know anybody in the House who would want to take that position, but the National Party, for its own purposes, loves being confused and loves confusing the issue.

Madam SPEAKER: That is not necessary.

Murray Smith: Does the Minister accept that simply removing section 59 of the Crimes Act without replacing it with something else, such as my member’s bill provisions, would mean that any parents who physically disciplined their child would be committing a criminal offence; if so, does he consider that people who commit criminal offences are criminals only if they are successfully prosecuted?

Hon STEVE MAHAREY: No, I do not accept the premise of the member’s question. What I think we are up to in this debate is, as I signalled in my answer to the primary question, that no one in the House condones anybody using violence on a child that leads to harm. Everybody in the House wishes to avoid any notion that an ordinary parent smacking a child would end up being criminalised, and therefore the best step forward at the present time is to allow for an open debate.

Sue Kedgley: Has he seen reports from the Plunket Society, the Commissioner for Children, the Law Society, and many community groups such as the National Council of Women, the Public Health Association of New Zealand, the Paediatric Society, and now the Families Commissioner, all supporting repeal of section 59 of the Crimes Act, and would he agree that that shows that a wide cross section of middle New Zealand, and groups concerned about the welfare of children and families, support Ms Bradford’s bill to repeal section 59 of the Crimes Act?

Hon STEVE MAHAREY: I think recent opinion polls, as well as that long list, show that public opinion on this matter has changed quite significantly over recent years, and therefore I repeat that I think the position we are in is that people are opposed to physical discipline of children that leads to harm, and they want to avoid criminalisation of ordinary parents who smack their children, and therefore it is time for a wide, open debate about these issues, which all those people have called for.

Judy Turner: Does the Minister accept that unintended consequences of the member’s bill seeking to repeal section 59 of the Crimes Act mean that an amended version would better serve his Government’s position on this matter?

Hon STEVE MAHAREY: While members of this Government hold views on this issue, there is no specific policy, because, as we have said, we have chosen to invest in positive parenting programmes and to evaluate those. But we are clear where public opinion lies, and therefore we invite members of the House to allow the wider public to have a view on this matter. It is a matter that requires the input of the public. It is very clear that the parameters of this debate are about avoiding criminalising ordinary parents, and ensuring that children are kept safe. Allow an open debate!

Judy Turner: Can the Minister confirm that the Government will treat the repeal of section 59 of the Crimes Act as a conscience issue; if not, why not?

Hon STEVE MAHAREY: The only bill before this House on this matter is a member’s bill, and it is yet to be decided upon. But I think it would be the view of the Labour members of the House that that bill should go to a select committee, where the public can have a say on the issue, rather than our trying to shut it down as some people seem to want to do.

Murray Smith: I seek leave to table a copy of my member’s bill, which clarifies the difference between abuse and appropriate physical discipline.

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

Sue Kedgley: I seek leave to table a document calling for the repeal of section 59 of the Crimes Act, signed by Presbyterian Support New Zealand, Parents Centres New Zealand, and many other groups.

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

Sue Kedgley: I seek leave to table a remit passed by the New Zealand Plunket Society supporting the repeal of section 59 of the Crimes Act, which points out that it provides a legal excuse in cases of serious assault against children.

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

Barbara Stewart: I seek leave to table my member’s bill, which outlaws attacking a child with a secondary implement, and also hitting a child around the head.

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

Bills

Imprest Supply (First for 2005/06) Bill

First Reading

Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Imprest Supply (First for 2005/06) Bill be now read a first time.

Bill read a first time.

Supplementary Estimates

Imprest Supply Debate

Imprest Supply Debate

Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Appropriation (2004/05 Supplementary Estimates) Bill and the Imprest Supply (First for 2005/06) Bill be now read a second time. This will be, of course, the last imprest supply bill before the election. It is a good time to place on the record certain key facts. It is a good time to ask some key questions of the desperate and dateless members opposite us.

This Government has a proud record, and we are grateful for the support we have received from parties in the House. We have seen economic growth at the highest sustained level for 30-odd years in New Zealand. We have outstripped Australia for 4 years in a row, which the National Government never achieved. We have seen the growth and innovation framework, which is guiding that economic policy. We have seen employment rising, with 260,000 new jobs, the vast majority of which are full-time jobs. We have seen unemployment dropping to record low levels since the modern indices began. We have seen poverty falling for the first time for many years in New Zealand, and that is before the Working for Families package started to come into force in any great sense on 1 April this year. We have seen health spending rise. We have seen mortality rates fall and life expectancy rates rise. We have seen the growth of primary health-care organisations, cheaper doctors’ visits, cheaper pharmaceuticals, and increased operations across the board.

We have seen a restoration of the level of New Zealand superannuation, which was cut by the National Government in 1999, at the same time that it legislated for a tax cut. One paid for the other then, as it would again in the future under a National Government. We have seen the setting up of the New Zealand Superannuation Fund, which secures the future of New Zealand superannuation, and, finally, the National Party has had to accept that that fund is a permanent part of New Zealand’s public policy.

We have seen successful industrial relations reform, which has seen record low levels of industrial disputes, and, indeed, underemployed institutions for settling industrial disputes. We have seen the introduction of paid parental leave and so much else. Moving forward we will see the introduction of the KiwiSaver scheme to help average, ordinary, hard-working, battling Kiwis save for their future, their retirement, and their deposit on a first home, and this Labour-led Government is the first party in 30 years to introduce those sorts of measures.

We will see, on 1 April next year, stage 2 of Working for Families, which will deliver to many two-child, low to middle income working households $30, $40, or $50 a week extra in the hand, which could never be matched by any tax cuts the Opposition can offer. On 1 July next year we will see the introduction of the rates rebate scheme, which will help tens upon tens of thousands of superannuitants pay the rates they struggle with at the present time. We will see, on 1 April next year, the introduction—indeed some of it was on 1 April this year—of business tax changes and the simplification of that scheme.

From members opposite, all we have heard offered against that is one thing: tax cuts. National has become like the ACT party these days. Tax cuts is the answer from the members opposite to everything, from paedophilia to boils on the back, as far as one can tell. How do we solve the problem of too many people being in accident and emergency departments? Give them a tax cut! Give them a tax cut, and they will leave, bleeding but happy—marching into the golden future they will go under a National Government.

We ask now: where is the beef? It has been promised for so long. It is a case of Salome with about 97 veils on, and only five have gone; there are still 92 left to go. Under National, there would be tax cuts by Christmas, then it was by 1 April next year, then it was in 6 or 9 years, then it was for the top end, then it was for the middle, then it was for the top again, then it was for everybody. So it goes on and on in utter confusion.

Watching Dr Brash against Simon Dallow on Saturday morning was an exercise in elderly confusion. Like an ageing courtesan, the National Party is trying to keep its policy covered up until the lights have gone out, the election is on, and the public cannot really see what is actually underneath. And underlying that policy is a whole set of myths. The first myth is big government. The National Government never got government spending below 32 percent of GDP. It is 30 percent of GDP now. After Working for Families and all the other things, it will rise back to 32 percent of GDP and stay there. Where is this big government that Labour has been putting in place?

The second myth is high tax. Australians have two tax rates above our top tax rate, and tax on top of their higher taxes in terms of Medicare, compulsory superannuation, capital gains tax, stamp duty—and so on, and so on.

The third myth is that National can deliver a lot to the ordinary, hard-working Kiwi by means of tax cuts. What would the Australians deliver for the equivalent of a billion dollars or so a year if it was in New Zealand? Six dollars a week! Will that be the big bribe? That will not fill up a billboard, will it? Not even half a billboard would be filled up by $6 a week from the Opposition—and it is not what people are expecting, or have been led to believe, if National were to be elected.

National is now promising significant tax cuts for all workers. We know what that means. People are expecting about 30 bucks a week from National. National has promised movements in every threshold, and to get back to 5 percent on the top rate means raising the top threshold to $80,000. It has promised to cut the top rate from 39c to 36c. It has promised to cut the company tax rate from 33c to 30c. It has promised to divert all the money out of the Government account, over time, into the National Land Transport Fund. It has promised to scrap the carbon tax. What does that add up to? It adds up to $4 billion a year to start with, rising to $5 billion a year by 2007-08. That is the cost of National’s policy. That cannot be done by simply cutting the number of public servants in Wellington. There are not enough to go around. If we cut the lot of them, there would not be enough left over.

The fourth myth is that we can pay for tax cuts next year, and the year after, and the year after, and the year after, with this year’s cash surplus. But this year’s cash surplus will be all gone by 30 June. It has been used to pay off debt. It has gone into the superannuation fund. It has gone here, it has gone there, it has gone everywhere. None of it will be left on 1 July.

So what will pay for these tax cuts, come a National Government, if it is ever elected? We know the consequences. Firstly, higher interest rates, because that much looser fiscal policy must mean tighter monetary policy, and it must mean higher interest rates. Those hard-working, battling Kiwis will pay more on their mortgage to pay for John Key’s tax cuts. He will be laughing all the way and putting more of his money offshore, as it all is at the present time. He will continue to invest overseas, rather than in the future of this country, as we learnt today in question time. It is pretty obvious what that was all about. The hard-working, battling Kiwi will be the person who has to pay for that.

National would have to cut into core spending. The billboard is right. It is tax, or it is a cut. It is tax or a cut in health; it is tax or a cut in superannuation; it is tax or a cut in education; it is tax or a cut in law and order. That is what the battle is about, as we lead into this election over the next few weeks. Electing a National Government would be the 1990s all over again—cuts, cuts, and cuts to pay for tax cuts for those who are better off. We saw it in 1996, 1998, and 1999.

The real question for New Zealanders is very, very simple. Can they afford National? The answer for the great majority of New Zealanders is very simple. No, they cannot afford National. Only a small minority can afford a National Government. That is why National will not release its policy until the last possible moment. If it is released too soon it will be clear there are holes in the policy, it will be clear it does not add up, it will be clear it will make this country worse off, it will be clear it will make most New Zealanders worse off, and it will be back to the misery and strife of the 1990s under Ruth Richardson and Bill Birch. Bring it on, in 2005, for this election.

JOHN KEY (National—Helensville): What a revealing speech that was from the Minister of Finance in the House this afternoon. The entire Cabinet was whipped to come to the House to listen to his speech on the Appropriation Bill. Government members were desperate to try to give their Minister of Finance some encouragement, because they know a Minister of Finance on the rack when they see one. They were so desperate that they forced the entire Cabinet to come to the House to listen to his speech. About the best thing we can say is that they looked slightly more enthused with that speech than they did with his Budget speech. When Dr Cullen rose on 19 May and read the Budget, the entire Cabinet looked bored. Darren Hughes was out in the lobby, giving No-Doz tablets to back-bench members. It was a disgrace. It was nothing short of a public relations disaster—a public relations disaster that will cause the end of a number of casualties. Mike Munro was not happy that he was not told of this strategy. He was not told what was going on. He was unhappy.

Darren Hughes: I raise a point of order, Madam Speaker. I want to make it clear that the Government is happy for a 5-minute suspension in the debate to allow there to be more than one National Party MP in the House listening to Mr Key. It is very unfair of his colleagues.

Madam DEPUTY SPEAKER: The member will please be seated. He knows that is not a point of order on which to interrupt a member’s speech.

JOHN KEY: The truth is that I do not need a whole lot of people to try to prop me up and tell me that I delivered a good Budget when I know it was a bad one. I do not need my mates around me. I am quite confident in what I am doing. I am not the one who is lying in bed at night, wondering how I could have got an available cash surplus of about $4 billion—and we will work our way through those numbers in a moment—and how I could have been so out of touch with the people of New Zealand.

Mark my words, this Government is on the way out, because it has become arrogant and it is not listening. I was on Newstalk ZB the day after the Budget was delivered, with Michael Cullen. He was asked the hard question. He was asked why there were no tax cuts in the Budget, and he gave this answer: “According to our polling, people don’t want them.” That is what happens when a Government is run on the basis of looking backwards at the polls. It forgets what the average, battling mainstream New Zealander cares about. It is not about a bunch of flaky policies and programmes that the Government is dreaming up, with thousands of bureaucrats, left, right, and centre; it is about real New Zealanders not being forced to line up in queues at Work and Income, to be turned into beneficiaries. When Michael Cullen can come to the House and tell New Zealand families why they have to pay the top personal rate of taxation, at 39c in the dollar, and at the same time ask them to line up at Work and Income, then he will be able to answer a question that at the moment they are scratching their heads over.

The Budget was an absolute disaster. The “deep, dark secret” that Mike Williams went out and told New Zealanders about was meant to be some great tax cut. Mike Williams knows that. He has tried to argue, through his Minister of Finance, that it was the KiwiSaver. Last time I looked, I do not think the Labour Government would like to hear what Mike Williams thinks the KiwiSaver scheme is. He thinks it is a dirty, dark Tory secret. Mike Williams was trying to do one thing, and that was to pump up this Budget—to pump up the fact that there was some sort of tax cut. The truth of it is that there was no tax cut. The people of New Zealand know what the “deep, dark secret” is; they absolutely know. It is that under this Labour Government, for as long as Labour is in office, there will never be a tax cut. That is why the people are rejecting Labour, and that is why they will reject it come election day. It does not matter whether the election is in July, or August, or September. This lot will be gone, because the people of New Zealand are sick and tired of a bunch of bureaucrats being employed while their families’ belts are being tightened, because the Government wants to go out and spend their money, thinking it can do so on their behalf. That is the truth of it.

The “deep, dark secret” is that there will never be a tax cut under Labour. If it cannot afford a cut when there is an available cash surplus of around $4 billion, when there is an operating balance excluding revaluations and accounting changes of $7.4 billion for the second year in a row, just tell me the conditions under which we can have a tax cut. There never ever will be one.

This is a Government that is out of control. Every time I get up and talk about the number of bureaucrats who have been hired in Wellington, the Minister of State Services wants to stand up and say that I am somehow deluded, that I must be wrong, and that no extra bureaucrats have been hired. Answer me this question: if they are all the same people who are being transferred in from other Government departments, if they are already on the payroll, then why has the amount of commercial real estate that the Government has taken here in Wellington gone from 360,000 square metres to over 500,000 square metres in the last 5 years? Tell me why the core State sector has gone up from 30,000 to at least 38,000, if not more. Tell me why Treasury is writing to the Government, to tell it that its policies are out of control, that 80 percent of Government departments have been hiring, recklessly, that there is no increase in productivity, and that there will have to be cuts.

Last Friday, Treasury put on its website the Budget discussion document. I urge people to read that document. It states quite clearly that Labour’s policies are not working, that reprioritisation has to take place, and that cuts have to happen. That is the advice coming from Treasury, not just once to the State sector but also in the Budget advice document. Mark my words, there was a reason for a lot of people coming down to the Chamber to listen to Michael Cullen this afternoon, and it had nothing to do with the quality of his speech or of the outcome; it had to do with the fact that this Government has got it so horribly wrong, and the polls it is seeing internally are telling it that it is the end.

Government members shake their heads. That is exactly why they are in trouble. They are in denial. We know that the NBR poll has been done by UMR pollsters. We know that UMR has been on the phone to the Prime Minister and to Michael Cullen. We know that in today’s New Zealand Herald there was just a hint that maybe Dr Michael Cullen might be forced to bring forward those indexation changes. We know when the Minister of Finance is in serious trouble. We know that this is not the confident Michael Cullen who ruled the Chamber, that this is a Michael Cullen who is under pressure. I have said many times before that when Michael Cullen was given the portfolio of Attorney-General it was the straw that broke the camel’s back—and boy, did we not see that on Budget day when he made such a hash! He has argued that the available cash is $2.4 billion. Well, what does he argue is the $700 million in cash that he is giving to the Reserve Bank? Is that a consumption item? Why does he include $723 million of student loans that have been repaid at over the Government bond rate? There are billions and billions of dollars of cash.

The Minister came into the House and told us that New Zealanders should feel good, because they pay less tax than Australians. He does not understand—and he should, because he is the Minister of Revenue—that New Zealand has a broad-base low rate of taxation. That means that people in New Zealand can deduct virtually nothing from their income, whereas for people in Australia there are many, many deductions before they get there. A few weeks before the Budget I asked Michael Cullen in this House what he thought of the Australian Budget from Peter Costello and what he would do to match a situation where Australia will attract bright, young, hard-working entrepreneurial people. He stood in the House and answered that we should be happy, because in Australia 80 percent of people will face a top personal rate of 30c in the dollar and, somehow, in New Zealand, it is a great thing that 75 percent of people will face a top personal rate of 21c in the dollars. That tells us just how out of touch Michael Cullen is. What he has just told the people of New Zealand is that it is a good thing that 80 percent of Australians earn $70,000, or less, and a good thing that 75 percent of New Zealanders earn $38,000, or less.

National does not believe that earning $38,000, or less, is as good as it gets. We do believe in increasing the pie. We do not believe in redistribution. We do believe in those good old-fashioned principles that have made New Zealand go forward—in taking the opportunity to tell New Zealanders that they can keep more of what they earn and that we will join with them as a Government and share the upside and the good times. Michael Cullen is a finance manager and a Minister of Finance who has proved he wants to balance the books on the revenue side. There will be more Labour speeches and more Labour cronies sitting in those seats—and boy will Labour need them when it is under so much pressure!

BILL GUDGEON (NZ First): The Grow Up Free From Poverty report was commissioned last January, and nobody knew just how many people were falling through the gaps in international aid. Major charities wanted to know how children, often the worst casualties of poverty, saw their own situations. Children in 18 developing countries reported that they did not see enough of their parents. Stigmatised by AIDS or disability, many knew that their best hope of living was in the sex trade. The biggest problem was their parents’ alcoholism and, according to the report, that was at the top of the agenda.

What is happening in New Zealand—a developed nation, supposedly? We have an accident and emergency department without a hospital, or it could be the other way around; we have a hospital without an accident and emergency department. We have families who are suffering, children without parental guidance, and Government departments unskilled to carry out the responsibilities placed before them.

I quote from the Sunday Star-Times of 12 June: “CYF alerted before baby died. Family, nurses, lawyers, and a doctor raised concerns about the treatment of 7-month-old Kathleen Harris-Talivai.” There has been famine and poverty in many parts of the world, but here in New Zealand it is becoming all too common that physical abuse beyond description is part of what happens every day. How can a Child, Youth and Family Services worker advise that the child in question would be better off with his or her parents, when there is evidence before the worker that the child is being physically abused? Why does it have to be like this?

The social policies of this Government have a part to play in what is happening in our communities. In speaking to a high-profile identity of the Ngāti Porou iwi, it was stated that many of our people have lost the work ethic, and along with that have come the negative results of idleness. Family as we understand it—father, mother, and children—are starting to become an issue that is fading into the sunset, and other agendas are coming to the fore. The reason why there is instability in our society is that there is a lack of good parenting skills, and the social engineering of this Government has contributed much to that agenda.

The elderly have been neglected, especially those who have served our nation in the armed forces. This Government will give aid offshore, but no consideration will be given to 35 servicemen in the Montecillo Veterans Home and Hospital in Dunedin. The Agent Orange debacle is still unclear and there is still no result as to what compensation should be given. The last words I heard from the Montecillo veteran were these: “Remind the Governments”—and that includes National and Labour—“of their promises that they made to us when we returned from the war.” What were those promises? They were that the veterans would be taken care of.

Let me remind this Government again: $10 billion given to the armed forces works out at less than 1 percent, and we still have a skeleton armed forces programme running. How can that be, when defence should at the top of the agenda for any country and every country, especially the democratic nations?

JIM PETERS (NZ First): In the grand speech made by the Minister of Finance he asked the question whether New Zealanders can afford National. The real question he should have asked was: “Can we afford Labour yet again?”. The answer from New Zealand First is: “Absolutely no; we cannot.”

The Minister of Finance covered the various issues that he sees as the components of his platform, forgetting absolutely that in 1999 this Government inherited a very stable rural and farming economy, and that nothing Labour has done since then has added one whit—perhaps a few months of help to Fonterra. That is the backbone it inherited. Looking at it from the rural economy point of view, 6 frittered away and wasted years is that proud Government’s record. No wonder the Minister was so voluble, making grand statements about the future; he did that on the backbone of frittered years, when this Government has had, in terms of the land-use economies, the best years that I can remember for a decade and a half, if not more. At the end of that time, all we have seen are wasted time and wasted policies.

But let us come back to the central, core issue, which is this. Last week the most amazing announcement was made by the Minister of Education that the head of the Education Review Office was taking 4 months’ leave to oversee the exam system for the New Zealand Qualifications Authority. What an indictment on that Government’s proud record—as espoused by the Minister of Finance—that, as we speak, an officer has to go from one Government department, supposedly concerned with the audit and review of education, somehow to bring some sort of sensibility to the New Zealand Qualifications Authority! What an indictment! What confidence in our Government does that give our young students, who are halfway through the examination year? It is absolutely deplorable.

But it is no wonder, because that is the sort of thing I see happening throughout the education portfolio. The Ministry of Education has people beavering away in the back room—the bureaucratic army that John Key talked about—putting together key competencies to overturn the traditional framework of education that the secondary school system has had for the past decade. People are beavering away to put together social, key competencies.

What would one expect, therefore, of an agency such as the Teachers Council, which is empowered by the Education Standards Act 2001 to have certain key duties? One such duty is to determine the standards for teacher registration and the issue of practising certificates. That is meant to be the prime aim of the functions of the Teachers Council. As well, it is to develop a code of ethics for teachers. One would expect that the Ministry of Education would have some ability, therefore, to go ahead and implement the intended changes to the Teachers Council, which came from the Teacher Registration Board.

I can report to the House that that is an abysmal failure. It is not just that three separate heads have resigned, and been given good payouts in the process. A year ago I raised these matters at the Education and Science Committee, where I was assured by Ministry of Education officials that the actual functions of the Teachers Council were working. So the House will be surprised to hear that the supplementary estimates do not have any additional votes for the Teachers Council, to try to establish—which it has not done so far—and maintain its function of leadership in the education sector, and also to carry out the simple process of teacher registration. That system is just not working as it ought to. Is it very surprising to me, therefore, to be able to tell the House that the Teachers Council has not functioned in any way as designed by legislation? There are people out there in front of classrooms who do not hold even limited authority to teach. There are people in front of our young children today who have not been registered in any form at all. There are teachers who were registered but are no longer registered. The whole system has failed dismally—that is, the Teachers Council’s monitoring of educational standards and enhancement of the teaching profession, as outlined in the Act, and as mentioned several times by the Minister.

Therefore, all the good words I hear about the education sector—all the trial projects, the short-term funding, all the issues about raising the standard of teaching—have failed. Teachers are still the most important part of the school area. All the aids are but a supplement to having a sound, effective teacher in front of a classroom. At the present time, this Government has failed. It has failed with regard to a supply of competent teachers. It has failed with regard to teacher registration and competence. Unfortunately, and most of all, it has failed the young people of today. As I said last week, youngsters are asking the Government to give them assurance. No such assurance can be given by the Minister of Finance with regard to his Budget, or by the Minister of Education.

Hon STEVE MAHAREY (Minister for Social Development and Employment): Like most members in the House, I am pleased to take part in the debate on the Appropriation (2004/05 Supplementary Estimates) Bill and Imprest Supply (First for 2005/06) Bill because, if there is one thing that defines why we are here, it is this particular debate. It is the debate where we get to talk about how taxpayers’ money will be spent. It means we are charged at this time to say how we have sensibly applied their money to the kinds of issues that make a difference to New Zealanders. After all, the whole point of collecting tax is that it is impossible for individual citizens—and perhaps the richest amongst us have learnt that it is even impossible for them—to be able to buy their own hospitals, lay down their own roads, run their own schools, or do all the myriad of things that taxpayers’ money is raised for.

This is the dividing line between the left and right in politics. On the right, people want less and less money because they personally have more and, therefore, they can do more for themselves. As we move into the “average person” category, they realise that if they do not make a contribution through the taxation, they will not get the kinds of things that allow them to educate their kids, keep them healthy, keep them housed, keep them fed, and get them a job, and do all the things that go with a civilised society.

This election will be very much about that dividing line, whereby people come down on the side of how much we will apply to those issues of collective concern and how much we will return to those who already have privilege. “Privilege”, as far as the National Party and the ACT party are concerned, is its own reward. The more one has the more one will get, under the National Party.

Given that background of why this debate is important, I want to applaud Dr Cullen’s Budget. I think it was the kind of Budget that said: “No, this intends to be a long-term Government.” It says that we are going to carry on responsibly applying the money we raised from taxpayers to issues that are of concern to them. And what a record! There are 6 years of achievement behind Dr Cullen’s administration of those taxes. He is able to point to growth in every single year, above that of the OECD average. He can point to more paid jobs than ever in the history of this country. He can point to having an unemployment rate that is at the head of the OECD—that is, 3.9 percent. The only country with a rate lower than ours is Korea at 3.8 percent. Fewer people are now on a benefit, by hundreds of thousands, than there used to be in this country. I will come back to that point.

There has been continual investment in issues that matter to New Zealanders, and in this Budget Dr Cullen has said that he wants to maintain a strong and credible fiscal stance. In other words, he wants to balance the books, make sure the chequebook is in good shape, and ensure we can pay our way forward so that we do not go back to booming and busting the economy, as was done under previous administrations. We will make sure we can pay our own way. Dr Cullen wants to be fair. He wants to include New Zealanders in the good things that are happening. He wants to ensure that every single Kiwi has a stake in this country and that Kiwis know they can get into a house, afford their education, and have a future here as working New Zealanders, and he wants to build the conditions for growth. What a change!

Dr Cullen wants to build the conditions for growth, as opposed to what we saw from 1972 to 1998, when incomes were dropping. People in this country had become so used to things going down, they wondered if they could ever go up. Since then they have. The conditions for growth have been set in place, and this Budget is about that. There are no bribes, no rush of blood to the head, and no saying that we will do things that we cannot sustain into the future. This Budget is about carrying on laying the foundations for long-term Government, long-term growth, long-term prosperity, and long-term social justice in this country. That is what this Budget was about.

Now, I have to say that in my portfolios I am delighted at what we are doing. In the social development area, I have no doubt that this Budget will do more for people who are on a benefit, but it will also make the debate around beneficiaries even more difficult for National Party members. They can fudge and they can change the figures, but in the end they will have to face the fact that Dr Brash used to say, in his querulous way, that the National Party will get the number of people on benefits down from 500,000. Then, unfortunately for him, he discovered the number was not 500,000; he was including superannuitants. So he had to stop doing that, because he did not want to be caught out on that one.

Dr Brash then said that National would get the number of people on benefits below 400,000. But, unfortunately for him, we have got it below 400,000. So he used to say—and I notice in the newspaper today he is still saying it—that National will get it below 300,000. He says it in that querulous, baloney-led way of his. I have news for him! There are 298,000 beneficiaries now. The number is below 300,000. The number of working-age people on a benefit right now is 298,000. He says that he will lower that figure in 10 years. He says he will take that figure of 298,000—although I am sure it will be lower by the time we have an election, because it keeps dropping—and reduce it by 100,000 in 10 years. That is 10,000 a year. He could do that by doing nothing. Does National have a policy or not?

What is the point of the National Party policy, which is so ambitious that the National Party promises a drop over 10 years, whereby in 5 years we have taken the number from a little over 400,000 to 298,000? Those are the kind of promises one makes when one is 64 years old. Don Brash will be 74 by the time that promise matures—he will be living in Trinidad or somewhere by then, on his gains from the Reserve Bank. So that is not a promise, at all.

In the jobs area, National tells us that it would get more people into jobs, against this Government’s record that shows more people are employed than ever. Don Brash will have more people in employment than ever, when we have more than ever in employment. We have fewer people on benefits—we have a 3.9 percent unemployment rate. We have a superb record on this. Who believes anybody else would do better than this Government has, after it was left with the deficit of the 1990s?

Don Brash says he will fire people who are in the public service. Let us put aside nurses and let us put aside teachers whom he might have to get rid of—let us put aside all those people and just talk about core public servants. When I got my job in the tertiary education area, I asked the Ministry of Education, under the National Government, to send me the people who were doing industry training so I could talk about the rebirth of modern apprenticeships with them. Bill Birch had cancelled apprenticeships in 1992 and we had a major problem: we did not have people being trained. So I asked the ministry to send across the people doing the training. One very thin man turned up in my office to inform me that he spent a quarter of his time on industry training. It is no wonder that there was no Modern Apprenticeships scheme. It is no wonder that there was nothing going on in industry training. It is no wonder that we had a deficit in the people trained to do our skills in our factories. It was because there was nobody in the National Government—nobody in its bureaucracy—who was employed to do anything about training. That is why we have a deficit.

Training cannot be left to the market; if one wants apprentices, everybody has to pitch in and do something about it. We do need at least one whole person to get up each day, and say: “My job is to do something about training.”—at least one! To have a quarter of a person working on it is a bit low. But that is what National wants to do. It wants to take the public service back to the days when it could do nothing.

Research, science, and technology are the driving forces of innovation in this country. Funding has increased by 56 percent since this Government came to power back in 1999. That is the single biggest increase in that budget in the history of funding for science, research, and technology. Is anybody against that? Does anybody think that is wrong? Does anybody want to say that we should not be driving innovation through science? Does anybody want to have those kinds of things cut—apart from Tariana Turia, who does not believe in science anyway? Is anybody against that kind of thing?

What about housing? The KiwiSaver project and the mortgage insurance scheme are getting first home buyers into homes. What about building State houses, lowering the cost of housing, and all the innovative partnerships we have running with Abbeyfield and other community groups who are building houses across this country—is anybody against that kind of spending at all?

I ask members to look at broadcasting. Is anybody against the notion that we should have an independent culture in this country and a strong screen production centre where we are able to produce programmes, films, and television about ourselves that create jobs and create pride? That is why young people like this country these days. They love the notion that they can get a job, have a future, and get an education, and that they live in the kind of exciting country we get from the cultural policies we have been investing in. Can members imagine Don Brash investing in something that might lead to a CD—if he knows what a CD is? That simply will not happen with someone as boring and as out of date as Dr Brash, who would not know Shihad from Pacifier.

Katherine Rich: Neither would Helen Clark!

Hon STEVE MAHAREY: Ms Rich knows who Pacifier is, which is good. Helen Clark would know who Pacifier are; actually, she knows them personally. This is the debate that divides this House—on this side we will invest in this country; on that side they will not.

RODNEY HIDE (Leader—ACT): For the benefit of anyone who is still listening at the end of that speech, I will say it was from Steve Maharey—the smarmy one, as described by his former ministerial colleague John Tamihere. I remember John Tamihere telling the nation that he went to meetings with the smarmy one and was given copious notes, but when he came out they did not add up to anything—there was no substance. We saw that with Steve Maharey in his speech today. We heard Mr Maharey talk about the Budget as being a good use of money and talk about the results of that. We saw last week the human face of Labour’s health policy, and we saw the response from Labour when confronted with the human face of its failed health policy.

Let me remind members what that response was. A man with Huntington’s disease was in pain, and when he went to the dentist he was unable to get his teeth attended to. He was stuck on a waiting list for more than a year. That was the promise of the health waiting system—to wait more than a year, because his case was said to be semi-urgent. Wellington Hospital told him that there were people in far more pain than him, and that he should be happy to wait a year. When that case was raised in the House, we saw the response of the caring Minister of Health. Her response was to get the man’s records and say that he was not in pain! Well, that was news to him. That was news to his mum. [Interruption] The Minister of Health laughs now. She thinks that is funny, because she got away with it. Then she told the House that the man had gone to his dentist on a routine check-up. Well, that was not true, and the Minister now knows it was not true. The man went to the dentist because he had toothache, and he had to wait a year to get it attended to in her health system.

What has happened now? The Minister met with the man’s mother in her office. She got home, and suddenly someone from our health system was on the phone, wanting to see Alvin to look at his teeth, and, yes, he has a date. Why? It is because Annette King was embarrassed. But the sad thing about it is that Alvin is just one of 180—

Jill Pettis: The member would just say “Go private.”

RODNEY HIDE: The member they refer to in the Labour caucus—I am sure in a kind and endearing way—as “paint stripper” or “fish wife” yells out, because she does not want to hear about people and the results of the Government’s health policy. Why does she not just listen and try to help people, for a change? The problem is that we got help for Alvin, but 180,000 people are queued up on our health waiting lists.

Let me walk through the numbers in this Budget. In 1999 the health budget was $6.1 billion. It is now $9.7 billion. It has increased—[Interruption] Jill Pettis yells out about how marvellous that is, because, being a lefty, she thinks that spending money is a good thing as long as it is other people’s money. Health spending has increased by $3.6 billion a year, or 57 percent. One might say: “Wow, I bet that bought a lot of operations.” The figures show that we have increased the number of operations by 1.3 percent. Let us think about it. Annette King has increased the health budget by 57 percent, to increase the number of operations by 1.3 percent. What a useless Minister of Health she is. And members should get this: the number of New Zealanders has increased by 4.3 percent, so the number of operations per capita has gone backwards.

Back in 1999, Annette King said that the waiting list of 96,000 was criminal. Now she does not release the numbers. We have had to work for—[Interruption] The Minister looks up. She knows that is a fact. We have had to—

Hon Annette King: That’s a lie.

RODNEY HIDE: The Minister can call out that I am lying. We have the dose on her, because she has, in this House. The waiting list was 96,000. The budget was increased by $3.6 billion, but what has happened to the health waiting list? It has blown up to 180,000. The number of people on the waiting list has—

Hon Annette King: What rubbish!

RODNEY HIDE: Annette King calls out that that is rubbish. We know why that is. It is because people now have to wait in order to get on to the waiting list. That is the reality of health under Annette King. She still cannot get over the fact that a man with toothache cannot get a $5,000 operation in our health system without waiting at least a year.

The number of people who died while on our health waiting lists was 850 in 1999. Last year, under Annette King, 1,200 people died on our health waiting lists. Annette King sits there and laughs. She knows the numbers, and she should not be laughing at them.

Hon Annette King: I raise a point of order, Madam Speaker. I am quite happy to sit here and listen to that drivel, but I will not have that member say that I am laughing at the comments he is making. It is certainly true that I would laugh at him, but not at the comments he is making.

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

RODNEY HIDE: The Minister can sit there and—she has admitted it—laugh through her speech about the failure of her policy, laugh at the people who are queued up in pain, and laugh about people having to wait in order to get on the waiting list. Treasury itself says that the Minister is out of control. We have the report. It states that the Minister has blown the budget and that health spending is unsustainable. I have never seen a report like it. Treasury advised Michael Cullen to go back to Annette King and tell her to redo the numbers, because her priorities were wrong and the Budget was under stress. We have seen the wasteful spending—$3.6 billion has been spent on health, with no result. More people are waiting than ever before, and more are upset with the health system than ever before.

Then we have the prospect of tax cuts. Mike Williams told the people of New Zealand that there was a deep, dark secret in the Budget, and when I went into the lock-up, I found it. It was a tax cut of $34. I thought wow, that was not bad for someone in the 20c in the dollar tax-rate range. Then I looked at it again. I had thought the tax cut was $34 per week, but it turned out that it was $34 per year—a packet of Wrigley’s chewing gum per week. Then I read a bit more, and found that the cut would not occur until 2008. So people will receive a packet of chewing gum as a tax cut, but they will have to wait 3 years for it under Labour. Michael Cullen says that he cannot afford tax cuts. I say to Michael Cullen, Annette King, and Clayton Cosgrove that New Zealanders cannot afford to keep paying their tax. They cannot afford to fund wānanga, hip-hop tours, and million-dollar grants to rich American companies. They cannot afford to keep paying that tax and make ends meet. That is the situation in this Budget that we are voting on. Currently, the Government’s spending total is $53 billion per year. In the next 5 years it is set to grow, according to Michael Cullen, to $73 billion per year. That is 45 percent faster than the rate the economy is growing at. This Government is forecasting Government spending to grow 45 percent faster than the rate the economy will grow at.

I look at this figure. When we are thinking about what the Government can and cannot afford, the key figure to look at is the net wealth of the Government. Currently, the net wealth of the Government is $35.5 billion. That is the figure when we take all the assets the Government has and deduct all the liabilities. Our Government is solvent and is worth $35.5 billion. Over the next 5 years our Government’s net worth will be $63.1 billion. This Government is a rich Government. It is accumulating wealth at the expense of New Zealanders. The wealth of the Government is increasing at an astonishing $5.5 billion per year, which, interestingly, matches the maximum cost of ACT’s tax policy. If we just held the net wealth of the Government constant, we could pay for ACT’s policy. The net wealth of the Government is going up at the rate of 12 percent. That is all news to Clayton Cosgrove. He sits on the Finance and Expenditure Committee and is the only person who, I noticed when I was on the committee, could sleep while in the chair. It is unbelievable to watch. He actually does not follow anything that goes on in those debates.

The Government’s wealth is growing by $5.5 billion per year. We can afford tax cuts. I say that the people of New Zealand cannot afford to keep paying for this Government and for the wasteful spending that we see. That is why they will give their party vote to ACT at the next election.

KATHERINE RICH (National): If anybody wants to upset Labour right now, he or she need only mention the media’s and the public’s reaction to the Budget. Mike Williams made it incredibly difficult for the Labour Party, I have to say, by going around various meetings in Auckland and around the country, and by giving interviews saying that in the Budget was a deep, dark secret. It was so deep that very few people could ascertain what it was when they first went through the Budget documents—or could not find it, at all. When it transpired that the deep, dark secret was 67c in 3 years’ time, was it any wonder that the New Zealand public shrugged their shoulders and asked: “Is that it? Is that as good as it gets?”

New Zealanders understand, having just had the best economic conditions in a generation, that they should be in a position whereby they can get something back for their work—something back for the hard work they have done over the last 6 or so years. Michael Cullen, as the Minister of Finance, has had the best economic conditions that many Ministers have faced in a long time. If we are not able to have tax cuts after those sorts of conditions, the question most Kiwis are asking is when they can ever be relieved of some of the burden of tax. Members on that side of the House said that no more taxes would be imposed except on a few who earned over $60,000 per year. More taxes have been levied on New Zealanders over the last short period of time than have been levied on most generations prior to the last 6 years.

If we cannot afford a tax cut now, when will we ever be able to afford one? That is a key issue and the key question on the lips of many New Zealanders. That is the reason, I suppose, that the Budget was not well received by the general public. I am not talking about the wealthy—which the Prime Minister and the Minister of Finance seem to think is anybody who earns over $38,000 per year—but about those hard-working Kiwis, the bulk of our citizens, who earn less than that and who want something more in their pockets at the end of the week. They are the people who pay for everything. They do not have a community services card. They pay for everything and face the increasing costs of petrol, Nana’s sherry, and carbon emissions tax. They are paying for absolutely everything and getting nothing back.

Well, we on this side of the House do not think that people earning $38,000 per annum are wealthy. We do not think that people earning $60,000 per annum are wealthy. If we look at our own communities, we will find doctors, nurses, some teachers, and police who earn over $60,000 and who are now caught in that top tax rate. We do not see those people as being the wealthy elite. If we think that those people who earn $60,000 should front up to Work and Income New Zealand to get some kind of handout, then there is little future for our economy.

This bill does not set aside money to fix the tax problem we have in this country. This bill will not give New Zealanders more than just 67c in 3 years’ time. This bill will not set aside money to fix the current problems with the police, which basically leave some Kiwis ringing 111 and getting a cab, not a cop. This bill and this Budget will not fix the current debacle with the National Certificate of Educational Achievement and New Zealand Scholarship. It will not give any relief to hard-working families—the families who get up every day and go to work—

Jill Pettis: Yes, the Working for Families package.

KATHERINE RICH: Is it not interesting that Ms Pettis is now talking about the Working for Families package? That was last year’s story. Labour has dredged it up—understanding that its Budget has fallen as flat as a pancake—to try to make things a bit better when it argues in front of Kiwis who say that its Budget has been such a disappointment to most Kiwis.

We have seen an extra $3.5 billion spent on health. We have seen a whole lot of spending in other areas as well, but we have seen little gain. It was interesting to hear Michael Cullen in the Chamber take credit for good weather, good commodity prices, good economic conditions, and good employment numbers, when that member over there knows that the good conditions we have faced have, frankly, had nothing to do with this Government.

Jill Pettis: One hundred and thirty million dollars has nothing to do with the weather.

KATHERINE RICH: Is it any wonder that Michael Laws of Wanganui says he has some nutters in his town, when Jill Pettis sits over there and makes such inane comments? Labour thinks that for a person to be wealthy, he or she must earn more than $38,000 per year. Well, I can say that we on this side of the House have bigger and better dreams and aspirations for this country. When Kiwis are earning $38,000 per year and the Government’s answer is to make them front up to Work and Income New Zealand to get a handout, then I do not think the Government is asking the right questions. The answer is not further entrenching welfare dependency in this country; the answer is helping people to be independent. Working for Families will provide relief for only about 14,000 extra families who were not already caught up in the welfare system, and I do not think that that is something to crow about.

Moana Mackey: Spin, spin.

KATHERINE RICH: Members on that side might say: “Spin, spin.”, but they are the ones who are spinning. They are the ones who are facing Mike Munro, deeply concerned about the way the spin was handled when it came to the Budget. It is members on that side of the House who are angry that they were let down by Michael Cullen after being told that everything would be all right. They were told: “Keep quiet, boys and girls. There’s going to be something in the Budget that will keep all your punters happy.”, and it did not happen. Sixty-seven cents in 3 years’ time—I bet that will go down well in Gisborne! When those members are standing on the hustings and talking about what Labour is promising, that will not go down terribly well. Mr Hide said it was enough to buy a packet of chewing gum. Actually, it is not. A packet of chewing gum costs 70c. With 67c, one would have to wait till the next year to have enough to get a packet of chewing gum.

Some of the other ideas the Government has talked about today did not catch the imagination of New Zealanders, either. They fell asleep at talk of the KiwiSaver programme. Their eyes glazed over when they were told about the deal for first home buyers. When one looks at the deal for first home buyers, one realises that one would have to buy a house that was so cheap that many Kiwis probably would not want to live in it anyway, and one cannot buy houses for the value that allows one to qualify.

The Budget has been a deep disappointment to the Labour Party, and Labour members know that. They can sit there and smile, point, and carry on, but they know they do not have anything to go out and sell on the hustings, and that their people are just as disappointed. It is interesting that Michael Cullen said that the reason there was not much more in the Budget was that the Government’s own polling said that tax was not an issue. It just goes to show how decisions are made in this country right now that if a poll indicates that something is wanted or not wanted, that is the way this Government makes its decision.

It is interesting that Michael Cullen said that tax was not an issue, yet post-Budget it was one of the major issues of interest to this country. Kiwis are finding it harder to get by as they spend more at the petrol pump and spend more on their petrol and more on their goods and services—all taxes and levies from a Government that said that it would not raise any taxes or additional levies. So I think Labour has quite some explaining to do. Instead of talking about what the National Party will do, Government members should stand up and say why they are so excited about their Budget and why they think it is a vision for New Zealand.

Darren Hughes: They have.

KATHERINE RICH: No, they have not. They have stood up and talked about the National Party, which I think demonstrates a deep sensitivity and a deep understanding of what the problem is. We on this side of the House are delighted that the Government has fallen flat on its face with a Budget that has not excited anybody at all, because it allows us to demonstrate a difference in terms of what National will be offering at the coming election. Kiwis will see through what the Labour Government is offering. It is all about spin. Government members are deeply disappointed. They might be pretending that they are as happy as sandboys, but we know they are disappointed with what Michael Cullen has delivered.

ROD DONALD (Co-Leader—Green): Today—

Clayton Cosgrove: Don’t talk about oil!

ROD DONALD: I will be talking about oil. I thank Mr Cosgrove for reminding me. I will talk about it later, so I ask the member to be patient.

Today we are talking about the supplementary estimates and we are also debating an Imprest Supply Bill. That imprest supply bill will give the Government the money it needs to run the country if an election is held before the Budget is passed. This year I am confident that the Budget will pass its third reading before the House rises for the general election, in the same way that 3 years ago I was confident that the Government would pull the plug before the Budget was passed. In fact, just before the supplementary estimates debate started 3 years ago, Prime Minister Helen Clark told the whole country that we would have a snap election. That was on 11 June 2002. At that point we knew what was ahead of us. We had an election date, and I wish Helen Clark would give us the same courtesy now and set an election date. But I would have to say that she did not need to call a snap election on 11 June 2002, and she certainly does not need to call one now.

I would like to look back briefly over the last 3 years at the Government’s report card in relation to the debate that took place on 11 June 2002. Labour has passed some good legislation in some crucial areas, but it is interesting to see what it has not advanced. On that date in 2002, the Marine Reserves Bill was waiting for its first reading in Parliament. It got that first reading after the election, thanks to support from the Green Party, but it still languishes at the Local Government and Environment Committee, because the Government is more interested in advancing legislation on marine farming than it is in marine reserves. We call on the Government—Mr Cosgrove may be leaving the Chamber; I hope he will stay and hear what I have to say about peak oil. The Marine Reserves Bill is still stuck in the select committee, because Labour lacks a serious commitment to increasing the number and area of marine reserves in New Zealand. We have to contrast its dragging the chain on conservation with its pushing ahead on economic growth.

Another bill that was held up by the snap election was the Minimum Wage Amendment Bill. The Greens supported it. The Minimum Wage Amendment Bill is another example of legislation United Future has opposed in this Parliament, but we are very pleased to give our support to Labour on such legislation, because we are just as committed to social justice as we are to protecting the environment and making the economy sustainable. It is good that the minimum wage does continue to increase. It is now $9.50 an hour—a lot more than when National was last in power. But it is not enough. It is not good enough. New Zealand workers deserve at least $12 an hour, because without that level of income one simply cannot bring up a family in any sense of decency. I know that most New Zealanders would rather get a wage that is enough to live on than have to rely on family support or any other Government handout. So we advocated for that legislation, and we made some progress there. We advocated for the transfer of undertakings, and that legislation has finally managed to get through in the last 3 years. In fact, 17 bills passed in this term of Parliament have passed only because of support from the Green Party. Those bills simply would not be law without it. There would be no Supreme Court, no Māori Television Service, no Care of Children Act, no Criminal Records (Clean Slate) Act, no Climate Change Response Act, and so on, without the support of the Green Party.

The Government has certainly learnt a lot in the last 3 years, and those pieces of legislation are examples of what it has learnt. The Labour-Progressive minority Government has done a very good job of managing this House. As an advocate of MMP, I would like to give it credit for that. Despite having only 53 seats out of 120, it has successfully mustered a majority for most of its legislation by turning to a number of parties for support. United Future has been the only party to vote for two Budgets—because Labour was intransigent on genetic engineering and therefore did not enjoy our confidence—and seven other bills have passed only because of United Future. As I said, the Greens are responsible for the passage of 17 bills, and New Zealand First was the only non-Government party to vote for the Foreshore and Seabed Bill. We got a warning in the last term of Parliament, when Labour relied on New Zealand First for the passage of two bills, both of which have turned to custard in various ways. So members should look out for what will happen to the Foreshore and Seabed Act.

Despite what the critics say, MMP has not led to the tail wagging the dog. Indeed, before Christmas Labour worked with United Future, the Greens, and New Zealand First in turn to pass legislation under urgency. However, it is disappointing but not surprising that Labour’s management of the economy and of voters’ expectations is not as good as its management of Parliament. Let us face it, Dr Cullen’s Budget was a public relations disaster. As I said at our recent conference, Arnold Nordmeyer is Michael Cullen’s hero, but that did not mean he had to deliver such a grey Budget. It was timid on issues such as tax cuts where it should have been bold. Last year’s Budget was bold, with Working for Families, and we supported that. In the last term, the superannuation fund was bold, even though we opposed it. But this time, as everyone says, 67c a week in 2008 for low and middle income earners has done nothing to excite voters and everything to turn them off Labour. What is more, Dr Cullen’s failure to address mounting student debt is alienating a whole generation of young people, their parents, and their grandparents.

Labour’s KiwiSaver package is a good move, but for many people with no discretionary income it only highlights the growing gap between the haves and the have-nots. Homestart was another good idea. It basically restores what National axed in 1992, but it is still only a token gesture in the face of rocketing house prices. So instead of Labour forcing through the Overseas Investment Bill under urgency later this week, it should be banning the sale of all land to foreign investors, because those sales are artificially inflating the price of entry-level properties. Inflating house prices mean that the Kiwi home, instead of being a dream to aspire to, has become a nightmare for first home seekers.

I give Dr Cullen credit for one thing: pinching the title from my 2001 conference speech on his superannuation fund—which I called “Invest now to secure the future”—for his Budget, which he calls “Securing our future”. That Budget, I am afraid, will not go far enough to securing the future for the nation, as Dr Cullen proposes, because he continues to gamble a big slice of our taxes on the overseas sharemarket instead of using that money for sustainable infrastructure to future-proof our economy, to educate and train our young people so that they can be productive citizens, and to meet the community’s health, housing, and social needs. There is not enough money going into protecting the environment, either.

The supplementary estimates, if I may discuss them briefly, put aside some money to deal with flooding. That is a good thing—there is something like $32 million in the supplementary estimates—but where is the money going for planting forests where they are needed? One of the environmental commitments that this Government should be making is reforestation of marginal land, as well as long-term measures to put the brakes on climate change. In going beyond reforesting headwaters, the Government would be making some bold moves to tackle climate change. The Government is not doing enough to reduce our dependence on fossil fuels in this country, and I point it to the Green Party’s energy package, which has recently been announced. That package gives the Government a very clear plan of what we need in New Zealand.

Some of our proposals would have been in those supplementary estimates, had the Government been committed to protecting the environment, to making our economy more sustainable, and to improving the quality of life of New Zealanders. At the top of that list is half a million solar water heaters for homes in New Zealand, which is something that we will be campaigning for strongly after the election, along with a sustainable energy commission, a one-stop advisory shop for households, and not using coal to generate electricity, because the use of coal only adds to our carbon emissions and will put the Government in an even worse position than it appears to be in in relation to carbon credits. We say to the Government that it should look at the Green Party’s energy policy, and its tax policy, which makes the first $5,000 of income tax-free, so that people can afford to pay not only for the increasing cost of power but also for doing the good things, like insulating their homes and putting in energy-efficient light bulbs, etc.

Hon PHIL GOFF (Minister of Foreign Affairs and Trade): It was a bit rich to hear the Greens, who apparently want to spend more money on everything, joining the National Party chorus by saying that they want more tax cuts. We have heard from the National Party already that that is the big promise for this election, but its members will not tell us what those tax cuts would be and where they would come from.

We know where the tax cuts would come from and where the money would go. We know that the money would go to the rich, because Don Brash has said it would. In fact, he said he could spend a third of the surplus, and that would cover cutting company tax rates and the top personal tax rate to 30 percent. So we know that the money would go to the rich, and we know that it would come from ordinary New Zealanders and from the areas where Government spends most money.

National superannuation would not be safe from National. It promised in 1990—I remember it; I was on the campaign—that there would be no superannuation cuts. There were no ifs, no buts, no maybes. What did National do? It increased the surtax to the highest level ever. I remember Lockwood Smith talking about student fees. He said they would be removed, and that if they were not removed, he would resign. He doubled the fees, and he stayed there for 6 years. One cannot trust the National Party. I am sorry that the Greens would choose to align themselves with it.

This election will be about track record and leadership in Government. It will be about credibility and about vision. On every front, it will be the Labour-led Government that wins the support of New Zealanders, because of 6 years of competent, stable, consistent Government. I have been in this House long enough to know that different parties over different times have gone into election campaigns making promises, and then have reneged on those promises. Then parliamentarians wonder why their credibility in the wider electorate fell as low as it did. I am proud to have been a member of a Labour-led Government that promised only what it could deliver, and delivered on what it promised. That is refreshing in terms of New Zealand’s political history. It is about credibility, reliability, and trust.

We know that the National Party is promising everything. It put out a law and order policy, and I got my people to cost it. It would spend $722 million more a year on law and order, plus $1.8 billion in capital expenditure. Over a 10-year period, it would be a $9 billion promise. That, from the party that says it will cut taxes and slash Government income! It will spend a whole lot more on law on order—but where will the money come from? Nobody on the National benches will tell us. There is absolute silence from those members. There is not even an interjection from the crowded National benches, because they cannot answer that question. We all know that the money would come from ordinary New Zealanders. They would get it in the neck.

Many New Zealanders will remember the 1990s, the age of Ruth Richardson, Bill Birch, and Jenny Shipley. But they should not forget those who are still in Parliament—Lockwood Smith, Bill English, David Carter—

Hon Harry Duynhoven: Nick Smith.

Hon PHIL GOFF: —Nick Smith, Tony Ryall—all the old, failed, tired hacks from the past, who expect us to believe them now. Tony Ryall is the only Minister of Justice in this country’s history who has faced a referendum on his term as Minister of Justice. In that referendum, 92 percent of New Zealanders showed that they had no time for the absolute and abysmal failure of the National Government to deliver. We have delivered in law and order. We have delivered the lowest crime rates in 23 years. We have delivered the best police resolution rates in 22 years. We have now put another 1,200-plus police staff into the police force. Compare that with National’s plans, which we uncovered when we became Government, to slash police numbers by 540 to pay for the failed INCIS scheme! How can National have credibility when its members look at their track record of their failure to deliver? We can stand proudly beside our track record and say that we have delivered for this country.

Let us look at what we have delivered. We have delivered the best growth rates that this country has seen in decades. For 4 years in a row we have had higher growth than our bigger cousins across the Tasman, in Australia. We have delivered 260,000 additional jobs—260,000 more New Zealanders able to pay their way, able to contribute through the taxation system, and able to improve their standards of living and the strength of the county. We have lowered poverty, and we will lower it further. That is something we are particularly proud of. We will pull from a third to a half of kids currently living under the poverty line out of that poverty, through the Working for Families package.

That is something to be proud of—not big tax cuts for former Governors of the Reserve Bank, chief executives, or merchant bankers. That is what the National Party stands for. Its leader and its finance spokesperson are former bankers, and they are standing up for the rich and powerful, giving them all the assistance they need—or do not need, as the case may be. They are ignoring the people on the ground who need the help—the kids who need a decent education and the people in the health system who need better health-care.

And that is what Labour has delivered; we have cut the cost of going to a doctor. That is the key thing that saw people end up in hospital—because they could not afford to get to the doctor. Through primary health organisations we have lowered the cost. We have lowered the cost of pharmaceuticals. We have committed to delivering more operations; more orthopaedic and cataract operations are provided for in the latest Budget. We are making New Zealanders healthier. People are better off under Labour, and when they think about the choices, they will come to that conclusion.

We have delivered paid parental leave. We are about to deliver 4 weeks’ holiday. Don Brash said that he was against that and that the country would go bankrupt, but when he looked at the polls he thought he had better say he was for it. We know about National in the past saying it is against things, changing its mind to make it look as if it is for them, and, when it is safely elected, changing its mind back again.

Then, of course, we have the nuclear-free policy. National does not have the courage of its convictions. It has a bill, introduced by ACT, before the House that says this country will cease to be nuclear-free. A senior National MP told the Agenda programme on Saturday that Don Brash and most of the National caucus do not believe in a nuclear-free New Zealand. Will they come out and tell New Zealanders that? Not on your life! They know that, two to one, New Zealanders are in favour of the policy, so those members will dissemble about it, and betray their promises if they think they can get away with doing that—just as they have done in the past.

The tax cuts are a myth. Yes, of course we would like to pay less tax, but we know there is a cost to tax cuts, and that cost is a cut in the expenditure that is badly needed for the people of this country. We are giving superannuitants a rates rebate, which will be the first decent increase in rates rebates in more than 30 years. We are looking after health needs. We have reversed National’s cuts in superannuation. That would be the first thing to go under National’s policy. We know that what those members are promising simply does not add up. We know that the Australians spent $22 billion on tax cuts last month in their Budget, but what did that deliver to the average income earner on between $23,000 and $58,000 a year? Six dollars a week! In my electorate, on 1 April this year families on the average wage with three kids got 55 bucks more a week—$55 more in the pocket to help them meet the needs of their growing families, at the time that they need that assistance.

Those sorts of benefits in real, disposable income can never be delivered through tax cuts. Tax cuts would help the wealthy. Tax cuts would mean a cut in the major social expenditure areas of health and education. Tax cuts, as the OECD reported to us, would end up being inflationary, and we would end up with higher interest rates. What the National Party would give on the one hand, it would take back in additional interest rates on the other.

I am proud to be in this party that has delivered for New Zealand. I am proud to be in this party that has competent leadership. Can we remember Don Brash on the foot-and-mouth hoax? He was going to produce what Annabel Young, the chief executive officer of Federated Farmers, said would have been New Zealand’s Chernobyl. We cannot rely on him. We have a competent and able Prime Minister; we will still have that person as Prime Minister after the election this year.

GORDON COPELAND (United Future): It is very clear that between now and the election the Minister of Finance, Dr Michael Cullen, will try to convince the nation that there is no room for tax cuts following this year’s election. However, this assumes that any alternative Government would carry on with his expenditure plans exactly as he has determined them, and that they would be funded in exactly the same way as he has intended. In other words, there is only one form by which the Government can spend its money and fund its way forward, and that is the way that Michael Cullen has determined—there is only one form of architecture for the house. Well, that might be true for the house that Michael built, but let us be clear that there are alternatives.

Dr Michael Cullen’s Budget is not carved in stone; it is not Holy Writ, and it can be changed. If someone else—for example, a sensible, stable, prudent, reliable centre party—were to be part of a coalition after the election, then it will be changed. I mean, let us get real. Dr Cullen is running a massive, multibillion dollar surplus but, at the same time, he is saying that there is no room for tax cuts until 2008. Hello—is something missing in that statement, somewhere? Of course there is room for tax cuts, and they will be happening if United Future has something to do with it. We have a good track record in that regard.

The other day in the House, Minister Steve Maharey said that the previous Government had cut taxes. Well, let me tell the Minister that the previous Government was a National - New Zealand First Government, and under that Government there were no cuts in taxes. In fact, the National - New Zealand First Government actually reversed the tax cuts that had been announced by the previous Government. That previous Government—guess what?—was a National - United Future Government. So it is very, very clear from our track record that every time United Future is brought into the frame, taxes go down; when we are not in the frame, taxes go up.

United Future will be cutting taxes in a number of ways. First of all, we want income-splitting for couples who are raising children. It is quite unfair that a person who has no dependents pays exactly the same tax as a man or a woman who is supporting, maybe, a spouse and two or three children. That is quite unfair; we want to bring it to an end, and income splitting will do that. We want to reduce the company tax rate, over 3 years, from 33c in the dollar to 30c in the dollar, and we want to introduce a $3,000 tax-free threshold.

I would like to ask the Hon Phil Goff, who just resumed his seat, how that puts more money in the pockets of the rich. Can anybody tell me that? It puts more money in the pockets of everyone. Every single taxpayer would get more money, every child would get more money, every tertiary student would get more money, and every superannuitant would get more money. In fact, there are no exceptions to that rule. That is not putting money into the pockets of the rich. That may be the National Party’s tax policy. Eventually, I guess, we will get to hear what that policy is—maybe about 2 weeks before election day, the way things are going? But United Future’s policy is to give a tax reduction to every single taxpayer, and that will do it.

We will also adjust the tax brackets by $5,000, so that the income threshold of $38,000 will go to $43,000 for those on a tax rate of 33c in the dollar, and the income threshold of $60,000 will go to $65,000 for those on a tax rate of 39c in the dollar. We will do it not in 2008 but in 2006—1 April 2006. And it gets even better. United Future will raise the amount of money that ends up in the pockets of New Zealand’s 476,000 superannuitants. In our tax cuts we are also offering them a boost in their annual amount of superannuation. We will do that, first of all, because they will benefit from the $3,000 zero tax threshold and, secondly, because we want to take out an anomaly in the present formula for calculating superannuation, where it is always based on retrospective data in relation to the cost of living and the average wage. We would make that formula rather prospective, so that on 1 April every year the calculation would be done based upon what we expect the consumer price index and the average wage to be over the next 12 months. That is a fair policy. It means that superannuitants actually get the right amount—65 percent after tax—of the average weekly wage, concurrent with the movements in that wage, rather than always being on the back foot and being behind.

We will take GST off rates, which again will leave money in the pockets of superannuitants and all other residential ratepayers in this country. How much will that cost? Well, I can tell the House that it will cost a little less than $2.5 billion to bring in all those very, very sensible and very good tax cuts. It will leave money in the pockets of families. It will leave money in the pockets of companies. It will leave money in the pockets of children. Fancy, at the moment we tax the earnings of kids—their pocket money. We put a tax on it. We want to get rid of that. We put a tax on the few dollars that tertiary students earn while they are trying to pay their way through a university education. We will bring that to an end, as well. We will leave more money in the pockets of children. They will have some pocket money—the actual amount that is given to them as pocket money, and not reduced through taxation. As I mentioned, we will put quite significant amounts of money into the pockets of superannuitants, and give them a fairer deal as we move forward.

Now when we think about it, let us put that in context. United Future says that it will give tax reductions of about $2.5 billion. Michael Cullen says that there is no room to give tax reductions of $2.5 billion. He has said so in the House several times already. When I ask him a question about any old thing these days, he comes back and says: “If we go ahead with the tax cuts that that member is proposing there will be no room for expenditure on health, there will be no room for expenditure on education, there will be no room for expenditure on police, and there will be no room for expenditure on defence.” But does he ever mention the fact that he is actually budgeting for a surplus of between $6 billion and $7 billion a year? How come he is silent about that reality? I think the silence needs to come to an end.

I think that the media also needs to do some pretty simple basic arithmetic here, because the people of New Zealand certainly are. They say that if the Government has a $6 billion to $7 billion surplus and a party comes along and says that it will leave $2.5 billion of that amount in people’s pockets and people’s purses so that they can have more money to service their debt and more money to provide an adequate income to their families, so that they can give their families the health and education services they want for them and ensure that they are able to have some little family celebrations occasionally, with plum pudding and the like—so that they can do all those things that we take for granted as part of the New Zealand tradition—it is no reply if they are told that that cannot be done because Dr Cullen’s surplus is only $6 billion to $7 billion. How big does a surplus have to be before we can afford tax cuts?

Let us do the simple arithmetic. Let us follow the logic through. I challenge the media today to get stuck in and say: “Let’s unbundle all of this.” We are collecting that $6 billion or $7 billion surplus from taxpayers; that is where it comes from. So when we say we cannot afford tax cuts, United Future says that Dr Cullen is wrong. We certainly can. If we have something to do with this, we will. It is time to shift aside from the simplistic analysis that the Minister of Finance is giving to the nation on this. If he cannot afford tax cuts—and that is what he is saying; that the nation cannot afford tax cuts, and it would be better if he said that the Labour Government cannot afford tax cuts—well, let us get some new advice from somebody else. Let us get some new vision from someone outside the Labour Party that will see more money in everyone’s pockets. At the same time can I say that by just rearranging the architecture and the balance sheet of the nation, we can, at one and the same time, by innovation, and by doing things differently, ensure that we continue to build a world-class health system, education system, police system, and so on in this country. We do not have to have this false dichotomy that says that we cannot do both. We can, and if United Future has anything to do with it, we will.

Hon MARK GOSCHE (Labour—Maungakiekie): A couple of things came out of the Budget last week that I should comment on. One of them was something that is an absolute rarity—it is as rare as National Party members in this House getting up to speak. It was the emergence of a National Party piece of policy. Paul Adams and I got to hear it first-hand on Friday in Auckland. What was it? It was the National Party’s policy on helping the disability providers—the people who care for people with disabilities in New Zealand. What was it? It was from its spokesperson, Sandra Goudie, and she said this: “We’re going to help the disability provider employers. We are going to take penal rates off the workers in that sector who work on public holidays.” Who are they? They are the people who go into the homes on public holidays and look after the elderly and those with disabilities. To help the sector, Sandra Goudie has promised that the National Party will repeal the Holidays Act and take away penal rates from those hard-working, low-paid New Zealand workers, most of whom do it for love, not for money.

That is the National Party’s policy that we heard last week. What a doozy! National members will go out on the hustings and tell those workers that the way to solve the shortage of the workforce in the disability sector is to whack the workers over the head and take some money off them. Well, contrast that with the policy of this Government. We have put money into that sector, badly needed money, so that those workers can, in fact, be trained, so that they can be paid more, and so they can go into the homes of the elderly and the disabled and work and get recognition for that work. But National Party members, true to form, say: “Nah, we’re not having that.” Low-paid New Zealand workers—some of the lowest-paid, hardest-working people in this country, who look after the elderly and the disabled—are to be punished to pay for the tax cuts for the rich!

Well, what does one expect of the National Party when one looks back at its track record? Remember the tax cuts of the 1990s? How were they funded? National sold 13,000 State houses—that is how it funded the tax cuts—after it had already sold the railways. Of course, this Government has had to buy the railways back because that was an absolute failure as we saw our railway system stripped away and the money was ripped off by the people whom the Government sold it to. That left us with an enormous burden on the roads because our rail system was not doing its bit.

I suppose, to fund the next round of tax cuts, if Dr Brash ever gets his way, National has not much that it could sell, but he said he will sell Kiwibank. That will be great for the low-paid, medium-income New Zealanders who are lining up at that bank to take advantage of the lower interest rates that no other bank would actually offer! Through the home ownership scheme, this Government is, in fact, helping more and more people into home ownership through the mortgage insurance scheme, which is another good feature of this Budget, as is also the KiwiSaver scheme that will put $10,000 into the pockets of hard-working Kiwi families so that they can buy their first home. That scheme will be delivered through the likes of Kiwibank that Dr Brash wants to sell.

Let us look a little deeper, because to cut the tax from 39c down to 30c, which National said it would do, and the company tax down from 33c to 30c, will cost about $2 billion, and not one single low-paid or medium-income family will see a cent as a result of that, because they do not pay the top tax rate of 39c, nor do they pay company tax. But $2 billion will be down the tubes, gone, and cannot be spent on health, and it cannot be spent on education. As Dr Cullen said, one will get a tax policy, but it is actually a cut in health, a cut in education, a cut in defence, and a cut in law and order.

But hang on. Let us see what National has promised to spend if it ever gets a chance to be the Government again—well, $2 billion on cutting tax for the wealthy and for the companies, and it wants to spend $4.5 billion on transport over the next 10 years. that is pretty miserable, but nevertheless, it is new spending. It has promised to build the Waikato expressway. It has promised $120 million for Northland roads, $110 million for Tauranga, and so on and so forth. Wherever National members visit, they promise to spend.

But there is a hidden issue. How will they fund that? They will have toll roads. What is a toll? It is a tax. So Dr Brash is going to say that the wealthy can have a tax cut, and the companies can have a tax cut, but all those other fellows will have to pay to build the new roads by paying tolls. How will they manage that? That is what we want to know. They will also have to pay more for education for their kids, and for tertiary education for their older kids.

Everybody knows what happened in the 1990s as a result of taxes being cut. There was not any money to supply our education system with what it needed. Labour has put millions and millions into bringing back to some sort of reality the spending on schools, the spending on tertiary education, and the spending on health. National members would also be opposed—and we know they are—to the half a billion dollars that this Government has stumped up with to pay nurses. The most highly rated profession in this country is nursing. It is not politicians, it is not the police, but nurses. This Government recognises that we cannot afford to import nurses to work in our hospitals while we export our trained nurses to the rest of the world so that they can earn a decent living. So that half a billion dollars cannot happen if there is a tax cut and if all that money is spent on roads—as the National Party said it would do.

Then there is the $4 billion they have said they will spend on defence so that we can be equal to Australia. They have committed to spending $722 million a year on law and order. Members will remember that National is going to abolish parole. When they do that they will have to build more prisons. They cannot just have the prisoners wandering around in the paddock. They will have to build more prisons, and, at $220 million each, they will have to build a lot of prisons when they abolish parole.

Where will that money come from? That is what the country wants to know. Where is Dr Brash, who prides himself on being an economist, and a miserable one at that? He put up interest rates, year after year, so that New Zealanders could not afford to buy a house. Rates of homeownership plummeted to record lows as a result of his regime of interest rates. Dr Brash is saying that his party, if it is ever elected to Government, will help low to medium income families. Well, let us hear how he will give them a tax cut and spend the extra $4 billion, which Labour has in its Budget for health. How will he keep the promise to elderly New Zealanders, who have seen this Budget take away asset testing, or the first steps towards it? Where will he find the extra $18 million that is going into home-based care situations, which I have talked about? Sandra Goudie has said that those workers do not deserve that, and she will take their penal rates off them.

What about the $71 million for residential aged-care that this Budget stumped up with? What about the $297 million to lift quality in tertiary education? In this Budget there is $45 million for industry and trade training, to make up for the fact that last time National was in Government it did away with trade training and apprenticeships. So now we have nobody to build our roads, our hospitals, our schools, and all the infrastructure this country is crying out for.

It is not voodoo economics; it is something worse when a party can tell people it will give them a tax cut but it will not tell them how much, when, or whether they will get it, but it will still be asking people to vote for it and trust it. That is what the National Party will say. That is what we know National will say. But we want the hard questions put to them by our media and by the public. How can we have all the things we have now in health, education, defence, and law and order, and have a tax cut too, and how can they afford to do that when they have already promised to spend more and more on roading, transport, law and order, etc.? It just does not add up, and any person who scrutinises National’s voodoo economics, will see right through it—and through Dr Brash and his colleagues.

At least Sandra Goudie was honest enough to come up with a stupid, dumb, ignorant policy—that was better than none at all—when she said that the lowest-paid, the most caring workers in this country. will lose their penal rates on weekends and holidays, and that will be the one piece of party policy that we can guarantee National will deliver on if it is ever allowed to. That is how it will fund its tax cuts. They will take it from the lowest paid.

KENNETH WANG (ACT): One thing is absolutely true in this debate about how taxpayers’ money is to be collected and spent. We are debating this bill under urgency, but I am wondering why we are debating it in such a big rush. The one thing that is clear to me is that this Government wants to spend more. It wants to spend more and more. This bill is about grabbing money from hard-working New Zealanders and squandering it. If we look at the figures, we see more tax collection. Actually, we do not need to look at the detail; we need to look only at the ballpark figures to see that tax revenue is at a record level, and that $3.4 billion will have been collected by the end of this financial year. That figure is in addition to all the levies, penalties, fees, and fines, so overall we are looking at nearly $5 billion in revenue collection this year. There will be even more waste, and we will see Government expenditure jump up to a record high of $6.5 billion, more than the previous year, as the forecast shows.

What is the revenue being collected for? We all know what it should be for. It is meant to help ordinary New Zealanders and their families, but we all know that it will be spent on hip-hop tours, wānanga—which is a raced based policy—and social engineering. A story in the Dominion Post today, under the headline: “Taxpayers fund $1m grant to US company”, tells us that taxpayers are funding a company called Navman. I want to draw members’ attention to the fact that 3 years ago this Government, via Industry New Zealand, spent $23,000 of taxpayers’ money on that same company, by paying for its American owners to stay at Huka Lodge and be taken on a fishing trip. That money was squandered, and I wonder how the Government can spend more money—up to $1 million—on that American company. This is an example of grabbing taxpayers’ money and spending it on corporate welfare.

We have to look at Labour’s repeated claims that the proposed tax cuts are just for the rich. I would like to draw members’ attention to the fact that tax cuts are not for the rich, as we see when we look at what ordinary New Zealanders are saying. I personally encounter many New Zealanders who run their own businesses, while battling to raise their families. Are taxi drivers rich? Are they being bracketed with the rich who will be ripping off the system? Members may recall what I said in my maiden speech at the end of last year. Dairy owners are battling for their lives to keep their shops open, with the help of family members who are all struggling. What about the people in the public service, like police officers, teachers, and nurses? Are they rich? Certainly not. They are hard-working New Zealanders. At the most, their incomes can be bracketed as just middle-class incomes. What have they got? We all know what they have got. They have got a packet of chewing gum a week, but not yet—they have to wait for 3 years.

ACT knows what it is to be rich. Those people are bracketed as rich by Labour. Those people, hard-working New Zealanders, are being labelled by Labour as rich. I can say that they are certainly not rich.

IAN EWEN-STREET (Green): I would like to address an anomaly that I have picked up in the agriculture supplementary estimates. In 2004 there were two major flood events—one in the Bay of Plenty and one in the lower North Island, in the Wanganui-Horowhenua region. The estimates have given $6 million to the Bay of Plenty and over $26 million to the lower North Island for farm restoration. That sounds really good. I applaud the Government for giving that money to farmers. But for farm restoration? Basically that says that we have had those severe storm events, the farm has been destroyed or the farming operation has been interrupted in some way or another, but here is money so that the farmer can put the farm back to the way it was before the event. That may have been fine back in the days before we were aware of climate change, when we could do whatever we liked and be fairly certain that pastoral land would be sustainable in the long term. But Cyclone Bola proved that that was simply not the case—that land use actually plays a major part. If we simply restore pasture to pasture after it has been devastated by a flood, we will not stop the same thing from happening again in the future.

At the time of the floods I implored the Minister to consider the afforestation of marginal lands, and he agreed with me. But let us look at the estimates. Forestry encouragement, under the estimates, has zero dollars. There is absolutely nothing for developing forestry. If we had forests on marginal lands, those lands would not slip. Trees actually hold the soil together on the steeper slopes. We have to say that climate change is here to stay. I am not suggesting for one moment that if we plant trees on marginal land, those trees will change the climate. Of course they will not. But what they will do is ameliorate the effects of climate change. When we talk about one-in-100-year flood events or storm events, we simply have to say that that is no longer the case. We are looking at maybe one-in-10-year events.

I think the Government should take a much stronger line in terms of climate change factors, and think about land use that will mitigate the effect of future events. One of the things that I think we should do is to get a realistic and updated assessment of the erosion susceptibility of soils, particularly in hill country. It just makes sense to convert marginal pastoral land use to some other land use. I accept that in the short term, farmers who are farming sheep and cattle, pastoral farmers, simply cannot afford to close up their paddocks and plant trees, or allow them to revert to native bush. But we do have to say that those farmers need to be supported in some way, so that their land use will not have a detrimental effect on people further downstream. We need to find out what crops—whether trees or other crops—are appropriate to topography, to vehicle access, to soil type, to steepness of slope, and all that sort of thing. It makes sense for us to grow trees.

Clayton Cosgrove: What about hair?

IAN EWEN-STREET: We could grow hair, as well. That would slow down one kind of erosion, I suppose.

One thing that I think we could have done in the supplementary estimates, rather than giving money to farmers and telling them to go back and restore their farms, was to say farmers had to come up with a plan that would make their farms more sustainable in the longer term. Farmers should have to come up with a management plan for their farms before they get the money. So if the farm has a variety of soil types, for argument’s sake, the farmer could say the class 7 soils would be put under trees, and the higher class soils would be kept for pasture, and what have you. That sort of thing is very easy for the Government to do. It is a condition of the farmer receiving the money. Most farmers would simply say that it makes sense. Why does the Government not do that? I do not know. We are not talking about rocket science. It is a simple thing to do to simply put a condition on the money.

I think it also makes sense to have a public insurance scheme to cover events like the floods. Why does the Earthquake Commission look after residential properties, but not farming properties?

Hon ANNETTE KING (Minister of Health): I am very pleased to speak in the appropriation debate. This is an opportunity for parties to showcase their policy for the forthcoming election. This is the last appropriation debate we will have before we go to the polls. Parties are able to come into this House and set out clearly for the voters of New Zealand what they intend to do.

I have to say that I have been underwhelmed by the contributions from the National spokesperson and the ACT spokesperson. John Key’s speech was less than memorable. He managed to attract an audience of one—Lindsay Tisch. He was the only person who turned up to hear John Key’s speech. That would not be unusual, except that I was in the House on the day John Key gave his Budget speech. Some members will recall that on that day he had an audience of one—Lindsay Tisch. I want to ask National members why they do not like John Key. Why will they not come into the Chamber to support and listen to John Key? I can only assume it is because he has absolutely nothing to say. That is what his speech was. It was full of nothing. It was empty blancmange. There was not a bit of policy, not a single principle. All his speech was, was a rant, a rage, and a whinge.

Then I listened to the verbal diatribe—or was it verbal diarrhoea?—that poured out of the mouth of Rodney Hide. But I have to say that I looked at him when he was giving his speech, and I pitied him. I felt pity for that man. He is a sad case. He is a sad man. He is desperate and he is dateless, because nobody wants to play with that party. He is undermined by his own members. He spent the whole weekend trying to shore up his leadership of that disappearing party. He is outshone daily by Richard Prebble, the previous leader. He is out principled by Ken Shirley. He is out of sorts, he is out of condition, and he is out of here. That is the truth about Rodney Hide. No Parliament, I have to say, needs to have a malicious fabricator, but that is what Rodney Hide is.

Kenneth Wang: I raise a point of order, Mr Speaker. I think you should draw it to the member’s attention that this debate is about the 2004-05 supplementary estimates. It has nothing to do with leadership. I think this speech is totally out of order.

Darren Hughes: I understand and respect the member’s sensitivity about the state of the ACT leadership, but this debate is traditionally a wide-ranging debate. I am sure the Minister was well within the Standing Orders, but we respect that party’s sensitivity at this time.

The ASSISTANT SPEAKER (Hon Clem Simich): I thank the member for his help.

Hon ANNETTE KING: I know that the member has not been here long and that this is his first appropriation debate. He probably did not listen to his own leader’s speech, which was very wide ranging.

I have to say that I do not think this Parliament needs a malicious fabricator. Rodney Hide makes up figures, he makes up stories, and he is full of blatherskite. I do not think this Parliament will miss that, at all. I am waiting to hear the National Party’s health policy. I suppose New Zealanders are, as well. We get a lot of negative whingeing and moaning from National’s health spokesperson. He goes around New Zealand, saying how it is all bad; how the whole health system is in crisis. Most people scratch their heads and say that when one looks at the patient satisfaction surveys, one can see that 88 percent of patients think that the health system is very good indeed. However, I thought that Dr Hutchison might, in the near future, like to give us some health policy. We have waited for 6 years, and we are prepared to wait another 6 weeks or so. However, I did get a little glimpse of what we are likely to get from the National Party’s health policy on television during Queen’s Birthday weekend, when Dr Hutchison gave the first hint. He said that National’s health policy in relation to elective surgery was to bring back waiting lists.

Hon Members: Oh!

Hon ANNETTE KING: Yes, members heard me right. He said: “We’ll bring back waiting lists.” I was interested to hear a person from the Association of Salaried Medical Specialists say that putting people on waiting lists would not improve their health one way or the other. However, we now know that part of the National Party’s health policy will be to bring back waiting lists. That is a complete turn-round from National’s policy, which was clearly set out by Bill English on 16 September 1997. It was a policy that National set about to implement from 1998, and it was called the booking system. When we became the Government we looked at that policy and asked how it worked. We asked whether it was a good policy, whether we should continue with it, and whether we should try to improve it. We thought that it was an honest policy. It was one of the few that we got out of the National Party in the 1990s, but it was an honest policy.

The booking system told people whether they would get an operation, when they would get an operation, whether they were close to getting an operation or could expect to get one, and whether they would not get one within the resources. That system was set up through a series of interventions that were made in the late 1990s. First of all, Bill English said that we needed to get people off waiting lists and he said that the way to get them off waiting lists was, first of all, to just keep raising the sustainable threshold. That would get them off any waiting lists. Then, by 1998, National started to implement that policy. So I can only assume that, having implemented it, they now think we will go back to a waiting list system where 96,000 people waited and waited. They were the same people—they were not going on a list, being seen, and going off a list. They were the same people, and some of them had waited for 12 years. Some had waited 8 or 10 years, or whatever. Some of those people never went on a holiday, because they were scared that a letter might come from a hospital saying that their name had been taken off the list and they would be offered an operation. Now we have a party that says it will go back to putting people on waiting lists—[Interruption]—and David Carter thinks that is fantastic. I say that it is dishonest to tell people that by putting them on a list they might get an operation. A health organisation should be able to tell people what can be done and when it can be done within the resources it has.

The other thing Paul Hutchison has taken to doing is going around New Zealand telling people how terrible everything is. He was in Tairāwhiti just last week, and he said that the number of people waiting for operations and the number of people getting operations in Tairāwhiti was worse than it was in the past. Well, I have to tell members that he made that up. I have the latest information from the Tairāwhiti District Health Board, and it shows that it is doing more operations than it was in the past. It is doing more operations this year than it did last year, and people there are scratching their heads as to why he came to their place and said that in the media. We do not need that sort of dishonesty when it comes to the health system. Members should look at what is really going on. They will see that huge progress has been made by the many, many doctors and nurses who work within our health system.

Kenneth Wang said that our doctors and nurses are not overpaid. He is absolutely right. They would have been paid a whole heap less if we had not put money in this Budget to settle the biggest nurses’ pay claim this country has ever seen. Half a billion dollars of health money will go to increase the wages of nurses in New Zealand. Let me hear ACT deny that that is good expenditure of money. Over the last 3 years our doctors in our hospitals have had a 50 percent increase in their pay. Why did we do that? We cannot run a health system unless we have doctors, nurses, hospitals, and facilities, and we have to invest money in that. It does not happen by itself. We respect that investment. We want that investment. Finally, we are starting to see that investment pay off in New Zealand. The rebuilding of a public health system takes money and time. We under-invested in health right throughout the 1990s. Only now have we got it to some state of equilibrium, and 60 percent of that expenditure has gone into the wages and salaries of our health professionals in particular.

We have heard a lot about the growth in numbers of bureaucrats. I have to tell members that more people have been employed in the health system, but the growth in bureaucrats—which has been thrown around—has been 0.4 percent over that whole 6 years. Only 0.4 percent of that increase has been in so-called bureaucrats. Of course, the bureaucrats are the booking clerks, the people who ensure that people will have operations, and the people who answer the telephones. They are the sort of people that National said it will get rid of. National said it would take that money and put it into health. Well, a person will be lucky to get an extra ingrown toenail operation out of getting rid of the bureaucrats—as National calls them—in the health system. I am very proud of what we have done for health in our Budget, and we intend to do more when we return to Government.

Hon DAVID CARTER (National): It is a delight to follow the Minister of Health and her contribution in this debate on the supplementary estimates. I start by saying to the Minister that we have, and New Zealand has, lost faith in her. One has only to look at the headlines in the Dominion Post today, and the Minister had the opportunity to do something about that and she chose to ignore it totally. The Dominion Post headline stated: “Emergency overload; Hospital A & E staff struggling to cope”. It goes on to state: “Wellington Hospital’s emergency department is bursting at the seams … Patients are spilling into hallways and staff are struggling to cope. One staff member described the situation as ‘near crisis’.” Yet we have had 10 minutes of absolute garbage from the Minister of Health and she refuses to address the real issues and the reason why the public of New Zealand have no faith in that Minister or the health policies of this Government.

As we debate the supplementary estimates today, it is the final debate in this year’s Budget, and will not Dr Cullen and his Labour Government friends be pleased to see this debate out of Parliament, once and for all! Because as we all know, this Budget has been a total disaster for the Labour Government. Helen Clerk had the—I was going to say the “audacity”, but I think it would be truthful to say the “stupidity”, to say that that is the Budget that Labour wants to campaign on. I say to Annette King, and the few members of the Labour Government sitting in the cross benches, to make my day! I am happy to debate with the people of New Zealand the absolute generosity of Dr Cullen when he promises hard-working middle-income New Zealanders a tax cut of 67c a week, provided they wait around in New Zealand for the next 3 years!

What arrogance a Minister of Finance displays by coming into this House, acknowledging to taxpayers throughout New Zealand that they are paying too much tax, and then having the stupidity and the arrogance to say that Labour recognises that New Zealanders, particularly middle-income New Zealanders, are overtaxed, and if they stick with the Government it will give them 67c, but they have to hang around New Zealand for the next 3 years! That was just the most stupid thing that Dr Cullen could ever have done, and Labour Government members now on the opposite side of the House hang their heads in shame, to think that they were part of such a Budget policy this year. [Interruption]

I welcome the opportunity to debate with Harry Duynhoven, on any platform he likes, Labour’s tax cut of 67c a week against National’s tax cut policy, which will be announced in the not too distant future. If he thinks his Government’s policy will be a winner, he is as out of touch as Dr Cullen. I suspect he is, because that is what has happened to the Government. It has become so arrogant, so out of touch, it is failing to realise what New Zealanders are really worried about.

Hon Harry Duynhoven: Which electorate do you represent?

Hon DAVID CARTER: I want to take the opportunity to talk about some aspects of the supplementary estimates, but first I will pick up on the rather inane interjection from Harry Duynhoven. I tell him that I represent the farmers of New Zealand, who have had enough of that Government. I refer particularly to Supplementary Estimates of Appropriations at page 12, which talks of $2.649 million more being put towards Jim Sutton’s campaign to develop public access in this country. That is on top of the money that had already been spent in last year’s appropriations. That is on top of the $2 million being budgeted next year for the next 3 years by Jim Sutton and Helen Clark, as they progress an agenda to open up the privately owned farmland of New Zealand to people who Helen Clark thinks should be allowed to wander over that land.

If Harry Duynhoven thinks that that policy is popular, he is as out of touch with New Zealanders as he could possibly be. He should realise that the issue is a major concern for New Zealand farmers. Now, he is nodding his head. He is actually one of the few who have woken up to the fact, and acknowledged, that this is a major concern for farmers. Farmers who live in isolated areas know they do not have the resources of the police force. They know the situation where Peter Bentley was being beaten to a pulp, and his wife was on the phone ringing 111, and the police kept Mrs Bentley talking on that phone, and would not let her get off that call to ring the neighbours for help. No help arrived, for a matter of an hour or more. That is why farmers feel so deeply about this public access debacle being advanced by Helen Clark and Jim Sutton.

Hon Harry Duynhoven: What about foreign ownership?

Hon DAVID CARTER: I tell Harry Duynhoven that it is not for some selfish reason that farmers want to lock up their land. They are willing to let the people of New Zealand wander over their land, but they want to be shown the respect of being asked. They are the ones who have spent their hard-earned cash buying the farm in the first place, and they want the opportunity of saying yes or no to people who ask whether they can wander.

I remind Harry Duynhoven that it has worked well for 160 years, and all that goodwill is about to be destroyed. I look forward to seeing that member, and the other few members of the Labour caucus currently in the House, being on the steps of Parliament on Thursday week when thousands of farmers are going to descend on this Parliament to again lodge their protest over this public access debate. It is the No. 1 concern that New Zealand farmers have at the moment, and they have absolute disgust for Jim Sutton as he continues surreptitiously to advance that policy.

We tell him to table the legislation. We have been asking him all year to table it. We heard a few weasel words over the weekend saying the legislation will be in the House before the election. We took the opportunity to ask the Minister a direct question at question time today, and his answer as to when he would table the legislation was: “When we are ready.” Jim Sutton should wake up, and listen to and feel the concern of farmers.

I bring to the House’s attention one other interesting supplementary estimate—that is, the $3.133 million being added to the budget of the Weathertight Homes Resolution Service. That is a bureaucracy chewing up $18.5 million a year, but it is meant to be out there resolving the disputes and problems around leaky homes. The House has been told time and time again that the number of cases being brought before the resolution service, well and truly exceeds the cases resolved so far. At the current rate it will take over 100 years to resolve the claims.

I was amazed at some interesting statistics that Nick Smith provided. It is costing over $100,000 of bureaucracy to resolve the average claim. That typifies this Government, whereby it throws money into a bureaucracy, and employs heaps more civil servants in Wellington, and thinks that that will resolve the problems of this country. It is no wonder New Zealanders feel grossly overtaxed when they know their hard-earned taxpayer money goes into building a bureaucracy that is some 40 percent bigger than it was 6 long years ago. I say to middle New Zealand: “Help is on the way. Tax cuts will be delivered, but you’ll have to vote for a change of Government to get them.” I trust that middle-income New Zealand will do that.

CLAYTON COSGROVE (Labour—Waimakariri): As my colleague Harry Duynhoven said, the previous speaker, for the benefit of those who did not know this, was one David Carter, the former failed finance spokesperson who was sacked by his leader, sacked off the front bench twice—

Darren Hughes: Twice?

CLAYTON COSGROVE: Twice. And now in theory David Carter is National’s spokesperson on agriculture and the leader of the C-team within the National Party. I first want to address a couple of points that Mr Carter made. He talked about the accident and emergency department at Wellington Hospital bursting at the seams. Well, there is a reason for that, I tell him, as he scuttles off like a paddle crab. There are not enough beds in the emergency department, because the department is not big enough. We can ask why that is. I am not a medical practitioner, but I assume that when an emergency department is being planned, one projects out on a population basis and finds out what the demands will be over the life of that building over the next 10 or 20 years. But when the planning approval was given for that building in 1999, by the previous National Government, of course, it did not make provision for enough beds in the department, nor for enough room in that department to put in those beds. That is why, sadly, the accident and emergency department at Wellington Hospital, as the member read from the headline in the Dominion Post, is bursting at the seams. National could not run a bath, let alone set up the planning and project it forward for an appropriate medical facility for the people of Wellington. That is the truth.

Then we come to the issue of leaky buildings. My colleague Mr Duynhoven reminded me that before I arrived in this place, the warnings were there. One can just ask any builder in my electorate. I talked with one last week. He said the warnings on the leaky homes issue were around for 10 years before 1999. There were warnings about the Rockcote, the polystyrene, the lack of gaps, and the lack of ventilation all causing leaks in houses.

Brent Catchpole: Why did George Hawkins refuse to acknowledge that?

CLAYTON COSGROVE: The previous speaker got up, but before Mr Catchpole, or “Tadpole”, or whatever his name is, was in this place—

The ASSISTANT SPEAKER (Hon Clem Simich): Please withdraw that comment.

CLAYTON COSGROVE: I withdraw. Before that member was in the House, so he should zip up and listen, for 10 years before 1999 the building industry was warning Nick Smith and the then Government about leaky homes. The question I have for Mr Carter, as he embarks on his road to Damascus - like experience, is what the devil did he do, or Nick Smith as Minister do, in 10 years to correct that problem? They did nothing.

In addressing the appropriations I want to touch on Mr Hide’s speech, just briefly. I know that the Minister of Health has commented on it. But what a sad speech it was from a very, very sour member. [Interruption] Mr Wang needs to read the Standing Orders. This is a wide debate. What a sour speech that speech from Rodney Hide was. That was Custer’s Last Stand—or, maybe from “Old Yeller” it was “Custard’s” last stand—because the great delight I will have at the next election, when I stand up on the stump—[Interruption] Mr Tisch should stump up and give us a policy. When I stand up on the stump, I will debate our policy of providing $83 a week for Sue and Nick, who have a couple of kids and earn $32,000 a year—which would take a 9c in the dollar tax rate, if one was to do so under a slash-and-burn policy like National’s.

The one thing I will take great delight in after we do win this election is that that crew over there, which includes Mr Wang and the so-called leader of the ACT party, will not be here. That cancer, in political terms, will be excised and cut out of this place—and I say that not in a disrespectful way. That wound will be excised from this Parliament. Gone will be the days of wading through the political sewer, and bringing this Parliament and its members into disrepute. I say to Mr Hide that he should remember, when he is outside this place as a citizen in the free world, there will be 120 of us who will be inside, and then we may see that member and a few of his mates called to account. I look forward to that day. “Old Yeller” will be right outside this place, and we will hold him to account.

I want to go back; I have digressed. This debate on the appropriations goes like this: National members want a tax cut that, by their own figures, if one dumps in excise cuts, cuts to company tax, cuts to personal tax—you name it—will add up to, in effect, $5.5 billion, which is half the Health vote. They say, when asked how they will get the dough, that they will cut out all the so-called waste in the Government. If we look at the figures when National was in office, we see Government expenditure was 33 percent of GDP. What is it now, with that so-called waste?

Hon Harry Duynhoven: 30!

CLAYTON COSGROVE: Thirty percent, my colleague says. What is it forecast to be once the Working for Families package is fully implemented?

Darren Hughes: 32!

CLAYTON COSGROVE: Thirty-two percent—1 percent lower than when the National has-beens were in Government. I ask those members how they would do that, because $5.5 billion is half the Health vote. That is not cutting waste out of the Health vote; that is gutting health. There will be no health system if $5.5 billion is cut out. The question is: which hospitals would they close? I say Mr Tisch should stump up with a policy. Which hospitals and which pre-schools in my electorate would he close? Would National do what it threatened to do in my electorate before I became the member in 1999, which was to gut and close Rangiora Hospital and Oxford Hospital—are the National members going to run that up the flagpole? By God, I will enjoy defending those hospitals. I will be in the trenches defending them if ever, after the election, National managed to implement that particular policy.

I was on CTV with Gerry Brownlee—there was not much room on the screen, I have to say. I asked him where he would get the money for tax cuts from, and he could not answer that. He said to me in the advertisement break that it was a bit like treading water—that until National announces its policy, it has to keep treading. National members have bleated on, and some may sink like deadweights. I say to them that they should get the tax policy out. If they are so proud of it, they should do two things: first, announce it today; and second, put it before the Finance and Expenditure Committee system that even National signed up to unanimously, whereby Treasury would gain a consultant—which it has done—who could cost all the political parties’ tax policies. Even the ACT party dipped into that one and submitted its policy—Mr Prebble must have been in charge that day. The Green Party submitted its policy. United Future submitted its policy. Labour’s policy is out there. It has been picked over, trodden on, booted around, and chewed around for years. Which party did not submit the tax policy that it is so proud of? That crew—the National Party. We have done one costing, and now there is a second round. Treasury does not get involved in politics. It has hired a reputable economic consultancy firm. But why will National not have its policy costed?

I predict that National will announce its tax policy, but that in no way will National go anywhere near anybody who would independently cost that policy. National will not go near anyone to have that done, because it knows the hidden traps that are in its policy. The hidden traps are that every member of Parliament, including Mr Wang over there on the Opposition benches, will get a couple of hundred bucks a week, I predict, out of a Don Brash tax policy. Mr Wang and a few others talked about hard-working Kiwis. Well, what would they know about hard-working Kiwis? What would every battler on $32,000 or $37,000 a year get from the so-called tax cut? Nothing. What would Nick and Sue in Oxford in my electorate get? Members should hunt them down and talk to them, because they are now receiving $82 a week as of this year, but under a National Party tax cut they would get nothing. If I am on $55,000 a year, what would I get from a National Party tax cut? I may get $5 a week. [Interruption] I hear an interjection from over there in the Opposition. Mr Hide says our policy would only buy a stick of gum. I suppose $5 would buy a triple meat burger for Rodney Hide. But a family of four kids and two parents earning $55,000, under our Working for Families system today, and given their rent and other costs, gets $150 a week. I said before that it would require a drop to a 9c in the dollar tax rate to give a family on $55,000 a year the equivalent of $150 a week—and I assume that at that point so little tax would be coming in that it would be a case of “the last one out switches the light off.”

That is where the debate will lie for those working people. After this appropriations debate, at the appropriate time, that is what we will go out and debate at the election. Then we will match Labour’s record with National’s record. The only record National can stand on is what it did last time it was in Government in respect of the pension. I ask where National would make the cuts—in health, in hospitals, or in the police? Where would it do that? The people want to know, and National should be honest enough to stump up and give them a tax policy.

RON MARK (NZ First): I tell all the listeners sitting in their cars that the speech we were just treated to from Clayton Cosgrove was his “Please make me a Minister next time.” speech.

Hon Annette King: He doesn’t need to say please. He’s doing all right.

RON MARK: Oh, so Clayton Cosgrove is going to be a Minister in the next Government?

Hon Annette King: Oh yes, you wait and see.

RON MARK: That is a very fine announcement from the Minister of Health, who will be departing, along with her entire front bench, as Labour leaves Government.

That factor brings me nicely to the point I wanted to make. It is one thing to have a debate and a speech targeted on the facts; it is quite another thing to have a member of Parliament stand up and use sarcasm, vindictiveness, and nastiness—to call one member a paddle crab; to call another member yellow and not be pulled up by the Chair; and to imply that another member is so big and fat that he did not fit on the TV screen in a particular interview. If that is the sort of arrogance this Government wants to bring to the next Parliament and to the next Cabinet, then so be it, but I suggest to Annette King that it is a little bit presumptuous to assume that Labour will be in Government.

I point to another comment. There was a little interchange that speaks very loudly of the culture. When Mr David Carter spoke—and, God knows, I am not here to defend him—he was questioned by Government members as to what seat he holds and what constituency he represents. Immediately to the fore came Judith Tizard, Annette King, Harry Duynhoven, and Georgina Beyer, to ridicule him as though he were some sort of B-class MP because he does not have a constituency. Here is the point: Georgina Beyer is herself now on the list; the Deputy Prime Minister of this country, the Hon Dr Michael Cullen, is a list MP. It smacks again of an arrogance that can be demonstrated only by people who believe that they are beyond reproach, and that they are, as constituency MPs, more important than list MPs.

It brings to mind the Jill Pettis comment, in answer to a question from a person on the street as to whether she could govern with New Zealand First. Her answer was: “They’re so unsophisticated.” Imagine that comment being reiterated in the freezing works, amongst the hard-core Labour vote! Imagine that comment on the marae! If Winston Peters is less sophisticated than Jill Pettis, and if that is the proviso the chief Government whip is going to bring to the negotiating table—that she wants to govern only with people who are sophisticated—then it suggests that Labour is a country mile away from its roots. The people on the marae, the tangata whenua, whom Labour so proudly claims to represent, are not going to take kindly to that sort of arrogance.

It is the sort of arrogance displayed by Mr Maharey, who made all sorts of promises in Opposition, then became a Minister and reversed his position. That act created the “Maharey principle”, which is the ability to say one thing when in Opposition and do another when in Government. It was most aptly summed up, not by Mr Cosgrove in his very sad speech, but by Dr Cullen himself, who said in the House: “We won. You lost. Eat that!”. That sums it up. Mr Carter was quite right when he pointed out that the commentary we hear from Labour MPs and Ministers is pure arrogance.

The Budget is my next point. I have just come from a Grey Power meeting in Porirua on law and order, which the Hon George Hawkins attended. I give him 10 out of 10 for attending—brave chap. He is a nice chap, actually. I have known George Hawkins for a very long time—since he was a member of the Mike Moore team. But for him to stand and justify the Budget, the supplementary estimates, and the expenditure of money in this Government’s coffers, by telling the people of Porirua this afternoon that crime is falling, was summed up by the reaction of the audience members, who crossed their arms and put their heads down and shook them. After the meeting was over I asked a number of people whether they knew of anyone in their family who had been a victim of crime and who had not reported that crime, and if so, to tell me why it was not reported. All the people standing around me said that of course they did—not one member of their family, but many members. For the Minister to justify his reduction in crime-fighting expenditure, an insignificant increase in the police budget, and an insignificant increase in police numbers over 4 years, by telling those elderly people, who have read in the papers of another two elderly people murdered in their home, that crime is falling smacks of either stupidity or arrogance—one can take one’s choice.

The same man said that burglary rates are down. Burglary rates are not down—reports of burglaries are down. Let us ask any policeman, policewoman, or citizen whether he or she believes that burglaries are down. Let us go to the national crime statistics and the victimisation statistics. They state that crime is under-reported by a massive 60 percent. Do we see a commensurate increase in expenditure in this Budget? Do we see a commensurate concentration on burglaries? No. When I went to the Northern Communications Centre I saw all the burglary cases from that night being stacked up as priority three, to be looked at not on Saturday, not on Sunday, but some time on Monday. How does that settle with average New Zealanders? Average New Zealanders who have had their home burgled try not to disturb the scene, because they truly believe that when they ring the police, a policeman or policewoman will come around to examine the scene, collect DNA, and collect fingerprints, and that then the family will be free to get on and clean up the burglar’s mess—that home-invasive mess. But that is not what happens. We all sat there—Marc Alexander, myself, and Martin Gallagher—and watched all those burglaries be classified as priority three, to be left for the Monday or Tuesday. In fact, we now know that burglary scenes are never investigated on the night or day they are reported—never. And the Government has the nerve to tell us that burglaries are down? No.

Reported burglaries are down for economic reasons. First, most people do not have home contents insurance. They can make no claim. So there is no point in their reporting the crime, because they know full well that it will never be solved, and they do not need a claim number from the police, because they will not put in an insurance claim. Second, those people who do have home contents insurance policies will make an evaluation as to whether they want to affect their no-claims bonus or excess. They will make a value decision as to whether they will report the burglary. Again, for the Government to talk of its pride about the police budget is a very, very sad thing. It belies its true commitment to resolving crime and bringing crime rates down.

For Mr Hawkins to say that the road toll is down and that that justifies the quota ticketing system is a nonsense. Speeders are not the only people who kill on our roads. What kills on our roads is bad engineering. If people need proof of that, they should go out on State Highway 1 and look at the good engineering that has been done to divide off those lanes along the coast. That sort of thing reduces road fatalities. Education—the excellent advertisements on television—reduce road fatalities. None of the people in Grey Power believe that the quota ticketing system on its own, which collects $100 million per year, is responsible for reducing the road toll. Children reduce the road toll when they tell their mum, dad, and grandad to put their seatbelt on. That comes from education. The quota ticketing system is about one thing and one thing alone: redressing the balance and bringing $96 million in revenue into the coffers. Engineering, education, and road safety together reduce the road toll, not quota ticketing on its own. Nobody believed the Minister when he tried to say that it did.

As for the lowering of standards in police recruiting, nothing in this Budget or these supplementary estimates suggests that this Government is serious about bringing safety to our streets with a serious increase in police numbers. For the Government to crow about 247 officers over 4 years is pathetic. We need 2,500 officers now. Auckland—[Interruption] The Minister Judith Tizard laughs. She should read the police’s own report from 2002. They needed then an extra 100 response units, and they still do not have them.

Hon PETE HODGSON (Minister of Transport): There are, apparently, 2 minutes left, so I will not embark on the major part of my contribution to the debate until after the meal break. Instead, I want to respond to some of the comments made by the member who has just resumed his seat. He has with this Government a point of agreement and some points of disagreement, and I want to tease out his arguments a little.

He had a point of agreement when he said—and he said it only the once—that enforcement alone will not improve road safety. He is right. We agree with that. We think enforcement alone will not improve road safety, and we are not supporting an enforcement-alone approach. That is why the advertisements on television that the member referred to are running. They are being paid for courtesy of the safety administration programme run by this Government. That is why more money is going into road safety engineering this year than ever before. That is why roads that are being built or refurbished today are safer than ever before. That is why the median strip along Centennial Highway that the member referred to went in under this Government. We understand that engineering, education, and enforcement together matter. What will not work is education and engineering. What will not work is two out of three. That just will not work. Two out of three will not do. Education, engineering, and enforcement together are mutually reinforcing.

It is not OK for the member who has just resumed his seat to suggest—and here is the point of difference—that this Government has enforcement in order to raise revenue. We do not. We would like nothing more than to collect nothing from speeding tickets. We would like nothing more than for nobody to receive a speeding ticket. It would suit us down to the ground. We would lose money. Actually, if we take a venal approach to it and talk about money only, instead of lives, we can say that we would probably make money on that, because we would avoid the costs of hospitalisation of people whose cars have been crunched, and the accident compensation costs that are inflicted upon society.

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

Hon PETE HODGSON: I have one question to ask the National Party. Where is its policy? Where is its policy on tax cuts? A policy on anything would do, but I ask where the policy on tax cuts is. The reason I am asking is that the National Party does not have a very good record of following through. It did not follow through on Ōrewa I. It did not follow through on imprisoning a whole lot of people in jails that had not been built and that it did not have the money to build. It did not follow through very well on what it said about taking babies from solo mums and putting them out for adoption. It has caused itself quite a headache by having lots of little dabs about where it might go if it were ever to become the Government, but never following through.

Now the weeks since the Budget are beginning to count. There has been no follow-through. Colin Espiner said in the weekend Press: “If National doesn’t release its tax-cuts policy—not just drop hints—in the next fortnight it will drop back behind Labour in the polls.” It will do that anyway, but the question is where is the tax policy. The reason it matters is that the ACT party has in the interim managed to put out its tax policy. All the details of that policy are out in the public arena. It makes no sense, of course, but it is out there. United Future has put out its tax cuts policy. The Greens have even decided they have things to say on taxation. But the National Party has simply said that it would give mighty big tax cuts. It is not saying how big or for how many—unless we add them all up. Let us add up all the hints that have been dropped about 39 percent becoming 36 percent and 33 percent becoming 30 percent, and about making sure that an extra $600 million—coming out of taxpayers’ pockets—is spent on roads, as well as about getting rid of this tax, that tax, or the other tax because National does not like it. When we add it all up, we get a very big number.

It has not yet been confirmed in a tax policy statement from the National Party. Why not? Because the National Party is starting to work out that it is not a minor party, that it cannot drop big tax numbers without coming under the immediate scrutiny of the finance sector, of the Labour Government, and of anyone who knows anything about how to drive an abacus. The National Party knows that it has to come up with a tax policy that is saleable, and it has gone and oversold. It cannot possibly put together a tax policy that would give the cuts of $30, $40, or $50 a week that New Zealand families would say is good enough—because that is the sort of money, just for starters, they are getting from the first part of Labour’s Working for Families package. So if National intends to give $30, $40, or $50 a week to New Zealand families, it needs to tell us where the money would come from.

Dr Wayne Mapp: The surplus.

Hon PETE HODGSON: The associate professor of something or other from an earlier time has interjected that he thinks the word is “surplus”. I have news for that gentleman: there is none. The operating balance excluding revaluations and accounting changes is a surplus that is spent on capital investment, the Cullen fund, retiring debt, building hospitals, and building schools. There is no surplus. So we have promises for rich New Zealanders and for middle-income New Zealanders. We have promises of cuts in the carbon tax, in company tax, and in income tax, and we have promises of no cuts in services. That does not add up.

The National Party has got itself into the beginning of a hole. It said that it would give New Zealanders tax cuts of consequence, it said that every New Zealander would be better off as a result of tax cuts from National, and it has worked out that it cannot afford the money. The only way it can afford tax cuts is either to borrow in order to fund them—and, guess what, the word “Muldoonist” was used against Don Brash, the leader of the National Party, in the New Zealand Herald today by a widely respected commentator—or to make swingeing cuts to health, education, social welfare, justice, and law and order. Those are the two options: borrow and hope, or swingeing cuts to social and security services.

The National Party is in a hole. It had a great time a few weeks ago. It is in a hole now, and it will have to announce its policy soon, because otherwise the hole will get bigger. That is the problem faced by the National Party. The hole will not get any smaller; it will get bigger and bigger. As the expectations of tax cuts rise in the country, as the smart alec two-word signs go up around the country, showing the difference between Labour and National, and as National thereby comes under the spotlight, questions will be asked more and more often by commentators and then by the public: “Where are the tax cuts? Where is the difference? What will this election be about?”. If it is not about tax cuts, then the public already knows how it will vote; people will vote for the Government they know and love so well. But if National can pull 5 billion bucks worth of magic from somewhere and call it tax cuts, then people in New Zealand might want to give it a bit of a chance.

So National has an opportunity to go to the people and say: “This is what we mean by tax cuts.” Then the debate can begin. Then we can decide whether this nation wants the Government to become an even smaller part of the country—whether the Government becomes even leaner and meaner and cuts spending on health and education much harder than National ever did in the 1990s. [Interruption] The member might remember that when the big benefit cuts took place at the beginning of the 1990s, the amount of money taken out of the economy was $1.3 billion—only a quarter of what is needed. We would need four times the money raised by the “mother of all Budgets” in order to get anywhere near the amount of money National has already promised to give New Zealanders. So National has to decide whether it will front up. Will it be tax cuts by Christmas? Will it be tax cuts by 1 April? Will it be tax cuts in the first 3 years? Or will it be tax cuts only when we can afford them, which is on the never-never?

Hon BILL ENGLISH (National—Clutha-Southland): Labour ought to listen to what people are saying about its 67c tax cuts.

Jill Pettis: Not much.

Hon BILL ENGLISH: That is right. In fact, they are saying worse than not much. It would be better if they were saying nothing. If I were that member I would think it better if the drivers on the taxi rank outside Auckland airport were saying nothing about the 67c tax cut. Instead, they are talking to every single passenger about what a waste of time it is, and, more importantly, about how they feel taken for granted. That is the strategic hole Labour has fallen into. Dr Cullen has been so busy trying to buy the election in 2008 that he has forgotten that Labour has to get some votes in 2005.

Hon Dr Michael Cullen: Oh, you’re going to buy them!

Hon BILL ENGLISH: Well, that was what he was meant to be doing. He has taken voters for granted. The Labour back bench will realise one of the long-term truths of politics: the punters are never grateful. The voters in New Zealand have a healthy disrespect for Government. The less damage the Government does, the more the voters may be grateful. But if Labour thinks that people ought to be grateful for getting back their own money, the lesson of history is that they will not be. Voters who think they are taken for granted do not behave well at the ballot box when a Government is looking for support. That is the problem.

There are middle and higher-income New Zealanders who have supported Labour at the last couple of elections, and Dr Cullen and Ms Clark, in particular, have made the arrogant assumption that these people are social democrats of some kind. Well, they are not. They are good, conservative, mainstream Kiwis, and their support has to be earned by any party. National used to take them for granted, and it learnt the hard way that it cannot. Now Labour is taking those people for granted.

That breach of trust between those voters and Labour is at the heart of Labour’s problems now. Dr Cullen and Helen Clark just assumed that because they were so magnificent, those people would keep voting for them. I know that Dr Cullen is talking about the last election campaign—all sorts of lessons were learnt from that—but the pity is that he does not appear to have learnt them.

I will spend some time on Dr Cullen’s accounting, because it is quite important. He has tried to change the definition of the Government’s surplus. He has tried to take us back 15 years—in fact, more than 15 years; it is now getting on to almost 20 years—when the Government accounts ran on—[Interruption] The early 1990s. It was Mode B (Gross) and Mode B (Net), and all that stuff. He is trying to take us back to when the Government just ran a simple fruiterers cash-register system of “cash in, cash out”.

In fact, there has been bipartisan agreement for almost two decades, if one includes the time that the policy was in the making, that “cash in, cash out” was not the way to run a modern Government; that, in fact, accrual accounting mattered. Dr Cullen had one chance to change the rules, which he took when he came in as Minister of Finance. He said that the current surplus was not a good way of measuring the activities of Government, so he would change it. That was his opportunity, and he changed it to the operating balance excluding revaluation and accounting charges.

That turned out to be a bit of a puff of smoke in the wind, because the operating balance excluding revaluation and accounting charges has been significantly different from the operating surplus in only 1 year. It makes a big difference to the management of Cabinet expenditure, because nothing undermines Cabinet Ministers’ self-discipline more than finding that they have been made to make savings, and then finding that the surplus gets dramatically changed because of a revaluation of the Growth Services Fund. They do not like that at all, because $500 million can just get changed overnight, on an accounting change, when they have spent months hacking away, saving $100 million.

Dr Cullen changed the system, but he did not change it to a cash system. If he had really believed what he now says about how the Government should account for its activities, he would have changed it then. He now knows that because he left it until it suited him, the public have no idea what he is talking about. As far as the public are concerned, they believe the numbers. Why would one blame them? We spent two decades educating the public about good public policy and good public accounting, and when they see a $4 billion, $5 billion, or $7 billion surplus, they believe the numbers.

In the last 3 or 4 months Dr Cullen has taken on the job of trying to change the public’s mind. If Dr Cullen is as clever as he thinks he is, he should know that it would take a good 5 years to change the public’s view; to tell them that the actual surplus is not the surplus, or to explain to the public that he has got all these other uses to which he puts the surplus, which means that there is not really a surplus at all.

Hon Dr Michael Cullen: So it’s not true, then?

Hon BILL ENGLISH: No, the point is that he had the opportunity to change the rules and he left it too late. Now the public believe the numbers that have been published. They believe that the Government has an operating surplus. It is going to be very difficult for Dr Cullen in the next 3 months to change the rules that have been in place for 20 years.

Dr Wayne Mapp: He will fail.

Hon BILL ENGLISH: No, it is worse than that. He has failed. The time for that argument is over. The look on his back-benchers’ faces shows what a revelation it has been for them. They believed what he told them, which was that because he was so smart the public would change their minds just because he said they should. But, in fact, they have not.

I will spend a little bit of time on the Government’s spending; in particular, in my own area of education. I have had, as everyone else has had, the released Official Information Act request on the Budget bilaterals for education. It shows a bureaucracy and Government completely at sea when it comes to understanding what it is doing with the money that it is spending on education. The Treasury reports on the bilaterals make it quite clear that the Government has no concept of value for money in education. It has had almost no control over the expenditure of money in education—particularly in tertiary education. The official documentation of the last 3 years outlines a trail of incompetence and waste. The public, because they have seen so much of it, have now come to understand the incompetence of the Government with their money.

That is the other thing Dr Cullen will have to come to grips with. Although he sees himself as some kind of fiscal hawk who has ridden the Cabinet and caucus hard on spending, the public increasingly believe exactly the opposite, because they see the evidence. In the public mind, value for money matters. It matters more than collaboration, cohesiveness, and partnership—all those weasel words of the day that mean no one is accountable under this Government. The public want value for money. If there is $3 billion more spent on health, they want to see $3 billion more of health services. The problem is that they see almost no extra health services. If they see a couple of billion extra dollars spent on education, they like to think that some people are learning something. But they have discovered that that is not happening, either.

Jill Pettis: Extra institutions.

Hon BILL ENGLISH: As that member will find out, our polytechs—public institutions of which she is supportive—will all get into huge financial problems over the next couple of years, despite the expenditure of huge amounts of money by the Government.

Hon RICK BARKER (Minister for Courts): That was the leader-in-waiting for the National Party, but—regrettably for the National Party—he is also the leader who took that party to the biggest defeat in its history. The biggest defeat that National has ever suffered in an election was under that man, Bill English. It just shows the value of the currency of his opinion. It is also worthy of note that he had some time in the finance portfolio. I reiterate the point made to the House earlier by Clayton Cosgrove that the Finance and Expenditure Committee had agreed that it would have Treasury examine the tax and finance policies of each party independently, in order to offer the public a fair opinion of those policies. The only party that will not put its policy through that process is the National Party, because it is afraid of what will be found—and it has good reason to be afraid. The other policies it has put forward, like, for example, social welfare, have been justifiably trashed. Its members do not talk about social welfare policies any more.

Hon David Carter: Ha, ha!

Hon RICK BARKER: Opposition members may laugh, but let us go back for the joke. The joke is that National’s leader, Don Brash, said that the party would have the unemployed line up outside a post office. That was the National Party’s policy on social welfare. We all know—except the out-of-touch National Party—that post offices have long since gone. The National Party then went on to say that women who refused to name the father of their children would have to face a financial penalty. The bad news for the National Party is that that is now the case. The National Party then said that there would be a 90-day trial period for beneficiaries who were trying to find work. Again, the National Party was wrong, because that is already policy. It also said that it would have people work for the dole—that if people could not find jobs, National would get them jobs in the community. Analysis of its own policy back in the terrible 1990s shows that that did not work. The people who were put on make-work schemes were less likely than others to find jobs.

The Labour-Progressive Government has been outstandingly successful in employment. When we came into office, we inherited approximately 160,000 people who were on the dole. The National Government in 9 years had managed to increase the number of unemployed from approximately 100,000 to 160,000. This Government has taken that number down by 100,000—100,000 people are off the dole, so while there were approximately 160,000 people unemployed, there are now about 60,000. There are 22 percent fewer people on benefits than there were before. This Government has been spectacularly successful in reducing youth unemployment and long-term unemployment, and I say to Bill English that the public will be very grateful for that.

When I was an MP in the 1990s, parents came to my electorate office and were desperate with concerns about their children’s prospects for a job. That is no longer a particular concern for parents, because this Government has increased the number of people in industry training by approximately 80,000. It has almost doubled the figure. The National Government got rid of apprenticeships; Labour reinstated apprenticeships, and it is giving kids jobs, hopes, and skills.

We have increased industry training funds, so the whole emphasis of this Government has been on creating jobs, giving New Zealanders skills to get those jobs, and filling job vacancies with New Zealanders in preference to importing people from overseas. It has been spectacularly successful. New Zealand now has the second-lowest unemployment rate in the OECD. When in our history can we recall New Zealand having fewer unemployed than Australia, Britain, the United States, Germany, Japan—almost anywhere? When can we recall the time in its history when New Zealand had a greater participation rate by the workforce in work? That is a remarkable achievement, and the public will be very grateful to this Government for leading such a remarkable turn-round. This country now has hope and opportunity, unlike the situation that will be put forward by the National Party.

National is saying that it will give people tax cuts, and we are talking there about approximately $5 billion worth of tax cuts. Now, the public are not as stupid as that. They will know that $5 billion worth of tax cuts will have to be paid for from somewhere. What will National cut? It has lined up what it calls a “bloated civil service”. Well, will it cut the extra 2,700 teachers this Government has put on stream? Will it cut the extra 3,300 nurses who are employed under this Government? Will it cut the extra 950 medical staff, or the extra 1,250 clinical support staff? This Government has invested heavily in public services, to make sure they are functioning and workable for the New Zealand public.

We used to have public services that were malfunctioning; they did not have staff or resources. This Government has invested heavily in roads, jobs, education, and health services. New Zealand, after 6 years of a Labour Government, is a vastly better place than it was when we inherited it. It is not perfect; we know there is more work to be done. That is why this Labour-led Government will campaign hard in the next election on its record: lower numbers unemployed, more people in jobs, wealthier people, and a Working for Families package that means we have reduced child poverty. On every front, and against every measure, New Zealand is a better place today than it was before this Government came to office. We have a proud record, and we are prepared to stand and have our years in Government compared with the nasty 1990s of the previous National Government.

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

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 48

New Zealand National 27; New Zealand First 13; ACT New Zealand 7; Māori Party 1.

Abstentions 8

Green Party 8.

Bill read a second time.

A party vote was called for on the question, That the Imprest Supply (First for 2005/06) Bill be now read a second time.

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 48

New Zealand National 27; New Zealand First 13; ACT New Zealand 7; Māori Party 1.

Abstentions 8

Green Party 8.

Bill read a second time.

Bills

Appropriation (2004/05 Supplementary Estimates) Bill

Imprest Supply (First for 2005/06) Bill

Third Readings

Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Appropriation (2004/05 Supplementary Estimates) Bill and the Imprest Supply (First for 2005/06) Bill be now read a third time.

A party vote was called for on the question, That the Appropriation (2004/05 Supplementary Estimates) Bill and the Imprest Supply (First for 2005/06) Bill be now read a third time.

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 48

New Zealand National 27; New Zealand First 13; ACT New Zealand 7; Māori Party 1.

Abstentions 8

Green Party 8.

Bills read a third time.

Urgency

Urgency

Hon Dr MICHAEL CULLEN (Leader of the House): I move, That urgency be accorded the debate on the performance and current operations of Crown entities, public organisations, and State enterprises, and the passing through their remaining stages of 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, and any bills into which those bills may be divided. This motion is moved to allow for additional sitting hours this week, to consider legislation the Government wishes to see passed before the end of June.

SIMON POWER (Senior Whip—National): I raise a point of order, Madam Deputy Speaker. Could the Leader of the House just confirm that it was his intention in that motion to have those matters go through all stages?

Hon Dr MICHAEL CULLEN (Leader of the House): Yes.

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

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 55

New Zealand National 27; New Zealand First 13; ACT New Zealand 7; Green Party 8.

Motion agreed to.

Debate on Crown Entities, Public Organisations, and State Enterprises

In Committee

The CHAIRPERSON (Hon Clem Simich): The debate on the performance of Crown entities, public organisations, and State enterprises is a series of debates on individual reviews of Crown entities, public organisations, and State enterprises as reported by select committees. The debates on the individual financial reviews should be relevant to their performance in the 2003-04 financial year and their current operations. A member may have no more than two calls on each review. Three hours is allowed for the debate. At the conclusion of the 3 hours, it will be reported to the House. A list of financial reviews available for debate is on the Table. I understand that members have indicated the Crown entities, public organisations, and State enterprises they wish to debate.

Reserve Bank of New Zealand

LINDSAY TISCH (Junior Whip—National): I raise a point of order, Mr Chairperson. If we do not speak to it, are we able to vote on it?

The CHAIRPERSON (Hon Clem Simich): Yes.

A party vote was called for on the question, That the report be noted.

Ayes 69

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

Noes 47

New Zealand National 27; New Zealand First 13; ACT New Zealand 7.

Report noted.

Air New Zealand

Earthquake Commission

Government Superannuation Fund Authority

The Guardians of New Zealand Superannuation

DAIL JONES (Junior Whip—NZ First): I raise a point of order, Madam Chairperson. Can I just clarify something? I take it this is a fixed 3-hour debate, so if we have pointless votes we are cutting into our own speaking time.

The CHAIRPERSON (Ann Hartley): Yes, that is exactly right.

DAIL JONES: And that last vote was called by the National Party?

The CHAIRPERSON (Ann Hartley): Yes.

Reports noted.

Television New Zealand

SUE KEDGLEY (Green): Well, it is just over 2 years ago that Television New Zealand was turned from a State-owned enterprise into a Crown entity, and given new legislation, a new charter, and a new mandate. There was a tremendous amount of hype and, indeed, a lot of hope. We were going to have a State broadcaster that would reflect New Zealand to New Zealanders. It was not going to show the same incessant diet of foreign programmes available on TV3 and other commercial television channels; it was going to show New Zealand to New Zealanders. We gave it money to implement its charter—about $25 million last year and the previous year. I think it is timely, 2 years later, to take stock and to ask ourselves whether it has worked. Has TVNZ lived up to its expectations, and have we seen, as we were told at the time that we would, more and better of New Zealand on our television channels?

Hon Marian Hobbs: All that ballroom dancing!

SUE KEDGLEY: I will come back to the ballroom dancing. When I looked at the fine print, which I did recently, I discovered that we have had less, not more, New Zealand programming on TVNZ since it has turned itself into a Crown-owned entity, since it has had its charter, and since we have been pouring money into it. The total number of first-run New Zealand programmes is actually down by 3 percent, or 185 hours, since the charter came in in 2003. If one takes out the repeat programmes, and looks at the 6 a.m. till midnight figures—which is what, internationally, one normally does—one finds that the Television One figure was actually down last year from 43 percent to 42 percent, and the TV2 figure was down by 1 percent, to 17.9 percent. Overall, for both of our publicly owned television channels, 38 percent of the programmes that screened from 6 a.m. till midnight were New Zealand programmes—in other words, 62 percent of the programmes were foreign. Frankly, that is appalling. In particular, what is the point of owning a television channel, TV2, when 83 percent of its programmes are foreign? We were assured that we would not see the same incessant diet of foreign programmes available on other channels. In fact, that is exactly what we have.

The television channels have managed to hide slightly the fact that we are actually going backwards in terms of New Zealand content, by setting voluntary quotas. That is basically a public relations exercise, where one sets a quota one would like, then trumpets that one has met the quota. But when I actually looked at the quotas, I found that Television One has reduced the quota it has set itself. It was 53 percent in 2003; in the last year, it has reduced the quota it has set itself to 52 percent. And TV2 has set itself a quota of 19 percent. We have to ask why TV2—the channel that our young people watch—is screening fewer than half the number of New Zealand programmes that Television One screens. It is quite extraordinary. The total number of first-run New Zealand programmes has gone down by 3 percent since the charter came into effect, in 2003.

We have to ask ourselves what the point of it is. We are not getting more New Zealand programming; actually, we are getting less. Where has all that money gone? What was the $25 million spent on last year, if it was not spent on increased numbers of New Zealand programmes? It certainly was not spent on children’s programming, which was something else we were assured we would have more of. In fact, TV2’s children’s programming was down by 115 hours to the lowest level in 5 years. Once again, we see a steady decline, and that is exactly the opposite of what we were assured would happen—we were going to see more New Zealand programmes, and so forth.

Everyone is asking where all the charter programmes are. People are talking about the fact that we seem to have an off-peak charter in that the charter is being met in off-peak hours.

Report noted.

Auckland District Health Board

Bay of Plenty District Health Board

Canterbury District Health Board

Capital and Coast District Health Board

Counties Manukau District Health Board

Hawke's Bay District Health Board

Hutt Valley District Health Board

Lakes District Health Board

MidCentral District Health Board

Nelson Marlborough District Health Board

Northland District Health Board

Otago District Health Board

South Canterbury District Health Board

Southland District Health Board

Tairāwhiti District Health Board

Taranaki District Health Board

Waikato District Health Board

Wairarapa District Health Board

Waitematā District Health Board

West Coast District Health Board

Whanganui District Health Board

Health Research Council of New Zealand

Health Sponsorship Council

New Zealand Blood Service

Residual Health Management Unit

Dr PAUL HUTCHISON (National—Port Waikato): Thank you, Madam Chair, for the opportunity to speak in this very important debate on the financial reviews of Crown entities, public organisations, and State enterprises. It is very important to look at these reviews in the context of some of the things that politicians like Annette King and Helen Clark said in the 1990s. At that stage of events, they went around the country saying they would cut bureaucracy and blitz the waiting lists. They said that if they taxed people a little more, they could fix health and education. They said they would deliver.

The CHAIRPERSON (Ann Hartley): I just remind the member that we are talking about the estimates.

Dr PAUL HUTCHISON: I absolutely agree with that.

If we look at the 2003-04 financial review of the Auckland District Health Board, what do we see in terms of delivery? We see that the board has a current deficit of $44.7 million. In 2002 the Minister of Heath told the Health Committee that there would be no deficits by 2005. They would be gone—blitzed; nothing there. But what do we see in the report of the Health Committee? We see that in 2003-04 that board has a deficit of $44.7 million.

Dr Wayne Mapp: How much?

Dr PAUL HUTCHISON: It is $44.7 million, and according to our advice that is likely to increase in the 2004-05 financial year to more than $83.3 million. The Minister of Health, who is the Minister in the chair, told the select committee in 2002 that there would be no deficits in any of the health boards. She said the combined deficit would be nothing—it would be blitzed.

That is just like what she said about the waiting lists during the 1990s. What do we know about the waiting lists in the district health boards in 2004? Let us just have a little snapshot, because the Minister is keen on snapshots. The number of patients waiting longer than 6 months for their first specialist assessment is 2,602. According to the Minister of Health, that is blitzing the waiting list! What about one of her other commitments about delivering?

Clayton Cosgrove: Scalpel!

Dr PAUL HUTCHISON: Well, if only she had got the scalpel out and sorted them out! What about patients waiting without a commitment to treatment, and whose priorities are higher than the actual treatment threshold? These are patients who undoubtedly are pretty unwell, who are in pain and, often, are losing their vision. How many were there? There were 351. This is the Minister who said Labour would deliver and blitz the waiting list, and in the Auckland District Health Board in 2004, 1,261 patients were given a commitment to treatment but were not treated within 6 months.

That is the sort of clarity that Annette King gave patients when she went tearing around the country in the 1990s, saying that Labour would blitz waiting lists, cut bureaucracy, and deliver results. But in the Auckland District Health Board in the year in question there were literally thousands of patients waiting for longer than 6 months—patients who had worse situations than those required to receive treatment and who did not receive treatment, and patients who were given a commitment to treatment but were not treated within 6 months.

Hon Marian Hobbs: There was a new hospital being built.

Dr PAUL HUTCHISON: Well, there was a new hospital, and who went and opened it?

Hon Annette King: Nobody yet.

Dr PAUL HUTCHISON: We can guarantee that when someone does open it—well, there is every chance that she will not get the chance. In 2 or 3 months’ time, there will be a new Government. The Minister will blame the previous Government for any cost that might have accrued to Auckland City Hospital. It is as predictable as night following day that the Minister will once again not accept responsibility. She will blame the last National Government—after 5 years and $3.3 billion. It is probably only $3 billion, I say to Mrs King, but to her that does not mean much, because she gets nothing from it.

STEVE CHADWICK (Labour—Rotorua): I am pleased to speak in this State-owned enterprises debate, because this is a Government that has incredibly strong leadership. The important issue as we go into the election is that we have financial security, and that is what New Zealanders care about. This Government is committed to Crown entities and State-owned enterprises working together with industry and with the private sector to benefit all New Zealanders. I am proud of that.

Our commitment to State-owned enterprises is not something we are going to flip-flop on or change our minds on. Our State-owned enterprises are working really well, and, before I talk about health, I would like to talk about Mighty River Power. In my own electorate it is working with industry—Norske Skog—to look at cogeneration of geothermal power. But our State-owned enterprises are also involved in social spending. Mighty River Power is involved in a “maintain New Zealand” partnership with the tertiary sector, the local college, and Norske Skog, and it is training maintenance engineers and has young kids doing apprenticeships. I think that is fantastic. Good on it!

We have looked at the Opposition’s view of these State-owned enterprises. Dr Brash says that minor changes are not quite enough. John Key, on the other hand, knows that privatisation is a really, really toxic issue. But, what is more, they do not know quite where or what to target. I say they will move into icons like Kiwibank and New Zealand Post. Just watch this spot. I wonder how many electorate MPs in the Opposition have gone out and seen the wonderful initiatives undertaken by New Zealand Post. It is working with communities on such things as New Zealand Book Week for little schoolkids—lovely, iconic brands like that.

I want to move on to which State-owned enterprises National will flick. I am deeply concerned about the health sector. I worked for 9 years under the National Government when it made its cuts. What did it cut? It cut the very things that made the difference to connecting communities together. National said that parenting courses were not part of maternity care any more. It said they were not part of core services, so it flicked them out to the private sector to see who picked them up. It is deeply worrying to me when National members talk about tax cuts that come to $1.9 billion. I have to look at health and ask what will go next. Of course, there is a very tidy package called the Working for Families package, which we really love because it targets—

The CHAIRPERSON (Ann Hartley): I am sorry to interrupt the member, but this debate is about financial reviews. The member needs to come back to the question.

STEVE CHADWICK: I will get back to the financial reviews, although I am talking about health, Madam Chair. I heard the Opposition talk about deficits. Under this Government, deficits in our district health boards are better than they have ever been. It is all right to go out there and give a promise, but do members know what Labour has given to this sector in terms of deficit management? It has given certainty. How did the Minister give financial certainty to the district health boards? She went out with a 3-year funding package. So for the first time for years the district health boards were able to actually get their heads around long-term security of funding. Funding was based on a population-based formula, so that it did target areas of deprivation and it did target inequalities in health status. Because of this good funding in health—and it is a substantial increase in funding—we are seeing reduced mortality rates and reduced morbidity. That is important to me. I would hate to see cuts to our funding of services of the kind that the Nats did when in office for those 9 years, when they said those things were no longer seen as core funded issues. They cut bits out and just funded what they believed Vote Health should actually support.

In health, I want to talk also about this “exploding public sector” myth. In health let us just see what has gone. The Crown Company Monitoring Advisory Unit has gone, and the Health Funding Authority has gone. In health, the size of the State spend has reduced from 33.3 percent in 1999, down to 30.1 percent. So the exploding public sector is a myth. Labour members will counter those myths when we go out there in the election campaign, because we know that this sector is working well.

BARBARA STEWART (NZ First): New Zealand First members are very pleased to have seen increased funding for health Crown entities over the last 2 years. We want to see health funding reach levels that are comparable with other European nations such as France, which spends around 10 percent of its GDP on health. Dealing with the health sector is tough. It is at the coalface of society’s ills, and it must deal not only with the physical but also with the emotional brunt of healing.

One of the most disturbing studies over the past year has been a Treasury report showing that despite increased spending on health, the sector has falling productivity—that is, fewer operations from more money. This report highlights the obsession within district health boards to balance the books no matter what, even if this does mean cutting some of the services. A clear example of this was the Nelson Marlborough District Health Board, which reduced the number of operations it was performing by 12 a week last October, when it was discovered that surgeons were performing more operations than were funded to be provided. So meeting the obligations of the balance sheets has come to mean vacancies and cutting staff, even in essential services. This is not the way to provide the First World health services that New Zealanders deserve.

We must question many of the monitoring regimes, which are expensive and seem to be yielding few results, that are in place across the district health boards. Do not get me wrong; adherence to procedures and protocols is really important, but when it becomes an end in itself, rather than a means to an end, we begin to lose sight of why they are there in the first place. When we choose to keep increasing the number of accountants and auditors at our district health boards, rather than the number of doctors and nurses, we have a real problem. Given the advances of modern technology, both in medicine and in information technology, the health sector ought to be booming. Instead, it is barely managing a fizzle, in some areas.

A second issue of major concern in the health sector is the training and retention of health practitioners across the whole range of professions. Hospitals are crying out for qualified doctors, surgeons, and other specialists. We know we have shortages of dental therapists, rural general practitioners, radiographers, and other technicians, and the list goes on.

Jill Pettis: We need more immigrants.

BARBARA STEWART: The member on the other side of the Chamber calls out for more immigrants. We actually want qualified immigrants—people who can add to our economy.

We have to face up to two simple facts in this area. The first is that we are in a global marketplace for these skills, and we are competing with Australia, the UK, and Canada. If we wish to maintain a First World health system, people who have those skills are absolutely essential, otherwise we are consigned to sending more and more of our patients on to waiting lists or offshore for treatment, and that is something that we definitely do not want to do. We need to develop some strategies to ensure that we have sufficient graduates in the areas of need. [Interruption] The Minister is acknowledging that we will do that. Secondly, we also have to face up to the reality that we have to pay First World wages if we are to have a First World health system. This could include options such as bonding graduates for a number of years, in return for writing off their student loans. It could also include targeting increased funding in health spending, specifically for pay rises for those parts of the sector that need them to retain staff.

One of the areas where we particularly want to see some action is that of adolescent oral health. Many teenagers cannot access dentists because the subsidy paid to dentists is insufficient. Parents often come to me and say that they cannot even get their child on to the dentist’s waiting list, because the books are closed. The dentist has enough teenagers on his or her books, and cannot provide extra cheap services to any more. Another area we need to be more honest about confronting is the state of our mental health services. Dealing with those who have mental health difficulties is one of the most taxing areas covered in our health system, yet this is one aspect of health care that often has its budget cut and its staff numbers reduced, and its staff have substandard wages.

SUE KEDGLEY (Green): As the previous speaker referred to, an interesting debate is emerging about why, despite all the funding that has been poured into the health sector over the last couple of years, Treasury reports falling productivity. Why could this be so? There are many speculations about why this might be so, but I believe that one of the key reasons is pointed to in a report that came out quite quietly last year from the Ministry of Health, called Looking Upstream: causes of death cross-classified by risk and condition New Zealand 1977. That report, quite extraordinarily, analyses the 20 top causes of death by risk factor in New Zealand. Diet is twice the risk factor of any other single risk factor. Poor diet is the cause of an estimated 30 percent of deaths in New Zealand. Somewhere between 9,000 and 11,000 deaths are caused by poor diet. No one believes me, so I have to take this chart with me when I go out, and show it to them. Then they finally believe me.

So if that is the case, what have we done about it over the last year or so of this Government? We have published a wonderful health strategy that does appear to be addressing the issues. It states the 13 population health objectives: improve nutrition, reduce obesity, increase the level of physical activity, reduce the impact of diabetes, improve oral health, and so on. When these population goals were announced, we were absolutely delighted. Then the Government announced that it was going to bring out a world-leading report on healthy eating and healthy action, and we were delighted with that, too. The Minister of Health has trumpeted it internationally, at the World Health Organization, saying: “Isn’t this wonderful?”.

But the problem is that we have this major initiative, this Healthy Eating - Healthy Action, but when we look at the books, alas there is not any funding for this wonderful new initiative. Thirty percent of deaths are caused by poor nutrition and poor diet, and this strategy states that it is going to focus on this issue. We have these population health goals. One would think that this flagship strategy would have some new funding, but alas there is none.

Sure, some district health boards—and I have met them—in some parts of New Zealand are beginning to get their heads around the issue, and there are some positive initiatives, particularly in the Waikato and in Manukau, but basically the Government has no specific funding for it. One would think that if this were the overwhelming cause of death in New Zealand, way more than road deaths and all the other issues we tend to focus on, there would be a national strategy, a huge new programme, but alas there is none.

I have just touched on one issue of big concern. The second issue concerns Pharmac. The Green Party strongly supports Pharmac. We are concerned that a big public relations campaign is developing against Pharmac and against its single-supply contracts. We saw that earlier in the year when some public relations people visited me, and I could see it coming. Suddenly, and it does not surprise me at all, some parties in this House, like United Future, rose up and became part of this campaign to undermine Pharmac and its single-supplier contract.

We do acknowledge that there are all sorts of issues that we would like to see improved with Pharmac. There is great room for improvement, but we are concerned that there seems to be an across-the-board strategy to undermine it, and that is a real concern from a fiscal point of view, and many other points of view.

Finally, I would like to talk about how the Government is quietly working without any political mandate to hand over the control of our dietary supplements and our pharmaceuticals to a trans-Tasman therapeutic goods agency in Australia. It has no mandate for that whatsoever.

Dr PAUL HUTCHISON (National—Port Waikato): A few speakers ago we heard the member for Rotorua, Steve Chadwick, say that one of the achievements of this Labour Government was that it had given certainty. I say: “Tell that to the 25,000 patients taken off the waiting lists in 2003 by the Minister of Health, Annette King, and sent to a life of absolute uncertainty.” And I also say: “Tell that to the Auckland District Health Board.”, which, in this financial review, is recorded as having a deficit of $44.7 million, and there is a prediction that by 2004-05 it will be $83 million.

The Minister of Health came to the select committee and said that she did not believe that. She said that the Minister of Finance and she had got together and they just did not accept that there would be a $100 million deficit by the end of the year. But let us look at the letters the Minister of Finance sent to the Hon Annette King in 2003, in which he stated: “It will be important that the additional funding leads to increases in outputs and is not absorbed by cost increases. My officials will be working with the ministry to put in place appropriate accountability and monitoring measures to address this issue. … Output activity data continues to support our shared concern about productivity in the health sector. Analysis of Ministry of Health data suggests that despite significant revenue increases”—significant amounting to about $3 billion—“volumes in the sector are static, if not declining.”

So when the member for Rotorua talks about certainty, when she just happens to forget that 25,000 patients were culled from the waiting lists to spend the rest of their time in uncertainty—and then again on 1 April this year at the Counties Manukau District Health Board another 2,000 were taken off the waiting list to live a life of uncertainty—[Interruption] We hear Moana Mackey, the pretender for East Coast, and what happened at the Tairāwhiti District Health Board? It took 596 patients who had been waiting longer than 6 months for a first specialist assessment to get to square one and send them back to their general practitioners. What does the Minister say? She says they will be monitored.

When I spoke to one of the patients, Peggy Griffiths, who had been thrown off the waiting list at the Counties Manukau District Health Board, she told me that no one had said how and when she would be monitored. The Minister of Health will say that she is now back on the waiting list. It took a huge amount of effort by me to bring it to the attention of this House, and suddenly and mysteriously Peggy Griffiths is back on the waiting list—and the Minister of Health will claim credit for that! First, she cuts people off waiting lists, causes the huge disappointment and uncertainty to people of just not knowing what was going on—

Gerry Brownlee: Have you got more?

Dr PAUL HUTCHISON: Yes, there are eight or nine. I have a little file. Members can imagine that every time I bring those people up, they will suddenly and mysteriously be put back on those waiting lists!

While we are talking about the Auckland District Health Board, it will be helpful to say just what a professor of surgery had to say about this Minister’s interpretation of the waiting lists: “So now patients are culled upfront and those accepted for surgery are still required to wait, just like the old-day waiting list. A double jeopardy now exists. The elective surgical booking system has degenerated into the elective surgical blocking system. The Ministry of Health has some explaining to do itself. Blaming health boards is a patent distraction ploy.” It is one of the things this Minister of Health has become an absolute mistress of: perpetrating the patent distraction ploy. She is an absolute mistress of that particular performance.

Gerry Brownlee: That’s a career option.

Dr PAUL HUTCHISON: There is a career option. I shall talk about some of the other things that have plagued the Auckland District Health Board with its predicted deficit of $83 million when the Minister said there would be no deficit.

RODNEY HIDE (Leader—ACT): I should say upfront that none of this is personal about the Minister of Health. I actually quite like Annette King. I think that she is a lovely lady and is good fun, but I have to say that she is the most inept Minister of Health we have ever had. We see that from the data we now have before us in this country. While we are doing the financial reviews, I shall take members through the Treasury report. It is damning of Annette King, and I shall read from it. The report is to the Minister of Finance, Michael Cullen, and it states: “The current oversubscription reinforces the importance of not only managing the immediate pressures back but of addressing the unsustainable growth path of health spending over the longer term. Treasury advises that you”—that means Michael Cullen—“request the Minister of Health to manage within her allocation, and that you defer any consideration of the roll-out of future allocations until the sustainability work has been completed.” The concern there was that the current expenditure path is totally unsustainable, and Treasury went on to recommend that the Minister, Annette King, resubmit her budget, providing “a reprioritisation of her current proposals so that total expenditure comes within the allocation, and a demonstration of how she will manage known risks so that expenditure remains within the agreed funding track.”

Why did Treasury recommend that? Because that Minister cannot manage. That Minister has taken the expenditure on health up to $3.6 billion a year and produced worse outcomes than previously. She has actually produced worse outcomes. She has increased expenditure by 57 percent. The number of operations has increased by 1.3 percent. [Interruption] Government members do not like to hear their own numbers. The number of operations has increased by only 1.3 percent. [Interruption] They do not like it, do they? They do not like to hear their own numbers come back. We know that Steve Chadwick, the chair of the Health Committee, said in this Chamber last week that no New Zealanders on the health waiting list were in pain—that is what she thinks. We know that Annette King has totally failed. Why? She told the National Party that to have 96,000 people on the waiting list was “criminal”. How many people are on the health waiting list now? There are 180,000 people on the health waiting list. They are queued up, waiting to get on the waiting list.

Here is another thing. Annette King said to the Health Committee that she would take the district health board deficits down to zero. What happened? What is the deficit at the Auckland District Health Board?

Dr Paul Hutchison: $83.4 million.

RODNEY HIDE: Annette King poured money in and got no result. I am afraid that as a Minister, she is a total failure. That is why $3.5 billion—

Hon Annette King: Louder.

RODNEY HIDE: The Minister asks me to speak louder. She should actually ask her colleagues not to set up a barrage of interjections—I raise a point of order, Madam Chairperson. It is not about whether I can take it; it is about the Chair. [Interruption]

The CHAIRPERSON (Ann Hartley): Please be seated. The member knows very well there will be silence during points of order. That is the final warning.

RODNEY HIDE: I raise a point of order, Madam Chairperson. That is the problem. You are not applying the rules at any stage. The Government whip just called out during a point of order. Opposition members are invariably asked to leave when they do that. It is against the Standing Orders to set up a barrage. I am having to speak through six Government members, who are not actually interjecting. That would be one thing, but they are just calling out a barrage, so no one can hear me speak.

The CHAIRPERSON (Ann Hartley): I have heard your point of order.

RODNEY HIDE: I am not finished on my point of order.

The CHAIRPERSON (Ann Hartley): I have heard your point of order.

RODNEY HIDE: Well, you will hear another one.

The CHAIRPERSON (Ann Hartley): Mr Hide, I have heard your point of order. When I get to my feet, you must sit down. I accept that there was barracking and that it was too much. I ask members to refrain from barracking.

RODNEY HIDE: I raise a point of order, Madam Chairperson. The Government whip called out during my point of order. The rule that has been set down on that by the Speaker is very clear.

The CHAIRPERSON (Ann Hartley): Please be seated. I have dealt with that matter.

RODNEY HIDE: I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Ann Hartley): No, please continue your speech.

RODNEY HIDE: I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Ann Hartley): Please be seated. I have dealt with the point of order that was raised, and I have spoken to the Government whip and given a general warning. There was a lot of barracking going on from all sides. I have spoken about that. Mr Hide, I ask you to continue your speech.

RODNEY HIDE: I raise a point of order, Madam Chairperson. I want you to explain to me the rules. There was a lot of barracking, but not from all sides; it was only from the Government side. My point of order about the Government whip calling out is that there was no barracking while I made my point of order. There was one interjection from a Government whip. The rules that have been set down in this House are very clear. Whenever an Opposition MP calls out during a point of order, the member is immediately shot out of the Chamber. Madam Chairperson, I would like you to explain why the Government whip, who should be setting the standard and certainly should be held to the same standard as other MPs, is allowed to get away with that. What is the difference?

The CHAIRPERSON (Ann Hartley): I give you another warning about raising points of order that are not points of order. When I have dealt with a point of order, that is the end of the matter. I have dealt with that point of order. There was a lot of barracking. I have dealt with the two points of order that you raised. I give you a warning that raising points of order that are not points of order is, in itself, disorderly. I now ask you to continue your speech.

RODNEY HIDE: I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Ann Hartley): Mr Hide, please be seated. Your point of order will be heard if it is a new point of order. You will not relitigate the two rulings that I have given.

RODNEY HIDE: I am not relitigating your ruling. I want to understand what you are applying here. You have not—

The CHAIRPERSON (Ann Hartley): Mr Hide, you will be seated, please. You are relitigating my rulings, and I ask you to continue with your speech. [Interruption]

RODNEY HIDE: Thank you. So what we see from this Labour Government—[Interruption]

The CHAIRPERSON (Ann Hartley): Order! Please continue.

RODNEY HIDE: So what we see from this Government—[Interruption] I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Ann Hartley): Please be seated. I had asked that the barraging stop. I want Mr Hide to continue his speech in silence.

RODNEY HIDE: I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Ann Hartley): Is it the point I have dealt with?

RODNEY HIDE: No, it is a new one.

The CHAIRPERSON (Ann Hartley): Point of order, Rodney Hide.

RODNEY HIDE: When Darren Hughes called out, he was in direct defiance of your ruling.

The CHAIRPERSON (Ann Hartley): Mr Hide, please be seated.

RODNEY HIDE: I have not finished my point of order.

The CHAIRPERSON (Ann Hartley): Please be seated, Mr Hide. As you know, interjections are tolerated. There was an interjection and then another one. When the second one was called out—although it was not barracking from one person—because there had been a lot previously, I said you could continue your speech in silence. I expect there to be silence. That matter has been dealt with. I warn you again not to trifle with the Chair—not to relitigate the ruling I have given. Please continue with your speech.

RODNEY HIDE: I raise a point of order, Madam Chairperson. My point of order is this, and you have not yet heard it. You gave a ruling, and you said there was to be no barracking. I sat down. Immediately, Darren Hughes barracked. That was not an interjection. You silenced him. I stood up to speak again. He immediately barracked. He is still in the Chamber, and I say he is the member who is defying the Chair, not me.

The CHAIRPERSON (Ann Hartley): Mr Hide, I will give you one final warning. You are relitigating what I have already ruled on. Please continue with your speech.

Gerry Brownlee: I raise a point of order, Madam Chairperson. I have sat quietly and watched this interesting exchange. I think the problem we have here is that it appears that Mr Hughes has moved to another seat in order to gain advantage from the microphone being closer to you. There is no doubt that your instruction was that Mr Hide would be heard in silence. Then Mr Hughes—the very young member that he is, and with perhaps a slightly impetuous nature—barked quite loudly towards Mr Hide. I think at least some rebuke of Mr Hughes would be necessary. He may even like to resume his own seat, which is much further away from the interference zone than where he is currently sitting.

The CHAIRPERSON (Ann Hartley): I thank the member for his assistance. However, I have dealt with the matter.

RODNEY HIDE: What we see from this Labour Government is an inability for the Minister of Health to front up to the big issues. We have to have Trevor Mallard, Darren Hughes, and the fishmonger’s wife, Jill Pettis, stand up here.

Hon Trevor Mallard: I raise a point of order, Madam Chairperson. I am sure you heard what that member said, and I am surprised you are not on your feet already to deal with it.

The CHAIRPERSON (Ann Hartley): The member knows that that is not acceptable. Members are to be called by their correct name. I ask the member to withdraw and apologise for that remark.

RODNEY HIDE: I withdraw and apologise.

Gerry Brownlee: I raise a point of order, Madam Chairperson. The Chair cannot anticipate a speaker. From where I am sitting, I clearly took the inference that after the name “Jill Pettis” there was a full stop, and there was then the start of a new sentence, which was not allowed to progress because of the point of order raised by Trevor Mallard. I would be quite interested to know what Mr Hide has to say about the fishwife. I am sure there is a lot more to come. I am sure it is not offensive to the Committee, and I say that Mr Mallard should be asked to contain himself until he understands the circumstances in which any particular comment is made. I notice that Mrs Pettis also understood there was a full stop after her name. She certainly does not look offended, to me.

The CHAIRPERSON (Ann Hartley): I just warn the member. Please be seated. I am dealing with this point of order, which was not a point of order. Mr Brownlee, that came close to trifling with the Chair. I had dealt with the matter. The member had apologised. I ask the member to continue his speech.

Clayton Cosgrove: I raise a point of order, Madam Chairperson. We may have a dilemma here. You have ruled, and I am not questioning your ruling, that the member should be heard in silence. The issue then arises that those of us who are offended against by, for instance, Mr Hide’s last reference to a particular member are then precluded from any retaliation at all. I am not challenging your ruling. I just seek your advice. When it is ruled that a member of Parliament should be heard in silence, that is fair, but if that member then decides to hurl abuse and make derogatory comments, or to use derogatory names about members on any side of the Chamber, those members have no option regarding that and cannot retaliate. I seek your advice on that point.

The CHAIRPERSON (Ann Hartley): I just make this point. The members, I believe, overdid their interjections, and that is why I asked that the member be heard in silence. That is the price to be paid. However, the point of order that was raised by Mr Mallard was dealt with.

Hon Trevor Mallard: I raise a point of order, Madam Chairperson. I just ask you to clarify the rules of this debate. Is my understanding correct that this is a fixed 3-hour debate and that all these points of order have come out of the time that the Opposition has to scrutinise the Government?

The CHAIRPERSON (Ann Hartley): The member is correct. It is a fixed 3-hour timed debate. This time comes off the members’ time, so we have probably wasted the equivalent of one speech.

RODNEY HIDE: The fishmonger’s wife too is stuck on the waiting list. That is the trouble. We have 180,000 New Zealanders stuck on the waiting list. The fishmonger’s wife, the cobbler’s wife, and the baker’s wife are all stuck on the health waiting list, and here we have Steve Chadwick—

Jill Pettis: Yes, we can change our occupations, but you will be out of here.

The CHAIRPERSON (Ann Hartley): Order, Jill Pettis! Order! The member’s time has expired.

Rodney Hide: I raise a point of order, Madam Chairperson. I stopped, and because you were talking I sat down.

The CHAIRPERSON (Ann Hartley): Your speech time had finished.

Rodney Hide: Yes, but I am interested in why you were talking over my speech while my time was still going, over the microphone.

The CHAIRPERSON (Ann Hartley): I was calling for order. Your speech time had finished, and I wanted to call the next speaker.

Rodney Hide: I raise a point of order, Madam Chairperson. Is Jill Pettis in trouble, or does she get away with that one, too?

Jill Pettis: Tell him to dry up. Grow up!

The CHAIRPERSON (Ann Hartley): I am on my feet. I warn the member. Mr Hide, I have dealt with the matter.

METIRIA TUREI (Green): The Greens are pleased to see in the supplementary estimates that some further money has been invested in the area of problem gambling and the enforcement of the gambling regulations, although it is not enough to curb the social and economic harm caused by the proliferation of gambling opportunities, including, particularly, pokie machines. My colleague Sue Bradford has been a strong and effective advocate for responsible gambling laws in this country that provide the greatest possible protection to our community from the harms of gambling. Sadly, this protection does not yet exist in our law.

In the health supplementary estimates there is $2.4 million for the funding of costs related to the administration of the problem gambling levy. That levy remains very small when compared with the profits derived from gambling The gambling industry has, of course, a massive vested interest in keeping the problem gambling levy as low as possible. Many of the industry’s representatives have argued that the scale of the gambling problem is exaggerated, and that the cost of dealing with it is overrated. But in 2003 gamblers in this country lost a record $2 billion—an increase of 9 percent on the year before. That is $5 million a day in this country, much of which is taken out of the homes of some of our lowest-income families. The industry continues to complain about the levy, and, clearly, wants to keep problem gambling strategies focused on treatment, rather than on the additional public health goals of health promotion and harm minimisation.

We need only recall the case a couple of years ago of the pokie-machine outlet, money-lending business, and problem gambling treatment centre all within the same building complex, and all associated with the same single director—a lucrative immoral ring of business interests. We need only recall the pokie-machine bar in the Ōtara shopping centre that contributed to the costs of a fenced children’s playground right outside the front door of that pokie bar. Or we need only recall the objection by the gambling industry to the regulations requiring pokie machines to display how long a person has played and how much money he or she has lost, to know that the industry is committed to the maximisation of its profits, and not the minimisation of social and economic harms from gambling.

Sky City recently wailed about how these regulations would lose it money—regulations that will affect all new slot machines after 1 October this year, and all machines from 2009. This company has over 2,000 gaming machines in New Zealand, with a forecast annual profit of $100 million. This complaint was despite the Government figures that show that New Zealand has 100,000 problem gamblers, who contribute $2 billion to that industry. Eighty percent of people who come in for treatment from the Problem Gambling Foundation say that they have a problem with pokie machines; for Māori women, the figure is 96 percent.

The fact that the proceeds of pokie addictions are then used for the benefit of all sorts of worthy causes should not be an excuse for any values-based group to continue to endorse this industry. The Greens would like the many community organisations that now rely on the proceeds of human misery for their continued survival to consider other funding options, and for Government and other non-gambling funders to better resource the sector, so that groups do not feel obliged to depend on the addictions and desperation of some of our poorest people for the pursuance of their good works.

Despite some of the minor improvements over the last 6 months—and we note the increase in the Vote Internal Affairs supplementary estimates of $1.17 million to enforce the new regulations in the Gambling Act—the levy and the legislation so far are not enough to deal with these harms. The Greens want to see much greater reduction in the number of pokie machines operating in this country, and a total revamp of the way the profits of those that remain are distributed.

Hon ANNETTE KING (Minister of Health): I thank members for their contributions to the debate on the performance of Crown entities, public organisations, and State enterprises. It was interesting that both the National member and the ACT member raised the much-maligned Treasury report. Of course, if we were to believe Mr Hide, everything that Treasury wrote would be absolute gospel, although I note that he does not take much account of Treasury’s report when it comes to its views on private insurance. However, those members quoted the much-maligned Treasury report and talked of falling productivity. Of course, what that report tells us, and what Treasury says, is that at this stage it is able to measure only about 46 percent of hospital activity, and it is not able even to measure what happens in the primary health sector.

It goes on to state that 60 percent of the costs are the wages of those who work within the health sector. I make no excuse for saying that the wages in the health sector have gone up—so they should. I think it was Barbara Stewart—and she always makes a considered intervention in this House—who said how important it is for us to retain our health workforce. Well, we do not retain our health workforce in an international market if we do not increase wages and salaries. So the settlement for nurses, which is backdated to last year and going forward, is half a billion dollars. It is the biggest increase that nurses in this country have had at any time, and they have fought for it for a decade. Past Ministers of Health know exactly what the campaign has been over that time. It has been settled, and I am proud that nurses will have that increased pay—they deserve it. I also tell members that over the last 3 years doctors in the hospital system have had about a 50 percent increase in pay. We needed to do that, to retain our medical workforce. I make no apologies for spending health money on that, either.

I also make no apologies for investing in new hospitals and rebuilding old hospitals. It was absolutely crucial because, in terms of the hospital sector, we actually have to have the bricks and mortar in order to provide the health service. We have put money into that. I believe that we are now seeing a health system that has had the investment in it that it needed. In fact, if we look at investment in health throughout the 1990s we can see that, in comparison with OECD countries, we under-invested in health. We needed to catch up, and we certainly have been doing that.

Dr Hutchison talked of deficits. I remind the Committee that under the previous Government, deficits reached 5 percent of the Health vote. They are now 1 percent of the Health vote. By anyone’s measure, that is an improvement. We have seen nearly every board in New Zealand reduce its deficit, with the exception of Auckland, and Auckland remains a particular problem. Many issues impact on Auckland, not least the impact of a building project that did not realise the $80 million of saving that was promised. It did not come about. However, the board is working very carefully on the issue, and we believe that it will reduce its deficit this year, as well.

Dr Hutchison mentioned the booking system. I think Bill English will be very disappointed in Dr Hutchison’s view on this. After all, it was introduced in 1998. I think the booking system is a good system because it is honest and it is fair. It tells people whether they will get an operation—

Hon Bill English: That’s not what you used to say.

Hon ANNETTE KING: It certainly is. Let me tell the member this: in 1999, 40 percent of those who were waiting for their first specialist assessment waited longer than 6 months. That figure now is 21 percent. It is getting better. I admit that when we started, we started from a low base and it had to be built up. The system, I believe, is one of the best we can have in terms of being fair about elective surgery.

Dr Hutchison mentioned bureaucracy. There has been an increase in staff of district health boards. In fact, the biggest increase has been in nurses. The next-biggest increase has been in doctors. In fact, the total increase in the number of bureaucrats in the health system has been 0.4 percent. Those are the facts. Opposition members talk about the bureaucrats, but the people they call bureaucrats are those who book the operations, answer the telephones, and help to run the system. Those members would have us get rid of people who help to make the system work. National would turn the funding for that handful of people into “funding for health”. Well, it would be lucky to get much out of that, I have to say.

I then heard Barbara Stewart talk about workforce issues. I agree with her. We have put a lot of investment into trying to improve our health workforce. To begin with, we reopened two training schools for dental therapists in 2001 and 2002. I know that it sounds amazing to the member, but all the training schools were closed in the 1990s; no dental therapy training schools were left in New Zealand. I am not quite sure how we were going to provide the service. Perhaps we were going to employ therapists until they were 99 years old; we certainly were not going to produce any more. It now takes 3 years to train a dental therapist—there is a degree course. We had our first graduates out of the Otago school last year, and we had our first graduates out of the Auckland school this year, but we need at least 40 graduates per year to provide oral health to the children and adolescents of New Zealand. We will get there, but we have to invest in training. We have to be committed to training.

We have also increased the number of medical students by 40 per year—the first increase since 1981. We actually have a much better grasp on those health workforce issues. We were training only 16 radiation therapists per year; we now train 38, and for the first time we can provide radiation treatment in New Zealand within the guidelines. It is fragile. We have to keep training and producing them for our own needs. It has taken a huge investment of money and energy to try to rebuild our health workforce.

Then we heard from the very, very sad member Rodney Hide. I actually pity that member. I have great pity for him, because he is now a very bitter, twisted, and thwarted man. He has been thwarted by his own party, actually. He had to spend the whole weekend stopping his members from getting rid of him. He has decided that he will go on a crusade on health. The unfortunate thing is that he is unable to put the facts out in a straight manner, which means that people do not believe him. He over-exaggerates and overcooks everything, and the consequence is that nobody believes him and nobody takes notice of him.

He talked about the sustainability of health expenditure. Certainly, there has been a big investment in health over these 6 years. I have already talked about the need to invest in our health workforce, infrastructure, and so on, and also in our primary health care, where we will get the results we want. But there does need to be a look at the sustainability of health funding in the long term. The Prime Minister announced at the beginning of this year that work would be done on the long-term sustainability of health funding. That work is now under way. It will be done properly, and I can assure this Committee that the Government will go through each part of that expenditure in order to get the best use of it. It will not be done with slogans and smart statements.

I conclude with reference to the Green member Sue Kedgley. She talked of the Healthy Eating - Healthy Action strategy. It is a nationwide strategy. It is not about a few people in the ministry trying to run a strategy around healthy eating and healthy action. It actually happens out in our communities, in homes, and in schools. It is about engaging all those players, in getting through the message on healthy eating and healthy action. I believe that as one of the first countries—if not the first country—in the world to put such a strategy in place, we will address those issues over time. But there is no quick fix solution to the fact that there are obese and overweight people in New Zealand. We have a growing number of them.

Gerry Brownlee: Oh, where?

Hon ANNETTE KING: I say to Gerry Brownlee that I could not possibly say I see any of them in this Chamber—I know that he is asking where they are. We have a few folk who are overweight, and, unfortunately, far too many children are overweight. There is funding, and action taking place.

I conclude by saying that very rarely do I agree with Sue Kedgley in any debate, but that I totally agree with her comments about Pharmac. She said that she supports Pharmac, that it does a very good job, and that there is a campaign to get it. I support her, and I believe that she is correct.

Reports noted.

Career Services

Learning Media Ltd

New Zealand Qualifications Authority

New Zealand Teachers Council

Tertiary Education Commission

Hon BILL ENGLISH (National—Clutha-Southland): I want to raise some issues with the Minister, Trevor Mallard, about the New Zealand Qualifications Authority. The board has decided to appoint Ms Karen Sewell as the acting chief executive officer. I ask the Minister to tell me whether this is the same Ms Karen Sewell who used to be the principal of Green Bay High School. The community around that school thinks that it will take at least another 5 years to clean up the mess she left. I know that she has been running the Education Review Office—

Hon Trevor Mallard: Very well.

Hon BILL ENGLISH: Well, the Education Review Office reports are sounding more and more like old-style primary school reports than they ever used to.

I ask the Minister to tell us why he thinks that that appointment will restore any confidence in the role of the New Zealand Qualifications Authority in administering our secondary school qualifications. I can tell the Minister that my feedback has been that it will not. That lack of confidence will be built on by his silly initiatives today. Is it not just so much the Labour Government that when there is a serious issue with exams and assessments for our secondary school students, it spends months and months chewing it over and then comes up with the solution of having a workshop and a seminar? The other thing it will do is put out a pamphlet. This Minister thinks that less time spent teaching and more time spent putting out taxpayer-funded spin will fix confidence in the National Certificate of Educational Achievement (NCEA). I want to know why he thinks that that will be the case. I want him to tell us how he will explain to parents that sending teachers off to more workshops and more seminars is the answer for NCEA.

It is time the Minister accepted that there are a couple of critical problems. The first is that the assessment is not consistent and valid, and the second is that NCEA is not manageable. It needs more resources at the margin than are worth it. The Minister should just fix those problems. Instead, we have gone back to the line that this Minister has taken right from the day he took the job—that any people who do not like NCEA or think there is a problem with it do not understand it and, therefore, must be stupid.

Hon Trevor Mallard: No, just this member is stupid, not everyone.

Hon BILL ENGLISH: He thinks they are all stupid, so the Government will send them a pamphlet in the mail that will tell them that NCEA is actually fine. Then they will think that the Government is fine.

Gerry Brownlee: If they can read.

Hon BILL ENGLISH: If they can read—they are the lucky ones. I want the Minister to tell us a bit about that.

I also want the Minister to tell us what his plans are for the New Zealand Qualifications Authority. I will give him a little bit of advice, if he is still thinking about those plans. He should not roll the New Zealand Qualifications Authority into the Ministry of Education. That would be a mistake. If the qualifications framework is going to work, then it needs to be administered by a body with statutory independence so that we do not see happening to the New Zealand Qualifications Authority what has happened to the Tertiary Education Commission, whereby the Government is shamelessly manipulating the funding levers to meet its own political requirements.

The qualifications framework is important for New Zealand. It should be kept separate and at arm’s length from political intervention, and that means running an independent statutory body in the way the New Zealand Qualifications Authority is set up now. If the Minister rolls it into the Ministry of Education, that will do more than anything else to undermine the existing bipartisan support for the qualifications framework.

Hon Trevor Mallard: Oh, we’ve really noticed that.

Hon BILL ENGLISH: The Minister knows that NCEA is only part of it. Of course there are questions about the quality of what is in that framework, but the concept of the framework itself is supported by both parties. So I tell the Minister not to roll it into the Ministry of Education. That would simply put it under the control of people who have already made a mess of NCEA policy. Why give them the job of administering this as well? I am sure that if the Minister persists until the election he will not get a permanent chief executive officer. But as the new Minister after the election I will be able to get a new chief executive officer for the New Zealand Qualifications Authority, because National will take a set of measures designed to increase the credibility of the qualification. [Interruption] Well, when the board sees a Government getting to grips with community concerns about the qualification, it will be able to go to potential chief executive officers with some confidence, whereas at the moment it is out there trying to recruit people to resuscitate a body that is on life support. Of course that is not a particularly attractive job. I want the Minister to explain to us also the rise in costs in the New Zealand Qualifications Authority and other bureaucracies, because that is where he is spending all his money, instead of in the schools.

Hon BRIAN DONNELLY (NZ First): I want to focus my attention upon the same agency. There are some genuine difficulties with this particular agency. As the report on the 2003-04 financial review notes, during that period of time the New Zealand Qualifications Authority faced the challenge of simultaneously trying to introduce both level 3 National Certificate of Educational Achievement (NCEA) and the scholarship examinations. When the review was carried out in February this year, we were right in the middle of the scholarship debacle. That exposed also some serious flaws in NCEA level 1, level 2, and level 3, particularly with regard to the variability of results. It has to be said that the New Zealand Qualifications Authority simply did not rise to the challenge it faced in the financial year under review. What is even more serious is that we do not believe it has faced up to the real problems that created the debacle at the end of last year and the beginning of this year, and we believe and predict that as a result of it not being prepared to face up to the issues, another debacle will occur at the end of this year.

The real problem is the fact that the agency has focused absolutely on standards-based assessment and has not recognised the limitations of that assessment. For example, something like 300 out of 900 students who sat the English scholarship examinations got a scholarship, but only nine out of 1,000 biology students got a scholarship. The authority tried to argue that that is because there was variability amongst the students. It is absolute bunkum to say that 33 percent of the students studying English were able to meet certain standards and only 0.9 percent of those studying biology were able to meet the standards. That raises some very, very serious questions about the whole underlying premise upon which the authority set the examinations. That is its task: to set the assessment tasks.

I have to say that the New Zealand Qualifications Authority has appeared before the Education and Science Committee and been reviewed more often than any other agency, and with very good cause. Phil Smith, who is the immediate past-president of the New Zealand Post Primary Teachers Association, made a very telling statement. He said: “If only NZQA had applied the same level of quality assurance to its own processes as it insisted that schools apply to their processes, then we would not be in the difficulties we are.”

I say to the Minister of Education that one of the things that has come through—and, as I think the Minister knows, I am not somebody who goes out and tries to attack people; I try to get to the root of a problem—is that this is the most untidy organisation I have ever come across. The information that is received from it by the select committee is, time and time again, purely and simply inadequately prepared. It has not been considered and researched. We saw flow charts, for example, that had examiners being trained before they had actually been appointed, chronologically. When we pointed this out to the people from the New Zealand Qualifications Authority they said: “Oh, we got that one wrong.” It has been a continual litany of errors from this particular agency.

We have the sequence of events that led to the announcement of the Level 3 Distinction Award, which is all reported in the review report. The issue is that on 17 January this agency reported the variability of the results to the Minister by email. It did not red-flag it. OK, that might have been a mistake—it is certainly untidy, at least. But almost 1 month later the chief executive officer could not explain why it was not red-flagged. A month after that error, which had caused the Ministers considerable embarrassment, the chief executive officer still could not explain why that matter had not been red-flagged. That suggests to me that there are some systemic problems within this organisation.

Explanations have been given for the variation in results. These are, I have to say, absolute and utter bunkum. They do not make any educational or scientific sense. Yet the public, the Minister, and we in Parliament are expected to accept that these are the rationales and that these are the proper processes. I say to the Minister that he has to take responsibility for this agency. He did not set it up. In fact, this Government did not set it up or create its culture; that was done by the previous National Government. But this Government has been administering the agency for 5 years and should have fixed it before now.

DEBORAH CODDINGTON (ACT): I, too, want to address concerns about the New Zealand Qualifications Authority. These are not just the concerns of this House; they are the concerns of parents all over New Zealand. Since 1990, the New Zealand Qualifications Authority has held itself up as a world leader in assessment; that is what it says it is. It has foisted on us the National Certificate of Educational Achievement (NCEA), which parents now call “No Chance of Ever Achieving”. The New Zealand Qualifications Authority does not even know what world standards are; it is not even interested in world standards. The NCEA scholarship has been a disaster. NCEA levels 1, 2, and 3 have been a disaster. As the Hon Brian Donnelly said, the New Zealand Qualifications Authority has been reviewed, reviewed, and reviewed. The State Services Commission review set terms of reference relating to standards, processes, and communication. These things should have been in the system long before it got to the stage of a State Services Commission review. They are all basic things that the New Zealand Qualifications Authority could not even get right.

The purpose of the New Zealand Qualifications Authority is to provide “quality assured qualifications”. What other Crown entity is the subject of a Tui billboard? This Tui billboard ridicules one of our most important secondary school qualifications. It says: “I past NCEA Inglish. Yeah, right.”

How shameful for a Crown entity that holds itself up as a world leader in education standards to be the butt of a joke on a billboard that advertises beer! That is about how far it has gone. The chairman, Mr Fraser, has gone. The chief executive officer, Karen Van Rooyen, has gone. The Ministers will not take responsibility for the New Zealand Qualifications Authority. We now have an acting chief executive, Karen Sewell, who, I am reliably informed, is a very nice person. But, as one prominent New Zealand principal likes to say, she was on her way to turning Green Bay High School into the only sole-charge high school in New Zealand. Parents took their children away from that school in droves. There were no standards at that school. In fact, it was so bad that when the zoning boundaries were redrawn, $50,000 was immediately, overnight, wiped off the value of properties that were brought into the zone of Green Bay High School. That is how bad it was. And now this Minister has allowed his board to appoint someone like that.

The problem is that the New Zealand Qualifications Authority is so bad now, and the level has reached such a poor standard, that it will be well-nigh impossible to attract anyone of quality to that position. Who would want to be handed a hospital pass like that?

What does the New Zealand Qualifications Authority cost us? In 2003 the Government threw $30 million at it. The Minister said that all the problems were due to not enough resources, and that it just needed more money. What did the Government do? It threw $52 million more at it in 2004. What was it, I ask the Minister—double or quits? Just keep throwing millions at it, and all the problems will go away? [Interruption]

Labour’s solution to everything is to just shovel more money at it. Students already pay to sit their qualifications. Despite that, when students were very kindly invited by the Minister to be reassessed in the NCEA scholarship disaster, would this Minister rescind the $30 reassessment fee they had to pay? At least David Benson-Pope said he would consider rescinding it, but no, the Minister of Education totally ruled it out. Well, why should the Labour Government rescind it? It was just another tax, as far as it was concerned.

The New Zealand Qualifications Authority and the Minister were warned and warned that the NCEA scholarship would be unworkable. A non-competitive system cannot be grafted on to a competitive exam. The solution is to give those qualifications back to organisations in the private sector like the New Zealand Education Scholarship Trust, which for years has run scholarship with no problems at all. We never saw that on a Tui billboard. We never saw New Zealand bursary, university entrance, or even School Certificate, which had some problems, on a Tui billboard. A whole generation of New Zealand students has been subject to an experiment. It is not just an unfortunate experiment; it is a total disaster, and they have been severely disadvantaged. It is child abuse of the mind.

LYNNE PILLAY (Labour—Waitakere): I am pleased to speak tonight from a more positive approach to our education system. It is really depressing to hear members on the other side of the Chamber banging on all the time about doom and gloom and not acknowledging all the good things that are happening in our education system. I will start my speech at the beginning, with early childhood education. We have seen the statistics and so much research that shows that through investment in early childhood education, there are real results later on in terms of achievement.

Jim Peters: For some.

LYNNE PILLAY: Yes, certainly not for the members of his caucus, but, generally speaking, our children in New Zealand are achieving. We are seeing the statistics about the achievement of 11-year olds now, who have had the benefit of early childhood education. That is something I prefer to celebrate. I am proud to be part of a Government that celebrates that. Why are those young people achieving? They are achieving because they had quality early childhood education that delivers. That is why we are increasing our commitment to, and our investment in, early childhood education. We have committed to 20 free hours’ funding per week in community early childhood centres for the future, and we know that that will build on the achievements we already see.

Jim Peters: Only for some.

LYNNE PILLAY: I do not know what the member means by that. I just cannot understand why members relish being so negative. I know many of them have chosen to leave after the next election, which is a very wise move, but I prefer to work and to celebrate all the good things that are happening. Increased investment and achievement in early childhood education means there is also an increased demand for training. That means upskilling and it means scholarships in early childhood education. That is a major investment of this Government, and it is one that I am very proud to see happening.

I will move on now to when children move from early childhood education to primary school, which I have seen in my electorate. It has been very, very good to celebrate, not only with children and our Government but with their parents and with the community at large. There are laptops in every school. Under this Government, every schoolteacher now has the ability to have a laptop to work with and to share with the children. What an advantage! That is something that happened under this Government’s funding. We should not forget that this Government—which does not promote vouchers or private education—stands for the right of every child in New Zealand to go to his or her local school. That is something that this Labour-led Government is very proud of. It is a real right that we see not only for our children but for their families, and our transport system is not clogged up by people trying to whip across town because a child might be a good rugby player and might have been poached by a school. We stand by the right of every young person in the country to go to his or her local school.

We should also acknowledge the building that has gone on under this Government. I have been to more school hall openings, refurbishments, general extensions on schools, and general celebrations of achievement than we have seen happen over the last decade in this country. Why? Because we are investing in our schools, and we are doing it wisely. That also means many, many more teachers and more funding for special education, because we know that that investment delivers in terms of achievement. We are not a party that says we think we are spending too much and will advocate for tax cuts that will not deliver.

BERNIE OGILVY (United Future): I rise on behalf of United Future to look at the financial reviews of three Crown entities. When I read out the names of the three education Crown entities—the New Zealand Qualifications Authority, the New Zealand Teachers Council, and the Tertiary Education Commission—what comes to mind for parents, taxpayers, learners, and children when those three entities are made known across the airwaves, in alleyways, and in the schools and universities around New Zealand? People will reply straight away to my question by saying that the issue common to all three is that they have been poor performers.

All three entities have been in the news, as I understand it, for very wrong reasons. All appear to be unable to control their own appetite for increase and for their own purposes. All impose on those they are looking after—monitoring, and auditing—what they are not prepared to see imposed on themselves. In fact, they are less able to control themselves than the schools, universities, or whatever that they are in charge of. Worse still I have noticed, as have a lot of people, that there is a tremendous overlap between those Crown entities. There is duplication and sheer waste when, for instance, the New Zealand Qualifications Authority, the New Zealand Teachers Council, and the Tertiary Education Commission all work separately to assess and appraise private training enterprises. I know of at least two teachers colleges where that has happened. There is a lot of duplication and waste. That is what comes to mind for a lot of people.

It has already been said that it is a fearful thing. It is of concern to myself and others, and I think to some on the Education and Science Committee, that it is intended that the Ministry of Education take some of those entities under its wing. We in United Future do not sense that their independence should be squished and squashed away, and lost. They need true statutory independence to do their jobs.

Some members have been talking in the House about the National Certificate of Educational Achievement (NCEA) programmes, which in my mind and in the mind of everybody in the National Party started as a dream, in order to bring forth learning into our schools. But NCEA has not ended as a dream; it has ended as a nightmare for a lot of people and certainly for a lot of students and employers around this nation. Do I need to say more? Well, others have said a lot, and tonight I want to quote from the Post Primary Teachers Association (PPTA) advisory officer, Julie Ellison. She said that there was enough evidence in the report the PPTA had, to show that some very poor-quality moderators were operating. That is only one comment she made. More dollars have been spent on NCEA, with fewer outcomes than people have deserved.

What is the New Zealand Teachers Council renowned for? It has produced more chief executive officers than any other Crown entity in the last 2 or 3 years that I have been in Parliament. It is amazing! The only thing it has ever produced, as I see it, is a code of ethics. When I asked in the select committee what that really meant—did it mean accountability?—they said it was definitely not a code of accountability. Then I asked why they went to all that trouble, over $103,000 worth, to produce a toothless wonder in reality.

So many people out there are declaring that the Teachers Council needs a complete rewrite—a complete rerun—because it is a toothless wonder. As for the Tertiary Education Commission, it is becoming a very, very protectionist organisation for a few, what I would call, State institutions. For instance, I have on the table in front of me an application of concern from Unitec, for that institution to obtain university status. The amount of money that has been spent by all parties, at this time in our maturity, to come to an obvious answer is laughable.

Hon BILL ENGLISH (National—Clutha-Southland): One of the entities we are talking about tonight is the Tertiary Education Commission, and I would like the Minister—now that he is in charge of tertiary education—to explain just where the Tertiary Education Commission fits in. It is my hope, on behalf of 2.5 million taxpayers, that he will do a better job than his predecessor the Hon Steve Maharey. I think that any history of public administration in New Zealand will record that member’s efforts as among the worst of any Minister—[Interruption]—and it is laughable that the member for Ōtaki is probably going to vote for him when Labour eventually changes its leadership. In fact, I think that Mr Maharey’s tenure as the Minister in charge of tertiary education should have put paid to any leadership prospects he had.

Darren Hughes: Give us a tutorial now.

Hon BILL ENGLISH: Just settle down.

I want the Minister to tell us now what is going on with the Tertiary Education Commission. Mr Mallard is getting headlines again, as in the Christchurch Press today, with talk of redundancies at Christchurch Polytechnic. Mr Mallard is wandering into the polytech sector like a bull in a china shop, and he is causing a great deal of strife by proposing changes that he will have to back off from. In fact, if he has not been told to back off by the Prime Minister already, then she will probably do that before the end of this week, when her media-monitoring unit counts the polytech headlines around the country.

What has happened is that the Minister has made a number of aggressive and irritable speeches, saying that he is going to cut back a number of course types. Now, on the face of it, that looks like a reasonable thing to do—except that a couple of months ago he announced a whole series of reviews of courses in tertiary institutions. And that sounds as if it would not be too unreasonable, except that prior to that the Government made an agreement with those polytechs about how they would handle the community education allocations in particular. That would have made some sense, except that before that the polytechs had done their charters and profiles in great detail for the next 3 years and they had been signed off by the Government.

So people are trying to run a polytech and provide skills for an economy that needs them, and there have now been four different interventions from the Minister and the Tertiary Education Commission. I do not necessarily sympathise with the sector generally, but I have to say that that is just grossly negligent public management. It is a case of ministerial whim; every time Ministers feel a bit of pressure, they go out and say they will do something else—whatever it is. So the chief executive and the council are sitting there, trying to work out which plan the Government will carry out—because all those plans came from the Government.

Well, can the Minister tell us what he will do? Will he stick with the original agreements about charters and profiles, or will he stick with the next agreement his predecessor made about community education? Or will he throw both of those over in favour of pursuing the raft of reviews that are being done by former corrections officers and people with PhDs—people who have never had a job but are reviewing our tertiary institutions? Or will he follow the statements he has made recently that he is sending a package off to Cabinet that will involve taking tens of millions of dollars out of the polytechs? I would like him to tell me that.

The other thing I would like him to tell me is just what he is doing about the viability of those institutions. Will he go around the same circle that Steve Maharey did, where everyone stands around, collaborates, and wrings their hands? He coughed up money for the polytechs just because he could not stand not being nice to them. So he bailed them out. Then, 3 years later, they were all back in financial difficulty again. Clearly, the Government has failed to get to the nub of the problem in relation to the viability of polytechs, and I want to know why the Minister will not take a sensible and measured approach to the matter. Why does he feel that he has to go out there and aggressively strut in front of the sector to show that he means business?

Hon TREVOR MALLARD (Minister of Education): I did not think it was possible. I really did not think it was possible. I did not think that Bill English could be a worse ditherer than Don Brash—but he is, absolutely. I did not think it would be possible for someone in this Parliament, much less in the country, to dither more than Don Brash, but we have had it from Bill English. He rammed into the Christchurch Polytechnic Institute of Technology and criticised it for all its courses—

Darren Hughes: He didn’t enrol?

Hon TREVOR MALLARD: Well, no. I think they have some standards!

But now something is being done about it and some changes are being made. The jandal has flip-flopped. The wrist has gone the other way, and it is almost unbelievable. We knew we had a tired and confused Leader of the Opposition who was very patchy in his approach and pretty hopeless overall. But what do we have now? We have the former Leader of the Opposition working really hard to try to make the present leader look good. [Interruption] Well, I think Bill English is more of a “Mr Sad” tonight, because what he has seen is what a number of us have seen recently—

Dr Wayne Mapp: Are you talking about the estimates?

Hon TREVOR MALLARD: Actually, I am talking about the reviews, and in particular the review of the performance of Bill English. He has been well reviewed by his caucus colleagues. He relied on Nick Smith to count the numbers, yet he complained about a few polytechnics being out of balance. Well, relying on Nick Smith to do the numbers is, I think, a fair sign of where that all sits.

But I turn back to the reviews. I think there is not much doubt that Career Services is a particularly tidy organisation. I do want to congratulate Patricia McKelvey on her Queen’s Birthday honour. She has made an enormous contribution to education in New Zealand as the principal of Wellington High School and recently as chair of the board of Career Services. I think she is also on the council of Victoria University. Career Services is a very tidy organisation, and I think it is fair to say that if all the other education Crown entities were of the same degree of tidiness we would have some more focus on educational rather than administrative matters in New Zealand.

I want to thank the Hon Russell Marshall for agreeing to take on the position of chair of the Tertiary Education Commission. He is someone who has a lot of respect in the sector, someone who was my predecessor some time ago, and someone who worked very closely with the Hon Richard Prebble when they were friends in the Labour Government. They worked very closely together on important issues at some stages, and less closely later on. I look forward to the new chief executive arriving for the commission, I understand, at some stage next month.

I notice that Mr English has taken a line that I think is rather unwise around Karen Sewell, who is a well-respected public servant. She is someone who, I think, has given, following the Rodger review and the initial work of Judith Aitken, the Education Review Office the reputation of being an organisation with an iron glove.

Hon Member: She is soft.

Hon TREVOR MALLARD: No, a velvet glove and an iron fist. On some occasions she is a little soft but, as the member who used to be the principal of a college in Northland knows, on occasions the Education Review Office is forced to tell the story as it is. It is full and frank, and not always desirable, and I tell Mr Peters that people are not always comfortable with the reports of Education Review Office.

Jim Peters: Because they are not always reliable.

Hon TREVOR MALLARD: I know on some occasions people get really bad reports, and I am amazed that we have gone all this time with the member as a member of Parliament and no one has had a good look at them. But I have had a read of them. I think it is particularly—

Hon Richard Prebble: Would you like to table them?

Hon TREVOR MALLARD: Well, I think they are on the public record.

Hon Richard Prebble: Oh please!

Hon TREVOR MALLARD: The member could go all high-tech and look them up on the web if he wants to. [Interruption] I know we have a couple of very retiring members further back, and I am surprised we have had a valedictory speech from Rodney Hide but have not had one from the two members who are going voluntarily. I invite them to take a call and tell us what they care about.

Reports noted.

Energy Efficiency and Conservation Authority

LARRY BALDOCK (United Future): I rise to speak on the Energy Efficiency and Conservation Authority. United Future members would like to make it known that we are great supporters of this agency. We think it is doing a good job and that it has some very practical solutions to some of the problems the country faces.

For 2 years now we have put in Budget bids for this agency to have increased funding, and we believe that it deserves to have more funding from the Minister of Energy. We hope the Minister will continue to be an advocate for this agency. If the Government is serious about its energy conservation strategy, it ought to be putting more money into this agency so it can achieve real reductions and real successes in energy efficiency, rather than just this little bit of money, which is a slight indication of commitment.

It is time that the Government walked the walk in terms of the so-called effects of climate change. I see that a great deal of the money that this agency is given is actually siphoned off to deal with reports on climate change and on the effects of carbon dioxide gases, rather than actually doing the things many New Zealanders believe would make a difference in our country, such as increasing the use of solar water heating in our homes. We were pleased to see, back in 2003-04, that funding doubled so that solar water heating could be installed in more homes, but it is still so little that it is hardly going to make a dent in reducing our dependence on energy. What is needed on that front is for the industry behind solar water heating to be given a very clear signal that the Government is serious about solar water heating being installed in all new homes, and seeing many of our older homes being refitted. Until the Government gives a clear signal that it really is serious about that, the industry will not respond and get ready for the massive infrastructure it needs in order to meet the demand that will come. We urge the Minister to take that initiative, to really deliver for the people of New Zealand in that strategy, and to support the good people in the Energy Efficiency and Conservation Authority.

We have welcomed the work that the agency has been doing with energy- efficiency ratings for homes, and we are pleased to see that in the 2005-06 Budget it has been given another $0.6 million to increase the number of homes that it can rate. But, again, it is still too little. We would like to see United Future’s policy implemented, whereby all homes will need to have energy-efficiency ratings when sold. We think that is a good way to have market measures involved in upgrading our homes to be more efficient. It is not a huge expense for a home to be given an energy-efficiency rating. The Energy Efficiency and Conservation Authority is able to deliver this service, and more people would be able to be trained if the demand were increased. For a very minimal cost, people could come and rate our homes, find the spots where heat is leaking out, and find the ways in which insulation and efficiency overall can be improved. They would consider the ways in which we light and heat our homes. There is much saving that can be made. We believe that if an energy-efficiency rating were required at the time of the sale of a home, people would be motivated to get better ratings, because they would be able to get better prices for their homes. The market would very much take care of this improvement. So we look forward to the Minister getting behind the Energy Efficiency and Conservation Authority and offering it more support through Budget allocation in the years ahead, so that it can do a lot more.

We hear an awful lot about the worries of climate change and the impending effects of human-induced climate change. The Government is imposing a carbon tax on our country and our businesses. It is seeking to raise something like $300 million with that carbon tax, yet it is giving less than $30 million to the Energy Efficiency and Conservation Authority, which could actually make a real difference. We do not think the carbon tax makes any sense at all, and we oppose it absolutely. But, perhaps, the tax would make a little more sense if it was being directed to the authority so that it could make rapid progress in energy-efficiency initiatives around the country.

Report noted.

Civil Aviation Authority

Land Transport Safety Authority of New Zealand

Maritime Safety Authority of New Zealand

Transfund New Zealand

Transit New Zealand

Transport Accident Investigation Commission

Dr WAYNE MAPP (National—North Shore): In the few minutes that I have, I wish to focus specifically on Transit New Zealand. The reason I do so is that it is the Crown entity responsible for the maintenance and construction of the New Zealand highway system. I have to say that back in 1999, Labour came into office with the promise of fixing New Zealand’s roads. I recall that Labour members went up and down the country saying that, and especially in Auckland they made that kind of boast. What is their record, after 5½ years?

Frankly, it is one of failure. The reason I say that is that in 2000 and 2001, expenditure actually went down. Transit ended up with hundreds of millions of dollars of unspent money in the bank, simply because the Government put everything on further review—the best single example being the North Shore bus lane. It was approved back in 1997, and finally started this year, with construction to be completed at the earliest in 2009. Think of that—a 12-year period to do a simple project!

Last year Transit issued a document, which I will seek leave to table later, that went to every single household in the Auckland region, called Getting Auckland Going. The information in this document caused that now infamous rift between the Northern Employers and Manufacturers Association, the Auckland chamber of commerce, the Minister, and Mike Williams. The reason is that this document is a bunch of lies. That is the truth of the matter. It lies from start to finish.

I want to produce this particular evidence. The document refers to 17 projects. I guess they got two of them right. Do members know why they got two of them right? Because the construction had been finished when the document was issued. So I guess when they said, in relation to the Puhinui interchange, that construction was complete, at least they could go down there, take a photograph, and say “Yes, that is complete.” They did the same also for another project, Grafton Gully, stages one and two—also complete. They got that part right. The rest of it was fundamentally untrue. In particular, and this is where Auckland feels so deeply let down, they went through a list of projects.

Construction on State Highway 18, the Hobsonville deviation, was to start in 2005. Bear in mind that this document went out in September 2004. It was issued by Transit, to every householder. Has construction started on State Highway 18? No. That was a lie in this document.

The construction of State Highway 20, the Mount Roskill extension, was to start, according to this document, in 2004. That is about 12 weeks after this document was issued. Has it even started yet? No.

So they could not predict even 12 weeks in front. That is just amazing. The next example is State Highway 20, Manukau extension: “construction starts 2005”. Has it started? No.

State Highway 1, new Waitemata crossing—“studies start in 2004”. Bear in mind that this document was issued in September 2004. They had to project forward only 12 weeks—just 12 weeks. Did they get that right? No. Has the project director started his work yet? No.

So that is the reason why Aucklanders feel so deeply disappointed. The truth is this. The only thing that one can now believe on whether construction has started is if one sees the bulldozers actually starting work. Anything else does not count. I read in the last week that State Highway 20, which, as I said, was to start last year, is to start in August. All I can say is that we will have to wait and see whether that is true.

The problem is this, and it comes back to governmental responsibility. Everyone in Auckland knows that our highways are clogged. Everyone in Auckland knows, in particular, that State Highway 20—the western ring route, which everyone acknowledges is absolutely crucial—has to be done to make Auckland’s traffic flow. The Government has said that, we have said that, and all Auckland mayors have said that.

When the Government’s road builder, Transit—under the authority of Ministers of Transport—says that the project will start, and it gives very clear dates just within 12 weeks, frankly people have relied on this document. The document was sent to every single household in Auckland—that is, 500,000 households—with the intention and expectation that people would rely on the document; that they would read it and believe it. In a sense, I guess that was part of the Government’s preconditioning for this election. Frankly, the Government has let Auckland down. Virtually every project that was predicted to start in 2004 and 2005 has not happened.

Hon Parekura Horomia: Rubbish!

Dr WAYNE MAPP: The Minister of Māori Affairs, who I guess thinks he knows Auckland well, says “Rubbish.” That speaks of his ignorance. If he had read this document he would be able to compare, just looking at the roads themselves, whether the roads were started on the days, months, or even the years stated in the document, and he would know that the answer was no. It is a judgment on the Government that members in Cabinet do not know whether their own proposals to fix Auckland’s roads have succeeded, or been started. In fact, that is an incredible indictment on that Cabinet. That it is so ignorant and has let Auckland down so badly, that it has deeply misled—

Darren Hughes: Is the member’s tunnel part of National’s policy?

Dr WAYNE MAPP: We support public-private partnerships, I say to the junior whip. National has a clear policy on fixing the roads. We are committed to spending all of the petrol tax on roads over the next 6 years. We have also said that we support public-private partnerships. Well-conceived projects like a second crossing ought to be put out to tender. Frankly, if we go by the situation in Sydney and Melbourne, they will come. It does not require any Government funding to do so, and that is the case in Sydney and Melbourne.

This Government, in its land transport legislation from last year, has let this country down disgracefully.

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

Tuesday, 14 June 2005

(continued on Wednesday, 15 June 2005)

Debate on Crown Entities, Public Organisations, and State Enterprises

In Committee

Debate resumed.

Civil Aviation Authority (continued)

Land Transport Safety Authority of New Zealand (continued)

Maritime Safety Authority of New Zealand (continued)

Transfund New Zealand (continued)

Transit New Zealand (continued)

Transport Accident Investigation Commission (continued)

Dr WAYNE MAPP (National—North Shore): Last night I was referring to a document issued by Transit New Zealand, in August 2004, to every household in the Auckland region. It talked about investing half a billion dollars in the Auckland highways, with more to come. There were 17 projects listed, with start dates given. The only problem is that the document has proven to be false. All the projects planned to start in 2004, and we must bear in mind that that was only 12 weeks after the issue of that document, did not happen. Of the projects that were to start in 2005, the majority did not happen. The Government wonders why Aucklanders—the people of North Shore, the Employers and Manufacturers Association, and the chamber of commerce—are completely disillusioned, fed up, and disgusted with this Government. It is that kind of propaganda that has done it. I say this to the Government: it has lost the trust of New Zealanders, and it has lost the trust of New Zealanders because it has misled them. I seek leave to table a copy of the document from Transit New Zealand.

Document not tabled.

Hon MARK GOSCHE (Labour—Maungakiekie): To quote the Leader of the Opposition, all I can say, after listening to that speech last night from the member and again this morning, is “Baloney!” I heard Dr Mapp last night claim that the National Party had the North Shore busway ready to go in 1997. Have members ever in their lives heard such a big misrepresentation of the truth? No. That is because transport issues do not matter to members opposite. Where is National’s transport spokesperson this morning? Where is Maurice Williamson? Why is he not here praising the Government for the projects that are reported as having been built or under construction?

The report talks about the central motorway junction in Auckland. What did the previous National Government do about that in 9 long years? It did nothing. It just looked at the bits of concrete sticking out of the ground, which had been there for 20 years, and did nothing. And it would do that again, if it were ever allowed to be in Government again.

Greenhithe, in Auckland, is under construction. Mercer to Long Swamp in the Waikato is under construction. Hewlett’s flyover in the Bay of Plenty is under construction. Mackay’s Crossing in Wellington is under construction. The inner-city bypass in Wellington is under construction. The Albany to Pūhoi realignment B2 is under construction. Then it will be a toll road—something the National Party talked about but did nothing about in terms of legislation. We had to pass legislation, one Christmas, I remember, to try to help Tauranga out. It was a special piece of legislation.

What has this Government done? We have legislation that allows it to happen, very simply, with the Minister of Transport being convinced that it is a good project, and ticking off a number of boxes that ask whether it will work financially, whether the public supports it, and whether there is an alternative road. All of that law has been passed. What did the National Government do? It did absolutely nothing. Did it allow for private-public partnerships in the law in 9 long years? It did nothing. But this Government has got on and done the real work.

That is why in Auckland there is a “buildability” problem. That is why the construction industry is in Samoa trying to recruit labour. It is also off in South Africa and Zimbabwe trying to get civil engineers. It cannot actually keep up with the tendering process, and at the moment a major project in Auckland—State Highway 20—is under way but other projects that follow it are having to get consortiums of New Zealand construction companies put together to be able to tender, because not one single company is able to do it on its own. There is too much work, and that is why the Australians are over here in consortiums actually tendering for New Zealand projects, because there is so much work, so much money, that the industry cannot keep up.

This report talks about that. It talks about the “buildability” problems—the labour shortages. It talks about the things the Government has done in terms of requiring 10-year plans, so that everybody knows that there is a major piece of construction going on, and that this Government is serious about fixing the issues.

The amount will be $18.9 billion over the next 10 years. What is National saying it will do? Last night we heard that a National Government would spend yet another $4.5 billion over that same period of time. How would that fix the problem? Labour is talking $18.9 billion over the next 10 years; National is talking $4.5 billion—and it is talking about having tolls. It is saying: “Oh, no, no. We’re going to give you a couple of bucks tax cut over here, before Christmas, in whatever year—who knows? But we’ll toll you so much that you won’t be able to afford to go on that road.” National would just tax people a different way. That is the age-old trick of the Tories over there. They do nothing but make the public pay for all the projects that this Government has the funds to do under its current regime.

This is a great report. This is a report that one would never have found under a National Government, because it has things in it that have actually been done. Construction is taking place all over the country. There are roadworks for half the distance between Auckland to Waikato. What happened under previous National Governments? Absolutely zip. They did nothing. They had a cost-benefit ratio system that made them think they could not do little improvements here or there, because that might stop a project from going ahead. They said that anyway there was not enough money.

When I became the Minister, I was told: “You’ll build nothing in Auckland in your first 3 years, because the National Government has done nothing to prepare for it, and there isn’t the money in the kitty to pay for it. In fact, in our first 3 years in Government, both Puhinui and Grafton Gully were built.

DEBORAH CODDINGTON (ACT): I would like to address the issue about Transit New Zealand, too. Last night I heard the Minister of Transport say that he would love to have a system where there were no police on the side of the road collecting fines, and that he would love our country to be one where people did not die on its roads. If he were really sincere about that, then his Government would do something about terrible pieces of roads, such as State Highway 2, and the road from Pōkeno to Tirau—State Highway 27. It is known now that the four-lane passing lanes will not go ahead there.

We will never get anywhere in this country while we continue down the path of having land transport politicised. It is totally politicised. For instance, the president of the Labour Party sits on the board of Transit New Zealand—and what an embarrassment that has turned out to be for the party. Transit New Zealand is just one of Mike Williams’ appointments. He gets $17,000 in fees from Transit New Zealand, $19,000 from the board of the Institute of Geological and Nuclear Sciences Ltd, $21,000 a year from the Railways Corporation, and $28,000 a year from Genesis Energy, and he is on the Auckland Regional Transport Authority, from which he gets another $25,000. That is $107,000. And it does not include the secret honorarium he gets for being president of the Labour Party. Not even Nick Venter has been able to find out how much that secret honorarium is.

When this debate was last raised in the House, Mike Williams faxed me and said that the figures I gave were wrong. I think I said the total was something like half a million dollars. His kids all asked for expensive Christmas presents, as a result. Well, if he gets upset every time someone raises how much he gets from the public purse, he should come clean and say how much he gets. But as Jonathan Milne asked, in that wonderful new publication the Herald on Sunday on Sunday, what will Labour do now about its president? He went to a meeting 2 weeks ago in the offices of the Minister of Transport and the Minister of Finance, where he embarrassed himself, was extremely rude, and brought to a halt the negotiations, and then he went and leaked it to Brian Rudman of the New Zealand Herald. What was written about that meeting was wrong. What was being written about The Way Forward in Auckland was wrong. That is the reason we will never get anything done.

On 30 June Transfund and Transit New Zealand will be releasing their 10-year programme. There is going to be some serious embarrassment for this Government in that statement. For instance, in this country we have roads that have proved to have a good benefit-cost ratio. That means they will deliver a very high rate of return to this country, they will enhance economic growth, and they will improve people’s lives. But they are not even going to appear on the 10-year programme. Why? Because it is not political. We will see roads in the South Island that do not have a good benefit-cost ratio, and the building of which will be very difficult to justify, but they will be there. Why? Because it is politically expedient in an election year to have them on the 10-year programme.

We have Government funding issues. The Government says that everything is all right and that we do not have to worry about it—everything is great. Well, it is not specifying starting and completion dates. As the honourable Dr Wayne Mapp pointed out, the paper that he tabled, which went to every household in Auckland at huge expense—

Dr Wayne Mapp: Frankly, can we believe it?

DEBORAH CODDINGTON: As Dr Mapp says, can we believe it? It is factually incorrect. It was proved at the select committee, under questioning, that there were incorrect statements in terms of what had and had not been started. I ask whether the Government does want to get serious about fixing the transport system in this country, which we predicted 3 years ago would get worse and worse when the Land Transport Management Act was brought in. It brought in a whole lot of other considerations that have to be brought into account when Transit New Zealand and Transfund are considering new roading projects.

And they are political. They are political to satisfy the Greens, they are political to satisfy that vote, and they are politicised to ensure that Ministers get back into Parliament when the election comes round again. We are just going back to the future.

Hon PETE HODGSON (Minister of Transport): The member who has just resumed her seat, Deborah Coddington, has made not very many strong arguments about not much at all, and I will not rebut them. But the member Wayne Mapp, who spoke last night and again this morning—apparently, he is the new National Party transport spokesperson, because we have not heard from the other National Party transport spokesperson—made a series of allegations that are scurrilous, that are outrageous, and that need to be rebutted. It is my pleasure to stand up here and give that member a towelling.

He stood up and said that Transit had put out a document that was incorrect. He said that Transit had put out a document that was a lie. He said that Transit had set out to mislead people. That is a scurrilous allegation and it is a wrong allegation, and I intend to dismiss it. The reason I intend to dismiss it is that it cannot stand unchallenged. The member made a series of allegations about Transit that are simply wrong.

There are 17 projects in the document he refers to. This is a document that 10, 11, or 12 months ago was put around the suburbs of Auckland. It is a document that states: “Auckland at a glance”, and it gives people an indication of what is going on in their city, in the Transit area. Of the 17 projects, 14 have been accurately described, and I will come to the other three in a minute. The 14 projects include the Greenhithe deviation. The document states that its construction is in progress. The truth is its construction is in progress. It states, in relation to the State Highway 18 upper harbour bridge and causeway duplication, that its construction is in progress. The truth is its construction is in process. It states, in relation to the State Highway 20 Puhinui exchange, that its construction is complete. Its construction is complete. It states, in relation to the State highway northern busway, that construction started in November 2004. Construction started in November 2004. It states, in relation to the State highway Grafton Gully stages I and II, that construction is complete. And on and on it goes. All of those 14 descriptions are accurate. There is a really interesting story about how come this Government can get 14 projects running in Auckland at once, and the member opposite cannot.

What about the other three? One of them is the Roskill extension, which was delayed by a 1915 piece of legislation on volcanic cones that, at the time this publication came out, nobody knew about. The member certainly did not. That legislation from 1915 that was discovered required a change of tack for the Roskill extension. Has the Roskill extension tender been let? Yes. Has the Roskill extension tender pre-construction work begun? Yes. When will the Roskill construction work begin? It will begin as soon as we get through the winter period. That one project has been put back by a number of months because of a statute nobody knew about. Did Wayne Mapp advise the House of that? No, he did not. Instead, he said that the document was an entire set of inaccuracies.

Two other projects need to be brought to the member’s attention. The first is the Hobsonville deviation. It says here that construction is due to start in 2005. It will not start in 2005, and the reason is the other project—the third project that the member did not mention—the Albany to Pūhoi realignment B2 (ALPURT B2). The reason the member did not mention that project is it is going ahead ahead of time. The bulldozers have already begun work. The ALPURT B2 extension is down in this document as being at the stage of consultation. In that respect the document is misleading, because the news turns out to be way better than was thought to be the case when it was written. The State Highway 20 Manukau deviation is on track; there are no problems with that at all.

The problem is that the ALPURT B2 construction had to go ahead for the reason that when the Tories were in power, the only thing they built in Auckland in 9 years was the Albany to Pūhoi realignment B1. Do members know what they did with that? They stopped it halfway. They stopped it on a corner of a suburban part of Ōrewa. That is where that stretch of road ends, to this day. They built a highway halfway to nowhere, then lost power. That is why ALPURT B2 had to go ahead.

But, wait, there is more. If one adds together the projects that were under way by National at the time of the change of Government, and also includes, out of generosity, projects recently completed by National—of which there were none—one comes up with $130 million worth of expenditure. ALPURT B2 alone is more than twice that. If one adds all 17 projects that the member decided he would take a go at, and the ones that have been recently completed—of which there are many, such as the Grafton Gully central motorway junction stage I or the Puhinui interchange, and on it goes—one does not come up with $130 million. One comes up with precisely 10 times that figure.

So that member should not stand up in this Chamber and say that the Government is not getting Auckland moving again. This Government is addressing a very serious backlog created by the Government of the member who just resumed his seat. That is the truth of the matter. At the time of the change of Government $130 million worth of construction was underway. Today, by precisely the same measurement, the amount is exactly 10 times that in value. Let us be very clear about who created the problem in Auckland, and let us be very clear about who is fixing it.

A party vote was called for on the question, That the reports of the Transport and Industrial Relations Committee on the 2003-04 financial reviews of the Civil Aviation Authority, the Land Transport Safety Authority of New Zealand, the Maritime Safety Authority of New Zealand, Transfund New Zealand, Transit New Zealand, and the Transport Accident Investigation Commission be noted.

Ayes 70

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

Noes 47

New Zealand National 27; New Zealand First 13; ACT New Zealand 7.

Reports noted.

Te Reo Whakapuaki Irirangi (Te Māngai Pāho)

Hon GEORGINA TE HEUHEU (National): For the clarification of anybody who might be listening, we are here to review Te Māngai Pāho, which is the funding agency for, mainly, Māori Television, and for the production of Māori programming shown on various broadcasting outlets in New Zealand.

An update from the Māori Television Service in June 2005 highlighted an issue that I think the Minister needs to turn his attention to. It stated that issues and solutions for Māori Television include continuing to produce high-quality Māori programmes. While conducting its review, members of the Māori Affairs Committee had some substantial discussions about just that issue. How do we monitor and come to make some judgments about what high-quality Māori programming is? The Māori Television Service, obviously, has that on its mind, and, hopefully, Te Māngai Pāho does, as well. Up to 35 percent of the funding that Te Māngai Pāho gets goes directly to the Māori Television Service. The Māori Affairs Committee suggested that emphasis be put on the way that funding contracts to broadcasters are managed, and that further attention was required in terms of enhancing and documenting its policies and procedures.

Of course, we all remember that 2 or 3 years ago the Minister, more than anybody, was being given all that wrong and fatuous advice by his Te Māngai Pāho executives. We had that whole debacle in this Chamber in 2001 and 2002. The Minister would stand up in this Chamber and not know what he was talking about, basically because he was being supplied with incorrect information. Thanks to a good National Party loyalist, Wira Gardiner, we now see that Te Māngai Pāho, at least, appears to have turned itself around. We hope that the chairman makes sure that everything is in place before he starts to think of leaving.

One issue relates to the monitoring of funding provided to third parties. That is where the organisation started to fall off the rails 2 or 3 years ago. That is an issue the select committee thought was important. The Māori Television Service exists as a result of a perceived Government obligation to protect and promote te reo Māori. This Committee needs to know that that objective is being achieved.

How will it be achieved? It will be achieved by making sure that the Māori Television Service has high-quality monitoring and review processes for the programming that is shown, and that it has in place its own financial procedures and documentation in terms of funding. So I hope the Minister will turn his attention to that this year, among a whole lot of other things—including, of course, his own department, which sees itself as the great saviour of Māori people. I would suggest that the reverse is true: Māori people will save themselves. They do not need a handout organisation to help them achieve their potential.

The other thing I want to mention is Māori radio. We saw in the estimates we looked at last week that a new initiative has been sought for an iwi radio upgrade. In a way, given that iwi radio has become the mouthpiece of the new Māori Party, I suppose the Minister has to be commended for the fact that iwi radio has achieved some funding. But, again, we ask whether Te Māngai Pāho processes are the right means of funding Māori radio—whether its funding processes are robust and whether, indeed, Te Māngai Pāho has made any decision about, or done any thinking around, whether there are too many iwi radio stations. A little bit of integration of iwi radio stations might see the funding go further. Hopefully these matters are in the Minister’s mind, as well.

Hon PAREKURA HOROMIA (Minister of Māori Affairs): I had hoped the Opposition spokesman on Māori affairs would come down and debate this issue. But certainly—

Simon Power: I raise a point of order, Madam Chairperson. It is quite contrary to the Standing Orders to refer to the absence of anybody from the Chamber, and the Minister should know that.

The CHAIRPERSON (Ann Hartley): Yes, the member is quite correct. Members should not refer to the absence of another member.

Hon PAREKURA HOROMIA: I want to remind the member who spoke before me about the state of Te Māngai Pāho when this Government came in. It was in a mess. It had no direction, no vision, and no mechanism for either governance or management. In 2003, under a whole lot of pressure, we reviewed it. I am proud to say that, through the efforts of the very able, capable people who work with this Government, the agency has sorted itself out. That is very clear. That member does not seem to like iwi radio stations. Well, I know that most Māori around this country appreciate, and spend a lot of time listening to, the iwi radio stations. For 20 years, and especially in the 9 years when National was last in Government, nothing was done about strengthening, restructuring, or supporting those iwi radio stations. We have done that—even to our detriment at times.

Let me talk about the Māori Television Service. The face we see there is the new face, although it needs a bit of maturity. I want to tell the Committee what Te Māngai Pāho has helped the Māori Television Service to do. The service will report a profit next week, like other State-owned enterprises, of $3 million. It will say quite clearly that it has repaid its loan 2 years before it was due. That shows good organisation, and it has come about because of a whole lot of support from Te Māngai Pāho.

We talk about Māori not being able, and about who should be supporting them. Ninety-one percent of Māori are in work. They are working—24,000 of them in the modern skills field. And we will need them, because this great broadcasting industry—especially its indigenous face and the indigenous activity that is going on through the Māori Television Service—needs people to deliver. We should remember that Whale Rider was about the indigenous people. Having just been to the Wairoa Māori Film Festival, I have seen a whole lot of talent and a whole lot of opportunity of which this Government is very, very supportive. That person talked about indigenity. Certainly, when I was at the Māori rugby game the other day, when the Māori team cleaned up the British Lions, the crowd’s first chant was the great chant of “Māoris! Māoris! Māoris!”. Then they went on to say: “Kiwis! Kiwis! Kiwis!”. Then they continually said: “Black! Black! Black!”. When there is a common thread around something that we all enjoy, like Māori broadcasting, then this nation will move forward a lot quicker.

Let me tell members that a whole lot of the viewership of Māori television is non-Māori; it is Pākehā—those other people. They enjoy watching it. Why? Because it is one of the finest adaptions in relation to showing Kiwi-ness on the box. I look back in history and ask how much Māori was on mainstream TV. What was done was not too bad, but there was very, very little, especially in Nelson. It is people like those in Nelson who really appreciate Māori television, who watch the cooking programmes and who watch the language programmes. They love it. They have classes down there to follow on from the language programme.

I point out that as a State-owned enterprise Te Māngai Pāho has done very, very well. Mr Brownlee and Dr Brash want to close down anything that has a connotation of Māoridom. It is disgraceful and it is shocking that they should even think that way. For once in this country, we have programmes produced by Kiwis, made by Māoris, and watched by the whole nation.

Report noted.

New Zealand Lotteries Commission

Report noted.

Building Industry Authority

Hon Dr NICK SMITH (National—Nelson): This financial review of the Building Industry Authority impacts on thousands and thousands of New Zealanders who have been grossly neglected by this Government in its response to the huge crisis in respect of leaky homes. I note that Damien O’Connor is in the chair. The first problem for homeowners is the way in which this important portfolio has been passed around the Cabinet table like a hot potato. Can members believe that in just 5 years there have been six different Ministers for Building Issues? It is little wonder that we have the scale of mess—with thousands of homeowners living in rotting and decaying homes, with their health affected, and struggling to try to find a solution—when Labour treats this issue with such disdain that it is passed from pillar to post. We have had Mark Burton—[Interruption] Judith Tizard pipes up. Can Judith Tizard—who has hundreds of her constituents confronted with those awful problems—justify to me why we have had Mark Burton, George Hawkins, Lianne Dalziel, Margaret Wilson, John Tamihere, Chris Carter, and now Damien O’Connor on building issues?

Then there is the matter of just how poorly the Government is managing the problem. We see in this report that $6 million is being spent on lawyers by this Government in order to fight the owners of leaky homes. Here are desperate people who need the Government’s help and assistance—but what is the Government’s answer? It will spend $6 million on Queen’s Counsels in order to fight them and in trying to pretend that the Building Industry Authority has done nothing wrong. What sort of insult is that to the intelligence of New Zealanders and of those poor families affected?

Then we see that $100 million is being spent on the Weathertight Homes Resolution Service, but not one dollar of that is to be spent on a single home needing to be fixed. Instead, that $100 million the Government is spending on the weathertight homes bureaucracy is, according to the Government, to provide a quick and speedy resolution of the problem of rotting homes. Well, is that not interesting? That is what the Government said 3 years ago. Three years later, fewer than 10 percent of claims have been resolved. Does Damien O’Connor, the Minister in the chair, realise that with current progress the Weathertight Homes Resolution Service will take 20 years to process claims under that “fast, cost-effective solution” the Government rammed through Parliament in 10 days? That is simply insulting, and it is a tragedy for the families concerned.

I want also to draw the Minister’s attention to something that is truly shocking. A poor old homeowner, who had a rotting home that had been certified by an independent certifier, wrote to the Building Industry Authority in 2004, the year under review, and asked who the insurer was for the independent certifier. The authority wrote back and said that it could not tell the homeowner, because the information was commercially sensitive. Now, that is shocking! There is a Government that should be helping those families, but it is putting up bureaucratic barriers to the extent of even refusing to name the insurer. What does that mean? It means that the homeowner is not able to take legal action to try to get his or her home fixed, because the Government is hiding behind the excuse of commercial sensitivity in order to protect the insurance companies rather than the homeowner. I say that that is a farce.

How can members opposite even pretend, with that sort of debacle, that they have any compassion for the families affected by leaky homes? I saw in the New Zealand Herald last week the glaringly smiling photo of Chris Carter, and I simply said: “What a disgrace.”

Hon DAMIEN O'CONNOR (Minister for Racing): That is one of the most outrageous speeches I have heard in this Chamber, from a member who thinks that the market will deliver to everyone—will give a solution to everyone, regardless—

Hon Dr Nick Smith: I never said that.

Hon DAMIEN O'CONNOR: Well, that member and his party say that, philosophically, on just about every issue in relation to the economy.

Hon Dr Nick Smith: Do not.

Hon DAMIEN O'CONNOR: Yes, they do. In fact, they said that through the 1990s, which is the very reason that this Government has had to step in and fix the big mess. Indeed, I accept the member’s point that it is a disastrous situation for a young family that has bought a home in good faith, and discovered that it is not just a leaky home but that they have a truly faulty, undervalued—or overvalued—disaster on their hands. How has that occurred? Many of those homes were built while Mr Smith was in Government.

Hon Dr Nick Smith: This was built in 2001.

Hon DAMIEN O'CONNOR: I tell the member that the regulations that governed the system right through the 1990s were set up by his Government on the basis that the market would deliver—that homeowners should know what they were buying: “let the buyer beware”. The problem was that that Government had insufficient safeguards to protect people who bought homes in good faith. That is why this Government has had to step in to what is a very significant issue, particularly in the Auckland area.

Hon Dr Nick Smith: It’s not working.

Hon DAMIEN O'CONNOR: It is working. We are working through the issue very, very carefully. We now have in place some regulations that govern the kinds of timber to be used in the process. We have to go through a very complex commercial situation to try to unravel a mess. The mess was laid down by the same blind ideology that that member and his party will take into the future—

Hon Dr Nick Smith: George Hawkins!

Hon DAMIEN O'CONNOR: It is not. I applaud the efforts of the Ministers in managing this difficult process. This Government has grappled with the issues, and has moved ahead and set up the new Department of Building and Housing, which will be responsible for all these issues. That member said: “Six different Ministers for building issues.” Well, the fact is we will now have one Minister overseeing the Department of Building and Housing, who will oversee all these responsibilities and issues. That has not occurred before, and it is the very reason that this situation has occurred.

Responsibility has been in a whole lot of different areas of Government, and commercial law and the smart, wise boys in the building industry have ripped people off, particularly in the Auckland area, because the laws laid down by the previous National Government, based on the blind ideology that the market would deliver to everyone, were insufficient to protect those people into the future. So we have set up the Department of Building and Housing. There will be a Minister responsible. We have tightened regulations and improved the standards and the types of timber that can be used. I have every confidence that, while not offering a perfect solution—I do not think any honest Government would say that it could—it is a huge step forward to protect the consumers in this country and the people who buy homes in good faith.

If we ever—God help us—see a National Government on the Treasury benches again, this country can be assured that we will be back in the same commercial situation that would allow leaky homes and rorts to occur right throughout the economy, because the National Party believes the market will deliver to everyone. Well, I say to Nick Smith and the National Party that they should wake up, because that does not work. This Government has had to step into the issues in the building industry, take stock, grapple with a difficult issue, change the whole structure in Government, set up a new Department of Building and Housing, and do the things that are necessary to move this situation forward. I am happy to say that this Government has taken huge steps to make progress, and I am confident that we will move forward in the same way.

BRENT CATCHPOLE (NZ First): I have just been listening to the Minister doing exactly what this Government has always done and, it appears, what it will continue to do—blame everybody but the real part of the industry that brought this whole debacle into being, which is the Building Industry Authority. When will a Minister acknowledge that the authority had everything to do with this particular problem? We saw in the Weathertight Homes Resolution Service report that the Department of Building and Housing is looking at acceptable standards, and that the new standards will adopt internationally recognised best practices for weathertightness. That is great! That would make me feel great and full of confidence, if it were not for the fact that the same people who were in the Building Industry Authority are doing this.

The authority adopted new standards in 1995 and 1998, which led to the introduction of kiln-dried timber and monolithic cladding, the combination of which was catastrophic. Did the authority carry out any tests on those products to make sure that they were compatible? No, it just accepted the industry and manufacturers’ warranties and specifications as proof that the products were OK. Did the authority listen to the industry’s concerns? No, it just totally ignored them and carried on with the whole process. It totally ignored the industry’s concerns right throughout. Did the authority act to rectify its mistakes when the problem became obvious to everybody else except the authority and the Minister who was in charge of the authority at the time? No, it did not. The authority did nothing. In fact, it stuck its head in the sand, and totally ignored and denied that anything was happening—and the rotting homes problem continued for years on end.

It was interesting to hear Clayton Cosgrove in the House yesterday say that Labour, and he, had known for 10 years that this problem was developing. That is an admission that the Government knew about the problem and the Minister knew about the problem for at least 10 years before they acknowledged it. Clayton Cosgrove admitted that in this House yesterday. If members look at his Hansard they will see that he admitted that. So this Government had known about these problems all along.

This Government set up the Department of Building and Housing, which absorbed the Building Industry Authority. The authority created this environmental, economic, and health problem of monumental proportions, yet that same organisation—the department—is being protected and shielded by this Government. The Government has put up $4.5 million to protect the department from any legal—

Hon Dr Nick Smith: No, $6 million.

BRENT CATCHPOLE: It is now $6 million, is it?

Dail Jones: What does New Zealand First think?

BRENT CATCHPOLE: New Zealand First thinks it is an absolute disgrace, and we want the Department of Building and Housing to be reviewed and the Weathertight Homes Resolution Service to be reviewed and reformed, because it is not providing the service that it was meant to or that everybody expected of it, particularly in terms of the department’s treatment of it. The Weathertight Homes Resolution Service was the one way that homeowners had of achieving a successful resolution, but the department refuses to take part in the process. The conditions were set by the Department of Building and Housing, yet it holds all the ace cards. Firstly, it refused to participate in the Government’s Weathertight Homes Resolution Service, which was set up to be a speedy, flexible, and cost-effective resolution for those homeowners. Secondly, it uses every effort to remove itself from the legal process. As well, the Crown Law Office has stated that it will not pay a cent to anyone undergoing mediation, because it will carry this issue right on through to every appeal process that this country has available to it.

The Department and the Government have no intention of looking after the people of New Zealand who have that problem. It is a disgrace.

PAUL ADAMS (United Future): I believe that this issue—this leaky building scenario and the department we are looking at—is probably one of the most serious issues that the country is facing at the moment. I have seen Government members stand up time and time again in this debate and proclaim that the Government is showing leadership. Well, where is the leadership on this issue?

The unfortunate part with the leaky homes situation is that the time bomb is ticking. The Government has a responsibility, and it is even classified here—the cost of litigation. The report states that the authority is one of a number of defendants in law suits. So the Government has a responsibility to look at this issue. But the problem that people with a leaky home have is that as every day goes past the situation gets worse. We have families living in Auckland, and no doubt in other parts of the country, who are living in homes that would now be dangerous. I have heard of people who have walked into their living room and a hole in the floor has just opened up and the floor has collapsed because it has been absolutely rotten. Young children have gone out on to a terrace and it has collapsed.

A Government that shows leadership on this issue needs to pick up the responsibility. Yes, the issues of resolving this problem are no doubt long and complex. But there is a very simple solution to this. The Government immediately needs to make available to people an interest-free loan so that the homes can immediately begin to be rectified, and then the process and the discussion with councils can take place on who is responsible for what. Do not forget that we have said that new standards have been put in place. Well, let me assure members that the standards, as good as they may be, are absolutely as useless as the previous standards if the inspections are not done and the new regulations are not checked.

As a qualified carpenter and joiner I assure members that the majority of the problems in the leaky homes situation are not because of the materials, but because of the standard of workmanship put into those homes. Any timber in a home will eventually rot if water is flowing through it. Therefore, when there are no satisfactory flashings around windows and doors to prevent water from flowing into a home—[Interruption] Dail Jones can bleat away as a lawyer. They are the ones who are responsible for making all these laws and regulations that are put into place. But, when the rubber hits the road the bottom line is that people have to rectify their homes. Rules and regulations will never make a home watertight. There has to be good workmanship, as well.

United Future believes that the Government has a responsibility to begin fixing these homes immediately. A time bomb will be going off. The longer this problem is left the more expensive the houses will be to repair. Many families bought their homes in good faith. Councils, or the correct authorities, had checked them. They have issued codes of compliance, yet in many cases those homes and houses did not comply with the very regulations they were supposed to be built under.

I believe that watertightness is one of the most significant issues we need to deal with, and it is not the time right now to apportion blame. It is time right now to find a satisfactory method whereby people who have problems with their homes can start to rectify the defects and get them fixed and under way. Yes, there is then a process to follow on in finding who is responsible and where the money will come from. But from my perspective, if the Government is serious about getting New Zealanders into home ownership, if it is serious about the social consequences of people having a good home to live in, then it must deal with this most significant issue—this watertightness of homes—immediately. The Government should provide a pathway for those New Zealanders, instead of delegating responsibility and shifting the blame here and there, which really is not helping the very people who are crying out for help.

Those people have stretched themselves to buy their homes and now they are being told they will have litigation cases to attend to and they will have to go to court. Where will they get the money from? In many cases it may cost them $60,000 or $70,000 to go to court to get a decision to shift the blame, or a portion of blame, whereas it may cost only $50,000 or $60,000 to actually repair their house. Who is to say that they will win their court case, and even then they still will not have a repaired home? We need to make sure that the work will be done. I encourage the Government and other parties to get together and say that we need to get finance available to those people so that they can begin the repair process.

DAIL JONES (NZ First): New Zealand First regards this issue of weathertight homes so seriously that out of the four calls we are entitled to in this debate of 3 hours, we are taking two on this issue. This is the most important issue facing Auckland at the moment, and other areas as well. In my view it is more important to Auckland than the transport situation, which has greatly improved in recent times. This is a terribly, terribly serious situation. Of course, we have just heard from a United Future member who said that he does not agree with the Government on this particular issue, but he will vote with the Government when it comes to a vote, because his party is supporting the Government in supply. So there is a bit of a double standard taking place there for United Future.

This issue has now reached a situation whereby a court case in Auckland today is so complicated that there are be two plaintiffs and 27 defendants or third parties in the one set of proceedings, and that is excluding the local authority. There can be 29 parties in one proceeding, and that is an utter disgrace. It is as if families are living in devastation akin to a tsunami. Now if a tsunami had been declared in Auckland, this Government would have stepped in and done something. But this Government is failing to do anything at all. It is all very well setting up a committee, but that is not what really matters. This problem goes back to the early 1990s, when Carter Holt Harvey conned the Building Industry Authority into approving non-boric treated timber generally for timber framing, in particular for exterior framing and bottom plates. The authority should have known that, inevitably, defective or inadequate workmanship would allow moisture through monolithic cladding and cause rot.

I disagree entirely with the United Future member. If there is a bad set of specifications and a bad set of materials no good workman can fix the problem, because it is intrinsically defective. That is the problem United Future and this Government cannot understand. The National Government was warned of the problem. The Labour Government was warned of the problem. Indeed, George Hawkins was written to about the problem, but, as usual, he took no responsibility. He did not even bother to read the letter, which indicated there would be a problem.

Now, we have these extensive, lengthy court proceedings that will go on forever. The time surely has come when we as members of Parliament must accept responsibility, and I make that point in particular to Russell Fairbrother and the Minister, who tried to make an effort in his speech. New Zealand First says we all have to accept responsibility. I was not here in 1991, or whenever, but even those who were here surely must accept responsibility. We must all accept responsibility. We cannot have a situation where Prendos says it is about $10 billion to fix, and someone else says it is about $5 billion. The people concerned are living a nightmare day and night, and have been for years and years.

Section 91 of the Building Act, which covers the Building Industry Authority, makes it clear that it was the Building Industry Authority’s problem. Who is behind the Building Industry Authority? Inevitably it is this Parliament. New Zealand First made the point in this House in 2002 that everyone must get a proper report, and get a clear assessment of the loss and the damage—which must be known by now—and that the Government must consider footing the bill. But the problem will never be finalised, because, of course, the problem can occur in cases that we do not even know about today. Really this Parliament has to say that it is the Building Industry Authority’s problem, that Parliament is behind the authority, and we must accept that.

Lawyers are confidently predicting that, at least in relation to the untreated timber issue, the Court of Appeal and the Supreme Court will hold that the Building Act did impose a duty of care, and negligence in respect of the approval of non-boric treated timber, and that ultimately the courts will hold the Building Industry Authority negligent and in breach of that duty of care. That is going to happen in the Supreme Court one day. I say to the Government, why wait for 5 or 10 years? Why put up money for lawyers to keep defending these proceedings and delaying the whole thing? This debate today is about the $6 million this Government has put up to defend all these cases. That is all we are debating today. Six million bucks is being paid to Government lawyers, but, of course, what about the lawyers for the other side? As I say, in this case, 29 parties are involved, excluding the local authorities. [Interruption] Mr Fairbrother can laugh and joke about it. It is a big issue in Auckland; it may not be an issue in Napier. This is a big issue for Aucklanders, and New Zealand First says that Parliament has to accept that it is an issue, and that we have to front the costs.

RUSSELL FAIRBROTHER (Labour—Napier): It is correct that the old Building Industry Authority should share some responsibility, but not all the responsibility, for the weathertightness issue. The speakers before me have neglected to observe that under the Building Act 2004 the Building Industry Authority became disestablished as a stand-alone authority and was brought under the new Department of Building and Housing. That makes clear, of course, a line of authority, and that line of authority is important as we discuss the current Building Industry Authority and the situation of weathertightness. And it is apposite not to leave out the cry for tax cuts, because the old Building Industry Authority represented the policy of “fewer taxes, let the market decide, let anarchy rule, let the consumer suffer, and let the devil take the hindmost”.

Those who bothered to listen to the submissions during the weathertightness inquiry and those who bothered to read the careful report of the Government Administration Committee on that inquiry, which took place a year or two ago and which gave rise to the Building Act 2004 and to the re-establishment of the Building Industry Authority as part of the Department of Building and Housing, would have discovered that in the mesh of responsibilities under the 1991 Act, the ultimate responsibility for the working of that Act fell not on the Building Industry Authority—which was an advisory body, not an enforcement body—but on the territorial authorities. I recall that was in section 28 of the 1991 Act. Territorial authorities had reposed in them the enforcement responsibilities—that is, they were the co-parent in the old Building Act—for establishing a safe regime for building houses and homes for people in this country.

What we have in the anarchy of the marketplace, which is controlled by tax cuts, is a situation whereby everybody looks after themselves and tries to evade responsibilities. Of course, it is easy to sheet responsibility home to the Government today for the failure of Governments over 14 years, before this Government addressed the issue. It is easy for people to say they will point the finger at this Government.

But let us go back to the old Building Act to see what that structure was and how it failed. It failed dismally, and many good citizens are paying the price today of that failure. However, let us not spread alarm by blaming the materials and the building industry, or by making people lose confidence in the houses they presently have and in the houses that are being constructed. The number of homes that failed the test of weathertightness is relatively small compared with the number of houses that were built in the period. Sure, the failures are spectacular and the losses for individuals are huge, but there are many competent builders out there who did a good job.

Of course, the competency of builders was hindered by another tax-cut measure: that of abolishing the apprenticeship scheme. In the anarchy that resulted from that—

Hon Dr Nick Smith: It was never abolished. Absolute rubbish!

RUSSELL FAIRBROTHER: Even Nick Smith could have become a builder. All he would have needed to set himself up as a builder was a ute, a dog, and a radio. But if people do not have the skills, they cannot interpret the plans, tell the designer where the plans are defective, or know which materials should be used for internal or dry spaces. They do not have the skills to know which materials should not be used where they will get wet.

The problems in this whole scenario are those of the abandonment of responsibility, and of leaving it to the imperial, politically correct, social engineering thing called “the marketplace”. Those who bang on about social engineering forget that the ultimate weapon of social engineering is tax cuts.

A party vote was called for on the question, That the report of the Government Administration Committee on the 2003/04 financial review of the Building Industry Authority be noted.

Ayes 70

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

Noes 48

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

Report noted.

The CHAIRPERSON (Ann Hartley): The 3 hours for the debate on the performance of Crown entities, public organisations, and State enterprises has expired. I shall report this debate to the House.

Report adopted.

Bills

Land Transport Amendment Bill

Second Reading

Debate resumed from 10 May.

PETER BROWN (Deputy Leader—NZ First): Let me say—

Clayton Cosgrove: Don’t use it.

PETER BROWN: Members over there are telling me not to use the 4 minutes 30 seconds I have left to speak. But between my last contribution and this one, the Government has seen fit—and it is right and proper that it has—to listen to New Zealand First, and has produced a Supplementary Order Paper that will, in fact, ease the burden of some taxi-drivers who have, in the distant past, been guilty of some crime. I am told in the information the Government has sent me—and it has been very cooperative, which might please Clayton Cosgrove; it has sent me quite a lot of information—that this legislation could affect 600 current taxi-drivers, or people with passenger licences, of which 200 will get the right of appeal. We think that is fair. I point out to Government members that if they want justice in this country, and I am sure they do, then it has to be embraced with fairness.

But an area that I do not think the Government has yet taken on board in terms of this bill—and I emphasise that New Zealand First is going to support the bill—is one that we are concerned about. It is the courtesy buses that are run by clubs. The Transport and Industrial Relations Committee, I recall, was informed that clubs seek donations to run these buses, but I have since found out that some of the major clubs in this country would not be able to provide this service on the basis of donations alone, and therefore have a minimum charge. From what I can gather, the clubs provide a very, very good service. The courtesy buses pick up their clients at their homes, charge them something like $2 or $3, and bring them to their clubs. The people enjoy their evenings in the clubs, then, for another $2 or $3, they are taken home.

This bill will make that illegal, because it provides only for courtesy buses run on the basis of donations. The manager of the Cosmopolitan Club in Mount Maunganui, which, I believe, is one of the largest clubs in New Zealand, told me that the service could well be in jeopardy if he is not allowed to charge a fee, albeit a very modest one. I understand that many other clubs are also in the same circumstances. I spoke with the Minister of Transport on this, and he asked me to get some letters from the clubs.

In very short order, I have had this amount of letters from clubs, which illustrates the depth of concern. They come from all over the place.

Obviously there is one from the Cosmopolitan Club in Mount Maunganui. I have a couple from cosmopolitan clubs. I have one from the Alexandra District Club in the South Island—the message has got around pretty well. I have other letters from Matamata, from the Petone Workingmans Club, the Napier Returned Services Association, and the Whangarei Returned Services Association. So this is a widespread problem. If we do not allow these clubs to put on a minimal charge—if the Supplementary Order Paper does not come into being when the bill goes through the Committee stage—there is a real risk that this service will disappear, or it will be run illegally.

I can see that some Government members are listening—the Minister for Transport Safety is listening. I ask honourable members whether that is what we want. Should we not be facing reality, what is happening out there in the real world? Should the laws not reflect what is happening, as long as it is legal? We are turning a perfectly legal, sound operating activity into an illegal activity. The argument will be that those people should get passenger licences. That is not always possible or practical.

DEBORAH CODDINGTON (ACT): I apologise to the House, but in my haste this morning I grabbed the wrong glasses and I am visually impaired this morning. We support this legislation. To those people who are listening to the debate this morning, it may be of some comfort to know that to me this was a bill that showed how select committees and Parliament should work, in terms of the way the members of the Transport and Industrial Relations Committee put aside political point-scoring and worked together to achieve a result that most people supported and were happy with. The bill dealt with some very serious issues, too. It dealt with a number of things, as the commentary sets out. The serious issue for me, especially, was transport service licensing. This was known as the legislation that was going to clean up the taxi industry.

When the legislation first came to the select committee, many of us did not think it was tough enough on the taxi industry, in two areas. One area was the signage for taxis, and the other concerned the drivers of taxis and buses who had convictions for serious offences—in particular, sexual offences. There is one such case before the courts at the moment. When the bill came to the select committee, it caught only those people who wanted to go into the taxi industry and who, therefore, would be applying for a licence. Lianne Dalziel from Labour and I, in particular, felt that that was not strong enough, and that for the taxi industry to enjoy a good reputation overall we needed to clean out the people already in the industry who have a serious conviction. I stress here that the bar is very high. We have made the provision retrospective, but the bar is still quite high. We are not prohibiting people who have a minor conviction from driving a taxi or a bus. From memory—and, as I say, I cannot read the bill properly at the moment, but my glasses are on their way—it relates to people who have been convicted of a crime that carries a sentence of 7 years’ imprisonment as a minimum. People do not have to be sentenced to that, but the offence carries that sentence. One has to be convicted of quite a serious crime to receive a sentence like that.

It was very disappointing that the member from the Green Party felt that that was too hard, that it went back too far, that people could have something dragged up from their past, and that people may have rehabilitated themselves and could drive a taxi again. I have nothing against rehabilitation, but people who get in a taxi are entitled to know that the person driving that taxi has been cleared and that it is safe. I have heard the Taxi Proprietors Federation pulled up about this issue in interviews, and the head of that federation has been asked why the federation did not clean out the industry, and why it granted licences to those drivers. Of course, the federation does not control that; it is not the gatekeeper. The Land Transport Safety Authority, as it was then, was the gatekeeper for people getting a licence to drive a taxi. From replies to written questions that I have put to the Minister, I have found the Land Transport Safety Authority did not have a list of all the people granted a licence to drive a taxi who had a conviction for a sexual offence.

Hopefully, this legislation will go some way towards improving the reputation of the taxi industry. There are some very good taxi-drivers who take pride in their profession. Their reputations are being brought down all the time by people going into the industry who have no knowledge of—yes, I will say it—New Zealand culture. Just because a woman who gets into a cab may have had too much to drink, or may be wearing revealing clothing, that does not mean she is asking to be sexually abused or sexually molested. That is not an excuse, any more than we would say that a man who gets into a taxi wearing a Hugo Boss suit, with a wallet bulging in his back pocket, is asking to be robbed. I do not care how much women who get into taxis have had to drink. That is the reason they get a taxi—to get safely home. They do not get into a taxi to be forced to commit indecencies on the taxi-driver.

The other issue was that of signage. The ACT party disagreed with the National Party over that. We believe that signage is a safety issue. I can understand exactly how people feel when they look along a cab rank and cannot distinguish one cab from another because, in Wellington, the cabs are all white and they all have yellow and black signage. If, like me, people only use Wellington Combined Taxis because they know those taxis are safe and reliable, but they have grabbed a cab, got into it, and started on their way before they realise the cab does not belong to the taxi company they rely on but to another company that is passing off and trading on the good reputation of Wellington Combined Taxis by copying its signage, for me that is a safety issue. Yes, there is competition and commercial legislation that deals with that, but as the industry owners who appeared before the select committee said to us, it is very expensive and time consuming for them to take a case to the Commerce Commission under the Fair Trading Act. They may win it, but so what? It is very difficult for them to enforce a decision, once a taxi company has copied all the signage. So those are the two main issues that we dealt with.

We also dealt with the issue of whether the drivers of courtesy vehicles should be subject to the same stringent barriers as apply to those who drive for remuneration or reward. The report back to the House excludes them from the legislation, because they provide an important service in terms of getting people home safely from clubs or wherever they are, and including them would be too difficult and punitive, and would disadvantage a lot of the people who rely on courtesy vehicles to get around. However, I do hope that when this legislation is passed—and it will be passed under urgency—the people who operate courtesy vehicles do not just sit back and heave a sigh of relief that they have been excluded from the legislation. As we said in the select committee, we would encourage the providers of courtesy vehicles to develop in-house policies to screen their drivers. I cannot emphasise that enough. Whether they should be included in the legislation has been considered by Parliament. The providers of courtesy vehicles should be on notice that although they have been excluded from the legislation this time, if they do not voluntarily set up in-house practices and codes to screen their drivers and make sure they are safe, then they will run the risk of being regulated by Parliament. It is not too hard for them to do that. There are very good organisations like Safe Network in Auckland, run by John McCarthy, which deals with trying to rehabilitate and run programmes for recidivist sex offenders. He has been there long enough to recognise the signs of potential recidivism, and he is more than happy to provide guidelines for organisations that may run courtesy vehicles for kids’ sports teams, for Cubs and Brownies, and for all those sorts of organisations.

I am proud that this legislation will be passed while I am still in the House, and I look forward to it having a positive effect, especially on the taxi industry.

PAUL ADAMS (United Future): I rise on behalf of United Future, which will also support the Land Transport Amendment Bill. I also was able to sit at various meetings of the Transport and Industrial Relations Committee as it was considering the bill, under the able chairmanship of Mark Gosche. It was pleasing, as other members have already said, that there was unity across all the parties that the issues we were dealing with in the legislation were important. It was great to see the cooperation as the members discussed rationally issues that were sometimes fairly hot and contentious.

One of the first things to be touched on was the provisions with regard to drink-driving—the “three strikes and you’re out” approach. First-time offenders face just the current court-imposed penalties, but the legislation recognises the challenges we face with drunken drivers on the road.

It is ironic that we want to get drunk drivers off the road, and we are also dealing with the taxi industry. Taxis are often the very method used by people who have the common sense to realise that they have had a little bit too much to drink. As Deborah Coddington said, that especially applies to young ladies. We are putting into place measures that mean that, hopefully, the taxi company will be interested only in taking them from their point of pickup to their home. Unfortunately, even recently, we have seen examples again on our roads where the taxi industry has failed in its choice of drivers, and there has been inappropriate behaviour from some taxi-drivers. This legislation will go a long way—hopefully, all the way—to rectify those problems. At one stage, the select committee looked at putting a blanket ban on drivers who had serious convictions, but I see the bill has been amended so that in certain cases there will be a right of appeal for those with minor convictions. I think that is fair. We have to accept that, after a period of 10 years, some people have definitely turned their lives round. So there will be a way that they can appeal, if they have behaved well over a long period of years.

I know that the disabilities industry welcomes the recommendation to put Braille identification in taxis, for blind people. Of course, as Deborah Coddington said, one cannot necessarily pick up from the colours of the car which taxi company the car one is hopping into belongs to. That is even worse for blind people; they have no idea what company it is. Now all the companies will have to have Braille identification, and blind people will be able to pick up which taxi company they are with, the name of the driver, and what the cab number is. I think that is a step forward. It is definitely a progressive step indeed.

Another part of the legislation that has been altered is that police are now able to serve at the roadside a notice of licence suspension. I had thought they were always able to do so, and was surprised to learn that they could not. Previously, they had to try to catch people at home, if their demerit points had got over 100; they had to find those people, who had often moved flats or were not at home. But, now, if someone is picked up on the road for any offence—it may just be that the brake lights are not working—and the police discover that the person has exceeded 100 demerit points, they will be able to serve a notice of licence suspension on the roadside, and that driver will be taken off the road.

United Future raised the issue of excessively noisy vehicles. That is a particular problem in some of our tourism spots. For example, in Larry Baldock’s area, Tauranga, there is a problem with people who, in the later hours of night, when tourists who have arrived in the country are trying to sleep, use excessively noisy vehicles. It may not necessarily be the vehicle itself that is noisy; maybe the noise is from the tyres, the stereo, or whatever. But people are being kept awake at night, and tourists are, in some cases, avoiding certain spots because of the noise level. I welcome discussion in the Committee stage about demerit points now being able to be issued to people who offend in such cases.

Another point that has been discussed relates to the passenger service licence for courtesy buses. That is an interesting issue to talk through. Yes, service industries use courtesy buses—we think of RSAs and those types of institutions that have courtesy vehicles that take people home or pick them up to bring them to the club for a few drinks—but it is more wide ranging than that. Sports clubs use them. There are groups that care for children after school that have courtesy vehicles to pick up children and bring them to after-school care clubs, or to places where they can do their homework, etc. They are providing a service.

Hon Maurice Williamson: Pick it up, you’re losing the audience.

PAUL ADAMS: I am sorry. Maurice Williamson is really wanting to wind everything up.

Hon Maurice Williamson: Get a bit of excitement.

PAUL ADAMS: I ask Mr Williamson how we can be excited about courtesy buses. These sorts of things need to be worked through. At the moment, as Deborah Coddington said, such groups will be exempted.

I also welcome the improvement—and I say to Maurice Williamson that I think it is the major one—to the logbook system. I think logbooks are essential; they have done a lot to bring safety to the industry. Now, as we move into the electronic age, we find that a lot of the more modern taxi companies run electronic logbooks that cannot be fiddled like a manual logbook can, yet drivers have had to run the two in conjunction with each other. Now we have released the courier industry, in relation to lighter vehicles, from having to have a logbook. That will stop a lot of paperwork and effort. It will be interesting to see whether the industry handles that responsibly, or whether we run into challenges with an industry that has been given the freedom to run without logbooks. Only time will tell.

United Future supports this legislation, and I have no doubt that my colleague Larry Baldock, who is our transport spokesperson, will add additional stuff as we go into the Committee stage.

KEITH LOCKE (Green): The Green Party is supporting this bill. It makes a lot of good amendments to the land transport regulations. The issue of taxi-drivers has come up in the debate so far, and it did exercise the Transport and Industrial Relations Committee. Members will note from the commentary on the bill that, although the Green Party supports improved safety for taxi passengers in terms of preventing unsuitable people from holding licences that allow them to carry passengers, we did criticise the permanent character of the exclusion of certain people who have committed serious offences. That view is in line with the Green Party approach that we cannot hold somebody’s transgressions against them forever.

We are in favour of rehabilitation. That is the essence of the clean slate legislation that was initiated by my Green colleague Nandor Tanczos and then became a Government bill under the name of Phil Goff and passed through Parliament. The concept behind that legislation is that we do not punish people forever. It is true that the clean slate legislation is about less serious offences—the concept is that after 7 years, a minor conviction can be scrubbed from a person’s record instead of it affecting his or her whole life. In terms of serious offences, our general approach to rehabilitation is that as much as possible people should be given chances in life to really make amends, contribute to society, and have a fulfilling life, even if they have done time for committing very serious crimes. We should not hold it against them forever.

The Greens propose that there be a discretion to allow the Director of Land Transport to issue a passenger endorsement to someone who has committed a serious crime according to the list provided in the bill, if the director is satisfied that there is no risk to public safety now or in the foreseeable future. That would be a very high test, but it would mean that the offence was not held against the person forever. Not to do that would, in some ways, elevate taxi-driving above some other professions in which there is danger, such as the sensitive area of early childhood education. We should not have a totally forever, prescriptive sort of approach to the exclusion of people from that particular profession. Sure, the offences listed in the bill are serious—attempt to murder, conspiracy to murder, wounding with intent, causing grievous bodily harm, aggravated wounding or injury, kidnapping, aggravated robbery, firearms offences, etc.

It is true that there should be an exclusion for such people, but the Greens are saying that years later, when such people have rehabilitated themselves—and a number of people in our society who have committed murders or done very serious things have later contributed in a very effective way to our society—there has to be room for discretion. The Green Party will support giving the director a discretion in that respect.

MARK PECK (Labour—Invercargill): I am pleased to take a call in this debate and to congratulate the Transport and Industrial Relations Committee on some extremely good work in bringing this bill back to the House.

I want to comment briefly on the taxi-driver issue. A whole bunch of issues around taxi-drivers cause concern. Recently I was in Auckland to do a couple of things, and I caught a cab off the rank to get back to where I was staying. As I hopped in, the driver said: “This is my second day.”, and I suddenly realised that I would have enormous difficulty getting anywhere, much less to my destination. Indeed, it proved to be that way. I had to tell the driver where I was going, and I was more confused than she was. I despair at what the Parliamentary Service has to pay out in taxi chits on occasions like that. It took us an extraordinary amount of time to get from the centre of Auckland out to Mount Wellington. I shuddered—I nearly wrote out two taxi chits, I was so embarrassed about the size of the amount to get back from the city. [Interruption] I must say that that crossed my mind.

I note that Peter Brown has made some good comments this morning about work that has been done in the interim since the commencement of this debate. I do think it is right that we take a strong line on who can and who cannot be a taxi-driver, particularly in relation to violent sexual offenders. There is one cab company in this city that I simply will not use. There is a history of reasons why I will not use that cab company. It goes back a long way, to a time when the company treated a rape complaint frivolously. I simply will not use that company at all. Indeed, if the company I do use suggests to me that it will send a cab from another company, I tell it not to bother. Even to this day, I would rather walk than use a company that took a complaint of that sort frivolously.

These are not frivolous issues, and it is good to see that they are now being tidied up in this bill. It is good legislation. I am delighted to see that we have perhaps managed to sort out an issue that concerned New Zealand First. So there will be rather widespread support for this bill, and I am just sorry for Maurice Williamson that his radio audience is no longer listening.

Hon MAURICE WILLIAMSON (National—Pakuranga): I am very happy to take a call on the Land Transport Amendment Bill on its report back from the Transport and Industrial Relations Committee, because in the case of this legislation the select committee worked exceedingly well. There was pretty much broad agreement on the objectives that needed to be achieved. Obviously there was some niggling about little bits and pieces of detail, and I want to get off my chest one of my niggles. This has more to do with the officials than with the Government. It relates to the fact that when the photo driver’s licence first came in, I wanted it to include—and I thought that, as the then Minister, I should have had at least some say—a field to show when one had first obtained a licence. In my case it was when I turned 15, back in—

Darren Hughes: 1945.

Hon MAURICE WILLIAMSON: No, it was before the First World War, as Darren Hughes will remember. I wanted to have that date on my licence, and the officials said no. They told me that the licences were to comply with a European Union standard layout, with the flag and the fields in certain areas and in a certain order. I remember having quite an argument about that. I was finally beaten into submission, because officials always ruled the roost when I was around. [Interruption] All right—sometimes. The officials said that we had to stick with the layout, so that when one went to a European Union country or elsewhere one would be carrying a licence in a standard format.

I am just staggered to learn that the advice to the Government has now changed. I think that is good. I am delighted that the licence is changing, and I think that will be great. I have a question for the Minister for Transport Safety. When we get another licence after this legislation comes in, will the new licences go back to showing the date when one obtained one’s original licence, or will they show the date when one first obtained a photo driver’s licence? I do not know whether the database now records that I first got my driver’s licence in 1966. That is a really important point, because I would like my licence to show the date as 1966, and that I have been driving for that length of time.

I am pleased that the committee dealt with some quite central issues in this legislation. I am happy to say that one of those issues—I know it is of serious concern to people like Deborah Coddington, and it should be of serious concern to everybody in this House—concerns the people who drive our passenger service vehicles, mainly taxis. I am not so strident about the requirements for those who drive a big bus, because unless it is very late at night and on a very long, thin, sparse route where there may be only one passenger, a bus driver has a lot less ability than a taxi-driver to do dreadful things to the passengers. In a taxi there is quite often, especially late at night in a lot of parts of the city, a one-on-one relationship. I think the passenger has an absolute right to know that the person who holds a P endorsement and is driving the taxi meets a number of qualifications. Passengers have a right to know that the person is a good and safe driver, has knowledge of the area and will not try to go from the city out to Mount Wellington via Albany—as happened to Mark Peck—and, more important than any of that, does not have serious past convictions.

I am prepared to be really hard-nosed on this issue. I am happy that the committee has reported back that, as one of its changes to the bill, this measure will affect not only people who apply for a P licence from now on but also people who may even be in the industry right now. I am sorry if those people get upset about that. I do not actually care whether they do. Anyone who has been convicted of murder, of a serious sexual offence, or of a serious violent offence, even if it was 20 years ago, should get another job. Those people should go and drive a truck, a bulldozer, a carrier, or a grader. I am sorry, but if they have been convicted of an offence like that, the taxi industry is the one industry I do not think they should be in—on a one-to-one basis with a female passenger late at night—even if they have had a clean slate for a while. That may be punitive to one or two taxi drivers who, like Steve Maharey, have led a life of blameless excellence for the last 20 years and would like to stay in the industry. I am sorry, but if this legislation picks on two people, that is bad luck. Hard cases make bad law. This legislation is the way to go.

It is not as though we have a shortage of taxi drivers. It is not as though we are saying that if we exclude the murderers and rapists, no one will be left to drive taxis—quite the opposite of that. If anything, in Auckland we have a most serious abundance of people driving taxis. We have Russian brain surgeons who have come to New Zealand and are taxi drivers. I have to say, to the credit of the Government, that that is better than it would be if it were the other way round—Russian taxi drivers coming here and being brain surgeons. Yes, it is better than that. [Interruption] Mr Duynhoven is referring to my earlier question. The issue of the date of the licence is fixed in the bill, but will the date shown be the date when one obtained one’s original licence?

Hon Harry Duynhoven: Yes.

Hon MAURICE WILLIAMSON: Good, there we are. The Minister for Transport Safety has earned his morning’s pay already, by giving me an answer to that. I am happy to say that I do not want serious offenders of the nature of those on the list to drive taxis. I am pleased that the bill not only excludes such people from coming into the industry but also applies to those who are already in it.

There is a lot of detail in the bill, but I want to talk about just a couple more things. The first is the issue of the chain of responsibility. I am happy to see that the legislation will be amended to allow for measures whereby in, let us say, a trucking operation, instead of pinging just the driver who may have committed an overweight offence or an unsafe driving offence—

Clayton Cosgrove: It’s like Rodney.

Hon MAURICE WILLIAMSON: No, no. Mr Cosgrove thinks that “overweight” applies to the driver himself, personally. I am talking about the vehicle that is being driven. It is a shame that Mr Cosgrove does not keep up with these things as he should. In the past drivers would get pinged for things that they were literally squeezed into doing.

When I was at university I used to drive for Refrigerated Freight Lines, a frozen pea and frozen bean trucking company. The company told us, when we came out of Napier at a certain time of the night, that we had to be at the bulk frozen stores in Auckland by 7 a.m. We would say that we simply could not do that without speeding. The bosses used to say that that did not matter, and that if we were caught speeding they would pay the fines. They told us that we had to just do it, so we did. All the drivers broke the speed limit, and I ended up being pulled over a number of times. I just gave my name, the name of my company, and so on, and off I went. The fines were all paid. Fortunately, there were no demerit points around in those days.

Simon Power: Those were the days.

Hon MAURICE WILLIAMSON: Those were the days. The company had to do things in that way. I kept thinking that it was a bit unfair that I was copping it. [Interruption] There were not demerit points.

Hon Harry Duynhoven: Who did that?

Hon MAURICE WILLIAMSON: Demerit points came in under National. Yes, I think demerit points are good; I am not arguing against them. One of the drivers—and I will not name him—racked up 18 speeding tickets within 12 months, but that did not matter, because Refrigerated Freight Lines picked up the tab and paid the speeding tickets, and so on.

This bill brings in what is called the chain of responsibility. It states that if a company makes a driver carry an unsafe load, if a direction comes from the boss that a driver is to take a container even though it is known to be overweight, or if a direction is given that a driver is to drive at a speed that exceeds the speed limit, it is now possible to extend the chain of responsibility to include all appropriate transport offences where a third party has influence over the transport task. We have done that. I know that was done at the request of the Road Transport Forum. The chief executive officer of the Road Transport Forum, Tony Friedlander, gives our committee a lot of very, very good advice. We are very lucky to have the services of those people. I look forward to dealing with some of the issues regarding this matter in the Committee stage.

I want now to pick up on my next little niggle. I want members to think about this, because it is not a big political issue, and I would hope that Government members may be prepared to support a slight amendment to the bill. It is to do with the little moped, Go-Ped motorised scooters. My little kids have graduated to a nice little electric scooter from the little scooter they used to stand on and use their own foot to push themselves along with. I have worked it out that the little electric motor on the scooter is 350 watts. This legislation will cover, say, someone who gets on one of those little scooters, which little kids can flick around on in parks. We are providing in this legislation that the director of Land Transport New Zealand—and I really shudder at the thought of the power that could go to his head on this—is able to allow those vehicles to be exempt or not exempt. I suggest a more realistic level—and National members put it in our minority report—of, say, 600 watts, which would cover nearly everything. In case anyone is interested, there is a table in the bill. I will cover this issue in more detail when we get into the Committee stage on the bill.

DARREN HUGHES (Labour—Otaki): I am pleased to take a call in support of the second reading of the Land Transport Amendment Bill. When I read through the report, I thought the members of the Transport and Industrial Relations Committee had done a great job on a whole range of different areas that a number of members will have had raised with them in their constituency clinics.

A number of people have come to see me about chartered clubs, like the “cossie club”, the RSA, and the workingmen’s club, which run a courtesy vehicle, normally on Friday and Saturday nights, to take members home. There has been some issue—[Interruption] Never this member! There has been some issue around whether there could be a fee for that service, and whether a courtesy coach should be included as a passenger transport service. Of course, if that were the case, that would mean that the drivers were required to comply with a whole lot of extra regulation. I am very pleased that the select committee has provided for the exclusion of those courtesy vehicles from the passenger transport service definition, provided that the service is not done on a hire or reward basis. If members of the club just make a donation for the use of the van, it will be excluded from the official definition. I think that will make things a lot easier for those chartered clubs, which do a lot of work in our communities and provide a very good service for their members.

In addition to all the other very good features of the bill, I particularly wanted to highlight that one, because I have had representations from clubs in the Otaki electorate. I am very happy to be able to support that provision of the bill.

PANSY WONG (National): I am really glad to have the opportunity to participate in the second reading of the Land Transport Amendment Bill. I understand that the National Party is supportive of the bill.

I challenge the self-proclaimed hard-working Minister for Transport Safety, Harry Duynhoven, to take into account my proposed amendments during the Committee stage that will further improve the objective of the bill. This bill’s purpose is meant to be to “promote, and enhance provisions in that transport legislation relating to safe road user behaviour”, and also to “improve and enhance the enforcement provisions of that transport legislation.”

As I have previously raised in Parliament, in 2003 a group of Chinese New Zealanders who were driving instructors raised a whole series of concerns with regard to other driving instructors, with or without licences, and their practices. I see that, after 2 years, one of those concerns has been taken up in this legislation. But there are other concerns that I would like to take this opportunity to raise, so that we can consider amendments during the Committee stage.

Amongst the concerns raised by those driving instructors was one about driving instructors who are allowed to teach driving in exchange for reward or money currently having to have an I endorsement licence. I am assured that this legislation includes an offence provision, which was previously, for some reason, omitted from the Land Transport Act 1998. But the bill does not require that those I licences be displayed. So there is no way for an enforcement officer to check whether a person is entitled to teach in exchange for monetary reward. So I will move an amendment, and I hope that all parties see fit to support it at the Committee stage.

I will move another amendment relating to people who are allowed to teach in exchange for monetary reward. I would like to think they are currently New Zealand citizens or holders of permanent residence visas. I allude to the fact that overseas students can obtain an I endorsement, in order to teach others to drive. I do not think that is safe. For me, it is important that people who teach others in a commercial manner should, at least, have been resident in New Zealand for a considerable period of time. Those people should understand the road conditions and the safety measures that go with that.

I also want to raise concerns, which I have written to the Minister about, in terms of the lack of monitoring of some of the outrageous advertisements that say learners can choose their own testing officer. The Minister has written to me and assured me that Land Transport New Zealand has now taken the issue seriously and will monitor those advertisements. But I hasten to point out that the Mandarin Times, a Chinese newspaper, dated 10 June—last Friday—included a driving school’s advertisement that said learners could choose their own testing officer, the testing route, and also to have weekend testing. In response to my query, the Minister stated that the special test to be carried out on weekends is meant to facilitate a group of people who seek their licence at the same time. If that is the case, why are there at least eight advertisements on the same day, in which every one of those driving schools or instructors offers people the option of sitting the driving test at weekends? I imagine that people want to sit it at the weekend because the traffic tends to be slightly lighter then, but that is no way to improve driving safety on New Zealand roads.

The other concern raised with me by some of the driving instructors was about the 6-month minimum requirement before the holder of a learner’s licence can convert it to a full licence. I would like the Minister later on to share with us whether there is actually discretion for a testing officer to grant dispensations for migrants in some situations. If migrants have had a long period of driving experience in their home countries, and can demonstrate, once they have passed the written test, that they are capable drivers, can they then convert a learner’s licence into a full licence? On some occasions, migrants who have had sufficient driving experience find it inconvenient to have to wait 6 months. That may lead to their resorting to acquiring a licence without sitting the practical test, which they are not allowed to sit. We should discuss that issue.

All in all, given that the bill’s purpose is to promote and enhance enforcement provisions, I have been wondering what Land Transport New Zealand has done with regard to the latest sentencing handed out to a driver’s licence testing officer. He got only 280 hours’ community service for selling about 100 fake licences—genuine licences in one sense, but fake in the sense that the people who had acquired those licences had never sat the practical driving test. I want to know whether Land Transport New Zealand is serious about enforcing safety on roads. Is the authority appealing the sentence? Is it working with the police to appeal that light sentence handed out to a driver’s licence testing officer who accepted $50 in exchange for granting a licence to people who had not sat the test? I want to know whether the Minister is serious about making sure that the people who paid to get those licences have their licences revoked. It is no laughing matter, even though Labour members may find it funny. Over 100 people might be driving on our roads without properly passing the driving test—

Jim Peters: Only 100?

PANSY WONG: —well, it could be more—endangering their own lives and other people’s lives. I challenge Labour members to stop laughing and get serious about ensuring safety on New Zealand roads.

I am looking forward to the Minister taking a call in the Committee stage, to assure New Zealanders that corrupt officers will be pursued, and that Land Transport New Zealand will appeal the sentence of 280 hours of community service that was dished out to an officer who had received bribes in exchange for handing out licences to people who had not passed the driving test.

Today we are debating the Land Transport Amendment Bill, which is supposed to strengthen the enforcement capacity of Land Transport New Zealand, and I want to know whether the Minister will ensure that the provisions are tough enough, and whether there are the resources and the will for Land Transport New Zealand to enforce the provisions. I am looking forward to the Minister’s support for the amendments I will propose in the Committee stage, and I also want an answer as to what further action the Minister will take with regard to the recent sentencing of the officer found guilty of accepting bribes to issue licences.

Bill read a second time.

Instruction to Committee

Hon HARRY DUYNHOVEN (Minister for Transport Safety): I move, That it be an instruction to the Committee of the whole House on the Land Transport Amendment Bill that it take the bill part by part.

Motion agreed to.

In Committee

Part 1 Preliminary provision

Hon MAURICE WILLIAMSON (National—Pakuranga): On some of the parts of this bill it will be a little bit difficult for us to get an exceedingly strong debate going on, because they are pretty mundane and run of the mill. But they are worthwhile. Part 1 has only one clause—clause 3, “Purpose”. I guess that every bill has to have a purpose, and if we are to stick to the very—

Clayton Cosgrove: You’re having us on.

Hon MAURICE WILLIAMSON: No. Clayton Cosgrove needs to learn a lot about how legislation works, and one of the things that legislation should always have is a purpose. The purpose of this bill is to “promote, and enhance provisions in that transport legislation relating to safe road user behaviour and vehicle safety;”. I would doubt that there would be a member in the Chamber who did not believe that that was an ongoing quest for us, and for years to come, I am sure, this Parliament will be looking at ways of improving them.

One of the ways in which change will occur over the years is in the technology used to record where vehicles travel and what they do. Already, in the heavy traffic fleet, a number of big trucks are recorded on the Global Positioning System. I imagine that paper logbooks will, one day, be an anachronism, and we will simply have everything on a Wi-Fi network running back to a base, with Land Transport New Zealand being able to look at any one truck at any one time, and with police enforcement officers being able to bring that truck up on their screens as they follow behind it, etc.

Paragraph (b) of clause 3(1) states that another aim is to “improve and enhance the enforcement provisions” of the land transport legislation. It is that provision that I am starting to get a bit nervous about. I say to members of the Government that there has been a distinct shift in the mood out there in the community with regard to enforcement. Let me talk about the commercial vehicle investigation units of the police. I think everybody who is interested in safe operations wants those bodies to work in a collaborative and cooperative way with representatives of the heavy vehicle industry, to ensure that heavy vehicles operate in a safe way—just as, say, in the civil aviation branch, people work with the industry to assist it and try to promote a safety culture. We will never actually get a safety culture if we do it only by punitive measures; we have to try to work in a collaborative and cooperative way.

But I tell the Minister for Transport Safety today that the more and more times I go out and talk with operators of heavy vehicles around the country, the more and more anger I hear being expressed. The commercial vehicle investigation units have turned into a far more punitive, “ping ’em, lock ’em up, throw away the key, deal to them” regime, even on some of the trivial logbook technicality issues, and they are putting unbelievably punitive fines in place. Instead of those units having the effect of, as clause 3 states, improving and enhancing the enforcement provisions of the transport legislation, instead of their achieving the aim of safe road-user behaviour and better vehicle safety, they are getting almost a negative reaction from the industry—“If that’s how we are going to be treated, then we’re going to pull down the shutters, ‘go to the mattresses’ ”—to use an expression from The Godfather—“and go to war with some of these things.” I do not think that is helpful. I hope the Minister takes that on board.

At the committee the other day I raised an example of a fairly large crane operator in Tauranga, Todd and Pollock Crane Hire and Haulage. I know that the owners do not mind my mentioning it; I think they are pretty responsible operators, and it is a good company. One of their cranes happened to go from their location to a building site less than 5 kilometres away. The driver forgot to remove the counterweight, which is supposed to travel on a separate truck, and that meant that the crane was 380 kilos overweight. There was a 400-kilo fuel tank on board, so if the crane had had a nearly empty fuel tank, it would have been within the limits. The fine was $35,000. The crane has been off the road, pink-stickered, for 2 months, and has been unable to generate revenue. Quite properly, the owners of that company are angry. Yes, they know they made a mistake, and, yes, they would be happy to pay the $800 fine for the crane being overweight, because it should not have been. Yes, they want to cooperate. They would rather the commercial vehicle investigation unit guys came in, sat down, and worked with the drivers, to try to make them understand the rules.

But I am saddened to say that this legislation does not do very much in the area of trying to promote people working together cooperatively to, as clause 3(1)(b) states, “improve and advance the enforcement provisions”. Well, enforcement will not work unless it is the final area of use. We should ping the bad operators, and the best thing, which I have heard suggested many times, is to get a risk rating system up and running. I know that Land Transport New Zealand applied for it in the Budget and was turned down. Treasury declined it. But let me say to the Minister that we cannot treat all the operators the same, because there are some really good ones, some average ones, and some bad ones.

DEBORAH CODDINGTON (ACT): I want to address Part 1, “Preliminary provision”, and, as I have said, ACT supports the bill. Part 1 deals with the bill’s purpose. I want to address an interesting issue that arises. Clause 3(2)(h) states one of the purposes of this bill is: “ensuring that a person whose conduct contributes to an operator’s or driver’s failure to comply with his or her duties under this Act is held accountable for that conduct;”. That deals with the chain of responsibility, in terms of breaching the law. Later on we will be looking at Part 2, in which clause 33A inserts new Part 6C into the Land Transport Act. Part 6C follows on from the offences relating mainly to logbooks, truck-drivers, etc. It was brought in because the people involved with this legislation believed that truck-drivers cannot be held to be solely responsible for breaching the law, and that their employers were urging them to work longer hours, not to take enough rest time, or, indeed, to break the speed limit. Part 6C includes new section 79T, which deals with someone who commits an offence being subject “to a fine not exceeding $25,000, who, by act or omission, directly or indirectly causes or requires a driver to—” break the speed limit.

What we will actually see in August will be very interesting. Will this legislation apply to cases that come to court where the speed limit has been broken and drivers have been urged to do so because they were, for instance, hurrying to get to a rugby match—or hurrying to get the passenger in the back of the car, who was working on papers, to a rugby match, when that passenger actually came out later and said she would rather be reading a book, anyway? Well, we all know whom I am talking about. I am talking about the Prime Minister. Of course, the Prime Minister will not appear as a witness in that court case.

Phil Heatley: Why isn’t she?

DEBORAH CODDINGTON: Exactly—why is she not appearing? Why is the Prime Minister not appearing as a witness in that court case? With that new section being inserted, and with the purpose of this bill being to bring into the legislation the chain of responsibility, it raises the question of whether the law applies to everybody who, knowingly or unknowingly, causes someone to break the speed limit. Will that law apply to everyone, or is a Prime Minister—or, indeed, a member of Parliament, if that should come up—above the law? I think that is a very important matter to address in the debate at this Committee stage.

As far as I am concerned, I believe we did not have to have that measure in the bill, because I believe that people are responsible for their own actions and should be held accountable for them. They cannot say that someone else made them break the law. Human beings have the power of free will. Unlike animals, they can think for themselves. They do have choices. People cannot speed, fill out their logbooks incorrectly, or drive when they have already been driving too long and should have taken a rest, and then say that their employers made them do it. They cannot speed and say that someone else made them do it. But if we are to hold passengers accountable under the law for causing someone to break the speed limit—and we have heard that the Prime Minister did urge the drivers on in that speeding cavalcade to break the law and to, as my colleague Stephen Franks said, “speed through the countryside, scattering peasants by the wayside like some dictator in a Third World country”—and if we are to bring this sort of legislation into this Parliament, then we have to make sure that when people are reportedly subject to that legislation and have done things that the public believe could bring them under this provision, justice is not only done but is seen to be done.

I think that that is a very interesting issue, which should be looked at in the debate at this Committee stage.

Dr WAYNE MAPP (National—North Shore): One of the interesting things to be taken from the previous speaker’s comments is that the prosecution has apparently said that it will not be calling the Prime Minister. What we have not heard is whether any of those who are defendants will be seeking to call the Prime Minister, because it is certainly my understanding—and it has been noted by others—that they might find it very beneficial for their cases to do precisely that. So I suspect that we actually have not heard the end of that matter. It would certainly raise the question of what the Prime Minister said. What she did not say was whether people were acting, at least in some way, as a result of things that she might have said.

The CHAIRPERSON (Ann Hartley): The member needs to come back to the purpose of the bill.

Dr WAYNE MAPP: So that would be a very interesting point that will come out, I might add, of Part 1, which contains clause 3(2)(h) concerning the accountability of people who give instructions. So although the Chair may be saying to come back to the bill, it is precisely why that issue is directly relevant.

One of the other issues I wish to deal with is a matter that will come up in one of the other provisions, which is referred to as “low-speed vehicle technology”.

Darren Hughes: That’s in Part 2.

Dr WAYNE MAPP: One would think that the Government would know that surely, by definition, when we have clause 3, “Purpose” in Part 1, everything else in the bill has to be related to the purpose of the bill. So, quite clearly, anything to do with the licensing of vehicles is covered by Part 1 of the bill. In fact, if it is not covered in Part 1, by definition it cannot be covered in subsequent parts, because it will not be fulfilling the purpose of the bill.

I want the Committee to have a brief discussion, mostly about vehicle technology, and will raise that later on. I just want to put this question to the Minister. I do not expect him to address it now, but I imagine he will later. We have given the Director of Land Transport discretion to exempt certain low-speed vehicles from the definition “motor vehicle”, if they have a maximum power output between 300 and 600 watts. Most electric power - assisted bicycles are between 300 and 600 watts, as opposed to being less than 300 watts.

I have a question that I will raise with the Minister when we get to Part 2, and I will ask him to take advice from his officials. In essence, what are the rules that the director will apply? It seems to me that too much discretion has been given to the director. Frankly, vehicles—or power-assisted bicycles, as we describe them now—with a power output between 300 and 600 watts should, by and large, be subject to blanket approval. It should be the exception rather than the rule that they not be approved, because the whole intent of those provisions is to allow such approval. So I appreciate that the Minister will not address that matter directly now, but will address it later.

The other provisions in Part 1 relate particularly to the regulation of drivers convicted of serious criminal offences, particularly those driving taxis. Having read the Supplementary Order Paper I do have some serious questions that I will be raising later about new section 29B, “Passenger endorsement may be reinstated in certain cases”. It seems to me that the way that is drafted currently is too open.

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

PANSY WONG (National): I would have thought that the junior Labour whip would show a bit more interest in promoting road safety instead of trying to shut down the debate. I am very supportive of the objective of Part 1, which is to improve and enhance the enforcement provisions in the transport legislation. I am very interested in urging the Minister to take a call to reassure the New Zealand public that Land Transport New Zealand will exercise the provisions of the legislation.

In my second reading speech I spoke about my concerns. Indeed, many people talk to me about the slow process of investigating the conduct of other officers and driving instructors in that sector. We want to know how often an internal audit or an independent audit has been carried out. The public would not have confidence in enforcement of legislation if they perceive that Land Transport New Zealand would not take complaints seriously, or if the sentence handed out to a testing officer who sold drivers licences was only 280 hours community service. That tarnishes New Zealand’s reputation as a country that does not stand for corrupt practices.

I want to know what Land Transport New Zealand is doing in terms of working with the police or the Crown prosecutor. Are they working to review the light sentence that has been handed out? I understand that an investigation is under way in the same area about the conduct of testing officers or driving instructors. I think the Minister should take a call to reassure us, after the House has spent time and resources to pass legislation, that the enforcement agent will actually carry out the law, and to assure parliamentarians, such as myself, that it is serious in enforcing this legislation. Otherwise, why are we sitting here under urgency passing this legislation? Is it just to make politicians feel good?

Hon Harry Duynhoven: The member knows that it’s not like that.

PANSY WONG: The signs are good. The Minister seems to be ready to leap to his feet to assure us, but I am not too sure why the Minister says he cannot. The Minister is paid to say he can, instead of screaming from his seat that he cannot. I am not sure what the Minister can do. All we want is for the Minister to give us an assurance that the provisions in this Land Transport Amendment Bill will be taken seriously by Land Transport New Zealand, because its past history of responding to complaints from the public has been very slow in coming forth.

So I tell the Minister that we will be on this case. I have amendments for the Committee stage, and I hope the Minister will take to them kindly. The signs are that other political parties would be supportive of my amendments, which I will go into more detail during Part 2. So, for me, as my very learned colleague the Hon Maurice Williamson says, who can argue against the purpose of promoting and enhancing road safety as well as enhancing the enforcement provisions? Surely the testing of that is in the actual implementation, and the public’s perception that Land Transport New Zealand is responsive to complaints, is diligent in carrying out independent audits, and is perceived to be transparent and even-handed in its handling of the legislation.

Dr ASHRAF CHOUDHARY (Labour): I move, That the question be now put.

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

Ayes 69

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

Noes 48

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

Motion agreed to.

Part 1 agreed to.

Part 2 Amendments to principal Act

Hon MAURICE WILLIAMSON (National—Pakuranga): I guess the difficulty we strike now, as a Committee, is that this is a piece of legislation with lots and lots of bits in it. It has been cleverly constructed by the Minister so that it has Part 1, which has one clause called “Purpose”, and then we go to Part 2, and that part, by my calculations, has something like—let me get this right—87 clauses, and a lot of detail. I want to put in a reserve bid right from the outset that this is obviously where the rubber meets the road, where the hook meets the load on the crane, and where we need to start getting into some of the specifics.

As I said in my second reading speech, a lot of the bill is just tidying things up. It is to cope with some offences that have not been dealt with properly in the past, and it will do some log-book process tidying up. The two big ones that I am happy about, before I talk about a couple of the niggles in this part, are by far the prohibition of people with a conviction entering the taxi industry, or the P licence holder—people who have a conviction for a murder, a serious sexual offence, or a serious violent offence; we would like to exclude them, even if they are in the industry right now.

I know that the Minister has put forward Supplementary Order Paper 375, but in our view it misses the mark. I think that it will grant the right for people to appeal and the right for the director of Land Transport New Zealand—and I know that a number of speakers on our side, in particular Dr Mapp, is more versed in the law and will pick that up—but my view is that I am prepared to be hard and fast on it. If we were desperately short of taxi drivers I would suggest that we would have to find a way to accommodate them. But I have to say that convictions for murder, serious sexual offences, or serious violent offences are not just ordinary things. It is not just that a person has had a couple of small burglary convictions in his past when he was a young bloke with a few tattoos, and so on. They are dreadfully serious events.

My view on those people is: “Sorry, get another job. Go and drive a bus.”—because there are lots of people on a bus, so the one-to-one thing is not quite the same; or, more important: “Go and drive a tractor, a bulldozer, or a truck, or get into the construction industry. It is simply not acceptable that you were convicted for that, and then for you to say that it was a while ago.” The 10 years that is currently proposed in the Supplementary Order Paper is not good enough, either.

Hon Mark Gosche: It’s not for murder.

Hon MAURICE WILLIAMSON: No, the 10 years does apply to other offences that I do not accept. Therefore, I have to give notice that the National Party will certainly be voting against the Supplementary Order Paper, but we will support the rest of the legislation.

Hon Mark Gosche: You rely on that legal advice from him?

Hon MAURICE WILLIAMSON: Dr Mapp is a doctor of law. I tell the member that I am happy to put him against that party’s legal brain any day of the week.

Let us get back to things like chain of responsibility. The Minister in the chair now is different from the Minister who was here before, and I shall repeat a few of the things I mentioned before about this. The chain of responsibility in this bill is a good move. For too long it had been possible for some dodgy operators at the company, management, and ownership end to embark on practices that were unsafe, or were skirting their responsibilities for weight loads under the truck licences that operators had. Then when the poor old driver, who was the very sort of person of last resort on the side of the road, got caught, he or she would be the one getting pinged, getting the fines, and the demerit points.

The Road Transport Forum made a very good submission—Tony Friedlander’s team came along to the select committee and said they would like the chain of responsibility extended to include all appropriate transport offences where a third party has influence over the transport task. I am pleased to say that those changes look to be in the bill and look to be suitable. They cover not just things like speeding offences, but weight limits, load security, and a range of other issues.

When it gets down to the trivial, I have an issue to discuss with the Minister, and I hope he will think about letting the Government at least have a bit of leeway on one amendment I want to put up, and that is to do with the little tiddlers—the Go-Peds and the mopeds. As everyone will know, there is now a stunning level of little vehicles that mainly kids and some teenagers get around in. If one goes to the beach, one will see them with those little devices. The problem is that under the old Transport Act most of them were considered to be a motor vehicle; people had to get a licence and a number plate, pay for registration, and all of that. It was truly ridiculous.

However, the attempt to exempt the more trivial of these has missed the mark. I showed the select committee some photos of my little 7-year-old twins driving an electric scooter at the beach. It is not an unsafe vehicle. It is not one likely to be involved in accidents on the road, because they use it on little trailways and paths. It has a little 350-watt electric engine, and unfortunately that will still get caught up in the bureaucracy of the director of Land Transport New Zealand making decisions on it, and so on.

In relation to the minority report, I have to say that the National Party tried to be as cooperative as it could on this, as always. As members will see in the commentary on page 9 of the report, at the bottom, New Zealand National believes that 600 watts would be a more realistic cut-off point. I agree that if we get into the really big, powerful engines on some of the mopeds and Go-Peds—and there are now look-alike chopper bikes out there with much bigger engines—that would be foolish. But for a whole lot of the more kids’-end toys, I would like to see changes.

I look forward to taking more calls later on, after other colleagues, especially Dr Mapp and his legal mind, on this stuff about penalties. However, I do not want bad eggs driving taxis, under, any circumstances.

DEBORAH CODDINGTON (ACT): I shall talk about two things that are of concern to me. One is Supplementary Order Paper 375 in the name of the Hon Pete Hodgson, the Minister of Transport. I agree with the last speaker, the Hon Maurice Williamson, that the Supplementary Order Paper almost overturns all the good work we have done in terms of cleaning out the taxi industry. We actually agreed in the Transport and Industrial Relations Committee—the Labour members agreed to this, too—that if one was out, one was out. With this Supplementary Order Paper, a person can apply to be reinstated by the Director of Land Transport if that person’s offence was committed more than 10 years ago and he or she has not reoffended in the 10 years leading up to the time of the application.

Ten years is a very short time for those offences. We are dealing with a very high bar. The offences are crimes like murder or a sexual offence.

Lianne Dalziel: Murder is not included.

DEBORAH CODDINGTON: I am not talking about the Supplementary Order Paper at the moment. I am talking about the actual bill as it stands, and what we agreed to. If a person’s licence has lapsed for 10 years, as it reads here—

Lianne Dalziel: You can’t include murder.

DEBORAH CODDINGTON: I know that. The member should let me finish. The member should listen for a moment. Instead of getting so excited, she should just settle down. In relation to the specified offences, as Maurice Williamson said, if it is a sexual offence and a person got only 3 years or 2 years in jail, or did not even go to jail, it is still a sexual offence. The passengers who hire a cab, or who hire someone as a bus driver, have the right to know that that person does not have a conviction for such an offence. I do not care whether it happened 15 or 20 years ago. As Maurice Williamson said, people with such convictions should go and drive a bulldozer, but they should not drive something where they come into contact with passengers.

So we will not be supporting Supplementary Order Paper 375. It is actually the wrong way round. What we discussed in the select committee was that if someone with a conviction thought he or she was a fit, able, and proper person to be a taxi-driver, but had had his or her P-class licence application turned down, that person could go to the High Court for a review of that decision. This Supplementary Order Paper has turned that on its head. Instead of the burden of proof being on the applicant—the would-be driver—that person can now go to the High Court if the director turns down his or her application to be reinstated. That is not the way that we discussed it in the select committee. The provision is far too easy. We should look at the past record of the director of the then Land Transport Safety Authority. By that, I mean that when I asked the former Minister of Transport, Paul Swain, in 2003 how many of the then current taxi drivers had convictions for sex offences, I was advised by the Land Transport Safety Authority that it did not maintain a database of all taxi-drivers with criminal convictions, nor had it done so in the past. What sort of a gatekeeper is that? Now we are turning the measure back on its head with the amendment to insert new section 29B on Supplementary Order Paper 375, which, basically, will almost take us back to the days when the authority had no clue about what was happening.

The other good point Maurice Williamson made was that Part 2 and the schedules make up the rest of the bill. However, small parties like ACT get 10 minutes, if lucky, and 5 minutes, if unlucky, to debate this major legislation.

I note especially new Part 6C, “Offences relating to chain of responsibility”. It provides that a passenger can be held criminally liable or responsible in terms of the driver breaking the law, if the passenger knew or suspected the law was being broken. I have already mentioned a court case due to come before the court in August, involving a motorcade. I think five people have been charged. Two police officers who were passengers are accused of being parties to the offence. It is very difficult to understand why two police officers, who were passengers, are being prosecuted because it is suspected they knew the law was being broken, yet the Prime Minister, who heads up the highest court in the land, did not know that.

PHIL HEATLEY (National—Whangarei): I would like to continue on from where Deborah Coddington left off, and to talk about new Part 6C, “Offences relating to chain of responsibility”. Labour members may like to wake up or put down their newspapers, and to flick through the bill. New section 79T, “Offence to cause or require driver to breach speed limits, maximum work time, or rest time requirements”, states: “Every person commits an offence, and is liable on conviction to a fine not exceeding $25,000, who, by act or omission, directly or indirectly causes or requires a driver to—(a) exceed any applicable speed limit if that—(i) person knew, or should have known, that the speed limit would be, or would likely be, exceeded; and (ii) driver is a driver to whom … applies;”. I could easily slot other words into that provision—such as “the Prime Minister … directly or indirectly causes or requires a driver to—(a) exceed any applicable speed limit if that—(i) Prime Minister knew, or should have known, that the speed limit would be, or would likely be, exceeded;”.

I simply say that whether it is a young 17-year-old exceeding the speed limit in Clayton Cosgrove’s electorate—because he certainly does not have that issue under control—whether it is a 75-year-old exceeding the speed limit in Ponsonby, or whether it is a Prime Minister exceeding the speed limit over 200 kilometres of road in the South Island, the rules should remain the same. We say that no one in this country—unless the Labour members concede it is a corrupt country—should be above the law. National is asking questions in this Parliament, as people are asking questions in their homes throughout the country, about whether the Prime Minister should be accountable to the law, just like everyone else. I am not saying she is guilty or not guilty, but she should show up in court and give evidence on that matter, just as every other New Zealander would, young or old, and South Islander or North Islander.

New section 79T, inserted by clause 33A, is specifically about passengers who would encourage, or at least not discourage, “directly or indirectly” a driver to speed. There is shame in the Labour Party camp about the motorcade issue, because the Prime Minister was in a hurry over 10 or 50 or 200 kilometres, I think, of road in the South Island that the motorcade screamed over in order to attend important affairs of State—I have forgotten whom the All Blacks were playing that day! The motorcade was rushing through South Island towns in order to attend important affairs of State. The Prime Minister, we understand, allegedly—

Deborah Coddington: They were playing the Wallabies.

PHIL HEATLEY: The All Blacks were playing the Wallabies that day. The Prime Minister encouraged her driver to go over 140 kilometres an hour—that is our understanding of it. This bill addresses that sort of issue, and I hope members on the Government side of the Chamber will take a call in defence of the Prime Minister, to explain to us why she is not giving evidence in court voluntarily. Why is that the case, when this bill highlights that particular matter?

I would now like to touch on the issues that Maurice Williamson put forward to the Committee some minutes ago regarding the offence history of taxi-drivers or others who wish to drive people to various destinations around our cities or countryside. I find it appalling, as does Deborah Coddington, that those in the taxi industry who are supposed to be acting as “gatekeepers”—monitoring drivers—have no idea of the offences taxi-drivers may have committed before they took up the role of taxi-driver. The industry has never asked drivers about the offences they have committed or been convicted of, and does not appear to care whether drivers have committed or been convicted of offences. Certainly, the industry has no record of whether drivers have committed or been convicted of offences. Of course, serious violent or sexual offences should be known within the companies in the taxi industry, simply because no one would like to think that his or her mother, grandmother, daughter, or sister was being taken, at 12 midnight on a Saturday night, around seedy parts of Auckland by such drivers. There should be restrictions on that.

I appreciate that Supplementary Order Paper 375 in the name of the Hon Pete Hodgson specifically excludes some violent and sexual offences, but other offences are not excluded. All we ask is that there be some transparency in the employment of taxi-drivers around our cities and countryside, so that people are kept safe. People put tremendous trust in the people who drive them around. My understanding of criminal activities, and I have heard this on a number of occasions from police specialists, is that if anyone is ever approached—akiddie, a woman, or anybody—by someone in a motor vehicle who wants that person to get into the car, and who tries to make the person do so, either forcibly or otherwise, the best opportunity for escape is before the person gets in the car. Once people get into a motor vehicle, they are effectively captured and it is very difficult to escape. We willingly get into taxis—we pay to get into taxis—and we are, in effect, caught up in that taxi for as long as the driver would have us in there. If the driver is a criminal, has criminal offences, or has further criminal intent, it is a very dangerous position to be in, indeed. We challenge the Minister on his lax laws and softening of the legislation, whereby we are not able to monitor or gate-keep, as Deborah Coddington said, those taxi-drivers and would-be taxi-drivers who have those sorts of previous convictions.

It is interesting to think that taxi-drivers have a 10-year time frame—that somehow it is safe for people who have not offended for 10 years to drive New Zealand women around the streets of Auckland in the dark hours of the early morning. But those people might have been in jail for the whole of those 10 years, in which case they could not have offended over that time.

Hon Maurice Williamson: That doesn’t stop them.

PHIL HEATLEY: That is true. Under the current prison system, as we have seen throughout New Zealand, people can still deal drugs while they are in the prison system, they can still be involved in illicit sex while in the prison system, and on it goes. But the reality is that people may not have had a conviction for the last 10 years because they have been inside the slammer. I am interested to know whether Mark Gosche will promote taxi companies driving up to prisons, and saying to prisoners about to be released: “Jump aboard. You’re entering society. Here’s your job. Here’s a licence for 6 months. You go and drive the good people of Auckland around Manurewa for the next 6 months. You haven’t had any conviction in the last decade, because we’ve kept you locked up. Granted, you did have a sentence of 30 years and we’ve let you out in 10, but the reality is that you haven’t had an offence in the last 10 years, so you’re a safe person.”

We think that is absolutely absurd. There is enough concern in the taxi and cab industry as it is at the moment, with all sorts of people from around the world driving cabs, such as brain surgeons from Russia and dentists from Lithuania. All sorts of people are driving people up and down the wrong streets in Auckland, Wellington, and Christchurch, and the last thing we need is for criminals and those who carry convictions to drive our people around, as well.

PETER BROWN (Deputy Leader—NZ First): There is an old saying that “a little bit of knowledge is a dangerous thing”, and the member who has just resumed his seat has illustrated that absolutely 100 percent. I shall explain the taxi-driving conviction clause, for want of a better term.

Clayton Cosgrove: Just take it slowly for him. Use small words.

PETER BROWN: I will speak slowly and use small words, because I am only a simple sailor myself. This bill puts anybody convicted of these crimes out. Those who are convicted and who have never been a taxi-driver will never get the chance—they are out, totally 100 percent. This bill also puts out those people who are currently driving taxis and who in earlier years have been convicted of these offences—totally out. Those who have been convicted of murder and serious sexual offences are out 100 percent, forever. But the other people are granted a right of appeal. They are, to some degree, granted an element of fairness.

New Zealand First does not want those people driving taxis, at all, but we do not believe that we are the people who should be removing justice from those people—neither is Maurice Williamson nor Wayne Mapp. In the first instance, we think that the director is in a much better position to do so, and, in the second instance, it should be the High Court. We think that is a reasonable approach. I caution members, before they embark on a wordy journey, that saying that we are letting murderers, rapists, and goodness knows who, drive our taxis with impunity will send a signal of alarm throughout the country. Those people are definitely excluded, and I am glad to see that National members have suddenly recognised that.

I want to speak briefly about courtesy coaches, because this matter is of some concern. I have just spoken to the Minister and the officials on the issue. A number of clubs in this country run courtesy buses, and they charge a fee. Some charge it by donation, but some have a set fee. Some give guidance about what sort of donation a person should make, but others charge a set fee. This bill will make the practice of charging a specific set fee illegal. In many instances, clubs have told me that they will remove their courtesy coaches. But, thankfully, I now know, after having spoken with the Minister and the officials, that these provisions will not come into force for some time, and therefore clubs will have time to make representations to the Government, or whoever, to have their case listened to.

A number of clubs have courtesy coaches, including Napier RSA, Kawerau Cosmopolitan Club, Stokes Valley Cosmopolitan Club, Levin Cosmopolitan Club, Alexandra District Club, Whangarei RSA, Wanganui RSA, Waitomo Club, Pētone Working Men’s Club, Onehunga Workingmen’s Club, Matamata Club, Wairoa Club, Mount Maunganui RSA, Tauranga RSA, Waihī Beach Memorial RSA, the Mt Maunganui Cosmopolitan Club, and last, but not least, the Ōtaki Memorial RSA. The member for Otaki said that the Ōtaki Memorial RSA was not concerned about this legislation, but it is. I have a letter written by the club to the Minister and copied to me. I am told that 350 of these clubs exist in the country, and as they have 220,000 voting members they are a voice to be listened to. Having spoken to the Minister and the officials, I am encouraged to believe that in the fullness of time their concerns will be identified and amended.

I emphasise that many of these clubs tell me that there is no competing taxi service at closing time and during the hours of darkness, and they want the ability to charge a modest fee to drop people off at their homes. One club I spoke with reminded me very strenuously that if Parliament removes this service, then it will be putting more drunks on the road. That sits very uncomfortably with New Zealand First. We want to get drunks off the road, but we do not want to destroy their liberty to go to their clubs, and if a courtesy service can be arranged, managed, and administered in a reasonable manner, with a modest fee attached, then New Zealand First is all for it. But after talking to the Minister and the officials, I understand the complications and I respect their view.

Hon PETE HODGSON (Minister of Transport): I stand to take a brief call to respond to my colleague from New Zealand First Peter Brown, to thank him for his quite careful remarks but also, because it is on the record, to correct him on one of his remarks, if I may. The member said this legislation makes charging a fee illegal, and I just want the Committee to be very clear that it already is. That is already the case. This law makes things no worse. What it does do is to provide a regulatory framework by which we can progressively make things better. As society changes, as attitudes towards drink-driving tighten up, as good RSAs and other service organisations around the country seek to take responsibility for their club membership, and as that becomes a more and more expensive thing for them to do, and therefore their desire to charge becomes greater, so too must the regulation keep up. That is why the passage of this legislation matters. We can then have the development of the regulatory framework to keep it abreast of the changing needs of society. I thank the member for his remarks, and correct him on just one of them. This bill does not make anything worse. It does the opposite. It lays the framework to make things progressively more flexible and more responsive to the needs of society.

LARRY BALDOCK (United Future): I would like to take a call to address the Minister of Transport’s amendment on his Supplementary Order Paper to Part 5 of the schedule. It deals with the problem of people who operate a vehicle that creates excessive noise. I welcome the Minister’s cooperation on this, and thank him for it. The amendment proposes to add 10 demerit points to that offence.

Before I became a member of Parliament I was a member of the city council in Tauranga. At the time we had a particular problem in one of our best tourism areas, along the main beach, where there is a lot of high-rise apartment-style accommodation. For many years we have suffered the problem of young people coming to town in their cars and thinking it is fun to go round and round in a circle, making a noise. Sometimes this happens at 2 in the morning, making life miserable for both residents and visitors. In fact, I quite frequently see in the newspaper letters to the editor from people who had come for a nice relaxing holiday but have gone away very disappointed. They write to the newspaper that they will never come back, because their sleep was destroyed because of this nuisance.

Early on in my term in Parliament United Future saw the opportunity to give assistance to pass the boy racer legislation so that the police have more powers to deal with this issue, particularly where the drivers are doing doughnuts and other dangerous things.

Hon Maurice Williamson: Has it made a difference?

LARRY BALDOCK: It has made a difference in regard to that activity, but it has not addressed the issue of those who simply want to make a nuisance of themselves. People can do that regardless of whether they have a modified muffler on their car. They can use just a standard car and simply rev the engine at 2 o’clock in the morning and they will wake people up. They can use their car stereo and be a nuisance. When I spoke to police in the area about what suggestions they might have to deal with it, they said they wanted to be able to take the keys off the drivers, right there on the spot, so that they could immobilise the vehicle for the evening—the drivers could come back the next day and get the keys—and that would be the end of the problem for that night. That would soon send a message to those causing the disturbance that it will not be tolerated.

Unfortunately, it seems that step is a little bit too draconian in some people’s minds, so we have arrived at the compromise of putting on demerit points. I think that is a reasonable compromise. We will have to monitor how it goes over the next year, but at least it is better than simply issuing tickets to those young people, because they seem to take no regard of them, at all. In fact, some of them have a glovebox full of tickets. They do not pay them, or else they go home and somebody else digs deep into his or her pocket and pays for those tickets, which I cannot really understand. The effect is that those young people have disregard for the law. I hope this amendment to add 10 demerit points will send a very clear signal to those young people. We love young people. We think that stage of life is a great time. Sometimes young people do crazy things and sometimes they do not have regard for other people around them. We do not want to be too severe, but we do want to send a message that that sort of behaviour will not be tolerated.

Not only is it affecting the residents of the area; it is also hurting the economy, because great investments have been made in providing facilities for visitors. We value tourism in New Zealand and we have increasing numbers of tourists every year. It is not a problem just in the Mount Maunganui and Tauranga area; other very popular tourism sites around the country are at risk from that kind of behaviour. I am sure that visitors from overseas go away wondering why on earth we tolerate that behaviour. So I welcome this amendment. Hopefully, with the addition of 10 demerit points, if people are caught once, twice, or three times, they will realise they are very close to having their licence taken off them, and they will find some other useful activity in which to engage in the wee hours of the morning, particularly at the weekends, which is when this kind of activity occurs.

Of course, the problem will be addressed only if the police are adequately resourced so that they can go out at night and catch those engaging in this activity. We certainly hope that, as this new law comes into force, the police will take the initiative to undertake some campaigns during weekends, so that the message is sent very clearly, early on in the piece, to young people that they cannot continue that activity and drive everybody nuts. I hope the people of Tauranga and Mount Maunganui will finally get some relief and be able to have a good night’s sleep. One of the most important things we can have in life is a good night’s sleep, and I hope that will be the case.

PANSY WONG (National): I have proposed two amendments to Part 2 that I would like to explain to the Committee in detail, to enable members of the other political parties, including the Minister in the chair, the Hon Pete Hodgson, to consider them. I look forward to the Minister’s comments—hopefully they will be positive. I learnt from the Hon Harry Duynhoven that in relation to individuals who teach learner-drivers for monetary consideration, the offence of not having the “I” endorsement was previously omitted from legislation. Apparently that offence has been reinstated in this Land Transport Amendment Bill— and I welcome that—to make it clear that any individual who teaches learner-drivers for monetary consideration should obtain an “I” endorsement.

But what this legislation has not taken into consideration is how we can inform the public that people who want to learn to drive properly from a licensed driving instructor are getting that service. The Minister in his letter to me said that they would advertise in newspapers, etc. I think that a very smart move would be for an instructor who is properly authorised to do it for commercial purposes to display the “I” endorsement on the vehicle in which he or she teaches students, just like taxis do. Nowadays when we get into a taxi we know the name of the taxi-driver, which enables individuals to lodge a complaint or make inquiries. It also reminds the driving instructors that they have to have the “I” endorsement in order to carry out those commercial activities.

My second amendment proposes that the driving instructors who can obtain the “I” endorsement should be New Zealand citizens or holders of a permanent residence visa. That is to avoid visitors, or people holding student permits, teaching others for commercial gain. I do not believe that teaching others to drive on New Zealand roads can be entrusted to persons who have spent a short time in New Zealand. Even though they may be experienced drivers in their home country, we have our own rules.

If we look at the United States or China, we have the right-hand versus the left-hand driving habit. Also, New Zealand has a unique set of road conditions, particularly on the open road. So I believe that the “I” endorsement driving permit should be limited to New Zealand citizens, or people who are permanent resident visa-holders. I hope the Minister can take a call to indicate whether he is in favour of those changes to enhance road safety for New Zealand society.

I continue to bring up the theme of this legislation being about enhancing the enforcement regime. Just now my colleague Phil Heatley, who is a very robust debater, raised a very good question. He asked whether the Prime Minister, the Rt Hon Helen Clark, should be seen to be above the law. This legislation should send a stern signal and say that no matter who, if legislation to enhance road safety in New Zealand is infringed, that person should front up to the court to answer or defend the charges, otherwise we are making a mockery of having one standard of rule for all. It would be one standard for the Prime Minister and one standard for the rest of New Zealand’s citizens, which I do not think would be a desirable outcome of this legislation. The enforcement provision is one that National members want to see being properly enforced.

Dr WAYNE MAPP (National—North Shore): I wish to talk on Supplementary Order Paper 375 and to refer members to the commentary in the bill itself. There was concern about whether there ought to be some form of—and I noted this specifically—appeal provision for those who had been convicted of offences prior to the enactment of the legislation. The concern did not exist in relation to those who would be convicted post the enactment of the legislation. That relevant part of the commentary concludes: “All members of the committee recommend that further consideration be given to this matter.”

The first point to note is that it was intended to be an appeal. That normally involves, or envisages, going to either the District Court or the High Court—that kind of gravity, if you will. So even the process itself is intended quite specifically to be something of a deterrent. What does the Government’s Supplementary Order Paper have instead? All a person has to do is apply to the Director of Land Transport, which is a relatively simple, straightforward procedure, thus having a low threshold.

I note that it relates to convictions more than 10 years prior to the enactment of the legislation—at least that point was correctly noted—and, secondly, the person must have no convictions for offences punishable within the last 10 years.

Let us say this legislation will come into effect on 1 July this year. Essentially it applies to anyone with offences prior to July 1995. As has been noted, those offences do not include murder or serious sexual offences, but they do include some very serious offences indeed.

Phil Heatley: What are they?

Dr WAYNE MAPP: They include aggravated assault and a whole series of very serious offences. That is our particular concern. They include attempt to murder, conspiracy to murder, and—which is probably much more common—causing grievous bodily harm by injury, and aggravated wounding and injury; in other words, the classic “GBH”, as it was known. Those are offences for which a person invariably gets a sentence of imprisonment. So they are very serious, yet we are saying that such a person ought to be able to go through a relatively straightforward procedure, which is to apply to the Director of Land Transport and get a passenger endorsement to drive a taxi or, indeed, a bus.

We say that there are two problems. The first problem is that the process is to go to the director, as opposed to, for instance, applying to the District Court as being an appropriate venue. That would have been a much higher threshold, and the rules could have been more properly prescribed. That is the first flaw.

The second flaw is the 10-year period. It will hardly escape the notice of members that the clean-slate legislation also has a 10-year period. Surely we would want to draw a pretty significant distinction between wiping genuinely minor offences where there have been no further offences committed in the last 10 years, and these kinds of offences. A 20-year period might have been more appropriate because, as Mr Heatley quite rightly pointed out, in reality a large chunk of that 10 years will have been inside a jail. I am absolutely sure that the public should not have to be driven in a taxi by someone who has spent maybe 7 of the last 10 years—say, 1995 to 2002—in jail.

There are two flaws. The first flaw is the application to the director, and the second flaw is the 10 years. I believe that the Government has taken excessive licence from the views of the select committee. Yes, there was a problem, and I was one of those who said the Government needed to look at this issue. I assumed, I must say, that the Government would be thinking of an appeal to a court in order to deliberately raise the threshold so it would not be easy to get. What has been done instead is that people apply to the director and then, if the director turns the case down, there can be an appeal to the High Court. There is a double threshold. It is quite clearly intended that the first level of application will be lower and easier. Do we truly want to say to people who have committed serious offences and who may have been in jail for 7 years that they can simply apply to the director to get a passenger endorsement? Is that what the Government is seriously saying to the public of New Zealand? Apparently, it is. It says people should just write a brief letter—that will do, and they will get their passenger endorsement. It does not matter whether they have thrown acid or been convicted of grievous bodily harm and things of that nature. So we cannot support this Supplementary Order Paper in the way it has been drafted.

If there had been a different threshold—say, an application to the District Court with full evidence given either way—that might have been quite a different situation. It would have been clear on the face of it that the threshold—[Interruption] No, the first application is to the director. Only if the director refuses does one then go to the High Court. It is amazing, is it not? A member of the select committee, who is a lawyer, has apparently not even read the Supplementary Order Paper, because she thinks the way to do this is to go to the High Court. I say to that member that the High Court issue arises only if the director turns the case down. I say to the Minister that I do not believe that this Supplementary Order Paper meets the kinds of circumstances that members on this side of the Chamber envisaged by the specific reference to the concept of appeal. An application to the director is simply not an appeal. It is just that—an application. That is the first issue I wanted to deal with.

The second issue is one that was dealt with, but I bring it up again. It is the rules about vehicles between 300 watts and 600 watts, which are mentioned in the commentary, and in clauses 4 and 68A. We say that the Government has got this one wrong. Frankly, we believe that there should be general approval for vehicles—basically, bicycles—up to 600 watts, and then nothing further. I believe that this issue will have to be revisited by the Government. Part 2 is very long. It runs from page 7 of the bill to page 99. Virtually the entire bill is contained within that part, and I hope that we will have proper opportunities to consider all the issues.

I suggest to the Minister that the provisions in relation to the definition of “vehicle” contained in clause 4, and the further provisions, clause 68A on that very question, are flawed. There is an absolute exemption for vehicles under 300 watts. That is fair enough. Then the director has discretion for vehicles between 300 and 600 watts, and that is inadequate

LIANNE DALZIEL (Labour—Christchurch East): I move, That the question be now put.

DEBORAH CODDINGTON (ACT): Thank you, Madam Chairperson, for giving me that call, because I would really like the Minister, Pete Hodgson, to take a call to explain this Supplementary Order Paper to us. There is another flaw in addition to the two that Wayne Mapp pointed out. I too am unhappy with the Director of Land Transport having the sole power to reinstate licences to those who already have convictions. I think it should go to the High Court first.

Secondly, I would really like the Minister to explain something about reinstatement. A licence cannot be reinstated if people have been convicted of a serious offence under section 29A(2)(a) or (b)—inserted by clause 13—which relate to murder or a sexual crime punishable by 7 years’ or more imprisonment. However, if we look at section 29A(2)(d), inserted by clause 13, we see that it states: “an offence committed outside New Zealand that, if committed in New Zealand, would constitute an offence specified in paragraphs (a) to (c).” But when I look at the Supplementary Order Paper, it does not seem to me—and I am not a lawyer—to include paragraph (d). Do we have an anomaly whereby if a person is convicted of murder or a serious sexual crime outside New Zealand, he or she is not subject to the same barrier as those who were convicted of it inside New Zealand? In other words, could a person slip through because it was a historical conviction, and, therefore, the person would not have to apply, or is it the other way round? I do not know. That is why I am asking the Minister to explain. For me, committing a serious sexual offence with, say, a little girl in Thailand is just as bad as committing it with a little girl in New Zealand, and it should be treated exactly the same.

I know—and we discussed it at the Transport and Industrial Relations Committee—that with a lot of immigrants these days, especially refugees, it is very difficult to find out exactly what criminal history they have, or whether they have one, because we are dealing with different jurisdictions. The committee talked about that. But, where possible, I think the same laws should apply. If we are bringing in a law that totally prohibits—no ifs, no buts, no right of appeal—New Zealand people convicted under New Zealand legislation of murder or a serious sexual crime from going into the taxi industry or from getting back into it, then I think we should apply that same legislation to those who have been convicted of comparable crimes in another jurisdiction, when we know and can find out about those crimes. Let us face it: if people have been convicted of such crimes, whether or not they are taxi-drivers, they should not be in this country. It is a privilege to live in New Zealand, not a right—but that is another debate, and not one that relates to this legislation.

So I ask the Minister to take a call to explain this Supplementary Order Paper. It is very important. The select committee members worked together very hard to arrive at a situation we could all be happy with. We will probably have a situation whereby people can go to the Director of Land Transport, and if they are turned down they can go to the High Court, but let us at least have a situation whereby the same rules apply to everyone, whether he or she was convicted in New Zealand or overseas.

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

LARRY BALDOCK (United Future): Thank you, Madam Chairperson, for giving me the chance to raise another matter about Part 2. It relates to clause 15 and the issue of work time and logbooks. I was approached by a very nice couple in Tauranga—I am sorry to raise matters relating to Tauranga all the time, but somebody in this Chamber has to raise the concerns of the good people of Tauranga. That nice couple operate a dial-a-driver business as a part-time operation. The husband works full time and the wife works part time, because they see their priority as making a living that is sufficient to enable them to raise their family. They want the mother to be able to stay home in the afternoons so that she is there when the children come home from school, and I think that that is laudable. They are concerned that this legislation will affect their business. I appreciate the discussion I have been able to have with the Minister and the officials to see whether the situation could be resolved, but they have informed me that it is not possible in this legislation to find a way to exempt that couple. I have been informed that there is some hope, because this legislation will not take effect for a year. There will be another process of submissions before the rules come into force, so we may be able to find a way forward for the couple in that time.

In this debate I simply want to put on record what the couple’s concern is, so that we will remember that we need to work through this issue in the year ahead. The couple work, as I said, but they come home in the evening. The husband goes to bed. It is probably best for me to read from his submission to the Transport and Industrial Relations Committee, so that the issue will be nice and clear for everybody. The husband wrote that he arrives home shortly after 5 o’clock, eats his dinner, and then goes to bed for approximately 4 to 5 hours of rest. He is then ready for when, at around 10.30, the couple start to get calls from people who wish to be driven home because they have had a little too much to drink. Since the overarching concern of this bill is safety, I think it is important that we keep services like that operating so that people can find a way to get home if they have had too much to drink. So at around 10.30 the phone may go, and the couple may begin to respond to some calls. They do not take calls after midnight during the week, but on Saturday night—their busiest night—they go through until 3 in the morning. They are taking care not to overwork and make themselves too tired. They do not drive long distances when they pick people up and drive them home. They believe that they are operating in a very safe manner.

The problem is that the legislation, in establishing the 13-hour period in which a person can continue to work, will affect them. It will not take into account the fact that although the husband works during the day, he comes home and has several hours of very good sleep, is probably as alert as anybody else, and can provide the service. He wrote: “We understand the concerns regarding driver fatigue, and accidents that are related to this, but feel that dial-a-driver services in smaller centres do not pose a threat to our clients in this regard.” I agree with him. Just how many accidents can be attributed to safe drivers who are getting drunk clients home? There is no evidence that there is a problem. I think that someone who has worked driving for 13 hours will be far more tired than that gentleman, who has worked an 8-hour day, gone home, had a sleep, and then gone out to work again for a few hours in the night, accompanied by his wife and sometimes, apparently, by the children, who the couple say enjoy being involved as a family in the business. I think we should applaud a family that is committed to working together like that in order to provide an income so that they can meet their needs.

The husband wrote: “It seems ridiculous to me that a man can drive a truck for 11 hours out of 13 in a day, and then go out and drive as many hours as he likes in his private vehicle, and there isn’t a law against that.” His comment makes pretty good sense, really. He also makes the point that it is not fair to judge all people as needing the same amount of sleep each night. He wrote that many people exist quite happily on only 5 to 6 hours of sleep in a 24-hour period, and I am sure that all members in this Chamber would have to agree with him. The husband wrote: “Both myself and my wife are people who do not need 8 hours every night and manage very well on the regime that we have put in place. We do not drive great distances here in Tauranga. Probably the furthest area we have transported clients home to is Te Puke, which is only 26 kilometres from central Tauranga. Our driving is start-stop stuff along streets we have got to know very well, and we are always careful to keep to the speed limits and take no risks.”

I want to put on the record of Parliament that there is something that has not been resolved through this legislation. I support the legislation for trying to improve safety, but we do not want to exclude the small dial-a-driver businesses, which I believe exist not only in Tauranga but in other areas, from operating. It is in the best interests of the safety of all of us that people who have been drinking can find a way to get home. Sometimes taxi companies will provide that service, but when taxis are very busy they prefer to take one person home and not to tie up two drivers.

PETER BROWN (Deputy Leader—NZ First): I want to speak about the two amendments put forward by National Party members.

The first is in the name of Pansy Wong. It seems to me to make quite a degree of sense. She states: “Driving instructors who teach driving for hire or reward must display the I endorsement in a visible manner during driving courses.” I would have thought that was a pretty sound sort of requirement in legislation—that a driving instructor displays the endorsement in a visible manner so that when one gets in the instructor’s car one knows that he or she is the genuine article, so to speak. The amendment goes on: “Driving instructors who teach driving for hire or reward with an I endorsement must be New Zealand citizens or permanent residents.” I cannot read her last words, to be honest, but that requirement, too, makes sense. Should our driving instructors not have learnt their trade in this country?

Dr Wayne Mapp: It seems sensible.

PETER BROWN: It seems quite sensible to me, and it seems to be an oversight that the legislation does not recognise this sort of thing. So I think I can say that New Zealand First will support Pansy Wong’s amendment. We believe that driving instructors should advertise who they are, how they are qualified, etc., and we believe that they should have learnt their trade in this country and be fully au fait with our rules. Some of our rules are slightly different from rules elsewhere. One example is the right-hand turn rule, which came in 20-odd years ago; I am sure it was devised by panel beaters! I thought the Hon Mark Gosche was going to look at that rule a year or so back, with a view to amending it, because in some areas it causes a lot of confusion. I think it is important that driving instructors are permanent residents or New Zealand citizens. We will support that.

The Hon Maurice Williamson has put forward another amendment that we believe has quite a lot of merit. Its purpose is to combine, in relation to appendix 2 of the commentary, vehicles with a power output of less than 300 watts and vehicles with a power output of between 300 watts and 600 watts. The Transport and Industrial Relations Committee has just looked at this matter pretty carefully. I thought we did a pretty darn good job on it, but Maurice Williamson made some valid points a few moments ago. He pointed out that a vehicle with a power output of between 300 watts and 600 watts may be determined by the director not to be a motor vehicle. That seems to add, possibly, an awful lot of unnecessary bureaucracy on to the director. There is a little picture of the type of vehicle; it helps us on this side of the House immensely.

Phil Heatley: Ha, ha!

PETER BROWN: The member laughs, but it does make things very clear. They are very straightforward-looking vehicles, and all the other requirements—driver requirements and vehicle requirements—have to be adhered to. So we think the Hon Maurice Williamson on this occasion has got it spot on, and we will support the amendment in his name.

On the issue just raised by Larry Baldock, I wonder whether he is actually serious. Is the member suggesting that it will be compulsory for a fellow to go home after doing his 8 hours and have a 5-hour sleep? For all we know, he could go and play football. We need to have some rules and regulations governing driving on a commercial basis for income. I think the bill pretty well has it right. I accept the anomaly—I myself am aware of it—that a truck-driver after driving a truck for 11 hours can then go and drive his car from here to the other end of New Zealand if he so wishes. That is a loophole that we may have to look at in the fullness of time. But when it comes to commercial driving, it is only right and proper to have some restrictions.

I think this bill goes a long way towards addressing some of the concerns, and certainly the concerns around logbooks. Some drivers and company managers have told me how drivers have been fined excessively for very minor logbook offences. This bill takes care of that.

The question was put that the following amendment in the name of Pansy Wong to Part 2 be agreed to:

to insert the following new clause 10A:

10A New Section 26A inserted

26A Display

(1) driving instructors who teach driving for hire or reward must display “I” endorsement in a visible manner during driving courses.

(2) driving instructors who teach driving for hire or reward with “I” endorsement must be New Zealand citizens or permanent resident visa holders.

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

Ayes 49

New Zealand National 27; New Zealand First 13; ACT New Zealand 9.

Noes 68

New Zealand Labour 51; Green Party 9; United Future 8.

Amendment not agreed to.

The question was put that the following amendment in the name of the Hon Maurice Williamson to clause 68A(2) be agreed to:

to omit from subsection (2) of section 168A the expression “300 W”, and substitute the expression “600 W”.

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

Ayes 49

New Zealand National 27; New Zealand First 13; ACT New Zealand 9.

Noes 70

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

Amendment not agreed to.

The question was put that the amendments set out on Supplementary Order Paper 375 in the name of the Hon Pete Hodgson to Part 2, and the following amendments in his name to clause 85, be agreed to:

to omit from subclause (3) the words “Sections 4(a) to (d), 5(6)(a), 7, 8(3) and (4), 9, 12 to 14, 18 to 23, 24(2)(a) to (c), 26(3), 29, 32 to 39,” and substitute the words “Sections 4 to 46”; and

to omit subclause (4).

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

Ayes 84

New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Māori Party 1.

Noes 36

New Zealand National 27; ACT New Zealand 9.

Amendments agreed to.

Part 2 as amended agreed to.

Schedule

The question was put that the amendments set out on Supplementary Order Paper 375 in the name of the Hon Pete Hodgson to the schedule be agreed to.

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

Ayes 84

New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Māori Party 1.

Noes 36

New Zealand National 27; ACT New Zealand 9.

Amendments agreed to, and schedule as amended agreed to.

Clauses 1 and 2

Dr WAYNE MAPP (National—North Shore): I rise to speak to clauses 1 and 2, the title and commencement. The interesting part here is the commencement date itself. Under clause 2, there is a complex formula of which provisions come into force at which times. For instance, the legislation as a whole comes into force on 16 January 2006, which is basically 6 months from now, but certain parts of it can come into force on an earlier date. I ask the Minister of Transport why the special rules that we have now introduced relating to taxi-drivers, which are covered by clause 13, have to wait until 16 January to come into force, instead of coming into force at the time of the royal assent. That was the original proposal, but now it seems, as I read this, that clause 13 will come into force on 16 January 2006. It may be that it is intended, by Order in Council, to bring that portion into force at a different date, possibly an earlier date. I would like some assurance from the Minister that that would be the case.

For the moment, he has effectively created a loophole whereby those who have been convicted of serious offences would be able to continue driving over the following 6 months. I would have thought that on legislation of this nature, when the rules on this kind of issue are being changed, particularly with the very loose appeal procedure that is now being approved—well, it is actually not an appeal procedure, really; one just has to apply to the director and that will suffice—the public are exposed to unnecessary risk. This Parliament, based on the submissions that its committee received, wants to give a very clear signal that passengers in taxis, in particular, deserve special protection. Parliament has established what is, overall, apart from that review procedure, a rigorous test, an exemplary test even, whereby persons guilty of various serious offences ought not to be able to drive taxis. But, as I read the legislation, that does not come into force for another 6 months, and I have to ask why we would do that. Why would we allow someone convicted, literally, of murder, or of various serious sexual offences, to continue to drive over the next 6 months and, potentially, place people at risk? As a Parliament, we are saying that that is not possible, and that those people ought to have their licences removed. Presumably that means now, not 6 months from now. So I want some form of explanation as to why—and maybe I have misread clause 2, because it is relatively complexly constructed—that is not the case. I would be pleased if the Minister could give a direction on it.

Other parts of the legislation, I understand, have implementation processes involved in them, and new rules—logbook requirements, etc.—have to be developed. One would expect that to take some period of time. After all, it is not simply a question of people changing patterns; they also have to complete new logbooks, essentially, to comply with the legislation for the future, and, clearly, people need time to produce those logbooks, and so on and so forth. This is an area in which Parliament says, upon balancing public safety and the interests of the drivers, public safety takes priority. I believe if we are saying that as strictly and as seriously as we are—and it is a substantial test; I recognise that—then that part of the legislation ought to come into force at the time of the royal assent, or as soon as possible thereafter. I would appreciate an explanation from the Minister on that point.

Clause 1 agreed to.

The question was put that the amendments set out on Supplementary Order Paper 375 in the name of the Hon Pete Hodgson to clause 2 be agreed to.

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

Ayes 84

New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Māori Party 1.

Noes 36

New Zealand National 27; ACT New Zealand 9.

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

Bill reported with amendment.

Report adopted.

Third Reading

Hon PETE HODGSON (Minister of Transport): I move, That the Land Transport Amendment Bill be now read a third time. I thank members for their work on this bill. The examination it has been given, and the amendments made, have improved it considerably. The bill is a result of a series of reviews, and it is intended to improve the safety and security of road users in line with the New Zealand Transport Strategy. It also remedies a number of problems in the legislative framework regarding the responsibilities of road users, traffic offences and penalties, and the driver-licensing system.

Its main features and significant amendments include a requirement to surrender superseded driver licences, in response to police and hospitality industry concerns that superseded learner and restricted licences are being used to assist minors to gain entry to licensed establishments. This bill contains amendments to transport operator licensing in line with the 2001 review. They aim to simplify and clarify licensing requirements and to reduce compliance costs for transport operators.

The bill also includes measures to improve commercial driver standards through the Ministry Rules Programme. Those include enhanced accountability for taxi organisations, and strengthened offence and penalty provisions. It now also requires taxi service licence holders and drivers to provide company details in Braille inside taxis. That step should enhance the security of visually impaired taxi passengers.

The bill prohibits persons convicted of serious violent and sexual offences from being a passenger service driver. That will address the risk to public safety from having those with such convictions in a one-on-one situation with passengers. The Transport and Industrial Relations Committee extended the scope of the provision in order to cover offences committed prior to the commencement of the bill, which means that the provision will apply to existing passenger service drivers with convictions for serious violent and sexual offences.

The House has further amended the provision, following concerns raised by the select committee, to allow some individuals convicted of certain listed offences—but not murder or sexual offences—to apply to have their passenger endorsements reinstated, in extremely limited circumstances. The circumstances apply when the conviction is more than 10 years old and when the applicant has not been convicted of an imprisonable offence in the previous 10 years. I consider that that approach appropriately balances the ability of those posing no risk to the safety of the public to maintain their passenger endorsements, with the legitimate personal security concerns of the users of passenger services.

The bill clarifies that home community support workers, who occasionally give rides to their clients—to help them with shopping, for example—do not require passenger service licences. It was originally intended that that matter be clarified via the forthcoming operator licensing rule. However, I accept that considerable uncertainty has arisen in the home-based care sector as to whether licensing is required, and so that issue should be rectified quickly.

In addition, operators of courtesy coach services have raised concerns that the bill will affect the service they provide. I can assure them that the bill does not require courtesy services to be licensed where the payment of a fare is not a condition of carriage. However, there will be an opportunity in the upcoming months for organisations to comment further on the passenger licensing provisions, during the development of the operator licensing rule. I will ensure that those organisations that have contacted me on that matter are kept informed about the submission process.

Work is also under way to extend the current exemption to passenger service licensing for car-pooling arrangements, to include initiatives such as the Rideshare programme currently being developed in Auckland, along with other social, informal, or not-for-profit activities. It has never been this Government’s intention to capture those arrangements in the licensing regime; clarification would therefore be useful, and I will seek to implement those exemptions by regulation as soon as practicable.

Following consultation and a review, the bill retains prescribed driving-hours and logbooks for commercial drivers. The select committee has placed key limits on the allowable hours in the primary Act. That gives due emphasis to the importance of managing fatigue within the transport industry. The bill also simplifies the driving-hours and logbook system, and introduces a new, simpler definition of work time. Additionally, it introduces a new “chain of responsibility” offence to ensure that employers and other industry participants are held accountable if they knowingly allow or cause driving-hour breaches. It also covers offences for load security, overloading, and speeding, where commercial vehicles are involved. Those are positive measures, which, by making the likes of consignees and consignors equally liable where they have knowingly contributed to an offence, will help improve the safety of commercial transport services.

The bill contains a number of common-sense amendments to remedy several defects in transport legislation. Those include empowering police to serve a notice of licence suspension at the roadside on a driver with more than 100 demerit points, where the director has been unable to serve the notice. They also include ensuring that driving offences involving injury or death apply both on and off a road, and updating the definition of “motor vehicle” to exclude vehicles powered by very small motors. The maximum power output for low-powered vehicles has been increased to 300 watts or higher for specified classes of vehicles, such as electrical bicycles.

During the debate on this bill the United Future party raised the issue of excessively noisy vehicles. As a consequence of discussions with them and with the Greens, the bill now strengthens the sanctions and tools available to enforcement officers to deal with excessively noisy vehicles. It does that by assigning 10 demerit points for vehicle noise offences, and by increasing fines. This bill contains a large number of positive changes to the legislative framework underpinning land transport safety. Not only will it improve safety and help save lives but it will also reduce unnecessary complication and business compliance costs. I commend it to the House.

Dr WAYNE MAPP (National—North Shore): National supports this bill. We recognise, as the Minister has indicated, that much of it covers improvements to the existing legislation and enhancing it. I note, in this third reading, that the Transport and Industrial Relations Committee members worked very constructively together to enhance the legislation. The rules in many parts are detailed, technical, and naturally intended to attract the interests of only those people who are most directly affected in the transport industry. So I note the rules around logbooks, etc., and the details around the limited licence powers of traffic officers, and the like. Some specific things did not get covered in earlier debates, including some of the rules around goods and services vehicles—in particular, the sizes of those vehicles. That area of the law has actually been made somewhat more liberal, and we recognise the value of that in terms of the practicality of operating modern New Zealand businesses.

There are, of course, some issues that the select committee and, indeed, the preceding debate have focused on—and quite properly so. The changes are substantial, and rest particularly around the P1 endorsement—that is, the endorsement for taxi-drivers, bus drivers, drivers of courtesy vehicles—and electric bikes. I want to turn to the issue of that P1 endorsement for taxi-drivers. The select committee, in some respects largely on its own initiative—and I note at this point the contribution of Deborah Coddington; it was she who really raised the issue at the select committee and the committee, to a person, saw the importance of the issue she was raising—recommended a major change to the legislation, so that people in the industry at present who have very serious convictions ought not to be allowed to hold a P1 endorsement. We felt that passengers in taxis are in a uniquely vulnerable situation, particularly late at night, and particularly if they are young women. So the people who are carrying those people ought to satisfy rigorous tests.

In essence, we have proposed that anyone who is henceforth convicted—or, more particularly, who has previously been convicted—of murder, of a serious sexual offence, or of other serious offences such as aggravated assault and the like should not be able to hold a licence. On further consideration, we did consider that there should be a very limited appeal. The National Party believes that the Government has gone too far, in essentially giving discretion on appeals to the director rather than to the court system. If the proposals put forward by the Minister had referred, for instance, to a District Court considering that issue, they would have almost certainly received our support, but we consider that giving that power to the director has softened the requirement excessively.

The courtesy vehicle issue vexed the select committee. We have come up with some minor modifications to the existing rules. I am not sure that we ever got that one completely right, and no doubt it is something that could be revisited further.

I want to comment on the issue of electric bikes and then, by extension, on some of the issues that I think this country will have to look at in the future. We believe that the number of electric bikes being used is likely to increase, for a whole variety of reasons. More cycleways are being constructed and, by and large, they have support within local communities. Almost certainly that will lead to a greater increase in the numbers of bicycles that have electrical assistance to propel them, and we believe that a more liberal approach is necessary. It is quite common now for those bikes to have motors of 600 watts. That will become increasingly common in the industry, and we believed a blanket exemption up to that level was appropriate. The Minister has said that the director should have the discretion to rule on exemptions for vehicles with motors of between 300 watts and 600 watts, and maybe that is something that will need to be revisited further.

I want to close on this particular point: I believe that, as a nation, we will have to consider more seriously the issue of vehicle emissions. I think that there is a real question as to whether we are taking a rigorous enough approach to that issue. Certainly, much of the New Zealand passenger fleet consists of imported vehicles, many of which were quite old at the time of being first imported. I wonder whether we will have to look more rigorously at putting an age limitation on the first importation of those vehicles, plus take a more rigorous approach to the emission levels of those vehicles, generally. In a whole variety of ways, this country is concerned about global warming. There are different approaches to that issue. The Government’s approach is very much—

Phil Heatley: Taxes.

Dr WAYNE MAPP: —taxes, as my colleague has quite rightly put it. National is opposed to a carbon tax but, nevertheless, we recognise the seriousness of the issue. I note that last week President Bush also noted the significance of the issue. I believe that in due course the United States will become a party, not to Kyoto, but to a subsequent convention. Rather than taking a punitive tax approach—which is always the fond approach of the socialist; the European way, if you will—the approach of the United States is to provide incentives for new technology. I guess it is an issue of whether one thinks an incentive or a tax is more appropriate. We know what the Government thinks. It thinks the tax, or the punitive approach—the cost-plus mentality approach—is the right way. I believe that in time that will be shown to be an unwise decision.

Nevertheless, I think there is concern that we should have a more efficient vehicle fleet. I have only to think of the work done by the Toyota and Honda motor companies on their hybrid technology vehicles. I imagine that over the next few years the United States will be incentivising that kind of technology. President Bush has already indicated that is the pathway the United States will take, and I believe that a future agreement, post-Kyoto, will have a much greater focus on incentives rather than on punitive taxes. The outcome, of course, is intended to be the same: to reduce the effect of global warming.

Hon Pete Hodgson: This is about land transport.

Dr WAYNE MAPP: I say this to the Minister, who has responsibilities in this area. I believe that when this issue is reviewed further—and it will have to be—the pathway of Kyoto and of taxation will be seen, essentially, as a flawed approach. Nevertheless, the matter will have to be dealt with, and I believe that the way of the future will be technological innovation. That will be driven more through an incentivisation process than through punitive taxes. I believe that one of the things we will have to look at is the age of our vehicle fleet and the rules around the importation of motor vehicles, particularly their age at the time of their first importation. It is noteworthy that Toyota and Honda have said that importing vehicles that are already 8 or 10 years old means that New Zealand misses out fundamentally on newer technology.

If that issue was looked at more thoroughly by the Government and Crown agencies—the Energy Efficiency and Conservation Authority, for instance, should be looking at that issue more intensively—we may come up with a more rational approach to that particular issue. That is not to suggest that we would not have second-hand imports; clearly, they are a feature of New Zealand’s way of life, if you will, and we do get substantial technological advantages as a consequence of importing them. But that does not mean to say that the alternative is essentially to have open slather on importing any vehicle, no matter how old it is. So I suggest that as we look at the issues that this bill raises, we see we will have to think more creatively and more imaginatively in order to deal with the issue of global warming.

Hon MARK GOSCHE (Labour—Maungakiekie): I am very pleased to see this legislation finally reach this point. It is good law. It deals with some very serious issues. It makes sure that our punishments for those who drink and drive, and those who speed at the upper end of the scale, are much harsher so that we actually deal with the repeat offenders, and with those who are going extremely fast, in a less tolerant way than the law currently allows.

We also deal with some quite small but significant issues, in the bill. Some are very important, particularly to those who drive for a living. We are allowing people who are currently disqualified from driving, say, buses to have the chance to go for a limited licence if they have not offended while driving their buses. We know that there is a shortage of truck drivers and bus drivers in this country, so some of these minor changes actually help people. People might not be able to continue to drive a passenger service vehicle, but they can drive a truck. At the moment they are prohibited from doing both, and that does not make sense.

Visually impaired and blind people, who are great users of taxis, for obvious reasons, will benefit from a small but significant change. The bill will put Braille signs in taxis for their safety, so they can identify who has been driving them, which company, etc. Surprisingly, the National Party opposed the provision that has just made the law on taxi signage safer, simpler, and better. The National Party’s position is to make it harder and much more expensive. National members say that the taxi companies should go through the courts and use competition law to do that, which shows people that they have no understanding of small businesses and the costs that apply to them.

Changes to liability through the chain of responsibility say that one cannot design a contract that actually makes the driver break the law. One cannot overload, and do the things that are being done out there at the moment, and get away with it. The Road Transport Forum asked for that change, and the Transport and Industrial Relations Committee and the Government are very pleased to be able to deliver it.

We have also taken some regulation away from the smaller end of the industry—the courier driver type of operations. The law is much simpler now, with lower compliance costs. It is a sensible law, and I support it fully.

Sitting suspended from 1 p.m. to 2 p.m.

PETER BROWN (Deputy Leader—NZ First): Let me first apologise to those people who have just tuned into their radio at 2 o’clock—expecting Parliament to be sitting—to hear the Rt Hon Winston Peters take on the Government again and embarrass it even further. Unfortunately that will not happen. The Government has given up the ghost. It has put the House into urgency. So the Rt Hon Winston Peters has been denied his opportunity to ask this Government some penetrating questions.

We are debating the third reading of the Land Transport Amendment Bill, and it is a bill that New Zealand First supports. That is not to say that the Government’s bill is 100 percent correct, but it is pretty close.

Darren Hughes: 99 percent?

PETER BROWN: Maybe not 99 percent, but pretty close. There are three aspects of this bill that I would like to touch on. The first is the simplified logbook regime for commercial truck-drivers. It is long awaited and long overdue. Truck-drivers are not the brains of New Zealand, and in saying that I am not putting them down. They are average guys who drive trucks for a living and by and large drive them very, very well. But I have seen some entries in logbooks that have allegedly resulted in drivers being charged with a crime. The one that comes to mind is a truck-driver who signed off at Wanganui one evening and said that he had off-loaded his truck at the depot at Wanganui. The following morning at 6 o’clock, or half-past 6, he signed on again at the depot “loading”, but he did not put “Wanganui”. Apparently, he was fined in excess of $300 and suspended for a period of time. He was a family man with a couple of children, and, but for the goodness of his employer, he would have lost quite a lot of money. That sort of regime seems ludicrous to New Zealand First. So we are very, very pleased that this Land Transport Amendment Bill simplifies the logbook regime for truck-drivers. It is easier for them to fill in the details and easier for the police to identify any problems.

This country depends on trucking. Frankly we do not have enough trucks. When the logging comes back on stream, as it will in a year or so, we will be in dire need of more truck-drivers; if not by the thousands, certainly by the hundreds. They are the backbone of society. There is not much that we purchase from retail stores that is not delivered by truck. Indeed, much of the cargo that comes and goes through our ports is handled by trucks. Some people say: “Put it on the rail.”, but railways are not as flexible as trucking when it comes to small parcels of cargo. Rail is OK and is very good when moving goods from depot to depot, but when it comes to small parcels and small container loads—two or three containers or two or three truckloads—trucks are in their element.

New Zealand is a nation of small exporters, as well as large exporters, and trucks have a role to play. Trucking people are entitled to a straightforward regime, and in our view this simplified logbook will achieve that. I only hope the commercial vehicle inspection unit of the police takes on board what is being done today, and adopts a more cooperative attitude with the trucking people than it has done in the past.

The second area of concern is the contentious issue of passenger endorsements on licences for taxi drivers and bus drivers. New Zealand First totally supports the concept that a person who is guilty of murder or other serious crimes, as listed in the bill, should not be driving a taxi or a bus. We absolutely support the notion that people who have that sort of past should be prohibited from driving taxis or buses. But somewhat regrettably several hundred of our taxi-drivers—if we believe the figures given to us—are guilty of some sort of heinous crime. At one point the Transport and Industrial Relations Committee simply wanted to say “out”, meaning “out, out” with those people. But in its wisdom the Government has listened and said that, although it is not prepared to accept those people, if they have an established track record of driving competently and have caused no problems to the public, the bill provides the right of an appeal for some of them—not people who have been guilty of murder, rape, or sexual offences—but, none the less, those who have been guilty of some serious offences.

The Supplementary Order Paper that accompanies this bill provides a means for reinstatement of passenger endorsement for people who have not reoffended in the last 10 years, so have a clean record for that period. Some of them might well have been rehabilitated to such a degree that they own the taxicab or own the business. It would be most unfair to say that we are prohibiting them from driving forever, without any right of appeal. This bill stops them from driving, but it gives them the right of appeal to the Director of Land Transport or, subsequently, to the High Court.

New Zealand First prides itself on being the law and order party in this Parliament. We would, if we were honest, want those people totally excluded from driving taxis or buses. But if we want law and order in the country we have to have justice, and justice is dependent on giving everyone a fair hearing. As much as I dislike defending the right of people who are guilty of some awful crimes, to have a fair hearing, if we want law and order we must have justice. Those people are entitled to a hearing, and a legitimate hearing at that. So New Zealand First supports the Supplementary Order Paper, just as it supports the bill.

Our third concern is courtesy vans operated by clubs. I am quite relieved, after talking to the Minister and his officials and hearing the Minister’s comments in the House, that the Government is taking an objective view on this issue. I am told there are 350 licensed clubs in this country with 220,000 voting members. The clubs probably have other associated members who cannot vote. It is common practice for the clubs to run a courtesy bus, although it is illegal for them to charge a fee. They are meant to seek donations, but currently many of them charge a fee. Frankly, the Parliament must face up to the reality of what is happening in the outside world. I am told by the Minister and his officials that because this bill will not come into force until January next year, there is a time frame available. I was encouraged by the Minister’s comments that the Government would be listening to submissions from those clubs, or people associated with those clubs, in a very positive manner, and that he was hopeful of addressing the concern under what he termed “operating licence rules”. I think I have that correct. This is a good bill, and 90 percent correct—

Darren Hughes: 99 percent—

PETER BROWN: That 99 percent must be a record for this Government. So New Zealand First supports the passage of this bill.

DEBORAH CODDINGTON (ACT): I want to speak briefly in the third reading of this bill. It is probably the last piece of legislation that I will see all the way through this House, and I take the opportunity to thank the chairman of the select committee, Mark Gosche, who knew what was dear to my heart in this legislation—that is, cleaning up the taxi industry by not allowing those who have convictions for serious sexual abuse crimes to hold a P endorsement on their licence and be able to drive taxis or buses. As a member of a small party who is on two select committees, and spokesperson for 10 portfolios, it was difficult for me to be at every single select committee meeting. The chairman went out of his way to make sure that when I was there we discussed clauses that related to those offences, and I do appreciate that. As I said before, it was a good—[Interruption] If those members would just listen for a moment, they would hear that there is no need for them to interject. This legislation is a good example of people working together in a select committee to achieve the required result. I think this legislation does actually make New Zealand, in some small way, a better place.

We are cleaning up the taxi industry. We need to clean up the taxi industry. For a while there were a lot of calls that it needed to be totally regulated again. This legislation steers a way between those two opposites, if one likes. There is no need to go back to total regulation of the taxi industry. We do not want to go back to the days when women came out of a restaurant at 11 o’clock at night and there was not a taxi in sight. The industry was so tightly controlled and so expensive to get into that there was never a taxi when one really needed one. That did not make for safe cities. There is still some merit to the argument put forward by people who have been in the taxi industry for quite a long time that perhaps we should look at devolving the control of the taxi industry back to local authorities or local communities. They have an interest in keeping a good taxi industry in their town or city, because it is a reflection on the state of their town or city. They could take some pride in having a good fleet of taxis, good drivers, and all that sort of thing. It is more a matter of self-interest for them. This bill does not deal with that, but maybe it will be dealt with in the future.

One of the things that I am particularly pleased got through is the provision to make the ban on those with serious convictions retrospective; it will apply to those already in the industry. It is a very high bar; sexual crimes subject to a sentence of 7 years’ jail or more, murder, and a number of other crimes fall into that category. But we did discuss and get the officials to work out whether we could make it retrospective. We all agreed, and there was cross-party support, with Lianne Dalziel, Lynne Pillay, Maurice Williamson, and myself in particular agreeing that it was just not good enough to allow these people to drive in these situations—even to drive a bus. Maurice Williamson raised the point that perhaps the case of a bus driver is not quite so bad, because a lot of passengers are on board, so it is harder to commit a crime. That is not the only point. I believe that people who pay for a service—and we are talking about paying passengers here—have a right to know that the person who is driving, and in charge of that service, is a fit and proper person. By a fit and proper person we mean that that person has not been convicted of any serious crime. It is not just about whether we give them the opportunity to commit those crimes again; it is about the safety of communities and the perception of being safe.

That is why I agreed that we needed to look at the issue of being fair to those who have been rehabilitated—that they should have a right of appeal to the High Court when their application to renew their licence is turned down. We now have seen that come in on a Supplementary Order Paper, slightly differently. Unlike the Minister, I do not have a huge amount of faith in the Director of Land Transport in terms of his using his discretion to decide whether those people are fit and proper persons, especially when their crimes were committed overseas. However, we shall have to see.

The thing I do take issue with is the 10-year barrier. Peter Brown thinks 10 years is enough—what if, for instance, the taxi-driver has been rehabilitated enough to own his or her own business? Hundreds of sex offenders and murderers own their own business. Owning one’s own business does not make one a safe person by any stretch of the imagination. Kidnapping a child is one of the crimes that, under this legislation, would bar a person from getting a taxi licence, but under Supplementary Order Paper 375 one would have a right of appeal—one would not be barred automatically. Say a person kidnapped a 6-year-old girl, was convicted for that, and did his or her time, and that was 10½ years ago. That little girl would now be 16½ years. She gets into a cab and sees that the man who kidnapped her 10 years ago is driving the cab. Ten years ago is nothing to that person. In that person’s life it is nothing.

Another crime that comes under the category of appeal is attempted murder. For murder a person is automatically barred, but for attempted murder a person is not. The intent is still the same; it is just that the person did not succeed. He or she did not kill the person; he or she attempted to murder the person, intended to murder him or her. To me 10 years back is not enough. What if a person was the subject of a murder attempt when he or she was 40 years old, and 10 years later jumps on a bus, hands over the fare, and sees that the driver is the person who attempted to murder him or her 10, 11, 12 years ago? Those people should not have such a low barrier to the right of appeal. I still think they should go back to the High Court to fight it out there. If they were genuinely rehabilitated, and genuinely believed that they had a right to be in a position of trust, then they would put their money where their mouth is and fork out the amount of money needed to appeal to the High Court. They would not take such an appeal lightly. I am not saying that people do not become rehabilitated; they do. But there are plenty of other jobs—and other driving jobs—that they can do.

In closing, another thing that the bill does not address, but that needs to be addressed in terms of taxi-drivers, is stopping Work and Income New Zealand from using taxpayers’ money to set immigrants up with cars and licences—providing translators when they sit exams, and putting signs on its walls telling them that they can get jobs as taxi-drivers. As someone said recently, when one comes out of the Auckland airport one could be excused for thinking one was in downtown Delhi, or somewhere like that. We have more than enough taxi-drivers. We do not need to spend taxpayers’ money putting immigrants into taxis.

Hon Rick Barker: So they don’t deserve a job?

DEBORAH CODDINGTON: Of course they deserve a job.

Hon Rick Barker: They don’t deserve a job?

DEBORAH CODDINGTON: The Minister says they do not deserve a job. He might think they do not deserve a job. I ask him whose money is getting them into a job. It is taxpayers’ money; money is being taken off the taxpayers to get them into a job.

Hon Rick Barker: So are we going to spend money on white people getting a job?

DEBORAH CODDINGTON: We only take brown immigrants, do we? I thought we took immigrants from all over the world. The Minister does not want brown immigrants getting into jobs. Well, that is very interesting from that Minister.

In conclusion, I am just pleased to be able to support this legislation. Although it will not be the silver bullet for the taxi industry or the transport industry, it goes a long way, and the ACT party will be voting for it.

MIKE WARD (Green): I endorse the comments of Deborah Coddington about the cooperative nature of the process. In fact, it is interesting to hear the sort of barracking across the House. The select committee was much more peaceful than that. We support the Land Transport Amendment Bill. It contains a range of common-sense measures and is the outcome of numerous submissions and substantial consultation and deliberation. However, the Greens felt obliged to include a minority report on the bill. It reported back over the decision of the committee to make passenger licence “fit and proper person” provisions retrospective, without minimum sentence or appeal provisions. As originally written, the bill made provision for the opportunity to exempt individuals sentenced to less than 2 years in prison, and it was not proposed that the provisions be retrospective.

Because of several well-publicised incidents of individuals with serious convictions gaining a P endorsement on a licence and subsequently committing an offence against a passenger, the committee decided the provisions should be retrospective. The committee considered the possibility of appeal, but, apart from myself and latterly Peter Brown, it was not satisfied that the conditions for appeal as presented by the officials were sufficiently robust to protect passengers from the possibility of finding themselves in a taxicab with a rapist or murderer. So rather than run the risk of letting anyone through, it was decided to remove the possibility by removing all.

Deborah Coddington asked whether the time period of 10 years without conviction was long enough, if, for example, the person’s last conviction was more than 10 years ago. She wondered about people who had been convicted of kidnapping or rape, but we must remember that in addition to the 10-year requirement, the director has to be convinced the person is unlikely to offend again. I would have thought that a person convicted of a serious sexual offence or kidnapping would be unlikely to pass the barrier. I agree with the intent of the provision, and since the “fit and proper person” test may not on occasions have been applied robustly enough in the past, there may be a case for re-examining drivers with previous serious convictions. However, the prospect of depriving persons of their livelihood long after conviction, and quite possibly for an offence at the minor end of the scale, and removing the minimum sentence provisions for an offence for which the person has already been punished and which the community may well have known about and forgiven long-ago, is, in my opinion, unfair and would likely result in a serious injustice, without any improvement in passenger safety. The Greens are pleased that the Supplementary Order Paper reinstates the minimum sentences and provides for a right of appeal.

I have a query about new section 29B(1) inserted by clause 13: “A person whose passenger endorsement is deemed to be expired and of no effect under section 29A(1A) may apply to the Director to have that passenger endorsement reinstated if—(a) the person has not been convicted of an offence specified in section …;”. Then follows the word “and”, and I wonder whether it should be “or”. Because paragraph (b) states: “the person’s last conviction for a specified serious offence occurred more than 10 years before the commencement of this section; and”. It seems to me it should be “or”. Perhaps I have read it wrongly, but people might want to think about that.

When I drew attention to the matter originally, one party put out a press release saying the Greens were soft on crime and wanted rapists and murderers to be driving taxis. Of course that is nonsense. People convicted of serious offences should not be driving taxis, but this provision is for those at the lower end of offending. The Supplementary Order Paper provides that the director may reinstate a passenger endorsement if he or she is convinced that the applicant poses no risk to the community.

The point was made that even schoolteachers and early childhood workers are not subject to such conditions. It is not difficult to imagine an incensed public dumping on Parliament at the prospect of losing their taxi-driver, perhaps the only taxi-driver, in a small rural community, because of a 30-year-old scrap, an only offence by that person, committed in his or her youth. That is the kind of situation that no doubt some members in the House might have found themselves in, had they not been lucky. I can think of times in the past when I have been beaten up by people and not inflicted any great injury on anybody, but it is possible that I could have found myself in such a situation.

I know that most members of the committee shared my concerns about the possibility of an injustice and were motivated by a concern for the safety of passengers. I hope they are satisfied that the amendments made will not endanger passengers.

I wish to speak briefly about the provision for licensing small motorised personal transport devices—namely, mopeds, scooters, skateboards, recumbents, etc. The rationale for exempting these vehicles is that if the motor is such that they pose no more threat than someone on a bicycle, then what justification can there be for treating them differently? The bill has a little wriggle-room to provide the director with the opportunity to consider new and innovative devices that might pose a minimal risk, for inclusion in the list of devices not requiring licensing. I think that is an interesting aspect, and with the need for more innovative means of transport, it opens up the opportunity for some of those more innovative means of transport. The Greens will be supporting the bill.

PAUL ADAMS (United Future): United Future is also supporting the bill. I think one of its strongest points is the restrictions on the taxi industry. I want to pick up on what Deborah Coddington was saying about offenders. I was thinking about that over the lunch break, and definitely there are certain areas of transgression that prevent people from having a second chance and being in the situation of being a taxi-driver—such as sexual sins. When we think about the 10-year time period in respect of past convictions, we do not know what might trigger somebody in a certain situation. We are talking about the taxi industry, about the one-on-one situation between a taxi-driver and a female or male passenger. Therefore, the amendment is a welcome addition to enable people to feel safe when travelling in taxis.

I sat on the Transport and Industrial Relations Committee for part of the process, and it was great to see the various parties in Parliament working well together on this legislation. It was refreshing, and Mark Gosche did a tremendous job of chairing the committee and picking up on everybody’s viewpoint.

I want to touch on the amendment that United Future has had put in the bill with regard to noisy vehicles. We had actually pushed for the ability to have a noisy vehicle immobilised. The noise is made in the late hours of the night, and causes a nuisance. It is a problem throughout most of the major cities in the country. However, noise in itself is an interesting scenario. In transport, one of the things that has concerned me is that we have regulations that car exhaust systems must be no noisier than they were when originally manufactured. That requirement is causing major challenges to the secondary exhaust market. I fail to see how we can have a requirement that an exhaust be no noisier than when it was originally manufactured. Surely, we must have the simplicity of putting in a maximum decibel level that an exhaust noise can be. My suggestion would be 100 decibels. To give members some idea of what 100 decibels is, I tell them that a Stagecoach bus accelerating away from traffic lights reaches 123 decibels. I myself have checked it with a meter, and 100 decibels is not an unreasonable amount.

There are two types of citizens when it comes to noise. Firstly, there are people I refer to as “CAVE” people—“Citizens Against Virtually Everything”—and, secondly, there are the enthusiasts like myself who just want a nice, crisp-sounding exhaust note on their motor vehicle. “CAVE” people are the sort who live around the Western Springs Stadium in Auckland. They move into an area that has the magnificent sound of speedway racing, which has been going on there for decades, and then they begin to complain about the noise.

Getting back to the amendment that United Future wanted, I think it is of serious concern, especially to the tourism industry, when people in cars cause undue noise at night-time in resorts such as Tauranga, and keep people awake. We need to look seriously at how we will address the problem in that area, but I say let us not go overboard and take that nice, crisp exhaust note off all cars.

I am also pleased to see that the issue of a P licence—for passenger servicing—for drivers of courtesy vehicles has been looked at. We have to face up to the fact—and provide for it in legislation—that certain service industries are doing road safety a favour in driving people home. Sometimes it becomes a fine balance in the law as to what we are going to do about that.

But overall the bill is good legislation. I believe that it will go a long way to cleaning up a lot of areas. We welcome the changes to the logbook requirements. We think that is a step in the right direction. We acknowledge that more and more of this type of tracking will be done electronically, and that is great. Probably there will not be a problem with speeding trucks in the long term, because all of them will be tracked by the Global Positioning System, and the police will be able to see what speeds they are travelling at in various sectors. In the end, that will bring greater road safety, which I think everybody here is looking forward to. So United Future is happy to support the legislation.

LYNNE PILLAY (Labour—Waitakere): I take this opportunity to take a short call in support of the bill, and also to acknowledge the comments made by previous speakers. I was a member of the Transport and Industrial Relations Committee, and quite agree with Paul Adams that Mark Gosche did a great job chairing that committee. We made some very progressive decisions to make this bill very sensible and workable in order to improve safety and security for all road users in New Zealand. I also acknowledge the people who made a submission on courtesy vehicles. We were able to make some really common-sense decisions about the use of courtesy vehicles, making sure that the good work being done in that area is not impeded but that safety is ensured. I will not take any more time. I am proud of this bill, and I commend it to the House.

PANSY WONG (National): I notice from the timetable that this bill’s passage through the House is being completed on almost the anniversary date of its introduction to Parliament. The bill was introduced in June 2004, so on the anniversary date of its introduction it is quite pleasing to see parties on all sides of the House supporting it.

I want to raise an issue that I think the National Party and ACT also raised, in terms of whether individuals who have committed serious sexual and other offences in the past can, after a 10-year period without further conviction, be a taxi-driver. We are hopeful that the rigid enforcement of this provision will see a real improvement. I notice that in the last few years, particularly since the promotional campaign against drink-driving has been run, the use of taxis has hugely increased, especially at weekends. Security in terms of the type of individual who is allowed to drive taxis is therefore important.

However, from a personal point of view, I am disappointed that Labour and United Future did not see fit to support the two amendments I proposed during the Committee stage. I took one issue just to demonstrate how difficult it was, and how slow it can be at times, to introduce measures to improve safety on roads. For example, I learnt that the 1999 Land Transport (Drivers Licensing) Rule requires that a driving instructor who teaches driving for reward hold the I—driving instructor—endorsement licence. The rule also requires the instructor to have the appropriate class of licence for the vehicle that the learner is being taught to drive. That is all very well, but unfortunately the offence provision for providing unlicensed driving instruction for reward was omitted from the Land Transport Act 1998. That has been picked up only in this current legislation. For an offence to be omitted for 7 years before it can be put right has saddened me.

I am also saddened that those two parties did not see fit to accept the two amendments I proposed that would strengthen safety provisions. Currently, individuals who give lessons for monetary reward have to hold an I endorsement licence, yet the public has no transparent or quick way to learn whether they do; neither is an enforcement agent able to verify readily whether driving instructors do hold an I endorsement licence. My amendment was simply that it should be displayed in the vehicle when driving lessons are being conducted. When we think about it, we require taxi-drivers to display their names and identification as a reference point for concerned enforcement agents, passengers, or, in this case, students. I was very disappointed that Labour and United Future did not see fit to incorporate that amendment. I hate to think it will take another 7 years for a sensible amendment like that to be accepted.

I also proposed a further amendment that driving instructors who teach for monetary reward should be limited to New Zealand citizens or permanent resident visa holders. If we are concerned about safety on roads, then I think that the people who are qualified to teach for monetary gain should, at least, be very familiar with New Zealand road conditions and New Zealanders’ driving habits, and with legislation and regulations surrounding that. So I was extremely disappointed, once again, that Labour and United Future did not see fit to endorse that amendment. Just now in the courts, a driver’s-licence testing officer has been handed down a sentence of 280 hours’ community service for selling licences to individuals who did not seek to be tested, and another driving instructor who offered to sell licences is now facing sentence.

I am watching with interest to see whether there is one standard of law in New Zealand. I expressed concern that the sentence of 280 hours of community service did not send people a serious enough message about not accepting bribes. I think it is very sad that in New Zealand, where we pride ourselves on not tolerating corruption or bribery, the sentence does not, in my mind, reflect the serious nature of the offence. After all, these individuals did not pass driving tests, and are allowed to drive on New Zealand roads. They are endangering not just their own lives but also those of pedestrians and other drivers on the roads.

So I hope Land Transport New Zealand will take this issue seriously, because history shows that it does not respond effectively and efficiently to complaints about driving instructors. Proper investigation seems to be very slow in coming, and there is a reluctance to take action. This morning in my second reading speech I read out the advertisements of driving schools, or of individual driving instructors, which offer individuals a choice of testing officer, a choice of sitting the test on weekends, and a choice of the route of their test. I have been assured by the Minister for Transport Safety, the Hon Harry Duynhoven, that Land Transport New Zealand is undertaking to monitor these types of advertisements. However, these advertisements continue to appear in newspapers. The ones I quoted are dated 10 June, which is last Friday.

Overseas students shared their astonishment at this. They said that in their home countries blatantly fraudulent advertisements like that are not allowed in newspapers, and that they are more likely to be displayed on lamp posts, etc. I urge the Minister to monitor Land Transport New Zealand to ensure that these types of complaints are taken seriously. I think that in New Zealand we should not tolerate publications that contain advertisements of a fraudulent nature, as they indicate that bribery and corruption are taking place.

Although National supports this legislation, I am extremely disappointed that Labour and United Future have not endorsed the two amendments I proposed. I can only live in hope that Land Transport New Zealand will start to take those complaints seriously.

Hon RICK BARKER (Minister for Courts): I rise to support the Land Transport Amendment Bill and to say that it is excellent legislation whose introduction was also supported by United Future, the Greens, and, of course, our coalition partner, the Progressive Party. The bill enhances the safety aspects of transport legislation. It improves the law concerning the responsibility of road users. It is tough on serious offences, particularly those in relation to alcohol and speed. It enhances the power to take effective action against repeat drunk-drivers. It also offers security to the travelling public in that those people who have convictions for serious violent and sexual offences will be prohibited from being a taxi-driver. This is good legislation and I am pleased to see that it has the almost unanimous support of the House.

Bill read a third time.

Bills

Tariff (New Zealand - Thailand Closer Economic Partnership) Bill

Second Reading

Hon JIM SUTTON (Minister for Trade Negotiations): I move, That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a second time. I thank the Foreign Affairs, Defence and Trade Committee for its work on this bill. I note that the committee recommends by majority that the bill be passed with no amendments. The committee also noted in its report that it had previously examined the full national-interest analysis of the agreement, and on that occasion the majority also supported the agreement.

The bill amends New Zealand’s domestic legislation to enable New Zealand to become party to the New Zealand - Thailand Closer Economic Partnership Agreement, thereby allowing the agreement to come into force once Thailand has also completed its domestic implementation processes. The agreement provides for all tariffs applying to goods of New Zealand or Thai origin traded between the two countries to be either eliminated immediately or phased out over a scheduled period. Most New Zealand imports from Thailand already enter duty-free under New Zealand’s existing tariff policy. The agreement provides for the remaining tariffs to reduce to zero variously on 1 July 2005, 1 January 2008, 1 January 2010, or January 2015.

The agreement also provides for the use of bilateral transitional safeguards by both Thailand and New Zealand. These allow either party to address situations of serious injury, or the threat of serious injury, to domestic industries caused by increased imports due to tariff reductions or removal under the agreement. Part 2 provides such a mechanism by creating a new regime under the Tariff Act. This regime establishes the right for a New Zealand industry or company that considers it is suffering serious injury as a result of a surge in competing imports from Thailand to ask the Chief Executive of the Ministry of Economic Development to initiate a safeguards investigation and revert to a higher tariff level for a certain period.

The committee addressed several issues that were specific to the content of the bill in particular. The committee considered the consistency of the bilateral safeguard mechanism with World Trade Organization rules. The committee was advised in this regard that the bilateral safeguard mechanism is fully consistent with World Trade Organization rules. The similar strict standards that are currently applied under New Zealand’s global safeguards regime, and that are based on World Trade Organization rules, also underpin this bilateral safeguard mechanism.

During the first reading some members raised the issue of new food-testing regulations being proposed in Thailand and the potential effect of those regulations on New Zealand exporters. Although this issue is not directly related to the content of the bill before us and is not part of the closer economic partnership agreement, I would like to take the time to confirm to the House that progress is being made towards resolving this important issue. Since the regulation was first notified late last year, New Zealand, along with Australia and the United States, has successfully argued for a delay in implementation to allow time for our trade concerns to be taken into account. When I met the Thai Ministers of agriculture and commerce at the time of the signing of the agreement, they gave a commitment to work with New Zealand on recognition of New Zealand’s food safety systems in the application of the proposed Thai regulation. New Zealand’s formal application for recognition of our system has been lodged with the Thai authorities. The New Zealand - Thailand closer economic partnership provides a new avenue to help progress this issue. A special meeting of the bilateral Committee on Sanitary and Phytosanitary Measures will be held in Thailand on 23 June so that relevant experts can put New Zealand’s case directly to the Thai authorities. That opportunity would not have been available before the agreement was negotiated.

I should note, in response to a point raised during the first reading, that under the agreement’s rules of origin only goods of genuine Thai origin will benefit from the New Zealand tariff reductions. Those rules mean that Thailand will not be a back door for preferential entry of goods from other countries.

At the select committee, despite the opportunity to do so, no serious evidence was presented to counter the Government assessment that the agreement will not have an adverse overall impact on New Zealand producers. The adjustment effects arising from the removal of New Zealand tariffs on goods imported from Thailand under the agreement are expected to be negligible. First, some 65 percent of imports from Thailand already enter duty-free. Second, the phase-out arrangements for New Zealand’s more sensitive sectors are very gradual. For sensitive products with a lower tariff, such as whiteware, existing tariffs will effectively be maintained at current levels before being removed in 2010. Finally, adjustment assistance has been made available in the context of New Zealand’s unilateral tariff reductions, to help the textiles, clothing, footwear, and carpet sectors build skills and global competitiveness.

Although the adjustment effects in New Zealand will be limited, the opportunities being created for New Zealand exporters in the Thai market are significant. Thailand is a heavily protected market. Tariffs are levied on virtually all imports from New Zealand—many are in the 20 percent to 40 percent range. Under the agreement, Thailand will eliminate tariffs immediately on over half of New Zealand’s current exports, including most current manufactured exports, and progressively phase out the remainder.

In broader terms, this agreement offers the most far-reaching bilateral market opening for New Zealand since CER. As noted in the select committee report, the bill will deliver real benefits to many New Zealand industries, and will open up opportunities for New Zealand to develop the trading relationship with Thailand to its full potential. I commend the bill to the House.

Dr the Hon LOCKWOOD SMITH (National—Rodney): That was the Minister for Trade Negotiations, who has just announced one of the most wimpish actions I have ever heard of, as an election sop to apple growers in this country. After years of discussions with the Australians over access for apples, that Minister has said—wow—that the Labour Government will have more discussions at the World Trade Organization. The Minister knows that those sorts of things never resolve intractable disputes like this, and he should explain to the House why he is not taking dispute resolution action—something with a bit of guts in it—for our apple exporters.

I come back to the bill. This is the third trade agreement that this country is passing legislation to implement. The first one was CER with Australia, which was negotiated by a National Government. It remains—despite the fact that it was negotiated in 1982, more than 20 years ago—one of the world’s highest-quality trade agreements. The second one was the free-trade agreement—or closer economic partnership, as this Government calls them—with Singapore. That was largely negotiated, as well, by the last National Government. In fact, I signed the heads of agreement on that one prior to the election in 1999. That is also a very high-quality trade agreement.

This is the first trade agreement New Zealand seeks to implement that has been negotiated by a Labour Government. It is a low-quality agreement. It is the first one negotiated by any Labour Government, and it is a poor-quality agreement. We will support it, because it is better than nothing. We made it clear in the debate on the first reading that we will support it, because it is better than not having an agreement, but it is a poor-quality agreement. Of this country’s GDP, 68 percent comprises services businesses, and this agreement does nothing to gain access for our services. This agreement does nothing to gain 68 percent of our economy—service industry providers—access to the Thai economy. All it does is say that in 3 years’ time a services negotiation will be initiated. That is not good enough.

The second problem we have with the agreement is that, despite the fact that the Government says its policy is not to have laws that give more favourable treatment to Māori, the agreement has in it a reservation allowing it to provide “more favourable treatment to Māori”, and National opposes that. I am not allowed to use the word “hypocrisy”, but I do not know how a Government can claim a policy of not having more favourable treatment for Māori, and then, in an agreement like this, have the exact words “more favourable treatment to Māori”.

Our third concern is that, under this legislation, tariffs here in New Zealand will not be phased out in total for Thai imports into the country until 2015. The reason why that is a problem is that the Minister for Trade Negotiations, the Hon Jim Sutton, who is meant to be one of the leading trade Ministers in APEC, has brought into this House legislation that in its effect will breach New Zealand’s commitments to APEC. The APEC Bogor goals that New Zealand has been signed up to for years require us to remove all impediments to free trade by 2010. That is what we signed up to. Labour has never officially resiled from that. If the member for Otaki—who is about to lose his seat, because National has a far better candidate than the little feller, the fifth-former from Ōtaki, Darren Hughes—thinks Labour has officially resiled from the Bogor goals of APEC, he should tell us when that was, so that we know that the Government has done so. If the Government has not resiled from the Bogor goals, why does this agreement extend beyond those goals? Why does it make a mockery of New Zealand’s commitment to APEC? That is the third reason why we consider this to be such a low-quality agreement.

Specifically, at the select committee—incidentally, how long did the select committee have to consider this bill?

Dail Jones: 13 working-days.

Dr the Hon LOCKWOOD SMITH: The select committee had 13 working-days to consider the bill. One meeting was available, and half an hour was set aside for the third trade agreement New Zealand has ever entered into. According to my notes, it was on 2 June that the select committee, very briefly, looked at this legislation. It is too important for such brief examination.

What National questioned extensively was Part 2. Part 2 puts into New Zealand law, for the first time, transitional safeguard measures in a free-trade agreement. The Minister for Trade Negotiations has already acknowledged that in his second reading debate contribution. It is a serious move for New Zealand, for the first time, to put into our law transitional safeguard measures. Those measures, by their very nature, are complex international trade law measures. I will come back to that. The bit that I wanted to make sure National clarified at the select committee was that some concerns were being expressed by people who are reasonably knowledgable about international trade issues as to whether the measures in this legislation were totally consistent with our obligations under the General Agreement on Tariffs and Trade, particularly article 24 of that agreement. Clause 8 of article 24 caused the most concern to observers of New Zealand’s trade measures. But the officials at the select committee, of whom a number are present in the House right now, gave the committee an unequivocal assurance that the specific provisions in Part 2 of the bill that implement the transitional safeguard measures are totally consistent with the requirements of GATT, particularly article 24. National members accepted the advice of officials, but we make it very clear that we do have some lingering concerns, and we are accepting that advice only because the officials were so unequivocal that the provisions were consistent with GATT.

Let me come back to the fundamental problem with safeguard provisions. Clause 7 inserts new sections 15A to 15H into the principal Act. New section 15B states: “(1) The chief executive may undertake a transitional safeguard investigation to ascertain whether goods that have been subject to tariff reduction or removal after entry into force of the free trade agreement—(a) are being imported in increased quantities …”—and I thought trade agreements were meant to result in increased quantities of items being imported and exported—“and (b) are causing, or threatening to cause, serious injury”. Members of the House can understand why this is complex law. How does one establish whether something that is being imported in increased quantities is threatening to cause injury to an industry?

New Zealand has been on the receiving end of punishment from this kind of safeguard provision. Members will have short memories if they do not remember the US lamb tariffs. The US argued that increased export of New Zealand lamb to the United States was injuring, or threatening to injure, its industry, and it imposed tariffs on us. It is complex law. When it is used against New Zealand it can be very damaging. This House should think seriously about the provisions in Part 2. The worst feature is that Thailand reserves the right to impose transitional safeguard measures against our agricultural exports to Thailand. If this agreement is worth anything, they should increase under this agreement, and, therefore, we automatically risk safeguard measures being taken against us.

I think the House should look very carefully at Part 2. During the Committee stage National will examine it in some detail, because I can just see all the actions and investigations being taken to implement safeguard measures, to the disadvantage of trade between our two countries.

CLAYTON COSGROVE (Labour—Waimakariri): I have said a number of times about that member—and I think it is true today—that he makes very angry and sour speeches. I can recall, before I became a member but when I worked in this place, when international trade issues were generally—on both sides, actually, regardless of who was in Opposition and who was in Government—treated in a non-partisan way. I have to say that that was a slightly over-the-top, sour speech. I suppose it is no wonder, given that it was made by a member who will soon become the former trade spokesperson for the National Party when a certain individual, Mr Tim Groser, enters this place on the Opposition benches.

We are looking at the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill 2005. If we look at it in the context of this Government’s track record, we note that it is interesting that this Government has a superb track record in negotiating deals to the benefit of this country. [Interruption] Hold on! Help is on the way. I am coming to it—taihoa. It seems that somebody over there—Mr Carter—is having a bad hair day. This Thailand agreement is projected to be worth hundreds of millions of dollars to this country. I would have thought that that would be a non-partisan, unarguable issue for both sides of the House.

Let us look at this Government’s track record in respect of trade, and let us look at the Singapore agreement that has been implemented. I was reliably advised, before I came into this place, that the then National Government spent an inordinate amount of time negotiating an agreement with Singapore. That is fair enough—good stuff. But I am advised that, in reality, all the goods involved in that agreement were free of tariffs anyway, apart from, I am told, beer. Beer was the only sticking point that National—[Interruption]

Hon Mark Burton: I raise a point of order, Madam Speaker. The member opposite made a very unparliamentary comment, and he should withdraw and apologise.

Madam SPEAKER: I apologise. I was sneezing at the time and missed it, so would the member please withdraw and apologise.

Dr the Hon Lockwood Smith: I withdraw and apologise. I raise a point of order, Madam Speaker. It is very difficult in this Parliament to encourage members to tell the truth to the House. I know that you will say that there are mechanisms for doing it and that it is not a point of order to raise this, but I have just demonstrated the dilemma. It will go into the record of the House that Mr Cosgrove said that National took a long time to negotiate the closer economic partnership agreement with Singapore. In fact, the record will show that it was done in record time—it was done in just a few months. That is the dilemma. When members are careless with the truth, there is no way—unless we go through all the rigmarole of personal statements—to bring them back.

Madam SPEAKER: The member is right; that was not a point of order. But perhaps it is a matter that the next speaker for National could clarify for the record. I remind members to stick to the bill.

CLAYTON COSGROVE: I am obliged that you were sneezing, Madam Speaker, and not yawning during my speech.

I come back to the bill and the track record of this Government. The point I was making in respect of Singapore is that I am advised that beer was the only product that could not enter Singapore duty-free. National got hung up and stuck on that—and it took this Government to complete that deal, which we have done. We have also entered into the Trans-Pacific Strategic Economic Partnership Agreement negotiations between Chile, Singapore, Brunei, and ourselves. We are in negotiations now with China, Malaysia, and the whole of ASEAN. So I would have thought that if we rack up the report card between Labour and National in respect of our history in trade negotiations, we beat them hands down. I invite the next speaker for the National Party, in addressing this bill, to point to National’s achievements in respect of trade negotiations in 9 long years of Government. If we go back from there, we hit my predecessor Mike Moore. His track record in the 1980s stands for itself in respect of trade.

What does the New Zealand - Thailand agreement do? It opens up, yet again, hundreds of millions of dollars worth of business opportunities for our people and our businesses. I say to the National members that I would have thought they would agree that this agreement is something we can celebrate. I would have thought they could get beyond politics and not have a sour, derogatory, and very negative attitude. I think that our diplomatic people, who are beyond politics, most New Zealanders, and most New Zealand businesses are gratified for any sort of free-trade agreement, whichever party it comes from, because they want to grow their businesses and they want further opportunities. The deal with Thailand will give them those further opportunities.

It is a little bit rich for National members to stand up and bag an agreement when they belong to a party whose history is one of incompetence and the incompletion of international free-trade agreements. The member mentioned the issue of apples. I recall that National was in Government for nigh on a decade, and the question is: what did it do? Well, those members have seen some action from us on that issue. I invite National members to revisit their track record in respect of trade negotiations. I am told that the member who spoke before was great at turning up at meetings. Whether he ever got to the green room, I do not know. We know that now he will not, for two reasons: first, he is in Opposition; and second, Mr Groser will have his job—and I wonder why Don Brash stabbed the member in the back.

I ask the member and the next speaker from the National Party to show a little faith and a little bipartisanship and to celebrate what is for New Zealand business, for New Zealand jobs, and for Kiwis rich and poor, old and young, and in work and out of work, a great opportunity to take advantage of yet another huge market in Asia—a huge market in the world—where we can push our products and services first and earn money for this country. It is a good agreement. I commend the Minister for his work. Let us just get on with it.

DAIL JONES (NZ First): The speech made by the Hon Dr Lockwood Smith was excellent. He was highly critical of the bill. New Zealand First is opposed to the bill, and Dr Smith reinforced New Zealand First’s view that we should oppose it. I do not think the member said anything in favour of it. He was highly critical of it and gave good reasons why we should not support it, and I endorse everything he had to say. He has confirmed New Zealand First’s view that we should oppose this legislation.

I should perhaps mention in passing, seeing as the previous two speakers have referred to it, the issue of apples. I raise with the Minister for Trade Negotiations, Jim Sutton, that the answer he gave me in the House yesterday was not consistent with the facts in so far as apple leaders are concerned. He gave a clear indication to the House that all the apple leaders supported this dispute with Australia going to the subcommittee. My understanding is that that is not the case. They want this dispute on apples to go to the disputes committee. In due course this matter will be taken further in the appropriate way, unless the Minister reconsiders, quite promptly, the statement he made to the House yesterday.

New Zealand First is concerned, in terms of this legislation, about the workers of New Zealand. Today we have not heard Labour members mention workers at all, because they really do not care about them. Clayton Cosgrove gave an apology of a speech that was really based on an attack on Dr Lockwood Smith and offered nothing positive. Mr Cosgrove gave the impression that he was concerned about the delay in bringing a new brand of beer into New Zealand. Perhaps he wished to try it and was concerned that it was not getting here fast enough, so as soon as he came into Government he allowed it to come into New Zealand so he could give it a try. That seemed to be the basis of his whole speech. Surely, Labour members can do better than that.

But let us talk about workers. I read in the national interest analysis, in reference, for a change, to the disadvantages—the officials quite properly set out advantages and disadvantages—the statement: “The clothing, footwear and carpet sector, where the highest tariffs of 17-19 percent prevail, has traditionally been the most sensitive to tariff reductions. Concerns in relation to imports from Thailand were also raised in respect of whiteware, plasterboard, steel and certain textiles.” New Zealand First is concerned about the future of New Zealand’s clothing industry, footwear industry, carpet sector, and whiteware, plasterboard, steel, and textile industries. For the reasons outlined in our minority view, which were confirmed, I believe, by Lockwood Smith, we are opposed to this legislation. I think the words used by Dr Smith were that this is a poor-quality deal, and it is a very minor one in so far as New Zealand trade relations and import and export trade are concerned. In New Zealand First’s view, we should not be setting an example as being anti - New Zealand workers so soon in any trade negotiations.

I have looked at the December 2004 statistics on New Zealand exports to Thailand and imports from Thailand. The top 20 exports to Thailand in 2004 were worth $297 million. Of that, almost $255 million came from dairy products, and suchlike. That is to be commended, as is the fact that we are moving into the baby food area. Asian people—and I was born and brought up in Asia, and came here when I was 15—do not eat or drink dairy products. Dairy food is alien to them in general. It is excellent that our exporters are targeting the baby food market so that those consumers can literally grow into it and the market can constantly grow.

Regarding our imports from Thailand, I know now why the Labour Government wants to support this legislation. We know that Labour does not care about the workers any more. In the reign of Louis XVI, Marie Antoinette said of the starving workers words to this effect: “Don’t worry about them; if they can’t eat bread, give them cake.” I see from the trade statistics that we are importing $21 million worth of caviar from Thailand. It seems to me that the Labour Government’s new saying to the workers might be: “If you can’t get a beer or a decent meal, eat caviar; we’ll get it for you from Thailand.” That is the way things seem to be working. The Labour Government does not care about New Zealand workers at all any more. It can buy off a certain group of people with benefits, and suchlike. Whether in relation to a trade deal or in any other area, the Labour Party does not seem to have any regard for workers at all. The things that are coming in from Thailand at the moment include $121 million worth of trucks and vans, air-conditioning machines, and suchlike. A lot of those things come in duty-free already.

Dr Lockwood Smith from National said that this was a poor-quality agreement. One does wonder why we are spending so much time on something like this. Why did we bother to get into a deal with Thailand at all, bearing in mind that some things, like services, are not covered at all, that so many parts of the agreement do not start until 2015, and that some start dates are even extended to 2025?

I want to take up the point raised by Dr Lockwood Smith as to why we must bring a reference to the Treaty of Waitangi into this bill. Why does article 15.8 of the agreement reserve the right for New Zealand to adopt “measures it deems necessary to afford more favourable treatment to Maori … including in fulfilment of its obligations under the Treaty of Waitangi.”? What is this fetish on the part of the Labour Government and its supporters that when we get into trade deals with places like Thailand and Singapore, we must somehow bring in our obligations under the Treaty of Waitangi? Are our importers supposed to take this into account when they are dealing with Thai people? Is that why caviar exports from Thailand will increase—because sturgeon was not fished by Māori people in days gone by?

Other aspects of this bill should, of course, be borne in mind. New Zealand First has been very concerned about the constant arrogant attitude of the Labour Government. The Prime Minister signed this agreement before the Foreign Affairs, Defence and Trade Committee had finalised its deliberations on the national interest analysis, and certainly before the passing of this bill. We have a bill before us by which Parliament is to ratify the agreement, but the Prime Minister has already signed the agreement—weeks ago, in Thailand. What is the point of coming here if that is the arrogant attitude Prime Minister Helen Clark constantly adopts towards New Zealand? She does not really care about this Parliament. She does not care about what happens here, whether it is a matter of social engineering legislation or of any other type of legislation. This agreement with Thailand has already been signed. The Prime Minister had a grand TV opportunity. How the Prime Minister loves her television opportunities! She has breached the Cabinet Manual, as well. In New Zealand First’s view, the Labour Government has breached the Cabinet Manual, because this matter was considered by the select committee for only 13 working days, not 15 working days. The Government’s whole attitude to this legislation has been cavalier and arrogant. It shows absolutely no regard for this Parliament whatsoever.

I take Dr Lockwood Smith’s point on the service industries. That is an excellent reason why we should not pass this bill, bearing in mind New Zealand’s achievements in this area. The national interest analysis notes some of the disadvantages to New Zealand in entering a closer economic partnership with Thailand. On page 22 is an unusual insertion: “The broader negotiation involved New Zealand meeting some specific Thai interests such as in the area of temporary employment for specialist Thai chefs and, potentially, traditional Thai massage therapists. The access for specialist Thai chefs to work temporarily in New Zealand subject to certain conditions is not however expected to displace New Zealand workers. Care will be taken to ensure the integrity of any system for temporary employment access ultimately offered for traditional Thai massage therapists.” If we look around Auckland, Wellington, or wherever we very soon find out just what a traditional Thai massage therapist is. [Interruption] He is not in my party.

I just say that this is a very unusual piece of legislation. It is a poor-quality bill, and New Zealand First will not support it.

KEITH LOCKE (Green): I rise on behalf of the Green Party to say that we will oppose this bill, and we presented a minority report on the bill to the Foreign Affairs, Defence and Trade Committee. Although this bill has some good features and the agreement will bring some advantages, particularly for New Zealand agriculture in terms of promoting and selling agricultural products in Thailand, they are outweighed by the disadvantages for the people of Thailand, both workers and farmers, for workers in New Zealand, and for our manufacturing industry, which will be undermined by this bill and by the agreement on which it is based.

I want to go through some of the disadvantages. Firstly, will the agreement help Thai workers? The proponents of this agreement, and agreements like it, say that such an agreement will help the people of the country we are signing it with. They say that it will help these people develop. It is true that Thailand has developed and that it is not the poorest country, although the Oxfam analysis that was submitted to the select committee on the closer economic partnership agreement shows a great difference between rich and poor and between the rural and urban sectors in Thailand. Wages are very low, much lower than New Zealand wages.

The New Zealand Council of Trade Unions put out a statement a few months back warning of the risks of trade deals such as this. It referred to the Thai agreement, then in preparation. While it noted that the agreement included a process to enable unions to take up complaints about breaches of labour rights in Thailand—which was, it said, an improvement on the closer economic partnership agreement with Singapore, which made no reference to labour issues—it still felt that the agreement fell far short of an enforceable and meaningful process to address breaches of core labour conventions, such as the use of child labour and forced labour, discrimination, and the suppression of union rights.

The Council of Trade Unions referred to a 2003 study of Thailand conducted by the International Confederation of Free Trade Unions that reported on forced labour, sweatshops, the exploitation of illegal migrant workers—including workers involved in the production of clothing for export—and forced prostitution, including national and international trafficking in women and girls. Added to that, Thailand has not signed and implemented all the core ILO conventions. So there is a serious problem as to whether the workers of Thailand will really benefit from this agreement.

The Greens argue that richer nations such as ours have a certain duty to say that if we are going to have trade agreements with other countries, we would have to seriously discuss questions like labour standards and the effect of the trade agreements on communities, and would try to use negotiations to improve a situation for the workers of that country—in this case, Thailand. That has not been done. There are, as the New Zealand Council of Trade Unions said, some improvements over the Singapore agreement in the general text of the treaty, but there is nothing at all in the bill itself that will try to make Thailand adherent of labour standards, ILO conventions, etc. In fact, during the Committee stage, the Green Party will put forward a number of amendments to try to at least get such provisions in the bill before us today.

It is not just the question of Thai workers, either. There was a very interesting submission from Oxfam New Zealand, which I referred to previously, to the select committee on the New Zealand - Thailand Closer Economic Partnership Treaty. As I said at the beginning, there are some advantages for New Zealand in the promotion of dairy exports, but the Oxfam submission actually had a section on dairy farmers in Thailand, which I found quite interesting. Oxfam, of course, is looking at the interests of poorer countries, and often people in the rural sector, in particular. Oxfam said there is a potentially vulnerable sector in Thailand, which is dairy, on which 60,000 Thai farmers and their families are directly dependent.

Oxfam referred to an Australian study by the Department of Foreign Affairs and Trade in Australia, and it quoted a bit from that department: “As for the dairy sector, subsequent intense competition under the terms of an FTA would marginalise Thai dairy farmers, and thus adversely affect employment.” That is what the Australian Department of Foreign Affairs and Trade thinks as they approach fair trade negotiations. They said that perhaps the growing world demand for milk solids might mitigate this, and that it was possible that if countries like Australia and New Zealand help Thai farmers improve their dairy industry, it would reduce that problem for Thai dairy farmers. They also said that that does not seem to be the case in Thailand, because the Australian Department of Foreign Affairs and Trade talks about a new Nestlé plant in Thailand for canned milk, which will be supplied by Australian imports.

I think we have to look at that if we are to make our trade policy consistent with our aid policy, which is what Oxfam is trying to do. We have to assist small-scale dairy farmers in Thailand, alongside developing our own markets there. Oxfam said that the approach of helping Thai farmers should precede any threat to their current livelihoods from import liberalisation. Oxfam was also concerned about making sure Thailand fully implements ILO core conventions, particularly in the light of serious breaches of workers’ rights and safety, most notably in the case of factory fires. That is illustrative of problems for the Thai people flowing from this agreement in the bill we are discussing today.

For New Zealand workers, there could be significant job losses, particularly in the textile and clothing sector, where, if there are no tariffs at all, Thai products could compete very well with their very low wages. That would also undermine our manufacturing industry. It is true there is a transitional provision in the bill. It is not spelt out in terms of years in the bill, but if one refers back to the original treaty, one can see that this transitional period is for a maximum of 3 years. That is not very long to protect New Zealand workers from the competition of very low-paid Thai workers. So that is not sufficient.

In closing, I reinforce what Dail Jones said, which is that it is strange that the select committee was discussing—and in the end approving—this bill after the agreement had actually been signed. I think that shows the need for a provision that came before the House a year or 2 ago when I put forward the International Treaties Bill, which required that Parliament should approve international treaties. Parliament should not just be at the end of the process, and its consideration is actually being treated as irrelevant by the Government of the day. We need a proper process there. The Green Party is also concerned that services are not included in this agreement yet, although there will be negotiations on services. We are concerned that there will be an undermining of our services, and of our control of our own services, be it health, education, or Government services, if we give to businesspeople in countries like Thailand free entry to our market in that respect. We are very concerned, and I think that in total the bill is not one that the Green Party can support.

Hon KEN SHIRLEY (ACT): The ACT party supports the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill and will be voting for it. We recognise that trade is the lifeblood of the New Zealand economy. I acknowledge the good work that Minister Jim Sutton and his officials have done.

We believe that trade should be a non-partisan issue. It is in the interests of the New Zealand economy as a whole to promote freer trade in a global sense. Obviously, like others, we would prefer to see multilateral trade agreements. There are serious advantages that multilateral trade agreements have over bilateral agreements. They are fairer in a global sense. If we think about the work—the glacially slow work—made at the Tokyo round, followed by at the Uruguay round, and now at the current Doha round, it is a disappointment for a country like New Zealand to have the agreements stalled, but we keep plugging away. Successive Ministers in successive Governments of all persuasions have been consistently promoting New Zealand’s interests at international fora in getting and working for freer trade. Overwhelmingly, it is in our enlightened self-interest to do so.

One of the problems with bilateral trade is that the more powerful nation actually has advantages over the least powerful nation. But it is all progress along the way. This particular agreement with Thailand is not perfect. Other speakers have commented that it has limitations. All trade agreements always will have limitations. But each step is a step towards freer and more open, comparative trade. That is why it is certainly in New Zealand’s interests to advocate for freer trade based on comparative advantage, and it is for that reason that we have to accept that although we may have an advantage overall, there will be adjustments. Some of the adjustments may carry some pain. Certainly, if we have areas of quite high protection, or relatively high protection—perhaps in clothing and textiles—then we do not have the comparative advantage, so, yes, we may lose some jobs in that sector. But New Zealand First and the Greens have to understand the point that, to the extent that the overall New Zealand economy will be stronger, other jobs and opportunities will open up that will more than compensate for that. One of the great advantages of trade is that both parties benefit, and the collective benefit actually creates greater prosperity, not just for the countries involved but for the world at large. A rising tide lifts all boats, and that is what freer trade can do.

The other thing to note, of course—and I think I mentioned it at an earlier stage in this debate—is that throughout history, no two openly democratic nations that have traded with each other have ever gone to war. I put out the challenge to members to name two openly democratic countries that have traded together that have ever gone to war. One of the best ways of building global securities is actually to open up for trade, but the xenophobic arguments from the Greens and New Zealand First are the very arguments that create instabilities and problems, in an international sense.

In the big-picture view, I think that one of the greatest obscenities in the world is the way that wealthy nations in Europe and North America insist on free trade in areas where they have comparative advantages, based on high-tech goods, and the like, yet deny developing countries the same opportunity—in fact, engage in massive subsidisation and tariff protection against the developing Third World. It just so happens that although New Zealand is not characterised as a Third World nation, structurally our economy is more representative of being so, with our heavy dependence upon agricultural goods. So it is true that we would benefit, but so would some of those poverty-stricken nations of Africa, and the like. That is why I take exception to the Greens’ argument that says: “Oh, no, no. We should give these countries more aid.”, and then they come to this House and vote against opening up with trade.

There is no better way to assist people to lift their standards of living and to gain prosperity than to trade with them. I find it an incredible hypocrisy and contradiction to promote more aid on the one hand but to deny the opening up of trade on the other hand. Yes, by our standards some of those countries may well operate sweatshops, and employment conditions may be a lot harsher than we would accept, but the way to lift those conditions is to open up trade and, with growing prosperity, those other social standards, and the like, will rise with it. That has been the experience throughout the ages in all economies. Not to do that is to consign those nations to continuing poverty, and everyone, effectively, is the loser.

So without hesitation ACT certainly supports this bill. We acknowledge its shortcomings, such as the lack of a proper breakthrough in services; I understand that the Thais have agreed only to initiate negotiations in 3 years’ time. I am constantly confused by the Labour Government’s race-based laws, if you like. Here we have it again, with favourable treatment for Māori. That should not be necessary. All New Zealanders should stand alone. Ethnicity has nothing whatsoever to do with it. Of course, we know that this Labour Government did a similar thing when Māori corporations were given a lower taxation rate. We are actually glad they have a lower tax rate, but we would like everyone to have a lower tax rate. We are not against Māori corporations having a tax rate of 19c in the dollar; we believe everyone should have a lower tax rate, and there should not be differentiation based on race. To put that into an international trade agreement, as we have here, is certainly, in the eyes of ACT party members, a very, very strange thing to do.

Another good area concerns timber. Although we might be affected by clothing, carpets, and textiles, Thailand is potentially a very significant market for New Zealand’s timber, particularly sawn timber and other products. I understand that we face some very high tariffs there of 20 to 30 percent, or thereabouts. The Minister could perhaps clarify that. This agreement, and the conditions the bill creates, will certainly be a major breakthrough and favoured by many sectors of the New Zealand economy.

In conclusion, I reiterate that the ACT party will support the bill. We think that it is a quite small step in trade liberalisation, but all such steps are supported by the ACT party.

Hon PETER DUNNE (Leader—United Future): Firstly, as the chair of the Foreign Affairs, Defence and Trade Committee I acknowledge the constructive way in which the committee’s members—although it may not have been all that obvious from the debate this afternoon—participated in the discussions in the committee, both on the national interest analysis of the agreement and on this bill. I also acknowledge the support and advice we received from the officials who advised the committee throughout that process. That advice was most appreciated. It led, I think, to a constructive understanding of the issues, and to a report on both the national interest analysis and the bill, which is balanced and reasonable in the circumstances.

The starting point I want to take with regard to this legislation is the picking up of some of the points, ironically, from the previous speaker. In today’s international environment, multilateralism is clearly an opportunity and an option we wish to pursue. But the glacial pace of international trade reform and some of the political difficulties associated with that have led increasingly to nations seeking bilateral agreements, particularly within their regional sphere of influence. I think that that is part of a national self-interest, and it is no coincidence that in recent years, under Governments led by both Labour and National, New Zealand has sought to develop closer economic partnership arrangements with Singapore, China, the ASEAN states, and the countries in the Pacific Three Closer Economic Partnership agreement, the Thailand agreement, and so on. That is part of our way of ensuring not only the spread of international free trade and the opportunity that goes with that but also the greatest possible opportunity for the people of New Zealand, for our manufacturers and our exporters, to have the chance to sell their wares in other markets.

One of the lessons we have learnt over many, many years as fortress mentalities and nation States have broken down and as national boundaries have evaporated, is that to get the advantage of a deal for us we have to be prepared to make a deal with someone else. That is really at the heart of these types of free-trade agreements. There will be situations where we might quibble about whether the advantage to us is as pure and neat as we might wish, but in reality it will always be a compromise—put crudely, what we can get away with and how little we have to give up in order to get away with it. That is the tension inherent in all these negotiations.

New Zealand has to remember a few things, as well. We are a very small country, isolated, and at the end of the world’s trade routes. We will be more price-takers than price-makers. Although we have some natural advantages, we have some huge disadvantages that we can do very little about. Consequently, in all these negotiations, from the time that Ministers of overseas trade—from Jack Marshall onwards—made their annual trudge to Europe over dairy and sheep meat access in the lead-up to the British entry to the European Economic Community right through to the present, the New Zealand position has always been to ask how we can advance that New Zealand sense of self-interest; how we make sure that in the global scene the New Zealand case has some recognition. I think that tribute must be paid, without exception, to our trade Ministers over the years for their patience, for their endurance and, on the whole, for the success they have achieved on behalf of our country, in terms of furthering the opportunity for “New Zealand Incorporated”.

The world changed vastly when the Europeans decided in the 1950s—and I pick up the point about peace and harmony made by Mr Shirley—that their future would be secured if they stopped fighting each other and started trading with each other. The flow-on effect of that meant that that cosy situation we once enjoyed—where it was a simple exercise of growing the lambs, shearing the wool, putting the meat produce into muslin cloth, refrigerating it on a ship to Britain, and getting the cheque back sometime later—had gone forever. We had to become more dynamic; we had to become more innovative. The whole march of progress towards free-trade agreements that this country has entered into from CER onwards has really been about securing opportunity and a future for this country. Therefore, I get very angry with those who start to take a myopic view, which says on the one hand: “Let’s bring back Fortress New Zealand. Let’s throw out the barriers and pretend that the rest of the world doesn’t exist.”, and on the other hand: “Let’s be so preoccupied about the conditions in other countries that we forget about the opportunities in our own country.” That is at the heart of this agreement.

The bill is actually a very narrow one. It deals with the implementation of some of the tariff provisions related to this particular agreement. It has an unusual feature in Part 2, but, as we were advised at the select committee, that has occurred as much because of the insistence of the Thais in putting something similar into the agreement at their end as because of the result of New Zealand pressure. There are some useful steps in that, and it is fair to report that after committee members had teased out those issues with the officials, we were satisfied that those provisions not only were consistent with out GATT obligations but also were likely to deliver “real benefits to many New Zealand industries and will open up opportunities for New Zealand to develop the trading relationship with Thailand to its full potential”.

That is the heart of this issue. That is what this bill is about. It is what this agreement is about, and it is what the whole history, in recent years, of trying to develop closer economic partnerships with other nations in our part of the world has been about. As I have said, I applaud the initiative and the energy of successive trade Ministers in bringing that about. I am pleased to say on behalf of United Future that, as a consequence of those measures, we support this legislation enthusiastically and wholeheartedly, and we support the process that is seeing opportunity brought to New Zealanders because of a willingness on a bipartisan and, increasingly, a multipartisan basis to embrace the notion of free trade and the notion of these types of partnership arrangements with the countries with which we have the closest contact.

Hon DAVID CUNLIFFE (Minister of Communications): I would like to thank the member who has just resumed his seat, and to acknowledge the previous speaker, the Hon Ken Shirley, for what I thought was a useful intervention, as well. The Tariff (New Zealand - Thailand Closer Economic Partnership) Bill is a fairly technical bill that reads into law the changes to the tariffs schedule brought about by the New Zealand - Thailand Closer Economic Partnership Agreement.

The debate is an opportunity to note the high level of bipartisan support for this type of trade agreement, which is relatively widely held in this House—perhaps, for the listeners, unusually so. There is broad consensus in the House that multilateral trade reform is always the “first, best” option when one is a small, remote country reliant upon good, transparent rules regarding international trade law for one’s prosperity. Successive Governments have done their best to further that agenda, with success that indicates that New Zealand’s diplomatic service and trade diplomats, in particular, punch above their weight. It is also recognised that in these difficult days it takes some time to bring fruition to a multilateral agreement. For that reason, complementary regional and bilateral agreements have a role to play, of which this is one.

I would like to address the objection brought about by the Green Party, because it is a fundamental one in any debate on international trade. It is answered by the theory of comparative advantage—that is, even if a country is the weaker player in every industry, it is still better off by trading so that it exports what it is relatively good at producing and imports what it is relatively poor at producing. I find myself in strong agreement with Ken Shirley on the point that it is obscene that various developed countries—and probably the European Union is the most notable—protect themselves from low-cost imports from the Third World. The benefit to those protectionist countries is far greater than the benefit from the aid that flows south to the developing world. That is a sad truth, and it is one that successive New Zealand Governments have worked to overcome. So that is all, I think, relatively bipartisan across this House, and I acknowledge the work that the former Minister for International Trade, Dr the Hon Lockwood Smith, has also done. That work was carried on in great spirit by the Hon Jim Sutton, and it was recognised by the Foreign Affairs, Defence and Trade Committee.

But there are some differences between the two sides of this House. There is a tendency on the right to believe that simple market opening will deliver the kinds of gains that New Zealand needs to be a prosperous economy in the 21st century. On that point, this side differs. We say that market opening is a necessary condition but it is not a sufficient condition. It must be balanced by active development of the capability of our exporters to deliver the goods—in other words, to drive through the opening that has been created, and to form the kinds of partnerships with our overseas partners that will derive value back to New Zealand. That is a new agenda. It is required that we have the statistical capability to measure it, that the national interest analysis follows it, and that we have the support through New Zealand Trade and Enterprise and others to implement it. This debate is about reading into law the tariff preferences created by this agreement. This is a good bill and I urge its adoption.

JOHN CARTER (National—Northland): I am just getting over a dose of, if not the flu, certainly a heavy cold, but one of the things we can smell is the stench of the dying, decaying Labour Government, can we not? One can smell it in the House. I went through it in 1999, when it happened with the National Government. People could smell the decay around us. Well, it has been transplanted across to the Government members.

Hon Trevor Mallard: Where’s that Don Brash—has he gone for his afternoon sleep?

JOHN CARTER: The member who just resumed his seat is an absolute example of that—along with the Minister of Education, whom I will talk about shortly in the context of this bill. He told us that he would fix all those things about having special preference for Māori, and what has he done? He has done absolutely nothing. He told the country that he would fix it up. He said: “We’ll fix it. We’ll make sure it’s all even and all fair, and that there’s no preference given.” What do we have in this agreement? We have special preference for Māori.

Hon Trevor Mallard: No.

JOHN CARTER: Oh, the Minister says “No”. I will quote him shortly.

Hon Trevor Mallard: Read it.

JOHN CARTER: I will. Let me just read something out: “It concerns me that article 15.8 reserves the right for New Zealand to adopt measures it ‘deems necessary to accord more favourable treatment to Maori …’.” It is in the agreement. The Minister should go and look. The Minister who has the race relations portfolio does not even know that that is in there. How disgraceful is that?

First of all, I want to talk about the positive sides to this agreement, because there are some, and I do want to congratulate the Minister for Trade Negotiations on making at least some gains. He is to be commended for that, as are, as has been said in this House, previous Ministers who have done so.

Hon Trevor Mallard: You’re too kind.

JOHN CARTER: Well, I do not think I could ever be said to be too kind, but at least I am a reasonable person who will acknowledge that at least this agreement is a step forward. It is good to have trade agreements; there is no question about that. The National Party supports that concept absolutely, and, of course, it supports this agreement, apart from the fact that we have concerns about some parts of it. It is worth noting that currently only 4 percent of the goods that we export to Thailand are duty-free, and on 1 July, after this agreement takes effect, 52 percent will be duty-free immediately. That is of huge value to our industries.

The problem is that some of the qualifications in the agreement cause us concern. The first thing is the qualification that goods be free of chemicals, which the Minister actually referred to in his address. That is a worry because growers in New Zealand will have to certify—we assume that this will happen; negotiations are still going on—that the goods being exported are free of chemicals. There is nothing wrong with doing that, other than that the cost of gaining the certification is quite likely to be more than the cost of the tariffs that are currently imposed. So the growers themselves may not actually end up receiving any financial benefit out of this agreement, at all. We will wait and see.

But the second thing that worries me about this particular part of the agreement is that it has to be negotiated. Regarding the cost of negotiating and the time delays—although the Minister has tried to assure the House that it will happen rather rapidly—I have to say that the track record is not flash. If we look, for example, at the negotiations between New Zealand and Australia around apples, we see that they certainly have not been rapid, at all. Indeed, in the last 6 years there has been no progress at all with regard to that matter. All that has happened is recently the Minister finally decided that we will refer the dispute between Australia and New Zealand over apples to the Committee on Sanitary and Phytosanitary Measures for discussions. Well, what does that mean? Absolutely nothing! Why does the Government not take the bull by the horns, as National did on lamb tariffs when we were in Government, and take the matter to the World Trade Organization to get it sorted out? The disputes process is there; let us just get it done. It worries me that if that is the track record of this Government in regard to trying to settle disputes, what will happen when we are in the middle of negotiations on issues that this bill provides? I suggest that there will be delays and complications, and, as a consequence, there will be significant costs to our growers.

One of the previous speakers from Labour talked about its track record in negotiating trade agreements. Well, the only one that Labour has had any involvement with, as a Government, apart from this one, was the Singapore agreement, and all it had to do was sign the final piece of paper. To be fair, the previous member who spoke acknowledged the work that had been done by my colleague Lockwood Smith in regard to the Singapore agreement. That work was all done under the National Government. Yet a previous Labour speaker—I think it was the member for Waimakariri, whose name I cannot recall at the moment—

Hon Member: Cosgrove.

JOHN CARTER: Clayton Cosgrove claimed that Labour had a fine track record. Well, actually, when one looks at it, one sees that the equivalent of Labour’s track record is a flat tyre on a vehicle that is broken down. That is about as good as it gets.

This agreement is Labour’s first attempt, and there are lots of qualifications in it. I say to the House that we need to be concerned about some of the conditions in this legislation that may well put different sorts of tariffs on our exporters. It is unfortunate that we have any qualifications at all. At least, the Singapore agreement was clean, done, and end of story; it was just a straight trade agreement. CER was the same sort of thing. This agreement is a case of “Yes, we can do it, but with all sorts of ifs and buts.”, and that is most unfortunate.

I want to talk about the one part that does concern me, as I said I would, and I hope the Minister in charge is listening. It is the issue that appears in article 15.8. Why in the world do we have to have in a trade agreement an article that states that New Zealand reserves the right to adopt “measures it deems necessary to accord more favourable treatment to Māori … including in fulfilment of its obligations under the Treaty of Waitangi.”? I ask Parliament why that clause is in an international trade agreement. It mystifies me. I asked that question during the first reading and no one was able to give me a reasonable answer.

I wondered whether it is because some of the fruit that Māori grow is different, but I do not think it is. I do not think the apples that Māori grow are different colours from other apples. I would not have thought so. I am sure the apples are the same varieties and the same colours as the apples that non-Māori grow and export to Thailand. I am sure they are the same, so why would Māori need preferential treatment? I cannot think why. Maybe the cherries are different. Maybe the blush is a different colour or something. I do not know why. But it really mystifies me as to what the advantages are to this country and to the Māori people in having that clause in the legislation. The Thai people, I am sure, do not know what the Treaty of Waitangi is. I doubt whether they have ever heard of it, actually—well, one or two of them will have heard of it now because it is in this agreement. It is a real mystery.

This Government, 12 months or so ago, gave this country an absolute assurance that there would be no more preferential treatment, and that all those kinds of clauses would go. Trevor Mallard, the Minister in charge of that, said: “Forget about it. You don’t need to worry about it. This Government’s got it under control.”, and here we are, signing an international agreement that puts it back under the spotlight. Quite honestly, the Government needs to explain—and I hope the Minister in charge of the bill will do so during the course of the Committee stage—why that particular provision has to be in this sort of legislation and in these sorts of agreements. It actually does this country no good, in my view.

National members look forward to the debate in the Committee stage, and we will explore some of these clauses more closely during that debate.

Hon DAVID BENSON-POPE (Minister of Fisheries): I am pleased to rise in support of this bill.

A party vote was called for on the question, That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a second time.

Ayes 96

New Zealand Labour 51; New Zealand National 27; ACT New Zealand 8; United Future 8; Progressive 2.

Noes 23

New Zealand First 13; Green Party 9; Māori Party 1.

Bill read a second time.

Instruction to Committee

Hon JIM SUTTON (Minister for Trade Negotiations): I move, That it be an instruction to the Committee of the whole House on the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill that it take the bill part by part.

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

Ayes 69

New Zealand Labour 51; ACT New Zealand 8; United Future 8; Progressive 2.

Noes 49

New Zealand National 27; New Zealand First 13; Green Party 9.

Motion agreed to.

In Committee

Part 1 Implementation of preferential tariffs under New Zealand - Thailand Closer Economic Partnership Agreement

Dr the Hon LOCKWOOD SMITH (National—Rodney): Part 1 of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill is the part that actually implements the negotiated preferential tariff schedule, if one likes, for Thai products coming into New Zealand. It is an essential part of this bill. Our law does have to be amended to enable that negotiated tariff agreement to be put into it. So I make it very clear that National is totally supportive of Part 1, because it is absolutely essential to implement that agreement. Having said that—that we are totally supportive of it—I think it is important we understand the pluses and minuses that Part 1 will make available for New Zealand.

I will deal with the pluses first. Although this bill does not cover exactly what happens for our products in Thailand—a similar piece of legislation to this will do that in Thailand—it is important to realise that the laws that implement negotiated tariffs have a big impact. For example, for New Zealand exporters to Thailand, 52 percent of our exports will be duty-free as soon as this agreement is given effect to, and as soon as legislation similar to Part 1 of this bill is passed in Thailand, compared with 4 percent now. That is a big plus. That is why National is so supportive of trade liberalising legislation. There are big pluses like that for our horticultural exporters, most of whom face 30 to 40 percent tariffs—people such as kiwifruit exporters. Those tariffs will be eliminated, and that is very important for our industry.

I would ask the Minister—if he could explain this under this part, because I cannot see where else in the bill we can really address this—to explain a little more about where we have got to in terms of making sure our horticultural exporters do get meaningful access to Thailand. The reason that has become an issue is that Thailand brought in a new provision reasonably recently that requires people to certify that horticultural products are free of, I think, three particular chemicals. The costs of the testing for those chemicals and the costs of the certification for that may well match, if not exceed, the tariff reductions that are being achieved. I realise that I am running a bit of a risk in asking this question, but I see this part as being the only part where the Minister could elaborate on that matter a little further.

The Minister said in his second reading speech—if I heard him correctly—that Thailand had agreed to defer those requirements for a period of time. I would appreciate the Minister making it more clear exactly how long that period is, and exactly what has been done to make sure a process is put in place to have those requirements ultimately removed. Obviously, this agreement, and the legislation we seek to pass right now, is really nullified in large part if those kinds of non-tariff barriers—I mean, it is exactly that kind of non-tariff barrier that has kept our apples out of Australia. We want to make sure that, as we pass this legislation, we will not be caught up in similar non-tariff barriers in Thailand. It would be helpful if the Minister could just enlarge upon what he said during the second reading phase. I accept that you, Mr Chairman, could rule that he cannot do that, but I do not see another part of this bill where he could do so. I think the Minister’s advice on that issue would be very helpful for members, in understanding the full implications of this legislation.

I have already pointed out that although we totally support Part 1, I do have a concern that the schedule of tariff reductions that we will be implementing with this legislation takes New Zealand beyond its 2010 commitment under APEC. That is a huge shame. I disagree with Peter Dunne. Peter Dunne said, in his second reading speech, that in these trade negotiations we should try to get away with what we can and find out what we have to give up in order to get what we want. It is not like that. I have done a lot of trade negotiation work. In fact, we ought to be saying that we do not want to have any of that stuff around the New Zealand economy, anyhow. It is all bad for us. Unilateral trade tariff elimination makes a lot of sense. In a lot of the trade tariff negotiation work I have done in the past, a lot of effort has gone into helping other countries to understand how maintaining those barriers is actually an impediment to their own economies. They actually suffer from maintaining those barriers. I do not think that old-style trading is a great way to proceed in negotiations.

JOHN CARTER (National—Northland): I follow my colleague Lockwood Smith, and I am sure that Mr Jones will get a call very shortly. I raise this issue in relation to Part 1, and again, it is in a similar vein to that stated by my colleague Lockwood Smith, and relates to the wording that appears in the agreement. I assume that the wording applies for goods both coming in and going out of New Zealand, in regard to the issue under article 15.8 of the agreement relating to the Treaty of Waitangi, where it states it deems necessary to accord more favourable treatment to Māori, including the fulfilment of its obligations under the Treaty of Waitangi.

I draw the Committee’s attention to a speech made by Mr Trevor Mallard, as Coordinating Minister, Race Relations, at Victoria University in July last year when he said, as the Minister in that capacity, that Māori have no extra rights or privileges under the treaty or in the policy of the New Zealand Government. I ask the Minister in the chair, Mr Sutton, whether he can explain that statement made by the Minister in charge of race relations, Mr Mallard. He and Prime Minister gave an assurance to this House that there would be one law for all. Yet the Minister might explain why that clause is in the agreement that gives favourable treatment to Māori, including the fulfilment of obligations under the Treaty of Waitangi, whatever that means.

Perhaps the Minister might like to explain to the Parliament how it actually affects goods coming from Thailand into New Zealand. I would be very pleased if the Minister could explain to us what sort of impact that wording in the agreement would have on someone from Thailand who is making some Thai product and then runs up against the favourable treatment for Māori when it comes across our wharves. I wonder what impact that will have on that person’s ability to be able to trade fairly and freely with all New Zealanders. The Minister might like to take a call to explain why he and the Government—Helen Clark, Trevor Mallard, and Jim Sutton—believe that it is important that that sort of clause is in an international trade agreement.

For the life of me I fail to see that it will make one iota of difference between us trading with Thailand, and Thailand trading with us. I would be very pleased if the Minister could take a call to perhaps enlighten us, and in particular enlighten me so that I can explain to the people of Northland why the Government felt that in this particular case it had to abandon its policy of one law for all—if it has that policy, and actually I do not think that it does—and put that in this agreement. It will be interesting to know why.

My colleague Lockwood Smith also raised some other interesting aspects of the legislation and of the agreement. Of course, they are issues we raised in the first and second readings and I do hope that the Minister will take a call to explain to us those issues that will be of worry around the matter of negotiation—particularly the issue, as my colleague Lockwood Smith has said, around the matter of chemicals, etc. It is very important that we have a good understanding in this debate, so that when we are asked by the rural sector that we represent we can explain to it what impact that will have. I am concerned, as my colleagues are, that it may well impinge on its ability to have a full and free trade between Thailand and New Zealand. We certainly do not want that to be an outcome of this agreement.

DAIL JONES (NZ First): The previous speaker from the National Party, John Carter, raised the question that I had raised earlier about the insertion of the Treaty of Waitangi into this legislation. It was almost a speech, I thought, in opposition to the bill, and I support everything he said. For the reasons given by him, New Zealand First is opposing the bill.

Next week the Rt Hon Winston Peters, on behalf of New Zealand First, will be making a speech about matters relating to the Treaty of Waitangi, and I do not intend to take that aspect any further today at this stage.

The point has been raised about horticulture. In the New Zealand First minority report attached to the partnership agreement we made the point that we were concerned about the submission from the New Zealand Horticulture Export Authority, which indicated to the committee, and I quote: “However, new residue testing requirements proposed by the Thai government have the potential to significantly reduce the benefits from the agreement. These requirements are viewed by both the New Zealand export industry and Thai fruit and vegetable importers as a non-tariff trade barrier focused on reducing imports of Chinese fruit and vegetables. We are working with the Ministry of Foreign Affairs and Trade to address this issue …”. That is the Horticulture Export Authority’s submission.

I note that horticultural exports do not feature prominently in our exports to Thailand. The list I mentioned earlier on of New Zealand’s exports to Thailand, which lists 20 products, does not show horticultural exports, at all. At the No. 20 level are exports worth $3 million, so I assume that any horticultural exports must be worth less than that. But, clearly, they are in grave danger because of the trade agreement entered into between Thailand and China. In terms of that, of course, Chinese goods are allowed into Thailand. Since October 2003, Thailand has provided duty-free access for horticultural items from China, as part of an early harvest package, ahead of their full free-trade agreement negotiations. It seems that the Thai people are willing to enter into an agreement on the one hand, but on the other hand start to put up barriers, even with the Chinese. We are going to be caught up in their barrier with the Chinese; it, obviously, will affect us, as well. It makes one question the worth of an agreement of that kind.

Much has been made of the reduction in tariffs, but we must look at what the existing tariffs are. I gave a couple of examples in New Zealand First’s minority report. Infant milk food formula was worth $34.9 million in 2003; the tariff goes down from 5 percent to zero, not from 17 and 18 percent, as suggested elsewhere. Wood pulp was worth $5 million; the change in tariff is from 1 percent to zero, so that is not much of a drop. For what is a fairly small market, as Dr Lockwood Smith said, this is a poor-quality agreement overall.

The services area is the one of vital importance to New Zealand, and we know that it has not been allowed to be implemented. But, the other way round, it does seem to be working. I ask the Minister to explain why so many specialist Thai chefs and traditional Thai massage therapists are being allowed into New Zealand. Do they ever go back to Thailand? Why must we keep on bringing them in? What happens to them? How long do they stay here? Can we not at some stage train New Zealanders to cook Thai food? Indeed, I had a very nice Thai chicken curry in a place just outside the building here at lunchtime. Surely, we can cope with making a nice Thai meal, after all these years. Why should New Zealanders lose out on jobs? Why must we always have Thai chefs? What is the need for traditional Thai massage therapy in New Zealand? Were we not able to survive and cope without traditional Thai massage therapy? Why do we need these types of people in New Zealand? Why not train New Zealanders so that they can get these jobs, rather than our bringing in Thai people all the time to do them?

Can a Labour Minister explain why the clothing, footwear, and carpet sectors, and whiteware, plasterboard, steel, and certain textiles must be placed at risk, because of an agreement entered into by him?

This is a sad day for the workers of New Zealand, and I am wearing my red tie just for them today. Obviously, no Labour Party member has worn a tie of that colour today.

Hon JIM SUTTON (Minister for Trade Negotiations): A number of questions have been raised. I will deal first with the question raised by Dr the Hon Lockwood Smith, which was also raised, I think, by Dail Jones. Those members asked where we have got to on the issue of the Thai sanitary and phytosanitary provisions announced recently. Even though the issue is not really, strictly speaking, dealt with in this bill, the question was not ruled out of order before, so I guess the answer will not be, either. I can say that the proposed new Thai regulation, known as regulation 11, would, if fully implemented, impose a new testing and certification regime on a range of 16 food products, including many of interest to New Zealand. In respect of implementation, it will apply to all countries exporting to Thailand. Implementation is now scheduled for 30 June.

Since the proposed regulation was first notified late last year, New Zealand has expressed its opposition to it in a number of ways directly to the Thai authorities in Bangkok, and in the World Trade Organization Committee on Sanitary and Phytosanitary Measures in Geneva. During the week of the signing of the Thai closer economic partnership in Bangkok, which was on 18 April, there were meetings between myself and the Thai Minister of agriculture, and one also with the Thai Minister of Commerce, and a meeting between the respective Prime Ministers. That has resulted in an undertaking from both Thai Ministers to work with New Zealand towards recognition of New Zealand’s systems as being equivalent to Thai systems for the application of regulation 11—in other words, for Thailand to accept our inspection and certification of goods exported from New Zealand.

There is, I must say, preferential access for New Zealand fruit and vegetables into Thailand, and that is a special benefit for New Zealand under the closer economic partnership. New Zealand is therefore in a position of advantage ahead of other suppliers to Thailand, whatever the outcome on the proposed new testing regulation. China, which already has a closer economic partnership with Thailand, has a similar advantage to New Zealand, but is in the Northern Hemisphere, so it does not have the out-of-season advantage that we have. I think the fact that our officials now have a meeting with the Thai authorities on 23 June demonstrates that the bilateral sanitary and phytosanitary committee that has been set up for this sort of eventuality looks as though it will be able to do its job. So we are hoping for a happy outcome in that respect.

I would like to thank Dr the Hon Lockwood Smith for his support for Part 1 and for the tariff reductions. However, I cannot support his criticism of the Hon Peter Dunne’s remark about the negotiating realities—that agreements like this always involve compromise. I think there can be no doubt that that is so. The National Party spokesman should understand negotiating realities. After all, he had the experience—in fact, this was the sole success of his 9 years, I think, as trade Minister—of agreeing to commence negotiations with Singapore, with whom New Zealand already had duty-free access for all goods, except beer. Now, despite that, those negotiations were stuck. They were going nowhere at the change of Government. We have got there. I suppose Dr Smith would consider the highlight of his trade negotiations career to be his attendance at the Seattle conference, which is a bit like a British general believing the highlight of his military career was attendance at the Dunkirk evacuation. It was really, however one dresses it up retrospectively, an unmistakable defeat and failure.

John Carter raised the issue of the Treaty of Waitangi clause. That clause preserves the right of any Government of New Zealand to implement policies of its choice in relation to Māori and to fulfil treaty obligations without being obliged to offer equivalent treatment to overseas entities, provided that, of course, the New Zealand policies do not act as a disguised restriction on trade or investment. To leave that clause out, as National advocates, would be to commit New Zealand taxpayers to provide the same benefits to any overseas company investing in New Zealand that it may provide by way of assistance to Māori, iwi, hapū, or whānau. So all I can say is that National so hates the indigenous people of New Zealand that it would condemn New Zealand taxpayers to paying extra taxes forever to overseas investors, in order to leave any reference to the Treaty of Waitangi out of any future trade agreement. That is notwithstanding the fact that National put an almost identical clause in trade agreements—into the General Agreement on Trade in Services, which is part of the World Trade Organization treaties. It was an almost identical clause, which, of course, National cribbed from one of the many countries that also have clauses to protect the interests of their indigenous people in such treaties. So I do not think we need to worry about that matter.

The member Dail Jones asked why we are allowing trained Thai chefs and massage therapists to come to New Zealand to ply their professions. Well, I say to him that, firstly, a good Thai therapeutic massage probably would not do him any harm, and a good Thai meal, cooked by a professionally trained Thai chef, would not do any of us any harm. This agreement introduces to Thailand, through its support of those iconic Thai crafts, the concept of trade liberalisation in services.

Dail Jones: Who wrote that?

Hon JIM SUTTON: I can reassure the member that if any New Zealanders want to train as Thai massage therapists or as Thai chefs, then I am sure that can be arranged. They can go to Thailand and sign up for a course, although those courses are not to be taken lightly. The member would need to commit himself to extended concentration and hard work, which is probably something he has not had to do very much of in recent years.

I think that that addresses the serious questions that have been raised so far.

KEITH LOCKE (Green): The Green Party has an amendment to clause 4, to insert after the words “being the produce or manufacture of Thailand”, the words “whose product processing complies with core International Labour Organisation Conventions”. If we look at the treaty upon which this bill is based and that it is supposed to implement, we see references to ILO conventions. Associated with the treaty are arrangements between Thailand and New Zealand on labour and the environment. The problem is that although the words that both New Zealand and the Kingdom of Thailand are to sign up to are very nice, there is no actual implementation, other than that if we have a disagreement we have another talk, then another committee, then another talk. There is no actual implementation, which is why the statement from the Council of Trade Unions that I mentioned before stated that it was not an enforceable or meaningful process to address breaches of core ILO conventions. I think that is the case, and it is the reason why we should put in the bill that we reserve the right, if the tariff is to be lifted, or if a preferential tariff is to be applied, that Thailand at least has to meet those core ILO standards.

There is a problem. Thailand signed up to the ILO Declaration on Fundamental Principles and Rights at Work, and its follow-up, and it is true that there is at least one ILO convention that Thailand has signed up to—the ILO Convention 138 Concerning the Minimum Age for Admission to Employment, relating to not using child labour, but in wandering around the sweatshops in Bangkok one will see that people do not exactly adhere to that convention. There is quite a bit of corruption in Thailand, and Government officials do not actually implement ILO conventions. Then there are some other ILO conventions, like the right to collective bargaining, that I understand Thailand has not signed up to. There is a very low rate of unionisation in Thailand, partly because of that and partly because union organisers in some factories in Thailand may not last very long on the job; they are just put out of the door. Sometimes there are just what are called “disappearances”: people just disappear, and the authorities do not do much about it if one goes to them. In fact, the authorities are sometimes tied up with the people who are exploiting the workers, and they are keeping the unions out or are employing child labour. That is the reality.

Even Nike, a company that has a big international reputation to protect in terms of its production of footwear, subcontracted out to an Austrian-owned firm in Bangkok to produce its shoes, but even there, union organisers were pushed from the jobs. Demonstrations took place in Thailand, and I think there was even one in New Zealand, supporting the workers. However, the workers did not really get anywhere, because in Thailand there are no real enforcement provisions for labour laws. So the least we could do is to put in our legislation the amendments such as those that the Green Party has proposed. That would at least give us control over the situation. One of the Labour members talked about the theory of comparative advantage in trade—

Dail Jones: David Cunliffe.

KEITH LOCKE: Yes, it was David Cunliffe. He is one of the ideologues of free trade on that side of the Chamber, with the theory that somehow there is this law of comparative advantage, that there are some things people in each country are good at, that they will export nicely, and that Thailand will develop nicely as an economy because of that. But it does not take into account the reality that in Thailand the minimum wage is NZ$0.77 an hour. So it is not a question of what New Zealand workers are good at and what Thai workers are good at; New Zealand workers are quite good at textile manufacture, but they are out-competed.

Dr RICHARD WORTH (National—Epsom): National supports the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill. But, for those who have been listening to the debate, there are reservations to be entered in respect of the treaty itself.

I start by recording my disappointment that the Minister who has a particular responsibility for this bill, Minister Sutton, has used speaking time in this Chamber to launch petty and personal attacks on National members. In doing that, he damages his reputation in the trade area.

I want to pick up two points that I think are relevant and significant in the context of the debate on this part. The first has been identified by others, and it is that in the trade treaty itself, article 15.8 reads, in part: “nothing in this Agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement including in fulfilment of its obligations under the Treaty of Waitangi.”

We should not, I would say, be including in trade treaties such affirmative action provisions. I am not blaming the Minister for that. He may have some responsibility, but it is a comment more directed at the trade negotiation team, who should surely have thought more carefully about the appropriateness of including such provisions. That is the first thing.

The second comment is that an aspect of merit in the trade treaty is the dispute resolution provisions. There is a detailed code, broadly patterned on what we saw in the New Zealand - Singapore agreement. It stands in very marked contrast to what is in our Australia and New Zealand Closer Economic Relations Trade Agreement, where the only obligation is an obligation of “consultation”. As others have pointed out, in a wider context, we have running-sore disputes with Australia that remain unresolved. The apples dispute is the classic illustration of that, going right back to 1922, I think, when it started.

It is also appropriate to reflect on the incredible acceleration in the world trade community of the growth in bilateral and regional treaties. As I understand it, a count by the OECD’s trade directorate, quite recently, identified 142 bilateral and regional agreements, a third of them concluded in the past 3 years. At the point that the count was done, another seven awaited ratification, and the OECD indicated that another 50 were planned, of which more than 30 involved countries in Asia.

So we have these regional initiatives going on, these World Trade Organization initiatives, and they are buttressed by bilateral initiatives. The Minister has made specific comment on this. I note that he said in a speech to the Singapore Institute of Policy Studies on 27 November 2001: “The WTO provides the broad framework of rules for international trade and a forum for pursuing trade liberalisation at a global level. But high-quality CEPs deepen economic interaction. When they are based, as New Zealand’s are, on the multilateral framework, they can also provide guidance on the direction in which the multilateral rules should evolve.”

Well, the argument is—and National has advanced this argument—that this is not, for reasons we have indicated, a high-quality closer economic partnership, more is the shame. But perhaps the hope is that with a change of Government in September, the skills that National can bring to the table with a negotiation team from the ministry will add to the depth of this agreement.

I have spoken primarily about clause 3, and I now make a final comment on clause 4, because clause 4 provides for the preferential tariffs conferred by the agreement to be implemented for Thailand by providing for such preferential rates of duty to be included in the preferential tariff column of the tariff for application to goods produced or manufactured in Thailand.

JOHN CARTER (National—Northland): I want to pick up—

Clayton Cosgrove: A bad hair day!

JOHN CARTER: Well at least I have not had to have a transplant, as that member has—and neither am I likely to have one. The only transplant will be when that member and his colleagues are shifted out of here.

Dr the Hon Lockwood Smith: Yes, to this side of the Chamber.

JOHN CARTER: It will not be just to this side of the Chamber, it will be right out of the House. [Interruption] That fellow from Ōtaki, “Deacon Humes” or something, is gone. When he has been around for as long as I have, he will not have red hair at all.

However, I will get back to the bill. I was interested in the Minister’s reply when he read out the part about our obligations under the Treaty of Waitangi. I listened to his response with interest. He gave the impression, from the bits he read out, that the wording we had used was not accurate. However, I have checked, and it was absolutely accurate. It was as it was read out. The Minister said that we had to include that provision because we have a responsibility to fulfil our obligations under the Treaty of Waitangi. The first question I want the Minister in the chair, the Hon Jim Sutton, to answer is: what does that mean? What are our obligations under the Treaty of Waitangi?

What worries me is that by putting in the supposed preferential treatment for Māori, it is saying that Māori are not as good as the rest of New Zealanders. I absolutely reject that. What the Minister is saying to me is that my oldest granddaughter, who has Māori blood in her, is not as good as my second grandchild who has no Māori blood in her. I reject that absolutely. They are both equal New Zealanders. They are both fine New Zealanders. When they grow up they will make a contribution to this country, not because one is Māori and one is not, but because they are New Zealanders who have the opportunity to be New Zealanders and make a contribution, regardless of their race. That is how it should be. They absolutely will get out there, and both will be proud of each other. They love each other and enjoy each other’s company. They do not care what their bloodlines are, other than that they are Carters and proud of it. They are proud New Zealanders, but this Minister is saying to one of them that she is not as good as the other. I reject that.

I reject that on behalf of all the Māori people in Northland whom I represent. They are just as good as the rest of the people I represent in Northland. They do not want a handout from the likes of Helen Clark and Jim Sutton. They are not interested, actually. Certainly some of them want some assistance from time to time, but they do not want someone who is condescending, and who says to them: “Well, you poor person, because of your race we have to come along and give you a hand, because we are whiteys and are superior.” We do not need that sort of attitude in this country, thank you very much. The people of Northland stand shoulder to shoulder, regardless of their race, and get on with their lives. All they want is a fair break. They do not want some Government telling them that part of them is lesser than the other, because it is not. I say to the Minister: take this clause out of the agreement; it is an insult. It is an insult to the Māori and non-Māori people of this country, and it is an insult to the people of Thailand, who do not even understand it.

Darren Hughes: Hone knows all about insults!

JOHN CARTER: Members opposite can chuck brickbats, I do not care, because I know I am right. I remember when last debating this issue that that fellow over there with the red hair, whose name I cannot remember, said to me: “Say that up in Northland.” I challenged him to come up and have a debate. Has he been up? Not on your nelly! He knows that he would get run out. He does not even know where Northland is, but he knows he would get run out. I would take on him, or anybody, on a stage anywhere on this issue, in Northland or anywhere in New Zealand, and clean him out. Everybody in New Zealand is equal and everybody can make a contribution, and that is how it should be.

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

Dr the Hon LOCKWOOD SMITH (National—Rodney): I had wanted to take a call following the contribution from the Minister in the chair, the Hon Jim Sutton, just a few minutes ago. What concerned me was that the Minister appeared to seek to misrepresent to the Committee what the Thai trade agreement stated. What he read out, in response to the challenges around the article relating to the Treaty of Waitangi, was a very selected part of that article in the agreement. I was so concerned that I sent back to my office for a copy of the agreement, because I thought that what the Minister said to the Committee must be right and that I must be wrong in what I had alleged the agreement contained. I now have a copy of the agreement right here with me, and what it states is somewhat different from what Mr Sutton read out.

I want to quote the agreement absolutely. It concludes with this statement: “Nothing in this agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Māori in respect of matters covered by this agreement, including in fulfilment of its obligations under the Treaty of Waitangi.” I think we have a right to know what on earth that means. What the Minister read out to the Committee just a few minutes ago was not that part of the article, at all. What does it mean? In relation to Part 1, does the Minister intend that on items relating to Māori business and Māori trade, the Government reserves the right to impose more favourable tariffs for Māori businesses? I think the Minister should tell the Committee exactly what that means.

What are the Government’s obligations under the Treaty of Waitangi in respect of trade agreements? The Minister said to the Committee a moment ago that without this clause it would have to extend to Thai business people, or to Thai businesses or investors, the same rights as any Māori person. What about any other New Zealander? Whatever is required to protect the interests of New Zealand ought to apply to all New Zealanders. That is the bit we are trying to get at. The Minister in the chair, Jim Sutton, should explain to the Committee exactly what he intends to do with this article. What he quoted to the Committee a moment ago was a very partial representation of the article. The bit we are really concerned about is the bit I read out, which is the entire second half. No words at all were left out. We want to know exactly what it means, because we do not know what this Government believes its obligations are in respect of the Treaty of Waitangi in trade matters with regard to this legislation, including Part 1. What is it that the Minister may be seeking to do with this clause in relation to Part 1? If it is not Part 1, is it Part 2? Is it that, in fact, safeguard measures will be imposed? I think the Minister should make clear exactly what is in his mind, because he agreed to this agreement.

New Zealanders have a right to know what the Government means when it says it reserves the right to accord more favourable treatment to Māori. All New Zealanders have every right to feel insulted by that. Māori have every right, because they are not inferior and do not need more favourable treatment. I know that the Minister will say National did that previously. I accept that. I say we were wrong. It is no use going back to that. I say National made a mistake in including that kind of clause in the General Agreement on Trade in Services. I absolutely accept that.

Hon Jim Sutton: You’re wrong now.

Dr the Hon LOCKWOOD SMITH: If the Minister is saying we were right then but are wrong now, I want him to explain to the Committee exactly what “more favourable treatment” he intends Māori should have, and exactly what this Government sees are its obligations under the treaty. At Victoria University in July last year, his colleague Trevor Mallard said that Māori have no extra rights or privileges under the treaty or in the policy of the New Zealand Government. Who is right—Trevor Mallard, the Coordinating Minister, Race Relations, or Jim Sutton, Minister for Trade Negotiations? They cannot both be right, because this agreement reserves the right to confer more favourable treatment, but Trevor Mallard says that that is contrary to Government policy. We want to know who is right.

Hon JIM SUTTON (Minister for Trade Negotiations): I will deal with Dr the Hon Lockwood Smith’s question first. The answer is that my colleague and I are both right, and he is wrong. I want to address the serious issue that Keith Locke raised on behalf of the Green Party. He wants us to pass an amendment that would force Thailand to comply with all the ILO core conventions on labour. I point out to the member that even we ourselves do not adhere to all the ILO core conventions here in New Zealand. The member is not attempting to address that. It is quite obvious that what the member is trying to do is to use the ILO conventions as a pretext for protectionism. He is just flat-out anti-trade. He does not want it allowed, unless everybody meets a completely unattainable standard of compliance with conventions that we have not even signed up to. I think the member ought to consider the situation again, and ask whether it is what he really wants. Does he want us all to be self-sufficient peasants who do not trade anything internationally? Does he seriously think New Zealanders could eat 20 times as much dairy product as we eat now, in order to keep it revolving in the economy without exporting any of it?

Richard Worth asked whether this is a high-quality agreement. The answer is that it certainly is a high-quality agreement. It is completely comprehensive in respect of goods. All goods will go to a zero tariff either straight away or over an agreed period of years. So that puts this agreement amongst the top 1 percent of bilateral trade agreements in the world. What is more, we have a commitment to undertake a negotiation on trade in services within 3 years. Anybody who pretends to have any understanding of international trade and who does not understand why this agreement was done, instead of trying to force Thailand to negotiate now, ahead of its negotiations with much larger APEC trading partners, does not have the wit to get involved in the game himself or herself. I am absolutely astonished that any member in this House needs to have it explained to him or her why we have taken this opportunity to defend our position in the Thai market for our goods and to achieve advantage over most of Thailand’s trading partners while we had the chance to do so now, rather than waiting until we could have a perfect agreement with free trade in all goods and services. I can advise the member that there would likely be a very long wait for that.

DAIL JONES (NZ First): The National Party members keep on making the speech about the reference to the Treaty of Waitangi in this agreement, so I look forward to the National Party opposing the legislation, as New Zealand First is doing. That is clear New Zealand First policy. I am pleased the National Party is supporting New Zealand First policy, and I hope it will take that to the final conclusion and vote against the bill. I am reminded of the famous expression of the Rt Hon Winston Peters: “You can steal my horse, but you’ve got to be able to ride it out of town.” National Party members are trying to steal our horse, in saying that they oppose the reference to the principles of the Treaty of Waitangi. Now they have to ride it out of town as well, by voting against the bill. Can they do that? I do not think they can.

LESLEY SOPER (Labour): I move, That the question be now put.

JOHN CARTER (National—Northland): I am interested in the response of the Minister in the chair, Jim Sutton. He made a very fleeting response to the comments made by my colleague Lockwood Smith, by myself, and by others in reference to the issue of the treaty article in the legislation. I make one comment to Mr Dail Jones, who talked about riding horses. I suspect that it is a while since he has ridden a horse, and I doubt whether he could ride one out of town. He talks about being consistent. Well, we have already said we support trade agreements, so we will support this trade agreement. There are parts of it that we do not like—one that we have referred to is article 15.8 of the treaty, and we will make sure that we keep talking about that. We want New Zealanders to know the inconsistencies that there are with this Government.

But I say to the member who talked about getting on a horse and then riding it out of town, that the way one does that, of course, is by becoming the Government after the next election, which we are looking to do. When we are the Government, we will take this horse, with regard to the treaty stuff, right out of town. It will be addressed at that time. We have made it very clear that those sorts of things will not appear. My colleague Lockwood Smith quite openly said that we made a mistake during the 1990s by including these sorts of clauses in agreements. [Interruption] That is right, but what the Labour Government does not like to hear is our admitting that we made a mistake.

There is nothing wrong with that. People respect people when they stand up and say they did something but it was not right—that they got it wrong and they will address it. That is the problem with this Government. It is not prepared to stand up and say that it has made a mistake. It is not prepared to stand up and say that it has got this wrong.

The Minister, Jim Sutton, tried to say that both he and his colleague Trevor Mallard were right and that my colleague Lockwood Smith was wrong. Well, I ask the public to match this. I will read out article 15(8) of the agreement again for their edification: “… measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement including in fulfilment of its obligations under the Treaty of Waitangi.” The important part of that statement is “more favourable treatment to Maori”. Let us remember that this is the Minister Jim Sutton’s agreement. At the same time, the Minister Trevor Mallard is saying that there are no extra rights or privileges under the treaty or in the policy of the New Zealand Government for Māori. So how can Mr Sutton say that both he and Mr Mallard are right, when there is absolute inconsistency between what they are talking about?

First of all, they should stand up and say they have got it wrong. Secondly, they should then stand up and tell us why they are suggesting that Māori in this country need special rights and assistance. As I said, my two granddaughters—one of Māori descent and one not—are equal, and and are both fine New Zealanders who will make a great contribution to this country. One sure is not inferior to the other, and neither are the people of Northland and the Māori of New Zealand. They are fine New Zealanders. Certainly, like other people in this country, some amongst them need help and assistance. National will be right there to give that assistance, but we will not be condescending and we certainly will not entrap them into a welfare life that ends up binding them forever to the breast of the State.

We oppose that. That is not what we intend to do, unlike this Government, which makes such silly statements that are meaningless and that no one can explain. When the Minister, Jim Sutton, gets up and says that we have to do that to honour our obligations to the Treaty of Waitangi, and when members of all the Opposition parties have asked time and time again for the Minister or anyone in the Government—Prime Minister Helen Clark or Deputy Prime Minister Michael Cullen—to explain what it means, they cannot do it. We do not need silly stuff in the legislation.

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

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

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 57

New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Green Party 8.

Motion agreed to.

The question was put that the following amendment in the name of Keith Locke to clause 4 be agreed to:

to insert in subparagraph (i) of section 7(1)(h) after the words “being the produce or manufacture of Thailand”, the words “whose product processing complies with core International Labour Organisation Conventions”.

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

Ayes 8

Green Party 8.

Noes 110

New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Amendment not agreed to.

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

Ayes 97

New Zealand Labour 51; New Zealand National 27; ACT New Zealand 9; United Future 8; Progressive 2.

Noes 22

New Zealand First 13; Green Party 8; Māori Party 1.

Part 1 agreed to.

Part 2 Application of transitional safeguard measures and provisional safeguard measures

Dr the Hon LOCKWOOD SMITH (National—Rodney): Part 2 of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill is the part that introduces a whole range of transitional safeguard measures. As I mentioned at the second reading, this is the first time that such provisions have been entered into New Zealand law in a bill like this. I would really like the Minister for Trade Negotiations to tell the Committee why he and the Government have found this necessary. It will invariably invite a whole new bureaucracy and a rush of bureaucratic procedures.

Let us look carefully at some of the provisions in Part 2. Let us take, for example, new section 15F(1)—inserted by clause 7—which enables the Minister to decide to apply a transitional safeguard measure. It states: “The Minister may decide to apply a transitional safeguard measure …”, which will be higher tariffs or higher duties for a certain product, when there has been an increase in the quantity of that product coming into the country, and—I accept that there is an “and”; that an increase in the quantity coming into the country would not be a sufficient reason on its own—it could threaten to cause serious injury. I invite members to really think about that. If this trade agreement is worth the paper it is written on, it should result in much-increased trade between New Zealand and Thailand. There will be, if it works, a big increase in Thai products coming into New Zealand. Some sectors may say that a big increase in products like theirs coming here poses the threat of injury to their industry, and off we go. Those sectors will be able to apply to the chief executive of Trade and Enterprise, and there will be a whole process of initiating an investigation to establish whether there has been such an increase and whether it does pose a risk of threatening to cause serious injury.

We have seen this sort of stuff at work around the world. We know that it invites action and litigation. Obviously, if, for argument’s sake, manufacturers in New Zealand are producing some kind of product, and they see an increase in imports of it, we will get into trouble. The part even tries to define what “like goods” are. One can seek an investigation into a transitional safeguard measure if a “like good” has been imported into New Zealand in increased quantities. We can see the kind of bureaucratic process that this sort of legislation invites.

New Zealand has never required it before. The Minister could probably say we have not had a bilateral trade agreement with an economy quite like Thailand’s before. I accept that. But why do we want to bring into our legislation this kind of provision? The Minister should be honest with the Committee. First, did New Zealand want it, or did Thailand want it? Is it, in fact, just because New Zealand buckled to what Thailand wanted that we are putting this whole bureaucratic process into our law? It is so woolly. We know that the United States has safeguard measures; its procedures invite applications for consideration of safeguard measures, and we know the problems that cause the United States Government. Do we want this kind of thing in our New Zealand law?

There are other issues that I hope my colleagues will also ask the Minister about. Will the safeguard provisions in Part 2 be applied differently to Māori and non-Māori businesses? As our agreement with Thailand reserves the right for us to apply to treat Māori more favourably under the agreement, could we see Māori applying for transitional safeguard measures—because Part 2 would enable them to apply for transitional safeguard measures—that non-Māori would not get? The agreement provides for more favourable treatment for Māori. If what I am saying is not correct and not possible, the Minister should make that very clear. He should make it unequivocally clear that it would be impossible, under the safeguard provisions in Part 2, for Māori to claim, using article 15.8 of the agreement, special safeguard measures that non-Māori could not achieve.

JOHN CARTER (National—Northland): I want to follow up the issue my friend and colleague Lockwood Smith has drawn to the Committee’s attention in regard to Part 2. In particular, the Committee needs to look at new section 15F(1), inserted by clause 7, which states: “The Minister may decide to apply a transitional safeguard measure if he or she makes a determination, as a result of an investigation by the chief executive … that goods … (b) are causing, or threatening to cause, serious injury to an industry producing a like or directly competitive good.” That really needs to be given a thorough interpretation. I wonder what it means, exactly. I would be interested to hear the Minister comment on that aspect of this part, if he would be so kind.

Under New Zealand regulations—occupational safety and health, for example—and the laws of the politically correct system under which we work, we now have such stringent rules that we restrict the public and our industries from doing all sorts of things, in a way that is not thought of in other countries. I wonder whether that section means that we are taking the opportunity to put up trade barriers, against the spirit of a trade agreement. Is this some sort of backyard deal that allows us to worm our way out of our obligations? If we are signing a free-trade agreement with another country, then there has to be free trade.

Hon David Cunliffe: What a sad speech.

JOHN CARTER: That member will be sad when he is not back in Parliament after the next election, so if I were him I would not worry about being sad now. If I were that member I would be happy to be taking calls, because they will be amongst his last—which will be a blessing to Parliament.

I ask the Minister what new section 15F(1) actually means. A free-trade agreement, on my understanding of the situation, means free trade. I know that people like Keith Locke do not agree with that. That is fair enough; he states his case. But the point is that signing up to a free-trade agreement means that we can put our goods into a country and it can put its goods into ours. We should not need barriers because of different rules and regulations within the countries, yet surely that is exactly what that section states. I think that issue is absolutely important, and I look forward to the Minister explaining to us what that section means.

I want to go back to an issue I have raised already, on which the Minister has not satisfied me and certainly, I believe, will not have satisfied any of the listeners to this debate. It is the issue around the Treaty of Waitangi. Again I ask the Minister to tell the industries involved—because they are the ones that are directly affected—what the agreement means in referring to the fulfilment of our “obligations under the Treaty of Waitangi”. What does that mean with regard to this trade agreement? I do not understand; I do not know what it means. That phrase is just parrot words unless we have some understanding of what those obligations are. I know that the Minister, like his fellow Ministers when they are asked questions, will ignore that question, which is unfortunate. But if he is going to ignore it, why was that phrase put in the agreement at all? Some bureaucrat at some stage will be asked a question about it, and he or she will then be obliged to spend hours and hours on trying to figure out what it means—because the agreement states that someone will have to. It is likely that that person will get it wrong or, after doing hours of research, he or she will not be able to find the answer, either.

It is a serious matter when we have legislation and treaty articles that refer to things that are not defined and that people cannot understand. Quite honestly, they end up being meaningless. Particularly in trade agreements that we arrange with other countries, we should know what absolutely every word in a treaty means, and know what impact an agreement has on our country and on the country with which we are making it. In this case, the Thai people have every right to be able to understand the phrase. In fact, it amazes me that they have not asked for an explanation.

Hon JIM SUTTON (Minister for Trade Negotiations): The member John Carter has asked why we have agreed to a bilateral transitional safeguard mechanism. I point out to him that for the mechanism to apply, increased imports must result in serious injury or threat of serious injury, which is a very significant and relatively strict test. It is not expected that there will be recourse to this provision often, if ever. It is a safety net. It was agreed reciprocally. Thailand did press for this provision, and New Zealand agreed to it in the context of an overall deal that met New Zealand’s interests.

I remind the member that under this agreement New Zealand attains, over an agreed period of years, completely tariff-free entry for, amongst other goods, our dairy products into the Thai market. If the member believes that the Thais would have agreed to that without putting in place this relatively modest safeguard against what a lot of Thai producers clearly fear will be an absolute torrent of New Zealand product that will destroy their market overnight, then the member is dreaming. He is dreaming of a perfect world where he is the Minister and everybody around the world agrees with him. He will have a long wait for that.

Opposition members have gone on again about the Treaty of Waitangi and what that clause requires the New Zealand Government or the Thai Government to do. They have suggested that the Thai Government would be forced to give preferential access or preferential exemption to products from Māori businesses when it came to applying the safeguard measure. [Interruption] The member did indeed suggest that, and it is no good his claiming now that he did not. All I can say is that that is a ludicrous suggestion. I point out to him that the Treaty of Waitangi clause does not require the New Zealand Government to favour Māori, but it does mean that if we do something for Māori—such as assisting Māori language broadcasting—we do not have to do it for Thailand. Does the member want to commit the New Zealand taxpayer to pay subsidies for the production of Thai language TV broadcasting in New Zealand? Will those members say yes or no? Do they know what they are talking about? No, they do not.

DAIL JONES (NZ First): I was not going to take a call, but the Minister for Trade Negotiations has provoked me now. Is the Minister really saying that this agreement will allow the Māori language to be broadcast in Thailand, that the Māori people of New Zealand will be given a great advantage in their language being broadcast there, and that is what he is aiming at? What a load of nonsense, if that is what he is saying. He actually does not know just what he is saying. That is the point of the matter.

The second point regards one being able to take action if one feels that Thai goods are flooding into New Zealand contrary to one’s wishes, or vice versa with Thailand. That clause is really a lawyer’s dream, because so many cases will be commenced under it. If something like that is allowed to happen, it will happen, and lawyers will just love it. Can members imagine a smaller New Zealand trader trying to compete against someone importing from overseas and wiping out that New Zealand businessman? The small New Zealand business—and, remember, 97 percent of New Zealand businesses are in that small to medium sized enterprise category—would not be able to compete with wealthy Thai exporters who want to destroy the New Zealand market, and to set up something for themselves in terms of getting money from overseas. That is another reason for opposing this agreement.

We should not look at this agreement as if it is the answer to all New Zealand’s worries. In the year ended December 2004, our exports to Thailand totalled $364 million. If we had to rely on that, we would not be going very far at all. However, our imports totalled $659 million. I can see this agreement being rather like the Singapore one, where the Singaporeans are doing better and better relative to New Zealand. The Thais have gone into this agreement for only one reason: they have pulled the wool over the Minister’s eyes and over Helen Clark’s eyes. The Thais are going to do very well out of this agreement, to the detriment of New Zealand workers and suchlike.

Hon David Cunliffe: Is the member supporting the bill?

DAIL JONES: David Cunliffe does not care two hoots about it; he is too busy with his comparative something or other theory. However, people like Keith Locke, I must say, and New Zealand First members have their feet on the ground and are concerned about the real workers of New Zealand.

KEITH LOCKE (Green): It is a little step forward that the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill includes the transitional safeguard measures. Although, as the Minister for Trade Negotiations has just said, it was not the initiative of the New Zealand Government to put those in; it was the initiative of the Thai Government. Perhaps the New Zealand Government even beat them back a bit, if, as the Minister says, the Thai farmers are worried about a flood of dairy products. As I pointed out earlier, Oxfam New Zealand, in its submission on the treaty to the select committee, talked about the problems of Thai dairy farmers, and also quoted from a document of the Australian Department of Foreign Affairs and Trade that made a similar point. But surely, whether it is protecting Thai farmers against New Zealand products, or protecting New Zealand manufacturers and workers against Thai products, this is a very limited arrangement, on two levels.

The Minister has said that the measure has to meet a very high test of serious injury to an industry. There is some good phraseology used elsewhere. A detrimental impact in relation to increased importation of goods is an “actual decline in output, sales, market share, profits, productivity, employment, and utilisation of production capacity;”, or some threat to cause “serious injury to an industry producing a like or directly competitive good.” It is good that the provision is there, but when one reads the fine print elsewhere, one finds that that provision lasts for only a maximum of 2 years, following the elimination of the tariff on the product concerned. So it might help New Zealand workers or Thai farmers for that little period of 2 years, but beyond that we could be in serious difficulty.

The Green Party has three amendments to clause 7. They are of the same theme as my amendments to Part 1, which was to insert into the clauses a little bit extra on labour standards and the environment. Under clause 7, if my amendment is passed, there would be a paragraph (1)(c) in new section 15B that would include in the transitional measures products that “are being produced without acceptable labour standards or in ways which detrimentally affect communities or the environment.” Also, my amendment would insert subparagraphs (i) to (iii) into new section 15D(d) to bring into account “(i) the extent to which the imports have been made by forced labour, child labour or women who are paid less than men for the same work; or (ii) the extent to which the imports have been made in unsafe and sub-standard working conditions; or (iii) the extent to which the imports have been made without reasonable environmental standards”. My amendment to insert paragraph (1)(c) into new section 15F would take into account exclusions on items that “are causing, or threatening to cause, harm to Thailand because they are being produced without acceptable labor standards or in ways which detrimentally affect communities or the environment.”

Those amendments would provide a lot of protection for the rights of people in Thailand, particularly working people, in terms of labour standards, and, in the broader community, in terms of environmental effects and effects on communities. I think there is good reason to be concerned there. If members follow events in Thailand, they will see that the Government does not protect the environment very well in terms of the expansion of industry. At least, those amendments would allow New Zealand, if there is a big outcry from the Thai community and non-governmental organisations that they are not being properly protected under this agreement, to exclude the products that are producing that damaging effect on the Thai people.

So I hope members will support those amendments. They do strengthen the clause. As I said, it is good that the transitional safeguards are there, but they are very wishy-washy and weak.

BERNIE OGILVY (United Future): I have just become aware that, on the closure motion, I wrongly voted nine votes on behalf of United Future. It should have been eight. I seek leave to correct that.

The CHAIRPERSON (Ann Hartley): Leave is sought to correct that. Is there any objection? There is not.

Dr RICHARD WORTH (National—Epsom): I would like to ask the Minister a question on something that is far from clear to me in Part 2, and express the hope that he will provide a response. We are of course talking about the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill, which National supports with reservations. Part 2 is concerned with the application of transitional safeguard measures and provisional safeguard measures. There is a brief explanation in the explanatory note of the bill as to what all this is about. The note states: “The Agreement provides for the use of bilateral transitional safeguards by both Thailand and New Zealand. These allow either party to address situations of serious injury to domestic industries caused by increased imports due to tariff reductions or removal under the Agreement by reverting to higher tariffs for a certain period.”

The actual part inserts new sections into the principal Act. There are interpretation sections, and a code that involves investigative procedures: matters to be taken into account by the investigator, who is the chief executive; publication of investigation results; and provisions dealing with transitional safeguard measures and also provisional transitional safeguard measures.

I question the Minister about why this particular part is necessary, and why it is not possible simply to rely on the current provisions in the World Trade Organization agreements. Of course, it is the essence of the World Trade Organization regime that binding tariffs are key to the smooth flow of trade in goods, but there are exceptions, as I am sure the Minister is aware. Three of those exceptions that are well-known would be actions taken against dumping, or selling at an unfairly low price; subsidies and special countervailing duties to offset the subsidies; and—the third is what we are on about here—emergency measures to limit imports temporarily, designed to safeguard domestic industries.

The rules around safeguards in the World Trade Organization context are well known. A member may restrict imports of a product temporarily—take safeguard action—if its domestic industry is injured or threatened with an injury caused by a surge in imports. The injury has to be serious. Well, that is what this part is all about, also. The safeguard measures were always available under GATT’s article 19. They might not have been frequently used in those days; indeed, I understand that some Governments preferred to protect their domestic industries through grey-area measures, using bilateral negotiations outside GATT’s auspices. They would persuade exporting countries to restrain exports voluntarily or to agree to other means of sharing markets.

It also seems to be the case that what Part 2 is seeking to catch is wholly consistent with the safeguards regime in the World Trade Organization, because we are talking about import surges justifying safeguard action, and that can be either a real increase in imports—an absolute increase, as it is called in the trade—or an increase in the imports’ share of a shrinking market, even if the import quantity has not increased. That is the so-called relative increase.

As I look through the safeguard provisions in the World Trade Organization agreement, I cannot see why the Government is getting itself involved—as it is in this bill—with Part 2 issues. I am not a member of the Foreign Affairs, Defence and Trade Committee, but I do not believe that that issue was fully considered by the committee. The only comment I can see about that issue in the recommendations of the committee when it reported to Parliament is this one line: “We are advised that the inclusion of these provisions is fully consistent with our GATT obligations.”

Dr the Hon LOCKWOOD SMITH (National—Rodney): I hope the Minister will answer those very learned questions from my good colleague Richard Worth, because they cover important issues. I would like to come back to the Minister’s response a few minutes ago to questions put to him. I am really troubled by the rave he gave in response to the questions raised about the Treaty of Waitangi and the article about the treaty in the agreement, and how they apply to the part of the bill we are debating right now. The Minister gave the impression in that rant that that provision will somehow avoid giving to Thai people an advantage that Māori may have in New Zealand. I want to make it very clear to the Minister that that is not what this part is about, and I want to go over the words very carefully with the Minister. Article 15.8 in the agreement states: “… nothing in this Agreement shall preclude the adoption by New Zealand”—it is nothing to do with Thailand; this is adoption by New Zealand—“of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement …”. So it is a matter of what New Zealand deems necessary and, clearly, the transitional provisions are covered by that agreement.

I want the Minister to tell the House what he and this Government intend to do, or are contemplating doing, whereby they intend to deliver more favourable treatment to Māori that is not relative to people in businesses in Thailand but is relative to other New Zealand businesses. That is the issue, and that issue concerns New Zealanders. All New Zealand businesses should be treated in the same way under this agreement and under this legislation, but article 15.8 provides for the Government somehow to give more favourable treatment to Māori relative to non-Māori New Zealanders and non-Māori New Zealand businesses. That is what the wording states: “… in respect of matters covered by this Agreement …”—that is, trade matters. Then it goes on to state: “… including in fulfilment of its obligations under the Treaty of Waitangi.” I want the Minister to tell the Committee what bits of the Treaty of Waitangi confer more favourable treatment on Māori in trade matters relative to other New Zealanders. That article is nothing to do with people in Thailand; it covers a domestic matter. What does the Government have in mind? What will it confer on Māori that confers more favourable treatment on them relative to other New Zealanders? And where in the Treaty of Waitangi does it state that that should happen?

I understand that the articles of the Treaty of Waitangi provide for all New Zealanders to be given the same rights, so what does the Government see in the Treaty of Waitangi that may require it, in its view, to deliver more favourable treatment to Māori? This provision in this agreement means that the Government can do that—it can deliver more favourable treatment for Māori relative to other New Zealanders, and not breach this agreement. Now, that is what concerns a whole lot of New Zealanders. Sure, we have done that sort of thing in the past, but I thought that the Coordinating Minister, Race Relations said that the Government’s policy of doing that was finished. Māori have no extra rights, to quote Trevor Mallard in July last year, when of course that was a big issue following the Ōrewa I Speech by National’s leader, Don Brash. We know what this Labour Government is like. Its members will say anything when they come under pressure—especially Trevor Mallard, who could not give a damn what he says; he will say anything. So in July last year, following Don Brash’s Ōrewa I speech, Trevor Mallard said that Māori had no extra rights or privileges under the treaty or in the policy of the New Zealand Government. Then, just a few weeks later, what do we see? The Government has put into an international treaty a provision that shows it intends to reserve the right “… to accord more favourable treatment to Maori in respect of matters covered by this Agreement …”.

All I want the Minister to do is to tell us what is in his mind. What kind of more favourable treatment does he have in mind that Māori need? Maybe then the people of New Zealand could understand. And what obligations under the Treaty of Waitangi make him feel that Māori somehow should be accorded more favourable treatment than non-Māori? When we read the Treaty of Waitangi we do not see where it states that Māori should be accorded more favourable treatment. That is not a big ask, I tell the Minister. I do not think that it is a big ask. What does that article mean? That is all we are after. Actually, we want to know also what the Minister means when he says he reserves the right—

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

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

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 57

New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Green Party 8.

Motion agreed to.

The question was put that the following amendment in the name of Keith Locke to clause 7 be agreed to:

to add to subsection (1) of section 15B the following new paragraph:

(c) are being produced without acceptable labour standards or in ways which detrimentally affect communities or the environment.

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

Ayes 8

Green Party 8.

Noes 110

New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Keith Locke to clause 7 be agreed to:

to add to paragraph (d) of section 15D after the word “obligations”, the words “such as but not limited to—”, and the following new subparagraphs:

(i) the extent to which the imports have been made by forced labour, child labour or women who are paid less than men for the same work; or

(ii) the extent to which the imports have been made in unsafe and substandard working conditions; or

(iii) the extent to which the imports have been made without reasonable environmental standards.

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

Ayes 8

Green Party 8.

Noes 110

New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Keith Locke to clause 7 be agreed to:

to add to subsection (1) of section 15F the following new paragraph:

(c) are causing, or threatening to cause, harm to Thailand because they are being produced without acceptable labour standards or in ways which detrimentally affect communities or the environment.

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

Ayes 8

Green Party 8.

Noes 110

New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Amendment not agreed to.

Part 2 agreed to.

Dr the Hon LOCKWOOD SMITH (National—Rodney): I raise a point of order, Madam Chairperson. I seek your guidance as to how you are assessing acceptance of closure motions in this debate, because we are obviously not allowed to raise a point of order when you accept the closure. Could you give us guidance as to whether it is based simply on the time involved in the debate or on your consideration as to whether serious questions are being answered, because I think the public has a right to have questions answered.

An example of the seriousness of what I am raising is that a few minutes ago my colleague Richard Worth asked, for the first time in the debate, a question about a very serious issue relating to the consideration of the World Trade Organization’s provisions for safe transitional safeguards compared with those in this legislation. The Minister chose not to answer a question on a very serious issue, yet you accepted the closure motion prior to that question being answered and before the issue could be pursued by other speakers. I would appreciate your guidance. Do you give any consideration to that kind of thing, or is it purely a matter of the amount of time you consider has been spent on the debate?

The CHAIRPERSON (Ann Hartley): I assure the member that the time does not come into it. The matter is one for the Chairperson alone, and I make my judgment according to the debate.

Clauses 1 and 2

Dr the Hon LOCKWOOD SMITH (National—Rodney): Madam Chair, I think it is time this Parliament had some decent answers from the Minister for Trade Negotiations. As I have just raised a moment ago, you accepted the closure motion and the Minister had not given answers to serious questions. My colleague Richard Worth raised the question of why it is necessary to duplicate in a slightly different way the transitional safeguard provisions of World Trade Organization agreements. They have been used by various countries. World Trade Organization agreements supersede bilateral agreements. They apply automatically, anyhow. Why was it necessary to introduce them into our law? Even Dail Jones from New Zealand First, who is a lawyer, pointed out that the provisions in Part 2 of this bill are a lawyer’s dream because of the kind of wording involved. We got no answers from the Minister on that issue.

So, Madam Chair, we want some answers out of this Government as we now debate clauses 1 and 2—a general debate covering the whole bill. Madam Chair, you cannot get away with it as easily as that, because I have also asked very specific questions—

The CHAIRPERSON (Ann Hartley): The member will not bring the Chairperson into the debate.

Dr the Hon LOCKWOOD SMITH: I apologise—I did not realise that I was. But if you tell me I am—

The CHAIRPERSON (Ann Hartley): The member clearly said “you” to me.

Simon Power: I raise a point of order, Madam Chairperson. I appreciate that members should not be bringing you into the debate by referring to you directly as they make their contributions. On behalf of the Opposition, all I would ask is this. I have sat in this Chamber for many hours during this urgency period. A raft of members have brought you into the debate at one time or another. During the time that I have been in the Chamber, none of those members have been pulled up for that. Dr Smith is one of the most experienced members of Parliament in this Chamber, and all I would ask you—[Interruption] Well, you can sigh, Madam Chairperson, but all I would ask is that the same rule is applied to all members of Parliament. Given that you have stated that matter, I will now be listening for any member bringing you into the debate, and raising points of order accordingly.

The CHAIRPERSON (Ann Hartley): I thank that member for his comments. The member did bring me into the debate most inappropriately, and also contested a ruling. I would certainly warn members not to do that. I take the member’s point.

Dr the Hon LOCKWOOD SMITH: I raise a point of order, Madam Chairperson. I would appreciate your making it clear to me how I contested your ruling. I made it very clear that I could not do that—that your acceptance of a closure motion was something that could not be contested. I sought your advice as to what guided your judgment, which I believe we are entitled to do, because this is a parliamentary democracy, not a dictatorship.

The CHAIRPERSON (Ann Hartley): Please continue. I have given my ruling.

Dr the Hon LOCKWOOD SMITH: Let me come back to the bill that we are debating. We expect some answers from the Minister, because there are important issues. I have mentioned those raised by my colleague Richard Worth in respect of Part 2, and I want the Minister to cover the issue around the Treaty of Waitangi. We know that it embarrasses the Government. We know that it is contrary to what Trevor Mallard told the people of New Zealand. We know what Trevor Mallard told the people of New Zealand after the public had made it so clear, following Don Brash’s Ōrewa I speech, that they did not like the Treaty of Waitangi being used in a way that would confer preferential treatment on Māori. The public of New Zealand made it very clear that they wanted all New Zealanders treated the same before the law.

I want the Minister to tell us where the clauses in this bill give effect to what he has agreed. He signed article 15.8, which states specifically: “… nothing in this Agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement …”, and, obviously, covered by this bill, which gives effect to the agreement. I ask the Minister what that means. So far, the Minister’s explanations to this Committee have made no sense at all, because the issue is more favourable in respect of other New Zealanders. What does the Government have in mind in terms of intending to confer more favourable treatment on Māori compared with other New Zealanders? If there are issues in this agreement and in this legislation to stop Thai investors being given some advantage, that is fine. But that should apply to all New Zealanders. I want to know from the Minister, and I think New Zealanders want to know from the Minister, what that means. What does the Government have in mind, given that Trevor Mallard said that Māori have no extra rights or privileges under the treaty, or in the policy of the Government? What does that mean, when the Minister has signed an agreement, and the Government has signed an agreement, that reserves the right to implement measures they deem “necessary to accord more favourable treatment to Maori”?

I think the people of New Zealand deserve a response to that—the Minister’s attempts so far have been more to fudge the matter than to clarify precisely what the Government has in mind, and precisely which obligation under the treaty it feels is involved here—because then the matter would be put to rest.

DAIL JONES (NZ First): We are looking at clauses 1 and 2, and I want to comment on clause 2. On the face of it clause 2, “Commencement”, states: “This Act comes into force on 1 July 2005.” All New Zealanders know that Helen Clark was in Thailand some weeks ago signing this agreement with the Thai people, without any regard for the New Zealand Parliament. She took another photo opportunity on that occasion, as she loves doing, that showed her signing the agreement on behalf of New Zealand, and binding New Zealand to an agreement with Thailand. Of course, the Thai people were doing the same, not fully realising just what the protocols are in New Zealand for this type of agreement.

When we were in the Foreign Affairs, Defence and Trade Committee considering the agreement itself, we were very, very concerned. In the short space of time that was made available to us, and almost on the day in question when we were looking at it, and despite the Cabinet recommendation that 15 working-days should elapse before the select committee had to report back to Parliament and that the Government should take no action within that 15 days to bind New Zealand, and when only 13 working-days appeared to have passed—despite all that, there was Helen Clark signing this agreement in Thailand in breach of all the protocols that New Zealanders expect her to honour in terms of Cabinet agreements.

That was just another example of the arrogance of this Labour Government. It does not care about the people of New Zealand’s wishes, is not concerned about Cabinet protocols, and is not concerned about this Parliament. Its Prime Minister goes racing off and signs agreements, and binds the people of New Zealand.

The bill states that this agreement should come into effect on 1 July 2005. That is not what the people of New Zealand think. They saw Helen Clark signing the agreement, and as far as the people of New Zealand are concerned, they believe that it is already in existence—otherwise, why did Helen Clark have yet another photo opportunity? She went over to Thailand, signed this agreement, and wasted the taxpayers’ money—or was she wasting the taxpayers’ money? Because this bill states “1 July 2005”, yet there was Helen Clark, before 1 July 2005, signing the agreement in Thailand. Which one is it to be?

Clearly there is total arrogance on the part of the Prime Minister, Helen Clark, in so far as having any regard for the people of New Zealand, and any regard for Parliament. The select committee procedure was just an absolute whitewash and a waste of time, because the Government had clearly made up its mind and signed the agreement. Even this debate in the House is an utter waste of time because the Government has made up its mind. Helen Clark has been over in Thailand and signed the agreement. We are totally being used in this Parliament and in this country for the benefit of Helen Clark and yet another photo opportunity. No wonder New Zealand First opposes this bill!

KEITH LOCKE (Green): The Green Party has an amendment under this part to clause 2, to extend the date when this legislation will come into force from July 2005 to July 2010. I think that the Government may actually support this amendment, and I will just explain why that is—and the National Party members will be interested in this. Clearly, there is a bit of a misunderstanding in the National Party ranks about the Treaty of Waitangi and our commitment as a nation to it, and about the need for clauses in agreements and legislation referring to the Treaty of Waitangi. The National Party has referred to the article that allows more favourable treatment of Māori in respect of matters covered by this agreement—that is, article 15.8 in the original treaty. In view of the misunderstanding in National’s ranks, if we extend the implementation date out for 5 years and the National Party members have a bit more education and perhaps talk to a few Māori, by July 2010 they may understand things a bit better and there may be more agreement in the Committee on this bill. It may also be the case that if we extend the start date out to 2010, members on the Labour side of the Chamber may think a bit more about the implications of this bill in the meantime, and think that perhaps they should not go ahead with its basic provisions.

An extension to the implementation date would also give a little more time for New Zealand industries, Thai industries, and the agricultural industries to adapt. I talked earlier on about the danger to the Thais, in terms of their dairy industry. Perhaps in 5 years Thailand could, with New Zealand’s assistance, make its dairy industry a bit more efficient, and there could be a win-win situation whereby our dairy products would not then undermine the Thai industry, but would be on top of Thailand’s dairy industry and put dairy products into a richer society. Thailand would have grown a bit richer in those 5 years, we would be selling more dairy products, and everyone would be happy. We would not then get that rebellion from Thai farmers. So extending the start date could help us there.

Also, it may help in terms of the evolution of the international debate on free-trade agreements like this, and of people coming to understand the strengths and weaknesses in such agreements, and understanding what should be put in and what should not. At the moment, this sort of blanket free-trade agreement does undermine certain sectors in both the countries involved. It actually hurts, particularly, the poor people in both countries. In this agreement the poor people in Thailand are affected, because they are kept in poor conditions with low wage rates. We are not helping them at all, because we are not putting clauses into this agreement that will help to protect them. The working people in New Zealand—those in the clothing industry, in particular—will also be subject to unfair competition, because of the much lower wages in Thailand.

Lockwood Smith has been asking how the Treaty of Waitangi clause will affect trade with Thailand. I think you have to look a bit beyond this bill, because he is talking about the agreement—

Simon Power: I raise a point of order, Madam Chairperson. I am sorry to interrupt the member, but I believe he was bringing you into the debate, Madam Chairperson, and was not pulled up for it.

KEITH LOCKE: I am sorry; I apologise if I did that. I do not recall doing so. I was saying that if Lockwood Smith looks at article 15.8 in the original treaty, he will see it may apply not just to the tariffs that are contained in this bill but also to the investment provision, and also, potentially, to any subsequent agreement on services. That could relate very directly to Māori, in terms of some of their educational institutes, and the special relationships we have in terms of fishing agreements, land agreements, and things like that. There may be special provision for Māori—and rightfully so, in terms of settling past grievances—that means, in terms of the competitive situation, we would not allow full competition from non-Māori institutions in New Zealand.

LESLEY SOPER (Labour): I move, That the question be now put.

Dr RICHARD WORTH (National—Epsom): That is absolutely shameful, but it exemplifies what has characterised this debate through the stubborn refusal of the Minister to answer reasonable questions put to him. There is a strange phrase, for those who may be listening to this debate, that finds its way into the jargon of Parliament, and that is to talk about “strangers in the House”. Those are people who are not members of Parliament but are in the debating chamber. To the right of the Speaker’s chair are six or seven high-ranking and powerful officials from the Ministry of Foreign Affairs and Trade. They know the answers to the questions we have been asking the Minister. The Minister is determined to remain mute and not respond. He has offered three explanations, some conflicting, on one of the issues relating to the Treaty of Waitangi, but he has not dealt directly with the questions that have been asked. He has not dealt with this other issue relating to the need for Part 2.

I come to the particular part we are concerned with, and that is, the question of the commencement date for this legislation. The answer is very simple, of course: because that is the date that this particular trade treaty comes into force. It was signed in April. The plan is for it to come into force on 1 July. That is why we are in urgency. Certainly, it was a great and worthwhile—and I mean that—plan to embark on a bilateral trade treaty with Thailand. I think, legitimately, the public, and I hope the negotiators, saw the substantial benefits that might flow from a treaty. Those aspirations have been significantly eroded by limitations in the treaty that have been the subject of comment by others.

But I would say that this closer economic partnership marks the beginning of a new era in which New Zealand and Thailand will work together and build on their long-established relationship. I would also say that the closer economic partnership is a building block for inter-regional trade with other ASEAN countries. So it has strategic as well as economic significance. Traditionally, New Zealand’s main exports to Thailand have been commodities, while Thai exports to New Zealand have been motor vehicles, air conditioning, and machinery. So New Zealanders are not really aware of the sophistication of the Thai market, and conversely, Thais have not seen New Zealand’s capabilities in business innovation and cutting-edge technology.

I believe that Thailand and its neighbours are a key export market for New Zealand companies. Certainly, with incomes rising in Thailand, a growing middle class, economic growth being steady, and brand-conscious consumers, all looks good in the context of the long-term potential of this market. There is huge scope, for example, in areas such as cooperation in automotive components. As others have said, Thailand is the Detroit of the East.

I urge the Minister to respond to legitimate questions that National has raised in the context of this debate. Why is there a need to be evasive? Why is there a need to hesitate and not furnish answers? Why must the Minister—as he has done—persist in this debate with cheap and sniping attacks on National members? We deserve better than that. In this critical area—

Hon David Cunliffe: He’s one of the most expensive Ministers we have got.

Dr RICHARD WORTH: There is nothing cheap about this Minister, an intervener says from across the way. Well, the Minister has an opportunity to show what he is made of, and I hope that he does, because we are entitled to answers.

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

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

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 57

New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Green Party 8.

Motion agreed to.

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

Ayes 97

New Zealand Labour 51; New Zealand National 27; ACT New Zealand 9; United Future 8; Progressive 2.

Noes 21

New Zealand First 13; Green Party 8.

Clause 1 agreed to.

The question was put that the following amendment in the name of Keith Locke to clause 2 be agreed to:

to omit the term “2005”, and sustitute the term “2010”.

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

Ayes 8

Green Party 8.

Noes 110

New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Amendment not agreed to.

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

Ayes 97

New Zealand Labour 51; New Zealand National 27; ACT New Zealand 9; United Future 8; Progressive 2.

Noes 22

New Zealand First 13; Green Party 8; Māori Party 1.

Clause 2 agreed to.

Bill reported without amendment.

Report adopted.

Third Reading

Hon JIM SUTTON (Minister for Trade Negotiations): I move, That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a third time. The bill allows the agreement negotiated between Thailand and New Zealand for a closer economic partnership to come into force once Thailand has also completed its domestic implementation process. The agreement provides for all tariffs applying goods of New Zealand or Thai origin traded between the two countries to be either eliminated immediately or phased out over a schedule period.

Sitting suspended from 6 p.m. to 7 p.m.

Hon JIM SUTTON: As well as providing for all tariffs applying to goods traded between the two countries to be eliminated, the agreement provides for the early commencement of negotiation to liberalise trade in services. The agreement also provides for the use of bilateral transitional safeguards by both New Zealand and Thailand. Members opposite seem to have difficulty in understanding that concept. I am not sure what it was that they could not understand, but I will just point out to them that the bilateral transitional safeguards under the closer economic partnership simply allow New Zealand to raise tariffs on Thai goods back to the level applying to imports from other countries, in the event of serious injury or threat of serious injury because of a sudden and dramatic surge in imports.

The World Trade Organization global safeguards apply generally to imports from all countries, and can raise tariff rates above the World Trade Organization bound rates if a World Trade Organization safeguard is applied. I think that explains the relationship between the two.

Clearly, most members who have participated in the debate, like most New Zealanders, recognise the value of freer and fairer trade, and have supported this bill accordingly. The National Party members have spent most of their debating time raging against the presence of a Treaty of Waitangi carve-out article in the bill, an article that is identical in effect to the one they had proposed in the Singapore - New Zealand closer economic partnership, and one that they cheerfully agreed to put in New Zealand’s treaty binding us to the General Agreement on Trade in Services of the World Trade Organization. However, they seem to get particularly exercised by this article. Their necks turn red before our very eyes as they rage against it.

The meaning of the article that they have trouble understanding is, I suggest, plain on the face of it. The Government has no particular plans for more favourable treatment of Māori, but given the historical injustices perpetrated by the Crown on Māori in breach of the treaty over the years, we deem it equitable not to preclude some favourable treatment by way of redress, if this seems necessary to the Government of the day at some time in the future. National members may shout until their necks turn red but Labour believes in justice.

I thank everybody in the House, and in particular the members of the Foreign Affairs, Defence and Trade Committee, for their attention to this important legislation. I would also like to thank the officials who were involved in the negotiation of the agreement, especially the team leader, Rachel Fry, and the members of the public and private sectors who provided invaluable input into the process. They can all be proud of their special efforts and their achievement.

The agreement opens up substantial opportunities for exporters, both immediately and over the longer term, and will enable New Zealand’s trading relationship with Thailand to achieve its full potential. Moreover, the closer economic partnership will serve as a springboard for developing aspects of the New Zealand - Thai relationship beyond the economic domain. The conclusion of the agreement has already provided the impetus to introduce a working holiday scheme with Thailand, and it creates a platform for greater cooperation in areas such as tourism, education, cultural links, and scientific exchange. Beyond this, the agreement with Thailand has added impetus to the pursuit of New Zealand’s wider trade strategy objectives in South-east Asia, with negotiations now under way on free-trade agreements with Malaysia and, indeed, the entire ASEAN membership. I commend the bill to the House.

Dr the Hon LOCKWOOD SMITH (National—Rodney): In speaking to the third reading of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill, I want to reflect on what took place in the Committee stage. The Committee did canvass a number of issues in relation to this legislation, which, I make clear from the outset, National supports—not because we think it is a great piece of legislation or because we think the Thai trade agreement is a great agreement, but because we believe that any trade liberalisation is positive for New Zealand and is worthy of support. I congratulate the Government on making some progress in trade negotiations, and I congratulate the Minister for Trade Negotiations on having made some progress on trade negotiations.

But having said that, I am troubled by the quality of the agreement, which this legislation implements here in New Zealand. I think any reasonably objective examination of it would show that, on balance, it is worth doing, but there are quality issues. New Zealand up until now has set very high standards in our bilateral work. During the second reading debate I mentioned that CER was a very high-standard agreement. Our Singapore agreement is a high-standard agreement. I accept that the Singapore agreement was probably easier to negotiate, although services with Singapore were not easy to deal with, I think it is fair to say—but they are included.

Of course, one of the troubles with this agreement is that services are not included, and services make up over two-thirds of our economy. It is a serious concern that they are not included. OK, the Minister says that negotiations on that are to commence within 3 years. At least that is something, and services are not left out altogether, but it sets a poor precedent when agreements go ahead with bits having been left behind for a period of time. I guess the Government was getting a bit desperate. It had failed with the Hong Kong free-trade agreement. That one had been initiated a long time ago, and the Government had failed on it. The Government had no runs on the board in respect of bilateral trade agreements, at all, so I guess it wanted to get this one in the bag regardless of the quality.

There is a second concern about quality, and that is the extension of New Zealand’s undertakings beyond our APEC goals. OK, I accept that the Minister could not necessarily have negotiated with Thailand to phase out its tariffs earlier than the date it has agreed to do that—2025, from memory. But that is no reason for New Zealand not to agree to phase out our tariffs sooner. People are starting to learn a lot about trade. I have heard speeches this afternoon from members pointing out how important trade is to maintaining and enhancing peace and security in the world. I think I heard a member talking about trade lifting the tide and raising the living standards of all people in the nations that are trading. What I have not heard members of this Parliament begin to understand is that for us to remove barriers to trade with us, for us not necessarily to have as long a phase-out time as other countries, is to our advantage. It actually would have made sense to phase out New Zealand’s tariffs by 2010—our APEC goal commitment—because that would be good for New Zealand and the New Zealand economy. Why did the Government agree to phase out our tariffs on goods from Thailand by 2015? That hurts our economy. All the research is so clear: the countries that open up their economies first will be in the strongest position in this globalising world. Here, this Government has chosen to maintain a long phase-out of our own tariffs, and that is a reflection of poor quality and confused thinking.

Hon David Cunliffe: Why does nobody do that in the real world?

Dr the Hon LOCKWOOD SMITH: In fact, quite a few successful economies have—Hong Kong, for one. Singapore did not maintain tariffs around its goods. New Zealand, of course, legislated to phase out tariffs, and Labour actually repealed that legislation, and New Zealand’s economy will suffer because of that. The economies that are the first to open their markets are the economies that become the strongest in a globalising world. That is clear, if the member would only open his eyes to see.

We raised a number of questions, and, in fairness, I must say that the Minister did start to answer those questions. But then I guess the questions got a wee bit harder, and the Minister, the Hon Jim Sutton, got a bit petulant, started to throw his toys out of the cot, and refused to answer any more questions. Jim Sutton is not a bad bloke, I guess. He used to be a good guy, till Labour wrecked him. He certainly stopped answering questions. He became a bit more petulant and threw his toys out of the cot. These are the serious issues that we asked questions about and never got answers to.

The first question was about the transitional safeguard measures. For the first time, New Zealand is implementing specific transitional safeguard measures in our law. Sure, we are party to the transitional safeguard measures involved in our World Trade Organization agreements, but good questions were asked. Why legislate for this, when we are already covered by the transitional safeguard measures of the World Trade Organization? It makes more sense for Thailand to want to put crazy restrictions into its law, but why do we follow suit? Why do we not stick to the World Trade Organization provisions? Why are we putting into our law the set of measures in Part 2 of this bill? I think it was Dail Jones from New Zealand First who said that they will be a lawyer’s dream.

One does not need to be much of a lawyer to realise that, once one reads that the bill talks about a threat of injury and an increase in the volume of imports. I think the Minister, in his third reading contribution, talked about a rush of imports, or a huge increase in imports. The legislation does not state that. It refers just to an increase, either in real terms or in relative terms. Once we have those kinds of words in our law, once we have words such as “like goods”, lawyers will have a field day. It does not have to be an increase in imports of one’s own product; it just has to be an increase in imports of like products—and this legislation tries to define what like products are.

Why put this sort of stuff in our law, when there already are safeguard provisions in the World Trade Organization agreements, which have some precedents around them? These provisions are a bit different, a bit new in our law, and I predict we will see a new industry emerge that challenges imports under these transitional safeguard provisions. If this agreement works—and we hope it will—imports from Thailand will increase. That is what we want. We want an increase in our exports to Thailand. So I think it was short-sighted of the Government to put those transitional safeguard measures into our law, and it is sad that the Minister did not have the heart to respond to the very good questions from my colleague Richard Worth in relation to why we should do that when the World Trade Organization already has similar provisions that would be quite adequate for New Zealand.

The last question on a serious issue that we raised with the Minister was why have in this agreement an article that states: “… nothing in this Agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement including in fulfilment of its obligations under the Treaty of Waitangi.” We asked the Minister—which I think was perfectly fair, as this is now to be part of our law—what that meant. The Minister refused to answer. He got up and raved on, but clearly did not answer. In fact, he misquoted the article and sought to downplay it through misquoting it. The article clearly states that the Government intends to be able to accord more favourable treatment to Māori.

New Zealanders find that objectionable. That was very clear following Don Brash’s Ōrewa speech last year. Trevor Mallard promised after that speech that Labour’s policy had changed, that in future it would not accord more favourable treatment to Māori. Clearly, Labour will say anything it if thinks it will help it in the polls. That is quite clear. The polls were running against Labour last year on these treaty issues, so Helen Clark appointed Trevor Mallard as the Coordinating Minister, Race Relations to quieten everything down. He made a public statement at Victoria University that Māori have no extra rights or privileges under the treaty, or in the policy of the New Zealand Government, and within weeks—in fact, at the very same time—he knew, or should have known, that the Government was incorporating into a treaty with Thailand a provision that does exactly that; a provision that does accord more favourable treatment to Māori.

National members object to that, although we do support the bill in its overall impact.

LUAMANUVAO WINNIE LABAN (Labour—Mana): Kia ora, talofa lava, sawasdee, and warm Pacific greetings. I have much pleasure indeed in standing to speak during the third reading of this very, very historic legislation, the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill of 2005. I want to thank especially the honourable Minister for Trade Negotiations, Jim Sutton, and also the officials from the Ministry of Foreign Affairs and Trade who have worked tirelessly in negotiating this special agreement between the peoples of Thailand and of New Zealand. It does indeed represent a significant economic and strategic opportunity for New Zealand. It not only opens up more opportunities for New Zealand businesses but is also an important step towards improving our trading environment in the region and worldwide.

I want to respond to a couple of issues. One, raised by some members on the Foreign Affairs, Defence and Trade Committee, was the Treaty of Waitangi. The relevant provision in this closer economic partnership does not have any impact on the nature of the Government’s policy in relation to Māori. It is not uncommon in international trade agreements for countries to reserve the right to accord more favourable treatment to indigenous peoples or ethnic minorities. In fact, back in 1994 New Zealand recorded a reservation in its schedule of commitments under the General Agreement on Trade in Services (GATS). That provided for more favourable treatment to be accorded to any Māori person or organisation, but Australia, Canada, Malaysia, the United States, and France—on behalf of New Caledonia—have all included some form of indigenous reservation in their GATS schedules.

I also want to respond to my colleague from New Zealand First, in terms of the impact of the closer economic partnership on jobs. Although a lot of allegations about job losses are made by a lot of people who are essentially opposed to free-trade agreements, there is no evidence to substantiate those allegations. The impact of opening up the New Zealand market to imports from Thailand is expected to be very muted. It is not expected that tariff reduction and removal on imports from Thailand will have a direct impact on employment.

On the other side of the ledger, a good number of export-focused industries have welcomed the outcome of the closer economic partnership and the opportunities it opens up for developing trade with Thailand. At this point in time, I want to point out the benefits, and how New Zealand will gain from this agreement. I will give some examples of the sectors that will benefit from the complete elimination of tariffs from 1 July this year. There will not be annual duty payments of about NZ$3 million on current levels of infant milk-food products. New opportunities will be opened up for the export of avocados, cherries, persimmons, and kiwifruit as a result of the removal of the 30 to 40 percent tariffs on those products. The removal of the 40 percent tariff on carrots will allow New Zealand exporters to regain the NZ$2.5 million market lost to China. A large number of manufactured exports will see their tariffs completely eliminated, including the 15 percent tariff on gas pumps, the 5 to 10 percent tariffs on plastic moulding equipment, and the 15 percent tariff on radio parts.

I refer now to a letter that the New Zealand Horticulture Export Authority wrote to the Foreign Affairs, Defence and Trade Committee, urging it to support this special partnership agreement. The authority stated: “New Zealand fruit and vegetable exports have dropped from almost $13 million in 2002-03 to $7 million in 2003-04. This is the direct result of the free-trade agreement signed between Thailand and China coming into effect on 1 October 2003, providing tariff-free access for all fruit and vegetables. The New Zealand - Thailand CEP will reduce tariffs on a range of products from 40 percent to 0 from 1 July 2005, allowing New Zealand exporters to compete on a level footing with Chinese suppliers.” The authority stated in the last paragraph of its letter: “Thailand, particularly Bangkok, is a dynamic and rapidly growing economy. This positions the New Zealand horticultural industry extremely well to take advantage of growing demand and affluence. The New Zealand horticultural industry looks forward to the passing of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill, which will deliver real benefits to our growers and exporters.”

It is indeed a pleasure to stand to support the bill. I thank all those involved, including the chair of the select committee, the Hon Peter Dunne, my colleague the Hon Lockwood Smith, our other National colleagues who have supported the passage of this bill, the Hon Matt Robson from the Progressives, and also my Labour colleagues. I also thank New Zealand First and the Greens for not supporting us. Other than that, this is a great day for New Zealand, and I thank you.

DAIL JONES (NZ First): The first thing I should do is indicate the nature of the trade between Thailand and New Zealand, based on Statistics New Zealand external trade statistics for New Zealand exports to Thailand in the December years—say, December 2004, and also December 2002 and December 2003. The astonishing thing is that I have to disagree with the preceding speaker. She has misinformed the House, based on the letter she received from the Horticulture Export Authority. I look at the reference I have to horticultural exports. The member said that they totalled $7 million last year. The member has the letter, but I have the statistics. The statistics do not confirm what is in the letter. The letter is seemingly untrue, and that member, a Government member, has not bothered to check the facts. She must not repeat things that are told to her, assuming they are true.

According to these—[Interruption] The member should not look at me like that. These are the statistics, and I will read them out. If we look at the top 20 subtotal for exports to Thailand, there is not one dollar for horticulture, and the statistics go down to $3 million. There is not one dollar of horticultural export goods mentioned there. These statistics are for the top 20 exports. We have milk-powder extract, buttermilk, butter, timber, fish, raw hides, frozen beef, air vacuum pumps—$3.3 million for those—and $3 million for iron or non-alloy steel flat-rolled products. There is nothing for horticultural products.

So if the member is going to quote statistics, she has to get them right. She has to check what she is quoting. Just because somebody has told her something, that does not mean that it is true. That is the basic rule of politics. She has been caught short badly. I read that letter and I thought I would check the figures. That letter was wrong. If it is right, I will look forward to discussing it with the authority. I would like to see members of the authority tomorrow, because these statistics must be right, surely. This document has been given to me by the Parliamentary Library. It is quite clearly entitled “Statistics New Zealand external trade statistics 2004, 2003”, and there is a reference to 2002. It is as simple as that. So the previous speaker has mud all over her face.

Of course, this bill is also about horticulture. While we are on that topic I will make just one more point. Why did the member not quote this from the Horticulture Export Authority? The authority told the select committee considering the bill: “However, new residue testing requirements proposed by the Thai Government have the potential to significantly reduce the benefits from the agreement. These requirements are viewed by both the New Zealand export industry and Thai fruit and vegetable importers as a non-tariff trade barrier, focused on reducing imports of Chinese fruit and vegetables. We are working with the Ministry of Foreign Affairs and Trade to address this issue.”

The barriers they are putting up against China affect New Zealand as well, so the amount of fruit exported to Thailand from New Zealand will be virtually nil. I have those two documents here, and the member can comment on them. I am prepared to table them, to make them available to anybody. Clearly, it is all very well for the Minister to parrot something and for this other Labour member to parrot something, but parrots are only parrots. We have to think for ourselves sometimes, and that is what we do in New Zealand First.

We care about the workers of New Zealand. The National Party wants more and more imports into New Zealand, and their members support this bill. The Labour Party gets its facts wrong, and its members stand there and say how wonderful this legislation is. There are more and more imports into New Zealand, and more jobs are being lost for workers in Porirua.

What about the workers in Porirua? They will suffer as a result of this legislation. New Zealand First made that clear. Once again, we quoted from the information in the report, which was supplied by the officials. The national interest analysis on page 21 has the following statement, and refers to the New Zealand First minority view on the agreement: “The clothing, footwear, and carpet sector, where the highest tariff of 17.9 percent prevails, has traditionally seen the most sensitive tariff reductions. Concern in relation to imports from Thailand was also raised in respect of whiteware, plasterboard, steel, and certain textiles.”

New Zealand First is concerned about workers in those industries, some of whom I am sure are in the Porirua and Wellington areas. The previous speaker, who represents an area of Wellington, seems to have no regard for them whatsoever. I can say that New Zealand First does have concern for those workers.

It is interesting to read about the imports from Thailand, and I mentioned this in the Committee stage. One of the imports is caviar—$21 million of caviar is imported from Thailand. I can just imagine all the Chardonnay-sipping Labour socialists now will be adding Thailand caviar to their lovely lattes and coffees when they are in Ponsonby, Grafton, Parnell, and wherever else one goes in Auckland to enjoy a Saturday latte. Now they will have a touch of caviar, probably on their French-imported biscuits. That is what the Labour Party has to offer to the workers. If they cannot have bread, they can have some caviar—imported especially from Thailand.

What a state this Labour Party is in today. No one in this Labour Party has shown any concern for the workers of New Zealand. New Zealand First has been concerned, and the Greens have shown some concern, although they seem to be almost as concerned about the workers in Thailand as they are about the workers in New Zealand.

National Party members made some very good speeches on this bill. I had regarded them as being in opposition to the legislation. I commend Dr Lockwood Smith for his speeches. They were all in opposition to the legislation. He has admitted that it is a poor-quality agreement. I think he is just going on the basis that any trade agreement is a good trade agreement, it does not matter what the quality is. As far as New Zealand First is concerned, it has to be a good-quality agreement, and the prime requirement is the welfare of the workers of New Zealand.

What does this agreement offer New Zealand in that very important area of services? This agreement does not include services, and that is despite services contributing 68 percent of New Zealand’s GDP. This agreement provides for negotiation to be only initiated within the next 3 years. Initiated negotiations do not necessarily end in completed negotiations. They begin in 3 years’ time, and how long will they go on for? We are talking about services being 68 percent of our GDP, and they are not even included in this agreement.

Dr Lockwood Smith said that it set a bad precedent. It sets a terribly bad precedent. One can imagine that if we are going into a deal with China, and they see what we have agreed to in this agreement, well the Chinese will have read every last word of it and they will be going for the same sort of deal. They will not want to give us services, because they will say: “Well, you agreed to do that deal with Thailand, so why should you not do it with us as well?”. It is an appalling agreement in that respect, also.

As far as services are concerned, it seems to be a bit of a one-way street. As the reports from the officials pointed out, it seems we make provisions for Thai chefs and Thai female massagers to come to New Zealand.

Hon Dover Samuels: Really?

DAIL JONES: That is true, yes.

Hon Dover Samuels: The member seems to know all about them.

DAIL JONES: I do. I had to read it a few times. I cannot pronounce it—there are too many “ths” and I lose track of it so I have abbreviated it a little, I have to confess. Dover Samuels looks up. Yes, there is a special provision for Thai chefs and Thai female massagers. What sort of an agreement is that? I asked the Minister in the chair, Mr Sutton, when these people actually go back, because they seem to be here temporarily. I never got any answer from the Minister. He was too flabbergasted himself to think about it. Although I think I did get an answer about how wonderful it would be for me to have a Thai female massage. What sort of an answer is that? We in New Zealand First want to know how long these people are going to stay in New Zealand, what they are going to do here, and why New Zealanders cannot do those jobs. New Zealanders should get those jobs first. Surely, after all these years of links with Thailand, we should have people capable of doing massages and knocking up a nice Thai curry for us all, without having to go to Thailand or having a Thai chef to do it.

Finally, I just make the point that the bill is a travesty as far as parliamentary process is concerned. The Prime Minister, in her arrogant way, and ready to get any sort of photo opportunity, had already signed this agreement. We saw her and the Thai people signing it, yet here we are, wasting our time in Parliament, pretending to approve an agreement that the Labour Government has already signed. That is an arrogant attitude. I draw the attention of the member concerned to the submissions on the agreement, which are not necessarily the submissions on the bill. She clearly has not read the submission of the New Zealand Horticulture Export Authority. I have read the letter that she has given. I checked the facts in it about trade, and they are wrong.

I seek the leave of the House to table the extract from Statistics New Zealand’s external trade statistics showing New Zealand exports to Thailand in December of the years 2002, 2003, and 2004, and imports from Thailand, which make no reference to horticultural products being $7 million.

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

LUAMANUVAO WINNIE LABAN (Labour—Mana): I seek leave to table the letter from the New Zealand Horticulture Export Authority, the chief executive of the New Zealand Fruitgrowers Association, and the New Zealand Vegetable and Potato Growers Federation to the Foreign Affairs, Defence and Trade Committee to support the New Zealand - Thailand closer economic partnership agreement.

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

KEITH LOCKE (Green): The Greens will oppose the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill, because although there are some advantages for New Zealand exporters—fruit and vegetable exporters have been referred to—overall, it will be a disadvantage to a good many people, both in Thailand and in New Zealand. Workers in both countries will not be the beneficiaries. In my earlier contributions, I talked about the disadvantages that Thai workers face at the present time, with very low wages, with international labour standards not applying, and with very poor conditions in the factories they work in. They actually want our assistance. Thai workers have been out here campaigning against this agreement, because what they want are agreements that have attached to them some advantage for them in terms of better wages, better conditions, and more adherence by their Government to international labour standards.

Just last week I received an email from a New Zealand unionist, a friend of mine, in Thailand. He was visiting various unions there, and he said: “Yesterday I met again the president of an electronics factory union. He also works in the factory. They have problems, including how hot the factory gets. However, he was telling me about the number of relatively young people who are dying as a result of chemicals at work. One worker was just 27 years old. She had breathed in solder fumes continuously for 5 years. Another young woman, 32 years old, agreed to give a newspaper interview about her work-related fatal illness but died 2 days later, on the day she was to be interviewed. Two of the women workers I have met on the last three visits seem to be suffering from some effects of chemicals at their work.”

Then he goes on to say that another major in the factory is subcontracting. One of the subcontracting companies in the factory again did not pay its employees on time. As a result the workers have to pay an extra 50 baht a day in rent until they pay their due rent. He says: “I am wondering about the Thailand NZFDA and how we can work closer with Thai workers on issues like chemical poisoning and subcontracting.” So there are contacts between New Zealand workers and Thai workers to try to get mutual benefits for both. This free-trade agreement and the legislation we are discussing today do not really advance that. In fact, if we work in such a way with these agreements so as to increase the wages and conditions of Thai workers, that helps us, because it reduces the wage gap in production, both in Thailand and in New Zealand, so there is less likelihood of the very low wages in Thailand undermining the exports of New Zealand manufacturers or undermining the production of New Zealand manufactures here, which could accompany goods produced by cheap labour flooding into New Zealand.

We have to realise that we should not take an ideological approach to trade and say that all free trade is good and it will all come out right at the end, or, as one speaker said today, that somehow it raises the level of us all. In fact, that is not true. Industries are undermined and destroyed by free trade. The Greens do not say that we have to be totally self-sufficient, or that we have the complete, full range of manufacturing that we once had, but we do not want to undermine all our manufacturing by competing with very low-wage economies. As I quoted earlier from Oxfam, there is a potential for New Zealand trade in dairy products to Thailand to undermine the Thai dairy industry, whereas if we build in transitions, where we help increase the efficiency of the Thai dairy industry at the same time as we are easing in imports, then it is a win-win situation. There is a growing market in Thailand, as other speakers have said, and it can accommodate efficient Thai dairy production while not destroying those farmers as well as exports from New Zealand. That is what we should be working towards.

Sometimes these free-trade agreements are surrounded by myths. That applies not only to the agreement we are implementing in legislation here today but also to the free-trade agreement with China that is in the pipeline. One of the myths is that New Zealand will keep its manufacturing industry, because we will move out of mass production of manufactured items and into high-level, high-value-added quality goods. That myth has been in New Zealand society for some time. I remember many years ago, when the Japanese were just starting to pick up their industrialisation, New Zealanders used to say: “Oh, these cheap Japanese goods—they’re no good. They’re not really a threat to us.”, and put them down as low quality, etc. There is a bit of that myth around in relation to the newly emerging economies of east Asia, be it China or be it Thailand, that somehow they are producing in a mass way and we can compete with quality goods. In fact, if one does not have a proper manufacturing base, one does not get the quality at the top end.

One has to realise that countries the size of Thailand and, particularly, China, have both. They have the mass production, and they have a very strong and growing quality-research end, a high-tech end, that will compete directly with us on all levels of manufacturing. If we destroy our manufacturing base, or limit it so much that we do not have the skills in the economy, be it in clothing or other forms of manufacturing, we will not be able to compete at any end of the market. Even our fashion designers are finding that at the moment. They look around for really skilled people to sew up their garments, and they are finding a shortage because of the collapse of the clothing industry in New Zealand, which this bill we are discussing here today will increase. It is the same in other forms of manufacturing as well, be it metallurgy or whatever. We need the tradespeople and the designers to be able to produce for the domestic economy and compete in the international economy. To use an analogy with the rugby game that is going on tonight, one does not get a quality team, be it the Wellington Lions or be it the All Blacks, if one does not have a big playing base. The quality comes out of that big base. We have to take note of that if we want to protect our own manufacturing here.

The Greens tried to improve this bill with amendments to make any transitional agreements subject to ILO standards, but we failed. I think we have to remember that this bill is the first of a range of bills that may come in to cover the other aspects of that agreement in relation to investment and, later, to services, if that gets agreed to. We have a problem in New Zealand at the moment with quite a foreign takeover of our industries and land, and we do not want to increase that through these free-trade and investment agreements that make us even more like foreigners in our own country in the sense of our ownership of infrastructure, industry, and agricultural land. Labour should be a little bit ashamed about this. Traditionally, Labour has had a close association with the trade union movement, but that association is loosening now because Labour is not taking note, in terms of this bill, of the criticisms made by the Council of Trade Unions of the free-trade agreement and what has come out of it. Unfortunately Labour is adopting more and more this ideology that free trade is everything and that we should just pursue it wholesale without taking into account the interests of New Zealand workers.

Hon KEN SHIRLEY (ACT): ACT will certainly be supporting this bill. We are the champions of free trade. We recognise the benefits that come from freer trade in the international community. In fact, my colleague Kenneth Wang, New Zealand’s newest member of Parliament, was just saying to me that those Green Party people are mad. That is what he said. He said that because the Greens believe that New Zealand can just lock itself in a cocoon—the “fortress New Zealand” approach—when at the end of the day New Zealand is, perhaps, as a percentage of GDP, more dependent on trade than just about any other economy in the world. If we accept the basic fact that New Zealand is dependent on trade, then we can see that it is certainly in our overwhelming interest to be the champion of free trade and to look at breaking down barriers wherever we can.

The harsh reality is that trade liberalisation is progressing at glacially slow speeds. We had the Tokyo round in the 1960s and 1970s, followed by the Uruguay round, which slowly crawled on. We had the Cairns group trying to promote agriculture right through that era. We now have the Doha round. It is frustrating. I commend trade Ministers from successive Governments, because I think that trade is non-partisan. We as a Parliament should be supporting our trade Ministers, whatever Government they are from. Some say that those Ministers are just swanning off around the world and having meetings every other week in some other place. It is actually a hard slog. I know that. Any gains we make are made very slowly. Right from Jack Marshall’s time onwards, through successive Governments, we have had good trade Ministers who have worked in New Zealand’s interests.

It is overwhelmingly in our interest to get comprehensive liberalisation of trade, because we have been disadvantaged proportionately very highly. The Rogernomics Government of the 1980s transformed the New Zealand economy. I was very proud to be a member of that Government. Most people in the ACT party relate to those reforms—the current Labour Government, of course, denies them—and those reforms are the reason for the prosperous situation this country is in today. That is the reality. The Government of the time broke down those barriers and took the hard yards back in the latter part of the 1980s, and that continued in the early 1990s under Ruth Richardson, until Jim Bolger sacked her. That is when the hard yards were done. That is when we took the bold decisions to take away our subsidies and to start taking away our tariff protections, and to the extent that, for a long period, we as a nation led the world, we are in a stronger position. We are in a stronger position because we have already taken away many of our trade barriers, and therefore we are poised to gain proportionately more than most by getting breakthroughs in agreements.

I understand that the tariff against our sawn timber going into Thailand is up in the 15 to 20 percent range. Officials could probably confirm that. That is a very serious obstacle to the profitability of our very important forest industry. Yes, we may lose in footwear, clothing, and textiles, because in those instances Thailand has the comparative advantage. But that is the beauty of freer trade. Both economies will be better off. Both peoples in both nations will be more prosperous. Overall, the global benefits and prosperity that come from freer trade are overwhelming. That is what the Green Party and, I regret to say, the xenophobic New Zealand First Party, simply do not understand. They do not get it. They believe in “fortress New Zealand”. They like to stoke prejudice and say that people will lose their jobs to foreigners. What utter nonsense! The benefits for New Zealand in freer trade are overwhelming, because freer trade is based on comparative advantage. That is Economics 101. Therefore, the ACT party is very enthusiastic in supporting freer trade.

However, I have to say that, regrettably, this agreement, which has been signed, does have some serious shortcomings and deficiencies. Unfortunately, the current socialist Labour Government has imported into it all sorts of extraneous and strange concepts that actually debase the value of it—like the fact that we will have more favourable treatment for Māori. That is PC socialist nonsense—absolute nonsense. That provision is a foolish addition to this free-trade agreement. I am sure that the officials did not recommend it. It was a straight policy decision from this Labour Government—this misguided Labour Government, in this instance—and I actually feel sorry for our Minister for Trade Negotiations, Jim Sutton, for having to tolerate that sort of pollution of what could have been a much more robust and sensible negotiated position.

I am sure that the Minister did not support the insertion of that silly provision. What are we actually saying here? Is there something special about Māori apples? If we want to put apples into the Thailand market, are we saying that if they are grown by Māori there is something special about them? What absolute nonsense—what absolute patronising pap! Who on earth thought up that provision, other than, perhaps, some Māori militant who is going for separate sovereignty or something and sees this as part of the leverage towards that. There is no place for that sort of nonsense in international trade agreements. We would certainly oppose it if another nation tried to impose those sorts of provisions, so why on earth did this Labour Government succumb to that sort of nonsense? I bet that the young member for Otaki, Darren Hughes, did not support that proposal. He is a rational young man, from what I have seen of him. I do not know who in that Labour Government carried the day and imposed that sort of nonsense on a trade agreement.

I have to say to the House that although the ACT party champions free trade, and although we have indicated our support and will be voting for this bill, that provision almost swung it for us. We find it totally objectionable that stuff like this—like the principles of the Treaty of Waitangi—continues to be perpetrated in legislation, and ACT consistently votes against them. The “Winston First” party members always oppose them verbally. They go out to public meetings and say that they are opposed to bills that refer to the principles of the treaty, but every time it comes to a vote in Parliament, they vote for them. The ACT party walks the talk, and it was on that basis that we were almost spun out of voting for this bill. It is a particularly foolish provision to have in this negotiated free-trade agreement.

I note that there are rules of origin, and we have been given some assurance that they will not be exploited. We take that on trust. We also note with disappointment that services are not provided for in this agreement. I understand that the only commitment Thailand has made is to initiate negotiations in 3 years’ time. Of course, that is pretty meaningless; we appreciate that. But that is the nature of these trade agreements. The big picture is that we have taken a step. We have a commitment between two nations to move forward with a bilateral agreement. We would far rather have a multilateral agreement. Multilateral trade agreements are far preferable, but because of the sluggish progress made under the Doha round—and it will always be so, I fear. In the meantime we have all these bilateral agreements between nations. It is only when one gets to a collective point at which a sufficient number of these bilateral agreements exist that one gets a culture globally to swing in behind the multilateral agreement. That is the reality. So the ACT party will support the bill, but again I must stress that we express our serious disappointment with these foolish, extraneous clip-ons that the Labour Government, for politically correct reasons, has put in the agreement. They do not belong in it, they are foolish, and they are perverse.

JOHN CARTER (National—Northland): As I look around the House tonight, I see the member who has just resumed his seat, Ken Shirley, and the member who spoke a little earlier, Dail Jones. I can see no one else who has actually experienced what is it like to be part of Government that is about to lose an election. Those who have been through that, like Ken Shirley, Dail Jones, and myself, know what the smell is like. They know the feeling. They sit there and they look. They smell the stench. They feel the decay. They understand what a party on its way out feels like. That is what we are seeing—

Hon Ruth Dyson: Have you got only one speech?

JOHN CARTER: Ruth Dyson has asked me whether I have only one speech. Quite honestly, at the moment it is the only one I feel like giving, and it is glad tidings for New Zealand. At last it looks as if this lot is on its way out. The point I am making is that members sit there, emitting hope, thinking they may be able to hang on, and not looking at reality. I look at things like this legislation, and I look at the headline: “Labour backs ‘sorry’ envoy”, and I see that it has happened again, has it not? This is what happens when a Government is going out of power. The stories are bad. The Government brings legislation through, because it worries that it will not get another chance to do some of the socialist things it wants to do as a socialist Government.

We have had the first reading debate, the second reading debate, and today the Committee stage of this bill. We have pushed this bill through under urgency. It is an important bill, because it organises free-trade relations between our country and another. But underlying it are all the things this Government was asked to tell us about but could not or would not—one or the other. Those of us who have been around for a while know why. It is because one gets to the stage when one is too tired to respond. It is such a big effort to bring legislation of this nature forward that when the Opposition starts asking deep questions such as why there are exceptions in the legislation and why there are clauses in it that refer to the Treaty of Waitangi—we want to know that means, what the implications are, and what the words “obligations under the Treaty of Waitangi” mean—the Government cannot answer them. We know that it has spent all its energy on getting the legislation into the House, and that it is beyond its ability to explain its reasons any more. That is why someone with a few years’ experience in this place can smell the decay and the stench. One can smell the rotting carcass of a Government on its way out of office.

This is a great day. Here we are debating the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill, which is an important piece of legislation. The Labour Government, after 6 long years—far longer than 9 years under National—has finally given us something positive. I must say that I commend the officials who have worked hard to make this happen. Good on them. I commend their Minister for the work he has done, because undoubtedly lots of hard work has been done. But unfortunately there are so many qualifications around the agreement that it is limited at this stage. But that is OK, because at least we have a foundation so that the incoming Government can fix it up, and that can be done too.

I want to focus on two issues tonight. The first is the fact that we have all these exceptions—all these issues that really matter. The fact is that all the qualifications around the agreement will cause lots of complications. Mark my words—as previous speakers have said, there are issues that will cause us problems as we develop this agreement. In fact, one of my colleagues said to me earlier, as other speakers have said, that it is a lawyer’s dream. [Interruption] Yes, well, one of them was unkind enough to say that there is some good in it, because it will help the lawyers, but, of course, that is not the intention. The agreement is intended to help the country, and it will. But, sadly, it will cause some legal complications on the way through. The second important issue is the fact that this Government is still trying to tell the nation—as in the speech made by Mr Mallard in the middle of last year—that there are no preferences for Māori under the Labour Government any more. Yet in this bill we have a clause that gives preferential treatment to Māori. In my view, that is an absolute insult.

Jill Pettis: When are you going to mention the whānau?

JOHN CARTER: I do not need to. I seriously do not need to. The fact that this clause is in the bill says enough. It says that this Government has not moved away from patronising the Māori people of this country. The Government is saying that the Māori are not as good as the rest of New Zealanders, whereas people like me who represent a good number of Māori people know that they are just as good and make as big a contribution to this nation as any other New Zealanders. And they do so because they are New Zealanders, not because of their race. That is the issue that Labour unfortunately cannot get its mind around. It is not a matter of race; it is a matter of contribution. It is a matter of doing what is right because one is a New Zealander, and the people of Northland, Māori and non-Māori, do.

I am proud to represent the people of Northland. I am proud that those people, if they were in this House today, would support my saying these words, regardless of their race. They are Northlanders and they are New Zealanders. They want to see this nation go ahead, and they do not need clauses in legislation that give special preferences to anybody. They are not those sorts of people. They are here for New Zealanders. They do accept that there are some in our society who need assistance from time to time and who, for some reason, have not done as well as others and need some support. They understand that the incoming National Government will give those people that support. What they cannot accept is the fact that they currently have a Government that thinks it can condescend to Māori and give them a special preference when they do not need it. That is one of the reasons—one of the many reasons—why this Government has suddenly acquired the smell of an outgoing Government. It suddenly has that aroma—one that it cannot wash off. Members can put on as much under-arm deodorant, aftershave, and spray as they like, but the aroma does not go away. Ken Shirley knows that; he has been there. Dail Jones knows that; he has been there. I have, too, and however much one washes, it does not disappear. When members are on their way out, they are on their way out. We support this bill, but we do so with some qualifications.

A party vote was called for on the question, That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a third time.

Ayes 94

New Zealand Labour 51; New Zealand National 24; ACT New Zealand 9; United Future 8; Progressive 2.

Noes 22

New Zealand First 13; Green Party 8; Māori Party 1.

Bill read a third time.

Bills

Taxation (Base Maintenance and Miscellaneous Provisions) Bill

Second Reading

Hon DAVID CUNLIFFE (Associate Minister of Revenue), on behalf of the Minister of Revenue: I move, That the Taxation (Base Maintenance and Miscellaneous Provisions) Bill be now read a second time. The Finance and Expenditure Committee has considered the bill and recommended a number of amendments to the proposed legislation.

The main feature of the bill, of course, is legislation to ensure that foreign-owned banks operating in New Zealand pay sufficient tax on their New Zealand income. The legislation proposed in the bill is a response to the fact that foreign-owned banks operating here appear to be relying excessively on debt funding their New Zealand businesses and their offshore investments. They can therefore use interest deductions arising from this excessive level of debt to reduce the proportion of their income that is subject to tax in New Zealand. One way of doing this is to use cross-border financing arrangements, which are generally funded by debt, to generate income that is effectively not subject to tax in New Zealand.

Banks can also substitute debt for equity in financing their New Zealand business, which can result in a New Zealand business being thinly capitalised relative to the worldwide business. The bill therefore introduces thin capitalisation rules that ensure that the income of banks cannot be sheltered by interest deductions arising from excessive debt. Banks will not have access to interest deductions if they do not hold a level of equity equivalent to 4 percent of their New Zealand banking assets weighted for risk. They must also have enough capital in New Zealand, on which no interest is deductible, to fully fund their overseas investments. Supplementary Order Paper 337, which was released after the bill’s introduction, further strengthens the proposed legislation, and ensures that it operates as intended.

The committee has recommended several changes to ensure that the legislation, once enacted, is fully effective. A major group of recommended changes relates to the measurement of equity that supports a New Zealand banking business that has a foreign owner. In particular, the committee has recommended changes to make it clearer what should and should not be counted in the equity calculation, and which assets can and cannot be debt funded. The Supplementary Order Paper allows regulations to be made by Order in Council, should the definition of “equity” prove to be unclear at any point in the future. The committee has recommended that this power be narrowed and limited to situations where there is a need for clarity about whether a particular instrument is considered to be a debt or equity instrument. I am confident that the changes will improve the operation of the new thin capitalisation rules. The Government intends to monitor closely the operation of the new rules to ensure that they are well understood and operating as intended.

The bill also introduces statutory privilege, or a right not to disclose certain documents to confidential tax advice that is given by advisers, such as chartered accountants. That right is similar to legal professional privilege, although it is subject to a number of exclusions. The change has been welcomed by tax professionals. As introduced, the bill required tax advisers to provide a statutory declaration of information contained in a privileged document. However, the committee believes that such a requirement for all circumstances would impose unnecessary compliance costs on those seeking to claim privilege, and that a statutory declaration should be required only as a last resort. Therefore, it is recommended that a process is introduced that would see the Inland Revenue Department requesting a statutory declaration only when necessary to an investigation.

The other main change the committee has recommended to the privilege legislation is to widen the definition of “tax adviser” so that it is not limited just to advisers who have a significant function of giving tax advice, as long as they are members of an approved organisation, such as the Institute of Chartered Accountants of New Zealand, that does so. The committee has recommended a number of other technical amendments to the privilege legislation that will also help it to operate more effectively.

The bill introduces several business-friendly amendments. They include clarification of the income tax rules on transfers of assets and liabilities to beneficiaries when a taxpayer dies, which is a reform that is long overdue. They include a number of technical changes to the tax depreciation rules to ensure their operation and reduce compliance costs. The ambit of the changes extends from the treatment of patents in plant variety rights, through to deductibility for losses on buildings. They include expansion and clarification of the rules on tax deductibility for business environmental expenditure, such as the cost of preventing, remedying, or mitigating the discharge of contaminants. The changes allow environmental costs, like other business costs, to be taken into account for tax purposes. The changes include the introduction of a 6-year tax exemption on income from non-resident drilling rigs and seismic ships involved in the exploration of petroleum in New Zealand, as part of a package of measures to boost gas exploration. The committee has considered those and other amendments in the bill and has made a number of helpful recommendations to ensure the smooth operation and effectiveness of the proposed legislation.

At some point before the bill proceeds to the Committee of the whole House, I will release two Supplementary Order Papers: one to ensure that the draft legislation better reflects the recommendations of the Finance and Expenditure Committee in a number of areas, and the other to split the bill into two in anticipation of passage. I thank the committee for its thoughtful consideration of this highly technical bill and I recommend it to the House.

PANSY WONG (National): National supports the Taxation (Base Maintenance and Miscellaneous Provisions) Bill, but let us reflect on the raft of taxation legislation that has been coming before the House in the last 3 to 4 years. In 2004 the House passed the Income Tax Act 2004, which is over 1,000 pages long. That Act tried to tidy up and combine all the amendments. Since then, a lot of taxation legislation has come before the House. Last week, we saw another one, the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill, go to the Finance and Expenditure Committee for consideration. The issue that I want to bring up is the raft of taxation legislation that has come before the House. Some pieces of legislation are unavoidable; we have a lot of understanding for the ongoing tactics by some corporations to minimise taxation. But one can argue that others would be avoidable if we did not have such a complicated tax regime.

That tax regime is further compromised because the Labour Government is continuing to use it also for targeting activities or for influencing behaviour. Every time that is done, we find that tax legislation becomes even more complicated.

Let me demonstrate by saying that it is well known that Government MPs and Cabinet Ministers are always standing up and saying that Labour is intending to reduce compliance costs—which include taxation—in its legislation. But the truth is, if we look at the estimates, we see that the Inland Revenue Department is telling us it has put aside $3.25 million to set up a unit in order to familiarise small to medium sized enterprises with their tax obligations and educate them so that they understand them.

Tonight we are debating legislation that once again runs to 170 pages, which is why that special unit will have to be set up in order to familiarise and educate those small to medium sized enterprises; that, to me, is not simplifying compliance tax.

The other complication the Labour Government is introducing is an increase in the Inland Revenue Department’s workload in terms of delivering social welfare issues. For example, $66 million has been set aside for the Working for Families package, so the more the Inland Revenue Department’s workload has been diverted to purposes other than the collection of tax, the more complications we have in terms of debating taxation legislation.

To demonstrate that once again in the estimates of the Inland Revenue Department, we find that it has allocated $117 million for information dissemination, etc. The assessment of tax, on the other hand, is allocated $66 million, which in itself tells us that something is not going very right for the Inland Revenue Department, which is set up to collect tax, supposedly to finance necessary Government expenditure.

One of the most controversial or high-profile issues contained in this Taxation (Base Maintenance and Miscellaneous Provisions) Bill relates to what we call the thin capitalisation rules, which are meant to close the loophole of foreign-owned banks that claim excessive interest expenditure. We support that.

I also ask the House to reflect on the fact that on one hand our Inland Revenue Department says that it wants to close loopholes and that it does not want foreign-owned banks to take advantage of our taxation legislation—indeed, one of the Inland Revenue Department’s objectives is to enhance and promote compliance with our taxation law—but I cannot help reflecting, on the other hand, that our State-owned enterprise Transpower has apparently entered into a financial transaction, about which today the Hon Michael Cullen has not seen fit to share information with us in terms of whether that transaction really does not cost New Zealand taxpayers.

There is an ethical issue involved; we are passing legislation today to ensure that foreign-owned banks do not take advantage of loopholes in our tax legislation, so one has to ask what sort of example our State-owned enterprise is setting in its undertaking. I actually asked the Inland Revenue Department whether it conveyed the message of tax compliance to State-owned enterprises to ensure they do not enter deals that could be seen to be taking advantage of tax loopholes both here and internationally. Quite interestingly, the answer I got back from the Inland Revenue Department was that it treats State-owned enterprises in the same way it treats any other corporate taxpayer, and the department always tries to encourage self-compliance with legal requirements, and provides assistance to do so.

I asked about the types of deals, but the Inland Revenue Department, in talking about the types of investments State-owned enterprises would make, said that that was not a matter for the department—correctly so. Those enterprises are responsible to the guidance set by shareholding Ministers. But the Inland Revenue Department continued to say that any encouragement or guidance regarding tax compliance directed specifically at State-owned enterprises has to come from shareholding Ministers.

It is interesting that the Inland Revenue Department then went on to say that it was aware that such guidance had, in fact, been provided. So I am really looking forward to seeing during the Committee stage whether the Minister will disclose to us, so that we can see whether we are adopting one law for all, and whether all State-owned enterprises, in return, are also observing or complying with legislation in the spirit of paying their fair share of taxation. We are looking forward to asking those specific questions during the Committee stage.

As I mentioned, National is supportive of this bill and we welcome some specific provisions. But, in saying that, we also say that every time we look at the provisions, even the provisions we support, we find that the compliance for the tax provision is complicated. The National Party has promised ultimately that it will cut the company tax rate and also personal tax rates, because that is the only way to achieve more simplified taxation legislation.

When company and personal tax rates are set at high levels, there is so much incentive for tax advisers, individuals, and companies to spend a lot of their energy in engaging in tax arrangements. I remember, being an accountant myself, that in the late 1990s my accounting colleagues told me that they were actually spending more time in doing management consultancy and in helping companies to grow, but ever since the Labour Government put up the personal tax rate, a whole raft of tax advisers and consultants have come into play, and tax compliance has become complicated—[Interruption]—as the Labour member yelled out—which is why we have been constantly brought back into this House to debate tax legislation. I think that any Government that wants its private sector and others to concentrate on expanding their businesses should bring taxation down.

Hon HARRY DUYNHOVEN (Minister for Transport Safety): I am a little surprised to be invited to join in this debate, but it is actually one that is very important to the oil and gas exploration industry. It contains a very significant change, which is that the Finance and Expenditure Committee has agreed with a proposition in the bill to provide tax exemptions, applicable for 6 years, for income earned by non-resident rig operators from the drilling of wells in order to explore and develop offshore petroleum fields in New Zealand. It also provides an exemption for income earned by non-residents from ships providing seismic survey readings in order to identify petroleum in New Zealand.

Both of those initiatives are very important, particularly in my second portfolio as Associate Minister of Energy, where I am responsible for the Crown minerals section of the Ministry of Economic Development, which deals with mines and, of course, petroleum exploration. Those two measures contained in this bill will make, I believe, a not insignificant difference to the industry and will be very much welcomed. The bill certainly allows for the, shall we say, mobilisation costs in New Zealand, which are quite large because of our distance from the main oil drilling centres of the world, to be offset at least to a degree in the costs factored in by the companies, when deciding where to invest their money and where to send their seismic ships or offshore drilling rig equipment. Whether the drilling is submersible or semi-submersible, the mobilisation costs, drilling rigs, etc. are very expensive. So I think that is a not insignificant measure in this bill.

I want to take only a short call, but I do want to respond very briefly to my colleague on the Opposition side of the House who preceded me. I think New Zealanders are getting just a little tired of the tired old mantra from the right wing of New Zealand politics, which keeps talking about New Zealand’s high-tax regime. That is simply a nonsense. When we consider most of the countries that we like to compare ourselves with, we find the tax burden on the New Zealand taxpayer is lower than it is on taxpayers in virtually all of them. In fact, if we consider the entire OECD, I think it would be fair to say that if we take into account all the taxes, including such things as the health taxes, superannuation payments, and all the other things that people stack on top—even such simple things as the registration costs for one’s motor vehicle—we would find that there is one country in the OECD that has generally lower daily costs by way of tax than New Zealand. I think there may be a couple of countries in that situation, but Mexico is the one that springs to mind and, to be really honest, I do not hear a lot of New Zealanders talk about rushing to take their businesses off and establish them in Mexico.

What I do hear is that a lot of people are very keen to find out how we are so efficient in the running of some of our public institutions.

Pansy Wong: Oh, ha, ha!

Hon HARRY DUYNHOVEN: I tell the member—and she can laugh and jump up and down if she likes—to look at some of our public institutions. Recently I was talking to a new immigrant to New Zealand, a doctor who has been here for several years now. He has worked in the health systems in many of the countries that we like to consider to be more advanced than us, including the Netherlands, I have to say. He said to me that New Zealand’s health system is the best one he has worked in, and that it provides the best outcome for the money provided. That gentleman has worked in several countries at a very high level in the health system. Now, what does that have to do with taxation? It is taxation that provides for all those things, yet we have seen significant development in this country over the years. Ms Wong can jump up and down all she likes, but she is not providing me with the facts and figures that state other countries are doing significantly better than us.

I just wanted to take a short call on this bill, but I am sure the measures taken in it for the oil and gas industry will provide a very good dividend for New Zealand.

CRAIG McNAIR (NZ First): Like the member Harry Duynhoven, I was surprised to see another Labour MP apart from the Associate Minister of Revenue—and a Minister normally takes the initial call—get to speak on a bill such as this.

I want to make just one other point before I get specifically on to the bill. The National member Pansy Wong talked in her speech earlier about the small-company tax unit this Government is setting up. Well, that is not the only such unit this Government has started to set up. Obviously, in the last couple of weeks we have just seen the Government set up, after pressure from New Zealand First, a small Immigration Service unit, as well. The Government is into setting up small units.

Pansy Wong: That’s not tax.

CRAIG McNAIR: Obviously, as Pansy Wong has said, that is not exactly about tax.

Pansy Wong: It is.

CRAIG McNAIR: Well, it is, I guess.

Pansy Wong: It’s funded by tax.

CRAIG McNAIR: Yes, that is right—it is funded by tax. The commentary on the bill states: “The bill introduces new thin capitalisation rules to prevent foreign-owned registered banks operating in New Zealand from accessing interest deductions if their capital in New Zealand is insufficient to support their operations in this country and their offshore investments made through New Zealand.” It also states: “Banks also use cross-border financing arrangements, funded by debt, to generate income that is not subject to New Zealand tax.”, and that is a very worrying thing. It continues: “The banks then claim a deduction for the interest expenses on the resulting debt, which reduces their New Zealand tax liability.”

Last night the Hon Bill English, former leader of the National Party, former Minister of Finance, former Minister of Health, and National’s current spokesperson on education, made a very interesting admission. He said that National had taken the people for granted, and that Labour has, too. That is what that member said last night in the debate on the performance and current operations of Crown entities, public organisations, and State enterprises. I believe that that was a very honest admission. The member was being honest with us, and I think it is a very relevant comment in relation to this very bill that we are talking about tonight, the Taxation (Base Maintenance and Miscellaneous Provisions) Bill.

The reason why I believe that it is a very relevant comment is that for the last 7 or 8 years, or even longer than that, New Zealand First has been highlighting this issue to successive Labour and National Governments. Month in, month out, and year in, year out, in this Chamber and at the Finance and Expenditure Committee, our leader, the Rt Hon Winston Peters, and others in New Zealand First have highlighted this issue with the Government of the day. The question I ask is why nothing was done about this issue for such a long period of time. New Zealand First quite openly supports this bill, and I want to restate that support tonight, because the bill is a step in the right direction. It provides something that we have been highlighting for the last 7 or 8 years, or maybe even longer.

It is actually quite interesting that we are only 3 months out, I think, from an election—

Hon Richard Prebble: Oh, I don’t know, we might be a month out.

CRAIG McNAIR: We might be a month out—say, a maximum of 3 months—out from an election, and this Government feels, all of a sudden, the need to pass this bill under urgency. As I said, for years and years New Zealand First has highlighted and raised this issue with the Government. The Rt Hon Winston Peters started raising these kinds of issues right back at the time of the wine-box inquiry, and we have been constantly raising them ever since, and nothing has been done about it. We come to 2005, and a maximum of 3 months, or maybe a month or 2 months, out from the election, all of a sudden the Government feels the need to pass this bill through the House under urgency. I think it is quite telling and also very interesting that the Government is doing this at such a time.

I said earlier that this bill introduces new thin capitalisation rules and other measures to stop banks from avoiding tax, basically—if people want to interpret what I said earlier and make it pretty simple. To cut a long story short, this bill is introducing these rules to stop the banks from avoiding and wriggling out of their taxes. I think it is quite shameful, when we look at this bill and at what I was highlighting earlier on about National admitting that it had taken people for granted, and saying that Labour has, too. I think this is a very significant bill to highlight that fact. During Labour’s last reign in Government, back in the 1980s, it sold Postbank for $678 million—over 20 years ago—and sold the Rural Bank for $687 million, and in the 1990s National sold Housing Corporation mortgages for $2.4 billion. Then we had the shameful, shameful sale of the Bank of New Zealand, which we all know came back to bite this country badly, and the country had to bail the bank out.

I think it gets even more shameful and scary when one looks at how much banks have earned over the many years since the successive Labour and National Governments opened up the banking industry to foreign-owned enterprises in the way that they did, and when one considers the way that some of these foreign-owned banks have treated the public of New Zealand—the taxpayers of New Zealand. They have treated them with no respect whatsoever, by trying to wriggle out of the tax rules that are in place, and that is why we are speaking on this bill tonight. The ANZ National Bank had an after-tax profit of $680 million in 2004 and $713 million in 2003, and Westpac had an after-tax profit of $617 million in 2004 and $462 million in 2003—gone, straight out of New Zealand. The Bank of New Zealand, which is the saddest one of all, I think, considering its history, had an after-tax profit of $471 million in 2004 and $548 million in 2003. The ASB had an after-tax profit of $316 million in 2004 and $278 million in 2003. The combined profit for all 16 registered banks was up 8.8 percent to $2.6 billion. The most worrying thing out of all of this is that the total assets among the main banks have increased 5.4 percent to $188.3 billion, led by ASB’s $5.5 billion increase. Westpac’s was $2.6 billion, and the Bank of New Zealand’s was $1.7 billion, which, as I stated earlier, is one of the saddest stories, I believe, in our New Zealand economic history.

I just want to read to members the Dominion Post article of 12 May in the “BusinessDay” section: “Intense competition and a damaging shift by home owners into fixed-term loans have not stopped banks ramping up profits to a record $2.08 billion in 2004. Profits for the main banks were up $91 million or 4.6 per cent on 2003,”. Then, one hears all these stories of these banks making billions of dollars since they were sold to foreign-owned enterprises, and one sees other stories.

Hon RICHARD PREBBLE (ACT): I rise on behalf of the ACT party to speak to the Taxation (Base Maintenance and Miscellaneous Provisions) Bill, which is a bill typical of tax bills that Governments have been introducing into the New Zealand Parliament, I guess, most years. It is full of very complicated technical amendments to meet what are seen as various anomalies and loopholes in the tax system.

Before I turn my attention to that, let me just immediately respond to what I think were some fairly ludicrous remarks from the New Zealand First Party. If one had listened to the New Zealand First member, one would have heard him say that what is appalling and a matter of great concern is that banks in New Zealand are profitable. So I guess New Zealand First’s position is that it would be wonderful if New Zealand banks were making no money, were unsound, and the value of their assets—the last speaker was concerned that it had gone up—were falling.

Hon Harry Duynhoven: We were there once.

Hon RICHARD PREBBLE: That appears to be the last speaker’s position. I just say to the honourable member that, as Mr Duynhoven has said, that situation has actually happened in New Zealand. What happened? When banks fail, the effects have been disastrous. I still remember the effect of DFC failing—a tiny bank and financial institution in this country. Did it have huge implications? Yes, it did, and innocent New Zealanders, whose only fault was that they were dealing with the DFC, found themselves wiped out. But New Zealand First would have us believe that that somehow is a better situation. Well, that is absurd.

It also needs to be said, because there have been certain remarks made about banks, although not so much by the honourable member—remarks generally about this legislation—that those banks in New Zealand that have taken advantage of some clever management of their assets, and have taken various steps, have actually done nothing illegal. Indeed, it became clear, and officials admitted it in front of the Finance and Expenditure Committee, that the banks had actually been to the Inland Revenue Department and received approval for those arrangements. It has never been regarded as in any way illegal or immoral for a taxpayer to seek to minimise the amount of tax that he or she pays. Although that New Zealand First member may be fairly silly and immature in his views on banking, I guarantee that he actually does not pay any more tax than he needs to—unless he is even sillier than I think. If he personally sees nothing wrong with his minimising his tax, there is actually nothing wrong with the banks in New Zealand doing that.

Indeed, I might even go further. One could argue that a strong banking sector is so important for a nation that we ought to be a little bit careful before we go pursuing it hard for income tax. When we actually look at what the banks have been doing in the last decade, we see they have been able to collect a large amount of money from overseas investors and lend it to New Zealanders because we have not been saving enough. Again, I hear people complain about that. Well, they should think about the alternative. Are they really saying they do not want our banks to lend on mortgages and the like in the way that they have done?

Having said that, let me now turn to the bill itself. The ACT party will not vote against the bill, and the reason is that most of these measures actually have been consulted on widely with the accounting profession, which sort of acts as the informal collector of tax for the Inland Revenue Department in New Zealand. They have been consulted on with the various organisations that are involved, and there is grudging support within the community for the measures, because they are needed for the integrity of the tax system.

Having said that, and having also said that, for that reason, ACT will not vote against the bill, I say we are actually opposed to this type of tax legislation, because some of the measures contained in this bill are police-State powers. The Inland Revenue Department is given huge powers under this bill, and it is given those powers because it is quite impossible to collect the amount of tax that the New Zealand Government demands, without these sorts of measures. If these measures were appearing in any other legislation except tax legislation, the whole House—even the Greens; well, maybe not; they tell me that they are so unworried about this sort of tax bill that they are not even going to debate it; perhaps I should not speak on behalf of the Greens—every other political party except the Greens, would be outraged. They would be outraged at measures being put before the House that stated that civil servants were entitled to go into one’s bank accounts, entitled to order one to produce documents, entitled to make declarations as to how much tax one has to pay—and unless one can prove to the contrary, one has to pay it—and also entitled to make arbitrary statements about how one’s income should be dealt with, when, in fact, that may not have been what one had intended.

One of the reasons that tax laws are getting more complicated is that we are in a global economy. Indeed, the banking system falls a bit into that—these debt deals were done internationally. So the New Zealand Inland Revenue Department, to try to protect the tax base, is finding itself having to pass very complicated laws in order to try to pursue people’s income around the world. I think that is an exercise in futility; that, in fact, the Government will fail. The Government will be able to collect the money from—if I can put it like this—the little people. It will be able to collect tax from those who pay wages and salaries, because the Inland Revenue Department can pursue such people. But if one has real money, then one has the ability to determine when one earned it. One of the problems the Inland Revenue Department has is that it is very difficult, when one talks about a large sum of money, to decide whether it is capital or income, and—if people have the ability to move the money around the world—when people actually earned it. The Government will never succeed, and what we will have is more and more legislation like this. This is 170 pages of tax legislation with police-State type of measures.

It is time that we actually looked at some alternatives. Mr Duynhoven mentioned a number of European nations and their tax systems, but what he failed to mention was the spectacular success that the Eastern European nations that have just joined the European Union have had by simplifying their tax systems and adopting what are very low, flat rates of tax—down to 16c. Of course, if we were to adopt a very low rate of flat tax down to 15c—[Interruption] The member, who claims to be an inland revenue Minister, should start reading some of the literature. He would discover that nations that have done that—and I went to a lecture in this city by a leading tax professor who was giving data on what had happened in those Eastern European nations—have maintained their tax revenue. It has worked spectacularly well. They do not need to have junior Ministers passing legislation of the kind that the Nazis used to pass—and I am not suggesting that the member is a Nazi.

This is a police State. These are police-State measures. People’s basic liberties are taken away in this measure. Our House, as one can tell by the numbers, will blindly pass the bill, when the real solution is to go to a low, flat rate of tax and restore our liberties.

GORDON COPELAND (United Future): That was an amazing speech, particularly the latter part, from a member of the House whose party has decided to vote for the bill. I just found the logic quite astonishing.

United Future will vote in favour of this bill. It does three major things. It sets in place new rules for the taxation of banks, as has been mentioned; it brings in a variety of tax-rule changes that have the effect of either reducing the quantum of tax paid by a business, or reducing the cost of tax compliance, and those are two things that United Future strongly supports; and lastly, it establishes tax adviser privilege to protect tax advice given by professional tax advisers, along similar lines to the privilege that has traditionally been extended to lawyers.

I am one of two members in this House who is a chartered accountant—the other one being Pansy Wong, who spoke earlier—and I am pleased, indeed, to see that these changes are being made. It is really, if one likes, a kind of injustice that lawyers on the one hand, and chartered accountants on the other hand, are probably giving equivalent tax advice to their clients, and the lawyers are being protected by privilege, but the chartered accountants have not been, and it is good to see a level playing field established in that regard.

I shall make a couple of comments on those matters, and the first one is to talk about the taxation of the banks. I agree entirely with the Hon Richard Prebble that profit is the lifeblood of businesses, and banks are no exception. Therefore, it is good and healthy that they make profits. That is how they become successful and provide good services to their customers.

I also agree with him that there is nothing immoral or illegal about any taxpayer taking action within the law to minimise his or her tax bill. Where I guess I probably differ from Mr Prebble, though, is in his conclusion, in saying that the banks had not used illegal means to avoid tax, because, as is well known through the media, there is a big dispute involving hundreds of millions of dollars between the Inland Revenue Department and the banks that is yet to be determined by the courts. It will be the courts, and they alone, when they have heard all the evidence, that will make a decision at the right time as to whether retrospective tax is owed. But these rules clearly set out the position for the future.

In my days as a chief financial officer for a large corporation I was also expected to minimise the tax paid by the company, and I did that—within the law, I might add. But in my role as a parliamentarian—now a gamekeeper, rather than a poacher—I do like to remind myself, when I am looking at these sorts of issues, that for example, a nurse working long hours in the intensive care ward in Wellington Hospital, or any other hospital in New Zealand, pays his or her fair whack of tax. They do that, as Richard Prebble has pointed out, because it is taken off them before they get it, through PAYE. Therefore, it is a matter of fundamental fairness that all New Zealand taxpayers should obey the law and pay their fair share of tax, and I do not think that that is asking too much of the banks.

That is essentially all this bill is doing. It is saying: “Look guys, sorry, you had a go at this, but we’re closing it off; we’re changing the law so that in future you will just pay your fair share.” We are not asking them to pay more than their fair share, or less than their fair share—but just the right amount. I think that that is a completely worthy goal.

The other thing I would like to touch on briefly is the part of the bill that deals with losses on buildings. This law change is designed to allow companies to deduct the residual book value of buildings on their books for tax purposes when buildings are destroyed through natural causes. But the committee received submissions, particularly from port companies, saying that that should also be extended to situations where buildings have come to the end of their useful economic life. In that situation also the building owner should be able to write off the residual amount and claim it for tax purposes. That is an entirely reasonable proposition. Therefore, the committee has recommended that the officials consider that issue as part of their ongoing depreciation review.

A similar matter came up in respect of dredging costs, also from the port companies. Under the current rules the initial costs of dredging are not permitted to be deducted for tax purposes. I believe that that is quite fundamentally wrong. As I mentioned, I am a chartered accountant and I happen to know that the idea of depreciation is to allocate the cost of an asset across the commercial life of that asset. When one thinks about a big hole being dredged to enable ships to go into the port, one is doing that to earn additional taxable income. Therefore, it seems to be fully consistent with general depreciation philosophy, if one likes, that those costs should be able to be capitalised and then depreciated in the usual way against the commercial, if one likes, stream of income that is arising from the asset that has been created: namely, the result of the dredging. I see no philosophical or tax principle why that should not be the case.

Therefore I led the committee to the recommendation, which Pansy Wong also supported, that we should also ask the Inland Revenue Department officials to re-examine that practice, to allow for the initial dredging cost to be capitalised and depreciated, but for subsequent dredging costs, as distinct from the first lot—and putting aside the question of betterment—to be allowed to be expensed. After all, when people dredge, the hole that they have made to get the ships in and to get greater depth and so on, gets filled in with sand and other stuff and they have to clean it out again, and that, to me, is no more than maintaining an existing asset and therefore should be expensed for tax purposes. I want to mention that we have asked officials to continue work on that issue, as well.

Those are the only remarks I wish to offer at the second reading stage, and, as I mentioned, United Future will vote in favour of the bill.

LINDSAY TISCH (National—Piako): This is an interesting bill, which National will be supporting. But there are some points that I think are important and that I wish to bring to the House’s attention. The first one concerns the thin capitalisation rules for foreign-owned banks. Banks, in terms of their debt restructuring, have been able to claim the interest as a deduction, and, of course, foreign banks have not been contributing to the overall well-being and economy of this country. Page 3 of the commentary on the bill—and I do not intend to read it out—summarises, quite clearly, a position that has arisen over time. Just to highlight the point, the changes, as the Government announced in September, are expected to result in those banks paying around $360 million a year more in New Zealand tax. That is a significant amount, and it is one of the reasons—

Pansy Wong: What’s Labour going to do with it?

LINDSAY TISCH: My colleague Pansy Wong, who is a chartered accountant and understands these issues, has asked a very good question. What will the Government do with that $360 million of extra tax?

Pansy Wong: Low-quality education.

LINDSAY TISCH: Well, it will squander it on some scheme or other, as it is very good at doing.

Pansy Wong: Hip-hop tours.

LINDSAY TISCH: There will be hip-hop tours, and it will be giving money for twilight golf. That money will be squandered in a number of other areas, with absolutely no accountability. However, the provision is a very good one. We are actually supporting it, in terms of the capitalisation rules.

The other areas I wish to comment on are the company tax rates and the personal tax rates. When we have very high personal tax rates, those who are paying the higher tax look for a way to minimise the risk—to minimise the amount of tax they pay. That is human nature, and we see that happening with the personal tax rates up at 39 percent for those earning over $60,000. I remember Labour’s pledge in 1999, that only 5 percent of people would be paying the higher rates, and now, of course, about 20 percent of people are paying those higher rates. It is the same with company tax. Paying tax is a disincentive to invest. We put tax on tobacco and alcohol, because it is a disincentive. This Government has taken the line that it will tax people more, and that becomes for people a disincentive to invest, to grow their business, and to do the things they like to do. The National Party is a party that would rather see money going into people’s pockets—let them choose what they will do with it.

It really is interesting to note what sole traders whose taxable income is over the $60,000 figure are doing. Instead of paying tax at 39 percent, they are forming companies, because the company tax rate is 33 percent. So sole traders and partnerships, but mainly people on their own—sole traders, sole proprietors—are asking why they should pay 39 percent on their taxable income when, if they form a company, they can actually take out as personal drawings, wages, salaries, or whatever they want to call it, up to $60,000 of taxable income and pay tax at only 33 percent. And if the taxable income of their business is over $60,000, they will not actually pay it at 39 percent, because, as a company, they will have to pay only the company rate of 33 percent on the difference. That is common practice with small businesses. They are doing that as a means of having the money in their pockets and of beating the system, and it should not be that way. If we had a fair tax system across the country, then we would not find businesses trying to do exactly what I am saying is happening—and I know it is happening, because there are numerous examples of exactly that rationalisation and restructuring. The law allows it to happen. Financial planners and management consultants who deal with the restructuring of businesses are saying: “Why pay 39 percent when you can actually pay 33 percent if you form a company?”.

The point I am making here is that although National is supporting this bill, there are certainly areas that the Government should be very mindful of. The Government could make it a lot easier on itself if it had a fair and equitable system, where taxes are there for a purpose—not a system where money is taken with one hand and redistributed with the other. That is how socialist Governments work. They grab the money from one side, redistribute it on the other side, and make more people dependent. That is the welfare system. That is the socialist view. Well, we now see, as a result of the Budget the other day, that New Zealanders have seen through this. They want money in their pockets. They do not want a Government that thinks it knows best how to spend their money, that takes their money and redistributes it at a later stage.

Pansy Wong: But Labour’s promising tax cuts.

LINDSAY TISCH: Oh, yes, Labour will promise tax cuts, but we know how the Government has operated over the years. It has increased taxes, and in 3 years’ time it will give people a reduction amounting to a measly 67c per week. Well, what an absolute insult to hard-working New Zealanders! It is an absolute insult to think that hard-working New Zealanders will get only 67c per week. This is a Government that says it will look after people. The figures are quite astounding, actually. If we look at the extra taxes people will be paying between now and 2008, when there will be a reduction, we can see that they have more than contributed, and a measly 67c per week reduction is absolutely outrageous. There is no justification for it, and I tell members that the Government will pay for that, because New Zealanders are seeing through it. They do not have a tax structure that reflects investment. There is no incentive and no initiative for people. There is nothing to reward the hard-working and enterprising New Zealanders who are out there making a dollar and, of course, are having to pay it over to this Government. That is the second point I wanted to mention.

The third point is about the provision that states that accountants are to have the same status as lawyers. That is fine. We have two accountants—

Pansy Wong: Only two?

LINDSAY TISCH: Only two chartered accountants. There is Mr Gordon Copeland—he was a chartered accountant—and there is my colleague Pansy Wong, who has crystallised and articulated very well the argument about taxation. It is always good to have on our team a chartered accountant of her qualifications and experience. She said that accountants will have the same status as lawyers. It is in the provisions, and that is something we also welcome. This Government will have much to answer for in a very short time. New Zealand voters will see through the facade the Government keeps putting up. We will see that very, very shortly, and the Government will pay the price. In the meantime, the small changes that are reflected in this taxation bill—namely in the thin capitalisation rules for foreign-owned banks—are changes we are supporting, as well as the other provisions. We will be voting for those.

Debate interrupted.

Voting

Correction

SIMON POWER (Senior Whip—National): I seek the leave of the House to amend the vote taken on behalf of the National Party on the third reading of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill.

Madam DEPUTY SPEAKER: Leave is sought to amend that vote. Is there any objection? No.

SIMON POWER: I incorrectly cast National’s vote as 27; it should have been 24.

Madam DEPUTY SPEAKER: I thank the member. That has been recorded.

Bills

Taxation (Base Maintenance and Miscellaneous Provisions) Bill

Second Reading

Debate resumed.

PETER BROWN (Deputy Leader—NZ First): I did not intend to take a call on this bill, but two previous speakers have tempted me to do so. First of all, I would like to clarify what my honourable colleague Craig McNair said. Obviously, Richard Prebble missed his point completely. I just thought that, well, age overtakes us all, and he misunderstood totally what my colleague had been saying. Of course New Zealand First expects banks to make a profit. We do not put our money in banks so that they can lose it totally, and for the Hon Richard Prebble to imply that New Zealand First thought otherwise is totally wrong. We want banks to make a profit. But I make it perfectly clear to the member that the sad fact of life is—and this is what concerns New Zealand First—that the major banks, the trading banks, are all foreign owned. If we cannot run a bank in this country, then what can we run? It is just a building we go into to deposit money. That is oversimplifying it, but we should be able to run our own banking system very, very successfully, and, indeed, make a profit out of it. It is a sad fact of life that the trading banks in this country are all foreign owned. As we have heard members say—and very eloquently by the United Future spokesperson—banks are not paying their fair share of tax, so we support the amendments in the bill that address that anomaly. I listened intently to Lindsay Tisch—

Pansy Wong: Great speech!

PETER BROWN: It was a good speech. The only problem is that it was not very accurate. But never mind; it sounded good. He said that people are forming themselves into companies to avoid paying the 39c tax and pay only the 33c tax. That might be true, but, equally so, there are considerable advantages in a sole trader forming a limited liability company, particularly if he or she is taking a commercial risk. I suggest that that is a more valid reason to form a company than doing so to avoid the element of taxation that Lindsay Tisch spoke about. Nevertheless, that is a valid reason for forming a company. There is a cost in forming a company, and it is a valid reason. If one can minimise one’s tax liability, then fair enough. But I would say that the major reason that people are forming limited liability companies is that there are a good deal of advantages in doing so.

I would like to clarify that New Zealand First would like to give the public in general some tax relief. We would like that. But we are also committed to having more police. We think that the police force in this country is undermanned, and considerably undermanned. Can I use the word “undermanned” in this politically correct environment? “Underpersonnelised” does not make sense, so “undermanned” will have to do. We want more police. We want more cops on the beat and in all sorts of areas. We want a significant increase in police numbers, and that will cost money. We want to give tertiary students a living allowance, because it is about time that we looked after them equally as well as we look after somebody on the dole. Right now a person on the dole gets funded by the taxpayer but a student does not. Students have to borrow for their funding. We want to put more money into roading, without tolls. I see Mr Cunliffe looking at me. We do not believe it is necessary to have tolls. We want to divert the money that goes into the Crown account into roading, and we want to enhance roading in rapid order. We are not into this 10 to 20-year plan; we want to fast track it. We know how it can be done. We want not only to inject more money from the Crown account into the roading account but also to structure either Land Transport New Zealand, or Transit New Zealand, to have more commercial thrust and to borrow money to get roading cracking. We know exactly what needs to be done and how it can be done within the time frame. [Interruption] Good, the member is with us there. The economic benefits to this country in fast-tracking roading are absolutely huge—almost beyond belief. So there is a degree of urgency about injecting more capital into roading.

We want greater investment in health. If we look at some of the countries in Europe where 9.5 to 10 percent of their GDP goes into health—but it includes the private sector—we see that they have a far better health system than ours. I mean by that that per capita they have more doctors, more hospitals, more hospital beds, better access to modern drugs, and better access to modern technology. We must put more investment into health. We have an ageing population, and that problem is not going to walk away from us. The older we get in this country, the more demands we will put on our health system. We have barely kept pace—

Hon David Benson-Pope: More than a 50 percent increase.

PETER BROWN: I do not know whether the member knows what he is talking about.

Hon David Benson-Pope: Has the member not looked at the figures?

PETER BROWN: I have looked at the figures very, very well. The Government puts a paltry 6 percent of GDP into health—a paltry 6 percent.

Hon David Benson-Pope: A 50 percent increase.

PETER BROWN: Six percent.

Hon David Benson-Pope: He’s having a senior moment.

PETER BROWN: The member needs a tennis ball. New Zealand First wants to give some tax relief, some tax incentives, to new exporters. This country is dependent on exporters. It is dependent on trade, and we would like to encourage new exporters into the game by giving them some favourable tax relief in order to explore new markets and get things going. We want, and need, to put more investment into railways in this country. The $200 million that the Government is giving to ONTRACK will not be enough. Anybody who knows anything about the railways knows that it will not be enough. Another area that we would like to put money into—well, perhaps not money, but we would like to create a favourable tax regime for it. I am talking about shipping, and it might surprise members that I have come out strongly on this, but it is something that is close to my heart. In this country we operate about nine coastal ships. We have no international shipping—nothing going anywhere outside New Zealand—and the coastal ships operating in this country are struggling.

Sue Bradford: Do you support cabotage?

PETER BROWN: No, I do not support cabotage, because cabotage adds a cost to users of ships, and it makes them less competitive. Cabotage is an area monopoly, and we do not support it. We support a favourable tax regime, exactly as the ships that service this country now get, so that our guys can compete on an equal footing with foreign shipping. If shipowners do not want to take it up, then we are none the worse off; but if they take it up, it will be a huge advantage for this country. This is an island country, and, believe it or not, 99.5 percent—and anyone can check me on this—of all cargo tonnage that comes into or goes out of New Zealand comes and goes by ship, and they are all foreign ships. That is a disgrace for an island nation tucked down at the bottom of the world. Then after we have delivered on those, we will give tax cuts to the general public.

Pansy Wong: Oh yes!

PETER BROWN: There might be a little wait, but at least the public will see the benefits of what we are trying to do. The member laughs. If her party comes to office, it will give tax cuts at the expense of health, at the expense of police, and at the expense of education. We are not into that. We support this bill. It is a move in the right direction, but there is a lot more to do.

Bill read a second time.

Instruction to Committee

Hon DAVID CUNLIFFE (Associate Minister of Revenue): I move, That it be an instruction to the Committee of the whole House on the Taxation (Base Maintenance and Miscellaneous Provisions) Bill that it take the bill part by part.

Motion agreed to.

In Committee

Hon DAVID CUNLIFFE (Associate Minister of Revenue): I seek the leave of the Committee to take the bill as one question and to have a wide-ranging debate.

The CHAIRPERSON (Hon Clem Simich): Is there any objection? There is no objection.

Parts 1 to 4

PANSY WONG (National): As various members mentioned in their second reading speeches, this legislation contains three major issues. I would like to start with one of the most high-profile issues that this legislation seeks to address, which is the thin capitalisation provision. That means that a foreign-owned bank would have to measure its equity financing against a yardstick of 4 percent. I understand that the Inland Revenue Department has carried out individual negotiations and consultations with the various trading banks. I must say that National is sceptical as to whether the annual taxation revenue will increase by $360 million. We all know, as my colleague Lindsay Tisch and various other members have pointed out, that if there is a high income tax break, then people and entities can prepare themselves for that, with tax consultants and tax lawyers all trying to minimise the tax paid, and that that is legitimate. There are legitimate ways to minimise tax payments.

But there is a further complication to this issue. The bill went into a lot of technical provisions to establish the formula to calculate the equity, etc. The Finance and Expenditure Committee deliberations were quite interesting. We were looking at Supplementary Order Paper 337 in the name of the Hon Dr Michael Cullen, which was brought to the select committee, and the Inland Revenue Department pointed out correctly the complicating issue about financing instruments. New types of debt instruments are being created every day. The Inland Revenue Department first came to the select committee to seek the regulatory-making power to declare whether a certain new financial instrument would be classified as debt or as equity. It was just as well that we had help from the regulatory select committee, which brought it to the attention of the Finance and Expenditure Committee that the original Supplementary Order Paper contained powers that were too wide. It was almost as though Parliament was giving away the power of determining the taxation level to the Inland Revenue Department, and the department concurred with that advice.

I would like the Minister to take a call to assure us—because Supplementary Order Paper 378 in the name of the Hon Dr Michael Cullen is very technical in terms of its drafting—that indeed that Supplementary Order Paper now contains a provision that does not subject Parliament, in a de facto sense, to giving away the power to set the taxation rates because the department can determine whether an instrument is a debt or an equity. We have given the department a narrow power, because we appreciate that the banking and commerce sectors will come up with financial instruments, and will need clarification of their status from the department in a relatively short time. So I want the Minister to take a call to assure us that the amendments on that Supplementary Order Paper, in terms of that regulatory power, do nothing but simply clarify whether a financial instrument is regarded as debt or as equity. Members can appreciate that, with a bill of 170 pages that contains a lot of technical provisions, the select committee relied on the officials to understand it and to preserve the integrity of the intention of the bill’s provisions. I want to make sure the Minister can assure us that we have not given away the power of Parliament’s right to set the taxation level.

I will now move away from the thin capitalisation rule. I also want to point out that we do welcome the provisions for deductions, for example, for expenses relating to patents, etc.

CRAIG McNAIR (NZ First): I want to take a call to talk about the thin capitalisation rules. First of all, I want to highlight to the Committee that what I said earlier in my second reading speech was misrepresented by Mr Prebble. I have no problem with banks making profits. Obviously I am very supportive of banks making profits. Any business needs to make a profit to survive, and obviously that is just a statement of fact. I have no problem with that. What I do believe—whether or not Mr Prebble thinks it is an immature belief, a young belief, or a junior belief—is that there are certain strategic assets that should be kept within New Zealand hands. The facts are that most New Zealanders agree with my view in that respect.

Hon Dr Nick Smith: So do most of them bank with a local bank, or an Aussie bank?

CRAIG McNAIR: Mr Smith from the National Party asks why most of them bank with an Aussie bank; but when only one or two banks in New Zealand are owned by New Zealand, and the other 15 or 16 are owned by foreign-owned enterprises, it will probably stay that way until more time passes. Kiwibank is growing and, hopefully, the tide will turn in that regard over time.

I do not want to focus my whole speech on what Mr Prebble said, but I was interested that he said that this is police-State legislation. Towards the end of his speech, I honestly thought he would vote against the bill, but he said he would vote for it. I do not know whether I am allowed to ask this, but I would like that member, when he next speaks, to clarify his position on that. It would be informative for the Committee.

We are debating the new thin capitalisation rules on stopping banks from avoiding certain tax that really should be paid. A lot of companies, foreign-owned and New Zealand - owned alike, are in that situation. I agree that it is in human nature to find the best way to pay the least amount of tax, but regardless of whether that is wrong or right, what I stated was that for the last 7 or 8 years, New Zealand First has been highlighting the issue of unpaid tax and that it needed to be addressed.

It may be 7 or 8 years too late, but tonight we are debating the issue. I am proud to be in a party that has highlighted that issue for many years now—which, I believe, is a triumph in its own little way.

Given that we are talking about tax and money earned, I think it was disappointing that Westpac joined other Australian-owned banks in not paying imputation to Kiwi shareholders. That highlights the fact that there are certain strategic assets that, I believe, should be kept within the hands of New Zealanders so that those banks can make decisions in the best interests of New Zealanders because to do so will be in their own best interests. The Australian-owned banks are doing what is in their best interests. I guess some people would say that they cannot really be blamed for that.

Hon RICHARD PREBBLE (ACT): I have say to the honourable member that that speech was even more confused. If I understood him correctly, he criticised Westpac and said that certain assets should remain in the hands of New Zealanders. Westpac used to be the Bank of New South Wales—I think it was formed possibly even before New Zealand was—and now the member appears to be saying he thinks it should be confiscated. I think he should think through his positions. He did make one reasonable point: given my strong speech against the bill, why am I not voting against it? Perhaps I did not explain it to him clearly enough. Given the complex nature of our tax laws, if we are to keep an integrity to it, then these sorts of laws are inevitable. We have thin capitalisation rules for other entities. Is there a particular reason why they should not apply to banks? No, there is not. So for that reason, the ACT party will reluctantly vote for the legislation.

Let me give the member an example of the arbitrary powers that exist. I turn to clause 110, “Cancellation of registration”, which is a simple example. Clause 110 allows the Commissioner of Inland Revenue to cancel the GST registration of a non-resident. Perhaps that does not worry the New Zealand First Party, but non-residents, like New Zealanders in Australia, do not get treated like that. Is that a police power? Yes, it is, because the commissioner, who is a civil servant, is able, under this measure, purely at his or her own whim, to cancel the GST registration of someone just because that person is not a New Zealand resident—and we will trust the commissioner to do it properly. Well, I do not know; I just do not like that. I think one should never have any right that one has—and the right to be able register for GST could be quite a valuable right—removed except by process of law by the courts. But we have this measure, and the reason it is inevitable that we have to have it is that we have such a complicated tax system that in order to make it work, we need police-State measures.

That is the point I was making to the honourable member. I am saying that if we continue to collect this much tax, if we continue to have an escalating tax system, and if different taxpayers continue to be treated in different ways, then, because people think that that is arbitrary and unfair, we will inevitably end up having police-State measures. The Australian tax system has it, so does the British system, so does the United States. Any country that has an escalating tax system that treats different taxpayers in different ways according to arbitrary rules—and I was trying to say to the member that it is an arbitrary rule to determine that something is capital or income—ends up with these sorts of police-State measures.

I am philosophically opposed to giving those sorts of powers to unelected civil servants, even if they have the highest integrity. That is why I say to the member that as a general principle, we as a House ought to be starting to have a look at these tax laws, and starting to ask ourselves what sort of country we are creating and whether there is a different way of doing it. Of course, there is. We just have to go to a low flat rate of tax. Then everyone is treated the same and there are no exemptions, and we would not have to hand the Commissioner of Inland Revenue police-State powers in order to be able to collect the revenue.

Perhaps the member is right. Perhaps, for that reason, I should vote against the whole of the legislation. I thought about that, but I thought the New Zealand First Party might then go around the country—of course, that member would not, but his leader might—and say I was trying to do special deals for foreign bankers. I am not. I want everyone, including banks that are foreign-owned, to be treated in exactly the same way. So I thought it would be safer not to vote against the legislation and, instead, speak against it vigorously in the hope that I might educate the honourable member so that he could see that there are some real reasons why this House ought to be concerned about the Taxation (Base Maintenance and Miscellaneous Provisions) Bill.

I make this prediction, and I am sure the Minister in the chair, David Cunliffe, will not disagree with it: next year, no matter which party is the Government, we will see a similar bill that will probably also be 170 pages long and will also give the Commissioner of Inland Revenue arbitrary powers—and this one is an arbitrary power, because under that provision he can cancel the GST registration of anyone who is a non-resident New Zealander.

Hon Dr NICK SMITH (National—Nelson): It is absolutely appropriate that in the last few weeks of this parliamentary session, we are debating tax law. When the New Zealand public go to the polls, issues of tax will be at the forefront of their minds. They know that in the term of this Government, the amount it gets, by hook or by crook, out of the pockets of hard-working New Zealanders, has gone up from $34 billion when Labour came to Government, to $50 billion this year, and by the Government’s own estimates, by 2009 it will go to $60 billion. The spending appetite of the Minister in the chair, David Cunliffe, and the members opposite—[Interruption] David Benson-Pope, the famous tennis player from the Government benches, is getting a bit upset that I dare suggest to him that the tax increases.

Hon Rick Barker: That member is unbelievable.

Hon Dr NICK SMITH: I ask Mr Barker or Mr Benson-Pope what justification there has been for increasing the taxes by $7,000 for every single household. I can understand that Rick Barker and David Benson-Pope are getting upset. They know that the electoral guillotine is coming along. They know that the electors out there have had enough of the tax-and-spend policies of this Labour Government. Those electors are struggling to meet their family bills, and the extra $7,000 a year that every household is having to pay in increased taxes is one reason why this Government will go down the tube in a few weeks’ time.

I am disappointed that in this bill there is no reduction in taxes. Every New Zealander knows that the Government is bursting at the seams with money. The Government boasts a $7.5 billion surplus, so why will those meanies on the Government benches not let working New Zealanders have a little bit of their hard-earned cash? What is it about the members opposite that they believe they are so smart and so brilliant that they can spend hard-working New Zealanders’ money better than New Zealanders can?

Mahara Okeroa: We are!

Hon Dr NICK SMITH: I just heard the interjection from the member for Te Tai Tonga. He said that yes, the Government can. How does he justify taxing my constituents an extra $7,000 per household? Suddenly he is silent. He cannot justify it, and that is why he knows that a tax cut for working families is what we should be giving in this bill.

But I am also amused, because clause 11B provides for the tax deductibility of failed or withdrawn resource management consents. That is an issue David Benson-Pope should be interested in. It costs New Zealanders who are putting up with the bureaucracy of the Resource Management Act tens of thousands of hard-earned dollars, and all Labour can offer them is a tax deduction. We on this side of the Chamber say that we should fix the Resource Management Act. Let us make sure that businesses and private individuals are not having to spend huge sums of money on failed and withdrawn resource consent applications. Would that not be a smarter policy proposition? What is gained by those hard-working New Zealand families and businesses having to apply to create wealth for New Zealand, to put a garage on their house, or maybe to be able to expand their business? [Interruption]

I remind the member opposite that the Forest Industries Council says that 20 new forest processing plants are being built in Australia as we speak. How many are being built in New Zealand? Not one. The only one we have is in Thames, which is in the very good member Sandra Goudie’s electorate, and that is being appealed by the Government. That is why members on this side of the Chamber say that the first thing a National Government will do is reduce taxes. You bet that we will bring in a tax bill—one that reduces taxes for ordinary New Zealanders, and does not increase them.

We have carbon taxes. The Government has increased income taxes and petrol taxes. National’s tax spokespeople have identified 34 increases in taxes that this Government has imposed on hard-working New Zealanders.

Hon David Benson-Pope: No one believes you.

Hon Dr NICK SMITH: Well, I say to Mr Benson-Pope that if that is the case, why did 80 percent of the New Zealanders who voted in the New Zealand Herald poll on tax say that they prefer National’s policy on tax over Labour’s policy, when we have not announced it yet? I say that again: 80 percent of New Zealanders prefer National’s tax policy over Labour’s, and we have not yet announced it! That says what New Zealanders believe. It says that they know that this Government is taxing the heart out of ordinary, working New Zealanders.

It is interesting. Even Jim Anderton, a member of this Government, has signed up to the view that taxes need to be reduced. Even United Future members, Labour’s bosom buddies in Government, have said that the Government is taxing too much and needs to reduce taxes. Why is it that the only parties left in this Parliament that want to keep putting up taxes are the Labour Party and what I call the “Watermelon Greens”? Although they are green on the outside, they are good old plain red socialists in the middle. Only those two parties stand by Labour’s policy of continuing to increase taxes.

One of the very first bills from an incoming National-led Government will be a tax relief bill. That will be one of the first things we do. One of the second things we will do is to fix the Resource Management Act. We will not have this bumbled amendment from David Benson-Pope—an amendment that has just been rubbished in the Finance and Expenditure Committee. It is the sort of resource management bill that we have—

Hon David Benson-Pope: The select committee approved it. They thought it was great.

Hon Dr NICK SMITH: I wonder whether David Benson-Pope stands by his view that no longer having de novo hearings in the Environment Court is a good idea. [Interruption] Is it not interesting? David Benson-Pope says that the most significant change in his resource management bill is the removal of de novo hearings in the Environment Court.

Hon David Benson-Pope: Tell the whole story.

Hon Dr NICK SMITH: That is what the member said. I seek the leave of the Committee to table a press release from Mr David Benson-Pope, dated 14 February this year, in which he said that the most significant change in his resource management bill was the removal of de novo hearings in the Environment Court.

The CHAIRPERSON (Hon Clem Simich): Leave has been sought for that course. Is there any objection? There is.

Hon Dr NICK SMITH: Mr Benson-Pope does not want to table his own press release in the Chamber, because it is garbage. There is as much truth in his own press release as there is in his claims to this Parliament about what he did with tennis balls when he was a teacher at an earlier time.

David Benson-Pope’s resource management bill is a disaster. It is a flop. Even his own colleagues have abandoned his key reforms, and not until we get a National Government will we get the sorts of resource management reforms that are required. That is why I again draw the attention of the Committee to clause 11B. The only thing that Labour is promising in respect of the Resource Management Act is that if people get dorked in the process and lose their money, they can reclaim it in their tax return. That is as good as it gets. Nothing is said about the lost opportunity and lost wealth. All people will get is a tax deduction. National will do far better than that.

This bill is a disappointment. As has so correctly been said, when we are taxing the heck out of New Zealanders, we continually have to have bills of this sort to try to knock all those New Zealanders who try to avoid the capricious tax that this Government is imposing on them. We need a change of Government so that we get a reduction in tax.

GORDON COPELAND (United Future): As others have mentioned, a significant part of this bill deals with the thin capitalisation rules, to ensure that foreign-owned banks in New Zealand pay their fair share of taxation. As I said earlier, we are not asking them to pay any more than their fair share. But I am afraid that I cannot buy into the rather sunny, utopian philosophy that has been voiced on this issue by the Hon Richard Prebble of ACT. He has just been joined in that sunny optimism by the Hon Nick Smith of the National Party. Both members correctly defined the problem: that we have to pass these huge tax bills. In fact, there are two of them every year, each about 160 pages long, so we are churning out tax law at the rate of about 320 pages per year. I agree that that is a bad thing, and I think that their analysis is correct in that regard, but I do not think they have come up with a solution to the problem.

If we buy into the argument that a flat tax rate of, let us say, 20c in the dollar would mean that businesses would no longer endeavour to avoid paying tax or to minimise their tax bill, I think we are dreaming. As someone who, as I mentioned, has worked in the sector, I know that any self-respecting tax adviser to a big corporation does not really think he or she has done a good job unless the corporation ends up paying no tax whatsoever. That view will continue to be held, regardless of whether the tax rate is 20c in the dollar. I do admit, on the basis of human nature, that the motivation to minimise tax is greater the higher the tax rate is, but I simply dispute the optimistic view that if we had a rate of, say, 20c in the dollar, that would somehow magically remove the need for bills such as this one. It certainly will not.

The other thing I have been surprised by in this debate is the announcement by Peter Brown that New Zealand First will cut taxes. It has taken New Zealand First a long time to make that announcement, and it almost sounds like a deathbed conversion. Anyway, New Zealand First joins the ranks of all the parties in Parliament, with the single exception now of the Labour Party—because Nick Smith is wrong, is he not? The Greens do have a tax reduction policy; they want to make the first 5,000 bucks earned by every taxpayer tax-free. Is that right?

Sue Bradford: Absolutely!

GORDON COPELAND: Every single party in this Parliament except for the Labour Party now believes that the time has arrived for Kiwis to get some tax breaks and some tax cuts. So I think the New Zealand First announcement tonight is quite momentous from that point of view. Although New Zealand First is a johnny-come-lately, at least it has finally got it right.

SHANE ARDERN (National—Taranaki-King Country): It was interesting to hear the last speaker correctly announce that even the Green Party is in favour of tax reduction. We are here tonight debating the Taxation (Base Maintenance and Miscellaneous Provisions) Bill. It is yet another complex pile of bureaucratic socialist engineering to try to outwit clever lawyers, accountants, and tax people, when all of it is unnecessary. One simple question that has been put tonight is yet to be answered. This question has been put many times over the last couple of sittings of Parliament and is yet to be answered: why not avoid it all, by just lowering the tax rate and taking out the incentive for those who invest so heavily in trying to get around the New Zealand tax system? Why is that question not answered? The reason is quite simple. It is that the Labour Party and all socialist parties fundamentally disagree that one can lower the tax rate and still provide basic services at the level people have come to expect.

Yet all the evidence in New Zealand, from our own experiment back in the 1980s, was that when the tax rate was lowered, the actual tax revenue went up. I see a former Minister from that period in the Chamber, and I am sure that he will agree with me.

Hon Richard Prebble: That’s right.

SHANE ARDERN: That is exactly what happened. The members on the Government side of the Chamber—and I see a couple of current Ministers having a little conversation in the back—should pause for a moment and listen to this, because clearly it is news that has never ever made it to their ears. It is just too logical for them to understand it—too simple. When the tax rate was lowered in the 1980s, tax revenue went up. More tax was paid. Far less was spent on consultants. There was far less need for this kind of bureaucratic nonsense to try to stop those who would use various tax loopholes—tax provisions is probably a more accurate way to describe them—to get around the taxation system.

Here in the New Zealand Parliament tonight we face a situation that is absolutely unique. Never before in the history of New Zealand have we had a situation like this. That is, we have surpluses that are higher than ever before in this country, no matter how we measure them. Whether we measure them on a per capita basis, or on an export dollar basis—whatever measurement we use—at the moment this socialist Government enjoys the highest surpluses New Zealand has ever seen. Yet at this stage, with those revelations—and clearly they must be revelations to the Government—and in these circumstances the Government still cannot see its way clear to having a lower tax rate for all New Zealanders, in particular for those they purport to represent. That is the most perplexing thing. The Government purports to represent hard-working ordinary mums and dads, yet it is that group that the Government is so disadvantaging through its taxation policy. I say to the Committee that I cannot understand for one moment why the Government will not listen to that kind of simple logic, when the evidence is overwhelming that lowering taxes will work and has worked before.

I would like to talk tonight about a number of other areas of income tax. One of them is the whole notion that if a company is growing and prospering, then the State should take a bigger chunk of its profits and have a bigger say in how it operates. Effectively, that is what happens. Through passing copious piles of regulation and legislation, such as the bill we have before us, that is exactly what the Government does. The Minister of Finance effectively says to those companies that he is much better at advising them on what they should do with regard to the management of their businesses than they are. He has no track record to prove it. No Government in this country has ever had a track record to prove it. But despite all the evidence, the Minister of Finance believes that he and his advisers are in a better position to tell companies how to run their businesses than they are. So what the Government says is that it will take a higher percentage of their income.

Hon DAVID CUNLIFFE (Associate Minister of Revenue): I would like to take the opportunity to respond to a couple of the questions that members opposite have raised.

The first came from Pansy Wong in relation to Supplementary Order Paper 378. Her question was whether the changes to the definitions there would change the underlying policy around equity and debt. The answer is no. The amendments were made at the request of the banks themselves. They provide some certainty and clarity, but the underlying policy will not change. The regulation-making power cannot be used for anything beyond clarifying those definitions.

Mr Prebble raised the issue of clause 110, which gives the Commissioner of Inland Revenue discretion to deregister non-residents who do not carry on a taxable activity in New Zealand. Mr Prebble described that rule as akin to those in Nazi Germany. It seemed a long stretch of the imagination, because what that provision in fact does is clarify that someone who is not carrying on a business in New Zealand, and essentially is not incurring any input costs to defray GST on, should not be able to take the GST margin as a final profit because he or she does not operate in New Zealand. In other words, we are treating such people in the same way that we would treat any other business in New Zealand. It is entirely fair, and of course we must reject the suggestion of Mr Prebble.

Mr Nick Smith argued that this so-called greedy Government has seen its tax take go up, but he forgot to tell the Committee that, in fact, tax as a share of GDP has gone down. According to the OECD, in the year 2000 tax as a share of GDP was 37.2 percent, and in 2002 it was down to 36.3 percent. [Interruption] The member has asked about the growth in GDP. It is true that under this Government GDP growth is nearly double that achieved by National when it was in Government throughout the 1990s. So part of the reason why tax as a proportion of GDP has fallen is that the economy has grown so quickly under this Labour-Progressive coalition Government.

Mr Nick Smith argued that the Government was sitting on a $7.5 billion surplus. That simply does not wash. Kiwis know that whether they are in surplus or in deficit is determined by whether, after they collect their pay packets and pay the bills, they have got any cash left in their pockets. [Interruption] On a cash measure, that is right. In 3 of the next 4 years, according to the Budget, we will be in a cash deficit situation. In 2008 we will face nearly $3 billion of cash deficit. There simply is no pot of gold. For the ladies and gentlemen out there in radioland, National is spinning them a line. If National were ever lucky enough to be elected, which is looking increasingly unlikely, it would spend New Zealand into the kind of oblivion that Rob Muldoon left the country in last time Labour had to rescue it, in 1984.

Nick Smith argued that 80 percent of people prefer National’s tax policy—even though it has not got one. That is the highest number that National members will ever see, because when they finally unveil their policy and try to make the numbers add up, it will be very, very clear that they do not. New Zealanders know a swindle when they see it, and they will vote for the Government that has delivered solid growth and fiscal credibility for the last 5 years.

Gordon Copeland said that Labour does not believe in tax cuts. Well, that does not square with the evidence in this year’s Budget, because we brought in a nearly $2 billion business tax cut package. I will recall it for members. Fringe benefit tax thresholds were raised, provisional tax was eased, tax on actively managed funds was erased, tax on international migrants and venture capital funds was lowered, there was a small-business tax discount in the first year of operation, and there were tax cuts in the $3 billion Working for Families package. This Government has already cut taxes. [Interruption]

He asked the key question—and Mr Shane Arden is asking it again—“Why didn’t you just cut rates?”, and that is a good question. The answer comes back to the central point of this bill, which is that if you just cut rates, the benefit would flow—

Dr Richard Worth: I raise a point of order, Mr Chairperson. Prior to your assuming your position as Chairperson of the Committee, we had a most unpleasant exchange with your predecessor, which was all about members bringing the Chair into the argument. In the last minute, we have had three instances of gross breach by this very young Minister. If he could just be brought to order, we would be grateful.

The CHAIRPERSON (Hon Clem Simich): Thank you for raising that point. The member is quite right, but I did not intend to interrupt the Minister.

Hon DAVID CUNLIFFE: I shall endeavour to speak in the third person. The central question is why we did not just lower the tax rates. There are two key reasons for that. This bill makes clear that certain large banks are foreign-owned, and they have kind of forgotten to pay tax—or enough tax—for the last 5 years. If we lowered the tax rates, much of the benefit of that would flow straight to the foreign owners. It would not go to the hard-working Kiwi battlers, to the panel beater shops, to the farmers in Taranaki, to my constituents in New Lynn; it would go to the Sydney financial markets, like the $360 million of tax that three Aussie banks have forgotten to pay per annum—and this bill is required to fix that. Do I care? You bet I care, because that adds up to the loss of an Auckland hospital every year, built from scratch, because those banks have hired smart accountants and lawyers to cheat the honest people of New Zealand of their hard-earned tax money.

I say, ladies and gentlemen, that this bill is, sadly, necessary. It is moderate. It has even been agreed by the New Zealand Bankers’ Association as a good basis for moving forward. Of course, I make no comment about individual taxpayers, but I regard it as sad but true—and it goes back to New Zealand First’s point—that although making a profit is an entirely laudable and legitimate thing to do, being a good corporate citizen in paying one’s fair share of tax is also a good thing to do. We regret that we have had to clamp down on this kind of corporate behaviour, but we make no apology for it. We do it for the sake of children and mums and dads in New Zealand who elect the Government to defend the interests of the little people from the Queen Street lawyers who are paid to enrich big foreign-owned business interests.

Hon RICHARD PREBBLE (ACT): Before I get on to the populist nonsense that the Associate Minister of Revenue put forward, let me just go to a technical point. He suggested that what I had said about clause 110 is wrong. What is a way of settling that? Well, KPMG, which is one of the world’s largest accounting firms, said this about clause 110: “If clause 110 is enacted, non-resident businesses engaged solely in taxable activities outside New Zealand may, at the commissioner’s discretion, have their GST cancelled. The effect of this would place New Zealand at a disadvantage in attracting non-resident businesses, as non-residents would be treated less favourably. … The unilateral and retrospective cancellation gives potential for significant losses.” I say to the Minister that that is an arbitrary use of power. I suspect this is the first time he has ever looked at clause 110.

Then the Minister came up with an argument that makes me take back everything I said about the New Zealand First MP—compared with the Minister, he is highly mature. The Minister told us that we cannot have a cut in tax rates, because if we did so, an overseas firm would be paying less tax. I say to the Minister that that may well be so, but his attitude also means that every New Zealander has to pay more tax just because this Minister is concerned that some overseas taxpayers will pay less. What a load of nonsense! That is exactly what the Minister said. Members can look at his Hansard.

If the Minister wants to know why he will be in Opposition—because I do not think he will lose New Lynn—within the next 3 months, it is because the Labour Government, for ideological reasons, refused at Budget time to make a cut in tax rates that all New Zealanders thought was reasonable. He can try to tell us that the books are cooked, and that it is not really a $7 billion surplus. Good luck to him. I say to him that every New Zealander knows that this Government has been collecting record tax receipts, and that the average New Zealander—the person who pays tax—according to Treasury, is now in no better financial position after tax than he or she was 5 years ago. The country is more prosperous, the Government is much, much more prosperous, but not the people paying tax, because of the increased amount of tax they pay—and people are paying more tax because inflation has put them in higher tax rates. In spite of the Minister’s promise, or the promise made on his behalf, that only 5 percent of all New Zealanders were going to pay a 39c tax rate, I say to the Minister that now 20 percent of all New Zealanders pay it. Now people are being told that they have to pay 39c in the dollar, because if they do not,Westpac might get a tax cut. I would like to be on a panel with David Cunliffe debating that during the election campaign, to see what the average New Zealander thinks of that particular argument.

But let me make it quite clear to the Government the real reason, the 38,000 reasons, that Dr Cullen feels he cannot cut tax—apart from his ideological belief in tax. He has increased the number of civil servants and bureaucrats in New Zealand by 38,000. He has a paper from Treasury, which has a lot of experience in how much it costs to employ civil servants, which states that, as a result of that, the Minister will be in deficit within the next 3 years. That is because the cost of employing those 38,000 people includes, of course, not just their salaries but also their accommodation, and the like.

The interesting thing about employing civil servants is that they actually cost more every year. Why is that? Well, out of that 38,000 about 1,000 will probably bring a personal grievance case against the Government next year. Another number will be pregnant. Another number will actually do some work—they will produce some papers—and then the Government will have to hire some consultants to look at the work that is being done. Every year they cost more and more money, and Treasury, which has a great deal of experience in these matters, has told Dr Cullen that he will be in deficit as a result of the 38,000 extra civil servants.

They are not actually producing any more hospital operations—there are more bureaucrats, more costs, but no more hospital operations. We all know that the result of the extra bureaucrats is a scholarship system that is a disaster. They have not resulted in higher educational standards, and they have not resulted in the elderly getting better social services—no, not a thing. But they have meant that the Labour Government feels completely unable to make any cut in tax rates.

That is the real reason, I tell Mr Cullen; it is not because he is trying to catch the Westpac bank. The reason Dr Cullen cannot make a tax cut is that he has 38,000 bureaucrats who are not producing any more hospital operations.

PHIL HEATLEY (National—Whangarei): My understanding, along with the understanding of 3.5 million New Zealanders, is that Wellington, the Beehive, and Dr Cullen are absolutely and utterly awash with cash. Every New Zealander believes that Wellington is absolutely awash with cash. But I have found out from Mr Prebble this evening that Wellington is awash with civil servants as well—in fact, with 38,000 extra civil servants. It is no surprise that what was not an election issue 3 or 4 months ago is now an election issue—that is, the fact that Wellington is awash with cash and it is time for some serious tax cuts.

Now the Labour Government has put forward this bill, and the Budget a month ago made a tremendous offer to New Zealanders, which was 67c extra to spend in 3 years’ time.

Lindsay Tisch: How much?

PHIL HEATLEY: It is 67c extra to spend. I can see the galleries clearing; the people up there did not know they had an extra 67c in 3 years’ time. Look—they are off down the road to buy themselves a packet of chewing gum just to celebrate, and good for them! National thinks there should be some serious tax cuts on top of the 67c in 3 years’ time, because Wellington is awash with cash, and every New Zealander knows it.

I would like to support Nick Smith, who was challenged by the tennis player opposite about the number of tax and levy increases over the last 5 years. I have a document that came out in August 2003, and it lists 24 tax and levy increases from Labour, which is the party that, members will recall, promised at the 2002 election there would be no new taxes. That is what it promised back then, but there have been 24 tax increases.

Perhaps members will remember the petrol tax increase—that 4.7c plus GST increase that came along with road-user charges for diesel vehicles. That tax was up 30 percent. The second was petrol tax II, which of course we are seeing at the moment. The third was the threatened flatulence tax, which at the time was going to be 9c on sheep, 54c on cattle, and 72c on dairy cattle. Well, that one did not come to pass, because of political pressure. The fourth was that income tax went from 33 percent to 39 percent. Members will remember that, and the Hon Richard Prebble talked about that. Fringe benefit tax went up from 49 percent to 64 percent, and trust income tax, the sixth increase, went up from 19.5 percent to 33 percent. There was an electricity tax, and an increase in the tax on alcoholic beverages—from $21 per litre to $38 per litre of alcohol. Members will recall a debate all night on the sherry tax. Dr Cullen decided he would stiff-arm the elderly; they could not go to bed with a sherry, because he whacked the tax up from $21 to $38 per litre of alcohol. He hit the elderly hard. He believed he was stopping young people from drinking high-alcohol beverages, but it was the elderly, sitting with their blankets over their knees in front of the heater and watching Coronation Street, who were the ones that suffered.

Members will recall that the ninth increase was the driver’s licence renewal fee. Its cost went up, as did the costs of birth, death, and marriage certificates. I have never had so many emails on an issue as those from people concerned about the cost of those certificates going up significantly. The ciggy tax increased, so that the cost of a packet of cigarettes went from $7 to $8. And there were Accident Compensation Corporation (ACC) levies, ACC motor vehicle levies, a petrol ACC levy, and the resident withholding tax. The 16th was an import fee, and the 17th was a Fire Service levy. Households’ and motorists’ levies went up 17.7 percent. A fishing-licence went up 10 percent.

LINDSAY TISCH (National—Piako): My colleague Phil Heatley, who was only halfway through his speech, made a very valid point. We should look back over the last few years at the record of a Government that says it is looking after middle New Zealand—that is what the Associate Minister of Revenue said; he said it is looking after hard-working New Zealanders. My colleague to my right, Phil Heatley, represents the area of Whangarei, and what a great electorate MP he is. Up in his area there are so many people who are in business, so many people who are enterprising and want a reward for their initiative, and what does this Government do? It sticks it to them—absolutely sticks it to them. The Minister says the Government is looking after middle New Zealanders; well, I will mention some of the facts my colleague did not get to mention.

He did not mention the carbon tax. Well, the carbon tax has come about because we have ratified the Kyoto Protocol. What does that do? At this stage, we do not really know, because of the implications of the carbon tax that is being introduced. But we do know that it will affect our international competitiveness. On the world stage, it will be difficult for us to compete internationally when two of our most significant trading partners, the United States and Australia, have decided not to ratify that protocol. That is the first thing, but let us look now at what the implications of the carbon tax are. At $15 per tonne of carbon dioxide emissions, that tax will be a compliance cost added on to all New Zealanders, not just those in business. What does it mean? It means that we will probably see a 4c per litre increase in the price of petrol at the pump, over and above the 5.6c per litre increase that we debated in the House about a month ago. Do members remember that one?

Phil Heatley: Yes, tax No. 33.

LINDSAY TISCH: Ah, there we are—tax No. 33. On top of that we are going to have a 10 percent increase in electricity charges. Well, who will be paying that? I tell members that it will be the hard-working New Zealanders, the hard-working families. I am telling the Minister and the Government now that that is their death knell, because people are not prepared to accept it. The Minister had the audacity to stand up here and say Labour was the party that was going to give tax cuts, and that it was the party looking after hard-working New Zealanders.

Hon David Carter: 67c.

LINDSAY TISCH: That is 67c—

Hon David Carter: In 3 years’ time.

LINDSAY TISCH:—in 3 years’ time, so I ask Labour members what planet they are on. I tell them that they will be looking for another job shortly.

Let us look at the Holidays Act. Well, for those in business there are increased compliance costs of employing staff in the holidays. I was down in Queenstown at Queen’s Birthday weekend, and do members know what was happening on Monday? Businesses were shut. Why were they shut? Because under this Government someone who works on a statutory holiday gets penal rates—that is OK; we used to have penal rates, anyway—but, on top of that, employers have to give a day off in lieu. It is double-dipping. So what are the firms saying? They are saying they cannot afford to pay the costs, and they just shut down. Who misses out in that arrangement? I will tell members who misses out: it is the employees—the people whom this Government says it is looking after. They miss out because, at the end of the day, if the business does not meet the bottom line and make a profit—the Government thinks “profit” is a dirty word—the business cannot reinvest and cannot create jobs. It is as simple as that, but Government members would not know that, because they have never been in business. They have never invested a dollar, never put a dollar at risk.

So what happens now is the Government introduces costs like the provisions in the Holidays Act concerning statutory leave and relevant daily pay, and people abuse the system to get extra money because they are having a holiday. Then we have the open-ended provision for bereavement leave that allows 3 days’ leave for the funeral of a close relative and 1 day’s leave for that of a close associate—open-ended—and we wonder why businesses are saying: “Enough’s enough!”. That is what they are saying, and they come to National and tell us to sort it out—and we will sort it out. I tell the Minister that we have a business policy that is attracting the attention of all New Zealanders.

CRAIG McNAIR (NZ First): In speaking again in the Committee stage, I just want to raise a few points that some members have referred to concerning what my colleague Peter Brown and I have said on the issues raised in this bill.

First of all, I say to Mr Copeland, who said that he had never heard New Zealand First advocate a tax reduction, that for a long time, even since before the last election, New Zealand First has constantly talked about tax reductions. That has been in our policy for many years and we have talked about it in exactly the way Peter Brown talked about it in his speech. New Zealand First believes that once we prioritise our economic and social spending, we should look at a reduction in tax. That is what Mr Brown said, and we stand by that statement. Our policy even states: “following the achievement of intermediate growth goals and focused social expenditure aim to reduce personal income tax levels;”. That is pretty simple and clear, and we stand by it.

Marc Alexander: You are down to one finger now.

CRAIG McNAIR: Well, it is all right for “Mr 2 Percent” over there to be talking about a one-finger campaign, but the fact is we are campaigning on the right issues, and the people of New Zealand seem to be happy with the direction we are going in.

Lindsay Tisch: I raise a point of order, Mr Chairperson. The member cannot refer to somebody as “Mr 2 Percent”. The member must refer to other members by their full name, but in his speech the member called the member from United Future “Mr 2 Percent”. I do not know of any member in the Chamber whose name is “Mr 2 Percent”. I think the member should stand, withdraw that comment, and apologise to the member.

The CHAIRPERSON (Hon Clem Simich): Thank you for raising that. All members know that if they are referring to any other member in this Chamber, they are to use the member’s full name, and if a member is referring to a party, the member is to refer to it correctly. But the member may not have been referring to anyone at all.

CRAIG McNAIR: Our other policy concerning taxation is: “Upon achieving short term growth goals aim to reduce corporate taxation beginning with a 20% tax rate for ‘new exports’ net income;”. So the question that I come to as far as this taxation bill is concerned is where is the vision in this bill. I ask where the vision is for this Government to be taking our country down the track of high expenditure, with the growing numbers of civil servants increasing the State sector by 38,000—as was just commented on. Where is this Government’s vision as far as taxation is concerned? As Mr Tisch has just said, it is 67c in 3 years. We in New Zealand First say that is a stick of gum in 3 years.

Another issue that I want to speak about briefly is what the Associate Minister of Revenue was saying—rightly so—just a few moments ago about banks paying the appropriate amount of tax. He was very passionate on that issue. I am glad to see that he was passionate on that issue, but New Zealand First is asking why the Government was not passionate on that issue 7 or 8 years ago, when we started raising it. The fact is we are approaching an election, and it just seems too coincidental that this Government is bringing this bill in under urgency in this way. We say it is incredibly ironic, and the fact is New Zealand First has been passionate about this issue for the last 7 or 8 years. The Minister was very passionate on the issue, and I was very impressed with how passionate he was, but the fact is the Government has berated New Zealand First for many, many years while we, year in, year out and month in, month out, have spoken against banks doing that.

We have suggested different ways that we can stop those banks wriggling their way out of paying their taxes. I remember talking to an official when we were going through this bill. I asked him whether he thought that this bill would be it, and that the banks would put their hands up in surrender and say: “OK, we’ll just start paying the appropriate amount of tax.” He said they would try to find new ways to avoid paying tax.

MARC ALEXANDER (United Future): I raise a point of order, Mr Chairperson. I just wonder whether a copy of the speech made by the member who has just sat down will be made available for purchase later. It was absolutely riveting stuff. It had the crowds in the rafters jumping up and down—stunning!

The CHAIRPERSON (Hon Clem Simich): That is not a point of order. I am going to call someone who may, just by chance, speak to the bill.

Hon DAVID CARTER (National): Mr Chairperson, I am pleased you have allowed me to take a call, because I want to focus on the seriousness of this bill. I want to focus on the tax bill before the Committee tonight.

Today I have had the privilege of actually being amongst real people, at the Fieldays at Hamilton. Thousands of people were there, and I was very interested to see that Dr Cullen and Helen Clark had made another significantly tactical error by having Helen Clark there to open the Fieldays. She was in the main arena at around 12 noon today, and she had assembled about 20 loyal Labour Party supporters and perhaps 100 passers-by. Helen Clark had the audacity to say at the opening that agriculture was the backbone of the economy—and everybody laughed! Everybody laughed, because the people who were there had been talking to me about tax. The issue on everybody’s lips at the Fieldays was tax. New Zealanders know they are grossly overtaxed.

We have had Dr Cullen trying to control the argument for many months now by saying that New Zealanders are not grossly overtaxed, yet he had the audacity and arrogance to come into the House and actually recognise that New Zealanders are overtaxed, and to say that they needed a tax break. “Yep, they need a tax break.”, said Dr Cullen. The Labour caucus had been briefed at 1 o’clock that day. Labour members had nodded their heads and said: “Dr Cullen, you are on the right track. Go in there and offer them a tax cut. Go in there and offer them 67c a week.” But there was a proviso.

Lindsay Tisch: What was that?

Hon DAVID CARTER: People have to hang around for 3 years before they get their 67c. Phil Heatley’s contribution, when he wisely advised New Zealanders listening tonight not to spend their 67c all in one go, was important. Tax is an issue at this election, and tax is an issue because Labour has created it as an issue. It has grossly overtaxed New Zealanders. Phil Heatley mentioned 24 new taxes—

Shane Ardern: It’s 33!

Hon DAVID CARTER: My point exactly—it was an old newsletter. Phil Heatley has been busy producing newsletters for a long period of time, busy trying to keep up with the rate at which the Government keeps imposing new taxes. The figure now is over 30 new taxes, and everybody down at the Westpac Stadium tonight watching that game had one thing on his or her lips.

Lindsay Tisch: What was that?

Hon DAVID CARTER: It was not the British and Irish Lions, and it was not Wellington; it was tax. People know they have been overtaxed and ripped off by this Labour Government for 6 long years, and even Dr Cullen notices it—even Dr Cullen acknowledges it. He comes in here and audaciously, stupidly, and arrogantly says: “You guys have been pretty good. You’ve paid your taxes. You deserve a tax break, so if you hang around for 3 years, we’ll give you 67c a week.” That is the issue at this election. We are debating this tax legislation today, but that is what people will focus on at the next election. They know that the Government has created a huge surplus of $7 billion. It is not a Government surplus; it is surplus taxpayer funds that have been collected over the last few years. It is money that the Government has collected and now is wastefully spending. That is what New Zealanders are focusing on. So I tell Dr Cullen, as we debate yet another tax bill, that he has created the environment for this election.

Mr Cunliffe is sitting in the chair, and has not taken a call while I have been in the Chamber.

Hon Member: Yes, he has.

Hon DAVID CARTER: Not while I have been in the Chamber. He knows that he is beaten. He hangs his head dejectedly, knowing that he listened patiently to Dr Cullen, who normally delivers, but after that Budget he is trying to justify the generosity of giving people 67c—provided people wait 3 years; we have to add that proviso. It is no wonder that 700 New Zealanders who went out of Auckland International Airport last week ticked Australia as their permanent place of residence now. The Australian Government managed to deliver substantial tax cuts. The Australians do not have to wait 3 years for 67c. That Government knows the importance of delivering tax cuts to an overtaxed country.

KENNETH WANG (ACT): It is very, very frustrating for us, constantly debating this taxation bill. To me it is all about money-grubbing and money spending.

I would like to draw attention to the fact that this House has been sitting under urgency since yesterday, and before that we debated the Appropriation (2004/05 Supplementary Estimates) Bill. That bill has been debated and is in the past. But what was it about? It was all about giving legitimacy to this Government grabbing more and extravagantly spending more. This bill is another example of this Government grabbing even more. We say that if we had adopted a lower, flat tax rate in the first place as the ACT party has suggested—25c in the dollar—there would be no need to sit here until midnight debating this bill and wasting taxpayers’ money.

I would like to draw attention to the fact that before Michael Cullen’s 2005 Budget speech the public had already spoken. The National Business Review survey at the end of April this year showed that 63 percent of New Zealanders were looking for lower tax rates. They expected our Government to deliver. They expected our Government to listen. Unfortunately, we have a very arrogant Labour Government that did not listen.

I would like to comment on the Minister’s statement that if we had a lower tax rate, it would benefit only those who are rich, the corporates, and foreign owners, who would grab our money and directly transfer it overseas overnight. But I would like to draw attention to the basic knowledge that in this country over 90 percent of businesses are small businesses. Those small-business owners have spoken. One needs only to look at the opinion polls. Business confidence has plunged to a 70-year low. Why? Do members think they are foolish or dumb? Of course one cannot say that; one would not dare to say that. But why does the Government still insist on a high tax rate? Is the Government going to label them all as rich, or foreign-owned corporates, or crooks? Of course, the Minister is shaking his head.

I know that the reason for this Government taxing all and taxing more is only that it wants to spend more. Of course, there are 38,000 more civil servants. Under this Government, that is not a big figure. It expects to spend more. It wants to spend more on things like the hip-hop tour and the wānanga institutions.

Every New Zealand family has also spoken out. Even Michael Cullen admitted earlier this year that the average New Zealand family’s income, in real terms, is no better off than it was 6 years’ ago. Those Labour members should not shake their heads; they should just look at the real figures. Those members can say: “We have a great plan—the Working for Families package.”, but the Government is not a machine to produce wealth. Where does the money come from? Tax and more tax. This Government knows how to do that very, very well. It should just remember where that revenue came from. It came from hard-working New Zealanders. It came from the 90 percent of business owners such as dairy owners, electricians, and plumbers.

Hon PAUL SWAIN (Minister of Labour): I move, That the question be now put.

SHANE ARDERN (National—Taranaki-King Country): First of all, I congratulate the Hon David Cunliffe, the member for New Lynn, on taking a call before—a very passionate call. What that young new Minister’s call demonstrated overwhelmingly was two things. One is that there is no substitute for experience, and the other is that David Cunliffe does not have any—he absolutely does not have any. I just say to that member that it was interesting to listen to him stand up and justify the Government’s position, by saying that the way to defend poor hard-working “Joe Hard-worker” out there—a traditional Labour supporter—is to layer another tier of bureaucratic nonsense on top of him and employ another pile of bureaucrats, to add to the now 38,000 new bureaucrats and civil servants that this Government has employed. Somehow that will protect people.

But what “Joe Hard-worker” will tell Mr Cunliffe, when he goes back to New Lynn, is that people have been told, and have read, that in this country we have had strong growth over the last 6 years. They have been told, and they have read, that the Government—the Minister, the Hon David Cunliffe and his Government colleagues—have a surplus like none other. They have been told that. Yet those hard-working small business people, or other hard-working New Zealanders, have never had it so hard. They are struggling. They cannot pay the school fees, cannot pay to get the 10-year-old Japanese import through the next warrant of fitness, and are struggling to meet their mortgage payments, so this Government is not working for them. The Minister will learn that when he goes back to his electorate in the election campaign that is coming up.

The reason for that is very simple: this Government simply has its hands too deep in the taxpayer’s pocket. There are 34 new taxes. I congratulate my colleague from Whangarei on his newsletter, which is now well out of date. It shows 24 new taxes and is a very important document. In fact, we may table it at the end of this debate, just to bring the Government up to speed with what it is doing. By the time that newsletter was off the print, another 10 new taxes had been added. This Government has introduced 30-odd new taxes. That is the reason why the good folk of New Lynn will tell the Minister, when he goes back there, that he is just too tough on them. And he is not delivering the services he promised, either. He said, and they believed him, that if they paid a little more tax—were a bit more generous, and gave a few more dollars—the Government would fix the health and education system.

Well, what have people got? Three billion dollars more are going into health, but there are fewer operations. A whole pile more money will go into various educational courses, but with less end results there. We have 1,200 more bureaucrats in the education system alone. I have before me something quite interesting. I have a document with a photo of a person who looks very similar to the Prime Minister. I am not sure whether it is her, but it states: “My commitments … [are] No rise in income tax for the 95 per cent of taxpayers earning under $60,000 year. No increase in GST or company tax.” Where does one go from there? The fact is that a huge number of the people who believed in that commitment have been let down. That is a broken promise, like none other we have seen in the history of New Zealand.

When we look at the legislation that we are debating tonight, we see a complex list of regulations to try to stop some foreign banks from using the taxation system, which has been designed by that Minister, to avoid paying their fair share of tax. No one will have too much sympathy for the banks that do that, and I accept the proposal the Minister has put forward in that regard. But here is a simple question for the Minister, which he did not answer, and on which there is overwhelming evidence: if he were to lower the tax rate and flatten the tax rate, would those banks go to the effort that they do now to avoid paying that tax, and would this regulation be necessary? The evidence in this country, if one goes back through history, is overwhelmingly that no, they would not make the investment they do, in terms of employing high-powered tax consultants, lawyers, and accountants, to get around the New Zealand system. The banks just would not bother; it would be cheaper to pay the tax.

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

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 378 in the name of the Hon Dr Michael Cullen to clause 2 be agreed to.

Amendments agreed to.

The question was put that the following amendment in the name of the Hon Dr Michael Cullen to clause 2 be agreed to:

to omit from subclause (9) the expression “75C,”.

Amendment agreed to, and clause 1 agreed to.

Clause 2 agreed to.

Schedules agreed to.

The Committee divided the bill into the Taxation (Base Maintenance and Miscellaneous Provisions) Bill and the Privacy Amendment Bill (No 3), pursuant to Supplementary Order Paper 379.

Bill reported with amendment.

Report adopted.

Bills

Taxation (Base Maintenance and Miscellaneous Provisions) Bill

Privacy Amendment Bill (No 3)

Third Readings

Hon DAVID CUNLIFFE (Associate Minister of Revenue), on behalf of the Minister of Revenue: I move, That the Taxation (Base Maintenance and Miscellaneous Provisions) Bill and the Privacy Amendment Bill (No 3) be now read a third time.

The central feature of the Taxation (Base Maintenance and Miscellaneous Provisions Bill is the introduction of important reforms designed to ensure that foreign-owned banks operating in New Zealand pay sufficient tax on their New Zealand incomes. Specifically, the bill strengthens the thin capitalisation rules to ensure that the income of banks cannot be sheltered by interest deductions arising from excessive debt. Banks must have enough capital in New Zealand on which no interest is deductible, to fully fund their overseas investments. The new measures will result in the more efficient operation of thin capitalisation rules in New Zealand, while giving greater protection to the New Zealand revenue base. This bill is around 170 pages long. Every year from foreign banks alone it will therefore protect about $2 million of revenue per page.

In keeping with the Government’s commitment to the business sector, the bill also introduces a number of business-friendly measures, including a number of technical changes to the tax depreciation rules to improve their operation and reduce compliance costs. These include broadening the rules on tax deductibility for business environmental expenditure, such as the costs of preventing, remedying, or mitigating the discharge of contaminants. The bill will allow those costs, like other business costs, to be taken into account for business purposes. The other measures in the bill aim to improve the operation of tax law. Of interest to tax professionals, and in particular, chartered accountants, is the introduction of new measures to give greater clarity to the operation of a statutory privilege for those in the business of providing tax advice.

Finally, as a result of this legislation, a consequential amendment makes a change in a cross reference contained in the Privacy Act.

Having reached the third reading, this legislation is the result of a long process involving the work and input of many. It includes the submissions on the proposed legislation made by interested parties, the dedicated work of officials who supported the bill during its development and passage, and the detailed analysis carried out by the Finance and Expenditure Committee. I am grateful to all of those involved in bringing the bills to their third reading, and I now commend the bills to the House.

PANSY WONG (National): What a sad speech that was from a dejected Minister. When the public is listening to this debate, they will contrast that with the passionate debates that were championed by my National colleagues. My colleagues are very confident and happy, because they are speaking on behalf of the New Zealand public. They know that this legislation is the last technical, complicated legislation that will be brought in front of the House by this minority Labour Government. This will be the last time, because when National takes the Treasury benches we will make sure that both the company tax and the personal tax rates will be lower.

That will negate the need for the countless pieces of complex tax legislation that this House has to debate.

I was reflecting on some of the Labour members who actually bothered to take calls during the second reading debate and the Committee stage. The Hon Harry Duynhoven actually tried to convince New Zealanders that they have not paid enough tax. So I hate to think what else this Labour Government has in mind for hard-working New Zealanders, in terms of taking money off them. As United Future has rightly observed, Labour is the only party left in this House that does not believe in lowering taxation. The problem with regard to Labour refusing to register the importance of lower tax, a complication caused by the different rates for personal tax and company tax, and by high taxation, is that that leads to tax compliance costs for individuals. As an accountant, I can imagine my colleagues, the chartered accountants and the tax lawyers. They are the ones who benefit from that situation. I wonder whether the Minister has looked at the number of tax consultants from large accounting firms who come in front of the Finance and Expenditure Committee, month in and month out, to debate and to make submissions on behalf of their clients. My accounting colleagues have told me they do not actually enjoy tax minimisation work. They would rather expand their management work in their consultancy companies. It is a lot more satisfying than tax consultancy, because they can actually assist their clients to expand their businesses rather spending so much time on investigating means to minimise taxation.

One of the most high-profile issues contained in this legislation is to do with the thin capitalisation rule. I understand that the Inland Revenue Department has carried out separate consultation with the foreign-owned banks, and we accept the measures that will be introduced to counteract the very innovative way in which those banks try to minimise their tax payments. But the Minister has refused my invitation to take a call and explain why on the one hand the Labour Government has introduced the thin capitalisation rule to ensure that foreign-owned banks will pay their share of tax, while on the other hand nobody is prepared to share with the New Zealand public information on the sort of arrangement Transpower has entered into. Is it an arrangement to minimise tax in New Zealand or to minimise tax overseas? Where is the ethic of a Government that introduces legislation to ensure that foreign banks pay their tax, but that will not tell the New Zealand public whether Transpower’s deal disadvantages New Zealand taxpayers? The Minister of Finance, the Hon Michael Cullen, says the public will simply have to take his word for it. Well, I am afraid that the public no longer takes the word of Labour Ministers seriously, because we have learnt from past experiences that they sometimes stretch the truth rather far. I think Labour members still have calls available, and I hope that one of them will stand up and share with the public the truth behind the Transpower deal.

I also want to share with the public a piece of information I obtained from the Inland Revenue Department. All my fellow National MPs have raised the issue that even a Labour Minister believes that the New Zealand public is entitled to some tax relief, and that the Hon Michael Cullen has proposed a tax cut of 67c a week in 3 years’ time. I have asked the Inland Revenue Department how much work is involved in changing the tax thresholds. The department told the Finance and Expenditure Committee that to adjust the tax thresholds takes only 3 months, but that to cater for changes in relation to provisional taxpayers takes about 10 months. So if this Labour Government is serious, it should at least show some remorse for overtaxing New Zealanders for the last 6 years by bringing forward the date of that very miniscule tax relief for the majority of New Zealanders. But I imagine that could be too much to hope for.

My colleague Dr Nick Smith has raised another excellent point about the legislation we are debating tonight. He was asking why people who have applied for resource consent, and whose applications either fail or are withdrawn, should be grateful for a tax deduction at all. Most individuals who engage in activities would rather that their projects get the green light to go ahead. To have a tax deduction for a very lengthy and drawn-out resource consent process is no consolation prize for them.

It was because of the refusal of the Labour Government to acknowledge that New Zealanders deserve to pay less tax that we have had the Inland Revenue Department admit it has to set aside $3.2 million to set up a small-business unit, to explain to small and medium sized businesses what their tax obligations are. How does that action square off with the continued promises and claims made by Labour members that they are serious about reducing compliance costs for small and medium sized businesses? All that such businesses want to do is to get on and expand. Why should they be grateful for a so-called subsidy to prepare their PAYE and all sorts of other source deductions? The Government has long used businesses as its tax agents, and I think that most small and medium sized businesses would prefer this Labour Government to simply lower the whole range of tax, to avoid them having to apply for subsidies to fulfil the tax compliance procedures.

GORDON COPELAND (United Future): During the Committee stage of the original Taxation (Base Maintenance and Miscellaneous Provisions) Bill the Minister in the chair, David Cunliffe, took the call and challenged, with some determination, the statement he claimed I had made that the Labour Government had not reduced taxes. I say to the Minister—and I conceded this in my second reading speech—that there are some aspects to this legislation that will reduce the quantum of tax for some taxpayers, but I put squarely to him that the net effect of this legislation is several hundred million dollars more of tax for the Government. The net effect of this legislation is not any reduction at all in tax for New Zealanders. We are to collect $360 million more, under this legislation, from the banks alone.

When I think of the figure of $360 million, it has a kind of familiar ring to it. One of the other members recognised straight away that 360 million bucks is exactly the amount of revenue the Government intends to return to New Zealand taxpayers on 1 April 2008, by adjusting the tax brackets by 6.12 percent—an adjustment that Dr Cullen says we could not afford until then. But in the legislation that we are to pass into law tonight we will collect 360 million bucks from the banks themselves. So where is the problem? Why is the Minister of Finance about the only person in New Zealand who does not realise that it is time for tax cuts and that we can afford them? It reminds me of the famous grandmother who watched all the troops marching past, and said: “Isn’t it a shame? The only person marching in step is my grandson.” It is that kind of myopic vision.

Also, when the Minister, David Cunliffe, tried to claim that somehow or other this legislation was going to reduce taxes, my mind went to an instance in this House a little while ago, when the newest member of the House, ACT member Kenneth Wang, in his first question to the Minister of Finance, asked him how many increases in tax he had undertaken since he had become the Minister in late 1999. The Minister responded that the figure was nine. The honourable Phil Heatley told the House tonight that it was actually somewhere between 24 and 32; as Phil Heatley is an honourable member, I accept his word in that regard. Then, in a supplementary question to the Minister, Kenneth Wang asked how many rates of tax he had reduced since he had become Minister, and there was a deafening silence from the Minister. I think that all of us in the House were just amazed that Kenneth Wang, whether by luck or by skill, had actually caught the Minister on the hop completely. That is the memory that New Zealanders will take into this year’s elections.

Let us unbundle the logic of another comment that the Minister in the chair tried to make in the Committee stage. He said that if we reduced the company tax rate, a considerable benefit arising from that would go to overseas investors in New Zealand companies. That is exactly the point. If we want to attract new investment into this country, then we need to have a competitive corporate tax rate. We heard from the Hon Richard Prebble that in some Eastern European countries those rates are down to 16 percent.

Hon Richard Prebble: Russia’s down to 12.

GORDON COPELAND: Russia’s is down to 12 percent. Ireland has had a very, very low rate; I am not sure where it is now—I think it may have gone up a bit—but it was down to about 12 percent at one stage, too. That is the whole point.

There is a kind of—and I hate to use the word—inconsistency, a logical inconsistency, in that two bills down from this legislation, in the urgency motion, is the Overseas Investment Bill. With that bill the Government wants to encourage overseas investment in New Zealand. How does that square with it wanting to do exactly the opposite when it comes to the corporate tax rate?

I want to reinforce also a point made by, again, Kenneth Wang—that is, the great majority of companies in this country actually employ five or fewer people. As he said, about 97 percent of them employ fewer than 20 people. We are talking about tax relief for all those companies, so why do we get fixated about a little bit of leakage going offshore, when the money potentially coming back the other way would be far greater? Even the leader of the Progressive Party recognises that reality. Even his party is saying that the corporate tax rate should come down to 30c in the dollar. In a way, I think we relish taking this issue into this year’s election.

I want to add just one other piece of information. Pansy Wong said she had a new piece of information. I have a new piece of information for the House, as well. Today, at the Finance and Expenditure Committee meeting, John Key asked Dr Cullen whether he might have second thoughts about waiting until 2008 for the 6.12 percent adjustment to the tax brackets. I thought I knew where John Key was coming from—that he was thinking to himself that a couple of weeks from the election date Dr Cullen might suddenly say to the nation: “Hey, guys, I got it wrong, and, yep, we’ll do it after all, and we’ll do it from, maybe, 1 April 2006.” But, no, he got a categorical response from Dr Michael Cullen: “No, I am not going to change. You’re going to have to wait until 2008.” So there it is. It is on the record. It is straight. It is clear. If nothing else, New Zealand voters will have some pretty clear choices to make in this year’s election.

Hon RICHARD PREBBLE (ACT): I rise to speak to the third reading of the Taxation (Base Maintenance and Miscellaneous Provisions) Bill. It was agreed that we would take the legislation as one question. The Associate Minister of Revenue, Mr Cunliffe, was rash enough to decide to get up and make—I guess I have to say, in fairness—a vigorous defence of the Budget and the decision of the Government not to grant tax relief. That resulted in a wide-ranging debate—which actually had been agreed to. Mr Cunliffe must have realised the position, from the reception he got. For example, I have just listened to the speech made by Mr Copeland, whose party normally supports Labour. Mr Copeland, in his gentlemanlike way, completely lacerated the Government’s position.

Mr Cunliffe wants us to believe that the Government does not have a $7 billion surplus. Of course, to believe that, one has to believe that the Auditor-General, who signed off the Government’s accounts, got it wrong; that Treasury, which is required by law to state whether the Government’s accounts are correct, actually got it all wrong; and that there is no $7 billion surplus. I just say to the Government that it has no chance at all of putting across that line. It is nonsense. The $7 billion surplus most certainly does exist, and there is the ability to have tax cuts.

The reason the Government is in trouble is that even someone such as the President of the Labour Party, Mike Williams, could not believe that the Government would not adjust the tax rates. The whole country expected adjustments, because inflation has happened, and because one of the promises that Labour was elected to Government on—I have a copy of the promise somewhere, if it has forgotten it—was that no more than 5 percent of the population would have an increase in income tax, but, of course, 20 percent of people in the workforce are now paying the 39c tax rate. The answers Dr Cullen gave in the House—apparently, Mr Cunliffe was not listening, because he denied that those answers were given—show that people in New Zealand on average incomes, after tax, are no better off today than they were 6 years ago.

Of course, that does not apply to the Government. The Government is much better off. It has been collecting revenue. As Kenneth Wang, speaking on behalf of the ACT party, pointed out, this tax revenue has not come from a few overseas companies, because although those overseas companies may pay some tax, the vast bulk of tax in New Zealand is paid by average New Zealanders.

In the case of New Zealand companies, 97 percent employ fewer than 20 people, and I think about 97 percent of them are New Zealand - owned. The Associate Minister got up and said that the Government could not give a tax cut, because it would help overseas companies and the banks, but that argument just will not wash with the average small-business man. The reason why someone like Kenneth Wang is so upset about it is that he is a small-business man. He knows that it is companies like his that are paying the extra tax, just as the average New Zealander knows how much money he or she has left.

I believe that tax is going to be the big election issue. I have no difficulty in believing Mr Carter, who told members that when he was at the Fieldays today the issue that people wanted to talk about was tax. That has been my experience.

I know what has happened to the Labour Government. It has looked at the polls and found that the polls say—and they still say—that 66 percent of people would pay more tax in return for a better health system. Well, I come from the ACT party, I believe in low tax, but even I would pay more tax to have a better health system. But I just know that if I paid more tax, I would not get a better health system. If we relook at those polls, we also see that the other 30 percent of people, who do not say they would be prepared to vote for more tax, know that they would be the people who would pay it. Most of the people who answer yes to that question do not think they personally would have to pay the increase. When we put the question a different way, as the National Business Review did—which, again, Kenneth Wang pointed out—before the Budget, and I do not know why Dr Cullen did not notice it, we see that two-thirds of all New Zealanders now think they are paying too much tax.

I suspect that that figure has now gone up further. The result of the silly decision made by the Government to give the price of a packet of chewing gum in 3 years’ time in tax relief has caused everyone in New Zealand to look at the question, and to realise that there has been inflation over the last 6 years and that the Government has not adjusted the tax rates. We also know that the Government across the Tasman, both before the election and, now, after the election, has dramatically adjusted tax thresholds for inflation. As we live in a global world, we are aware of that fact.

Of course, we then have to ask why the Government is not prepared to adjust the tax rates. There are two reasons. The first is an ideological one. Dr Cullen firmly believes that he can spend our money better than we can. That is his view. So he is in favour of higher tax. If it were up to him, I think he would lift it even further. That is the arrogance of a socialist.

But the second reason is that we all know that Treasury has told him that the effect of the Labour Government employing 38,000 extra bureaucrats over the last 5 years will blow out even the massive $7 billion surplus. That is because—and it is a well-established fact—when any one employs an extra person there are also extra costs in overheads, but when an extra civil servant is employed, his or her costs go up every year. The reason is that civil servants generate more costs. They produce new ideas, and the Government then has to go out and hire consultants to find out whether those ideas are any good.

I will use a parliamentary example, which we all would have seen. We now have the Parliamentary Service Commission. The position I am in is that I find that about every 3 years somebody from the commission comes into my office and tells me that my desk, which I thought was perfectly adequate, has to go because a new Occupational Safety and Health Service study says it is not ergonomically efficient. The whole civil service is like that. It is always coming up with these things. When we pass these regulations, most small businesses ignore them, but not the civil service—it applies them! There is a huge cost in putting in new furniture, putting in no-smoking areas, training people to use non-sexist language, training people how to be sensitive to Māori, or whatever the latest cause is, and the cost goes up every year. Imagine that there are 38,000 new civil servants, all of whom have to be taught about non-sexist language, about bicultural New Zealand, or about whatever the latest thing the civil service is into! Of course it is going to cost $7 billion! That is why Dr Cullen and a socialist Government cannot reduce tax. But, of course, an ACT party in Government could, because we are not politically correct, for a start.

I point out a further reason. Let us take the Ministry of Health: with all its extra bureaucrats, there are no extra operations—not one. If we asked the public whether they wanted more Ministry of Health bureaucrats, all well trained in biculturalism and non-sexist language, or whether they wanted granny to have her hip operation, the answer would be that they wanted granny to have her hip operation.

So if a Government were prepared to put a control on Government expenditure, we could have very substantial tax cuts. The ACT party says we could go immediately to a low flat rate of tax. Where is the relevance of that to this legislation? The original bill was 170 pages long. With a low flat tax, it would not be necessary.

PETER BROWN (Deputy Leader—NZ First): That was an interesting contribution from Richard Prebble. I am not sure whether I could decipher what was true and what was a figment of his imagination. I take it that the 38,000 new bureaucrats is a reasonably accurate figure. I think that illustrates the concerns New Zealand First has with this Labour-led Government, propped up by the “Poodle Party” of United Future.

I want to take this opportunity to again make New Zealand First’s position clear when it comes to tax. We support a fresh look at—

Dr Richard Worth: Do you support National?

PETER BROWN: I will come to National in very short order. I think that when I get to it, the member will be hanging his head in shame.

New Zealand First would like to see taxation eased for New Zealanders, but we do recognise that most law-abiding New Zealanders want greater resources given to the police. That will cost money. Most New Zealanders, so they tell us, want students to have a universal living allowance, and we support that. Most New Zealanders—

Dr Richard Worth: Very expensive.

PETER BROWN: It is an expensive exercise. The member is clearly thinking. Most New Zealanders, with the exception of members of the Green Party, want more investment into roading—far more than that Government is doing at the moment. Most New Zealanders, by a significant majority, want an improved health system. We have an ageing population, and New Zealanders want and need greater financial investment in that sector. I take issue with the Hon Richard Prebble, who said that if we put more money into the health system, it would not improve. That is far from the truth. Other countries have invested in the health system to a greater degree in proportion to GDP. This Government puts about 6.1 percent of GDP into our health system, but that is too low. We believe that it should be increased, on a gradual basis, to something like 9.5 or 10 percent, including the investment from the private health sector, which is in the vicinity of about 1.9 percent.

We would like to see incentives for new exporters. We believe that we have to add to our export base by encouraging exporters to get involved, and a tax incentive would go a long way to achieving that.

In this volatile world, we believe we have to put more investment into our defence forces. We have to put more investment into our railway, and more, I suggest, into our shipping—not by direct investment but by way of creating a favourable tax regime for encouraging our ship owners and ship operators to get more involved in the industry. Currently there is not one single ship running overseas and that, for an island nation tucked down at the bottom of the world, is a disgrace.

Labour spoke about, rather than introduced, its new tax thresholds—it did not introduce anything in this Budget in terms of thresholds. I think it created more enemies than it made friends. I met a number of people who were, prior to Budget day, absolutely devoted Labourites—that is the only way I can explain them—and they felt insulted to know that they will wait for 3 years, until 2008, when they will get the grand total of 67c a week extra, even though the Minister of Finance will pay each and every one of us in Parliament something in excess of $10 extra per week.

I want to touch on the banking industry for a moment. I take up what Gordon Copeland said, because I agreed with him when he said that all we want in this country is for banks to pay their fair share of tax. We want nothing more and nothing less. Currently, as I understand it, a court action is being taken because it is deemed that they are paying a good deal less.

Nobody in New Zealand First has said anything about not wanting banks to make a profit. We would like them to be owned by New Zealanders or by New Zealand companies. They are not, and we see that as a sad fact of life. We want them to make a profit and we want them to pay their fair share of tax. I make that quite clear.

New Zealand First believes in tax cuts. This legislation does not deliver on that, but it changes the structure in a way that is encouraging, and for that reason New Zealand First supports it. We see tax cuts as something at the end of the line, after we have delivered on the social good. We believe that the Government’s Working for Families package is a tax cut. It is a targeted tax cut for the low or relatively low paid. It might well spread higher up the chain, but basically it is a targeted tax cut for the low paid. New Zealand First supported the legislation when it went through the House just after last year’s Budget, and we are pleased with the feedback we are hearing on how it has been delivered thus far.

One of the urgent things we believe should be done is to put more money into roading. I am pleased that the National Party has taken our suggestion on board of diverting the petrol tax into the roading account. There was a time when that party was totally opposed to it. We started a process in 1998 of diverting 2.1c per litre of petrol into the roading account, which, if my memory serves me correctly, was about $70 million. Had that continued every year, with no growth in petrol sales, and fuel consumption remaining about the same—in other words, 2.1c equalling the same value—at this point in time there would have been something like $2.7 billion put into roading.

The National Party, when New Zealand First and National had a parting of the ways, which is putting it politely, stopped all that, although that is not so according to Don Brash. He blamed Labour in his speech to the Automobile Association convention. He said Labour came in and stopped it. It actually stopped in the 1999 Budget, which was delivered by Bill Birch. At the same time, behind the scenes in 1998 when we implemented it, Bill Birch was telling Winston Peters in particular, but it was well known to the rest of us in the New Zealand First caucus that he would not have a bar of transferring that money across. “Over his dead body” I think was the term. So it was definitely a New Zealand First initiative.

I ask the National Party, now it has taken the idea on board and, indeed, is promoting it, how many lives have been lost because that money has not been injected into roading. How much better off would the country be economically and socially if that money had been diverted across, as New Zealand First advocated? I know that this legislation has nothing to do with roading, or petrol tax, or anything like that. But since this Government has come into power, it has upped the price of petrol on at least two, possibly three, occasions by way of taxation increases. All of them, to our mind, have been unnecessary, and they have all been an additional cost to the average New Zealander, which was totally unwarranted.

New Zealand First supports this legislation, but we believe that taxation in this country has to be looked at freshly and reviewed positively. We believe, in essence, that tax should be fair, reasonable, and encouraging. This legislation is a move in that direction.

LINDSAY TISCH (National—Piako): National speakers have crystallised and articulated the argument about taxation. Taxation will be an election issue. What the Budget did was an absolute insult to hard-working New Zealanders. We support the Taxation (Base Maintenance and Miscellaneous Provisions) Bill because there are some issues in it that are of merit, but the hard-working New Zealanders who expected some tax relief, when the country is running a $7.4 billion surplus, feel cheated. They feel cheated because they are the ones who have earned the money. They are the ones who toil away. There is no reward for hard work, enterprise, or initiative. This Government just takes and takes. That is why the Labour Government is on notice that taxation will be an issue at the election.

My colleague Phil Heatley mentioned that 30-odd new taxes have been introduced. The compliance costs associated with those are immense. I want to clarify again from my speech in the second reading debate one tax that has not yet been introduced but has been mooted. It is the proposed carbon tax. That tax, valued at $15 per tonne of carbon dioxide emissions, will put about $250 on every household in New Zealand. What does that mean for someone on a fixed income? Where will those people recoup the costs of the extra $250 of tax? That boils down to 4c per litre on fuel—on petrol at the pump. Members will bear in mind that we have just had a tax increase at the pumps of 5.6c per litre. It also means that there will be about a 10 percent increase in electricity charges.

Peter Brown: How much on petrol?

LINDSAY TISCH: It is 4c per litre on petrol. That is when carbon dioxide emissions are valued at $15 per tonne. The Government could put a $25 per tonne value on that charge, and then the costs that I have just mentioned will escalate. The value at the moment of trading carbon credits on the secondary market is around £19 per tonne. So in New Zealand dollars the figures I have mentioned are very conservative, when the outcomes could be a lot higher.

It has often been said that taxation is theft. Well, that is what this Government has been into for the last 6 years. It has taken more money off people—socialist Governments do that, and then they want to redistribute the money and say how great they are. I wonder why 700 New Zealanders per week decide to go to Australia. What is the attraction? Seven hundred New Zealanders per week are finding it more attractive to shift offshore. They have more opportunities to make a living for themselves in Australia. Australia just had a Budget the other day, and it was bad news for New Zealand. Australians will get A$6 per week, and when will they get it? They are actually getting it now—not, as this Government is providing for, in 3 years’ time. This Government is saying that on 1 April 2008 it will give us 67c a week.

The credibility of this Government is in tatters. Any integrity it might have had years ago has gone. Hard-working New Zealanders will not stomach this. Everywhere I and my colleagues go, we find the big issue is taxation. I put the Government on notice that that will be an issue. Hard-working New Zealanders feel cheated by this Government, which had an opportunity to give tax cuts through running a $7.4 billion surplus. They feel cheated, and they will acknowledge that and record their protest at the polls in a very short time. Members must watch this space, because taxation is a key issue.

Bills read a third time.

Bills

Misuse of Drugs Amendment Bill (No 3)

Second Reading

Debate resumed from 9 June.

JUDY TURNER (Deputy Leader—United Future): I rise to speak at the second reading of the Misuse of Drugs Amendment Bill (No 3). Since the first reading of this bill, some quite substantial changes have been made. Most of those have occurred because of the inclusion of Supplementary Order Paper 298, tabled in the Health Committee in the name of the Hon Jim Anderton. The original bill included provisions to change the amount of a drug that a person could have in his or her possession before being legally presumed to be in possession of that drug for the purpose of supply. In this bill we are looking specifically at methamphetamine. The original bill also proposed to add a Ministry of Justice official to the Expert Advisory Committee on Drugs, in order to bring a justice perspective to that committee, which has been primarily charged with the health concerns regarding drugs and any new substances that come into that category.

At the first reading we were looking at a bill that created two new importing and exporting offences for precursor substances. It included new powers for search and seizure without warrant for ephedrine and pseudoephedrine, and also had some interesting provisions to allow what are called controlled deliveries, so that the police can establish who is involved, beyond the border control issues, with the manufacture and supply of illegal drugs. I think that that is a very good thing. When we are trying to look, in particular, at the organised crime scene around drugs, it is important that we allow the police to have those kinds of powers to investigate and follow through on controlled deliveries.

The first reading of this amendment bill included a revised approach to offences related to the possession of needles and syringes. The Ministry of Health funds the Needle and Syringe Exchange Programme, which has been set up to reduce the spread of HIV/AIDS, hepatitis C, and other blood-borne viruses among injecting drug users. Currently, those caught by the police in possession of needles and syringes have to prove that the equipment was indeed supplied by the needle exchange or through some legal means. The outcome is that it has been a very time-consuming matter for those staffing the needle exchanges, who spend unreasonable amounts of time in court as defence witnesses. This amendment reverses the onus of proof requirements, so that the prosecution must now provide evidence that the equipment was not legally obtained.

There was some discussion in the select committee about considering—and even in the last few days there have been calls by the New Zealand Drug Foundation to do this—an extension of those provisions. Some would prefer to see needles and syringes eliminated from being able to be used evidentially. My caucus and I looked again at the request of the New Zealand Drug Foundation—

Peter Brown: I raise a point of order, Madam Speaker. There are people chattering all over the place. I can hardly hear the member speak.

Madam DEPUTY SPEAKER: Would members please keep the chatter down.

JUDY TURNER: I was just talking about the consideration given to the issue of whether general equipment like needles and syringes should be able to be used evidentially in court cases. One concern we in United Future had is that although there may be some purpose, particularly from a health perspective, in making sure that somebody cannot receive an additional charge when he or she is charged with the possession of an illegal substance, a person should be able to face an additional charge of being in possession of a needle and syringe when that relates to the other end of drug offences—when people are being charged with the offence of supply. When the police—and we did discuss this with the police when they were at the select committee—discover, for instance, a box of syringes and needles in a place they are searching, and when the offence is the supply of drugs and the supplier is obviously well geared up to facilitate the drug use of his or her clients, then we felt, and the police certainly believed, that the police should be allowed to use needles and syringes evidentially as part of their case. We certainly support that. I think the majority of the select committee members felt that just changing the onus of proof was a sufficient measure, and that we would still like to leave the police some flexibility in that regard.

The new Supplementary Order Paper was received with mixed feelings by the United Future caucus. In our opinion, the intention of the Minister to respond quickly to the call from many community agencies to at least regulate, or to ban, new party pills and products as they come on to the market was a noble gesture. The Supplementary Order Paper the Minister has tabled certainly allows Parliament to respond with speed. However, we were concerned that the more substantial legislative work that needs to be done to regulate substances deemed by the expert advisory committee to be of a low risk would have been better served by a more comprehensive legislative model, put in place separate from the Misuse of Drugs Act. Our concerns were heightened when we realised that, by creating a new class of drug under the Misuse of Drugs Act, with all its existing Order in Council provisions, there was a very real possibility that substances like cannabis could be downgraded by those same Order in Council provisions in the future. We considered that to be a very real threat. I certainly do not believe, and United Future certainly does not believe, that that was ever the intention of the Minister, so we moved to have discussions with the Government around that issue.

We are very pleased to see that some limitations have been put into the bill on the power of the Order in Council provisions, so that full public and parliamentary scrutiny would be required before any such changes took place. However, we accept that there is a place in this bill for Orders in Council. The Regulations Review Committee cautions us about the overuse and misuse of Order in Council provisions, but we see a place for them. When a crisis arises that the police are aware of and want Parliament to respond to quickly, Order in Council provisions are an appropriate way to allow the Government to respond by bringing in some controls on substances that cause concern.

Having secured those changes, United Future is pleased to see this legislation advance, but we certainly want to be in discussion with whoever is in Government after the election. We want to see the continuation of the ongoing legislative work that needs to be done to have a separate restricted substances Act put in place, to give legal and regulated substances their own legal framework separate from that for illegal substances. The committee’s commentary on the bill suggests that that work should be done, and we are very much in support of that. Given the speed at which the new social tonics are being developed and marketed, I believe that our next Government needs to make that work a priority. We support the second reading of this bill.

STEVE CHADWICK (Labour—Rotorua): I am pleased to take a call in the second reading debate on the Misuse of Drugs Amendment Bill (No 3). I thank the members of the Health Committee. This was a very complex bill that came before the committee. I think its complexity comes from the fact that we are dealing with a drug-regulating regime that was established in 1975 by the Misuse of Drugs Act and subsequently amended by the Misuse of Drugs Amendment Act 1978. That is 30 years ago, and we are now finding that we do not always have the right framework in current legislative provisions to deal with the issues that we are dealing with in this bill.

The committee was quite happy with the amendments in the bill, which address matters like presumption of supply levels being amended by Order in Council. We spent a lot of time on that. We looked at thresholds for presumption of supply in relation to methamphetamine. It was of great concern to us that although the drug had been reclassified in a previous amendment to the Act, the thresholds had been set at the wrong level, so we needed to reconsider the threshold. We did not have any problem with this.

The bill also strengthens the provisions for offences of importing and exporting the horrible precursor substances, ephedrine and pseudoephedrine, that are now used in manufacturing P. That problem has caused us a lot of concern.

The trends we have seen in pill shopping at pharmacies have changed, and we needed to move our eye to the importing and exporting of precursors. We needed to make a shift to strengthening the powers of the Customs Service in the monitoring of importing and exporting.

Supplementary Order Paper 298 added a new Part 3 to the bill, which relates to benzylpiperazine. I note that this Supplementary Order Paper came in on 9 November. This legislation is not a knee-jerk reaction to a new substance on the market. The media said we were rapidly pushing it through the House; we have not done that at all. We received the Supplementary Order Paper in November, and here we are in June debating the second reading of the bill.

We had a lot of issues to grapple with over the current construct of the Misuse of Drugs Act and what we could do about a substance like benzylpiperazine. We also asked about some other substances out there, unregulated, that are causing concern because they are being used for their psychoactive effects. These include substances like “nos”—nitrous oxide. We even looked at things like nail polish remover and hairspray—products in the commercial market that are now being used for their psychoactive effects, for heaven’s sake! We had to grapple with how we could regulate these substances.

Everybody on the committee realised that a social problem with benzylpiperazine is emerging rapidly, and we also knew of problems with other products. So we were looking at a framework for dealing with these substances as restricted substances. I thank the committee for its work.

The concern was raised—which Judy Turner talked about—that we needed a stand-alone restricted substances bill, but we were advised that simply to get officials to work on developing a stand-alone bill, and to get advice and look at the policy of such a bill, would take about 6 months, and we were aware that we just did not have enough time for that at this stage of the political cycle. I was really pleased that in the end we agreed to do our best to get benzylpiperazine put on a restricted substances schedule. I thank the committee for that. I think it was a very pragmatic decision, which supported the Minister’s intention to show that we are going to manage the substances that are out there being used now and that we need to do something about.

So we went back to expeditious scheduling, which I think was put in the original bill for the very purpose of enabling us to respond quickly rather than have to amend standing legislation. We did not support the recommendation to develop a stand-alone bill.

I believe that now we have the framework in place it will allow us to add substances to the new schedule. I am very happy that the legislation is robust. We put all sorts of restrictions in the bill about sale and regulatory provisions that will make it a lot stronger. When we get to the Committee stage we will consider those aspects of the bill.

Dr LYNDA SCOTT (National—Kaikoura): The Misuse of Drugs Act is designed to classify drugs that do harm in our society due to addiction and death. There are three categories: A, B, and C. The expeditious scheduling of drugs was originally set up by Wyatt Creech. He developed the initial legislation in 1999, and when the Labour Government came in, the Health Committee continued that work. It shows that we can work across party lines at times for good legislation for New Zealand.

The provision for expeditious scheduling under the Misuse of Drugs Act has been used for Ecstasy and for Fantasy, which at the time were causing the deaths of young New Zealanders. We needed to be able to respond quickly to the smart chemists—the people who can change the chemical structure of a drug rapidly to escape the ambit of the Act—who prey on young people. That is why we put in place approval by resolution of the House, which is called an affirmative resolution process. That new system set up an expert advisory committee that recommends to the Minister of Health that a drug be added to the schedule, and at what level. The Health Committee then reviews that recommendation for 1 month. This process was used for Fantasy, for Ecstasy, and for P, drugs that can cause death and serious addiction. P often causes the person taking it to become incredibly violent, and in this country we have seen some serious acts of violence committed by people who are taking it.

The bill we are debating today concerns the precursors of methamphetamines. National members totally support the original bill that came to the Health Committee. We want to do all we can to curb drug abuse in this country. Of course, legislation against drug abuse is only the tip of iceberg. Getting to the cause of why our young people wish to take drugs in the first place is something we all need to battle with on a societal level. National totally supports that.

The situation with Supplementary Order Paper 298, however, is somewhat different. The Regulations Review Committee stated to us that the bill proposes moving presumption of supply matters to the schedule of the principal Act, so that they may be set or altered by Order in Council and approved by resolution of the House. Normally a bill would come to the House, then go to a select committee after the first reading, and there would be submissions from the public.

Benzylpiperazine and legal highs, as they are known as at the moment, have no regulation around them. They do not fit under the Food Act, the Misuse of Drugs Act, or the Animal Products (Ancillary and Transitional Provisions) Act—they do not fit anywhere. So it is fair enough that they need some regulation around them to stop young people, especially the under-18-year-olds, using them. The Expert Advisory Committee on Drugs said that those drugs did not cause serious or moderately serious harm, but that they just needed regulation. Is it appropriate, we ask, to use the expeditious scheduling regime to regulate those drugs? The answer that National came to was no. We should have had an actual bill before the House so that we could get it right.

We have seen what happens when Governments rush things—members will remember the sherry tax, the intent of which was to stop young people, and it totally missed the target. So we must take our time to make sure—

Hon Jim Anderton: It reduced it by half a million litres.

Dr LYNDA SCOTT: The Minister says it works. Young people now are queuing up in accident and emergency departments at night. It has not been working at all. I say to the Minister that more and more young people in the country are drinking alcohol. He may not like that, but that is the fact. Young people are in more damaging situations and in more motor vehicle accidents. We see more 14 and 15-year-olds in accident and emergency departments. It has not hit the target in any way whatsoever. It has been an utter failure. So I say to the Minister that he should open his eyes.

I return to the bill and the Supplementary Order Paper. No one disagrees with trying to do something about those so-called legal highs, but there has to be a process whereby we get it right; otherwise, we miss the target. Many times in this House I have seen people with good intentions, but all they do is put a lot of regulations in place that miss the target and do not achieve what they are intended to achieve. The problem is that we never go back and look at whether we have actually achieved our aims. No clear research takes place to see whether a piece of legislation worked; if it did not work there is nothing that lets us change it, or get rid of it and get something else. In this case, National members agreed with the advice of the Regulations Review Committee, and we felt that the extension of the procedures currently used for amending the classification of a controlled drug should not be extended in this way to something that is considered to be of only moderate harm and needing regulation. But we said we are totally committed to properly evolved legislation, dealing with restricted drugs and substances, being brought into the House and passed within 12 months.

The problem with solvent abuse is how one can tell whether an 18-year-old is buying a can of paint to spray paint a car, or whether he or she is actually going to sniff it. We need to listen to the people in the community about how to hit our target. No one disagrees with trying to get to the bottom of those problems, but we do not want to set up something that has to come back to the House and be amended. The select committee said it wanted to see a properly developed Act.

Another change that the select committee made was that one could only increase—not decrease—classification. I think that was because it was worried about a Labour-Green coalition. I remember when I sat on the Health Committee we went all over the country listening to people as part of the cannabis inquiry. That was simply because Labour needed the Greens. We spent a huge amount of money on the inquiry, going from one end of the country to the other listening to opinions on whether we should decriminalise cannabis. I think United Future was really concerned that if a Labour-Green coalition formed, we could see cannabis reduced down the schedule by that process. In the end, it could not get the support in the committee, and the majority agreed that one could only increase, not decrease, a classification by Order in Council. This would mean that a controlled drug could not be changed to a restricted substance without the controlled drug classification being removed by Parliament first. So it would have to come through the parliamentary process.

This is what is meant by unintended consequences. We rush those things through without proper scrutiny, then we have unintended consequences. The Associate Minister of Health may not be here the next time; he may not be in a Labour-Green coalition. If the people who thought they were promoting one thing are not there, they will get something else. It is called unintended consequences and it happens all the time. I say to the Minister that he should be glad that the legislation was limited to not being able to decrease the classification of a substance. We agreed with that limitation.

I was pleased to see the change to the needle exchange provision, whereby the onus of proof is moved from the one who has it in possession to those who are prosecuting. For those who go on the needle exchange programme the risk of HIV and hepatitis is high—because they are legally given those needles on the exchange programme. The current law has been an impediment to them, so National agreed with that.

All in all, we agreed with the originally introduced bill, but not the way that the Supplementary Order Paper was developed. So we will be supporting the bill as a whole, but not the Supplementary Order Paper, which is now Part 3 of this bill.

LYNNE PILLAY (Labour—Waitakere): I will take just a very brief call on the Misuse of Drugs Amendment Bill (No 3), because I think it is a common-sense and sensible bill, just like this Labour-led Government, and I commend it to the House.

SANDRA GOUDIE (National—Coromandel): The New Zealand National Party certainly supports the original Misuse of Drugs Amendment Bill (No 3), which deals with changes to legislation concerning drugs. We recognise the extraordinary harm to health and safety caused by inappropriate use of controlled drugs.

I had the opportunity to sit in on the Health Committee for a very brief period, and a gentleman who actually manufactures party drugs was making a submission to the committee. I asked him what research had been done into the long-term effects of the use of party drugs. Of course, there has been none. I think that is an extraordinary oversight. Nobody has any idea what the cumulative effect, or the combination of effects, of using those party drugs is if people are using other medications, or if people have other conditions that predispose them to being affected by the contents of those party drugs. There has been absolutely no real research into the peripheral effects of the use of party drugs.

There should have been some requirement on the manufacturers of party drugs to provide information to the House, or to the authorities, or to whomever, that determines what the long-term effects of party drug usage is, and whether it has any peripheral effects on any other existing medical conditions. It is extraordinary that we have these party drugs, but we do not require a bit more oversight in respect of their use. I guess one reason that we are going through this whole process is to put some controls around those drugs and to see where that takes us. Although we are putting controls around them, we are not requiring any research into their effects. That is something that should be looked at. Perhaps some sort of requirement on the manufacturer to do research is necessary for us to have a better understanding of what those drugs have the potential to do if they are taken consistently on a long-term basis.

Certainly, it is fairly well-known that our young ones’ bodies are not well-developed; at the age of 18 they are still developing, and their bodies may not be able to handle these types of substances, particularly if they are mixed with alcohol—certainly, with the amount of alcohol they are consuming in this day and age, with the lowering of the drinking age, which I think was one of the bigger mistakes made by this Parliament.

National members are mindful of the Regulations Review Committee’s statements that the affirmative resolution procedure should not proliferate, that it should be used only in limited and exceptional circumstances, and that any extension of the procedure in relation to the Misuse of Drugs Act 1975 should be permitted only where it is a necessary adjustment to alter the schedules of controlled drugs, and essential in order to achieve the purpose of the Act in dealing with the serious risk of emerging drug threats. Of course, if we have done no long-term research into party drugs, into legal party highs, how do we know what the effects will actually be? There could be some emerging risk from long-term usage, but we do not know.

Dr Wayne Mapp: What is the Government doing about it?

SANDRA GOUDIE: Yes, the member is absolutely right—what is the Government doing about that? It did not actually come up in the select committee, and nothing has been done about it, as far as I understand.

Hon Jim Anderton: That’s rubbish.

SANDRA GOUDIE: Well, the question was asked at the select committee, so—

Hon Jim Anderton: Well, ask a question of me.

SANDRA GOUDIE: The Minister was not at the select committee, and he was not the person producing the stuff. I would have thought that the person producing the stuff would actually know but, no—[Interruption] There was none. The producer said there was none, so unless somebody else is doing it, well—who would know? It is certainly a question, and perhaps the Minister would like to take a call and give us an explanation of his understanding of the research into party drugs and those legal party highs. We would certainly welcome the opportunity to listen to him give that explanation.

New Zealand National is very concerned about the increasing use of benzylpiperazine, party drugs, herbal highs, etc., particularly among the 18-year-old age group. It has been an emerging problem for some years, and we believe that the response should be well-considered legislation, with the public given opportunity for full submissions, and with nothing rushed through by way of Supplementary Order Papers. Everybody should have the opportunity to participate. In actual fact, I think there is too much haste in the promulgation of law in this Parliament, and I think the process should be slowed down somewhat.

So, as per the recommendations of the Regulations Review Committee, National members consider that legislation around restricted drugs, which are often legal substances, should be covered by primary legislation. We therefore do not support the Hon Jim Anderton’s Supplementary Order Paper, but instead commit that as a Government we would ensure that properly evolved legislation dealing with restricted drugs and substances was brought into the House and passed within 12 months. I note that many of the press releases around this legislation seem to be pretty well dominated by Mr Anderton.

Hon Jim Anderton: I am the Minister.

SANDRA GOUDIE: Well, he seems to be capturing the moment, yet he is presenting a Supplementary Order Paper that has not gone through the full process. I think that is a bit of a shame. I am glad that we are supporting the original bill, and are not supporting the Supplementary Order Paper. I am very pleased we are taking that position.

A party vote was called for on the question, That the amendments recommended by the Health Committee by majority be agreed to.

Ayes 107

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; Green Party 7; United Future 8; Progressive 2; Māori Party 1.

Noes 9

ACT New Zealand 9.

Amendments recommended by the Health Committee by majority agreed to.

Bill read a second time.

Instruction to Committee

Hon JIM ANDERTON (Associate Minister of Health): I move, That it be an instruction to the Committee of the whole House on the Misuse of Drugs Amendment Bill (No 3) that it take the bill part by part.

Motion agreed to.

In Committee

Part 1 Substantive amendments to Misuse of Drugs Act 1975 and consequential amendments

Hon JIM ANDERTON (Associate Minister of Health): I rise to speak in this Committee of the whole House debate on Part 1 of the Misuse of Drugs Amendment Bill (No 3) to explain the effects of Supplementary Order Paper 377 and the tabled amendments in my name. Firstly, the bill was originally intended to extend the powers of customs officers under section 36 of the Misuse of Drugs Act 1975 to all precursor substances. However, the bill as drafted did not accurately reflect that intention. Section 36 of the Misuse of Drugs Act makes certain powers under the Customs and Excise Act 1996 applicable when dealing with controlled drugs. Those powers enable customs officers who are investigating drug importation offences under the Misuse of Drugs Act to question persons, undertake searches, and obtain documentation, using their Customs and Excise Act powers. The amendment to section 36 of the Misuse of Drugs Act was intended to extend that application of Customs and Excise Act powers to investigations under the new importation offences involving precursor substances. The bill as written, however, confined those powers to pseudoephedrine and ephedrine—

Debate interrupted.

Sitting suspended from midnight to 9 a.m. (Thursday)

Tuesday, 14 June 2005

(continued on Thursday, 16 June 2005)

Bills

Misuse of Drugs Amendment Bill (No 3)

In Committee

Debate resumed.

Part 1 Substantive amendments to Misuse of Drugs Act 1975 and consequential amendments (continued)

Hon JIM ANDERTON (Associate Minister of Health): Last night, at about 3 minutes to 12, we started this debate, and I just want to recap on it for the benefit of members. There are two amendments in my name, and some members, I think specifically speaking for the National Party, have indicated that they would oppose those amendments—that is the indication I got. I want to point out to the National members, and to the Committee, that those amendments actually clarify the intention that the Health Committee had. If the amendments are not supported, some, I think, rather bizarre consequences will take place. I am not sure the National members fully appreciate that, and I would like to run past them again what this issue is about.

The first amendment on Supplementary Order Paper 377 in my name deals with the fact that this bill is intended to extend the application of customs and excise powers to investigations under the new importation offences involving precursor substances, such as ephedrine and pseudoephedrine. A number of other substances are also covered by the proposed new importation and exportation offences in the bill. If we do not pass the amendment on Supplementary Order Paper 377 to rectify the situation that the bill at the moment evidences, then the Customs Service will not be able to deal with illicit drug manufacturers, who have shown an ability to exploit legal loopholes and change their modus operandi. So I want the National members to seriously consider that if they do not support that amendment, they will restrict the powers of the Customs Service to deal with serious drugs. I hardly think that that is what National intends, but if it does not support the amendment it will have to stand accused of doing that.

The second amendment in my name is intended to ensure that the presumption of supply for a drug could be amended by Order in Council, and that the associated affirmative resolution procedure could be amended by Parliament. After hearing submissions, the Regulations Review Committee was concerned about the extension of this procedure not involving the full scrutiny of Parliament. The Health Committee—which did excellent work on this bill, and I thank the members for that—has recommended the following: “We recommend that the ability to amend the presumption of supply level for a controlled drug by Order in Council, as proposed in the bill, be limited to two circumstances (clause 5). The first is where the classification of the controlled drug is also being changed. We agree that changing this level in tandem with a classification or reclassification would prevent anomalies such as occurred with methamphetamine, where the drug was given a Class A classification by Order in Council, but the associated presumption of supply change required this bill.” So we had to go through two procedures and delay it.

I heard members of the National Party say last night that it would take only 12 months. We are talking about situations where young people are actually dying, for goodness sake! Coroners are urging Parliament to take action—

Dr Paul Hutchison: On what?

Hon JIM ANDERTON: On the misuse of drugs, on the importation of precursors, and all sorts of issues surrounding that. The solvent issue is one that I put forward and the committee has kicked it for touch, so I will have to go through another process on it. I suggest to members that the bill, as drafted, does not reflect the recommendation of the select committee. I urge members to think about this: the select committee has recommended something, the bill, as drafted, does not reflect that properly, and the commentary, when reporting back the bill to the House, states that the amendment to clause 5(2) in my name is necessary to rectify the situation. If we do not do that, we will have a problem in terms of getting changes to the default supply amount of controlled drugs, such as reducing methamphetamine from 56 grams to 5 grams, and so. We will have to go through two elongated procedures in order to achieve that.

I recommend these amendments to the Committee because I am certain they actually reflect what the select committee itself wanted. We have to change the bill in order to bring that about.

Dr PAUL HUTCHISON (National—Port Waikato): Thank you, Madam Chairperson, for the opportunity to speak on Part 1 of the Misuse of Drugs Amendment Bill (No 3). I think it is interesting—and somewhat rich—for the Hon Jim Anderton, at this late stage, to be asking for the National Party to make changes to its position, after he belatedly came into the debate with a poorly prepared Supplementary Order Paper. After all, the situation of party pills, and the legislation for benzylpiperazine and other such substances, have been known about for 9 or 10 years.

The firm view of all the advisers was that they are at quite a different level from the serious substances such as methamphetamine and their precursors, and other class A and class B controlled drugs. The firm view was that the less concerning substances that are getting so much publicity at present need their own well-considered, stand-alone bill. Indeed, I believe that the select committee was of the view that that would be the optimal situation, but, instead, it has reached a compromise with the Hon Jim Anderton, where this less considered situation has been tacked on to the end of the bill. Because of that, National is uncomfortable with supporting it.

Nevertheless, I, hopefully, will get the opportunity to talk about the details with the Hon Jim Anderton to see whether we can come to an arrangement. There is no doubt that National supports the substance of the original intention of this bill, which was to look at practical ways to ensure there would be better enforcement powers in New Zealand to stop the proliferation of class A and class B controlled drugs. There is absolutely no doubt that the situation has grown seriously over the last 4 or 5 years. We only have to look at substances like P, where we have had the police and the Institute of Environmental Science and Research saying that back in 1999 something like four or five clan-labs had been raided by the police. This has proliferated up into the order of 240, which reflects the enormous expansion of these illicit controlled drugs in New Zealand.

Certainly, we believe that the affirmative resolution procedure, which was reluctantly agreed upon by the select committee back in 2001 when the first amendment to the Misuse of Drugs Act came through, is a mechanism that should be used with great caution. The Regulations Review Committee has been absolutely clear about the need for this affirmative resolution procedure to be used very, very carefully. Because, after all, this gets to the heart of what democracy is about, and to the heart of what parliamentary procedures are about—where there is time to duly consider legislation, time for submitters to have their views heard by the select committees and reported back on, and then for a bill to be adequately considered in the normal democratic way through our Parliament.

It seems a great worry to me that the Hon Jim Anderton wants to bypass this procedure, which should have limited scope in a Parliament such as ours, and where the Regulations Review Committee was crystal-clear that it should not be used other than in exceptional circumstances. I do hope the Minister will indeed explain to the Parliament exactly where he stands.

PITA PARAONE (NZ First): First of all I want to say that I am standing in for Barbara Stewart on this matter, and to indicate that New Zealand First is pleased to support this part of the bill. Before I go on I also want to indicate our support for the Supplementary Order Papers that have been put before the House by the Hon Mr Anderton. We certainly support the arguments that he has put up to substantiate the need for Supplementary Order Paper 377.

We particularly support the proposed section 12AC, which is to be inserted into the Misuse of Drugs Act by clause 11 in Part 1 of the bill, where legislation that relates to precursor substances, such as ephedrine and pseudoephedrine, is strengthened. Both are key substances used in the manufacture of methamphetamine. We understand there is currently no offence relating to the import or export of precursors to the manufacture of methamphetamine. In fact, the legislation has not kept up with the trends of the day, so to speak. Given the adverse impact that this whole issue has, not only in this country but indeed the world, it needed to be responded to quickly, and we believe that this bill does that.

The lagging of the required legislation has meant that our law enforcement agencies, particularly the Customs Service and the police, have been hamstrung under the present law. It has also meant that the lesser charge of possession is the only charge that can be made in a whole lot of instances and, as we know, the penalties for possession are not as great as the penalties a person would face if charged with other matters related to this drug. In addition, it is difficult to make such a charge stick, where those substances are sent through the post, which has become a regular mode of transfer from one country to another. In that situation we need to ask who is actually in possession. That loophole needs to be closed and I believe that this bill will do that.

Parliament has a duty to support both the police and the Customs Service in their fight against the use of illicit drugs. This bill will certainly do that, particularly in the area of search and seizure requirements, and the amendments to that part of the Act are certainly appropriate.

New Zealand First also supports clause 14 in this part of the bill, which shifts the onus of proof for possessing a needle or syringe so that it lies with the prosecution. We all know the importance of the use of needles and syringes, and the dangers that second-hand use can cause, particularly with reference to the transmission of HIV and related diseases. So I stand on behalf of New Zealand First to say that we support this part of the bill.

Dr LYNDA SCOTT (National—Kaikoura): Part 1 of this bill relates to substantive amendments to the Misuse of Drugs Act 1975, and National supports this part. This was the original bill that came to the Health Committee after the first reading and it deals with the issue of precursor substances for the manufacture of P methamphetamine.

When I was at medical school, we had to study some drugs that were just given to us, and ephedrine was one of the drugs pulled out for me to study. So I did an intensive study on it and found that it had very little use apart from the fact that it dried up one’s nose when one had a cold. At that time we did not realise that it would be used as a precursor for the very dangerous party drug, P, which has been responsible for a huge amount of harm in this country. That harm has come in the form of addiction, and we have seen many a TV programme on people who engage in theft to try to get the money to buy this drug and fuel their habit. Methamphetamine laboratories have been found throughout New Zealand. A large laboratory was found and destroyed in my electorate, Marlborough, 2 years ago. The people who engaged in that activity are now suffering the consequences, because P was able to be expeditiously scheduled under the Misuse of Drugs Act.

That process was set up by Wyatt Creech and progressed by the Labour Government when it came to office in 1999. It allowed us to act very rapidly to put P methamphetamine on to a schedule, which meant that those who were found to be producing that drug could then suffer the most severe consequences in respect of penalties and time in prison. Then we found that there was no restriction on importing the precursor substances. As chemists did more to protect themselves against theft of cold remedies that had ephedrine and pseudoephedrine in them, people were found at the border with suitcases and suitcases of those drugs. They were bringing them across the border in order to produce methamphetamine, and there was nothing to stop them.

There was debate within the Health Committee about whether this bill should be used to schedule something like precursor substances, but everybody agreed that we should do so because we should be helping the police and the border control authorities to try to improve the situation regarding this drug. But the extension of that form of lawmaking has been of concern to the Regulations Review Committee, which said that significant matters of policy and principle should always be dealt with in the primary legislation that comes to this House, and that process has stood us in good stead for most of the time that this Parliament has been sitting. The process means all members of Parliament look at a law and examine a bill, and the bill is subject to the select committee process, where the public have the right to make submissions. Then we bring it back to the House and, in the Committee stage, we once again see whether we have got it right and try to make good legislation that will achieve the desired effect. So the Regulations Review Committee said that that was what we should do.

We did make an exception to that with the expeditious scheduling of controlled drugs, because everyone here felt that the time it takes to get legislation through the House was too long for things like Ecstasy, Fantasy, or P, plus now the precursor substances. But when it comes to using that process for something that will need regulation—that is, benzylpiperazine, a drug that the Expert Advisory Committee on Drugs has said is not of high risk of harm—National members have concerns.

JUDY TURNER (Deputy Leader—United Future): I rise to speak in the Committee stage on Part 1 of this bill, and I want to signal now that I have tabled an amendment, and will be seeking support from the Committee for it. It is to do with the Order in Council provisions and a recent concern I have about them.

It is important to state upfront that the Regulations Review Committee information to the Health Committee on the use of Order in Council provisions was very cautious. We know that that is often its approach to this sort of provision. United Future supports the use of Order in Council provisions within this bill where it allows us to respond with urgency to a situation that may develop. When a product comes on the market, or the drug scene in New Zealand changes in some circumstance, the police want the Government to be able to respond quickly and provide them with the legal framework they need to be able to act. There was some evidence that the methamphetamine situation might not have got away on us quite as quickly as it did if we had been able to respond a little more quickly to that situation, historically. We do not want to stifle that opportunity.

However, the problem that has developed with the Order in Council provisions is that, as the Act has been designed, they can be used in any direction. When one talks about recategorising a drug downwards—softening the impact of the legislation—by Order in Council, and that is not born out of a crisis of any kind but out of a policy desire, then I think the full scrutiny of Parliament, including the public submission process, should be considered.

The concern that we have, and that my amendment addresses, is in section 4(1B)(b), in clause 5. I will read what it presently states: “(b) the Order in Council increases”—and I think that was the word that some of us had perhaps misunderstood—“the amount, level, or quantity at and over which the controlled drug is presumed to be for supply.” Well, I think some of us read that as meaning it was a tightening measure, as we have with methamphetamine. What we are trying to address in this part is that the amount one can have in order to be considered as having a drug for supply was set at too high a level, and we are trying to track it backwards, so that one can have a smaller amount in one’s possession and be considered to be supplying it. That is extremely appropriate.

What does the wording here mean, when one understands what all the other substances in new schedule 5 of the principal Act are—which is what we are talking about here? Let me give members a hypothetical situation. By Order in Council we could decide to increase the amount of cannabis at which one is considered to have it for supply—I think it is something like 100 cigarettes—to such a level that proving supply would be a complete nonsense. The police would have a huge amount of trouble proving it. My concern is that we could do that by Order in Council, with paragraph (b) in existence. As far as I am concerned, and United Future is concerned, the people we most want to see the law able to ping is those who are supplying our young people. The law must be very clear as to the point at which somebody is considered to have a drug for supply, and we must be able to identify those people very, very clearly. If we are able, by Order in Council, to put the amount up, then I think a very dangerous situation could develop around that schedule.

So my amendment removes paragraph (b)—it just deletes it—and I would encourage the Committee to support it. I just remind members that the Health Committee members did agree that the Order in Council must be used only in response to a crisis that the police bring to our attention. It should never be used to implement a policy to liberalise drug law. That was not actually a danger until Supplementary Order Paper 298 was introduced, which is now Part 3 of the bill. By introducing Part 3 we have created the opportunity for drugs that are now classified as C grade to be dropped down into a new category.

Hon MAURICE WILLIAMSON (National—Pakuranga): It has been my experience in this Parliament that one can often get a better picture of legislation, and what is intended, if one comes to it completely fresh and has not been part of the process. I am happy to say that I have not been part of the process, so it was interesting to sit down this morning and freshly read the commentary back from the select committee, to read what the issues are, and then to make some determination about where I think I certainly would want to stand, and hopefully my party would want to stand.

What struck me very quickly with this was that although the National Party strongly supports the original Misuse of Drugs Amendment Bill (No 3), the party has some very serious concerns about how far one extends the regulatory process to allow the inclusion on the list of banned substances. I can tell members of this House, having been here for 18 years, that I have had very strong views on something as an initial instinct, and then after having been through a very elongated select committee process with public submissions, and hearing from a number of officials, and not just the one official who may have been getting in one’s ear from one department, that the solution has been not quite as simple as it first looked; what finally emerges from the parliamentary process might look quite different, and in many cases one’s original instincts have been wrong.

For that reason I would very, very much not like to support a regime that looks about to be put in place here, especially with Jim Anderton’s Supplementary Order Paper, that will allow a Minister, through Order in Council, to start adding things to controlled lists and to banned substances lists, just at a whim.

I accept that there is some awful stuff out there. Nobody could want anything that P stands for to be in any way able to be sold, including all the precursors—the ingredients that are used to make P. They have all got to be, somehow, controlled to stop the dreadful process going on. But I have to say that one can soon slip off the straight and narrow with that thinking, because there are some party pills and herbal pills around, and so on. Now that sounds awful—party pills and things that make people feel better or give them a slight high. But in many cases a lot of those things do not do any more damage than a couple of glasses of wine. They sound like they are addictive, and that they are like heroin or cocaine, but in fact they are not as serious as that.

So one immediately comes to a conclusion that there is a whole continuum, from things that are almost no damage at all. Maybe they do not do much but the kids think they make them feel good. I remember at Matamata College, one of the highs we used to get was putting an Aspro into a glass of Coca Cola and drinking it. That was supposed to give one a high. Well, we all pretended we got high but I understand that it makes no difference whatsoever. At the other extreme there are things like the heroins and the cocaines that one wants to ban.

I see the Regulations Review Committee making a very, very good series of recommendations here. We must not give to a particular Minister—not just this Minister, but any other Minister—some draconian powers to start getting in and banning stuff that is probably no more insidious or no more addictive than maybe alcohol or tobacco. We should not be allowing the bureaucrats to develop a wish list at a whim and be able to bang that through some form of a regulatory process without the proper scrutiny.

I think ACT said the right words in its minority report. It said we need a proper legislative process to safeguard against some form of ad hoc hysteria. ACT’s minority report stated: “Regulations Review Committee warnings regarding amendment to primary legislation by Order in Council, subject to affirmative resolution have been largely ignored.” I think that is right when I look back at the points that the National Party included in its minority report. It stated: “We are mindful of the Regulations Review Committee’s statement that—the affirmative resolution procedure should not proliferate, the affirmative resolution procedure should only be used in limited and exceptional circumstances, any extension to the affirmative resolution procedure on the Misuse of Drugs Act 1975 should only be permitted where it is: a necessary adjustment to altering the schedules of controlled drugs; essential in order to achieve the purpose of the Act in dealing with the serious risk of emerging drug threats.”

I have to tell the Minister that I am sure that when a new drug called “Q” arrives on the scene—the next one on from P, whenever it arrives—

Hon Member: It is here already.

Hon MAURICE WILLIAMSON: Well, if it is here already and “Q” is known to be a really serious, addictive, damaging drug like P is, I am sure this Parliament would want to almost—no, I think it would be unanimously—race to pass some legislation, but again with a proper process of consideration so that we did not suddenly ban “Q”. It is for that reason that the National Party will be voting against this.

Hon JIM ANDERTON (Associate Minister of Health): I just want to make a short intervention, because it is good to put the facts in the way of anybody’s ignorance or prejudice. Mr Williamson says he comes to Parliament fresh to the issue. That actually that he does not know anything about it. To get up and say that, as though there is an important point he is making, is completely erroneous. The affirmative resolution procedure—[Interruption] If Mr Williamson wants to deal with the drug issue, we will deal with it. This issue is not a party political issue. It is a serious issue that affects the lives and the future of a whole pile of young New Zealanders, and here we have Mr Williamson making a few cheap political points.

I point out—[Interruption] Yes, he is still shouting them out. I point out that the affirmative resolution procedure is not a draconian procedure. It is a perfectly reasonable system for Parliament to use. Actually, it was one of National’s own members, Wyatt Creech, who started the process in the first place, and I support it. I have discussed the matter with the Clerk of the House to make sure that this process is perfectly reasonable to use. Here is the process, and how draconian is this? The Cabinet of New Zealand has to consider an issue that it wants to go to the issuing of Order in Council. The Cabinet is not an outfit of cowboys who have just turned up on the night. Cabinet Ministers were elected to Parliament, and then they were elected to Cabinet. Cabinet considers whether the procedure goes to the issuing of an Order in Council. Mr Williamson describes that as some kind of whim of the Minister, but it is not. It is the collective decision of Cabinet. The procedure goes to the issuing of an Order in Council, and the Governor-General signs it on the advice of Ministers.

Then what happens? Does the Order in Council automatically become law? No, it does not. It goes to the select committee. Did Mr Williamson know that?

Hon Maurice Williamson: Yes.

Hon JIM ANDERTON: Oh, he did know that. But he says it is just a whim of the Minister, and the select committee does not have anything to do with it. Well, it has. The matter goes to the select committee for 28 days, and the select committee has to make a recommendation to Parliament—not to Mr Anderton, or to any other Minister, but to Parliament. Who makes the decision on the recommendation from the Order in Council? Parliament does. So to Mr Williamson, Parliament is some kind of whim of the Minister. It may be under a National Government, but it is not under this one.

Parliament decides this matter, and the process is determined by the fact that we have to be timely, democratic and relevant. How relevant is timeliness for Parliament? Last night we heard that 12 months should be all right to consider some of this stuff—that is what we heard last night. I think there may be a bit of a change in attitude on that, but 12 months was mentioned, and sometimes 2 or 3 years. It took us about as long as that to reclassify methamphetamine. Is that dangerous enough for someone? It took about 3 years to do that. Is that adequate? No, it is not. Should there be a better process than that, which makes Parliament relevant? There surely should be. Is there now? Yes. Does most of the Parliament support it? Yes. Does Mr Williamson support it? No. That does not make any difference, I do not think. I think that the rest of Parliament is right and Mr Williamson is wrong. Before Mr Williamson comes down to this House and gives us the benefit of his fresh ideas, he should inform himself about the process.

KATHERINE RICH (National): I thought the contribution from the Associate Minister of Health was most unhelpful. If anybody is attempting to score political points on this issue, it was quite clear from that last contribution that the Minister was attempting to score political points. He has to look at himself in terms of the amount of hysteria he has created over this issue by making such contributions. Mr Williamson, in undertaking a huge amount of constituency work in his electorate, sees at the front line the sort of problem that these drugs create. I think his contribution was very well-thought-out and raised some pretty important questions that the Minister did not deal seriously with in his contribution.

Many of the issues that come to Parliament are incredibly serious, but if we have a Minister who reacts to polls, public hysteria, or a lack of evidence about particular drugs, a whole bunch of things that have a normal, commonplace use will be banned. Imagine if the Government decided to do a poll on the use of hairspray or some nail polish removers! We get the impression from this Government that if a poll indicated that something was a point of huge concern to the public, a Minister would make a change and ban a whole group of products for which there was no evidence of harm. We are saying that knee-jerk reactions can be dangerous. Although the Minister in the chair might have huge confidence in his colleagues around the Cabinet table, that confidence is not shared by the rest of the country. We will have instances whereby Ministers, for the sake of a poll or for the sake of looking like they are doing something, want to ban products that have quite innocuous uses.

It has been suggested that this measure go back to the select committee. Well, we all know that the Government has the numbers on select committees. A select committee will not raise pertinent issues with, or point out issues to, a Minister who is hell-bent on changing the status of a particular substance. A select committee will not tell the Minister that he is nuts, that he should not make those changes, and that, frankly, there is no evidence that certain things should be banned. So the measure would come back to Parliament. Frankly, no one will stand in the way of a Minister who wants to react to what he sees as an issue for the public.

We need to make decisions on banning substances based on scientific evidence. So far, when it comes to party pills we have not seen any scientific evidence. We have had a whole host of anecdotal incidents where party pills have been proved to be the problem. It is usually a mixture of substances. Sure, those incidents are very concerning to any parent, but the role of Parliament and the role of any Minister is to look carefully at the science, the evidence, and the information before making a considered decision.

The contribution from United Future is interesting. I think many of that party’s amendments are more to do with a fear that cannabis will be legalised. I do not see that as being an issue.

One of the things that we are seeing is a bill to raise the legal age for the purchase of liquor, and I think people should consider how they will vote on it. Many members in this Parliament will vote for 18-year-olds to be able to buy party pills, but then will raise the age at which people can buy alcohol. There is certainly more evidence about alcohol than there is about party pills.

We cannot have knee-jerk reactions to those sorts of issues. We must act in a timely fashion, but with evidence, so that hysteria is not the basis for our making decisions about substances; otherwise, we will see a whole bunch of wacky decisions being made, driven by Ministers who want to react to public concerns about a particular issue that have no evidence to back them up. Yes, P has been an issue, but I do not think anything the Government could have done would stop it.

STEVE CHADWICK (Labour—Rotorua): I just want to put a bit of reason into this debate and to point out that a step has been forgotten by the Opposition. With respect, Maurice Williamson was a wonderful former Associate Minister of Health, in terms of his attitude to the sensible regulation of drugs and management of drug policy, and I congratulate him on that. We all need to be reasonable about the way we approach this issue. What has been forgotten is the role of the Expert Advisory Committee on Drugs.

This was not the result of a decision of the Minister to put pressure on the Ministry of Health to get some evidence quickly on benzylpiperazine. The Expert Advisory Committee on Drugs, which is far more reasoned and scientific in its decision on any drug, illicit or licit, raised concerns to the Minister on this matter. Yes, we on the Health Committee—and members have forgotten this— also put a justice official on the Expert Advisory Committee on Drugs. We received evidence from the Ministry of Health about its concerns on benzylpiperazine, and it also raised concerns about the use of benzylpiperazine in conjunction with other drugs. The ministry did categorise it as being of “low risk” in the recommendation. It was not the Minister’s recommendation that benzylpiperazine, a low-risk substance, needed to be monitored very, very closely—not politicians to monitor it, heaven forbid—but a recommendation of the Expert Advisory Committee on Drugs, which is established in statute. The recommendation was not in response to receiving anecdotal evidence, as the Opposition members said. Yes, there has been a lot of hysteria about benzylpiperazine, but we received the ministry’s report. It will be watching this drug very closely, and we urged that in our report back to the House.

I want to put on the record here that this is not a case of the Minister or of Cabinet going around and finding another whacky idea that they think will get a few more votes. This is an issue that we should all take terribly seriously, and we should listen to the advice and the scientific evidence we received. Our problem here is what we should do about licit and illicit drugs, when we have a drug schedule and a statutory framework that looks only at illicit substances. The select committee made a very wise decision to deal with a substance that we were all very concerned about, rather than to tell officials to go away, draft more policy, consult, and come back to us with a restricted substances bill. We were not prepared to take the time for that process.

MARC ALEXANDER (United Future): I would like to take advantage in speaking to this bill. It is curious to me that we have such reticence about moving ahead with the drugs that this bill deals with—the party pills and all the rest of it. It took 7 years—7 long years—before anybody moved on methamphetamine. We let the cat out of the bag, and, unfortunately, the police are now having to go backwards to try to deal with methamphetamine. What I do not want to see is this bill put aside, not dealt with here, and party pills and all the rest of it allowed to go on unregulated and unhindered.

The fact of the matter is that we may be able to assert that these party pills on their own may not cause the kinds of damaging effects that people might ascribe to them—and I would disagree with that statement, too—but the fact is that our young kids are using those pills in combination with alcohol and other drugs. We cannot isolate one aspect of it and look at just that. We have to look at the totality of the experience that young kids are putting themselves through, which endangers themselves and others, and, of course, it is hugely worrying to parents as a result.

Members should be going to the police and speaking to them. They should see what the results of these drugs are. They will find a completely different picture from the one we find as we sit in the comfort zone of our own offices. Down on the street, where these drugs are actually being abused in combination with other drugs, it is a totally different story. Very close to my office in Christchurch there is one of these party pill shops. I see, night after night, young kids standing around there, snorting, inhaling, and taking pills. There is always a litter of syringes and nose-cans. It is a combinational thing, and it has to be attacked that way. It is crazy to imagine that we can simply turn a blind eye to this problem.

This legislation is much needed. In the absence of anything else, we need this in order to protect our kids from themselves. Kids will experiment, but the problem is that they put themselves and everybody else at risk. This bill is one answer in terms of dealing with that. We can sit back and wait for all the research we want, but in the meantime real damage is done to real people out there, and it is time we acted proactively to deal with the scourge of party pills and other related drugs. The reality is that people taking these drugs are doing it in a way not considered in this House. That is a fact. We can sit here and debate until we are blue in the face about what should or should not be done—we could take more time, do more research, and all the rest of it—but it is the parents out there who look after their kids who are in trouble. Some kids come home worse for wear or have to be taken to hospital, and some die. That is the fact of it.

If people want to be reticent about passing this legislation and hold back and wait for more and more evidence, all I can say is that the evidence is already in our hospitals.

Dr Lynda Scott: It’s Part 1 we are debating, not Part 2 or 3.

The CHAIRPERSON (Ann Hartley): Could I just say to members that a lot of members have strayed across the paths, and I almost gave up trying to bring them back.

MARC ALEXANDER: That is exactly right. It is quite a wide-ranging debate.

The CHAIRPERSON (Ann Hartley): Yes. Please continue, Mr Alexander.

Darren Hughes: It’s true that National’s position is very unclear, though.

MARC ALEXANDER: It is very unclear. My understanding is that National members will end up actually supporting this bill. That strikes me as being strange, because they want it both ways. On the one hand they want to bag the Hon Jim Anderton for putting this legislation forward, but on the other hand they want to support it. They want a bob each way. That is actually quite disingenuous because it says they want to bag the intention of the bill but they do not want the public to go against them and ask why they have not helped.

The fact of the matter is that there is a huge public out there that wants something done. All we have to do is pick up the newspapers and read the letters that come in. They talk of doing something about the shops that sell such stuff; and it is not just what they sell—it is the activities that are taking place outside these places of purchase.

NANDOR TANCZOS (Green): I am quite pleased to take part in this debate. I was going to confine my comments strictly to Part 1, but I feel the need to rebut some of the comments made by previous speakers, so I apologise if I stray a little from Part 1. The first thing I want to address is the comment made by Mr Williamson, who talked about the provision of the affirmative resolution procedure for classifying drugs under the new schedule. I think the member misunderstands the process. He seems to think that it is a simple Order in Council that will be done by ministerial whim. It is the same mistake that Judy Turner made, which led to her particularly distasteful amendment previously.

The fact is that this is not a simple amendment by way of ministerial whim. It is actually an affirmative resolution procedure. It is a new procedure—maybe the member is unaware of it—and it requires a parliamentary process. It requires the matter to go to the select committee for 28 days, and for it to be debated and voted on in this House. I accept that there are problems. I think there should be a requirement to consult the public, because there is no requirement at the moment for either the Expert Advisory Committee on Drugs or the select committee to consult the public. The other thing that I think is a problem with the process is that there is no ability for either the select committee or the House to amend the notice of motion. I think that that is a serious problem, and I think it is something that the Standing Orders need to address. If a matter comes before the House, the majority of members may agree in general with the proposal but think it is not quite right, and think a particular drug should be classified as a B2 instead of a B1, or as a D2 instead of a D1, if we get to those kinds of schedules. But the House has no ability to make those kinds of changes, and I think that is something that needs to be addressed.

I would like to address the amendment put forward by Judy Turner. I thought it was quite extraordinary that she got up in the Chamber, told us she went through the Health Committee’s process on the bill, which was pretty long—we went through the bill in a great deal of detail—and then told us she did not understand the amendment the committee has recommended. She seemed to think it was the opposite of what it was. That is not the kind of admission I would make to the Committee if I had made such a mistake, but that is up to the member—she can tell us those things if she likes. And, of course, it is not the first time that Judy Turner has not understood the way the legislation works, but that is fine.

Judy Turner expressed concern about the use of the affirmative resolution procedure to amend the presumption of supply levels. I was actually the member who raised that issue in the committee. The Regulations Review Committee was quite clear on the matter. It stated that the affirmative resolution procedure should not be used to amend the presumption of supply unless it is in association with the classification of a drug. It stated the procedure should be restricted to those circumstances only. I was the one who reminded the committee that we should listen to that advice. The committee, in the end, made the decision to put in a provision that allowed the presumption of supply to be amended by affirmative resolution, apart from classification, in one circumstance: where the amendment was to put the presumption of supply level up. The reason is that officials told us we had a serious situation whereby the presumption of supply level was set too low. People were being convicted on supply charges, when actually the drug was just for personal use. That is significant, because if the drug is a class A drug, the maximum penalty for supply is life imprisonment. It is a very serious thing; the maximum penalty is life imprisonment. The officials said that they needed the ability, if there is clear evidence that the supply level is set too low, to amend it pretty quickly, and that is what the committee agreed to do.

People say that the supply level is not a problem, because if a drug is not for supply that can be proved in court. One of the difficulties with a presumption of supply is that there is a reverse onus. It is a basic undermining of the fundamental principles of justice—of being deemed to be innocent until proven to be guilty—because if a person has a certain amount of a controlled drug and it is over the presumption of supply level, then that person has to prove it was for personal use. The prosecution has to provide no evidence to back up the idea that the drug is for supply, except simply to state the amount. The defendant has to prove it is for personal use, and I just do not understand how he or she does that. How does a person go to a court and prove that the drug he or she has is for personal use? That seems to me to be a very difficult thing to prove. I think that one of the fundamental issues with regard to the Misuse of Drugs Act as a whole is that reverse-onus issue.

The committee received some advice about the presumption of supply issue. At first it was advised that the presumption of supply was to an evidential level of proof, not a legal one, which was satisfactory, but the correction to that advice was that it was actually to a legal level. The difference is that an evidential burden of proof means that the assumption is that the drug is for supply, but if a person can show evidence that it is not, then the prosecution has to prove it is.

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

Dr PAUL HUTCHISON (National—Port Waikato): I think it is of huge concern to Parliament and, hopefully, to the public of New Zealand when we hear the leader of the Progressive Party, the Hon Jim Anderton, making light of the affirmative resolution procedure. He said that it was not a draconian procedure.

Hon Jim Anderton: That’s right.

Dr PAUL HUTCHISON: Well, he is absolutely wrong. He should remember, and be reminded of, exactly what the Regulations Review Committee said about the affirmative resolution procedure. It said that the amendment of primary legislation by an Order in Council is commonly referred to as a “Henry VIII” clause, and is regarded as undesirable because it allows the executive the power to override Parliament. That is exactly what the Progressive Party, under the Hon Jim Anderton, would love to do.

He then said that Wyatt Creech, some years ago, had no problem bringing it in. Well, it was brought in with very careful consideration, because of the extreme concern about the proliferation of controlled drugs in New Zealand, and the very, very important need to make sure that law enforcement agencies had some methods to be able to reduce this proliferation. But here we have the leader of the so-called Progressive Party—

Dr Lynda Scott: The “Jim Anderton Party”.

Dr PAUL HUTCHISON: Yes, that is what it should be called. But the very important principle is that the leader of the so-called Progressive Party said that this affirmative resolution procedure is not draconian. It is a very, very serious procedure.

The other point the Regulations Review Committee made was this: “In our view, the classification of restricted substances is a matter of significant policy that should be dealt with by primary legislation. If a matter needs to be dealt with urgently, there are ways of dealing with primary legislation in an expeditious manner.” That is very, very important to remember. The other point—

Hon Maurice Williamson: The Regulations Review Committee said that?

Dr PAUL HUTCHISON: Yes, the Regulations Review Committee said that.

Hon Member: Are you going to repeat it?

Dr PAUL HUTCHISON: I will say it again, if the member likes, because it is absolutely the nub of the matter: if, indeed, a matter “needs to be dealt with urgently, there are ways of dealing with primary legislation in an expeditious manner.”

Hon Maurice Williamson: That was my point.

Dr PAUL HUTCHISON: That is exactly what the Hon Maurice Williamson was saying, and it is very, very important that Parliament is reminded of it.

The other practical point that was brought up by the Regulations Review Committee was that the Health Committee could use up all its time on this particular matter. That is of great worry, because surely the Health Committee should be spending its time on much more important matters, like the proliferation of spending—waste—that has occurred under the Labour regime over the last 5 years.

But we also had Steve Chadwick, the member for Rotorua and chairperson of the Health Committee, saying that, no, this matter of affirmative resolution is actually not all that important, because the Government is putting someone from the Ministry of Justice on the Expert Advisory Committee on Drugs. That is great, but all the people that one puts on the Expert Advisory Committee on Drugs do not make any difference in terms of the huge importance of the normal parliamentary process being carried out, when the leader of the Progressive Party, the Hon Jim Anderton, says that it does not matter, that there is a problem with party pills down in Christchurch, that he did not hear about it over the last 10 years but has finally woken up to it, so he will defy the normal, important democratic process and have a knee-jerk reaction to it.

I think it is very, very important that the people of New Zealand realise the lengths that Jim Anderton and his party will go to in order to defy the normal democratic processes.

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

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

Ayes 90

New Zealand Labour 51; New Zealand First 13; ACT New Zealand 9; Green Party 7; United Future 8; Progressive 2.

Noes 26

New Zealand National 26.

Motion agreed to.

The question was put that the following amendment in the name of Nandor Tanczos to clause 5(2) be agreed to:

to omit subsection (1AA) from section 4.

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

Ayes 17

ACT New Zealand 9; Green Party 7; Māori Party 1.

Noes 100

New Zealand Labour 51; New Zealand National 26; New Zealand First 13; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Judy Turner to clause 5(2) be agreed to:

to omit paragraph (b) from section 4(1B).

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

Ayes 109

New Zealand Labour 51; New Zealand National 26; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Noes 7

Green Party 7.

Amendment agreed to.

The question was put that the following amendment in the name of Nandor Tanczos to clause 14 be agreed to:

to omit subclause (1), and substitute the following new subclause:

(1) Section 13(1) of the principal Act is amended by repealing paragraph (aa).

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

Ayes 7

Green Party 7.

Noes 109

New Zealand Labour 51; New Zealand National 26; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the amendments set out on Supplementary Order Paper 377 in the name of the Hon Jim Anderton to Part 1, and the following amendments in his name to clause 5(2), be agreed to:

to omit from paragraph (a) of section 4(1A) the words “specified in clause 1 of Schedule 5”; and

to omit paragraph (c) from section 4(1A).

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

Part 2 Amendments to Misuse of Drugs Amendment Act 1978

Dr LYNDA SCOTT (National—Kaikoura): This part of the Misuse of Drugs Amendment Bill (No 3) deals with search and seizure. It also deals with the ability of our police to be able to do their jobs at the border. We totally support Part 2. Our police and our border control people try to do a very good job there. They were very hamstrung by the fact that there was no ability to do anything about someone who turned up in New Zealand, having come from Asia or other places overseas, with case after case full of ephedrine and pseudoephedrine, as a precursor drug for the manufacture of P. Obviously, if a case is opened and is found to be stuffed full of those pills, we know that the pills are not for regular use. But there was no legislation to prevent that from happening. The National Party totally supports being able to use the expeditious scheduling procedure, set up by Wyatt Creech, to enable those precursor substances to be put into the Misuse of Drugs Act, and to allow the police to then prosecute those who act to bring those sorts of precursor substances into New Zealand.

The people who are bringing the precursor substances in are doing it, simply and utterly, so that they can manufacture P. P has caused a huge amount of harm in our society. I remember when that first became an issue. A friend of mine who has since died, an older man who gave a great deal of community service, came to see me one day because he was part of Victim Support. He told me he could not believe what he was seeing. He was seeing men with good jobs, who had always been substantial members of the community, but who had just taken one of the party drugs because they were out somewhere and someone had offered it to them, and they had gone completely off their heads. They had attacked taxi-drivers, gone home and attacked their wives, and been involved in a huge number of violent episodes. He told me those people had ruined their lives, just through taking one pill.

When pseudoephedrine and ephedrine have become methamphetamine, they increase the neurotransmitters in the brain, and sometimes that makes people go absolutely crazy. Some horrendously violent crimes have been committed in this country by people who have been high on P. The other day a grandma came into my constituency clinic to talk to me about her grandson, who is 15 and is addicted to P. She was bringing her daughter to come and talk to me too, but the daughter was at home, dealing with the police, because the young man had threatened to kill his two sisters. They took it very seriously—and so they should—because the episodes of violent crime and the psychosis that we are seeing with methamphetamine usage are a very serious issue for New Zealand indeed, and our young people need to realise the substantial risk involved. But it is not just young people who are affected. As my friend Alan said to me, some older people in their 30s and 40s, who have been really good and substantial members of the community, have also been drawn into taking party pills or methamphetamine as a one-off, and are having severe episodes that have absolutely ruined their lives. We need to do everything we can to stop the people in this country who, for the sake of making a lot of money, engage in producing those drugs of abuse. National supports doing something about that.

I listened to some of the speeches, especially the ones given by United Future members, previously. I do not think they understand the issue. We totally support doing what we can to control any drug that the Expert Advisory Committee on Drugs says has a high degree of harm. The issue is the process that is being used to regulate drugs of low harm, which is the classification the expert advisory committee gave to benzylpiperazine. The Health Committee had a huge amount of debate on how to do that.

Dr PAUL HUTCHISON (National—Port Waikato): Part 2 again is one of the very important parts of this bill because it allows our customs agents and other law-enforcement agents to react to the very, very extraordinary and special techniques that are being used more and more by some of the criminal gangs that are attempting to smuggle illicit drugs into New Zealand. The methods they are using are becoming more and more sophisticated and therefore it is hugely important to have a mechanism to meet the sorts of things they are doing to feed the drug trade in New Zealand, and to control the growing problem that we see here.

I do absolutely agree with my colleague Dr Lynda Scott, who mentioned just how drastic is the seriousness of the risks associated with some of these controlled drugs, such as methamphetamine and their precursors. There is no doubt that not only can they be addictive, but that the bizarre psychotic reactions associated with their ingestion have led to some of the most horrific crimes that we have seen in New Zealand’s history. Therefore, it is important that special legislative circumstances are taken to give the enforcement agents the required teeth necessary to make some difference.

I think it is important to reiterate once again that that is why the Hon Wyatt Creech brought in the expeditious scheduling of controlled drugs and their precursors. This is a very real and serious problem, and it is hugely important to use exceptional techniques for this problem in those unique situations. It is very important to realise that the expeditious scheduling and the affirmative resolution process should be used only for specifically unique circumstances.

This part of the bill deals with allowing delivery of unlawfully imported drugs for purposes of detection, seizure of items found during search warrants, and international controlled delivery and liability for offences. I think it is worth pointing out that new section 12D(3), inserted by clause 26, again provides for some exceptional circumstances. It states that a: “… Customs officer, or officer of a relevant law enforcement agency … who is involved in an international controlled delivery—(a) does not commit an offence under section 6(1)(a), 12AB, or 12AC of the principal Act by reason of taking part in that international controlled delivery; and (b) unless he or she is acting in bad faith, is not subject to any criminal or civil liability as a result of taking part in that international controlled delivery.”

One might say that some of the aspects of this part of the bill, including those involved with international controlled deliveries and rub-down searches and strip-searches that are required to occur, perhaps are exceptional things that normally we would not want to have other than under extreme circumstances. Well, the circumstances are extreme. That is why they are included in the bill. That is why the National Party has no hesitation in supporting this part of the bill. But even then, once again it is important to realise that some of the drug importers or smugglers into this country are using methods whereby people ingest packages and try to take them through the border. It is very important to be able to have the powers to confine those people in hotels, sometimes for up to 2 or 3 weeks, to wait for that package of a controlled substance to finally emerge so that an arrest can take place for that individual.

Hon MAURICE WILLIAMSON (National—Pakuranga): It is with a certain amount of trepidation that I take another call, because when I took what I thought was a reasonably moderate call on Part 1 and said that there were some concerns about giving powers to a Minister—not the Minister in the chair, Jim Anderton; I was not trying to be nasty to him—Jim Anderton of the Jim Anderton party, who is going to set up a regime that will live for a thousand years, got up and savaged me. As members can tell, I am quite nervous now, because I get worried when people savage me. I kept thinking that I have to pay respect to a man with Jim Anderton’s ability. No one in the history of this world has self-named a party, as that man has. There was the Napoleonic era, but did Napoleon call his party the “Napoleon Party”? No. The same was true of the Elizabethan era. But we are to have the Andertonian era, with a glorious leader and some sort of Kim Il-Sung of North Korea - type equivalent.

We will even have to change our names. Matt Robson is out there right now, changing his name to “Jim Anderton II”.

The CHAIRPERSON (Hon Clem Simich): Order!

Hon MAURICE WILLIAMSON: No, I will come to Part 2.

The CHAIRPERSON (Hon Clem Simich): That is not the issue.There is a correct name for the party you are referring to.

Hon MAURICE WILLIAMSON: It is the Jim Anderton party.

The CHAIRPERSON (Hon Clem Simich): No, it is not.

Hon MAURICE WILLIAMSON: I am sorry, but the party has applied to the Electoral Commission to change its name to Jim Anderton’s Progressive party.

Hon Jim Anderton: Not for parliamentary purposes.

Hon MAURICE WILLIAMSON: It gets even better! The name is not for parliamentary purposes. Calling oneself the Jim Anderton party is something one does in the privacy of one’s own bedroom, but not out in public. At any rate, the leaders of the past—Fidel Castro, Leon Trotsky—never called a party after themselves. The Jim Anderton party told me I was wrong and evil, and I apologise to its glorious leader. I hope the regime lasts for a thousand years.

Hon Jim Anderton: You’re easy to savage.

Hon MAURICE WILLIAMSON: I am; I know that. I am such a delicate little flower that I take those things very personally. But I looked up the books, and saw that Mao Tse-Tung did not name the Communist Party of China the “Mao Tse-Tung Party”. He was not as arrogant as that. Lee Kuan Yew, who took over Singapore and ran it for three decades, did not name a “Lee Kuan Yew Party”. But Jim Anderton—

Hon Jim Anderton: Where is this in the bill?

Hon MAURICE WILLIAMSON: It is not in the bill, but I am surprised the bill is not called the “Jim Anderton Bill”. Why is it not the “Jim Anderton Bill”? What a silly name the Misuse of Drugs Amendment Bill (No 3) is. The bill should be the “Jim Anderton Promotion Bill (No 3)”—

Hon Jim Anderton: Parliamentary purposes.

Hon MAURICE WILLIAMSON: —for parliamentary purposes only, and not to be taken at home. That is what the Jim Anderton party is.

I make it clear that the National Party does support Part 2, which contains the search and seizure provisions. I know I will get another absolute rogering from the Jim Anderton party, and I am sorry about that.

Katherine Rich: Strip-searched!

Hon MAURICE WILLIAMSON: There will be a strip-search by the Jim Anderton party. But I make it clear we support the bill, because we do know there are certain things in it. As my colleague Lynda Scott pointed out, someone who comes through the border with a suitcase absolutely packed with cold and flu remedies that contain all the precursors one needs to head off to a big cook-up to make P is clearly not carrying it for personal use. That person could not use all those remedies in the thousand years that the Jim Anderton party regime will last for. They could not be used personally. So I am really happy that the National Party is supporting this part. I am sorry I got savaged on the first part. I will wait to take my medicine for the next part when it comes.

PITA PARAONE (NZ First): New Zealand First is quite clear as to what we are talking about in this part. The bill’s title is the Misuse of Drugs Amendment Bill (No 3), and not the name of a particular party. Of course, after the election we will not be worrying about names. The only name that will be prominent will be New Zealand First’s. I stand to support this part. These changes provide the Customs Service and the police with the necessary powers to enable them to effectively detect the presence of controlled drugs, and to take appropriate action. I must say that the example my colleague from Pakuranga mentioned, about visitors coming to this country, loaded down with a whole lot of drugs for medicinal purposes, could raise an issue, as we witnessed on a recent TV programme that featured a lady who came into the country loaded down with particular drugs that, she alleged, were for personal medicinal use.

This part indicates to us that it is absolutely essential in the fight against drugs. What is the point of wanting to eliminate illicit drug use and the consequences of that use, if the law does not provide the tools for our law enforcement agencies? This part now means that customs and police officers will be able to carry out personal searches on the basis of believing, on reasonable grounds, that a person is in possession of the drugs listed in clause 26. In essence, this part strengthens the ability of the Customs Service and the police in the fight against the illicit use of drugs. It is a known fact that drug use, which this bill is about, is a growing and serious problem. The considerable harm that is caused invariably impacts not only on those who are directly involved but also on their families and the wider community, in which many members are innocent parties in the whole sad episode. The drug P is a drug that we are hearing more and more about—particularly the consequences of its use, which are disastrous. I think that there are enough recent cases to suggest that this law is long overdue. We believe it could be strengthened, and we will certainly address that issue in the debate on the next part. However, I stand to take a short call to say that we support this part.

KATHERINE RICH (National): National wholeheartedly supports this part, because it will assist Customs Service officials to do their job. When I speak with pharmacists, people in the Customs Service, and pharmaceutical representatives, they tell me that the issue is less to do with problems regulating the products once they get into the country and more to do with border security. People bring in large quantities of ephedrine and pseudoephedrine in order to produce P once they are here, and put forward the argument that they are bringing those substances into the country for personal use.

Quite clearly, if someone turns up to an airport with suitcases full of that stuff, they are not using it for personal use. But it has been incredibly difficult for customs officials to prove that, and I think we are seeing here some tightening up of their abilities to deal with problems at our borders. We need to get a handle on the amounts of those substances that are imported. Although we can work with pharmacies to ensure that regulated substances are marketed and sold in a managed way, we can do more by assisting customs officials to be able to deal with the wide range of problems they face when people try to bring those substances into the country.

This part clarifies what the Customs Service is able to do. It is quite detailed in that it lays out what can and cannot be done during a strip search or rub-down search, and what can be required of a person coming into the country with suitcases full of cough medicine. It makes very clear what the Customs Service can ask a passenger coming into this country to do or not to do. I think that will tidy up some of the problems that have been faced in the past and some of the challenges that have been made when people have come through customs with, quite clearly, more goods than they would ever possibly use in a lifetime.

The issue is why there is that level of detail. In the past it has been proven that the level of detail in legislation—when it comes to strip searches, as one example—is very important. When the law is not clear, people will come in, challenge it, and get off, in many cases, on a technicality or because the law does not speak in a very detailed way about a particular incidence. That is why section 13EC, “Definition of strip search”, inserted by clause 27, goes through in quite some detail what officials may require a person who is being searched to do. It is very clear that it is a very full list. Hopefully, we will not see any loopholes, and people being able to get off quite serious charges on technicalities.

Detail is important, but I am not sure that we need the level of detail in some aspects of the bill. I draw the Committee’s attention to clause 29, which specifies that the Commissioner of Police and the chief executive of the New Zealand Customs Service must report to Parliament on the number of rub-down searches and strip searches undertaken by members of the police. I just wonder why we need that level of detail when every member of Parliament knows that, through a parliamentary question or a question in the House, we have access to that information. Why does it need to be specified in law? We live in a country that is increasingly over-regulated, and I would like the Associate Minister of Health just to describe and explain, I suppose, why, in that particular provision, we need to be quite so specific. It may be something to do with the police and their ability to provide information that perhaps needs to be specified in the law. I am not sure.

Some good points have been made in this debate by my colleagues, particularly about resources for the police.

JUDY TURNER (Deputy Leader—United Future): I want to take a very brief call on Part 2 in the Committee stage of the Misuse of Drugs Amendment Bill (No 3), just to say that United Future is very supportive of the provisions. We congratulate the Associate Minister of Health, Jim Anderton, on providing border staff with some additional strengths. I think it is great that the bill defines very clearly the raft of searches that can be done. Because of privacy issues it is good to be very clear, so that the power to search is not abused.

The thing in this part that particularly interests me is the ability for controlled deliveries to occur. Really, when we look at all the strategies around drug use and drug abuse in this country, we see that we need to be particularly vigilant to cover those people who make a living from the suffering and addictive behaviours of others. For the Customs Service in concert with the police, when they know that a delivery is coming, to be able to allow it to happen, to monitor it, to pick up on the whole down-line process, and to see, often, particularly in terms of precursor substances coming in, where it is being delivered and who is manufacturing it—to keep track of the whole system—means that the net that officials can throw is much wider, and that is an extremely good development. United Future wants to support the police in this work.

I really want to say just that we are very supportive of these provisions and very glad that the Minister has taken this step.

The question was put that the amendment set out on Supplementary Order Paper 377 in the name of the Hon Jim Anderton to Part 2 be agreed to.

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

Part 3 Restricted substances

The CHAIRPERSON (Hon Clem Simich): This debate includes debate on schedule 4.

Dr PAUL HUTCHISON (National—Port Waikato): It is Part 3 of the Misuse of Drugs Amendment Bill (No 3) that National has grave concerns about. We have grave concerns about the knee-jerk way that the Hon Jim Anderton has rushed to bring in a Supplementary Order Paper that has been put as Part 3, when there has been absolutely crystal-clear guidance from the Regulations Review Committee that the affirmative resolution procedure should not be used for substances such as party pills and benzylpiperazine, with which it will deal.

I think it is worthwhile just to look at the evidence regarding benzylpiperazine given to the Minister by the Expert Advisory Committee on Drugs. The executive summary concluded that insufficient information was available on which to base a recommendation to classify those substances in the schedules of the Misuse of Drugs Act 1975. The recommendation was absolutely clear, but the Hon Jim Anderton of the new “Jim Anderton Party”, which used to be known as the Progressive Coalition, is defying the very important process that the Regulations Review Committee warned against. Oh no, he will put that resolution procedure into Part 3! It is because of that that the National Party has said it does not agree with this. We have made the commitment to bring through, when in Government, well-considered legislation that indeed addresses in an appropriate way the very concerning problem of party pills in New Zealand.

That legislation will allow the proper parliamentary procedure to occur, and submissions will be able to be heard not in 28 days but in a time that is appropriate to hear them properly, so that we can have well-considered legislation.

It is important to point out that we heard some pretty colourful submissions regarding Part 3 of the bill, including from members of the Social Tonics Association of New Zealand, otherwise known as “STANZ”. They pointed out that members of the Social Tonics Association of New Zealand have sold an estimated 8 million servings of benzylpiperazine and related products in the past 5 years, with no credible evidence, they say, of these products causing significant harm. Indeed, this is the nub of the situation: these drugs, while they are of great concern to New Zealand—and it is a particularly great concern that many young New Zealanders are taking them—do not fall into the category of the very, very worrying controlled substances such as amphetamine, P, and its precursors.

I think it is worthwhile to point out what the Expert Advisory Committee on Drugs says about these substances, and about benzylpiperazine, which is the most commonly used, in particular. It states: “They are stimulant type substances that produce effects similar to known amphetamines and hallucinogens.” However, the effects are of nowhere near the severity of those of drugs that fall into the controlled A, B, and C classifications. The advisory committee states: “There is indeed some concern over the increase in supply of these products, which are marketed and distributed independently over the internet, through counter-culture retailers, and more recently in liquor outlets, service stations and dairies.”

That, indeed, is how Jim Anderton has finally woken up to the fact that they are being sold all around Christchurch, where his electorate is. Finally, in a truly dinosaur-like reaction, after 10 years of the gradually increasing proliferation of these party pills, Jim Anderton has woken up and decided to flick in a Supplementary Order Paper to sort the problem out, but unfortunately that Supplementary Order Paper has not been well considered. The National Party believes that thoroughly considered legislation should be brought in to address this worrying problem of party pills.

Dr LYNDA SCOTT (National—Kaikoura): Part 3 deals with a new class of restricted substance. It puts in place the same sorts of regulations that we currently have around tobacco and alcohol: restriction to those aged 18 and over, health warnings on products, advertising controls, and, of course, penalties if people break the law. And there will be restrictions around what is good manufacturing practice for these pills.

The Expert Advisory Committee on Drugs said that benzylpiperazine is not a drug that causes serious harm. I think that drug was a cattle drench to start off with; I think that is where it originated. There are people out there who will use all sorts of things. The minute we regulate for it, there will be something else. We are not just talking about benzylpiperazine. That is why National has concerns—because in the future other drugs, other substances, will be used. Because there will be other substances, we need a process that we feel is robust and has been well considered.

I ask members to think about the other things that are used. Datura is something the effect of which I, as a doctor, dealt with just about every year, when young people who had taken it would come in to the accident and emergency department. Datura produces atropine. It makes people slightly crazy, makes their eyes dilate, and makes them very hot, but it gives them a high, and every year people poison themselves on this drug. The plant grows around New Zealand, and people are sometimes stupid enough to try to manufacture a psychoactive substance from it and take it. I am not sure if there have been deaths from this drug, but many people have certainly got very close to dying from it. Then there are magic mushrooms, which people go and pick. We hope they do not manage to eat death cap mushrooms and completely ruin their livers so that they need liver transplants.

People will go and find other substances to use. It would be better if we were looking at the reasons why our young people feel they have to take those sorts of things to have a good time. I guess that is one of the reasons why there is concern about these party pills. Even though the expert advisory committee said these pills carry a low risk of harm, they condition our young people into thinking they have to take a pill in order to have a good time. Some of it may just be a placebo effect. We know in medicine that, in 30 percent of cases where people take a sugar pill believing it will do something good for them, it actually does, because of what is called the placebo effect. That young people get into this mindset that they cannot have a good time—that they cannot get a natural high, that they cannot enjoy an evening out—without taking something to help them do so is, I think, of great concern.

We have to ask ourselves why we have such a high youth suicide rate, why we have such poor statistics in relation to our youth. I believe that some of it is to do with their low self-esteem, and that that is why they feel they have to use alcohol to loosen up a bit, or have to take a pill to make themselves more sociable. Those are some of the issues we need to deal with—along with the breakdown of the family and the social decay that make these children feel that that is what they have to do.

Although the National Party has concerns about this area and would like to see restrictions, we believe that Part 3 should have come in as a separate bill. We could then have called for submissions on it, so that we hit the target that we want. We have seen time and time again legislation with good intentions—and I think Part 3 has good intentions—that misses its target, and we end up coming back to it to make amendments, to change things. That actually makes things more difficult, not better.

Benzylpiperazine does need restriction. This bill will pass today, and we will see that restriction put in place. But the minute that substance is restricted, there will be something else being used. We need to know whether the process that is being set up by this bill will actually work. All that Part 3 does is restrict advertising, restrict the sale of substances to under-18-year-olds, and make sure that there is good manufacturing practice. That is another concern. It is not just the main substance in the tablet; it is what gets puts in with it that, as we have seen with some health products, can cause harm.

Hon JIM ANDERTON (Associate Minister of Health): I would like to know why the National Party wants to have it both ways on this part. We are told that these drugs have been a problem for the last 10 years. If there has been a problem for the last 10 years, then, at least on reasonably primitive arithmetic, for half of that time the National Party was in Government. What did it do? The answer is “Nothing”. We are now trying to do something, and we are told that we should have done it 10 years ago when National was in Government. Oh, really? I can see one of those Tui advertisements coming up: “Yeah, right.”

Mr Hutchison said that this a worrying problem. But what did he suggest? He suggested that it was too difficult. This is like the process police. I suggest that he go out and ask the parents in shopping malls in New Zealand what they think. Mr Hutchison thinks this problem exists only in Christchurch. Does he go anywhere else in New Zealand than where he lives? Does he understand what is going on in the hinterland, in the regions of New Zealand? No. He should ask the parents of 12-year-olds in shopping malls, who actually get proselytised and promoted to by those who are pushing these drugs, what they think.

The National Party’s view is that it is difficult, we should think about it, and we should wait and see. Is that what parents think? No, it is not. It is “make my day” time as far as the rest of New Zealand is concerned in relation to the kind of attitude Mr Hutchison takes. He said that this part is the whim of a Minister. Does he realise that the Expert Advisory Committee on Drugs advised me as Minister to take a precautionary position on this matter and to, for example, restrict the age of sale—which is exactly what this bill does? Is the National Party for it, or against it, or has it not made up its mind? Will it repeal the provisions under the affirmative resolution process? I ask National to answer that. It has railed against a process that delivers on time, in a timely way, changes that address immediate, acute issues in New Zealand.

National members say that this is a terrible legal process and that it is undemocratic, even though it goes through an Order in Council process, through the select committee, and back to Parliament. They call it a draconian whim. Well, there may be one thing worse than a “Jim Anderton Party”, and that is a “Don Brash Party”. If Don Brash is the answer, there must have been a very silly question in the first place.

Darren Hughes: Would they repeal it?

Hon JIM ANDERTON: Yes, they can tell us whether they would repeal it. That would be honest. I can understand that. They can say that it is such a terrible process, and that when National becomes the Government—in another 30 years’ time—they would repeal it. I ask them to tell us that, so that I can have some respect for their position. But this posturing around the place is ridiculous.

Licit substances—and benzylpiperazine has been one up until now, and still is—are not necessarily without danger. I ask members to read the coroners’ reports on the kids who have died from solvent abuse. Members should read the coroners’ letters to Associate Ministers of Health, like me, that ask us to do something about this stuff—and then write back to them and to say that it is too hard: “Look, I am sorry, we are only the Parliament of New Zealand. What do you expect us to do?”!

Why did I get elected here—to do nothing? Coroners have written to me saying that they have presided over the inquest of five young kids who died from solvent abuse, and they have asked whether I could try to do something about it. Well, the Opposition would say: “No, I am sorry. We are thinking about it. We do not know.” It is ridiculous.

The Health Committee, to its credit, addressed the issue, did its best on it, and referred it back to me and said that it was a bit hard and it would have to be looked at. Well, we will look at it, and I am getting urgent advice on that. That has been in the too-hard basket for so long that it is ridiculous. In truth, more kids die from solvent abuse than from party pills, or anything like that, so we have to address that. In reality, of course, not all outlets are irresponsible. Some retail outlets, such as The Warehouse, have taken off the shelves some of the licit substances like butane, which has actually killed kids, and they actually sell them responsibly. Unfortunately, not everyone is like that. I give credit to them and others who do the same.

Parliament cannot just say that it is too hard and that we cannot do anything about it. Not all outlets are so responsible. People want to know what Parliament will do about it. This party in Government, supported by responsible Opposition and supportive parties in the House, is giving support to doing something. I wish the National Party would make it clear whether it was for or against it. We have had so many positions put by the National Party that we would not have a clue whether it is for or against it, whether it wants to repeal provisions, or whatever else. I am getting very clear messages from most of the Parliament that it is strongly supportive of this. I think the National Party should say yes or no. If it is not supportive of it, it should say whether it would repeal the provisions. Let us hear it, and then we will know. I think the rest of us want to get on with this bill and get it into law as fast as we can.

NANDOR TANCZOS (Green): I must say it was quite strange to hear Lynda Scott talking about the other substances that are already available. It is quite true, but that was one of the issues the Health Committee addressed quite carefully in the way that “substance” is defined. It includes any mixture, preparation, or article manufactured for the primary purpose of inducing a psychoactive effect. That is a deliberate attempt to ensure that the category is opened up so that new substances can be added. Let me add, once again, that it was the Green input that actually got that definition, because the committee was looking at restricting it to simply benzylpiperazine alone, and it would have been a major mistake if we had gone in that direction.

I will address three of my amendments. One amendment is to clause 36, “Matters to which Minister must have regard before recommending Order in Council under section 34(1)”. The bill puts forward a number of criteria that the Minister must have regard to that are in addition to the matters already set out in the primary Act, in section 4B(2). I made the point in the second reading stage that I do not understand why we would have one set of criteria for controlled drugs classified under A, B, or C class, and a different set of criteria for those under D class. As I said before, it suggests that we have already determined what classification we will make, before we have even looked at the criteria and the evidence. It makes obvious sense to have one set of criteria, incorporating both those sets, for all substances, and then the recommendation of where they should be classified would drop out of that.

Why would we not want those criteria to apply to any drug? Let us look at them. In clause 36(2)(b)(v) one of the matters is “the risk of encouraging persons to use more dangerous substitutes in place of the substance:”. I take the example of khat, which, I understand, is a class C drug. It is a bush that Somalian and North African people have been chewing for a long time as a mild stimulant. If we were going through the evidence-based criteria that we now have in place, which we did not have when khat was classified, would we not want the Minister and the Expert Advisory Committee on Drugs to consider whether making khat illegal might encourage North African people to use a more dangerous stimulant? Would we not want to ask that question? Would we not want to know? Would we not want that to be considered? It is unbelievable to me that we think those criteria do not apply in terms of classifying drugs as A, B, or C.

Subparagraph (vi) refers to the matter of “whether alternatives to restrictions or requirements imposed on the substance are available and are likely to be effective in reducing the risks or harm resulting from abuse of the substance.” Surely, we would want to ask whether there were alternatives to making people criminals. Surely, we would want to consider that, to have it in our mind, and to make it part of the equation. I hope members will support my amendment to clause 36 in that regard.

The other amendment is to clause 58. As I have said before, the enforcement powers are very draconian. At the moment, if an enforcement officer—health officer—or member of the police believes that an offence has been, is being, or will be committed, he or she has the right to go in and seize any restricted substance, document, or record. That could put someone out of business if there are no safeguards around that. My amendment states that it has to be done by warrant—not just because a police officer or health officer believes that there is an offence. There has to be some evidence, some basis for that belief. That is quite appropriate, and is like most legislation in this country.

The other aspect of the amendment is a time limit. If officers seize any substance, they may not retain it for any longer than 72 hours unless an information is laid in respect of the relevant serious offence. The situation at the moment is that a health officer could say: “I think you’re going to commit an offence sometime in the future.”, and could then go in and seize all the products off a person’s shelf, and seize his or her computer records. The officer would never have to charge the person, or to give the items back, but could just hold on to them forever. That will simply put people out of business; that will destroy businesses. There has to be some safeguard. If people break the law, of course they should be punished. But this legislation opens the door to punishing people who are abiding by all the laws and regulations, and simply gives unrestricted power. If members look at other kinds of offences, they will see that my amendment is quite in line with them.

KATHERINE RICH (National): I call on the Associate Minister of Health to take another call, because there seems to be a glaring inconsistency in his thought processes with regard to this bill and another bill before the House that aims to increase the drinking age. Both of those bills were brought forward to the House by the Progressive Party. I would like the Minister to explain why it is OK for an 18-year-old to buy a party pill, yet why, according to the Minister, that young person is not able to make the decision to buy a beer until he or she is 20 years old. Why does the Minister assume that a New Zealand citizen is responsible enough to make a decision about whether he or she buys benzylpiperazine, but not responsible enough to make a decision about whether he or she buys a glass of wine? There is a major, glaring inconsistency in the approach of the “Jim Anderton Party” to this issue. It is saying that it is OK for young people to buy party pills at the age of 18, but if they want to buy a beer at the pub they need to be 20.

The Minister told National members to go into the shopping malls and explain our position to concerned parents. I say to that Minister that he should go into shopping malls and tell parents why it is OK for New Zealand youth to buy party pills when they are 18, when he is going to turn round and vote to raise the drinking age for alcohol. That is not consistent—there is a glaring inconsistency. He is saying that young people are responsible enough to make a decision about one licit substance, yet are not responsible enough to make a decision about another licit substance that has been in our community for centuries. I ask the Minister where the logic is that allows him to vote for the regulation of the sale of party pills to 18-year-olds, yet also allows him to say that he does not trust young people with the ability to make a decision about whether they share a beer with their parents or friends, etc.

There is no consistency in the two bills the Minister’s party has brought before this House—well, Part 3 of the Misuse of Drugs Amendment Bill (No 3) has basically been brought to the House by his party, although it is now incorporated into a Government bill. There seems to be no logic in the dual positions the Minister is currently holding about two substances that are legal in this community. I would like him to explain how he will vote to allow New Zealand kids to buy party pills and herbal highs, yet will tell them they are not responsible enough to buy a beer or to make a decision about alcohol—which is something the community has had a lot more experience with than some of the herbal highs and substances we have seen proliferate in our communities in the last few years. The Minister has asked us to make his day by explaining our position; I would like him to make our day by explaining that glaring inconsistency.

There does not seem to be a helluva lot of logic in trying to regulate two different licit substances and saying to New Zealand citizens that they need to be 18 to buy one substance yet 20 to buy another. Although we have all this feigned concern about what is going on in the community, it seems to be more about politics and winning votes for the “Jim Anderton Party” as opposed to really dealing with the issues consistently and logically, with evidence and science, and bringing in laws that are consistent and that make some sense.

The other point I would like to bring up in relation to Part 3 concerns the definition of “substance”. We all know that people who are involved in drugs will try to work around regulation, so why does the bill define “substance” as something that has the primary purpose of inducing a psychoactive response?

Hon JIM ANDERTON (Associate Minister of Health): I will give just a brief explanation. At least at the end of my explanation people will understand my position; I still do not understand National’s position, even after I have heard that speech—and there have been a number of such speeches. The first thing is that this is a Government measure, not a member’s bill. The Government and other parties in this Parliament are bringing this bill before the Parliament. The bill concerning the alcohol age limit was a member’s bill that was a conscience issue for Parliament, and let me remind the member who raised the issue that plenty of evidence out there, plenty of studies nationally and internationally, show the serious effect of alcohol on young people. Benzylpiperazine, as has been indicated, is a new substance in terms of its use by ordinary people. [Interruption]

It was a cattle drench—that is true—and people probably did not have any idea that someone would sell cattle drench as a party pill. But they are now doing that—and, guess what? The Government has commissioned studies and research on benzylpiperazine, and when that research comes back it may well be that it will show there is no problem whatever. However, it may well be that the research will show more problems than we even know about. If there are such problems, and if the recommendations of the expert advisory committees and researchers are that we should take further action, then we will. So that is the difference between alcohol and benzylpiperazine research.

The evidence is in on alcohol, in my view, and in the view of a lot of other members in this Parliament; we are waiting for the other evidence. The Expert Advisory Committee on Drugs advised us to make a precautionary stand, and it suggested making that stand for the age of 18. It suggested the age; I did not. We have had the age of 18 for alcohol, and in the minds of many people in this Parliament—and in the minds of many people outside it; in fact, in the minds of the majority of New Zealanders outside it—that experiment of lowering the drinking age failed. So we are now addressing it, and we cannot be blamed for doing that. Seventy percent of New Zealanders actually agree with us, so if National members are saying that that is a bad thing, they can make my day twice. If they are saying they cannot make up their minds on this bill, they can make my day again.

PITA PARAONE (NZ First): I think it is timely that I enter the debate, particularly in terms of what the two previous speakers have spoken about. My colleague Barbara Stewart has put forward a Supplementary Order Paper that suggests that benzylpiperazine, party drugs, herbal drugs, and all other psychoactive substances should be included in the list of drugs prohibited from being available to the general community. Now, as the Hon Jim Anderton, the Minister in the chair, mentioned, there is no evidence about benzylpiperazine available at the moment, but I would suggest to this Committee that given the impact that the use of illicit drugs has had on our society, it would be better to err on the side of caution than to run the risk of waiting in the meantime for research to take place. We do not know how long that research will take, and in the meantime benzylpiperazine and other drugs will be available to our young people to use in the way they feel fit.

New Zealand First believes that all party drugs, including benzylpiperazine and other psychoactive substances, should be placed on the controlled drugs schedule. Although we are pleased some regulation is being placed around party pills—in relation to their place of sale, age limits for use, and manufacturing practices—we believe that that does not sufficiently address the problems and possible long-term health effects upon young users.

I found it very interesting that during the course of the debate on this very important bill, we had a group of young people in the Chamber. They would have been listening intently to the respective views, and wondering whether some people in this Parliament really have their future as a concern. How can the effects of those drugs be considered low-risk? New Zealand First does not think they are, and we are waiting for the Expert Advisory Committee on Drugs to carry out further research into that area. The research, as we all know, is desperately needed; no one is sure of long-term effects. We do not want to see a whole age group of young New Zealanders harmed from possible toxicity or brain damage from substances that currently are legally available.

Simon Williamson, Manager for Drug Investigations in the Customs Service, has said: “These pills are literally pouring into the country in huge quantities and New Zealand seems to be a unique market for them. In my view this is a clear case of the current regulations not keeping pace with the influx of synthetic designer substances that are available.” Further on, he says that the people “pushing this stuff” have invariably got a vested interest in its sale: “These people are making a lot of money by arguing that this is a safe alternative to illegal drugs, and all I can say to that is its”—I cannot use the word in this Chamber! “The pills are central nervous system stimulants, and there is evidence becoming available now, which suggests that they are toxic in content and damaging to the brain in high doses.”

So although we are pleased to see some regulation of those substances, we would like to see stronger regulations surrounding their sale. It is particularly noticeable that manufacturing standards cannot be guaranteed under current regulations. One of the most urgent problems is the continued supply of benzylpiperazine, in excessive and sometimes dangerous doses, by irresponsible operators. As Mr Anderton well knows, that is particularly problematic in Christchurch. This is also something that should be addressed in this Committee stage. If we are to hold the manufacturers accountable under this law, we need to be sure that justice is seen to be done.

I refer to a press release put out by my colleague Barbara Stewart, which quoted a medical toxicologist from the National Poisons Centre as saying that the adverse effects of these drugs are just beginning to show and that the pills should not be sold in New Zealand without a prescription. That reinforces our view that there should be no softening of drug laws for these new designer drugs. To that extent, I hope the Committee will support the Supplementary Order Paper put in by my colleague.

JUDY TURNER (Deputy Leader—United Future): I stand to talk to Part 3 of the Misuse of Drugs Amendment Bill (No 3) and to Supplementary Order Paper 298 in the name of the Hon Jim Anderton, which was tabled when we were already considering the bill in the Health Committee. From the outset when it was first tabled—and the select committee members will remember this—I was extremely cautious about the party pills issue. I know that the Green member thinks that makes me fickle. However, I did not want to approach this matter with a sort of arrogant belief that I had a monopoly on the truth. I was very interested to hear the opinions of the various select committee members on this matter. The tension that we worked with was that on the one hand there was a huge call from the community—and I remember particularly a letter from the Christchurch City Council—asking us not to shy away from our responsibilities as legislators, and to move to put something in place, at least in the short term, to deal with the problem that people see on the streets. On the other hand the counterbalancing tension was that it appeared to many of us that putting party pills under the Misuse of Drugs Act was not necessarily the best option.

The officials gave us some very good advice, and it was their advice that tempered my position. They said—and I heard several different lines on this—that 6 to 12 months’ work would need to be done, and I have since read that possibly even 2 years’ work would need to be done, to get a stand-alone restricted substances bill. We recommended in the commentary on the bill that that work be continued, and I would still like it to continue. I think that would ultimately be our preferred outcome. But it did not provide an immediate solution, and it would be cowardly of us, as members of Parliament, not to make some attempt in that regard. I want to thank the chair of the select committee, Steve Chadwick, for her guidance on this matter, and also the officials, because I really do think we have to be pragmatic in such situations.

I appreciate the conservative approach of the New Zealand First amendments. Starting from a position of prohibition is, I guess, an extremely safe position to take. However, we were not—

Simon Power: I raise a point of order, Mr Chairperson. The member is obviously in some discomfort. Perhaps I could seek the leave of the House for just a moment, for her to collect herself—so that other members do not attempt to take a call or anything—and resume her speech when she is ready.

The CHAIRPERSON (Hon Clem Simich): Thank you for raising that. We will just bide time for a moment. There is no hurry, Judy Turner.

JUDY TURNER: On the New Zealand First amendments, I do feel that the Expert Advisory Committee on Drugs has given us some guidelines on the matter of party pills, and I think we need to move on those. However, I share the concerns of the New Zealand First members. I think we do want to see the role of the expert advisory committee include the opportunity for constant and active review of this decision. My concern with regard to party pills is the cocktail effect when they are combined with alcohol. Part of what we regulate may be that party pills are unable to be sold in a context where alcohol is being sold as well—that may be a good solution. However, we did want to support this measure so that something is put in place now, to respond to the many requests that certainly came across my desk in that regard. So we are very happy, and I want to thank also the Hon Jim Anderton, because when I approached him with my concerns he had a very open door on the matter. I appreciate that, because I do feel that we need to proceed on all these matters with great caution.

This problem will not go away. As fast as we put regulations around products, new products are coming online. We do need to be extremely vigilant as we monitor those substances and their effect, and how they are consumed. I read a media release the other day on party pills, which stated that one of the concerns is the quantities in which party pills can be sold. There are recommended dosages on the product, but there is strong anecdotal evidence that young people ignore those recommendations and take far more than is recommended. We need to look, then, at the quantities the product is sold in. To wait for 2 years is absolutely not an option, and it is a very irresponsible position to take.

However, let me just reiterate that United Future would challenge whoever is in Government after this election to make this matter a priority, to advance the work that does need to be done—to take the 2 years if that is what it will take—and to get up a restricted substances Act. I think there are some long-term problems. I accept—and this will please the Green member—that one of the things I found very difficult in working on this bill was that it was a bit of a dog’s breakfast. I am not sure that Mr Tanczos and I would agree on how it should be improved. However, I found it quite difficult at times to get my head around some of the provisions, because they have been amended by adding bits on all over the place. I do think that an overall reworking could be done of our drugs legislation.

NANDOR TANCZOS (Green): To be fair to the previous speaker, Judy Turner, perhaps I made some uncharitable remarks earlier, and it is a very complex and difficult bill. One of the things I think there is widespread agreement on is that there needs to be a major review of the misuse of drugs framework, in order to produce some kind of coherent, integrated drugs framework.

I rose, though, to address the amendments of Barbara Stewart, and I do so because the New Zealand First member raised the issue. Unlike Judy Turner, I do not think New Zealand First’s amendment is a particularly conservative or safe approach to these substances. Ms Stewart is trying to add party pills, herbal drugs, and all other psychoactive substances to the schedule, as we have done with benzylpiperazine. I have to ask what that would mean. Herbal drugs—does that mean that health food shops selling chamomile tea, which is a known relaxant, will now have to restrict it, make it R18, and have labelling and manufacture restrictions? Does that mean grocers selling lettuce, which we know contains an opiate, latex, will suddenly have to make it R18? Does it mean that nutmeg will be restricted to adults? Will we be raiding Little India franchises to bust them for selling curries to minors? It is just bizarre! Let us get real about what it would actually mean.

Adding all other psychoactive substances to the schedule would clearly include Coca-Cola, because it contains caffeine. The rumour I have heard—I do not know whether it is true; I am a bit younger than many of the members here—is that one of the contributing factors to the horrors of the Pinochet regime in Chile was the nationalisation of Coca-Cola. If that is true, imagine what it will do to us if we try to make its product R18! It will not just be a military takeover; it will be lining us all up against the wall.

When we start to use those kinds of definitions, which are so broad, we have to actually understand what they mean. Perhaps I am being a bit light with the member’s amendment, but I think it does demonstrate that we have a pretty strange attitude when it comes to psychoactive substances, because they are all through our society. Drugs are all though our society, and I do not know whether there is a member in this Chamber who does not use drugs in one form or another. I would be highly surprised if that were the case. Very few people use no drugs, and I think that situation would probably apply only to strict Mormons.

Steve Chadwick: Nicotine.

NANDOR TANCZOS: Nicotine—exactly! Many members of this Parliament smoke. Drugs are rife in this society. Many members of this Parliament use some of the most dangerous drugs that are available in this country. Tobacco is one of the most addictive drugs and one of the most damaging to the body. Members of this Parliament smoke.

Bill Gudgeon: What about cannabis?

NANDOR TANCZOS: Well, actually, that is quite incorrect. The member needs to look at the evidence on how many people die from smoking tobacco a year compared with how many people die from smoking cannabis a year, which is zero. Then the member might be informed enough to express an opinion on the matter.

The question was put that the following amendment in the name of Nandor Tanczos to clause 36 be agreed to:

to insert in subclause (1) after the words “section 34(1), the words “or section 4(1) of the principal Act”.

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

Ayes 7

Green Party 7.

Noes 109

New Zealand Labour 51; New Zealand National 26; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Nandor Tanczos to clause 58 be agreed to:

to omit subclause (1), and substitute the following new subclause:

(1) Any District Court Judge or Justice or Community Magistrate, or any Registrar (not being a constable) may issue to a member of the police a warrant to enter a place, who, on an application in writing made on oath, is satisfied that—

(a) there is a restricted substance in that place; and

(b) an offence has been, is being, or will be committed under this Part in relation to that restricted substance in that place.

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

Ayes 7

Green Party 7.

Noes 109

New Zealand Labour 51; New Zealand National 26; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Nandor Tanczos to clause 58 be agreed to:

to omit paragraph (c) from subclause (3), and substitute the following new paragraph:

(c) seize any restricted substance, document or record (of any kind), or other article relating to a restricted substance (for example, any advertising or labelling material) and retain for not longer than 72 hours unless an information is laid in respect of a relevant serious offence.

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

Ayes 7

Green Party 7.

Noes 109

New Zealand Labour 51; New Zealand National 26; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the amendment set out on Supplementary Order Paper 377 in the name of the Hon Jim Anderton to clause 32 be agreed to.

Amendment agreed to.

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

Ayes 82

New Zealand Labour 51; New Zealand First 13; Green Party 7; United Future 8; Progressive 2; Māori Party 1.

Noes 35

New Zealand National 26; ACT New Zealand 9.

Part 3 as amended agreed to.

Schedule 1

The question was put that the following amendment in the name of Barbara Stewart to schedule 1 be agreed to:

to add to New Part 3, the following items:

Benzylpiperazine (BZP)

Party Drugs

Herbal Drugs

All other psychoactive substances.

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

Ayes 13

New Zealand First 13.

Noes 103

New Zealand Labour 51; New Zealand National 26; ACT New Zealand 9; Green Party 7; United Future 8; Progressive 2.

Amendment not agreed to, and schedule 1 agreed to.

Schedules 2 and 3 agreed to.

Schedule 4

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

Ayes 82

New Zealand Labour 51; New Zealand First 13; Green Party 7; United Future 8; Progressive 2; Māori Party 1.

Noes 35

New Zealand National 26; ACT New Zealand 9.

Schedule 4 agreed to.

Clauses 1 and 2

Dr PAUL HUTCHISON (National—Port Waikato): Thank you for the opportunity to speak on the preliminary clauses of this very important Misuse of Drugs Amendment Bill (No 3). The National Party is indeed supporting these very important parts of the bill because, as introduced, they amend two main areas of the Misuse of Drugs Act and the Misuse of Drugs Amendment Act 1978. These deal with presumption of supply matters to be amended by Order in Council, subject to the affirmative resolution procedure; they also amend the presumption of supply quantity for methamphetamine, and add a Ministry of Justice official as a member of the Expert Advisory Committee on Drugs. The National Party certainly believes that all those things are very important in terms of ensuring that the affirmative resolution procedure can be used in the most optimal way possible, given that it is a very special procedure.

I did not get an opportunity when we were discussing Part 1 to talk about the Needle and Syringe Exchange Programme. One of the aspects of Part 1 was, indeed, the reversal of proof that would be allowed for individuals who were on the programme so that they would not be subject to having to provide proof in the first instance that the needles were not obtained legally. Instead, the proof is on the part of the police to do this. I think that is a very useful measure because undoubtedly the Needle and Syringe Exchange Programme in New Zealand has essentially been a very useful process.

I was approached by the Drug Foundation to support an amendment that might completely remove any form of punishment for needle exchange users, whether they had obtained those needles through the programme or through illicit means. I understand that the international evidence has been that where there has been no form of recrimination for those needle users, it has meant that they have been able to go about the needle exchange process much more freely than is the case at present. Because, as I understand that, even with the reversal of proof, it still will mean their going to court and going through the process that they find sometimes pretty arduous and pretty difficult, when they are actually part of the needle exchange process, and are taking at least the responsible action to make sure that the needles that they use are clean and are unlikely to be associated with HIV, hepatitis, and all the infectious diseases that we are very concerned about for those substantial number of people who do, indeed, use needles in this country.

I note that the final report of the Needle and Syringe Exchange Programme recommended that the New Zealand Government and the community recognise the vital role of the exchange programme in preventing HIV infections, and I absolutely concur with that. It also said that the New Zealand Parliament should approve the proposed amendment to the Misuse of Drugs Act that would remove the offensive possession of needles and syringes legally obtained through the exchange programme, and indeed, National supports that.

It went on to say in its 16th recommendation that the basic training of the New Zealand Police should include a short session on New Zealand’s harm minimisation and the Needle and Syringe Exchange Programme, and that that exchange programme should liaise with the police to achieve this goal. I think that is very important, and the National Party supports it.

Dr LYNDA SCOTT (National—Kaikoura): I just want to respond to some of the things that the Minister in the chair, Jim Anderton, said previously. He talked about these drugs having been around for 10 years. Well, no; the drug problem has been around for a long time, but he was wrong about the time that Benzylpiperazine and P have been around. What happens is every year people think of something new. Benzylpiperazine has not been around for 10 years.

He also said that National had done nothing. Well, how hypocritical is that? This whole piece of legislation that this Minister is using was devised by Wyatt Creech; the Minister seems to forget that. The expeditious scheduling that has set up the affirmative resolution process was actually developed by the National Government because we had huge concerns about Ecstasy and Fantasy. Of course, the use of P methamphetamine is pretty new. It has appeared in the last 5 or 6 years, and it has been expeditiously scheduled, as well. So the Minister is incorrect in his assertions that National had done nothing. We had done a huge amount, and he has used that process, as we did, to try to ensure safety for our young people.

But the other thing that was hypocritical about this Minister saying he does not understand National’s position is he has actually said he will look at a stand-alone Act for Part 3 of the Misuse of Drugs Amendment Bill (No 3), that he will look at a separate Act for restricted substances. That is exactly what National was asking for—that there should be a separate Act of Parliament. There was a great deal of debate at the Health Committee about his Supplementary Order Paper 298. That debate was around how on earth we would actually fit it into this bill, whether it would achieve the aim that it was set up to do, and whether expeditious scheduling should be allowed to be used in this particular way. There was debate week after week. In fact, the chair of the Health Committee, Steve Chadwick was nearly tearing her hair out at some points. I remember her saying she had just had enough of our going round and round in circles on the issues. The Minister stood up and said: “There’s no problem.”, and I am sure he has good intentions, but that is not what National members have been debating; we have been debating the process. The Minister agrees that there is a problem. He knows that, and that is why he gave us an undertaking to look at setting up a stand-alone Act for this particular part of the legislation.

National supports the original intention of the Misuse of Drugs Amendment Bill (No 3). That intention was to make the precursor substances for making P methamphetamine—that is, ephedrine and pseudoephedrine—illegal. We support that. We support the change of onus of proof for needles, to try to improve the Needle and Syringe Exchange Programme. We support having regulations and some controls over party drugs; we have no problem with that, at all. It is just the process that was used that we have a problem with. The Minister himself agreed with us. He knows there were problems. He knows that this part was added very rapidly, and the select committee had a lot of trouble trying to decide what to do with his Supplementary Order Paper. The debate went round and round the table week after week. I am sure that United Future members can confirm that, because they had real concerns about it, as well; it was not just ACT and the National Party. We do need to ensure that legislation is properly drafted.

Even today, through the Committee process, National members have been making amendments to this bill. Dealing with controlled drugs is something that needs to go through the parliamentary process quickly. There are many ways for it to come through this House, and, of course, the use of urgency is one of those ways. We have always supported the select committee process because it allows the public to have a say—the people at the coalface dealing with these issues; the police, customs officers, and parents—on these issues so that we can try to get it right, and try to make sure that the legislation and the regulations that follow actually deliver what we want. I have seen, time and time again in this Parliament—I think the Charities Bill would probably be the best example in recent times—officials not hitting the target when they are deciding on regulations and developing law. It is not that everyone does not have good intentions; it is that people are actually not in touch with those on the ground and the real issues, and they miss the target.

National members certainly support this bill.

PITA PARAONE (NZ First): I shall talk to both clauses 1 and 2, and I shall deal with clause 2 first. Notwithstanding the technicalities that may prevent my suggestion, I believe that this legislation should come into force on the day the royal assent is given, rather than on the day after that.

But having said that, I say New Zealand First considers this to be a very important bill. It is important that the title is clearly understood by everyone. Notwithstanding that some legislation in the past has included clauses that lacked definition, and of course I refer to clauses regarding the principles of the Treaty of Waitangi, New Zealand First is glad to see that those principles are not included in this bill. It just goes to show that we really do not need those principles to be alluded to. It is more difficult to realise from the title that this important legislation relates to the regulation of benzylpiperazine and other party drugs. The manufacturers of those pills need to be able to identify easily and to understand these regulations. We understand that separate legislation for restricted substances is at least 18 months away. We will follow that development with some interest.

It is pleasing to note that groups like the Social Tonics Association of New Zealand are already taking measures to put into place many of the community-focused measures that are covered in this bill. This legislation will clarify that benzylpiperazine is not a dietary supplement or a food. Since it is included as a restricted substance, it is therefore, by definition, not a food or dietary supplement. That group is therefore taking voluntary steps, in anticipation of further regulation under the bill once it is passed—and I am talking about the Social Tonics Association of New Zealand. The association is changing its labels, so that products are no longer marketed as dietary supplements. It is also recommending three issues: firstly, limiting the amount of benzylpiperazine contained in each pill to 200 milligrams, with a limit of 600 milligrams per packet, secondly, including more explicit warnings on labels that benzylpiperazine is contained in products and they are not to be sold to under 18-year-olds, and, thirdly, developing terms of trade to prevent retailers from selling to persons under 18. It is essential that benzylpiperazine products are manufactured and sold safely. The association remains committed to regulations that will exclude irresponsible and unsafe operators from the industry.

This bill is an example of an evidence-based approach to policy development and of a strong commitment to harm minimisation. New Zealand First, again, repeats its support for the Misuse of Drugs Amendment Bill (No 3).

NANDOR TANCZOS (Green): I was not intending to speak on this part, but I did rise to speak because Dr Paul Hutchison raised a very important issue around needle exchange. I did actually move an amendment to remove the possession of needles as an offence. Members may have missed it, because it is in a miscellaneous provisions clause, and, again, that comes back to the problem of the bill and the Act as a whole. They are quite difficult things to find one’s way around in.

There is a concern that even by reversing the onus of proof—as the bill does—people are hindered from using clean needles. The Health Committee heard very strong evidence that police do use the existing law. Generally, police do not charge people for possession of needles, but they do use it to bully people and extract information. That does hinder intravenous drug users from using clean needles, and that is the problem. Perhaps it is not such a big problem with current intravenous drug users, because the current intravenous drug using community is well aware of the needle exchange programme, how it works, and its safeguards. But what is of increasing concern is new intravenous drug users. There is growing anecdotal evidence that some P users are starting to move to intravenous use. The evidence is not very clear, it is not very substantial, but certainly the anecdotal evidence that is coming off the streets is that as methamphetamine gets more scarce and more expensive, some people are starting to move to intravenous drug use.

Obviously, that is extremely worrying in a number of ways, and it should concern us all. But I certainly think we would all share the view that if people are starting to move towards intravenous drug use, there should be no hindrance to their getting clean needles. Of course, there is a simple cost equation as well. There are enormous cost savings to be made in health care. At present there is a 6 percent sharing rate of needles, and if that was reduced, or eliminated, that would produce huge savings for New Zealand health care. An independent valuation found that every dollar spent on New Zealand’s needle exchange programme currently saved an estimated $3.35 in health-care costs. So there is an enormous economic, as well as social, moral, and ethical, argument for doing that.

The committee did address this issue, but it was persuaded by the police not to remove it as an offence entirely. The arguments of the police were actually quite spurious. They said that they needed it for drug control and to stop an illegal market in needles. Let us be clear: there is no black market for needles and syringes in New Zealand—that is, all needles and syringes used for drug injection are obtained from an authorised supplier. Even if we did remove possession of needles as an offence, it would not take away the offence of unauthorised selling. One still has to be an authorised seller, so people could still be prosecuted if they were selling needles and they were not authorised to do so. So the law stays in place to allow us to police that.

In any case, let us be real about it: there are no incentives for an illegal market in needles. The concern was raised that there might be a drug dealer who was selling needles as well. First, there is no incentive for people to buy needles from a dealer, because they can get them free from the needle exchange simply by swapping their old ones. So there is no financial incentive; there is a disincentive to get needles from a dealer. Secondly, perhaps dealers could give them away, but why would they do that? Why would they incur an extra cost on themselves when there is no benefit in doing that? People would just go to the needle exchange to get one. In any case, if dealers were giving away clean needles, surely that would be a good thing. I would have thought so. It would be better than allowing their customers to share needles and, therefore, put themselves at risk of contracting HIV, hepatitis, or any of the other blood-borne diseases. The third possibility was that drug dealers would give away dirty needles. That just does not make sense. They would lose their customer base pretty quickly if they did that. Customers would know pretty quickly that that was going on and they would not use them. So it just does not make sense.

The argument is just illogical, and it is sad that the Health Committee was persuaded by it, because I do not think it holds any water. That is pretty clear from international evaluations, and we can look at the report of the Australian National Drug Law Enforcement Research Fund titled: The role of police in preventing and minimising illicit drug use and its harm, which shows clearly the benefits of needle exchanges and removing the possession of needles as an offence. As I said, there are enormous savings in health costs, mortality rates, morbidity rates, and the like.

JUDY TURNER (Deputy Leader—United Future): I shall take a brief call on the first two clauses of this Misuse of Drugs Amendment Bill (No 3).

First, I shall make a quick reference to the needle exchange business. The police shared their concern that if we removed the full ability for needles to be used evidentially, that could encourage needle use over other methods of consumption—that needle use would then become a preferred method, because of the legal sanction around it. That was a real concern that some of us shared.

I want to talk about the title of the bill. What comes to mind is what has been mentioned many times in the Chamber this morning, and that is that many of us—and we included it in the commentary on this bill—want to see ongoing work done to set up a restricted substances Act for legal psychoactive substances. I want to take a minute to challenge every party.

I shall start with National and Labour, the two parties that are going into this election campaign with the belief that they can viably be the Government after the election. My challenge to them is whether they are prepared to promise us today, in the Chamber, that they will continue the work, which I understand could take up to 2 years. Will those parties give us a guarantee that, if they become the Government, they will treat that work as a priority, so that a restricted substances Act is established? It requires the will of the Government, and I believe that those parties should make that commitment today.

But, beyond that, I ask this question of the other parties, whose goal is to be a support party after the election, and who seek to wield some power in terms of the conditions they put down to the party they are supporting: will they give the same undertaking that, after the election, they will set as a priority, with whichever party they are working with—if they get that opportunity—the advancing of this much-needed work, so that a restricted substances Act is put in place? I ask that question of New Zealand First, the Greens, and ACT. Will they make a commitment and guarantee us today that they would see that as a priority, and that it would be part of any agreement they made if they got the chance to make an agreement? I think every party needs to put itself on the line in that regard.

The question was put that the amendment set out on Supplementary Order Paper 377 in the name of the Hon Jim Anderton to clause 1 be agreed to.

Amendment agreed to, and clause 1 as amended agreed to.

Clause 2 agreed to.

Bill reported with amendment.

Report adopted.

Third Reading

Hon JIM ANDERTON (Associate Minister of Health): I move, That the Misuse of Drugs Amendment Bill (No 3) be now read a third time. This bill updates our drug laws and makes them more responsive to licit - drug use trends in New Zealand. I know that all parties in Parliament understand the importance of such a measure. In particular, the bill will permit presumption of supply matters to be amended by Order in Council at the same time as a change in classification, subject to the normal affirmative resolution procedure by Parliament, which, of course, means that Parliament still gets to decide the issue.

The bill sets the presumption of supply amount for methamphetamine at 5 grams rather than the present default amount of 56 grams. 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 and the affirmative resolution procedure. That change to the select committee report was sought by the United Future party. The bill adds a Ministry of Justice official to the Expert Advisory Committee on Drugs. It creates new offences relating to the importing and exporting of precursor substances, which are ingredients like ephedrine and pseudoephedrine that are used in the manufacture of methamphetamine. It creates new powers of search and seizure without warrant for ephedrine and pseudoephedrine, and it allows controlled deliveries of precursor substances, which will deal to some of our drug dealers.

The bill retains the offence of possessing a needle or a syringe, but it puts the defence of where the needle or syringe has been obtained lawfully, into the principal Act. Currently, this defence is hidden away in regulations, where few lawyers with not much experience can find it. It moves the onus of proof from the defendant to the prosecution, as recommended by public health experts.

Finally, the bill adds a new restricted substance as part of the legislation, and regulates benzylpiperazine, the main ingredient found in party pills, as the first restricted substance in New Zealand under the terms of the amended legislation, and it almost certainly will not be the last.

Today I would again like to thank all members of the Health Committee for their valuable work on this bill. I know there have been complex matters to deal with. Committee members had to tackle the public health and legal issues within a relatively tight time frame, but it is a better time frame than the years it sometimes took previously to get these matters before the House. I know that some members would have liked a great deal more time to consider a number of issues arising from the bill, but against that I know that the majority of us here understand the need to move as quickly and practically as possible to respond to changing trends in the drug abuse scene.

Since I became the Associate Minister of Health and became responsible for the national drug policy, 3 years ago, the Labour-Progressive Government has put in place a sophisticated strategy to try to turn the tide against the harm caused by drugs in our country. This strategy includes getting very tough on the pedlars of very dangerous drugs, like the manufacturers and importers of methamphetamine and its precursors. Our strategy includes increasing the amount of public investment on reducing the demand for drugs through community-based education and action programmes. It also includes investing more in treatment services, because there will need to be more if we are to realistically expect significant numbers of former drug users to get back on their feet and live a drug-free lifestyle.

Our strategy includes investment in empirical research into the medical health and social and economic effects that drug abuse is having on individuals, on their families, and on communities in New Zealand.

To effectively turn the tide against the abuse of alcohol and drugs, we need to work on all fronts at the same time. I have to say that I think some of the squabbling about whether we should have more stick and less carrot, or more carrot and less stick, is not very productive. Effectively reducing the harm that drug abuse is causing is not an either/or matter. It is about central government, communities, local government, and families working together on all fronts as appropriate to reduce harm from drug abuse. This bill before the House fits with that multifaceted and balanced strategy. I recommend it to the House.

Dr PAUL HUTCHISON (National—Port Waikato): The National Party certainly does support the Misuse of Drugs Amendment Bill (No 3) as introduced, because it deals with the very concerning area of controlled drugs and the huge need in New Zealand to use every possible method to stop their very worrisome proliferation. I want to remind the House of how that proliferation has occurred. We learn from the Institute of Environmental Science and Research that New Zealand’s first methamphetamine or P clandestine laboratory was discovered in 1996. Since then the number of laboratories has dramatically increased, particularly in the last few years. Police found nine laboratories in 2000. In 2001 they found 41, in 2002, 147, and in 2003, 146 of them were closed. I think that gives us an idea of how dramatically the problem has increased in New Zealand for about 10 years, but has particularly escalated over the last 5 years.

I wanted to point that out, because in the 1997-98 era the Rt Hon Wyatt Creech thought that it was important—at that early stage, before the escalation had really occurred—to bring in the affirmative resolution process, in order to have a mechanism available to combat the proliferation that he, quite rightly, saw would occur. The Labour Government sat around for several years, before finally bringing in its amendment to the Misuse of Drugs Act, in about 2001-02. It certainly took quite some time to do that. So although Jim Anderton said that something should have been done in the 1990s, the evidence is that as recently as 2000 only nine clandestine P laboratories had been closed by the police in New Zealand. But that number has escalated logarithmically over the last few years.

Undoubtedly, the reason we are supporting this bill is the inclusion of the main provisions in Parts 1 and 2: the presumption of supply matters to be amended by Order in Council, the presumption of supply quantity for methamphetamine, the adding of a Ministry of Justice official to the membership of the Expert Advisory Committee on Drugs, the creation of new offences of importing and exporting precursor substances, the creation of powers of search and seizure without warrant for ephedrine and pseudoephedrine, and the measure allowing for the controlled delivery of precursor substances. The National Party is hugely aware of the illicit use of drugs and of their importation by highly sophisticated gangs, which are ready to change their methods and formulae in relation to those very dangerous controlled drugs. If a drug appears on the schedules, the gangs will come up with another one, and therefore it is necessary to use every method we can possibly find to combat the sophisticated nature of illicit drug manufacture and the lengths to which New Zealand and international gangs go in order to bring drugs into this country. That is a hugely serious and worrying concern for us.

But it is also hugely concerning that the Hon Jim Anderton brought in the amendment that has now become Part 3 of this bill, which also covers the affirmative resolution procedure that the Regulations Review Committee has pointed out must be used wisely by the New Zealand Parliament. I reiterate what that committee stated about it: “The amendment of primary legislation by an Order in Council is commonly referred to as the ‘Henry VIII’ clause and is regarded as undesirable, because it allows the executive the power to override Parliament. Such powers should be granted by Parliament rarely and with strict controls.” I also point out what the committee further stated: “In our view, the classification of restricted substances is a matter of significant policy that should be dealt with by primary legislation.” It is for that reason that the National Party is not supporting Part 3 as brought in, somewhat belatedly, by the Hon Jim Anderton. The proper consideration it deserves has not been given to it.

There is no doubt that the National Party recognises the problem of party pills and the use of some substances, such as “BZP”, or benzylpiperazine, as being one of great concern. But we have made a commitment to bring in well-thought-out, well-considered legislation within the first 12 months of the new Government that will very likely come into office within the next few months ahead. I think it is also absolutely important to reiterate that the affirmative resolution process should be used with great care, as the Regulations Review Committee has recommended. That recommendation has been ignored by the Labour Party, and by Jim Anderton and his so-called coalition party, the Progressive Party. I think that is very, very serious. I also think it is important to point out what the Expert Advisory Committee on Drugs concluded about benzylpiperazine. It stated that there was insufficient information available on which to base a recommendation to classify those substances in the schedules of the Misuse of Drugs Act 1975.

I again absolutely emphasise the fact that the New Zealand National Party does regard those substances as being a very serious issue. Many of us have children and teenagers who talk continually about the proliferation of party pills, herbal pills, and related substances, and there is no doubt that those substances are becoming logarithmically more available. It is because of the highly explicit nature of how they are being advertised now, and of how they appear to be being used by many young people in New Zealand, that Jim Anderton has woken up suddenly and said that we must do something about it—and what is being done about it has been brought into Parliament very much against the wise advice of the Regulations Review Committee.

It is also important to point out that the expert advisory committee did express concern about the increased supply of party pills through a whole variety of mechanisms—over the Internet, through countercultural retailers, and, more recently, through liquor outlets, service stations, and dairies. We want to make sure that well-considered legislation is brought to Parliament regarding that. Time and time again we see the Labour Government bring in hurried legislation, under urgency, just like today, that will undoubtedly have to be re-amended at a later time. That is why we believe it is so important to have well-considered legislation. I was deeply concerned to hear the Hon Jim Anderton make light of the affirmative resolution procedure and say it is not a serious procedure. It is a very serious procedure. Indeed, it goes to the heart of our democracy, and it is a great worry when we have the Labour Party and the coalition party, the Progressive Party, making light of that procedure.

The National Party does support the bill, but is very concerned about Part 3.

STEVE CHADWICK (Labour—Rotorua): That was a rather confused speech made by the National Party spokesperson on health. Partly, it shows that there have been a lot of changes to the Health Committee.

I acknowledge at the beginning of my third reading speech the valuable contribution made by Lynda Scott. I know that this bill will probably be the last bill she is involved in. Lynda Scott was there when Wyatt Creech brought in his first amendment to the Misuse of Drugs Act, and she well understood about the Order in Council and the expeditious scheduling. I think it has been a confused issue ever since. Today’s debate by Opposition members has shown me how confused those members are about the value of the Order in Council mechanism. Wyatt Creech brought it in, very sensibly. We use it very moderately, understanding the need for flexibility and the ability to expeditiously schedule. Yet National has argued against the use of the Order in Council mechanism. It is quite bizarre.

This bill was a difficult one. It was very, very complex, actually, because of the statutory framework we are working with, with legislation on controlled drugs, then in came the issue of licit drugs with Supplementary Order Paper 298, which was referred to us in November. It was not a knee-jerk reaction. It was referred to us in November as a result of the Expert Advisory Committee on Drugs, not as a result of the Associate Minister of Health panicking and looking for answers out there, to please the electorate.

The Misuse of Drugs Act and subsequent amendments are rather out of date and do require a major overhaul. We do need to look at how we regulate both controlled and licit drugs. I believe that the Order in Council process showed it is still a robust mechanism and very useful in terms of expeditious scheduling. It does involve the House, it does involve Cabinet, and it does involve the select committee. I find it a rigorous process. It is not lightly used, at all. It was sad to see the Opposition, therefore, voting against Part 3.

There is a challenge to us about the mix of drugs, and we took it very seriously. I believe that members of the Health Committee, those who understood the original Misuse of Drugs Act, came up with a very sensible solution in terms of where we are in the electoral cycle. They knew that there was no way that our concerns about benzylpiperazine and where it stood in our public health framework would be addressed at this time in Parliament, and it was not good enough to say we would develop our own, stand-alone bill. I do not think that is a sensible solution, because it means yet another drug bill without our looking at the whole drug framework.

A lot of preparatory work was done. When we look at the way tobacco regulation and tobacco control were brought in, in 2003, we see that we have carried over those regulatory provisions into this bill. Members do not seem to have read this bill very closely at all. We have set up a second schedule of criteria that the Expert Advisory Committee on Drugs has to look at and take into account, before the Order in Council process is put in motion. We have put in some very sensible issues about the practicalities of enforcement requirements, and having the right incentives in place so that we do not push people into using another illicit drug that has come on to the market. We looked at sale and supply issues. Katherine Rich pointed out the very interesting issue that in this bill we are talking about restricting sale to 18-year-olds, and not promoting these social herbal highs to under-18-year-olds, yet a contradictory piece of legislation about the drinking age has been introduced. This bill allows a voluntary code, restrictions on the location of where sales can be made, and provisions for advertising, labelling, and co-packaging, as well as manufacturing standards.

I think we have done very, very well with this bill, given the complexity of the issues and the timing of the electoral cycle. I am proud to support this bill.

PITA PARAONE (NZ First): I rise on behalf of New Zealand First to speak to the third reading of the Misuse of Drugs Amendment Bill (No 3). I will say straight off that New Zealand First supports this bill, which might surprise some people on the Government benches. However, I have been asked, on behalf of my caucus, to extend our appreciation to the Health Committee, and in particular to the officials for the time they spent with the committee ensuring that it was totally informed about the many aspects of this legislation, and about the inclusion of legal and illegal substances in the same legislation.

New Zealand First was disappointed that the Supplementary Order Paper submitted by my colleague Barbara Stewart was not supported. However, New Zealand First did recommend that these groups of substances be treated in the same way as all other controlled drugs and included on the appropriate schedule. I note that during the earlier debate in the Committee stage the Green Party member made light of our suggestion, particularly in terms of products like Coca-Cola. I say to the Green member, and indeed to other members of this House, that if warnings were applied to the sale of products like Coca-Cola, then the general public would be aware of the dangers of the particular drugs contained in them. We believe that harm minimisation as a strategy does not address the issues and needs of those most at risk from abuse of these substances.

So while we support the Supplementary Order Paper put in by the honourable member, Jim Anderton, we view it as a first step only. New Zealand First believes that there should be no softening of drug laws for these new designer drugs. We believe that these party pills should be classified as controlled drugs.

We would have liked to see these substances guaranteed as harmless. We believe that until this occurs they should not be legally available for sale. We look forward to the Expert Advisory Committee on Drugs completing further research into the potential harms of these psychoactive substances. The manufacturers of these products claim that they are safe and that they are keeping people away from the more dangerous amphetamines. In fact, we believe that by creating a culture in our young people that it is acceptable, and even desirable, to take some pills to get high, we are increasing the number of our young people who would dare to try harder drugs.

The real answer to substance abuse is education against the pill-popping habit that party pills have so dramatically created. We are told that these products are safe if they are taken according to the instructions—that is, not to take them with alcohol, and to follow the recommended dosage. At best, this argument is flawed because a large number of people do not comply with these instructions. Even with prescription medicines, where the patient receives verbal instructions from the prescribing doctor, and then from the pharmacist, compliance is not always guaranteed.

Add this to the fact that these products are designed and promoted for use at parties, where alcohol is mandatory, and where there is pressure to take extra doses, and it takes a very strong-willed young person to resist. Compliance under these circumstances would be well below the pharmaceutical average. Because of that, we may see many more people hospitalised.

I was pleased to read in a recent letter from the Social Tonics Association that it is recommending limiting the amount of benzylpiperazine contained in each pill. That appears to be a sensible measure. We are aware that a small number of operators have been basically exploiting the unregulated market and producing low-quality products with variable amounts of benzylpiperazine, without warnings or labels. The level of benzylpiperazine can be two to three times higher than the dosages outlined as potentially dangerous by the Expert Advisory Committee on Drugs.

We are also very pleased with the new offences created by this bill. This bill has needed the attention of the House, as both the police and customs have needed the support of the law in their fight against the misuse of drugs, and this bill provides for that. New offences are created that will close the loopholes that currently exist. Any legislation that helps with the early apprehension of those involved in the misuse of drugs must be good for our country.

One of the other reasons why my caucus colleagues and I support this bill is that we are looking to the future, and in particular to the next generation of members of our families. We would like to think that we have been responsible for putting in place legislation that will help to protect the forthcoming generations from the dangers that the misuse of illicit drugs will cause to our young people. In conclusion, New Zealand First supports the passing of this bill.

HEATHER ROY (ACT): I rise on behalf of the ACT party to speak to the third reading of the Misuse of Drugs Amendment Bill (No 3). We will be opposing this bill for a number of reasons, which I will come to. This legislation is very untidy. ACT would have liked to be in the position of supporting this bill as it stood in the first instance, with just Parts 1 and 2. We agree that there is room for great improvement with the control of possession and supply of dangerous drugs. The bill’s creation of new offences of importing and exporting precursor substances, creating powers of search and seizure, without warrant, for ephedrine and pseudoephedrine, and allowing controlled deliveries of precursor substances should in fact occur, and we agree with that. But we object strongly to Part 3, which was added at the select committee stage by Supplementary Order Paper.

It is was interesting to hear some of the comments from the chair of the Health Committee, Steve Chadwick, when she spoke. She said there was confusion on the Opposition side of the House, particularly on the use of the Order in Council and the affirmative resolution process. There is no confusion. We have talked about that long and hard. We had very strong submissions from the Regulations Review Committee, which, unfortunately, have by and large been ignored in the final instance. ACT is very unhappy about that. We thought the advice we received was very good, and we were most unhappy that the advice was not followed through.

As I say, we would have liked to support the bill. We did support Parts 1 and 2 through the whole process, both at the select committee level and also here in the Committee stage. But we cannot support the overall bill, because of the untidiness of the legislation and the time pressure that was put on for it to be passed. Here we are, yet again, in another period of urgency rushing through legislation that would have been much better, much tidier, and much more effective in the final outcome had that time pressure not been put on the entire process.

As I say, we would have liked to be in a position to support the bill but, in the final instance, it promotes draconian powers in relation to substances that may well be little more insidious or addictive than alcohol, nicotine, or many other harmful but not necessarily catastrophic substances. That should give us pause for thought. I refer to Part 3, which was added at the select committee stage. To be fair to Mr Anderson, it was very good that the Supplementary Order Paper came to the select committee in plenty of time so that the full parliamentary process could be gone through and submissions could be made. But I think the fact that it is tacked on to a very rigorous bill when it should have been a stand-alone bill is a retrograde step. I do hope that as time progresses, that will in fact happen so that the dangerous substances that, as everybody acknowledges, cause great harm to society and, particularly, to our young people can be dealt with properly, and the provisions in Part 3 can be dealt with in a proper and efficient manner.

When the Supplementary Order Paper first came to the select committee, it had a blank schedule. There is certainly no historical provision for that to happen, and for the committee members to have a blank schedule in front of them with no idea, except from guesswork, as to what exactly might go on it was unacceptable. To allay the committee’s fears, the benzylpiperazine substances were put on that schedule, and it did seem as if that was just a ploy to allay the fears of many select committee members.

As I say, the legislation was very untidy. This was acknowledged, and has been acknowledged further more informally by many members of the select committee. None of us were really happy with that process, and many of us felt that the officials were put under extreme time constraints in coming forward with legislation that would meet the time requirements, as opposed to the proper process being gone through, and good legislation that is rigorous and that can easily be upheld by the courts where the direction is to be given. That should have been allowed to happen, and did not.

Perhaps our biggest fears were those I referred to with regard to the Regulations Review Committee. The Regulations Review Committee has always given us very rigorous and very good advice, but, by and large, on this occasion this advice has been ignored. That committee said to us that it was unhappy about the use of the affirmative resolution process, and it warned that that process should not proliferate—something that, at the time, all the Health Committee members agreed with. It considered that there should be compelling reasons for applying the affirmative resolution process when primary legislation is being amended in respect of serious offences. The Regulations Review Committee also noted that the affirmative resolution process is justifiable in limited and exceptional circumstances, including where there is a need for expeditious change.

I note that I wrote a letter to the Health Committee in September 2002 outlining problems with, particularly, the sale and purchase of benzylpiperazine products by many young people, some as young as 12, 13, or 14, at places like Star Marts. At that time, the select committee did not seem to be the least bit worried about those products, and my letter was passed on to the Expert Advisory Committee on Drugs. I felt at the time that that was really just to pacify me. Suddenly now there is an Order in Council process in place. The nature of this matter has hardly, I would say, been expeditious. That is just one example of what can happen when the Order in Council and the affirmative action process is put in place.

The Regulations Review Committee also noted that although the affirmative resolution procedure allows a truncated legislative process, it considers that there are considerable drawbacks. In particular, the procedure allows significant matters of policy and principle to be dealt with in delegated legislation rather than in primary legislation. We have heard other parties raise this issue here today. It allows a limited time for select committee scrutiny—not the great time as in the normal process, as Steve Chadwick indicated—which may be insufficient for public consultation or for substantial consideration of the policy rationale. In short, it should be used in extreme or very limited circumstances only. The legislation now allows for this process to be undergone in many and varied circumstances.

In particular, I mention new section 4(1AA), inserted by clause 5(2). ACT finds it bizarre that people’s liberties will be able to removed by ministerial decree—the Order in Council process—while all the machinery of Parliament will be needed to reduce regulation. There are no historical precedents for this action at all, and to allow the extra regulation of substances by Order in Council but to have the downgrading, if you like, of those same substances or any other substances on a schedule allowed to happen only by the full machinations of the parliamentary process is really quite bizarre.

Quite how we reached that point is very questionable. We should either have the same process, both ways, or the full parliamentary process, both ways. Anybody who has any knowledge of the legislative process looking from beyond our own battlegrounds here today would find this absolutely extraordinary.

ACT New Zealand opposes this legislation because of many process matters. As I say, we would have liked to support the bill for the benefit that Parts 1 and 2 will bring to the control and supply of serious methamphetamine-type medications that have brought great problems to our society—we all acknowledge that. We think that Part 3 should have been stand-alone legislation, and we are very loath to see substances that have yet to be proven to be very harmful lumped in with very dangerous drugs. Most important, we worry about the proliferating use of the affirmative action process through Order in Council. For those reasons, we oppose this legislation.

NANDOR TANCZOS (Green): I stand to support the Misuse of Drugs Amendment Bill (No 3) in its third reading debate on behalf of the Green Party, because in principle it does go in the direction the Green Party says that drug policy should go. At the same time, I acknowledge that it has been laced with a number of toxic adulterants, partly at the hands of the “UFO Party”, but the honourable Minister has to share some responsibility for the severe problems that remain in the bill. Before I go on to the substance of the bill, I would like to quickly address Mr Paraone’s comment about Coca-Cola. I agree that the labelling of Coca-Cola and some sensible restrictions on its use would be beneficial, but I am not sure that making it R18 would be particularly useful. However, I thank him for those comments.

We support the bill for a number of reasons. The first one is that it allows control of a range of substances that are currently unregulated. That can include any mixture, preparation, or article manufactured for the primary purpose of inducing a psychoactive effect. Of course, the bill has been introduced with benzylpiperazine specifically in that category, but it is open to other substances to be included. The bill addresses the situation of a growing industry that is currently unregulated, around which there are growing concerns, and that needs some regulations to be put in place. As the Hon Jim Anderton said, there is no evidence that benzylpiperazine causes a great deal of problems, but it is sensible to take a precautionary approach and put in place some sensible restrictions, just to dampen down its use a bit.

The bill adds a new schedule to the Misuse of Drugs Act. That was originally a Greens’ suggestion, and we are very pleased that it has been taken up. It has to be an amendment by way of inserting a new schedule in the Act, because otherwise we would need new legislation every time a new substance came to our attention. We already know for a fact that piperazines that are not benzylpiperazines—there are other forms of piperazines—are being sold in shops right now. Those piperazines are not included in this bill currently. We also know that other substances that are not even in the piperazine range of drugs are being sold, manufactured, and researched now. So we clearly need something that we can put new substances into fairly simply, and that is what this bill provides.

What does the bill do, in terms of restrictions? It puts in place things like age limits, restrictions on advertising, an assurance that there are quality manufacturing standards, and an assurance that there is adequate labelling, so that people can make properly informed choices. That is all absolutely sensible. The industry, which, by and large, has been responsible in the way it has dealt with the sale and manufacture of its products, has been calling for enforceable powers in that regard. There are cowboy operators, particularly in Christchurch, who have no regard for the voluntary code of the industry and who need to be brought into line. Gangsters are getting involved. That is the problem, and it gives us a taste of where the issue would go if we chose to prohibit the industry, rather than to restrict it by some sensible regulation. We would see an increase in gangsterism in the industry, and we want to avoid that. The Greens remain concerned about the unrestricted enforcement powers. There is no need for a search warrant, and there is no time limit, in terms of giving stuff back. Businesses could easily be put out of business on the whim of a health officer or police officer, and we think that that is a serious issue.

The Greens support the bill because it introduces some changes to the Expert Advisory Committee on Drugs, in particular by adding a Ministry of Justice representative. That is a much-needed change. That person can give advice on the justice implications of the classification of a drug as illegal. It is an area of expertise that has previously been lacking on the committee, so we welcome that. We remain concerned at two things. One is the confusion around the different criteria that the Expert Advisory Committee on Drugs applies when considering whether to schedule something as A, B, or C class, as opposed to D class. We think that that makes absolutely no sense. There should be one set of criteria. Substances should be looked at in accordance with all of them, and then the recommendations would simply drop out of that. The situation is entirely illogical at the moment. The other concern we have is about the lack of ability for either the Health Committee or the House to recommend amendments to notices of motion under the affirmative resolution procedure. This House needs to address that, because it means we must either reject or accept the Minister’s recommendation. For us to reject a recommendation would be a pretty substantial slap in the face for a Minister, and members are unwilling to do that without very, very good reason. But there may be good reasons to tweak a recommendation by a small amount, and there should be provision for that.

We support the introduction in the bill of a new offence around the import and export of precursors. We support that because the Greens actually said, during the reclassification of methamphetamine, that the Government needed to focus on precursors. We are pleased to see that happening but, once again, we are concerned about the enforcement powers and the provision of search without warrant powers around precursors. Search without warrant powers are draconian powers of search and seizure. They should be used very rarely and with real justification. When the Health Committee invited the officials to say why we needed to provide search without warrant powers, their explanations just were not convincing. The Greens are concerned about the proliferation of search without warrant powers made by this Parliament. It has happened in a number of Acts, including the Local Government Act, which has search without warrant powers relating to alcohol prohibition areas. Those things are, obviously, a breach of New Zealand Bill of Rights Act guarantees to be free from unreasonable search and seizure, and the Greens remain unhappy about that.

So the Greens support the bill, with some concerns. Before I finish, I will touch on some of the broader issues around the bill. Drug policy, like law and order, is a fruitful perennial for politicians. I end with a plea, really, for more evidence-based decision-making when it comes to policy making by this Parliament. I expressed concern already in the Committee stage and at the second reading about the “UFO” amendment that allows the Expert Advisory Committee on Drugs to recommend on evidence the reclassification of a substance if it increases the penalties, but not if it decreases them. I thank Heather Roy for her quite clear exposition of the offensiveness of that provision. It is a serious thing—it states that we will pay regard to evidence if it makes punishment more serious, but not if it reduces punishment. That is in line with the recently launched drug policy of United Future, which states that drug classification should be constantly reviewed and monitored to ensure it complies with the available evidence, but that the party will totally ignore any evidence that does not point to harsher penalties. United Future states that quite blatantly. I have never seen a party policy state so blatantly that the party will ignore evidence that does not fit its preconceptions.

My concern is that that unashamed contempt for evidence and information that does not fit United Future’s preconceptions currently influences drug policy in this Parliament, by way of the confidence and supply agreement with the Government. That is a serious issue for this country and this Parliament to think about. I know that United Future will be reduced to irrelevance after the election, so I am not really saying this to have a swipe at it. I am saying it more to members of the House and political parties in general. My hope, quite genuinely, is that political parties and members are genuinely committed to evidence-based decision-making, particularly when it comes to drug policy, and to supporting policies that work and can be shown to work—policies that reduce the harms associated with drug use. I would have thought that that, surely, was the goal of us all. I find it hard to believe that anyone at all in this House wants to increase the harms associated with drug use, but my worry is that often that is what we do, as an unintended consequence of ill-informed policy-making.

In that regard, I end by reinforcing the plea of the Expert Advisory Committee on Drugs, of a number of members of the select committee—it was echoed by Judy Turner from United Future—and of a number of members of the drug treatment world that the Misuse of Drugs Act be reviewed and overhauled. Again, I thank Steve Chadwick for her comments around the problems of that Act as it stands. It is a mess—an absolute mess. It is confusing, inconsistent, and fragmented, and we need to take that very seriously. The Greens hope that in the next Parliament we may see the development of a drug policy framework that is genuinely integrated, consistent, and, most important, based on the evidence about what actually works.

JUDY TURNER (Deputy Leader—United Future): I rise on behalf of United Future to speak to the third reading of the Misuse of Drugs Amendment Bill (No 3). At this third reading I would like to take some time to reflect on why we are bothering to do this. There are those who believe that prohibition should give way to regulation, and that prohibition is a lost cause and a flawed approach to managing drug use and drug abuse in our country. I have been accused of being obsessed with cannabis prohibition—and I suspect that it is true. Maybe I have just spent too long in New Zealand classrooms, along with thousands of other teachers, and tried to invest my time and energy in helping kids meet their potential. Maybe I have grown tired of seeing some of our brightest become apathetic and throw away good years in favour of risk behaviours that see them cut classes, be inattentive when they are in class, and achieving at decreasing levels that are well below their ability.

They become vague, late, overly egocentric, and insensitive to others. Their parents and friends see outbursts and mood swings. At that stage, parents often believe they have a difficult teen. To those families we currently recommend harm minimisation. That sort of means that we will teach them how to work out what level of brain damage is right for them.

For a percentage of young people the situation will get a lot worse. Clinicians do not refer to this deterioration as addiction; they call it neurotransmitter deficiency syndrome. Authors Tom Scott and Trevor Grice describe it by saying: “If an individual’s vats containing the chemicals responsible for calm and moderation are nearly empty, and at the same time the vats containing the chemicals for irritation and rage are full, the chances of responding sensibly to a minor setback or a mild confrontation are much more remote.”

So does the law send a message? Yes, it does. Even if one chooses to ignore the message, the law establishes a commonly held disapproval of certain behaviours. All law is ignored and flouted by a certain sector of society. That does not make it irrelevant.

In a famous social experiment that was often referred to when I was at teachers college, a group of university students were employed to help with an experiment, unaware that their behaviour was the real subject of the experiment. They were put in white laboratory coats and asked to modify the behaviour of some other folk by way of an electric shock. They could not see their subjects, but they could hear their responses. Not only were they required to administer the shocks but also they had to increase the voltage for repeated wrong responses—actors were responding appropriately.

The outcome was that it was discovered that as long as this behaviour was sanctioned, they would continue to inflict pain and they would even go to the level of taking somebody’s life. One or two did query whether they should continue, but after they received affirming nods they kept going.

I mention this because legal sanctioning does have consequences in people’s choices and behaviours. We must be very careful about the legislative messages we send. However, I want to make it clear that United Future does not believe that prohibition on its own is the total answer, or the single strategy that will work. We accept that we need a raft of health and education strategies—and parent education in particular—to address the tragic loss of potential that we currently have in our nation.

Mr Tanczos claimed that cannabis does not kill. I want to tell members about a friend of mine whose funeral I went to not long ago. He was a very talented young man who did not stay around long enough to discover that he had just got straight As in his course at polytech. He was a talented artist. However, with his talent, he was mentally unstable and had some potential for mental health problems—very manageable ones, if he had stayed off the alcohol and the cannabis. However, he chose to ignore the support around him. For him, cannabis was a gateway drug, and he hanged himself in his parents’ garage.

The open casket at his funeral gave his friends the opportunity for a bit of a joke. They put a cannabis reefer between his fingers. They were not my kids, so I could not take it out, but I was angry, because they had overlooked the fact that one of the reasons we were there—one of the reasons he was in that casket—was cannabis. For me it is quite a personal issue, because I have seen too many young people whom I care about deeply whose lives have been detrimentally affected. We as legislators need to make sure that we send a very strong message. We need to keep the human face of drug abuse before us all the time.

I do not know whether this has happened to other members, but I have talked to parents who were relieved that their child had been arrested—appalled that they had reached the state in which they wanted their child to be arrested. Parents have said to me that their child’s life was saved because he or she went to jail. That is an appalling feeling for a parent, and having to sit through that with a parent is pretty appalling.

So we must make sure that we do not shy away from our responsibilities—that we do all we can in policy and in legislation to make sure that young people, who are our country’s future, are protected from their own poor choices at times and from the pressure they feel to be part of a group.

As I have said, we support Governments having the opportunity, through the Order in Council provisions, to respond quickly to a crisis in the drug world, and we are very happy about that. But, as the Regulations Review Committee recommends, we must use that mechanism sparingly. We were very clear that when a crisis is before us those provisions should be used. Downgrading a substance is not a crisis; it is a policy matter. We would like to see the public, not just the Expert Advisory Committee on Drugs, have a chance to submit on such matters. We do not believe that downgrading a substance constitutes the kind of crisis that would necessitate the use of Order in Council provisions.

I have looked up the expert advisory committee’s actual advice on party pills, because that has been a huge part of this bill. At the time when it made its recommendations, the committee believed that there was no suitable schedule in the Misuse of Drugs Act. It believed that the Minister for Food Safety should be requested to consider the appropriateness of permitting the chemical benzylpiperazine to be sold as a dietary supplement. It recommended that the Minister direct the Ministry of Health to conduct further research into the potential harms associated with the use of benzylpiperazine, and it recommended that the Minister direct the Ministry of Health to investigate the possibility of gathering prevalence data on benzylpiperazine via the introduction of routine toxicology screening by community laboratories.

Lots of recommendations came out that need to be followed through on, and we would be very supportive of seeing those recommendations followed up very quickly. We are keen to see the end of the legal nonsense that currently forces us, through time pressures, to regulate legal substances along with illegal substances. We think that this creates a whole lot of legal nonsense that will get us into trouble in the future. We are therefore very keen to see continue the ongoing work that is needed on this, but we are happy to support the third reading of the bill.

Dr LYNDA SCOTT (National—Kaikoura): I rise with a little bit of nostalgia, which was created by Steve Chadwick when she mentioned that this bill will probably be the last major piece of legislation I will speak on in this House. I have thoroughly enjoyed being a member of the Health Committee. It has been one of the best parts of the time I have spent in Parliament. I will have my valedictory speech in which to say all these things, but I want to say now that working with Steve Chadwick was great. The members of the Health Committee have always tried very hard to work across parties, to get good legislation for New Zealand. Of course, at times one does not agree with a political part of a bill, but most of the time we have worked very well together. I have thoroughly enjoyed that time.

Steve Chadwick said that National had a confused position on this bill. It is not confused at all. The position has been very clear. We support this bill. We certainly support the affirmative resolution process to be used for class A, B, and C drugs. What we did not find acceptable was the way the Supplementary Order Paper was included as a new part, Part 3, “Restricted substances”. We know that this area has been complex. The select committee and the advisers grappled with it to try to find a way to fit it into the bill. Even the Associate Minister of Health acknowledged that it has not been a good process, and that we need a stand-alone bill. So I do not think there is anything unclear about what we have been saying today. It has been very clear indeed.

What concerns me is the Greens’ contributions to the debate on this bill. I was on the inquiry into cannabis, and I remember very clearly what Nandor Tanczos had to say during that inquiry. I see that he is supporting the process to regulate benzylpiperazine. Mr Tanczos was associated with a store in Queen Street where these drugs are sold. He knows a great deal about them. Yes, he wants the industry to come under legal auspices whereby it is controlled, because that would take other operators out of the business, leaving those who are legally selling these drugs to over-18-year-olds to make more money. He wanted cannabis regulated in the same way. He wanted it decriminalised and made available to those over-18-year-olds.

Nandor Tanczos: That’s untrue.

Dr LYNDA SCOTT: I heard that argument many times. What worries me is that the Greens supported Labour during the time of the cannabis inquiry, and we know that the Green Party gets some of its vote from the legalise cannabis group. That party will continue to push for a softening of the law around cannabis.

Mr Tanczos has changed his mind. He has become a dad, and I think that does change people. When one becomes a parent, one starts seeing the world a little differently—

Simon Power: Through sleepy eyes.

Dr LYNDA SCOTT: Yes, but I think he already had those. As parents, we start thinking about what the effects would be on our children. There is still a great deal of fear out in the community that a Labour-Green coalition would push to have a slackening of the drug laws.

Regarding the expeditious scheduling that we see in Part 3, there was concern expressed at the Health Committee that cannabis could be moved from the A, B, and C classification on to the list of restricted substances—that this legislation would provide a mechanism for that. Mr Tanczos talked about having the experts involved. We have the Expert Advisory Committee on Drugs advising the Minister at this point. The membership of the committee could be changed. The membership could be changed to comprise people who have a much more liberal view of drugs in this country. That would mean that we would see a loosening and a reduction in classification.

If that happened, I would be extremely worried, as would most mums and dads in this country. We would not want to see any change to the law around cannabis. I sat on that select committee inquiry. We went from one end of the country to the other, it cost a huge amount of money, and we came to the conclusion that there should be no change. But that was not the position of the Greens right the way though the inquiry.

National supports adding a Ministry of Justice member to the Expert Advisory Committee on Drugs. That was an oversight when we debated the first amendment Act. The process was set up by Wyatt Creech, and was brought in because of the Ecstasy and Fantasy issues at the time. Those drugs had been introduced into New Zealand, and the people who produced them changed the chemical structure just slightly in order to avoid the law. Everybody agreed that we needed a very fast process—we wanted it to be a 1-month process—to be able to put those drugs on to the schedule and to stop those who wished to prey on our young people and cause their deaths, all for the sake of money.

We fully support this bill, which provides for the regulation of the precursors of P methamphetamine. People can be prosecuted if they bring in large quantities of cold remedies, which have ephedrine and pseudoephedrine in them, to try to set up meth labs and produce P. P is the most serious drug issue facing the country at the moment. There has been a lot of effort to crack down on it. Just one tablet can cause significant harm. We saw a similar wave of the use of LSD in the 1970s. People saw too many of their friends end up in psychiatric hospitals due to the use of that medication. Talented young New Zealanders’ lives were ruined. Some survived, some committed suicide, but many had significant mental damage. Hopefully, people will see enough of their friends around them significantly damaged by P to ensure that, once again, it will not become a drug of choice amongst our young people, and they will realise the harm that just one tablet can do to them if they are susceptible.

The longitudinal studies that are being done on our young people in Christchurch and Dunedin are interesting. The Dunedin study is especially interesting, as it shows that genetic precursors mean that some people are much more susceptible to drugs and alcohol abuse when adverse events happen. One has to ask why some people get through them and others do not. It has been shown that the genetic predisposition of some people, plus an adverse event—that is, nature plus nurture, or the environment they are in plus their genetic make-up—are what make some people much, much more susceptible.

We fully support making sure that ephedrine and pseudoephedrine cannot be brought into the country in large supply. We support the change to the onus of proof in terms of people who have needles in their possession, to improve the needle exchange programme. We will be voting for the bill in its third reading stage.

KATHERINE RICH (National): As another National member speaking in this debate, I, too, rise to voice support for the Misuse of Drugs Amendment Bill (No 3). A lot of good changes are being made in the bill that will assist officials in their battle against drugs like P, which is surely one of the biggest challenges facing our community at the moment. As many members of the House will have also found when they spoke with the police and looked at the statistics, I know the reason that we have had such an increase in violent crime in the country is largely attributable to the use of P. Although the names and ingredients of those drugs will change, the issues of how to regulate and put in place legislation to control them will remain the same for successive Governments. The issue for us is to put in place good law that will do its best to control illegal drugs, and to put in place a framework that makes it quite clear to people what is right and wrong.

It was interesting to hear the Minister, Jim Anderton, talk about the bill, because he got himself into a position whereby anybody who voiced any alternative to, or concern with, a provision was suddenly presented as being pro-drugs. The Minister does not have a monopoly on the concern about drugs in the community. The Minister is not the only member of Parliament who is concerned about what is happening in some of our communities as a result of various drugs. That does not take away our right to speak out about concerns about the law, and to put forward some changes that we think will produce better law for the country. The concerns that we have voiced as a party basically related to the use of the affirmative resolution procedure. We totally understand the use of those procedures for illegal drugs that are classified as A, B, or C, but we raised some concerns about the use of similar provisions when it came to substances that were legal. That was the main reason that we voted against Part 3.

One of the points that the Minister did not address in any part of the debate was the apparent inconsistency in his thinking in bringing Part 3 into the main part of the Government’s bill. Although the Minister kept saying that it was a Government bill, we all know that Part 3 was a result of the Minister bringing in Supplementary Order Paper 298 in his name—a large change to the law—and attaching it, a bit like a patchwork quilt, to another piece of law. On the one hand, the Progressives say that we are in a situation where we need to regulate benzylpiperazine—one of those changes is to make it quite clear that those substances can be sold to 18-year-olds—yet, on the other hand, one of their main thrusts in bringing another bill to the House is to look at raising the age at which young people can purchase alcohol. On the one hand we are saying that 18-year-olds have the ability to make decisions, to act responsibly, and to apply their thought processes to the purchase of party pills and herbal highs, but on the other hand we are saying that they are not responsible and they do not have the ability to make a choice when it comes to making up their minds about whether they want a glass of beer. I think there is a real inconsistency there.

In my view, we see hypocritical thinking and no logic when we look at the two main pieces of legislation the Progressives have brought to this Parliament. Basically, they are saying different things about the ability of young people to make up their minds and apply their own thought processes to some decisions they make in their everyday lives. Although I challenged the Minister on that, he was not able to get up and explain himself—to say why he was pushing for the age at which one can purchase alcohol to rise to 20, yet remained perfectly happy for people to stroll into a shop and purchase a party pill, a herbal high, or whatever else, at the age of 18. Certainly, there is a contradiction there.

I think there are some great things in this bill. When we talk to customs officials and the police, we find that there has been a huge amount of frustration about the inability of officials to be able to nab people who turn up at our borders with caseloads of cough medicines that contain ephedrine and pseudoephedrine. People were able to point to what looked like extraordinarily large quantities of medicines, and to say that they were bringing them in for their personal use. Well, no one involved believed that, but the law did not give customs officials enough tools in their tool-box to be able to deal with those situations with greater clarity. So it is good that this bill lays out some very detailed specifications for how searches can take place, and how they may be executed within officials’ daily procedures. We have lists in the legislation for everything from strip-searches to rub-down searches. There seems to be a lot of detail, but in fact when we are dealing with people who will do whatever they can to get off a charge, or who have lawyers who will do everything they can to get their clients off charges, we need to be incredibly specific about the technical parts of this bill. So I am hoping we have done our work on this bill, and that there will not be any loopholes when the legislation is fully in place.

There are some good initiatives to make it easier for people to use needle exchanges, and to not be in a position where they feel that the law does not allow them to carry syringes and take part in their own rehabilitation, without being nervous about being charged for having, or without having to demonstrate proof of why they have, particular items in their possession.

One of the things that is very clear is that we as a Parliament will continue to face these sorts of issues. The types of pills and drugs will change. The next generation and the scientists out there, the backroom scientists who try to work out new combinations in order to get around these laws, will continue to do so. The challenge for us is to keep ahead of them, and to ensure that all parts of the public service do their bit to make sure we minimise the amount of drug use in our community.

One of the things that this bill does not deal with is the issue of policing. I think it is a real shame that the police put in for additional resources in order to keep on top of methamphetamine laboratories, and received only a small portion of the amount of resource they felt they needed to be able to keep on top of the problem.

We have thrown up some interesting inconsistencies, and I look forward to the debate on the second bill brought to this House by the Progressives. I will be asking them why they think it is OK that 18-year-olds can buy party pills and herbal highs, but they are not trustworthy enough to buy beer or to make a choice about whether they want to have a glass of wine. It seems to me there is more concern about party pills and herbal highs than the Minister gives the public credit for. So there are some interesting inconsistencies on the part of the Progressives.

I am glad to stand and support this bill. I think it will go some way towards assisting the Customs Service and the police to ensure they have more tools in their tool-box to deal with those New Zealanders who want to break the law.

A party vote was called for on the question, That the Misuse of Drugs Amendment Bill (No 3) be now read a third time.

Ayes 107

New Zealand Labour 51; New Zealand National 26; New Zealand First 13; Green Party 6; United Future 8; Progressive 2; Māori Party 1.

Noes 9

ACT New Zealand 9.

Bill read a third time.

Bills

Overseas Investment Bill

Second Reading

Hon JUDITH TIZARD (Minister of Consumer Affairs), on behalf of the Minister of Finance: I move, That the Overseas Investment Bill be now read a second time. The Overseas Investment Bill balances the need for ensuring sufficient protection for New Zealand - sensitive assets with encouraging foreign investment in New Zealand. This bill does that by ensuring that the screening of foreign investment is focused on sensitive assets, encouraging foreign investment that contributes to the New Zealand economy, and reducing compliance costs. New Zealand has a welcome and open attitude towards inward foreign direct investment, and it has been the Government’s intent to maintain that attitude.

Submitters on the bill focused on a range of issues that relate to ensuring that foreign investment in New Zealand is of benefit to New Zealand, and to ensuring that the potential gains foreign investments can bring to a small country like New Zealand are realised. The Government agrees that those are indeed the critical questions New Zealand faces when determining its foreign investment regime. Some submitters were in favour of New Zealand adopting a more liberal foreign investment regime, and others favoured a more restrictive one. Other themes that emerged related to a wish for better information on foreign investment in New Zealand, and a wish to ensure that provisions in the bill and conditions placed on an investor’s consent are monitored and effectively enforced.

The Finance and Expenditure Committee did not suggest any changes to the bill that significantly affected the balance between the restrictiveness and the liberalness of the regime. The Government concurs with that assessment. As a result of the deliberations of the select committee, changes to the criteria for the assessment of potential purchases of sensitive land by overseas persons have been suggested. The vast majority of transactions covered by the overseas investment regime are land-related, so it was appropriate that the select committee examined that area of the bill in particular detail. The bill specifies a number of factors that may be relevant to the assessment of purchases of sensitive land by overseas persons. As per the first reading of the bill, those factors can be summarised as economic development, natural and historic heritage, walking access, and the offer to the Crown of any foreshore and seabed contained within the sensitive land. The select committee has recommended that the relevant Ministers explicitly consider all the factors—

Madam SPEAKER: I am sorry to interrupt the member, but the time has come for me to leave the Chair.

Sitting suspended from 1 p.m. to 2 p.m.

Hon JUDITH TIZARD: The Overseas Investment Bill seeks to ensure sufficient protection for New Zealand’s sensitive assets while encouraging overseas investment in New Zealand. The Finance and Expenditure Committee has recommended that the relevant Ministers explicitly consider all the factors that are specified in the bill. The factors in the assessment of purchases of sensitive land by overseas persons may be summarised as economic development, natural and historic heritage, walking access, and the offer to the Crown of any foreshore and seabed contained within the sensitive land. The Minister must explicitly consider all the specified factors, and determine which factors are relevant and how important each is to the overseas investment in question. Having considered the relevant factors, the Minister must then determine whether the overseas investment will, or is likely to, benefit New Zealand.

The select committee has suggested also changes to the specific factors to be taken into account when assessing potential purchases of sensitive land. It has recommended to the House that the Crown have the right of first refusal to purchase any lake bed of more than 8 hectares, any riverbed with an average width of 3 metres or more, and any lake included within sensitive land. This welcome addition to the bill ensures that New Zealand has the ability to control whether riverbed and lake bed pass into overseas ownership when they are contained within sensitive land, with provisions similar to those already in the bill around foreshore and seabed.

Furthermore the select committee has recommended that a new factor be added to the bill—a factor relating to the enhancement of the habitats of recreational fisheries and wildlife, and walking access to the relevant areas. This addition to the bill is a result of submissions made to the select committee. Other changes relating to land investments are relatively minor. These include allowing potential enhancements—not solely maintenance of existing assets—to areas of historic heritage, and improvements to walking access to be taken into account when assessments of sensitive land are made. These are relatively small but important improvements to the bill.

An investor test is applied to all purchases of sensitive New Zealand assets. This will be standardised across business, land, and fishing investments, and will consist of a good character test, a financial commitment test, and a business acumen test. The good character test, which the select committee recommended be given some definition in the bill, applies to all individual overseas persons, while the financial commitment and business acumen tests apply to the collective of a company.

The bill as reported back to the House from the select committee included provision for marginal strips to be set up when sensitive land that adjoins a significant waterway is sold to an overseas person. This provision would have ensured the creation of marginal strips to guarantee that access and conservation objectives around significant waterways were met when sensitive land was being sold to overseas persons. The select committee recommended that no compensation be payable unless the marginal strip is greater than 20 metres in width. A Supplementary Order Paper will be introduced into the House to remove the compulsory acquisition of marginal strips. This will ensure a parliamentary majority for the legislation.

The bill makes provision for factors such as conservation values and walking access to be taken into account when decisions are made regarding investment in sensitive land. Access and conservation objectives will be dealt with on a case by case basis as part of the consent process, rather than as a statutory and automatic provision. The Supplementary Order Paper I mentioned previously contains also a number of technical amendments to the bill. These cover a number of relatively minor technical issues, the most important of which is amending the bill so that consent for a transaction will be required only when a property is acquired or a business is established. So it will no longer be necessary to specifically enable contracts to be entered into or given effect to conditional on consent being obtained.

The bill revises the regulator’s information and guideline functions in clauses 32 and 37 to cover overseas investment rules generally. The select committee has recommended to the House a variety of other changes. The most major of these are as follows. It is recommended that the regulator have a new function: to produce regular statistics. That will assist in ensuring that submitters’ concerns around the information on foreign investment are met. It is recommended that an interest in farmland with a term of 3 years or more must be advertised. It is currently obligatory for all sensitive farmland subject to overseas investment to have been offered and advertised on the open market to New Zealand residents. An exemption currently exists if the interest in the land has a maximum term of less than 21 years.

It is recommended that when considering a consent application the Minister should have the power to consult as he or she thinks appropriate. It is recommended that the regulator be able to charge an administrative penalty when an overseas person seeks a retrospective consent—that is, when that person did not gain a consent when he or she should have. It is recommended that the value threshold of $100 million and the area threshold—0.4 hectares for some sensitive land—be placed in legislation in the future, as opposed to being in regulation. This would mean that future changes to the coverage of the regime will have to be endorsed by Parliament.

No major changes are recommended by the select committee around the definition of “overseas persons”, the coverage of the regime, or the monitoring and enforcement of the regime. The Government proposes that the House accept the recommendations I have outlined, and other, more minor recommendations I have not listed, from the select committee. The passage of the Overseas Investment Bill is essential in ensuring that New Zealand’s overseas investment regime strikes the correct balance. I thank the select committee for its consideration of the bill, and I commend the committee’s report to the House.

JOHN KEY (National—Helensville): I arise on behalf of the National Party in relation to the Overseas Investment Bill. It is the intention of the National Party to support the bill, provided the matter referred to by the Minister in her address, in respect of no compensation for marginal strips, is removed from the process.

I want to take a step back and define the issues as I saw them as someone who sat on the Finance and Expenditure Committee. There were a great many submissions. I have to say there were, from memory, no submissions in favour of the bill, and I do understand the reasons for that. I want to run though the dilemma, as I see it, from the National Party’s perspective.

On a relative basis, there have been very few examples when the Overseas Investment Commission has in fact declined purchases of New Zealand land or foreign purchases of New Zealand companies. It has been a relatively lightly used provision—most applications have been accepted. Secondly, there is a genuine concern—and I think a warranted concern from New Zealanders—that we do not want to become tenants in our own country. I think the long-term future of New Zealand is not that of a bunch of people running around serving lattes to foreigners who own our country. We do have a brighter and better future for ourselves than just that.

There is a relatively good argument to say that most countries have some provisions around who can and cannot purchase their land. Of course, the risk in this situation is that New Zealand needs to think about its relative economic position compared with other countries. That is to say, the average American income is of quite some magnitude above the average New Zealand income. By definition, that means New Zealand can become quite a cheap entity. We face within that a risk around times when the exchange rate is particularly low, that New Zealand becomes quite attractive solely from a currency-play perspective.

That is the dilemma New Zealand faces. We have a global world now where the Internet is playing an interesting role. A large number of people are surfing the Internet looking to buy prime pieces of land around the world, and New Zealand is one of those places that is very attractive because—as we know—it is a beautiful nation. Therefore New Zealand is highly attractive because of its price, because of the global nature of the world, and our free capital markets that allow people to come in and buy land. By definition, of course, if one thinks about New Zealand in one sense, most New Zealanders would recognise that the land that is actually attractive to foreigners—and primarily we are talking about high-country stations, and beachfront and lakefront sites—is the land that is likely to be purchased by foreigners when they come to New Zealand. The truth is that they will not come to New Zealand to buy some piece of dirt that is out in the middle of nowhere. Generally speaking, they are coming for the choice bits of a great little country.

So I think we have to consider that element and then contrast it with the reasons why, on one level, the National Party supports this bill—that is, there are issues around property rights, and owners wanting to maximise the property’s value when they sell, the fact that we do live in a global world, and, broadly speaking, a sort of acceptance that we are part of a world where we do not want to close ourselves off completely on a number of fronts.

So I will take the first of those matters concerning company investments, where the threshold for reference to the Overseas Investment Commission has gone—from memory—from something like $25 million to $100 million. That reflects the fact that it makes sense to do that for companies financed for less than that amount, whether it is foreign or domestic capital financing those businesses—in one sense I see that as being largely irrelevant under that sort of measure.

Above that threshold, I am still relatively supportive, if foreign capital wants to come to New Zealand, but clearly there are national interest reasons why we would want to refer that. But under that level, I think it is just a reflection of the growing size of businesses and of what is relevant to the international situation.

Around the issues of sensitive lands, the first important thing to note is that the bill is attempting to tighten up the current situation, but it is worth remembering that there have been very few examples where things have been declined. So we have to put it in that context and say that this bill is an example of where we are actually making it more difficult. Young Nicks Head was a great example of a sensitive piece of land. It is a very small acreage but, regardless of its cost, it is now referred to the Overseas Investment Commission for its review. In that regard, I think that should be seen as a very positive step.

I want to talk for a moment about the marginal strips issue. If we recall the reason for marginal strips, it is really an issue that relates to the Queen’s Chain, which currently applies to about three-quarters of New Zealand. Most New Zealanders do not understand that situation terribly well. They think the Queen’s Chain is either something that has gone or something that applies all around the country. The truth is that it applies to about three-quarters of the country. But my point is—and I think it was introduced by Mr Parker—that in the event of a sale overseas, if the land did not have a marginal strip to which the Queen’s Chain applied, then the Queen’s Chain would be drawn up in the agreement in that instance.

Again, on one level I have some sympathy for that, and Nick Smith from the National Party proposed having a similar kind of process in his member’s bill. That came from the situation on D’Urville Island, where property was sold to foreigners and, as I understand the case, there was no Queen’s Chain. An offshore owner of an island gave instructions to those looking after the asset, indicating—rightly or wrongly—that the owner would not allow anybody else on the island, at all. So New Zealanders were effectively stopped from pulling up their dinghy on the beach, depending on where the high tide mark was.

I think, on one level, that locking New Zealanders out of that access to be able to land their boat, alight, and walk up a lake edge or whatever, seems wrong, so in that sense National would be very supportive of protecting that access.

The issue becomes one where, if we are not prepared to require that compensation be paid for allowing for access rights to the Queen’s Chain in private property sales, then we are really taking a significant property right from those who are selling, because the purchaser will almost certainly pay a bit less. That leaves us with the vexed question of whether the Crown wants to pay for the costs required to acquire the Queen’s Chain. In that respect I take it that the current Minister of Finance potentially shares my view—as a possible Minister of Finance—that it is a cost that we do not necessarily want to pay, if I understand that correctly. But National does not think it is fair to demand that the Queen’s Chain be applied on a non-compensation basis. So, on the assumption that that provision comes out of the bill, we will be supporting it.

I will digress very slightly to go back to the reason this issue is hugely sensitive, which is that there is a feeling that too much is being sold offshore. Again, I think pastoral leases are a good example of this. It is essentially correct to say that prior to 1995, pastoral leases could not be sold offshore, but now they can be, and quite a number of high-profile pastoral leases have moved offshore. So I think that New Zealanders are right to question that trend. On one level, I think they are right to say that it is their country and they do not want to become tenants in their own country—but on another level it is also important to weigh the property rights of the owner against that view, and to reflect a little on the fact that we now live in a somewhat more global world.

The definition of what a foreigner is becomes extremely difficult also. As some people know, I have spent a considerable amount of time living overseas and, under the technical definition, I may well have been deemed to be a foreigner when I came back and bought land back in New Zealand. So that situation creates some interesting issues. There is also the argument around someone who lives offshore but who wants to come to New Zealand and does not want to remain a taxpaying resident. That person may well have good grounds to buy here. So National will be supporting the bill, assuming the provision relating to marginal strips comes out, but we recognise that this is quite a finely balanced debate.

DAVID PARKER (Labour—Otago): I would like to deal with the issue of marginal strips. Because of the numbers in Parliament, we are being forced to drop the marginal strip provisions of this bill.

Simon Power: It’s called democracy.

DAVID PARKER: That is right; it is the effect of democracy. But I want to explain why we in the Labour Government feel that we were right to include them, and wish that we had the numbers to put those provisions through.

The underlying assertion behind Mr Key’s argument that I disagree with is the idea that a property right in land includes the right to sell it to an overseas person without restriction. That fundamental assertion underlies Mr Key’s objection to the compulsory laying off of marginal strips when one sells land to an overseas person. Of course, the position at law in New Zealand and in many overseas countries, including provinces of Canada, parts of Japan, and many other countries, is that there is not an unrestricted right to sell to an overseas person. Indeed, as Mr Key referred in his own speech, until 1995 there was a virtual prohibition on the sale of rural lands to overseas persons, under a part of the Land Settlement Promotion and Land Acquisition Act 1952, which was not repealed until 1995. So the idea that a Government has to concede that a property right in rural land includes the unrestricted right to sell it to an overseas person is wrong logically, I suggest.

Deborah Coddington: It’s not unrestricted now.

DAVID PARKER: I know that it is not completely unrestricted now, but it was virtually prohibited until 1995. If it was permissible virtually to prohibit the sale of land to overseas purchasers, it must be permissible and not in contravention of the private property right to have a lesser degree of restriction on the sale of overseas land. All that the provisions in the legislation did was to impose a lesser degree of restriction on the sale of rural land to overseas persons than was the case until 1995. It was not expanding upon the position before 1995; it was trying to restore rights of access to our waterways, which are sometimes placed at greater threat when land is sold to overseas persons.

What evidence did the Finance and Expenditure Committee have that there were legitimate concerns on this front? For a start, advertisements for Poronui Station were placed before us. Poronui Station was advertised for sale for US$50 million—in US currency—in airline magazines. The advertising material plainly included “private water” as a benefit to those who would acquire the property. That was emphasised in a number of places in the documentation.

I know that in my electorate I have had complaints from some of my constituents that some of the overseas purchasers of our rural land more rigidly stick to what they assert to be their private property right to exclude people from accessing waterways that pass through their properties. We have the ridiculous situation that the title of some of those properties runs under the river, and so, although the landowner does not own the water, he or she owns the riverbed. People have the right to float down the water, but they have not got the right to walk down the riverbed if they are fishing—except with the consent of the landowner.

One cannot fix all of these problems, which have grown up over time through accidents of history, I suspect. Mistakes were made in contravention of directions by earlier Governments that marginal strips should always be laid off. Sometimes those instructions were ignored by the relevant ministries, particularly in relation to pastoral land, where pastoral leases defined just the boundary, and really did not have regard to the need to lay off marginal strips alongside some of the rivers that passed through that land. So Labour reached the position that it was appropriate to actually record that a private property right to land does not include the right to sell it to an overseas person without restriction. It never has.

I would also like to point out what I see as—I am not allowed to use certain words here—absolutely irreconcilable: on the one hand, certain political parties deny that Māori should have any rights to the foreshore, because we need to protect the rights of all New Zealanders to access the foreshore, yet those same political parties, including National, oppose restrictions on the sale of land to overseas people that would see the compulsory laying off of marginal strips alongside waterways.

I am one who is sad to see those particular provisions lost from the bill, but we are reliant on United Future to pass this legislation, and those members would not have supported it with those provisions in it, so accordingly we are removing those provisions.

The balance of the legislation is good legislation. It effectively reflects the status quo in respect of business purchases that are to be permitted as of right, without Overseas Investment Commission approval being required. Purchases up to the new limit have, in recent decades, always gone through anyway, so there is no point in further regulating them. With those comments I am pleased to note my support for the bill.

CRAIG McNAIR (NZ First): In speaking to this Overseas Investment Bill, I just remind the House that I think it is quite ironic that we are seeing a bill such as this go through the House today in all its stages under urgency. This was a bit before my time, but a few members in the House will probably remember the Allan Wallbank petition to stop land sales to foreigners. It went up and down this country, and was signed by New Zealanders in provincial towns and cities all over the place. It was vigorously supported by the Labour Party, and was one of Labour’s big campaign issues at one time. Also, I think it is ironic and crazy that the National Party is supporting a bill like this. It does not surprise me that National is supporting it, because only 6 months ago we saw a policy flip-flop from the National Party, when all of a sudden it thought twice about selling State-owned enterprises, such as Kiwibank and some other strategic State-owned assets. All of a sudden it had a change of heart on that, and developed a passion to keep certain assets in the hands of New Zealanders.

I do not think that National was passionate about that, but it obviously changed its policy because of what the facts tell us, which is that New Zealanders are concerned about the issue and do not want more land or businesses to be in the hands of foreign-owned enterprises. I think it is very clear that the people of New Zealand have spoken on that issue. Labour has introduced this bill and National is supporting it, when they have a track record together of selling off $16 billion of State-owned assets between 1984 and 1996. After having a culture such as that within those parties, it does not surprise one to see this kind of legislation today. It was, indeed, asset sales such as those in the 1980s and 1990s that saw MMP evolve. One of the main reasons that people were outraged at the Labour and National Governments of the 1980s and 1990s was the fact that people did not feel that they were listened to. People felt that those Governments just railroaded over their beliefs and did what they thought was the best thing for New Zealand, without listening to people. That is actually one of the reasons we have MMP today—obviously there are a few other reasons, but that was one of the main reasons.

Another issue that I want to talk about today—and I guess I will be talking about it in a little more depth over the Committee stage—is how the threshold of ownership will be increased, as far as business investment is concerned, from $50 million to $100 million. Well, for a start, I think we should have looked at moving it in the other way—taking it from $50 million downwards, rather than pushing it up to $100 million. But I just want to highlight, and bring to the House’s attention, the fact that some businesses that were sold just in the last couple of years will miss out on this threshold, and will not be looked at now because of the higher threshold. The Sime Darby Motor Group Ltd of Malaysia paid $61 million - plus, with a potential additional consideration of up to $5 million, to acquire Truck Investments Ltd. Its businesses include trucks sales, companies, and a few other things. Skycity Entertainment Group Ltd paid $93 million for Aspinall (NZ) Ltd, which owns 40.5 percent of the Christchurch Casino. That, obviously, would miss the threshold. The AMP New Zealand Office Trust, owned 43 percent from Australia, paid $71 million for Mobil on the Park down here in Wellington, and $75 million for the BNZ Centre. Telecom New Zealand Ltd, owned 72 percent from overseas, paid $62 million for the information technology services company Gen-i Ltd.

We have a few other examples, which I will skip over, because there is such a long list. I think that illustrates my point very clearly. Vero Insurance New Zealand Ltd of Australia—the former Royal and SunAlliance New Zealand—paid $68 million for the motor vehicle and consumer goods warranty and credit insurance business of AutoSure Group Holdings. I will highlight just a couple more examples to the House. The UBS Group timber investors of USA paid $81 million for trees and forestry in the central North Island, and then there was a very interesting one that I want to finish off with. There are obviously a lot more purchases that would miss out on the new threshold. But the Brunswick Corporation paid $54 million for 70 percent of Navman New Zealand Ltd, with an option to buy the remaining 30 percent by 2005. Navman is a New Zealand - based electronics manufacturer of marine electronics and general navigation products. As I was reading about that, I took a few seconds to think about it, and it stopped me in my tracks. I remember the Minister for Industry and Regional Development trumpeting that business as one of New Zealand’s greatest successes. It was to be a new export opportunity for New Zealand, and it was going to create lots of jobs for New Zealanders and lots of profit for New Zealand. I then noted that Navman was sold to Brunswick Corporation for $54 million, which would miss out on that threshold. I think that is a very interesting thing to note and highlight to this House.

Another issue I want to raise in this House is the definition of “good character”. The test of “good character” is used in a number of places, but the term is not defined in the bill. I believe that there needs to be a tightening up of that definition. Actually, it is not defined at all. The bill just states “good character”; that is what is there. The Overseas Investment Commission will think that it is all right as long as either a solicitor, or even the individuals themselves, write a letter to say that they have “good character”. I would think that most people, or most corporations, would say that they had great character. It should be up to the Overseas Investment Commission in New Zealand to make that decision, rather than to just take their word for it. I also think that the Minister should take more responsibility in that decision-making process, and I will elaborate more on that in the Committee stage.

While we are on the definition of “good character”, I point out that the Overseas Investment Commission, in its 1998 report, even stated itself that the term was mentioned numerous times in New Zealand legislation, but was not once defined. The law is very ambiguous on that issue, which leads to extremely weak enforcement in the present situation. That is added to by the Overseas Investment Commission’s ineffective methods or criteria. The regime is simply ambiguous and needs to be changed. I shall read a recommendation by one of the submitters to the Finance and Expenditure Committee. It is a very interesting recommendation, and reads: “The term ‘good character’ should be defined in the bill. Its definition should reflect court interpretation, but should be wider than criminal convictions, including adherence to common ethical standards and absence of acts that would be illegal in New Zealand, or which have given rise to adverse civil court findings.”

DEBORAH CODDINGTON (ACT): That was an example of why people should take another take on this election. Could the two old parties please consider going into coalition together instead of with New Zealand First, because if either of them do, heaven help us!

I am going to be very unpopular. It is easy to take the populist stand on legislation like this and say that we support it. There is a lot of emotion around foreign investment in this country, and a lot of that emotional talk is absolutely not founded on reason at all. We have just had an example of it. This country was founded on foreign investment—our insurance companies and our banks. Our banks are still mostly owned by foreigners. If New Zealanders do not like that, they do not have to use them. They do not have to use the bank, they do not have to use their mobile phones, and they do not have to patronise foreign companies. Foreign investment, overwhelmingly, has been very good for this country. We would not survive without it.

Interestingly enough, those who follow Australian politics might remember Prime Minister Paul Keating saying a while back that the foreign ownership of the Gold Coast must be stopped. He wanted to stop Japanese people from buying up property on the Gold Coast. The reason he came out with that—because in Australia they are a lot more robust than us—was that they did not want those slanty-eyed people buying the Gold Coast. Someone else answered him in the debate by saying that no, they were buying it all off New Zealanders.

That is the problem. There are already restrictions on foreigners buying land in New Zealand, and I contend that those restrictions are stringent enough. But if we start to restrict them even further we have to be consistent and consider what that does to New Zealanders who want to buy overseas.

But I come to the basic principle of this bill, which is the issue of private property rights. I strongly believe that people who own property have the right to sell it to somebody who will pay them the highest price. It comes back to emotion again. A lot of people think that they do not want foreigners owning all our prime pieces of land. But if those people owned that prime piece of land they would want to get the best price for it when they sell it. They might want to sell their high-country station and use the money to fund their grandchildren’s tertiary education or put it into a retirement fund. We already have restrictions.

Mr Parker, on the opposite side of the House, seemed to imply that parties who opposed this bill want unrestricted access. We are not saying that. We are saying that the restrictions that are already there are stringent. The National member John Key cited D’urville Island. He said that it was sold completely to foreign ownership. He disagreed with that because, he said, ordinary Kiwis could not pull up their dinghies on the beach. A lot of ordinary Kiwis would like to have a swim in his Parnell swimming pool, but they are not allowed to. Why? Because it is his private property, and that is respected. People respect that he owns it, that he worked hard for the money that went into building and purchasing it, and that he has the right to restrict access to any common Kiwi who wants to have a swim in his pool. One cannot equivocate with property rights.

Mr Key talked about New Zealanders not wanting to be tenants in their own land, or not wanting to serve lattes to foreign owners who come to places like Central Otago or Northland. I was one of those waitresses serving lattes to foreigners several years ago, and it is a great way for ordinary Kiwis to recapitalise and get some money in their bank balances. Those people bring money to this country—[Interruption] He is up there, hiding behind the yellow boxes.

It is a good way to increase ordinary people’s wealth. Is there not something of the drawbridge mentality in this attitude? “I’m here, pull up the drawbridge and don’t let anybody else come in.” If we were consistent about this we would say that no white people could buy land in this country. We are all foreigners if we take the tangata whenua attitude and philosophy that Māori were the first people to occupy this land so they are the true tangata whenua. Then all of us could go the whole Fiji way, could we not? I am not advocating that; I am just pointing out the inconsistencies in some of those arguments, and the fact that it is very dangerous to start going down that road and saying what is good or not good.

The issue of Young Nicks Head came up. Sure, that was something that people felt very strongly about, there were protests, and it was on television every night, but we cannot pass legislation every time some minority group decides it does not want a piece of land sold. There was nothing to stop those people who were protesting about the sale of that land forming a company or a cooperative, getting a loan, and purchasing the land themselves. They were not barred from owning it.

We have to look at the issue of the marginal strip, which we will obviously deal with further in the Committee stage. If one is a foreigner and buying a piece of land for squillions of dollars, it will be a condition of consent that the Minister might say: “Well, you give us that marginal strip and you can buy it.”—as I understand it, that is how it will be if the Supplementary Order Paper goes through—and if the purchaser is paying a lot of money for it, then he or she will probably agree. Why is a foreigner paying a lot of money for that land and protecting that marginal strip any different from a New Zealander paying a lot of money for it? As I understand it, a New Zealander will not have to go through that same process. A New Zealander could actually buy it lock, stock, and barrel.

Hon Dr Michael Cullen: There’s no consent process for New Zealanders at all.

DEBORAH CODDINGTON: There is no consent process at all.

If the marginal strip is so valuable and is such an asset, surely it is an asset regardless of who the purchaser is or what he or she is paying. That is something I do not understand, and I hope that someone else can throw some light on that, because if we are to have that for a foreign person buying it, then surely we have to have it for a New Zealander buying it as well.

I will get back to the issue of foreign ownership. Someone—I cannot remember who the speaker was—raised the issue of New Zealanders being very opposed to a number of overseas people who are not citizens of this country coming over here and buying our prime real estate. Before I came to the House I read through a number of the submissions. Some of them were extreme, like those from the Campaign Against Foreign Control of Aotearoa, which, I suppose, one has to admire. It has been around for a long time. But we have to look at the ethnicity of some of the people who started it; it goes back to the drawbridge mentality.

In general, the people who want to come here and buy land, and who put a lot of money into it, are people who are attracted to this country because of those Kiwi assets, if you like—the wild open spaces, the rivers, the lakes, and the seabed. They are escaping what they came from. There is no evidence that foreign owners are in any way, general or otherwise, any worse owners of the land. They cannot put it on a ship and take it away with them. They can only keep investing in it. So ACT members are opposed to this bill. I think we are the only party in the House that is opposed to it, but none the less we will stand on our strong principle of property rights and we will vote against it.

ROD DONALD (Co-Leader—Green): It will not surprise anyone in this House, least of all Dr Michael Cullen, that the Green Party is opposed to this bill.

Hon Dr Michael Cullen: Thank goodness! That’s a relief.

ROD DONALD: I am glad it is a relief. Dr Cullen was worried I was going to turn round on this one. We were tempted to do so at one point, actually, because we are very keen on the marginal strips provisions that are contained in the bill. We disagree with the ACT party, in that we do think it is appropriate for foreign investors to recognise how we do things down here—the fact that we value and treasure access to the outdoors—and that it is appropriate, if a foreign investor is allowed to buy a significant piece of sensitive land beside a lake, by the beach, or adjoining a river, to provide a marginal strip giving Kiwis access to that public open space. So at the Finance and Expenditure Committee we were very keen to support the amendments initiated by the Labour member for Otago, David Parker.

Therefore, when United Future pulled the plug on those amendments by threatening to withdraw support for the bill if it did not provide for compensation for foreign landowners, we gave serious consideration to supporting it, at least at the second reading stage, just because we think the provision of marginal strips is a positive element. But at the end of the day we decided that the bill is so bad in so many other respects that we could not bring ourselves to back it. We are extremely disappointed that United Future - Outdoor Recreation NZ has put compensation for foreign investors ahead of access to the great outdoors for Kiwi recreationalists. I think there is an inherent contradiction within United Future when it claims to be the sensible environmental party, then pulls the rug out from under the very people it claims to represent.

I turn to the bill in its broadest sense. It is a giant con job. There is no doubt about that. When Dr Cullen announced in November 2003 that he was conducting a first principles review of the Overseas Investment Act, everyone knew what lay behind that smokescreen. He said that he wanted to provide greater protection from foreign ownership for iconic sites of historical, cultural, or environmental interest, but it was clear that he would use the facade of providing that protection to sell off the buildings and businesses associated with such iconic pieces of land. That has come to pass with this piece of legislation. It is remarkably cheeky to put in the purpose clause the comment that the legislation is all about acknowledging that it is a privilege for overseas persons to own or control sensitive New Zealand assets, then proceed to make it even easier for foreign investors to gobble up more of our economy, and to allow not just more of our land but also more of our businesses and central business district buildings to be taken over by foreign investors.

I would like to spend a couple of minutes pointing out that there are some good provisions in this bill, and that the Green Party is grateful for them. We hope we will not see the arrival of a Supplementary Order Paper to remove these good provisions after I highlight them to the Minister. It is good to see a tightening of the monitoring regime, in addition to what was already in the bill. That is a positive step. It is good to see an expansion of clause 18 to incorporate introduced wildlife, alongside the provisions that are already there for indigenous wildlife. It was good to hear Government members of the select committee recognise that Treasury officials are very much on the side of foreign investors and international organisations like the World Trade Organization, rather than batting for Kiwi battlers when it comes to placing appropriate controls on foreign investors.

But this bill falls way short of the recommendations the Finance and Expenditure Committee came up with back in 2001, when we comprehensively reviewed the Overseas Investment Commission. We looked particularly at the activities of the commission in relation to the Southland Plantation Forest Co. investment, and we found that the commission had fallen down badly. At best, the commission claimed there would be a net marginal gain in employment as a result of the approvals it gave that led to a lot of farmland in Southland being taken over by a Japanese forestry company. But at worst we have seen a community torn apart, which is why Labour members and I recommended jointly that an additional commissioner be appointed to represent the wider community, and that the application of the national interest criteria be extended to all proposals, not just land proposals. We can see the merit of that when we look at clause 18 of the bill. While that clause is appropriate for land, it is even more appropriate for business propositions, yet businesses have to pass only a good character test. So it would be sensible to extend the bill to cover all sensitive assets, not just land. That will be dealt with in one of a number of amendments that we will put forward.

We will put forward also an amendment on another issue that was highlighted by the Labour and Green select committee members back in 2001, when we agreed that the current $50 million threshold should be revised downwards. I would like to acknowledge my New Zealand First colleagues at the time for supporting the Green position that the threshold should be reduced to $10 million. That was the threshold just before the 1999 election. Mr Bolger lifted it to $50 million by sleight of hand, and this Labour Government has enshrined that in the closer economic partnership agreement with Singapore. The threshold is going in the wrong direction with this bill, which lifts it to $100 million. We want to take it back to $10 million.

We—the Labour and Green select committee members—wanted the Overseas Investment Commission to consider the impact on social well-being, environmental sustainability, and economic sovereignty when considering an investment in New Zealand, and I do not think this bill provides for that. Also, we wanted a code of corporate responsibility to be introduced. I concede that the bill does now contain a definition of “good character”, which is a step forward, but it does not go as far as a code of corporate responsibility. The national interest test should be expanded to ensure that any investment is compatible with Treaty of Waitangi obligations, a consideration that is completely absent from this bill. So instead of going forward and adopting in legislation the recommendations of the 2001 review, this bill has gone backwards. It has ignored the petition of over 7,000 New Zealanders calling for tighter controls on foreign investment.

I would like to make it clear—particularly to the ACT member who perhaps tried to imply that some of us who oppose this bill are against foreigners—that the Greens are not against foreigners. We are more than happy for people of foreign descent to make New Zealand their home, but if they want a slice of heaven they should have to make a commitment to this country. Almost half of our candidates in this year’s election were born overseas, so we are not anti-foreigner; what we are is very pro - New Zealand.

So we say no to land sales to foreign investors, whether they are corporate or individual, and we say that business investments must be greenfield investments. They must add value to our economy, not subtract value from it. That has been the problem. Foreigners have taken over Tranz Rail, Telecom, Air New Zealand, and Powerco. Many former central and local government assets have fallen into foreign hands. We have all seen the results of those takeovers, yet this bill is appallingly weak when it comes to scrutinising such investments.

I will put forward some amendments to strengthen the bill so that it genuinely allows only foreign investments that are in the best interests of New Zealand—because that is what we need. We do not want our net national debt to grow any larger than the $123 billion that it is at the moment. We do not want to be paying any more interest or dividends on foreign investment. For the year to December, $8.9 billion was the balance on income, because of the high level of foreign investment. We need to make our economy more self-reliant and sustainable.

GORDON COPELAND (United Future): I rise to speak on the second reading of the Overseas Investment Bill, which I think is a good bill. Probably, it strikes a fair balance between New Zealand’s need for overseas capital on the one hand, and the protection of sensitive land sales to people who have no intention of becoming New Zealand residents on the other hand. However, as is well known in the House, a degree of controversy arose around the amendments proposed to the original bill by David Parker, the member for Otago and a member of the Labour Party. Those amendments aimed to introduce marginal strips alongside rivers and lakes when land is sold to people who are not New Zealanders and who have no plans to become New Zealand residents—in other words to people who are merely part-time or visiting landowners.

I want to make it clear that United Future supports the creation of marginal strips in those circumstances, and I thank David Parker for raising the issue. Unfortunately, however, there was a fly in the ointment—quite a small fly, but a very, very important and significant one—and that was the specific provision in the bill that no compensation is payable to any person in exchange for the marginal strips. That is a very, very serious departure, and, from our point of view, an unacceptable departure, from the common law tradition going right back to Magna Carta that has always held there should be no confiscation without compensation. United Future was not prepared to live with a precedent of that sort in any New Zealand legislation.

The timing of this bill was extremely interesting, because while the Finance and Expenditure Committee was debating the question of no compensation, my member’s bill—a bill amending the New Zealand Bill of Rights Act 1990 to provide for property rights in the New Zealand Bill of Rights Act, and specifically stating that no one was to be deprived of the use and enjoyment of his or her own property without just compensation—was drawn from the ballot. That was one factor. But there is another factor as well, of course, and that is that the Government has announced its intention to proceed down the road not only of requiring marginal strips when sensitive land is sold to overseas persons, but, indeed, of requiring marginal strips from other New Zealand owners, as well, regardless of whether they intend to sell their property to a New Zealander or to an overseas person, and regardless of whether they intend to sell their property at all.

I think the whole nation is aware that this is an enormously controversial matter—so controversial that we have farmers in this country pledging to go to jail if land is to be removed from them without compensation. I have had delegations from Federated Farmers in Marlborough on that issue, and they were good enough to read out a statement I sent to their recent regional conference. A huge group of landowners in Waitakere City have approached me, and literally hundreds of farmers in the King Country and in the Waikato have all raised this issue with me. So the timing of legislation that has come to the House with a bland statement that no compensation is payable, really could not have been worse.

But in one sense, perhaps it is good that it did coincide with those other events that I mentioned, because it did—certainly for United Future—give us pause to really consider whether we wanted to support this legislation. I will probably talk a bit more about that in the Committee stage.

Quite apart from the issue I mentioned, on reflection I believe that it was actually unwise and unnecessary for the Government to try to force the issue of no compensation. I think that the situation that has now arisen, whereby the Government has signified that it will introduce a Supplementary Order Paper in the Committee to take out the provisions about marginal strips from the bill and, rather, deal with that matter during the consents process, is probably the right answer. I say that, because I think that during negotiations on a case by case basis, it is likely that many New Zealand landowners selling sensitive land to overseas residents will actually be quite willing to allow the marginal strip to be created, because they will be getting a price from the overseas purchaser higher than they can get from a New Zealand purchaser.

In that situation, therefore, they have every financial incentive to agree to a marginal strip, and so we neatly avoid, entirely, the question of taking that strip without compensation. It can be done by mutual agreement. United Future believes that that is the preferred way forward, so we are very, very pleased that the bill has been amended to take into account our considerations in that regard. We will, therefore, be supporting this bill.

Hon Dr MICHAEL CULLEN (Minister of Finance): I am pleased to take a short call in this debate to support my colleague the Hon Judith Tizard, who moved the second reading of the bill. I wish to speak on it at just a philosophical level rather than a detailed one, and light upon one small matter.

It seems quite clear to me that we need balance in these matters, particularly in relation to sensitive lands. There are concerns about excessive amounts of sensitive land passing into foreign ownership, but as soon as one tries to legislate that pretty well all land cannot be taken into foreign ownership, or requires some enormously complicated process in order to approve it, then we make it almost impossible for a very wide range of economic development to occur within New Zealand.

This country has always relied upon substantial amounts of foreign capital for its development. Until we lift our savings rates to a very, very, very much higher level than at present, that will remain the case. Certainly, I suggest gently to my Green colleagues that if they want to be so much in favour of New Zealand ownership and of the lifting of savings rates, then they should at least begin by supporting the New Zealand Superannuation Fund, instead of opposing that part of a long-term sustainable policy based upon savings that accumulated from New Zealanders.

The second point I would make in that respect is that land does not go away, simply because somebody has bought it. In fact, it is far easier to buy a factory and remove it from New Zealand than it is to buy a high-country sheep farm and remove it from New Zealand. It is very difficult to move a high-country sheep farm to some foreign country. The land does endure, in a way that other economic assets do not endure. So it is important that in this bill we provide mechanisms to consider quite specifically issues around access and so on, as part of the consideration of approval for foreign purchase of New Zealand land.

I might say in that regard that the purchase of Young Nick’s Head, for example, turned out to be better than if the previous absentee New Zealand owner had remained there. It was a deteriorating farm, with no access for New Zealanders, no Government ownership of the most sensitive part of the land, and a very unclear relationship in terms of the rights of local Māori to look after certain parts of that land. The new owner, Mr Griffin, has provided a much more satisfactory relationship. The land purchase by Shania Twain caused a great deal of interest in Otago, and we were able to gain some important concessions in terms of completing a track through the South Island.

Peter Brown: She’s going to sing at the Labour Party conference.

Hon Dr MICHAEL CULLEN: Of course Mr Brown, speaking with that perfect North London accent as he does, will stand up for the rights of native New Zealanders in these respects, without a single conscious thought that this might involve an “h” word that we are not allowed to say within this Chamber.

I welcome the fact that the National Party will support this bill, after the amendment is moved to remove the marginal strips provisions. [Interruption] But I would gently say to Ms Wong, before she goes much further, that it was her own colleague Dr Nick Smith, not to be confused with Young Nick’s Head, who introduced a member’s bill to provide for the compulsory acquisition of marginal strips without compensation, which the National Party voted for and sent to a select committee. Now, the National Party says in this bill that to act in that manner fails to recognise the foundation of our society. It is not something relatively minor; it is the foundation of our society! Ms Wong is telling us that Dr Nick Smith ignores the foundation of our society, in terms of his—

Pansy Wong: He does.

Hon Dr MICHAEL CULLEN: He does, does he?

Pansy Wong: Who put that in the bill?

Hon Dr MICHAEL CULLEN: I think he put that in the bill. Dr Nick Smith is the person who I think put that in the bill, without any doubt at all, because it was a bill in his name. The bill states “Dr Nick Smith” at the top of it, which is usually a subtle hint for the careful reader that that is the person who put that in the bill.

I am pleased that the National Party has done a U-turn on this. I predicted it would, when Dr Smith’s bill was sent to a select committee. I am grateful for the support of United Future. I recognise that there has been an issue of principle for them in this bill, which is why we have removed those provisions. I am grateful for the support of the National Party. I am baffled, I have to say, by the ACT party’s position on this, which seems to be totally open slather, but when a party is sitting on a proud 2 percent and going downwards, it can be very free and easy with its principles. When one is a retiring member of a party that is sitting on 2 percent and going downwards, that member can be even freer and easier with his or her principles, because there is not really a lot to lose at that stage in life.

I look forward to the Committee stage. The Government will be voting against all the amendments moved by Mr Rod Donald, and we hope for support from both the National Party and United Future in that respect.

PANSY WONG (National): I will take up just two points made by Dr Michael Cullen, the Minister of Finance of New Zealand. Firstly, if Dr Cullen is so concerned about New Zealanders not saving, I challenge him to give them a generous tax cut to enable them to save. A tax cut of 67c per week in 3 years’ time will not help most New Zealanders save up to buy even a piece of brick in Auckland—if they live in Auckland. Secondly, I fail to see how Dr Nick Smith can be connected to this Overseas Investment Bill, which is labelled as a Government bill and into which Labour member David Parker introduced the creation of compulsory marginal strips without compensation. I hope Labour takes some responsibility for that. After all, this is a Government bill.

National supported the Overseas Investment Bill at its first reading and its referral to the Finance and Expenditure Committee, because we also believe in striking a balance between the benefits derived from overseas investment, and the public’s desire to maintain the long-established New Zealand practice of providing public access for outdoor recreational activities.

But the vast majority of submissions, including the 8,000-signature petition, that we received and heard during the select committee process were against the bill. This reflects the public perception, after a number of high-profile cases, of the failure of the Overseas Investment Commission in following up and enforcing the obligations of overseas investors to fulfil their conditions of purchase. This perception of lack of enforcement led to calls from many submitters and signatories to restrict or ban overseas investment. But we should distinguish enforcement and undesirable conduct from banning overseas investment per se.

The main enforcement agency, which has been the Overseas Investment Commission, argued that it lacked the tools to take effective enforcement action when some overseas investors failed to meet the purchase conditions. One has to wonder why it has taken this agency so long to seek additional tools to carry out its work effectively. During the select committee process, all the members of the committee from all sides of the House shared the sentiment that we are more in touch with the public. All the members of the select committee urged the agencies to be more proactive in monitoring purchase conditions and enforcing the law when those conditions are breached. I imagine that unless a more proactive approach is taken by enforcement agencies to improving negative public perceptions, antagonism towards overseas investment will not be lessened.

National supports the tougher enforcement provisions contained in the bill, and we will keep a very watchful eye on the new enforcement agency to ensure that it does enforce the law. The administration of the overseas investment portfolio was undertaken by the Reserve Bank in the past, and has now shifted to Land Information New Zealand. We certainly would like to see that as a signal that more proactive enforcement action will be taken.

We realised that it must be election year when suddenly the largely cooperative atmosphere in the select committee took a new turn. Suddenly we had to take a lot more time, because David Parker brought in a change. He must have thought it would be an election year winner for him. His action must have had the endorsement of his Labour colleagues. Mr David Parker insisted that marginal strips must be created on sensitive land adjacent to rivers, lakes, and the foreshore.

Brian Connell: You could pay compensation for that.

PANSY WONG: No, it gets worse. The select committee spent a lot of time investigating whether this late addition was within the scope of the bill, whether it was in contravention of New Zealand’s international agreements, and whether it was workable. Ten pages were added to this bill. It became worse when we realised that Mr David Parker wanted the marginal strips to be created for no compensation. I do not know where he studied economics or finance. He argued that that provision would not affect the price obtained by the seller.

Gordon Copeland: He’s a lawyer.

PANSY WONG: Ah, lawyers! That explains it. Taking land away to create marginal strips would affect the price that sellers could obtain for their land. Any person of sense could tell us that the sale price must be affected. So at that point National changed its stance. Even though we supported the bill at its first reading, we could not support it at the deliberation stage of the select committee, because the expropriation of property without compensation is a fundamental infringement.

How could the bill contain such an unacceptable provision but still pass through the select committee and return to the House for a second reading? I think another party has woken up to the fact that this is election year. United Future registered a small protest during the select committee stage, to the effect that it found the provision to create marginal strips without compensation bad—but it was not bad enough to make United Future say it would not support the bill. If United Future had decided to oppose it at that stage, those provisions would not be contained in the bill we are now debating.

National gave United Future a hard time. We asked how that party could say it has principles, and how it could put up a weak protest but support the bill—and then we suddenly realised that it must be because this is election year. We understood that a closed-door negotiation had been conducted. United Future is the only party that supported Labour in getting the bill through the select committee stage. We can tell it is election year.

We have a lot of questions to ask David Parker. Will he abstain from voting on the bill? Will he vote against it when the Supplementary Order Paper we have been told about is introduced to remove the marginal strip provision? So I am looking forward to examining this bill in detail, to learn what the Otago MP will do. He is facing a stiff challenge from our brilliant Otago candidate. She will give David Parker a hard time.

Brian Connell: He’s gone.

PANSY WONG: His provision is gone, and the next thing left is for him to go, unless he can show his constituents that he will stand up for their interests. I presume that is why he introduced that provision. He has to explain to them why he is backing off from his amendments to the bill. National is looking forward to that part of the debate, and to examining the Supplementary Order Paper that will remove the compulsory acquisition of marginal strips without compensation.

MARK PECK (Labour—Invercargill): The National whips have played three extraordinarily cruel hoaxes on Pansy Wong. The first is that they forgot to tell her she is voting for the bill. The second is that they forgot to tell her that the tax cuts National is promising will not really be tax cuts. The third escapes me for now. I think it had something to do with whether there is lunch in the box. They were cruel hoaxes indeed, and I felt sorry for the member being so badly treated in that respect.

The Overseas Investment Bill is quite an important bill, because it seeks to do a couple of very important things. First of all, it seeks to protect the interests of New Zealanders in terms of their access to waterways and their enjoyment of what we see as our birthright, the Queen’s Chain. But at the same time it seeks to encourage overseas investment. One of the reasons it does that is that we rely on overseas investment for our economic prosperity. Pansy Wong and others who have expressed such moral outrage in this debate have forgotten that until we get ourselves, as a nation, into a situation of being good savers, we will rely on overseas investment for much of our prosperity. It is as simple as that. For Pansy Wong and others to stand in this House and say that giving people a tax cut will encourage savings is just so much cant. It simply is not true.

Darren Hughes: It’s baloney!

MARK PECK: As the honourable member for Otaki says, it is baloney. It just will not happen. Indeed, as everybody in this House knows, any signalling of major tax cuts will be met by the response of the Governor of the Reserve Bank putting interest rates up in order to dampen down demand so that inflation remains under control. Anybody with a skerrick of economic understanding knows that. Even John Key knows it. He was the one who said to Don Brash that he cannot introduce tax cuts in a mini-Budget after Christmas; it will take 9 years. National has ramped up the expectations of the public that there will be huge tax cuts, when we know, irrespective of the issues—

Deborah Coddington: I raise a point of order, Madam Speaker. I thought we were debating the Overseas Investment Bill.

Madam SPEAKER: Yes, that is a good point. Would the member please stick to the bill.

MARK PECK: I think I have made my point about the economic contribution of overseas investment, but I do wish to raise another point about the need to do something through this bill to protect the interests of New Zealanders. At the same time as we are doing that, we see the orange ribbon campaign going on. I find that quite fascinating. I am getting the wind-up from the whip; I think he wants me to do a better job of this. Those who have raised that issue cannot have it both ways. They cannot say that we cannot provide access over land to the marginal strips, and at the same time say that we need overseas investment as well. There are some fascinating issues in this debate, but I will take the whip’s advice and let others who wish to contribute to it do so.

PETER BROWN (Deputy Leader—NZ First): I think Labour played a bit of a cruel hoax on that member. It did not advise him which bill was on the Order Paper. New Zealand is a low-wage economy, on a worldwide scale.

Mark Peck: I blame the poms for that.

PETER BROWN: The member makes a joke of it. I know the Government thinks it will have addressed the situation by 2008, when it will give low-paid people 67c a week extra, but I can tell the member that that is not enough.

Craig McNair: A stick of gum.

PETER BROWN: That is about all it is worth. New Zealand is a low-wage economy. The ACT members and some of the other members who have spoken want to put New Zealand up for sale, with a line at the bottom of the advertisement saying: “Going cheaply.”

Craig McNair: Flog it off.

PETER BROWN: They want to flog it off to everybody. I know that Deborah Coddington and the Hon Michael Cullen stated that land sold to overseas investors does not go away—cannot be taken away. I tell honourable members that as far as the average New Zealander is concerned, it most certainly can be. It might as well be at the other end of the world, because they cannot afford it. If we open this country to buyers worldwide and say that anything and everything is for sale, so they should come here with their money, then the average New Zealander will never get anywhere. If the members on the Government benches do not understand how difficult it is for people to buy their first home, then they should go out and talk to some of the average New Zealanders who are trying to do that. Or if they do not understand how hard it is for a young farmer to get a farm, then they should go and talk to some of those guys who are suffering. John Key is a multimillionaire, Sunday told us.

John Key: Don’t believe everything you saw on that programme.

PETER BROWN: The member has a big, flash house in Parnell and a beach house that most of us here would die for. He would not have those assets had he not gone overseas to work for them. He would not have attained them on the pay scales in this country, no matter how good he is at his job. Just for the record, Mr Key is nodding in total agreement. I cannot think of one profession or one trade in which a person would not be better off working overseas—not one. [Interruption] Is the member giving me one?

John Key: Graeme Hart—he’s worth about $1.5 billion.

PETER BROWN: Where is he living?

John Key: He lives in St Heliers.

PETER BROWN: That is the one exception.

Brian Connell: Douglas Myers is another one.

PETER BROWN: Madam Speaker, this is difficult enough without these fellows—

Madam SPEAKER: Yes, it is difficult enough. Could we please stick to the bill.

Simon Power: I raise a point of order, Madam Speaker. I appreciate that we are in urgency and that things move along in a reasonably convivial way, but if the New Zealand First member personalises the debate in a way that involves Mr Key’s non-parliamentary life, then he can expect some interjection from those in Mr Key’s party who sit around him.

Madam SPEAKER: I take the member’s point. I thought there was an element of camaraderie there—obviously I was mistaken. It was getting out of control. Let us get back to the purpose of the bill. No humour is required at this stage—members should just address the bill.

PETER BROWN: As I recall, Mr Key made reference to his own circumstances in his own speech, and I think he took what I said with good humour. If we open the door for anybody to come here to buy anything, then we encourage young New Zealanders to go overseas to earn the big bikkies needed to come back and buy the country.

New Zealand First unashamedly believes that there should be some restrictions on overseas investment in this country. We will not get mixed up like ACT members and confuse that with people who come here with their money on a permanent basis, determined to settle here, invest here, and play a positive part in the economic and social well-being of the country. We are not confusing overseas investors with immigrants who come here and make a commitment to this country. The ACT member seemed to get quite confused when illustrating that point.

The Greens have produced a Supplementary Order Paper much of which, on the surface, New Zealand First supports. We have not had a chance to examine it in detail or to discuss it in caucus, but the Greens make some points that sit comfortably with New Zealand First, particularly in respect of the purpose clause. The Supplementary Order Paper enlarges the purpose clause, basically by adding clause 3(b): “Any ownership or control must be in the national interest for the long term benefit of New Zealanders.” We think that that is a fairly level-headed approach. The Supplementary Order Paper further adds clause 3(c): “Public participation in decisions about overseas investment will be encouraged.” I tell Mr Donald that New Zealand First will support that also.

I regret to say that we have not had a chance to examine the rest of the Supplementary Order Paper in detail, and therefore have been unable to discuss it as a caucus. I notice that the amendment to insert clause 18(2)(g)(i) relates to: “provisions made for settlements to claims made under the Treaty of Waitangi, including return of land;”, and that part of that clause refers to the principles of the Treaty of Waitangi. That puts us on our guard. But we will support the amendment to the purpose clause, because we think that the Greens have enlarged it to reflect what most New Zealanders feel about overseas investment.

I conclude by drawing the House’s attention to the fact that very recently a football club in the UK, namely Manchester United, was sold in large part to some Americans. There was just about uproar in Manchester. Manchester United is still going. The team is still playing soccer, as far as I know. It has not been moved out of the country—it is still there. The players still play in red and white. It still has Wayne Rooney and all the stars. But the Manchester United fans created uproar. The Government wants to do something like that to this country. It wants to do to New Zealand what has been done to the Manchester United Football Club. It is saying that it will do that to New Zealand—so does it not expect some passion and concern out there? I say to the Government that it is wrong. Can Government members tell me what gain was obtained for the country and for the average New Zealander by the sale of $16 billion worth of assets under Labour and National in the 1980s and 1990s? They should tell me that.

Hon David Cunliffe: What have the Romans done for us?

PETER BROWN: The member thinks it is a joke. He did not think it was a joke when he had to buy back Air New Zealand a couple of years ago. He did not think it was a joke when the Government had to buy back Tranz Rail after the average New Zealander had been promised a first-class railway system. If the Government has not learnt the lesson of selling things cheaply, then it should have done so by now.

New Zealand First is a political party founded on the principle that, first and foremost, it will look after New Zealanders and this country. [Interruption] The member over there makes a noise, but if he thought a little more deeply about what the people in Otaki think about this, he might have a different view. Maybe he should go out and ask them whether they want overseas investment. Oh no, that would be getting too close to the coalface. The Minister is shaking his head.

This bill will get through, because the good old boys of politics in this country, National and Labour, will combine. They will put up a sign saying that this country is for sale and going cheaply, and that buyers should come and talk to Michael Cullen and John Key. New Zealand First opposes this bill.

A party vote was called for on the question, That the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 54

New Zealand National 26; New Zealand First 13; ACT New Zealand 7; Green Party 7; Māori Party 1.

Amendments agreed to.

A party vote was called for on the question, That the Overseas Investment Bill be now read a second time.

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 54

New Zealand National 26; New Zealand First 13; ACT New Zealand 7; Green Party 7; Māori Party 1.

Bill read a second time.

Instruction to Committee

Hon PAUL SWAIN (Minister of Labour): I move, That it be an instruction to the Committee of the whole House on the Overseas Investment Bill that it take the bill part by part.

Motion agreed to.

In Committee

Part 1 Preliminary provisions

JOHN KEY (National—Helensville): We are up to the interesting bit now, the Committee stage debate on the Overseas Investment Bill. We know from the speeches on the second reading where the divisions in Parliament on this bill lie. I want to make particular reference to clause 4, “Overview”. Clause 4(1)(b)(i) talks about subpart 1 of Part 2. At the Finance and Expenditure Committee David Parker, on behalf of the Labour Government, inserted into this subparagraph the words—

Simon Power: I raise a point of order, Madam Chairperson. I am sorry to interrupt my colleague, but in the time since we have started this debate the Minister has not been in the chair. He has just returned to it now. I ask that we get some kind of discipline around Ministers’ seating arrangements while we are in Committee.

The CHAIRPERSON (Ann Hartley): I apologise. The Minister will stay in the chair.

JOHN KEY: Sadly, that is the position the Minister feels he will be in regarding the position of Minister of Finance as well—a chair was so close to him, but in a few months’ time the opportunity will be gone, and never will he manage to position his bottom on the Minister of Finance’s chair. What a tragedy. Let me go back—[Interruption] Well, it will be anyone—

Darren Hughes: Does he think he will get the job? Don Brash will give that away.

JOHN KEY: If he does and it is for the good of the country, I shall welcome and support the incumbent person. I shall support that decision fully, because the National Party believes in what is good for the country, not what is good for Labour. That is why Darren Hughes will be so firmly rejected when the election takes place. But let me digress no more; I will go back to the Overseas Investment Bill.

I want to talk about the addition to subpart 1 of Part 2 in clause 4(1)(b)(i) that was imposed by David Parker, on behalf of the Labour Government, during the select committee process. The additional words state that subpart 1: “imposes a statutory marginal strip condition for certain overseas investments in sensitive land:”. That clause originally included the words, following on from those I have just quoted, “for adequate and fair compensation”. The National Party would have supported that—[Interruption] Well, we would have discussed those words—“for adequate and fair compensation”. I suspect that the National Party finance spokesperson may have had some concerns about the costs of that compensation. But putting that to one side, we would have supported the inclusion of the words “for adequate and fair compensation”. Those words were not added. One is left with the feeling that that clause is nothing short of a grab of a property right—nothing short of the view of a Government that cannot quite differentiate between—

The CHAIRPERSON (Ann Hartley): Can I just clarify that we are talking about Part 1.

JOHN KEY: Absolutely—Part 1, clause 4(1). Madam Chair, were you not listening to my speech intently? I think it is one of the better ones I have delivered in Parliament so far—and Mr Cunliffe is nodding his head.

Let me go back to clause 4(1)(b)(i), which talks about imposing a statutory marginal strip condition for certain overseas investments in sensitive land. [Interruption] Yes, that is right. We know that because the words “for fair and reasonable compensation” were not added, this measure will fail. Unlike the Labour Government we understand property rights. We understand the definition as being that if something one owns in one’s own name is taken from one—“involuntarily acquired” is the term—there must be compensation.

Clearly, the Labour caucus voted for the wording that is in the bill. I understand Mr Parker’s reasons for doing so. He had some local reasons. He is under a lot of pressure in his seat of Otago. I understand that. I have been down there. I got the same reaction in Otago as I got when I was in Otaki the other day. In Otaki I asked what people thought of the local member, Darren Hughes, and they had never heard of the bloke. That is how they put it: “Never heard of the bloke.” I asked whether he was the guy cleaning out the back of the chicken farm that I was visiting, and they said: “No, I don’t think so; I think he’s in Wellington.” I got the same sort of reaction in Otago.

I understand that we are in a political environment and that Mr Parker has a lot of high-country stations in his electorate. [Interruption] Yes, he has to get it pumped up in the Otago Daily Times that up here in Wellington he is not just sipping lattes served by Deborah Coddington; he has to do something when he is up here. So sure enough, he thought that if he put this provision in the bill it would be really popular. I guess it would not be popular with those who are selling, but it would be popular with some, anyway. That is why Mr Parker did it. We saw the true colours of the Labour Government, which really does not believe in anyone’s property rights or anyone’s ability to earn anything in his or her own name, when Labour members happily followed the Pied Piper, Mr Parker, and voted for the inclusion of that provision. That was fair enough, except that when they came to Parliament they could not get even the Greens to agree with it. That is how sad it was. [Interruption] My friend Mr Donald is looking across and saying “maybe”. The Government is in an unbelievable situation.

DAVID PARKER (Labour—Otago): The reason we cannot get support to pass this rather moderate provision relating to the compulsory creation of marginal strips as a precondition of the sale of rural land to foreign people is that New Zealand First and the Greens oppose it, because they favour a total ban on the sale of rural land to foreigners. So it is not because they disagree with our more limited position that they oppose this provision.

I say to the member who just spoke that Labour does oppose confiscation of property rights without compensation, but the point here is what the property right is. Does a property right in rural land in New Zealand include the unrestricted right to sell to an overseas person? Is it wrong in law for the Government to say that it will not allow rural land adjacent to the foreshore, a river, or a lake to be sold to an overseas person unless a marginal strip is reserved? It is not. Until 1995 the Land Settlement Promotion and Land Acquisition Act made it absolutely clear that there was an almost total prohibition on the sale of rural land to foreigners—sale of land was not merely subject to a condition about marginal strips; it was totally prohibited. Against that background it is wrong to suggest that a private property right includes the unrestricted right to sell overseas.

Mr Key is saying that the public’s right to control, through the Government, the sale of land to overseas persons and to control access to our waterways ought to be transferred from the public to the private. At the moment the position at law is quite clear, given our history, that private property rights do not include the unrestricted right to sell rural land to overseas people. The argument John Key, the National Party, and ACT put to the contrary is wrong in principle.

They are asking the wrong question. They say it is wrong to confiscate a property right. We agree. But the question is what property right is being confiscated here. If a property right in rural land has not historically in New Zealand included the right to sell to overseas people, giving people the right to sell to overseas people subject to a precondition of laying off a marginal strip is not confiscating anything. No one is forced to sell to an overseas person. If a person wants to have the privilege of doing so, it is within the jurisdiction of this Parliament to say, quite properly, that as a precondition to that permission we will reserve a marginal strip.

I make one final point. It is absolutely inconsistent to say that one can control public rights of access across the foreshore vis-à-vis Māori claims to interest in the foreshore, and then, within 1 year, come to Parliament and say: “Notwithstanding our high and mighty principles on the foreshore, we will have a different rule when it comes to New Zealanders selling to overseas people.” There is a word for that, which I am not allowed to use in this Parliament.

We cannot get those provisions through. We have other good improvements in the bill relating to controls on sales to overseas people, which will go a long way to achieving a similar outcome, but it is very important that the underlying principle here be unpicked a little. When people say that private property rights should not be confiscated, they are right, but people need to take great care in what they define as the private property right. If people do not take care, they are, in effect, changing current baselines to privatise what are existing public rights. To do that, in a world of globalisation and of concentrations of wealth in certain parts of our world, is to threaten the birthrights of New Zealanders to access waterways.

ROD DONALD (Co-Leader—Green): I raise a point of order, Madam Chairperson. I did not want to interrupt the member, particularly because I agreed with most of what he was saying, but I suggest that we follow a logical sequence here. Part 1 does not have any reference to the marginal strips, as far as I can see. If we can get Part 1 out of the way—because it is a relatively small part, and I intend to take only one call—then we can have a much more wide-ranging debate on Part 2, where marginal strips are very much part of the debate.

DAVID PARKER (Labour—Otago): Clause 4(1)(b)(i) speaks of imposing “statutory marginal strip condition for certain overseas investments in sensitive land:”.

Simon Power: The Supplementary Order Paper refers to it, as well.

DAVID PARKER: The Supplementary Order Paper removes that provision.

The CHAIRPERSON (Ann Hartley): That is where I did get confused before.

DEBORAH CODDINGTON (ACT): That was a great speech from “Michel Foucault”! The member said that property rights are whatever one decides they are, and whatever anyone wants them to be. He is from the party that says: “We’ve got principles; what principles do you want to have today?”, as they dive into their bag of all sorts of different principles.

Property rights are absolute. They are not whatever one wants them to be. When that member goes on about people who have a property right not having the right to sell it to an overseas person, that is absolute emotional claptrap, because a property right means that a person has the right to sell a property to whomever he or she wants. I remind the member to read his history. Anyone who has read history might be aware of the Australian historian Geoffrey Blainey, who wrote that in 1900 New Zealand had the highest standard of living in the world and had no restrictions on foreign investment. So David Parker is absolutely wrong when he goes on about what constitutes a property right, and about the fact that it does not include the right to sell to whomever one needs.

Foreign investors should be subject to the same rules as New Zealand investors. If those rules are wrong or they are being broken, we need to look at them and ensure that everybody obeys them, rather than tweaking them around to come up with all sorts of different definitions of what a sensitive asset is and who should be buying what. The member for New Zealand First who spoke before was going on about ACT and the National Party wanting to sell the whole of New Zealand to anybody who comes through the door. That is also a total misrepresentation of the truth. When has anybody said that?

John Key: We didn’t say that, did we? We were talking about lattes.

DEBORAH CODDINGTON: No, I am talking about New Zealand First.

There are restrictions on anybody purchasing land in New Zealand. For a start, one has to have the money to do so, or the guarantee of the money from whoever is lending it. There are all sorts of laws and restrictions relating to the sale and purchase of land. The Minister of Finance, Dr Cullen, implied that legislation like this is necessary because New Zealanders have been led to believe, through reading advertisements in an airline magazine for the sale of Poronui Station, that the purchaser would have the right to the waterways. If we passed legislation every time some real estate agent came up with an over-hyped description of a piece of land or property that was for sale, we would never get out of this place. I am still looking for a piece of Tuscany in Avondale. Are we going to pass laws saying that no New Zealanders should be led to believe that they will be able to buy a piece of land in Avondale?

I come back also to the issue of overseas investment in significant business assets. Craig McNair dealt with that before when he talked about the fact that we should restrict investment in New Zealand businesses to New Zealanders because they are the only investors of good character. I remind that member of the wine-box inquiry, which was brought into the House by his leader. Not one overseas company was involved in the wine-box inquiry, and I wonder why that was. Well, it is usually because people or companies that invest in a company, a business, or a corporation in another country are usually—I am not saying always, but in the majority of cases—good corporate citizens. The mere fact that they are putting their money where their mouths are means that they will look at obeying the laws. That is what I mean when I say that if people do not obey the laws, no matter who they are—whether they are foreigners or New Zealanders—that is when we should deal with it. We should not deal with it on the basis of the country where they live.

I come back to the principle of property rights. It is all very well for Dr Michael Cullen to sneer at principles and to say that just because I, personally, am not coming back to Parliament I can afford to be fast and loose with principles. The ACT party is the one party—apart from the National Party—that is standing on principles and is debating this bill on the basis of principles. It comes back to the basic principle, which I repeat to David Parker, of whose land it is. Whose land is being sold here? What gives that member, just because he has been elected to Parliament, the right to breach property rights?

CRAIG McNAIR (NZ First): I want to speak on Part 1 because of the issue that was raised by the Labour Government when it inserted clause 4(1)(b)—

Brian Connell: I think it is termed the “steal clause”.

CRAIG McNAIR: The member on this side of the House terms it the “steal clause”. This Government had a bill that allowed for the blatant flogging of New Zealand ownership to overseas interests. Only a few months out from an election, all of a sudden, Government members looked at themselves and said: “Oh my goodness! We have to do something that makes it look like we are being tough on foreign investors.” That is what they did; they sat around a table late at night thinking they had to do something about that in order to give people the impression that they were trying to be tough on foreign investors. That is what they did, because they knew the sentiment out in the community. They knew that an overwhelming number of people gave submissions to the select committee in opposition to the bill. They knew the public sentiment on this bill, so they thought they had to do something. They got their spin machine together, they flew Mr Parker up from Otago early on a Monday—instead of having him come in on an early flight on Tuesday—they racked their brains, and they thought of a way to spin some sort of explanation to the public to make it look like they were working in the best interests of the people.

Some people could call that clause the “David Parker amendment”. I was going to call it the “smokescreen amendment”. Or it could be called the “blatant electioneering clause”, as well. The Government wanted to pop in an amendment that, basically, would allow foreigners to buy whatever they wanted but, after they had done that, it would take away their riparian rights. The Government would get rid of those rights if it wanted to, in certain circumstances. Basically, this is a poll-driven Government and if it thinks that the polls are telling it that people are not so approving of what it is doing, then—nothing to do with conviction or anything—it will act purely on the polls. Its decision would be based on that alone. I think it is quite disgraceful that the Government has come out with an amendment that, as I said, is such a blatant electioneering clause.

The Government has no conviction or passion about it. Labour has turned away from its principles. It signed up to the petition that went up and down New Zealand many years ago to stop foreign ownership of land, and then it went totally against its principles, which was proved by its $10 billion worth of sales of State-owned assets from 1984 to 1990. Allowing for inflation and the amount of assets those State-owned enterprises owned at the time, they would be worth billions of dollars to the economy now. We have $10 billion a year going out of the country now, just because of foreign ownership, and this Government has allowed that to happen. The Government is obviously not concerned about it, because it is letting it happen; it is continuing that kind of regime. It just does not give a stuff! But the Government expects us and the people of New Zealand to believe that it is trying to do something about the foreign ownership issue by popping in a clause like that, by flying David Parker up from Otago on a Monday, and by getting its spin machine together to spin out a bunch of lies to the public. That is what the Government is doing.

Hon DAVID CUNLIFFE (Associate Minister of Finance): I am reluctant to take a call, but I will take one quickly just to point out some of the inconsistencies in the submission by the previous speaker. He said that this Government lacks principle by bringing in a range of measures that provide some protection for sensitive land that is sought to be held by foreign investors. Well, that is a bit rich, because there is no lack of principle there. This Government has taken a very sensible, moderate, and balanced position, on the one hand screening negative investment in sensitive and iconic land—and the Finance and Expenditure Committee has further developed the screening factors that will allow that—and on the other hand encouraging foreign investment and lowering compliance costs in areas where that is clearly in the net national interest to do so. That is the appropriate balance.

Talk about a lack of principle—that member is from a party that when it gets out on the hustings rails against foreign investment and the country being flogged off overseas. Then its members come into this Committee and fail to support a sensible, moderate amendment by my colleague that would protect an iconic space around riverbeds and marginal strips. Well, they cannot have it both ways. Are they the defenders of the little guy, or are they what they proved themselves to be last time—God forbid it happen again—they ever got near the Treasury benches: “… full of sound and fury, Signifying nothing.”?

ROD DONALD (Co-Leader—Green): That was rather an abrupt end to that speech, but it was because, I think, David Cunliffe, the Minister in the chair, had run out of anything to say. It is very hard to defend this legislation, particularly because it is a con job, as I said in my second reading speech. It is a con job in a number of respects, and I would like to focus particularly on the purpose clause to emphasise my point.

Clause 3, “Purpose”, is very cuddly-feely. It talks about it being “a privilege for overseas persons to own or control sensitive New Zealand assets”. It then states that that privilege will be acknowledged by requiring overseas investments in those assets to meet criteria for consent and by imposing conditions on consent. Then we have to go to the small print to see that while the purpose talks about assets, the only real test will apply to sensitive land. There are b-all tests on anyone buying businesses, other than a good character test, so there is no expectation that a business buy-up will do anything other than tell us whether the person is supposedly of good character, and there have been numerous examples of business buy-ups where the foreign purchaser has not been of good character. So, as I said in my second reading speech, if the Government is serious about overseas persons owning or controlling our sensitive assets being a privilege, then it should give some teeth to that purpose.

It has not; therefore the Green Party will endeavour to do what the Government has failed to do, and will propose some amendments to the purpose clause. We will leave what is there as it stands, because it goes part-way, but we believe that it needs to be strengthened by making clear that any ownership or control must be in the national interest for the long-term benefits of New Zealanders. I ask the Government whether that is too much to expect of foreign investment legislation. If the Government does not support our amendment, then in effect it is saying that it is happy for foreign investment not to be in our long-term interest and not to be for the benefit of New Zealanders. That is an indictment on a Labour Government. It is what one would expect of National if that party were in Government. Of course, when National was in Government, it did make it very easy for foreign investors to gobble up a lot of our strategic assets, particularly State-owned assets. But for Labour to make that even easier, under the smokescreen of saying that it is a privilege for overseas persons to own or control our sensitive assets, is an indictment.

The Government, of course, is doing this because it has an agenda, and the agenda is very clear. The Government would dearly love a free-trade agreement with the United States of America, and we know full well that it is high on the US shopping list that any restrictions on overseas investments be reduced or eliminated. The Government has locked itself into the General Agreement on Trade in Services (GATS), and I have to ask it whether it is just a coincidence that one of the major demands from our trading partners during the current GATS round is for New Zealand to scrap the Overseas Investment Commission. Clearly, the Labour Government has done the bidding of our neighbours overseas—to the disadvantage of our own citizens—because the Government is scrapping the Overseas Investment Commission and transferring it to Land Information New Zealand. It will be even easier for foreign firms and individuals to buy up our land, our buildings, and our businesses, and Labour is therefore doing exactly what those Governments representing multinational corporations that already own a fair chunk of New Zealand want it to do.

So our other amendments to this part will tighten up the scrutiny on foreign investors by reducing the threshold from 25 percent ownership to 10 percent ownership. That actually brings us into line with the IMF, the OECD, and the United Nations Conference on Trade and Development in using 10 percent as a criterion for the standard international definition of foreign ownership.

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

BRIAN CONNELL (National—Rakaia): When I took a call in the debate on the first reading of this bill, I said that the National Party has no problem with the concept of foreigners pouring their hard-earned cash into New Zealand, subject to certain rules of engagement. I went on to say that everyone wins: overseas investors get to live in Godzone, and we get money for education and infrastructure. That is how citizens of New Zealand get to grow their wealth, and that is the contribution that foreign capital makes to our economy.

I was very much of that opinion when I came down to the House to talk on the second reading of this bill until I struck the “Mugabe clause”—the “Parker Pimpernel clause”. That is the clause that says—and this is from a rural member, the member for Otago—it is OK to take people’s private property rights, and it is OK to take the best part of their land and annex it without even offering compensation. The man’s true socialist agenda came pouring out and he is wearing it on his sleeve. He wonders why he will not be coming back to the House after the next election. Bye-bye, Mr Parker.

We should not be surprised that this is the type of thing the Government is doing. The same Government that is promoting this legislation is suggesting that the public can roam at will across private property. When Michael Cullen was on his feet, he slapped a sneaky little left jab into my colleague Nick Smith—below the belt, as is Michael Cullen’s way—by suggesting that this is the type of nonsense that the National Party would support. What he conveniently overlooked is that this is a Government bill sponsored by Michael Cullen, and this sneaky, nasty little clause is in the name of David Parker, the soon to be former member of Parliament for Otago. But we should not be surprised because this is—

Pansy Wong: Jacqui Dean is coming here.

BRIAN CONNELL: Jacqui Dean is coming. I know her. She is working hard and knocking on a lot of doors in Otago, and she will be here very soon.

But we should not be surprised that this Government would embark on this type of rhetoric. I was at a public meeting in Timaru where the Minister of Agriculture—a Minister of the Crown—got up and, in a public forum, said that the annexing of private property can be justified in the public good. That is the sort of thing one would expect to hear from the leaders of some Central African countries. But to hear it from someone in the New Zealand Government who represents the Crown is simply unsatisfactory and not acceptable.

It is all right for people like Mr Parker to say: “This land is everyone’s. We’ll put a value to it. No one’s going to miss it.”, but that is the worst type of interference in the property market that I can think of. The member from the ACT party, I thought, made this point particularly well. Why is it that we have been seduced by minority groups into thinking that foreign ownership of our land means that New Zealanders will not be able to enjoy it? The facts do not stack up. Of the land that has been sold in the high country around mid-Canterbury, six of the 11 stations sold in the last 2 years went to New Zealand interests. So much for the argument that they have been priced out of the hands of Kiwis. Fifty percent of those that were resold over the last 10 years went to New Zealand interests.

Michael Cullen himself stood in the Chamber a few minutes ago and said: “You can’t take the land with you.” That is right. One cannot. It is always going to stay here. Yet that same Minister is sponsoring a bill that says it is OK to steal other people’s property. That is simply unacceptable. The great shame of all this is that rather than attract capital to New Zealand, we are now getting ourselves into a situation where potential investors are starting to become gun-shy. Instead of welcoming those people and instead of using their capital, we are losing that opportunity. I can think of an example in mid-Canterbury where a five-star beef block—

Hon PAUL SWAIN (Minister of Labour): I move, That the question be now put.

ROD DONALD (Co-Leader—Green): I appreciate having a few more minutes to speak, as I had not even got on to supporting my good colleague David Parker on his excellent initiative. But before I go there, I want to finish talking about the amendments to the purpose clause that I have proposed on behalf of the Green Party, and I am pleased to see that the Minister of Finance is with us to hear those. One of our fundamental concerns with the legislation as it stands is the extent of influence that the Minister has through his letter of direction to the Overseas Investment Commission. Although I have made considerable criticisms of the secretary of the commission in terms of how he has acted, I recognise that the ministerial directive has pretty much determined how the commission operates. That has basically been—without quoting the letter in full—to facilitate overseas investment. The scrutiny function has very much taken a second-class position; the thrust has been to making it even easier for foreign investors to buy up our land, our businesses, and our buildings, and we need some balance to that.

Hence the amendment we are putting up to the purpose clause that public participation in decisions around overseas investment will be encouraged. I believe it is vital that the people of New Zealand have a say in whether overseas investments are appropriate, rather than the regulatory authority simply carrying out the wishes of the Minister of the time—although given that the Minister is usually Labour or National, there is very little difference between them in terms of their determination to make it even easier for foreign buy-ups.

I say this not only as a citizen but also with the benefit of information from Mark Dunlop, who made a submission to the Finance and Expenditure Committee. I think he was very brave to do so, as a former member of the Overseas Investment Commission staff. He said in his submission that the bill is fundamentally flawed and that it does not provide the framework, including supporting structures and safeguards, necessary to facilitate or ensure only positive and high-quality overseas investment that is beneficial to New Zealanders. He goes on to talk about the role of the regulator, and said that it is simply unacceptable that the same body can act as both a compliance and enforcement agency and an advisory and facilitative one. On the one hand, the commission is trying to encourage overseas investment, as per the directive letter; on the other hand, it is meant to be trying to ensure that compliance is maintained. Hence our amendment, and hence our criticism of the commission’s job now being handed over to Land Information New Zealand.

I finish my call by saying that I thought it was an excellent move on the part of David Parker to use this legislation to enable statutory marginal strips to be created when a foreign investor buys up land that adjoins our foreshore, our significant lakes, and our significant rivers. It is a great step forward for public access in New Zealand. It recognises that the lakes, the rivers, and the foreshore are public, should be open space, and, therefore, should be accessible. I am extremely disappointed that some parties in this House that I thought supported public access and the ability for people who enjoy the great outdoors to get access to that public space are now voting against this provision simply because there is no provision for compensation.

There is no provision for compensation when a subdivision takes place, either. Will United Future now be demanding that landowners be compensated when they proceed with a subdivision? I hope not. I hope that they will see sense. I hope that the outdoor recreation lobby and its party actually get some benefit from having its name attached to United Future, and I hope that United Future will change its position on these amendments—that it will not force the Government to move its Supplementary Order Paper and backtrack on what would have been a great step forward for New Zealand and for New Zealanders, especially those who enjoy the great outdoors. I am very sorry to see Dr Cullen have to back down on these provisions. They were successfully negotiated by the Labour member for Otago in the best interests of not only his constituents but also people throughout New Zealand.

LUAMANUVAO WINNIE LABAN (Labour—Mana): I move, That the question be now put.

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

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 51

New Zealand National 26; New Zealand First 13; ACT New Zealand 5; Green Party 7.

Motion agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 3 be agreed to:

to omit this clause, and substitute the following clause:

3 Purpose

The purpose of this Act is to acknowledge that:

(a) It is a privilege for overseas persons to own or control sensitive New Zealand assets by—

(i) requiring overseas investments in those assets, before being made, to meet criteria for consent; and

(ii) imposing conditions on those overseas investments.

(b) Any ownership or control must be in the national interest for the long term benefit of New Zealanders.

(c) Public participation in decisions about overseas investment will be encouraged.

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

Ayes 20

New Zealand First 13; Green Party 7.

Noes 92

New Zealand Labour 51; New Zealand National 26; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 6 be agreed to:

to omit from subclause (1) the expression “25” in both places where it occurs, and substitute the expression “10”.

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

Ayes 7

Green Party 7.

Noes 105

New Zealand Labour 51; New Zealand National 26; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 6 be agreed to:

to omit from subclause (4) the expression “25”, and substitute the expression “10”.

Amendment not agreed to.

The CHAIRPERSON (Ann Hartley): Rod Donald’s amendments to clause 6, to omit and substitute an expression in paragraphs (a), (b), and (c) of subclause (4), are now out of order, as they are inconsistent with a previous decision.

The question was put that the following amendment in the name of Rod Donald to clause 6 be agreed to:

to omit from subclause (5) the expression “25”, and substitute the expression “10”.

Amendment not agreed to.

The CHAIRPERSON (Ann Hartley): The next amendments to clause 6 in the name of Rod Donald, to omit and substitute an expression in paragraphs (b) and (c) of subclause (5), are out of order, as they are inconsistent with a previous decision.

The question was put that the following amendment in the name of Rod Donald to clause 7 be agreed to:

to omit from subclause (1) the expression “25”, and substitute the expression “10”.

Amendment not agreed to.

The CHAIRPERSON (Ann Hartley): The next amendments to clause 7 in the name of Rod Donald, to omit and substitute an expression where it occurs several times in subclause (2), are out of order, as they are inconsistent with a previous decision.

The question was put that the amendments set out on Supplementary Order Paper 376 in the name of the Hon Dr Michael Cullen to Part 1, and the following amendment in his name to clause 6, be agreed to:

to omit from subclause (1) the definition of computer register.

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

Ayes 100

New Zealand Labour 51; New Zealand National 26; New Zealand First 13; United Future 8; Progressive 2.

Noes 12

ACT New Zealand 5; Green Party 7.

Amendments agreed to.

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

Ayes 87

New Zealand Labour 51; New Zealand National 26; United Future 8; Progressive 2.

Noes 26

New Zealand First 13; ACT New Zealand 5; Green Party 7; Māori Party 1.

Part 1 as amended agreed to.

Part 2 Consent and conditions regime

The CHAIRPERSON (Ann Hartley): The debate on Part 2, clauses 10 to 79, includes debate on schedules 1 and 2.

PANSY WONG (National): Madam Chair, I hope that you will be very generous about accepting many calls, because Part 2 is basically the bulk of this legislation.

First of all, I would like to raise some questions for the Minister in the chair, Michael Cullen, to answer, because I really, really want to get some assurances from him. As I pointed out in my second reading speech, a lot of the resentment and negative public perception towards overseas investors, particularly those purchasing buildings or investing in business, is a result of some high-profile cases. There was some disproportionately bad publicity about some company that was supposed to move in and start mining or carry out some other operation and, after many years, nothing came of it. Officials came before the Finance and Expenditure Committee and said their hands were tied, because the previous enforcement monitoring regime did not provide enough tools for them to be able to carry out their task.

Part 2, Subpart 4, “Monitoring”, talks about the role of the regulator. The select committee, as a whole, was quite concerned about the wording and the use of “may”, as in clause 39, “Regulator may require consent holder to provide information for monitoring purposes” and clause 40, “Regulator may require any person to provide information for statistical or monitoring purposes”. I would like the Minister to take a call and explain to us whether it is really true in the past that the regulator found it difficult to obtain information, or to actually monitor, or to just pick up the phone to see why some of those investors’ plans had lapsed or whether the conditions had changed and what the reasons were. I think that created a lot of negative perceptions for the public, which has not been helpful.

So if the Minister can assure us that the word “may” in the legislation will be interpreted as an encouragement now that the regulator will be placed under Land Information New Zealand, and that he or she will carry out the monitoring and enforcements, that will relieve a lot of the negative perception towards overseas investors. In some cases the failure to fulfil the original conditions could be beyond the investors’ capabilities or circumstances could have changed.

The select committee also requested that there be action on additional information and activities, such as starting the collation of statistical information and the release of that for the public. Sometimes it is a fact that when information is not available people tend to have suspicions about what is happening. If information is available for public inspection, that would be helpful for the public perception towards overseas investors.

Of course the other thing I noticed was that 10 pages have been struck out of the bill—

Brian Connell: The “Mugabe clause”!

PANSY WONG: My colleague, the very, very learned, hard-working and robust representative for Ashburton, says it is the “Mugabe clause”.

David Parker: I raise a point of order, Madam Chairperson. Some people here have had relatives murdered by the Mugabe regime. That is true. I take offence at having a clause that is being associated with that despotic regime, and would ask that you bring the member to order.

The CHAIRPERSON (Ann Hartley): Would the member withdraw reference to that, please?

PANSY WONG: I withdraw. Suddenly this bill will become a lot skinnier. Ten pages of it will be struck out. They relate to clause 21, which is entirely the effort of the member for Otago, David Parker, who is soon to be replaced by National’s Jacqui Dean. He put in 10 pages of legislation to create marginal strips without compensation. I could not believe it. The member explained this to us in the select committee. He said that it did not matter and would not affect the value of the property just because a marginal strip had been created.

That is very, very strange, and I think the member might like to take a few calls. He seemed to be quite anxious to explain this himself, and I invite him to do so. This is the Committee stage, and all members are invited to explain and defend their position. So I invite the member to do that.

Hon Dr MICHAEL CULLEN (Minister of Finance): The provisions relating to the marginal strip, of course, will be removed by Supplementary Order Paper. That is the condition of United Future’s support for the bill. It also enables the National Party to vote for it.

But I have to say I think Pansy Wong should not push her luck too far in terms of her moral outrage on the provisions that the Finance and Expenditure Committee put in. First, she voted for Nick Smith’s member’s bill, which did exactly the same thing, and that was only last year; and, second, the current provision for a marginal strip after subdivision on coastal property was put in place in 1991, under the previous National Government. So Ms Wong’s “shock-horror” reaction lacks a certain amount of “probe” at the end of it, I think one could say! Her whispering in Brian Connell’s ear is not going to help the matter in that respect; it will just confuse him, I think, more than he is already confused on most of these matters.

The substantive issue that she raises is important. It is fair to say that under the current legislation the Overseas Investment Commission has insufficient capacity to follow up in terms of monitoring, but, more important, the current Act, which this legislation completely replaces, is quite inadequate in terms of the penalties and enforcement regime. This legislation will provide for a much more effective penalties and enforcement regime, should a purchaser fail to fulfil the conditions of consent. At the moment, what one ends up doing is forcing such purchasers to sell. That is actually at the extreme end of the spectrum in terms of the appropriate solution that ought to be followed through.

Although I think that has been part of the cause of public concern, I think there are wider issues of public concern. There is a widely held belief, which is not actually true, that foreign purchase leads to greater restriction on access over and through property. For some peculiar reason people think foreign purchase means land is not subject to other laws around planning, etc., and is outside the New Zealand legal framework. That is completely untrue. I am always opposed to any move to import into this legislation attempts to impose regulatory procedures, if one likes, in terms of planning, etc. What we are doing, quite consciously, in this bill is providing mechanisms whereby, as part of the consideration, we can take into account national-interest considerations around access, conservation, etc., and we have already begun to do some of that. The Young Nick’s Head agreement was exactly one of those. The Shania Twain agreement was another one of those kinds of agreements. We were able to get public gains, in terms of access, in terms of conservation, and in terms of historical protection, which could not have presented themselves if the sale had occurred to a New Zealand citizen or to a New Zealand resident person.

I think we are engaged in an important balancing act. Naturally enough, my colleague from Otago is concerned about the proportion of high-country land in the Queenstown Lakes District that is owned by overseas owners.

Brian Connell: Quite high.

Hon Dr MICHAEL CULLEN: It is quite high. Even the member for Rakaia, when he raised the issue, told us that 50 percent of land transferred in mid-Canterbury was transferred to foreign ownership. But there is actually quite a high—

Brian Connell: I raise a point of order, Madam Chairperson. If the Minister is going to refer to what I said, at least I expect it to be reported accurately. I said that 50 percent of the land that had been resold went back into New Zealanders’ hands.

The CHAIRPERSON (Ann Hartley): That is not a point of order. It is a debating point.

Hon Dr MICHAEL CULLEN: If I could be more precise, the figure was slightly less than 50 percent. The member said that of the 11 properties sold, six were bought by New Zealanders, which, by a very simple piece of arithmetic that is not beyond the member, means that five were not. That is pretty close to 50 percent of the total being passed into foreign hands in a relatively brief space of time.

There are some countries in the world where that could not happen at all—where foreigners are not allowed to buy land. In Australia, for example, there are still some pretty strange rules about non-Australian citizens buying urban property, and they would apply to some of the most senior chief executives in Australia. I think we have to bear in mind that balance is required in this respect, so that there is public confidence. The fact, I think, that the so-called two tired old parties are combined against the fringe elements in this House on this matter is not one that gives me great cause for concern. It gives me some degree of confidence that probably there is a sustainable consensus that will be reasonably stable moving forward into the future.

GORDON COPELAND (United Future): I want to take a call on clauses 21O and 21T of Part 2 of this bill, because I want to make United Future’s position on the matter of marginal strips, etc. very, very clear indeed to the Committee. I do so, firstly, to clarify what the Minister, Dr Michael Cullen, has just advised the Committee, and secondly, to completely rebut and debunk the comments that the co-leader of the Green Party Rod Donald has made to this Committee about our position. It is amazing how other people in other parties think they know more about United Future’s position than we do.

I go first to the Minister’s comments. It is not true that United Future asked the Government to remove marginal strips from this bill—we did not. We said to the Government that we could not agree to clause 21T and the provision that no compensation would be payable to any person. My specific suggestion in that regard was that the bill should provide for an appropriate access fee to be paid to the New Zealand land seller. United Future’s position in relation to this matter was very, very clearly set out in the commentary on the bill that came back from the Finance and Expenditure Committee, which stated: “United Future, although supporting the creation of marginal strips next to rivers, lakes, and foreshores, does not agree that private land should be acquired for this purpose without the payment of just compensation. If the creation of such marginal strips is seen to be of value to the people of New Zealand, then the Crown, on behalf of its citizens, is duty bound to pay compensation.” I advise the Committee that the decision to remove marginal strips in their entirety from this bill was the decision of the Government, but one that we acceded to. I think that is a slightly different story from the one given to the Committee by the Minister.

I now turn to the Greens’ comments. Clause 21O states that a marginal strip put aside under this legislation is to be put aside until the end of time. It is a permanent alienation of the use and enjoyment of a piece of private land currently owned by a New Zealander. It is State interference in use and enjoyment if it forces people to share something that they may not, necessarily, want to share. Clause 21T then states—and I want to get this very clear, because it is quite obvious to me that Rod Donald has the wrong end of the stick completely—that no compensation will be paid to New Zealanders who own private land if they are selling it to a foreigner. Mr Donald has told the Committee that we think that compensation should be paid to foreign purchasers. Obviously, he has never read a sale and purchase agreement. He has no idea how they work, because that is a ludicrous comment. That has never been our position, and in fact, it is a total misrepresentation of everything we stand for and believe. We are not as stupid as that.

I shall talk also about our affiliation partner, Outdoor Recreation NZ. I advise the Committee, and particularly Mr Donald, that Outdoor Recreation NZ’s position in regard to access strips in general, which it is strongly in favour of, as is United Future, is that they should not be created at the expense of property rights. That is the point of difference, is it not, between Outdoor Recreation NZ, the common-sense Greens—the practical Greens, the intelligent Greens, the logical Greens—and the party in this House called the Green Party, which masquerades in that colour when, in fact, we all know it is just like a watermelon inside. The Greens are as red as it gets, just like a watermelon. I am not at all surprised that the Greens are quite comfortable with the no-compensation clause. They back it to the hilt. The Green member Mike Ward spoke in this House on my member’s bill. His attitude was this: if he, Mike Ward, personally, or any of the Greens disagreed with what someone was doing on his or her property, they reserve to themselves the right to stop the person from doing it and to force him or her to do something else. That is what Mike Ward of the Greens told the House in respect of my private property bill, and that is the Greens’ attitude. That is outrageous. It will not be tolerated by New Zealanders. Really, when New Zealanders understand that that is the Greens’ agenda, they will make sure that they disappear from Parliament. Such views override the Magna Carta and all the rights we have worked for, over about 1,000 years, in terms of private property. To have those rights overridden by such ridiculous nonsense and sheer arrogance is unacceptable.

ROD DONALD (Co-Leader—Green): I appreciate the opportunity to take a call or two on this part, because it is the substance of the bill. As I said in my second reading speech, I would like to give the Government some credit for some improvements to this part of the bill and to thank the officials for their assistance in achieving those improvements—particularly such things as adding a definition of “good character” and so forth. In our view the bill is still remiss and therefore we have put up a number of significant amendments that I would like colleagues in the House to give some serious consideration to.

The first amendment is to clause 10, where it refers to “an overseas investment in significant business assets”. We want to make it very clear that in our view significant business assets should include aquaculture. Aquaculture is an increasing business on our coastline. In fact, it is a business that in our view involves people in businesses being able to make a private profit from an activity conducted on, and in, the public commons. Therefore, the coastal marine environment, in our view, is just as sensitive as the offshore islands, the high country, the lake fronts, and the riverbanks that have particular restrictions placed on them under this legislation.

We believe that aquaculture should be covered by this legislation, and it is not. That is a significant deficiency in the legislation, so we want clause 10 amended to extend to aquaculture. I have proposed that amendment, because this concern was reinforced by the Royal Forest and Bird Protection Society in its submission that stated the bill failed to protect public open space in the coastal marine area, and because there was no screening of purchases by overseas persons of their resource consents, or application for resource consent to use the coastal space for aquaculture. We think that it is absolutely vital that any foreign investor who cannot prove that such an investment is in the national interest should be disallowed from investing in applications for coastal permits and associated resource consents.

Therefore, we would like to see this bill include some weighty environmental criteria to ensure that those wanting to use our public commons, our coastal marine space, which is scarce and is sensitive, need to pass a hurdle as least as high as the hurdle that is required of those wanting to buy the high country or an offshore island.

But we are well aware why the Government is opposed to that amendment. It is because successive Governments have given away this Parliament’s right to protect our coastal environment. They have given it away through their negotiations on the General Agreement on Trade in Services. Way back in 1994 a National Government basically gave away our power to protect our coastal space, and then the Labour Government made it even worse through the Singapore free-trade agreement, where it basically did not exclude aquaculture from that agreement. Therefore, it is included, and it would be regarded as a breach of that agreement if the current Government, or the current Parliament, were going to protect our coastal marine environment. I think that that is extraordinarily sad, and it is outrageous that one Government has chosen to bind all future Parliaments in this way.

I contrast that with the fact that even what the Government has signed up to with the OECD has at least left the door open by reserving commercial fishing. Commercial fishing could be interpreted as aquaculture, but because of the Singapore closer economic partnership Labour signed up to, I think without due consideration, we are locked into forever in the future allowing more and more of our coastal areas—areas that New Zealanders value as a place to go fishing for themselves, a place to just potter around in their boats—to be taken up by marine farms of one sort or another, to the detriment of our ability to enjoy our great outdoors.

The next amendment we will be putting forward to this part relates to the threshold at which an overseas investment should be scrutinised. As I said during the second reading debate, Jim Bolger in the dead of the night lifted it from $10 million to $50 million, and then this Labour Government reinforced the $50 million threshold in the Singapore closer economic partnership, and they want to multiply it up to $100 million, whereas we want to cut it back to $10 million. I am hoping we will get some support from New Zealand First on that at least, because they supported a figure of $10 million at the select committee review in 2002.

We also have an amendment that would require all pastoral leases to go through a tenure review process before any of the high country can be sold. That was another recommendation from the Royal Forest and Bird Protection Society, which we believe has a lot of merit, and therefore we are putting forward an amendment to achieve that goal.

But the most significant change we want to see in this part, and the one I hope I have the chance to elaborate on, is that we want to see clause 18 applied to significant business assets. Clause 18, as far as it goes, is quite a good clause. It does require somebody wanting to purchase land to demonstrate that he or she will achieve a number of things, such as the creation of new job opportunities, the introduction of new technology and business skills, and an increase in export receipts for New Zealand, and that in the process there will be adequate mechanisms to protect or enhance existing areas of significant indigenous vegetation. I appreciate that the Government has added at my request, on behalf of Fish and Game New Zealand, that exotic species will also be covered, in terms of taking account of, or protecting, or enhancing them in the case of trout, salmon, and gamebirds, but also that public access will be enhanced.

But these provisions do not apply to business purchases, and that is ridiculous. Why apply them only to land? Why not extend them to significant business assets? So we have put forward amendments that say clause 18 should apply to business buy-ups. It is actually business buy-ups that are having much greater impact on our economy than land purchases by foreign investors. It is not enough that those businesses only have to meet a “good character” test. They should have to demonstrate that buying a business is going to lead to more job opportunities, bring new technology to New Zealand, and will look after the environment. We would add by way of an amendment that they should increase domestic substitution of imports into New Zealand to balance the export receipts the Government has put in.

It is absolutely vital that business buy-ups are greenfield investments, not asset stripping, which so many business buy-ups have been in past. Tranz Rail was a classic example of foreign investment leading to this Government having to bail out the rail network in New Zealand because it was stripped of any worth and left in a very dangerous state. So the Government ought to back extending clause 18 to include significant business assets. Without that, this bill has no substance. It is completely gutless. It will not achieve the intent the Government claims it will achieve, and it will certainly not meet the expectations of New Zealanders for tighter scrutiny of applications for foreign investment, let alone scrutiny of their activities when they come to New Zealand.

It is also remiss of the Government not to have any reference in this part to the Treaty of Waitangi, and we have suggested an amendment to clause 18(2) so that there are adequate mechanisms in place to ensure that any decision is made with reference to the principles of the treaty. We think that the Government should not back off its commitment to the principles of the treaty, and therefore we seek that amendment to this part.

We also want to pick up on the submissions that came from many people that any regulatory agency should be keeping a full and correct record of all land, business, and building sales to foreign investors. Something that came through and was, I think, virtually unanimous around the table, was that we do not know the extent of foreign ownership in this country, and even if the scrutiny threshold is higher than zero, the monitoring should be set at a base level.

DEBORAH CODDINGTON (ACT): That is one of the nuttiest proposals I have ever heard. How could the principles of the Treaty of Waitangi be applied to an overseas investor who is seeking to purchase a business in New Zealand? I thought I had heard everything! We have heard a lot of things today. We have heard about assets and about how foreigners are gobbling up New Zealanders’ land. We have heard that the Labour Government has brought in this bill to suck up to the Americans, so that we can have a free-trade agreement. I have heard so much racist and xenophobic claptrap that I am getting to stage where I wonder why any foreign investor would want to come here in the first place. We are very unwelcoming. People in the Green Party think that the Berlin Wall was built to keep the Westerners out.

I come back to Part 2, and specifically to clause 18 and the tests that need to be passed before foreign investors can purchase and invest in a business—in particular, in land with assets or important assets. May I just remind the member from New Zealand First that no assets were sold. No State assets have ever been sold in this country. They were all liabilities. If that party is to be consistent in its constant raving about the selling of the New Zealand post offices and Telecom, etc., why does it not put its money where its mouth is? Why does it not buy them all back, take away everybody’s cellphones, put everybody back on a waiting list where they had to wait for 6 months to get a new phone connection, have the New Zealand post office own all sorts of workshops, etc., have $90 million of taxpayers’ money going into it every year, and stop bleating on about the downside of selling to foreign owners things that were liabilities to the taxpayer? One could put up a good argument for the railway, by the way, that it was the New Zealand owners who stripped it and the foreign owners who at least tried to do something with it.

Rod Donald: Ha, ha!

DEBORAH CODDINGTON: I just remind the member of the wine-box inquiry. How many foreign investors were involved in that? Not one.

I come back to clause 18.

Rod Donald: How many of them gave money to ACT?

DEBORAH CODDINGTON: None. How can we force people to share? That is what the Green Party says we should do. It says that everybody should share, and it wants to force them to share. We will regret going down this path. What right do we have to force somebody who is purchasing a piece of land to put in walkways? What right do we have to force people to support the registration of historic places, wāhi tapu, or historic areas under the Historic Places Act?

Rod Donald: Demolish the lot, then.

DEBORAH CODDINGTON: That member has very little faith in human nature—no faith at all. Why does he think that just because he would demolish the lot, everybody else, every other private landowner in New Zealand, would cut down every piece of bush and destroy every archaeological site? Just because he has the view that he would do so, that is no reason to believe that every landowner in New Zealand will do so. If we have public walkways set aside, and if we allow access for people to go trout fishing and salmon fishing, how long will it be before the Department of Conservation, with its current philosophy of “humans bad, no humans good”, bars all public access to those areas? I predict that it will not be very long, at all.

It is bad enough that anybody in New Zealand has to go through the tortured Resource Management Act process to get anything done, without foreign investors having to be subject to all the conditions and tests set out in the bill. And what happens then? We have seen what happens when they do pass the tests. We have seen what happened with regard to Motutapu Station, where the Minister of Finance, Dr Cullen, talked about the agreement the Government was able to get there, with walkways, etc. What have those purchasers got out of that? We can look at the tortured process Elaine Lange, otherwise known as Shania Twain, is going through in order to get her house built, even though she has agreed to put in walkways and register significant sites. We should subject everyone to the same process.

BRIAN CONNELL (National—Rakaia): I have to start by responding to Michael Cullen. He is turning into a sensitive wimp. I do not know what is causing it, but I suspect that the political tide is going out and his true character is emerging.

Simon Power: He’s brittle.

BRIAN CONNELL: He is brittle, that is for sure, and it is starting to show. If he is going to quote me, I expect him to do it accurately. What I said was that there had been 11 high-country sales. Six of those had been sold into Kiwi hands, and five had gone to international interests. The five international owners have subsequently turned over those properties. Fifty percent of them—actually, three of them—were sold back into Kiwi hands. My maths are much better than Michael Cullen’s, because I know that that does not add up to 50 percent of the 11 original sales. That probably explains why today the Government announced a monumental cock-up, to the tune of $1 billion, over what are now New Zealand’s carbon liabilities, instead of the $500 million positive position it tried to tell New Zealanders their country would be in when it ratified the Kyoto Protocol.

Mr Cullen then took a cheap shot at my colleague Pansy Wong, when he said that it was a National Government that drove subdivision legislation. Well, there is a huge difference in driving subdivisions. Subdivisions actually add value, because people want them. Then he took another cheap shot—it was a threat, really—at my colleague Pansy Wong, when he said that she should be very careful with her moral outrage, because of something Nick Smith had done.

Pansy Wong: He tried to intimidate me.

BRIAN CONNELL: He tried to be intimidating. Well, one does not intimidate Pansy Wong as easily as that. In fact, one does not intimidate anyone from the National Party as easily as that. If the Minister is so sensitive, and if he is so sure in regard to the 10 pages of provisions the member for Otago put into the bill that state one can compulsorily take private property from New Zealand citizens without any compensation, then will he please explain why he is moving a Supplementary Order Paper to take them out? Will the Minister take a call and explain that fact? I bet he will not. What he will do is to rage on about Pansy Wong and Nick Smith, take cheap shots, and try to deflect from the fact that it is his bill—a Government bill that he is sponsoring—that proposed the clause in the first place.

It was only when he had to bow to public pressure, because the tide was going out for the Labour Party and the rest of his cronies who are associated with it, that he thought: “Oops, I’d better try to do something.”

But for that Supplementary Order Paper, the National Party could not have supported this bill, and that would have been a shame because the essence of overseas ownership of New Zealand lands, subject to reasonable conditions, is something I strongly support.

I have to ask where the negative sentiment comes from that says that overseas investment is bad, that it is hurting New Zealand. Overseas investors wanting to invest in New Zealand’s economy is a vote of confidence in our economy. It is not a negative sign. For goodness’ sake, we are now a multicultural society! We cannot build a wall around us to try to keep the rest of the world out. It simply does not work like that. We are all immigrants, starting with Kupe. Let us not forget that fact.

I am a strong believer that investors coming to New Zealand with their hard-earned cash and wanting to invest here is something we should welcome with open arms. Arguments to the contrary are simply arguments from people with their heads in the sand who hope the world will pass them by.

I can think of some practical examples to share with members of this Committee. I can think of a Japanese investor who bought a farm near the foothills of Rākaia, who spent $600,000 buying it, and who everyone thought was mad—

The CHAIRPERSON (Hon Clem Simich): I call Craig McNair.

SIMON POWER (Senior Whip—National): I raise a point of order, Mr Chairperson. The point the National Party would like you to clarify is about Mr Connell being obviously interrupted in mid-sentence by the bell. That exact same set of circumstances occurred when Mr Donald was speaking, and the Chair granted him an immediate second call, despite the fact that other members of Parliament were seeking the call. Mr Connell was interrupted in mid-sentence. He sought a second call, but he was not given it. I guess that what members on this side of the Chamber are now asking themselves is this: under what circumstances are second calls being granted, back-to-back, to some parties and not to others?

DAIL JONES (Junior Whip—NZ First): New Zealand First has the utmost faith in your decisions on these matters, Mr Chairman, and would not want to question them, at all. But I presume there is a practice that where there is a spokesperson, he or she is entitled to get a second call. I think it was part of the Standing Orders some time ago that spokespersons were supposed to get a second call, if possible. I am sure that Mr Rod Donald is the spokesperson for the Green Party on this issue, but I do not think Mr Connell is the spokesperson for National on it. In any event, I am sure you are working out the proper apportionments, and New Zealand First has every faith in your decision to give the call to Mr McNair.

BRIAN CONNELL (National—Rakaia): Perhaps Mr Jones could point to the Standing Orders that state that only spokespersons get back-to-back calls.

The CHAIRPERSON (Hon Clem Simich): I thank members for that. It is entirely up to the Chair. Yes, Brian Connell was in mid-sentence. There are quite a few calls to come yet, and I have no doubt the member will get some of those. I tried not to cut him off. Mr Donald was given consecutive calls because he has a great number of amendments. I think it will be fair all round. I did not want National to sneak too far ahead of New Zealand First at this stage.

CRAIG McNAIR (NZ First): This afternoon I want to focus on clause 21T, “No compensation for marginal strip”, and to get my case clear on this issue. Either we let overseas owners have the land or we do not. It does not really matter what side of the argument we are on—whether we are for this bill or against it, whether we are for foreign ownership or against it—at the end of the day what this clause and David Parker’s amendment were about was taking something away from somebody. They are saying: “We’re going to let you have it, but, once we’ve let you have it, we’re going to take some of it away from you.” We should make up our minds at the beginning. Either we let the person have it or we do not let the person have it. That is the deal, and that always should be the deal. That is the problem New Zealand First had with the clause, and with David Parker’s amendment—the smokescreen amendment. I think it is outrageous that the Government was even considering that clause, and still, to this day, Government members get up and passionately advocate for it.

We all know the reason why the Government is pushing this issue. An election is on its way, in the next 1, 2, or 3 months. Government members looked at each other and said: “What are we going to do? We have to do something to make it look like we are the true Labour Party of the old days.”—and by that I mean the Labour Party before 1984; the same Labour Party that went up and down this country, signing a petition pledging that it would—

Jill Pettis: Where was that member in 1984?

CRAIG McNAIR: Admittedly I was quite young. This is not from memory; this is from learning a bit of political history. The facts are that the Labour Party of old would not have supported this bill.

New Zealand First says: “Make up your mind. Either let them have it, or not.” New Zealand First says that at the end of the day this bill is wrong, it is fundamentally flawed, and it is not putting New Zealand and New Zealanders first. This bill allows foreign investors to come here, flog off our country’s assets in a huge way, and have no regard for New Zealand and New Zealanders whatsoever. That is what New Zealand First says. There is $12 billion going out of this country every year, because of the dealings of Labour and National in the 1980s and 1990s.

There is another point on this issue that I want to talk about, before I move on. Who will be next? That is the question I want to ask. Labour Party members put their heads together, thinking that here is a situation whereby they can make it look like they are being tough and looking after New Zealand’s interests, and put in an amendment to say that they will allow foreign investors to buy land in this country, but then they will take some of that land away from them. That is what Labour members did. They put their heads together and said: “Let’s do that.”, and then they said: “We will push this little part for now, and in the future we will start taking New Zealand - owned land off New Zealanders, once we have got this amendment through.” So who will be next?

Labour is very, very disappointed. David Parker was almost devastated by the fact that his amendment could not be rammed through today. He was devastated. Labour has a hidden agenda on many issues, and on this issue those members jacked it up. They thought they had it all ready, set to go, but they were not able to do it. That is why they are devastated—because they have a hidden agenda on this issue. They want Kiwis to be next. They want to start taking Kiwis’ land off them. They want to start initiating the “Mugabe clause” right through our legislation.

BRIAN CONNELL (National—Rakaia): When I was speaking previously I was about to share with the Committee the story of a Japanese investor who bought property in the Rākaia Gorge back in the 1990s. He paid $600,000 for a property, and everyone concluded he was absolutely mad. The locals were laughing out of the sides of their mouths. They could not give the land to him quickly enough. They thought they had caught themselves a mug. This investor has subsequently turned that farm into one of the pristine golfing environments in this country. It is now referred to as Terrace Downs. Terrace Downs is favoured by people on the golf circuit as one of the three best golf courses in this country. That investor has gone on to spend $80 million, and his initial investment was $600,000.

People from Christchurch have invested in Terrace Downs in their droves. The subdivision legislation that was introduced by National, which Dr Cullen took umbrage with, has enabled Christchurch investors to invest in Terrace Downs in their droves. Some of the houses there are outstanding. The landscape is outstanding, and the golf lodge is also on the circuit of “must visit” places for people who are holding a function of any sort. The number of tourists who come through Terrace Downs on any given day is contributing huge amounts of capital to the local community, as well as to New Zealand more broadly.

But—and there is a but—one or two of the holes I can think of go down to the water’s edge. We were told by the member for Otago to accept that that investor, having contributed something like $80 million to this iconic location, should have that value taken from him. He should have that land taken from him, so that people could no longer play the 10th hole on the Terrace Downs golf course. That is what he implied. That is what he was trying to do.

Michael Cullen can take all the moral high ground he likes. This is a bill that he is sponsoring. But he got the nod from the New Zealand public, to say: “Hey, the tide’s on the way out. You had better pull your horns in.” That is what Dr Cullen and David Parker were trying to foist on this House, and on the people of this country specifically.

I can think of another example, but before I go there I just want to say that this country needs people like that investor. We need people who are visionary, who are prepared to take risks, and who are prepared to have the courage of their convictions and come to New Zealand and invest. But I fear that a lot of the anti - overseas investor sentiments, which are driving some of the debates I am hearing today, are simply based on racial grounds. We have to accept now that we are a multicultural society and we need people like that to come here and invest.

I said I could think of some other examples, and I can. Another example, which also includes Japanese capital, is Five Star Beef Ltd in Ashburton. It houses 18,000 cattle, which are destined for high-value restaurants in Tokyo. That investment has about $30 million of Japanese capital, and without that capital it would not have happened. It would not be sustainable. That beef lot example underpins three local transport companies, underpins the local barley price, supports two freezing works in the district, and employs I do not know how many people, but it runs into hundreds. If we listened to the arguments that have been put forward, those investors would not be welcome in this country, and that is an absolute nonsense.

GORDON COPELAND (United Future): I want to speak a little further to the substance of the Supplementary Order Paper amendment that withdraws the marginal strips provision. I think it is very important to explain to the Committee that the Supplementary Order Paper amendment will not bring to an end the possibility that marginal strips alongside rivers and lakes will be set aside when a New Zealander decides to sell land adjoining lakes and rivers to non-residents.

I say that because in clause 18, “Factors for assessing benefit of overseas investments in sensitive land”, subclause (2)(ba)(ii) states that one of the things the Minister will do in deciding whether to approve such a sale is to look at “providing, protecting, and improving walking access to those habitats” of indigenous vegetation and indigenous fauna. Paragraph (d) of the same subclause states that the Minister will also ensure that adequate mechanisms are in place for walking access over the relevant land, or a relevant part of the land, by the public or any section of the public. Notwithstanding the Supplementary Order Paper amendment, the Minister will still, in deciding whether to approve the sale of sensitive land to an overseas buyer, take into account the whole question of walking access along rivers and lakes.

Here is what will happen. If the New Zealand seller decides that he or she can get a better price for the land by selling it to an overseas person, and both the seller and the purchaser know that that is a condition of the sale, then of course the New Zealand owner will agree to allow access. On the other hand, if the overseas buyer would not pay any more than a New Zealand buyer would, then the question will not even arise, and walking access will not be given. In substance, notwithstanding the Supplementary Order Paper amendment, I believe that marginal strips will still be created in the great majority of cases, and it will all be done without breaching the important principle that compensation should be paid when land is confiscated. We have a win-win situation.

I go back for a moment to a remark that Rod Donald made about the Ruby Bay cliffs. I am very familiar with the situation of the Ruby Bay cliffs. For those who do not know Ruby Bay, it is on Tasman Bay in the province of Nelson. It involves a piece of land known as the Copeland block because it is the place where I was blessed to grow up when I was kid, and a beautiful piece of land it is. That block has now been sold to a family who have built a multimillion-dollar house on the land, and it is now the subject of great controversy. Why is it controversial? It is controversial only to a group of Greens, really. It is controversial because the people who now live there, who are New Zealand residents, were born in California. Guess what they have had the audacity to do? They have cut down a whole lot of Pinus radiata trees that were growing along the top of the cliff. Pinus radiata happens to be a native of California, but this particular Californian family who have come here, who have decided to quit California and want to become Kiwis, are cutting the pine trees down, and are spending thousands of dollars on planting thousands of native plants on those cliffs. There will be indigenous plants on the cliffs.

Rod Donald: The cliffs are falling down.

GORDON COPELAND: They will not fall down once the growth starts, I say to the member. When I look at that with any objectivity, I conclude—as any reasonable person has to—that there are two things happening. One of them is xenophobia, because the people happened to be born outside this country, and the other one is just sheer envy. End of story.

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

JOHN KEY (National—Helensville): I rise to take part in the debate on Part 2 of the Overseas Investment Bill. I want to reflect on the issue around the size of companies, and the reasons for which the current threshold for a company to be required to give notice of an intention to acquire a New Zealand company, which is around about $25 million, will be extended up to $100 million.

Rod Donald: Shocking!

JOHN KEY: No, it is a wonderful thing. I want to talk about why it would not make sense for acquisitions involving amounts of less than that to be referred to the Overseas Investment Commission. As members will probably be aware, there has not been a situation where the commission has turned down an application from those companies.

I want to put a slightly different spin from that of the Green Party on what takes place when foreigners make an acquisition here in New Zealand. In particular, it relates to the criteria and factors that will be considered. They are the issues around job creation, business skills, development of export receipts, market competition, and additional investment and development. I say that because last Friday I met with a group of investors who have invested about $50 million so far in New Zealand, but who have ambitions to invest a further $150 to $200 million over the next 2 to 3 years. It was interesting to talk to them about the role they have been playing in the companies they have been acquiring in New Zealand. It has been a role of quite active management, which is slightly different from the normal venture capital situation, in which a lot of the investors will come along and supply some finance, but essentially leave the status quo in place—the companies concerned are left to get on with it.

In fact, the investors I met have done something a lot of commentators have argued is a real benefit of overseas investment. They have come to New Zealand and invested not only their capital but also—maybe this is more important—their time and their contacts in their international networks. In many respects, that is quite similar to the situation that operates domestically in New Zealand with “angel investors”, who are involved, I guess, more in the infancy of the development of a company. They may not put in very much capital at all, but it is very often the case that they agree to lend their experience, skills, know-how, and knowledge to small companies that are looking to develop.

What was interesting about the investors I met with last Friday was that they told me that, in the case of a number of New Zealand companies that they have bought into with a significant investment, they have managed to double and treble the size of the exports of those companies in a very short space of time—within months of acquisition. Members may ask themselves why it is that a foreigner is able to come to New Zealand and supply something that is more than just capital, which we accept is reasonably freely available here in New Zealand. The answer is that the companies that are being acquired often operate here in New Zealand in a niche area. They are built on the backs of entrepreneurial New Zealanders who have developed some good ideas, technical know-how, and skills. But those people lack the ability to have access to the marketplace, and to other suppliers along the food chain who may buy their products. So what is hugely valuable about those investments is not so much the ability of the company to get access to capital, but its ability to get access to those vertical chains.

Navman New Zealand is quite an interesting example. At one level I was concerned about Navman being sold offshore, because I think it is producing fantastic technology, and I do not want to see that company picked up, relocated to Los Angeles, and lost to New Zealand. The real challenge for New Zealand is to prove that it is an incubator and also a developer of great companies. It has been quite interesting to see that Navman has, at this stage at least, managed to take the foreign capital that has come out of the Brunswick Corporation and develop the company on, by building greater market access and penetration of its goods—by building a world-class company with world-class products on the back of that technical know-how.

Gerry Brownlee: That’s right.

JOHN KEY: That is right. For those who stand up to speak on this bill and say that foreign investment is bad—

Gerry Brownlee: Who are they?

JOHN KEY: The Green members, for one, and the New Zealand First members, as well. They do not want a bar of anyone from overseas. They actually forget the other things those people may bring outside of capital, which are much more important than capital. I refer to things like knowledge and know-how, and access to markets.

TIM BARNETT (Labour—Christchurch Central): I move, That the question be now put.

DAIL JONES (NZ First): I think this bill highlights what is happening in New Zealand to a large extent. Once again we are in danger of drifting back to the situation we had between 1984 and 1990, when Labour came into office and sold off New Zealand, and between 1990 and 1999, when National came in and sold off New Zealand. Now we see Labour and National once again combining forces to establish a situation whereby they can once again sell off what little is left.

I think the preceding speaker could quite easily have been speaking about the wine industry in New Zealand. Small vineyards have been developing in New Zealand. For example, Sauvignon Blanc is grown in the Matua Valley area, which is where Sauvignon Blanc started in New Zealand. The Matua Valley Wines company is the result of wonderful work done by the Spence brothers. Of course, people can reach a certain point at which they ask where they go to from here, and, inevitably, if their family do not want to stay on in the business, they ask themselves who will give them the best deal. The best deal may come from an overseas company.

Deborah Coddington: What’s wrong with that?

DAIL JONES: The company loses its New Zealand feel; what is “New Zealand” about it is being sold off. [Interruption] What is the name of the company now? We are gradually selling off New Zealand in that sort of way. In the first instance it sounds good, but if people think those big international companies are here for the benefit of New Zealand, they really have another think coming. People are so naive. Deborah Coddington and Gordon Copeland are so naive. If they think those big overseas companies are here for the benefit of New Zealand, they are dreaming. It is absolute dreamtime. They should be with Michael Jackson in never-never land. They are never-never land people if they believe that the big overseas companies are here to help New Zealand. Those wine companies are here only to help their shareholders get all they can out of the New Zealand wine industry. If necessary they would move on tomorrow, if there was no more profit, and it would be to heck with New Zealand.

I give members that as an example. I think it is so appropriate to the Helensville electorate and to the sort of thing that happened in West Auckland in the past. We are losing the New Zealand person being involved in and running the business. Those companies are now run not by New Zealanders but by foreign people. Foreign people come to New Zealand and run the companies now, and New Zealand jobs go begging. It may be that a New Zealander can get into the company and work his or her way up to the top somewhere in New York, or wherever, but we have to ask ourselves, if we are New Zealanders, where is New Zealand in all of that? I raise that as an issue. It is a classic example that I have come across.

Brian Connell: Where’s Ralph Norris going?

DAIL JONES: He is gone; he is lost to New Zealand. He is not here for New Zealand any more. It is a culture thing, of course. The National Party member talked about foreigners coming in and it being a racial thing. It is not; it is a pro - New Zealand thing. That is something the National Party does not understand. Those members are here only to talk to the big boys who want $50 million or $150 million deals. We wonder what else can flow on from that to a particular political party.

New Zealand First does not want a bar of that type of thing. We are here for New Zealand first. We do not want that situation created, which is the danger we see in this legislation. Deborah Coddington does not want to stay in Parliament any more and does not have any regard for trying to protect the interests of New Zealand any more. She is going; she is gone. But New Zealand First is here. We make the point that we should not pretend that any of these big companies are here for New Zealand. They are big internationals; they are in New Zealand today and in Chile tomorrow. If the Chilean wine industry booms, they will be in Chile tomorrow, and in Argentina the next day if they can. That is the way it goes. They would be in South-east Asia if they could grow wine there, but it is very, very difficult to grow wine from grapes in South-east Asia.

All the ideas that some of these people come up with sound great, but I say to Mr Copeland that I am afraid that he is really out of touch with what big business is about. I am sure that when he was with the oil company it was not working for New Zealand. It was working for its shareholders and its big interests. New Zealand First says we do not want to fall into the trap, once again, of National and Labour doing a deal and taking turns to sell off New Zealand. That is where New Zealand First comes in. We are in the middle. We want to make sure that everything is straight and fair, and that New Zealanders, in any deal that is done, are protected. New Zealand First’s role is to look after New Zealanders first.

Hon MITA RIRINUI (Minister of State): I move, That the question be now put.

ROD DONALD (Co-Leader—Green): I say to those members who, like Mr Power, are concerned about the extent of time the Chairperson has given me that this will be my last call. I am grateful for that time because, apart from New Zealand First, the Greens are the only party opposing the liberalisation of foreign investment in New Zealand. I know that ACT would like absolutely no rules on foreign investment, but at least it holds no sway in this debate.

As far as wanting to introduce tighter controls on foreign investment—something we think most New Zealanders support—I have a few more amendments that I would like to explain to the Committee and to the people of New Zealand who are listening. The first is to clause 32. It relates to the whole issue of compiling and maintaining a full and correct record of all land, business, and building sales to foreign investors—something that I think is absolutely vital and should be a responsibility of the regulator to do and to report on annually to Parliament.

I am pleased to say that most of the members of the Finance and Expenditure Committee recognised that there is a paucity of information about the extent of foreign investment in New Zealand. The Government officially acknowledges that somewhere around 1 million hectares of land is foreign owned, that a certain amount of our coastline is in foreign ownership—approximately 57 kilometres—and that around 2,720 hectares of offshore islands and around 150,000 hectares of high country are in foreign ownership. But absolutely no records are kept of land that is owned offshore that falls below the various thresholds contained in the schedules. All the members of the select committee acknowledged that there is some concern in the community about the extent of land purchases in particular areas by foreign buyers, even when most of the individual purchases are below the threshold.

I was pleased that the whole committee agreed with this statement in the commentary on the bill: “High demand by overseas persons increases house prices and can make it unaffordable for some New Zealanders to own property in such areas. There is currently no means for determining the extent of overseas ownership where the properties purchased are below the applicable threshold,”. The majority of the committee went on to state: “… the collection of information regarding the residency status of property owners would be valuable.” I am pleased that that recommendation is in the commentary, along with an encouragement to the Government to consider implementing a pilot programme to collect that information.

That is good as far as it goes, but we simply say it should go further and be obligatory. The Greens are concerned about two matters. One matter was raised by the whole committee, and that is the fact that foreign investors are outbidding Kiwis. We are not just talking about the bach at the beach or the family farm, both of which we think Kiwis should be able to buy; we are talking about that first home, which is so vital in order for Kiwi families to get the start in life they deserve. The dream of owning one’s own home is now turned into a nightmare because so much foreign capital is coming into New Zealand, particularly from Australia. Investors are buying up cheap residential properties and making it impossible for young Kiwi families to buy their own homes. So much for National’s property-owning democracy or Labour’s ownership society! The fact is foreign investors are allowed to outbid Kiwis when it comes to buying that first home.

We have evidence of that. We have anecdotal evidence from around the country—from Kaitāia to Invercargill. In terms of specific evidence, when I was on a select committee exchange to Australia last year we met a New South Wales Labor MP who was coming to New Zealand to buy up properties in Huntly and Ngāruawāhia.

GERRY BROWNLEE (Deputy Leader—National): I want to take a brief call to rebut some of the nonsense New Zealand First decided to inject into the debate, and in particular its criticism of the National Party. We know that New Zealand First is one of this Parliament’s parasites—

Dail Jones: I raise a point of order, Mr Chairperson. A member cannot call another member a parasite, surely.

The CHAIRPERSON (Hon Clem Simich): Not even a party, no.

Dail Jones: Thank you. I ask the member to withdraw and apologise.

GERRY BROWNLEE: I withdraw and apologise. Some will notice the parasitic behaviour of New Zealand First in the constant comments of its members about the National Party. Although I use the term “parasitic”, one may say also that that behaviour is somewhat symbiotic, because without the National Party there would be no New Zealand First. It is quite galling to find the New Zealand First politicians—

The CHAIRPERSON (Hon Clem Simich): Order!

GERRY BROWNLEE: I was just coming to the bill. If I had not been disturbed by the point of order, I would have been in only my first minute or so of rebutting the issue at hand: the misrepresentation New Zealand First chooses to put on National’s support for this bill.

Although we have reservations about the bill, in essence we recognise that facilitating overseas investment in a country like this is important. That does not mean selling everything off, I say to Mr Jones. It does not mean entering into the sorts of shonky lease-type arrangements that the Government has entered into over the Transpower assets.

Pansy Wong: What is that about?

GERRY BROWNLEE: Members ask what that is all about. We would all like to know what it is all about. It would be helpful to Parliament if Dr Michael Cullen were to come down here and explain exactly how it is that this Government, which is so committed to keeping State assets in the hands of the State, has allowed such a transparently shonky deal to be put together. It is transparently shonky, but is not transparent as a deal. Although we know that the assets are now in someone else’s hands and that the various parties in this Parliament who support the Labour Party have allowed that type of investment, we do not know exactly the nature and structure of that deal.

Brian Connell: Why don’t we know?

GERRY BROWNLEE: Dr Cullen will not tell us. I have to surmise that that is probably because Dr Cullen himself does not know what has been done under his nose. Dr Cullen himself probably does not know what has been slipped into the pile of papers on his desk and what he himself has signed off on, or exactly how much the New Zealand tax base has been rorted as a result of that particular transaction.

Brian Connell: What did Treasury say?

GERRY BROWNLEE: It would not matter what Treasury said, because the Labour Government simply rubbishes everything that comes out of Treasury. It does not treat Treasury at all seriously.

One of the most interesting points in this bill is the matter of the investor tests. It is good to see that we are making sure that those who choose to invest in this country are well qualified to do so, and that locals will not pay the price for their inability to get together the capital they need. I ask the New Zealand First members to tell us what is so wrong with having foreign investment in this country. Has there ever been a time in our post-1840 history when we have not been heavily reliant on foreign investment? There has probably never been such a time. Certainly the places of origin of the capital that is invested in this country have changed dramatically. There was a time when New Zealand was largely owned by British insurance companies and British banks. That, of course, has substantially changed. Many New Zealanders now, through international share portfolios, share in overseas investment in this country.

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

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

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 50

New Zealand National 25; New Zealand First 13; Green Party 7; ACT New Zealand 5.

Motion agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 10 be agreed to:

to insert in paragraph (b) of subclause (1) after the words “business assets”, the words “including aquaculture”.

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

Ayes 7

Green Party 7.

Noes 104

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The CHAIRPERSON (Hon Clem Simich): The next amendments are to clause 14 in the name of Rod Donald and are to omit the expression “25” and substitute the expression “10” in subclause (1)(a)(i) and (ii). These amendments are inconsistent with decisions already taken and are therefore out of order.

The question was put that the following amendment in the name of Rod Donald to clause 14 be agreed to:

to omit from subparagraph (ii) of subclause (1)(a) the expression “100”, and substitute the expression “10”.

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

Ayes 7

Green Party 7.

Noes 104

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 14 be agreed to:

to omit from subparagraph (ii) of subclause (1)(b) the expression “100”, and substitute the expression “10”.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 14 be agreed to:

to omit from paragraph (c) of subclause (1) the expression “100”, and substitute the expression “10”.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 17 be agreed to:

to omit from paragraph (e) of subclause (1) the words “either subparagraph (i) is met or subparagraph (ii)”, and substitute the words “subparagraph (i) and subparagraph (ii) are met”.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 17 be agreed to:

to insert, after subparagraph (iv)(e) in subclause (1) the following new paragraph:

(f) the relevant land includes pastoral lease land and a tenure review must be completed.

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

Ayes 7

Green Party 7.

Noes 104

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 18 be agreed to:

to insert in the heading to this clause after the words “sensitive land”, the words “and significant business assets”.

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

Ayes 7

Green Party 7.

Noes 104

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 18 be agreed to:

to add to paragraph (a) of subclause (2) the following new subparagraph:

(vii) increased domestic substitution of imports into New Zealand.

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

Ayes 7

Green Party 7.

Noes 104

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to 18 be agreed to:

to add to subclause (2) the following new paragraph:

(g) whether there are or will be adequate mechanisms in place to ensure that any decision made is consistent with the principles of the Treaty of Waitangi including:

(i) provision made for settlements to claims made under the of Waitangi, including return of land;

(ii) capacity retained for the establishment of Māori and Crown resource co-management structures.

(iii) protection of the right to benefit from, enjoy, and exercise authority over Māori taonga.

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

Ayes 15

Green Party 7; United Future 8.

Noes 96

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 19 be agreed to:

to add to subclause (1) the following new paragraphs:

(e) the relevant overseas person or (if that person is not an individual) all the individuals with control of the relevant overseas person are New Zealand citizens, ordinarily resident in New Zealand, or intending to reside in New Zealand indefinitely; and

(f) the overseas investment will, or is likely to, benefit New Zealand (or any part of it) or group of New Zealanders, as determined by the relevant Ministers under section 18; and

(g) if the relevant investment involves aquaculture, the relevant Ministers determine that that benefit will be, or is likely to be, identifiable and substantial.

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

Ayes 7

Green Party 7.

Noes 104

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The CHAIRPERSON (Hon Clem Simich): An amendment in the name of Rod Donald to clause 20 to omit and substitute an expression in subclause (1)(a) is out of order because it is inconsistent with decisions that have already been made.

The question was put that the following amendment in the name of Rod Donald to clause 32 be agreed to:

to add the following new paragraphs:

(i) compile and maintain a full and correct record of all land, business and building sales to foreign investors.

(j) report annually on the extent of foreign ownership in New Zealand.

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

Ayes 7

Green Party 7.

Noes 104

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 35 be agreed to:

to add to subclause (3) the following new paragraph:

(f) the content of any Code of Responsibility for Foreign Investors.

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

Ayes 7

Green Party 7.

Noes 104

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 43 be agreed to:

to add to paragraph (a) of subclause (2) after the expression “$300,000”, the words “or 10% of the value of the asset, whichever is greater”.

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

Ayes 7

Green Party 7.

Noes 104

New Zealand Labour 51; New Zealand National 25; New Zealand First 13; ACT New Zealand 5; United Future 8; Progressive 2.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 43 be agreed to:

to add to paragraph (b) of subclause (2) after the expression “$300,000”, the words “or 10% of the value of the asset, whichever is greater”.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 44 be agreed to:

to add to paragraph (a) of subclause (2) after the expression “$300,000”, the words “or 10% of the value of the asset, whichever is greater”.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 44 be agreed to:

to add to paragraph (b) of subclause (2) after the expression “$300,000”, the words “or 10% of the value of the asset, whichever is greater”.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 45 be agreed to:

to add to paragraph (a) of subclause (2) after the expression “$300,000”, the words “or 10% of the value of the asset, whichever is greater”.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 45 be agreed to:

to add to paragraph (b) of subclause (2) after the expression “$300,000”, the words “or 10% of the value of the asset, whichever is greater”.

Amendment not agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 47 be agreed to:

to add to subclause (3) after the expression “$300,000”, the words “or 10% of the value of the asset, whichever is greater”.

Amendment not agreed to.

SIMON POWER (Senior Whip—National): I raise a point of order, Mr Chairperson. I seek your advice in respect of Standing Order 120, which reads: “An amendment must be put into writing, signed by the mover, and delivered to the Clerk at the Table.” I have just noted that the amendments we voted on in Mr Donald’s name that were moved by Mr Donald have not been signed by Mr Donald. In fact, they were signed by Mr Locke. That places us in an unusual position, unless the Standing Orders can give us further elucidation on the application of Standing Order 120. I would appreciate that advice. You would see the difficulty, which, at face value, is that the amendments have not been signed by the mover, as required by Standing Order 120.

The CHAIRPERSON (Hon Clem Simich): Yes, thank you for raising that. That would be the impression one would get. But the explanation is that the amendments were all submitted in writing and all signed on behalf of Mr Donald by Keith Locke, and that signature is on the original submission of the amendments.

SIMON POWER: I want to be clear about that, Mr Chairperson. The Standing Order very clearly states that the amendment is to be signed by the mover. In this case, we have several amendments, and the amendments we have just voted on begin: “Rod Donald, in Committee, to move …”. That makes Rod Donald the mover of those amendments. Mr Donald has not signed those amendments; Mr Locke has. What is the standing of those amendments?

Rod Donald: I think that Mr Power has raised a very interesting point, and had the Clerk pointed that out to us at the time the amendments were submitted, then we would have taken them off the Table and a member such as Mr Power would not have had the benefit of seeing our amendments in advance of the Committee stage debate. I could have signed them after 2 o’clock when I returned to the House from Dunedin this morning. So perhaps the Chair would like to consider whether the Standing Order intends that it be required that the actual mover sign an amendment or whether another member can sign it.

In the same way, I understand, the procedure at the moment is that other members can sign, for example, the cover sheet for a member’s bill without the actual mover of that bill needing to sign it. For that matter another member can sign off an oral question without the actual member asking the question being needed to sign it. I think the liberal interpretation has been such that other members of one’s own party can sign on one’s behalf, and if we change that interpretation for this purpose, I think it would create some problems for parties having to find members to sign their own oral questions and other documents when they are not necessarily available to do so.

SIMON POWER: I accept the points made by Mr Donald. I also accept the practicalities of having to deal with the tabling of oral questions and members’ bills when proposing members—I guess that is the right phrase—are not available to annex their signatures. The difficulty we find ourselves in here is that a specific Standing Order relates directly to amendments. It is my submission—and this is not a difficulty for Mr Donald in the sense that it is probably more a difficulty for the Clerk that the matter has got to this point—that it seems on the surface that Standing Order 120 has been breached because the amendments have not been signed by the mover. There is no reference to “the mover or his or her nominee”, “his or her appointed person”, or “his or her substitute”. The Standing Order is very clear that it is the mover of the amendment who must sign the document. Now, I seek guidance from you as to whether we have just wasted 25 minutes of the Committee’s time in voting on amendments that are out of order—in fact, that probably breach the Standing Orders by the fact that we even considered them in the first place, given that, as I say, on the face of it Standing Order 120 has been directly breached.

The CHAIRPERSON (Hon Clem Simich): I thank the member. I need no further assistance; the matter has been very clearly laid out by the person who raised the point of order. Yes, on a literal reading of the Standing Orders it would appear to be correct. However, it is a very longstanding practice in the Committee and in the House that with consent, a member can sign on behalf of another member. That is what has happened this time, and it is for the convenience of members. But I think it is an issue that needs to be looked at, and I will get a proper ruling from the Speaker as to this practice.

GORDON COPELAND (Whip—United Future): I raise a point of order, Mr Chairperson. I fully accept your ruling in that regard, but I would like to say that I have checked Standing Order 365, which relates to the lodging of oral questions. It specifically states that such a question must be “signed by the member or by another member on the member’s behalf,”. So there is a distinction between Standing Order 120 and Standing Order 365, which is contrary to what Rod Donald advised.

The CHAIRPERSON (Hon Clem Simich): Yes. Thank you for pointing that out. That was not part of my ruling.

SIMON POWER (Senior Whip—National): I raise a point of order, Mr Chairperson. Thank you for your ruling. I do think that it would be worth the Speaker clarifying the difference between Standing Orders 365 and 120. I concur with my friend from United Future on that point, and I thank you, Mr Chairperson, for your guidance on it. But that still leaves us in a difficult position, and I think we owe it to the Committee to determine now what status is to be accorded the amendments we have just spent 25 minutes voting on.

The CHAIRPERSON (Hon Clem Simich): No, I do not need any assistance on that. I have accepted those amendments, based on the longstanding practice of doing it in just that way. All the amendments were put and they were dealt with. Decisions were made, and the votes were all lost. So other than to urge the Speaker to give a clear ruling on that—as I am sure the Speaker will—so that we can incorporate that longstanding practice through the Standing Orders, I cannot take it any further.

DAIL JONES (Junior Whip—NZ First): I raise a point of order, Mr Chairperson. With regard to the Minister’s amendments, I presume they will be put en bloc, so that we cannot, say, just have a vote on the amendment to omit clauses 21A to 21V and the heading above clause 21A as a separate vote? Some of us want to support that amendment but oppose everything else. We have supported the omission of the clauses dealing with marginal strips, but here we will seem to be voting against their omission. Is it the practice that there will be just one vote, and that we have no choice in the situation?

The CHAIRPERSON (Hon Clem Simich): That is a good point.

DAIL JONES: Do I have to seek leave to have that done separately?

The CHAIRPERSON (Hon Clem Simich): That is the normal practice.

DAIL JONES: In that case, I seek leave that we first vote separately on the provision in relation to clauses 21A to 21V and the heading above clause 21A.

The CHAIRPERSON (Hon Clem Simich): Leave has been sought for that course to be followed. Is there any objection? There appears to be objection.

The question was put that the amendments set out on Supplementary Order Paper 376 in the name of the Hon Dr Michael Cullen to Part 2, and the following amendments in his name to Part 2, be agreed to:

to omit from paragraph (b) of clause 42(1) the words “produce to the regulator”, and substitute the words: “provide the regulator with”; and

to omit from subclause (1) of clause 70 the expression “2004”, and substitute the expression “2005”; and

to omit from section 57(1)(b) in clause 73 the expression “57H”, and substitute the expression “57HA”; and

to omit from section 57F(2)(c) in clause 73 the words “Minister or”; and

to omit from section 57G(1)(b) in clause 73 the words “the relevant overseas person is, or (if that person is not an individual) all the individuals with control of the relevant overseas person are,” and substitute the words “all the individuals with control of the relevant overseas person are”;

to omit from section 57HA(1) in clause 73 the words “Minister or”; and

to insert in subclause (1) of clause 78 after the words “exemptions granted under”, the words “the 1973 Act or”.

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

Ayes 86

New Zealand Labour 51; New Zealand National 20; ACT New Zealand 5; United Future 8; Progressive 2.

Noes 20

New Zealand First 13; Green Party 7.

Amendments agreed to.

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

Ayes 81

New Zealand Labour 51; New Zealand National 20; United Future 8; Progressive 2.

Noes 26

New Zealand First 13; ACT New Zealand 5; Green Party 7; Māori Party 1.

Part 2 as amended agreed to.

Sitting suspended from 6 p.m. to 7 p.m.

SIMON POWER (Senior Whip—National): I raise a point of order, Madam Chairperson. Prior to the dinner break the Chairperson went through with members the concerns we had regarding amendments and Standing Order 120. That Standing Order refers to the fact that an amendment must be put into writing, signed by the mover, and delivered to the Table. Prior to the dinner break we discussed the fact that Mr Donald had moved amendments but they had been signed by Mr Locke. We had a discussion about whether that affected the validity of the amendments, and what would become of them, in terms of their standing, now that the vote had been taken on them. The Chairperson prior to the dinner break indicated that he would get a ruling from the Speaker, and I am asking at this point whether that ruling is forthcoming.

ROD DONALD (Co-Leader—Green): Mr Power is right to the extent that the Chairperson said he would seek advice from the Speaker on the issue, but the Chairperson also clearly ruled that he accepted the amendments. There was no doubt about that. So that particular issue is resolved, as far as I am concerned.

The CHAIRPERSON (Ann Hartley): What did he say then, Mr Donald?

ROD DONALD: Mr Simich accepted the amendments.

The CHAIRPERSON (Ann Hartley): The ruling is that a member can sign on behalf of another member if the member had that member’s permission. So I ask Mr Donald whether he had given his permission to Mr Locke to sign on his behalf.

ROD DONALD (Co-Leader—Green): I did indeed give my permission to Mr Locke to sign those amendments.

The CHAIRPERSON (Ann Hartley): That is the end of the matter.

SIMON POWER (Senior Whip—National): I raise a point of order, Madam Chairperson. During the points of order about this matter, Mr Copeland raised a very interesting point, which was that the matter raised by Mr Donald by way of comparison was to draw an analogy with oral questions being signed by another member of Parliament. Mr Copeland’s contribution to the debate was quite right when he referred to Standing Order 365, which specifically makes provision, at 365(1)(a), for oral questions to be signed by a member or by another member on that member’s behalf. In other words, there is an express, an explicit, authorisation for another member, with the consent of the member lodging the question, or the moving member, to do that on his or her behalf. No such explicit reference to another member signing on behalf of a mover in respect of an amendment exists under Standing Order 120. One of those Standing Orders relating to oral questions clearly makes provision for another member to sign on behalf of a member; Standing Order 120 makes no such allowance, expressly or impliedly. Although I certainly do not want to question your ruling, is it now the case that Standing Order 120 is amended by a Speaker’s ruling, so that a member, with another member’s consent, may actually sign an amendment moved by the original member?

The CHAIRPERSON (Ann Hartley): No, that is not correct. It is a longstanding practice that a member may sign amendments on behalf of another member, if he or she has that member’s permission. That is the ruling.

Schedule 1

The question was put that the following amendment in the name of the Hon Dr Michael Cullen to schedule 1 be agreed to:

to insert in the second column of Table 2 in Part 1 for the item relating to any regional park created under the Local Government Act 1974, and for the item relating to land that is listed, or in a class listed, as a reserve, a public park, or other sensitive area by the regulator under section 38, the words “0.4 hectares” in each case.

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

Ayes 81

New Zealand Labour 51; New Zealand National 20; United Future 8; Progressive 2.

Noes 26

New Zealand First 13; ACT New Zealand 5; Green Party 8.

Amendment agreed to.

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

Ayes 81

New Zealand Labour 51; New Zealand National 20; United Future 8; Progressive 2.

Noes 27

New Zealand First 13; ACT New Zealand 5; Green Party 8;.Māori Party 1.

Schedule 1 as amended agreed to.

Hon RICHARD PREBBLE (ACT): I raise a point of order, Madam Chairperson. I apologise. I was looking at the voting instructions for the evening and forgot, of course, that the House resumed at 7 p.m., not 7.30 p.m. I ask to correct the ACT vote from six to five.

The CHAIRPERSON (Ann Hartley): Leave is sought for that purpose. Is there any objection? There is not. Thank you. The vote will be corrected.

Schedule 2

The question was put that the amendments set out on Supplementary Order Paper 376 in the name of Hon Dr Michael Cullen to schedule 2 be agreed to.

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

Ayes 81

New Zealand Labour 51; New Zealand National 20; United Future 8; Progressive 2.

Noes 27

New Zealand First 13; ACT New Zealand 5; Green Party 8; Māori Party 1.

Amendments agreed to.

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

Ayes 81

New Zealand Labour 51; New Zealand National 20; United Future 8; Progressive 2.

Noes 27

New Zealand First 13; ACT New Zealand 5; Green Party 8; Māori Party 1.

Schedule 2 as amended agreed to.

Clauses 1 and 2

JOHN KEY (National—Helensville): I am happy to rise on behalf of the National Party to address this part of the Overseas Investment Bill. If commentators on this bill take nothing else out of it, they will know one thing—that is, the tide is going out for this very tired Labour Government. It is on the way out big time when its coalition partner, United Future, will not even support its tired, old Labour policy. Even if Labour does not think that people with property rights should be respected and rewarded, at least United Future was smart enough to understand the issue, and left the Government on its own—on its tod—with nobody else in the entire Parliament supporting it. The Government could not convince the Greens, who are opposed to everything, and it could not convince New Zealand First members, who are opposed to everything in this field. The Government did not get support from United Future members, who could at least see it National’s way. It did not really care about the Progressives, and ACT would not support it on this measure, also for some very good reasons. Labour members were “Johnny-no-mates”, and they have come to Parliament in the incredibly embarrassing position that they cannot even pass their own legislation.

David Parker was quoted in the Otago Daily Times, telling the people of Otago that he had a victory. He said that he had won and declared victory. That reminds me of Michael Cullen and Helen Clark declaring victory a few months ago—well, they are not smiling quite so readily tonight. David Parker will be looking for a new job post - election day, 17 September. He will be looking for a new job, but it will not be in this sort of area. No wonder Government members look a downtrodden and disheartened lot; they cannot even pass their legislation.

I want to refer to one thing that Mr Parker said in the Chamber recently. He took offence that National wanted people who owned something to be paid for it when it was taken off them. Then he said our position was inconsistent because, when it came to the foreshore and seabed issue, we were not prepared to give Māori anything for taking it off them, and that inconsistency was the problem with our position. I hate to tell Mr Parker, but he may not be aware that in National’s view Māori did not own the foreshore and seabed in an exclusive situation. They owned it along with all other New Zealanders, and they have not had anything taken off them. They are in the same position that they were in beforehand regarding the foreshore and seabed legislation.

So Mr Parker might be a bit confused about National members’ position on marginal strips, but we are not confused and we do not intend to send the message to anybody who invests in New Zealand—a domestic person or someone from offshore—that we will somehow legislate to have that person’s property rights taken off him or her anytime we like, just because the people in power think it is a really good idea on the day. We have seen that system operating in various other regimes. It has not worked tremendously well in Zimbabwe and I doubt that it would work terribly well here in New Zealand. So we will not be supporting that notion. [Interruption] That is right.

I do want to refer to the investment in companies that come here from offshore, and I think lifting the threshold does make sense. There are some very sound and credible reasons why foreigners who invest in New Zealand companies can actually add some real value beyond just the capital they invest in those companies. They can bring knowledge and skills and, more importantly, they can bring a gateway to take those New Zealand products and really grow them in offshore markets. I think we sometimes look with far too much scepticism at companies that come to New Zealand and invest. New Zealand is a country born out of entrepreneurs and people with a number eight fencing wire mentality of doing things, and we want to encourage that.

The last point I want to make—if I can make it in the 37 seconds that I have available—is about the purpose of the bill. I think it makes sense. The purpose clause of the bill states that it is a privilege for someone from overseas to buy land in New Zealand, and that when they do so, they should meet and honour some criteria. One of the other things I heard when I sat on the Finance and Expenditure Committee was that all foreigners who invested in land in New Zealand were bad and all New Zealanders who invested in land were good. That is not true; plenty of New Zealanders actually stop access in any form to their land. But foreigners who come here do have to recognise that they are playing in our playground, and that New Zealanders have a right regarding that situation.

ROD DONALD (Co-Leader—Green): It is with some sadness that I speak to the title of this bill, because the bill has gone in the wrong direction, in the Green Party’s point of view, and it has even gone in the wrong direction from the point of view of the Labour members who were on the 2001 select committee inquiry into the activities of the Overseas Investment Commission. In that inquiry, the Labour members and the New Zealand First member backed a number of Green Party recommendations that would have tightened up the control on foreign investment in New Zealand, whereas instead this bill actually liberalises the foreign investment regime. Yes, there is the smokescreen that so-called iconic sites will be more difficult to buy, but nothing in this bill will actually stop them from being purchased by overseas investors, and there is now every encouragement in this bill for foreign investors to come in and buy up more of our land, buildings, and businesses.

I think the complete removal of any land threshold in central business districts is extraordinary. It means that there will now be absolutely no control on land and buildings being purchased in the central business districts of Auckland, Wellington, and Christchurch. Dr Cullen has realised his dream, which is to make New Zealand one of the most liberal foreign investment regimes in the world. This legislation makes us consistent with the United States’ requirements for a free-trade agreement with it, and it brings us into line with what the multinational corporations have been pushing for under the General Agreement on Trade in Services. So the title of this bill really ought to be the “Overseas Investment Liberalisation Bill”, because it does nothing to achieve the stated purpose, which—as the previous speaker acknowledged—is to provide that it should be a privilege for overseas persons to own or control sensitive New Zealand assets.

I have moved one amendment to clause 2, “Commencement”, to ensure that no commencement date appointed by the Governor-General by Order in Council can take effect before 30 June 2006. That is to provide a cooling-off period, if you like, for the Government to think about the merits of this legislation, or perhaps to give an incoming Government that is more progressive in its outlook than this Government the chance to amend this legislation. I think it would be entirely consistent for the Government to support that amendment, because it dragged the chain over the amendments that Winston Peters managed to negotiate some time ago. They were not gazetted during the life of the National - New Zealand First Government nor during the balance of the period of National-led Government after New Zealand First left that coalition. To give some credit to Dr Cullen, he did finally gazette those changes, which have at least required farmland to be publicly advertised for sale in New Zealand before it is flogged off overseas—never mind how small the advertisement is.

It is quite consistent with overseas investment legislation for the Act or regulations not to come into force straight after the Governor-General has signed them. So I would urge other parties to support delaying this legislation until at least 30 June 2006, to provide something of a cooling-off period—a buyer-beware period—so that the people of New Zealand do have the chance to vote on this issue at the election, without the country being locked into a foreign investments regime that means, basically, that we are like the Wild West, but with a sheriff who is working hand in hand with the outlaws rather than on behalf of the good citizens of this country.

Hon RICHARD PREBBLE (ACT): I rise to speak to clause 1 of the Overseas Investment Bill on behalf of the ACT party, and I think that the bill is incorrectly named. It should be called the “Attack on Private Property Rights Bill”, because one of the fundamental rights one has when one owns property is to be able to sell it, but here the Government is claiming the right to dictate to citizens about who they can sell it to.

They have not actually given any reasons. Most of the speeches have been incoherent, like Mr Donald’s speech in which he was talking about the good citizens of New Zealand versus the outlaws. What an amazing statement! He is prepared to claim that anyone who is not a New Zealander is an outlaw. If statements like that were being made overseas, he would immediately condemn that as xenophobic, but then with no shame at all he is prepared to make xenophobic statements himself, and also demonstrate a complete lack of history. This country was actually built with overseas investment. This country was built by people who came and invested in this nation, and we still need their capital and expertise today.

I listened also with some confusion to Mr John Key’s speech, because while he was attacking the Government in the Committee stage, it appeared to me that the two old parties were voting together for this piece of socialist—

Hon Member: The great coalition!

Hon RICHARD PREBBLE: Maybe I misunderstood, or maybe Mr Key did not know how his party was voting, but it appeared to me that the two old parties were voting together for this legislation, which is clearly a nonsense. Intellectually it does not stand up. It is correct, as Mr Donald said, that there are some clauses in the bill that will, in fact, result in some liberalisation. But there are other measures for which there is no intellectual or moral basis. If a person selling his or her land is required to provide a walkway for citizens, and if that is desirable, why are only foreigners required to provide that walkway, and not people born in New Zealand? That is a complete nonsense.

Dail Jones: That is the next step.

Hon RICHARD PREBBLE: Maybe it is the next step. From the ACT party’s point of view, if the community wants to own a piece of land, then the community should pay for it. To just take it, is communism. That is socialism. I am amazed—well, actually I am not amazed. I would like to think that one should be amazed that the National Party is voting for such a measure, but I am not, because the National Party members were going around the country today saying they were opposed to attempts to take farmers’ land, and then we have Nick Smith’s bill—and Nick Smith should actually be in the Alliance—which is a socialist measure. That was being put forward.

The party that has been—and I think it would be fair enough to say this in the House—consistently in favour of private property rights does not believe in this type of intervention, and says that it is morally wrong that this Parliament has no moral right to be placing restrictions on citizens’ private property rights—

Gordon Copeland: That’s United Future

Hon RICHARD PREBBLE: Well, I have not actually noticed United Future being consistent on that matter. I think, in fact, the only party that has been consistent on that question has been the ACT party. I have looked at the minority reports, and I do not see a minority report from United Future making a strong stand on behalf of private property rights. Indeed, I have not been hearing such speeches on behalf of them. I hear Mr Peter Dunne making speeches on behalf of some sort of outdoor group that claims to have the right to trample over people’s private property rights. Am I right there, Mr Copeland?

Gordon Copeland: Fourth paragraph, page 11.

Hon RICHARD PREBBLE: Fourth paragraph, page 11.

Rod Donald: No heading.

Hon RICHARD PREBBLE: Fourth paragraph, no heading. What does it say, Mr Copeland?

Gordon Copeland: I have read it out to the House.

Hon RICHARD PREBBLE: Oh, the member has read it out to the House. Does the member want me to read it again? All I can say is that it is so pathetic I cannot even find it. What I am interested to know is, and given all these speeches, how is this bill going through? The National Party is opposed to it. The Greens are opposed to it. The United Party—

Brian Connell: National is for it.

Hon RICHARD PREBBLE: I heard Mr Key say he was opposed to it. Now if he is going to vote the way that he says he believes, how can this bill be passing? There must be some extraordinary mathematics going on.

BRIAN CONNELL (National—Rakaia): Thank you for a call on the title clause of this bill. One knows, when one looks around this Chamber, that a Government is on its way out when it is relying on people like the Greens, who want to stop all investment in this country, to come not into caucus but into Cabinet with it. Then it wants the same Cabinet to coalesce with the Māori Party, which wants to send everyone out of New Zealand. The Government expects that it will then have the support of a nation, and wonders why the tide is going out for it.

Mr Prebble said he was confused. I cannot speak for Mr Prebble’s state of mind, but what I can say is that if Mr Prebble had been here throughout the course of the debate he would have known that National was strongly opposed to the bill before Supplementary Order Paper 376 was tabled, which precludes the Government annexing private property without even offering compensation. So with that cleared up, I am sure that Mr Prebble will accept that investment in this country through foreign capital is what this country needs, and to send signals that that is not important, as the Green Party is doing, supported by the New Zealand First Party, would be totally unacceptable.

Now we have some Luddites here who are trying to turn the clock back. After years of market reform through the 1980s and 1990s we now have a strong-performing economy that people want to invest in. That is a vote of confidence in this economy, and we should embrace people who want to come to this country and invest here. Capital creates jobs, prosperity, and confidence. I tell Mr Donald and others that if we want to share wealth then first we have to create it, and creating it depends on getting capital and on getting people to invest their hard-earned dollars in things like infrastructure and property.

Dail Jones mounted an argument earlier in the debate that all investors coming to New Zealand are large companies, and they are going to suck every bit of goodness out of this country. They are here just to rape and pillage. Well, I have to say to Mr Jones that the vast majority of foreign investors in this country are not—

Peter Brown: The member admits that there are some people of that view.

BRIAN CONNELL: Well, yes, New Zealand First members are of that view. We are in agreement.

The majority of investors who come to this country are small investors who come here to live, and to invest their time and their money—they have kids—exactly the same as Mr Jones and Mr Brown did not so long ago. It is good enough for them, but they want to chase everybody else away. Reasonable people know that in order for New Zealand to continue to prosper we need capital. Throughout the course of this debate I have given numerous examples where foreign capital has created infrastructure and jobs for hard-working New Zealanders. I do not think that people listening to Mr Jones talk about the people who have risked their capital to create jobs will agree with his argument that foreign investors do not create any value in New Zealand. That is an absolute nonsense. I know that when Mr Jones was saying it, he had a smile on his face, but unfortunately people listening across New Zealand cannot see the smile on his face, and some—a very small number admittedly—might in fact take him seriously, which would be a travesty.

The other thing that has been noted throughout the course of the debate is that a number of investors have come here and bought high-country stations. Well, that is a crime, is it not? That is an absolute crime. The hysteria is that they will close all the roads up.

DAIL JONES (NZ First): Having been drawn into the debate, I could not resist a call, and if I have a smile on my face it is because, really, the National Party just cannot understand what happens when people invest $50 or $100 million in New Zealand, as the previous National speaker mentioned this afternoon. They invest that much money in New Zealand to take control of companies for the benefit of their overseas shareholders. They may export goods, but they also export the profits. The profits do not stay in New Zealand. The profits go overseas. [Interruption] Mr Carter and Mr Connell can laugh. Overseas shareholders want their money sent to them overseas. It is elementary. It is as simple as that, but the National Party just cannot understand that situation at all.

The National Party says, “What about investment in New Zealand?”. New Zealand First supports New Zealanders investing in New Zealand products. The way we say that should be done, of course, is through the New Zealand Superannuation Fund—something the National Party opposed constantly and vigorously until it did one of its flip-flops and now supports it. But if we want New Zealanders to invest, they have to save, and one of the ways in which they save is through the superannuation fund. That is how one gets New Zealand investment in New Zealand businesses and how the profits are kept in New Zealand. What is bleeding New Zealand to death, and will bleed New Zealand to death, is that if the world economy changes, all the money goes overseas in profits and does not stay here. We have seen it before in New Zealand on many, many occasions in New Zealand’s fiscal history, but the National Party just cannot see it at all.

What we have here tonight is a clear example of the two old parties, as Mr Prebble was saying, searching for a coalition partner. When one thinks about it, one realises that Labour’s best coalition partner, on tonight’s performance, is the National Party. I do not know why the commentators have not woken up to that. Mr Connell talked about the market reforms of the 1980s and the 1990s with the greatest enthusiasm. Those were the Labour reforms of the 1980s and the National reforms of the 1990s, and now he wants to get in bed with the Labour Party. The polls show—and that is what he was looking at—that that is the only way the two of them can get into Government. One has to add up the two parties’ totals. If one adds either of them to any one total of the other parties, neither of them can do it. Members know how much the Labour Party loves power and how much the National Party loves power, and, boy, they will do just about anything to share that power or to have that power.

Some of the commentators should look more closely at what is happening in this House, especially on bills like this, when members of each party talk about how successful the reforms of the 1980s and the 1990s were. Those parties are positioning themselves as they look at the way in which the leadership poll results change. Some people go up all the time and some people come down all the time. It is interesting to see how the National Party and the Labour Party are positioning themselves for a situation that might arise after the election. It is so important for the people of New Zealand to realise that if those two parties got together again, as they did with the 1980s and 1990s reforms, New Zealand will be in trouble. As I said, the only way that can be prevented is by New Zealand First being two or three times stronger in this House after the next election. We were founded on the mistakes of the National Party and the Labour Party in the 1980s and the 1990s, and I think that Mr Connell has given away the game tonight.

PANSY WONG (National): Chairman Mao of former Communist China would have been proud to have Dail Jones as a member, because in those times China closed its door to foreigners absolutely. Chairman Mao would have been proud to hear that speech from Dail Jones. I wonder whether Mr Dail Jones is also telling the public that New Zealand First does not want to be in power—as he has apparently just declared. New Zealand First has already declared itself to be in a permanent Opposition position. That is interesting.

As a member of the Finance and Expenditure Committee I would like to share the views of some of the submissioners who came before that select committee who believe that this bill has gone too far. I particularly want people to hear from a very important group—and my learned colleague the Hon David Carter would agree—Federated Farmers. I think they put a very credible counter-balance to the overwhelming submissions opposing the bill that came before the select committee. They were very, very anxious about the lack of overseas investment. Federated Farmers shared that with us. They are a very reputable group that we all know.

Farming is the backbone of the New Zealand economy. They were saying that people build up a business in a farm through their lives, so do we want to deprive them, when they reach the well-earned retirement stage in their life, of getting the best price for their hard work of building up their business? The Greens would, Labour would, and New Zealand First would, because they want to shut out people’s options. Any New Zealand - owned businesses and landowners can sell to anybody. They do not have to sell to foreign investors. They have the absolute freedom to choose who they sell to.

It is wrong for the Government to restrict that right—to artificially put in legislation and say that people should not be allowed to sell their hard-earned businesses that they have built up over a long period of time to the best offer. But what the Government does need to do is to introduce legislation that puts down criteria so that if overseas—or even domestic—investors want to purchase properties and businesses they will be subject to legislation and will have to conform to conditions. I think it is fair that people who enter a transaction should give an undertaking and be held to fulfil those conditions. That is why National has supported this legislation after the sensible Supplementary Order Paper to remove the creation of marginal strips without compensation was tabled during the Committee stage.

I hope I have shared with the members of the Committee, and, also, the public who are listening to this debate, that it is a matter of striking a balance. No Government has the right to restrict New Zealanders who have built up a business or who own a piece of property from accepting the best offer, given that the purchaser will have to fulfil a set of conditions. That is a pretty balanced outcome.

It is a very emotive issue. A large number of submissioners came before the Finance and Expenditure Committee. I emphasise once again that a lot of those negative feelings were generated because they felt that the law was not being enforced.

Hon DAVID CARTER (National): I rise to support the bill and to follow from Pansy Wong’s good contribution with another rationale, before other members—particularly Dail Jones—speak, as to why National supports this legislation now it has been amended. I refer to the process by which foreigners have the opportunity to buy land in New Zealand—[Interruption]—and that, for the benefit of Craig McNair, is an absolute privilege. Having been lucky enough to invest in New Zealand, they do so on the conditions imposed by New Zealand law and by the rules at the time of the Overseas Investment Commission.

What I have found particularly galling are the many cases in which foreigners have been allowed to purchase in New Zealand under conditions imposed by the Overseas Investment Commission, and then have completely thumbed their noses at the impositions imposed on them at the time they were given permission. I understand that this legislation significantly tightens the enforcement provisions. That is necessary because some foreign investors coming to this country have not been prepared to abide by the rules, and the legislation that existed previously meant that it was difficult for New Zealand to do much about that.

My second point is particularly in response to the very interesting commentary from Dail Jones when he argued that we do not need foreign investment and that there is suitable capital in New Zealand to provide all the investment capital that this country needs. I suggest to that man that he should get real. Capital in this world is in very short supply, and New Zealand must develop by attracting capital. We know that New Zealanders have historically not been good savers and I do not see that in the foreseeable future they would ever be in a position to provide enough capital by themselves. In other words, if we are to progress this economy, foreign investment becomes essential.

I refer now to some of the papers tabled before the Finance and Expenditure Committee, which show that over the last 3 years the number of people interested in applying to invest in New Zealand has continually declined. That is something the Minister at present in the chair, the Hon Dr Michael Cullen—the Minister of Finance—should take particular note of. He accepted my argument a minute ago that this country was in need of foreign capital. Therefore, questions need to be asked as to why there was considerably more interest in foreign investment in New Zealand in 2002 than there was in 2003, while there was considerably more interest in 2003 than there was in the last year for which we have figures—2004. I suggest to Dr Cullen, as the Minister of Finance, that an issue associated with declining confidence in overseas investment is the legislative framework imposed by this country not only on foreign investors but also on New Zealand investors. I refer to issues such as the ratification of the Kyoto Protocol, which we now find to be a miscalculation by Pete Hodgson of somewhere between $1 billion and $3 billion.

Brian Connell: That’s good maths!

Hon DAVID CARTER: The maths are fascinating in themselves, but the really interesting thing is the risk that it now puts this economy in for future generations. I happened to see Pete Hodgson rambling on in a TV interview tonight, saying that the reason the Government had ratified was for future generations of New Zealanders. He has now saddled New Zealand with such a huge international commitment that he is risking the very standard of living not only of future generations of New Zealanders but also of current New Zealanders.

The other point I want to comment on is the fascinating provision that has been completely removed from the bill following its process through the select committee. It is the issue whereby the bill had suggested we should take the opportunity, as part of the approval process for foreigners purchasing land, of ensuring that public access is guaranteed by the creation of marginal strips. I have some sympathy for doing that. Provided it is upfront and explained to investors before they purchase in New Zealand, it could become part of the rules that they fulfil for the privilege of being a landowner in this country.

PETER BROWN (Deputy Leader—NZ First): We have had three speeches from National Party spokespeople and I can say that I do not think any of them understand what they are talking about—not one. I listened very carefully to all three members and they advocate an open-door policy to anybody coming here with a suitcase full of money, which will enable such people to buy anything they want. That is effectively what those members said. [Interruption] Does the member disagree with that?

Hon David Carter: Absolutely.

PETER BROWN: Thank you. Then what—

Brian Connell: Read the Hansard.

PETER BROWN: I have read the member’s Hansard—well, I listened to his speech. Let those members answer this question: are they prepared to put any restrictions on foreign capital coming in?

Hon David Carter: That’s what this bill does.

PETER BROWN: I know what it does. What those members are saying is that because we do not accept this bill and we are not drawing the line in the same place as they are, then we are—what did the member call us? Was it “Mao Tse-Tungites” or something? The fact is that we are not drawing the line where those guys are drawing the line. Of the three speeches made by the members who are sitting there in sanctimonious glory, Brian Connell was the winner. He made the most stupid speech of all of those members. He said, effectively, that people could come here, buy the land, and live anywhere else in the world. I say to members that if we go back a few years, this was a high-wage economy in which one could afford to sell land, knowing that New Zealanders could compete for it. But they are prepared to put land on the world market, knowing that New Zealanders cannot compete for it.

Brian Connell: Oh, poppycock.

PETER BROWN: By and large they cannot compete for it. There are a few who can compete for it, but by and large the average New Zealander cannot buy a house or a farm in some areas of New Zealand if they are put on the world market, and those members well know that.

Brian Connell: Build a wall.

PETER BROWN: I tell my good friend that we are not building a wall. He has already admitted that he wants some restrictions. We are just telling him that he has not worked out where the restrictions should be.

Brian Connell: Build a wall! Keep them in.

PETER BROWN: If the member says during the election campaign that he wants to enable anybody to come to this country and buy anything from anybody, I will say to him that he has got it totally wrong, and the average New Zealander will say to him that he has got it totally wrong.

New Zealand First stands for restrictions and controls on people who want to invest here. We say that unashamedly. We have seen this country sold to the lowest bidder—let alone the highest bidder—and members opposite were part of it. That crowd—despite saying that no ifs, buts, no maybes, they would change the lot—carried on. In 1984, $16 billion worth was sold in this country. Can members tell me one benefit that we have got from that? We have had to buy back our airline and our railways.

Hon Richard Prebble: No, we didn’t. We didn’t have to buy it back.

PETER BROWN: At least one member realises that we did not have to buy it back, but, if we wanted it, we had to buy it back.

We could have let Air New Zealand go to the dogs. We could have let Tranz Rail go to the dogs. It might be too late—it might have already gone to the dogs. The crowd sitting behind me here are saying: “Let ’em come in. They’ve got a suitcase of money, let ’em come in and they can buy anything we have for sale.” I had thought that the Labour Government had learnt from its experiences. Clayton Cosgrove puts his hands up. He may treat this as a joke but I can tell him that there are many people in his electorate who will agree totally with New Zealand First. They are sick and tired of someone planting a for sale notice in the land of New Zealand and saying: “Come here and buy it.”

It may not have been Richard Prebble, but I have certainly heard ACT members say that the land cannot go away. Dr Cullen said that the land cannot go away, but for the average New Zealander in many cases that is just what happens. It goes away. It might as well be 12,000 miles away, as average New Zealanders will not be able to afford to compete on the open market.

Hon Dr Michael Cullen: When did the average Kiwi own a high-country farm? Ha, ha!

PETER BROWN: The member laughs. He might laugh a little bit later when he gives the low-paid people their 67c and tells them to go and buy the land they want and have saved up for, when foreigners come in and buy it at some exorbitant sum. I can tell the Committee about a situation where a house was sold on the Internet at three times its value.

Hon PAUL SWAIN (Minister of Labour): I move, That the question be now put.

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

Ayes 61

New Zealand Labour 51; United Future 8; Progressive 2.

Noes 46

New Zealand National 19; New Zealand First 13; ACT New Zealand 6; Green Party 8.

Motion agreed to.

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

Ayes 81

New Zealand Labour 51; New Zealand National 20; United Future 8; Progressive 2.

Noes 28

New Zealand First 13; ACT New Zealand 6; Green Party 8; Māori Party 1.

Clause 1 agreed to.

The question was put that the following amendment in the name of Rod Donald to clause 2 be agreed to:

to insert in subclause (1) after the words “Order in Council” the words “but not before 30 June 2006”.

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

Ayes 27

New Zealand First 13; ACT New Zealand 6; Green Party 8.

Noes 81

New Zealand Labour 51; New Zealand National 20; United Future 8; Progressive 2.

Amendment not agreed to.

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

Ayes 81

New Zealand Labour 51; New Zealand National 20; United Future 8; Progressive 2.

Noes 28

New Zealand First 13; ACT New Zealand 6; Green Party 8; Māori Party 1.

Clause 2 agreed to.

Bill reported with amendment.

Report adopted.

Third Reading

Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Overseas Investment Bill be now read a third time. The Overseas Investment Act has not undergone a thorough review since it passed in 1973, and I thank members of the House for their cooperation in progressing this important bill through the House. I particularly want to thank the members from ACT, the Green Party, and New Zealand First, who demonstrated how powerful the arguments in favour of this bill are.

At the commencement of this long-overdue review two objectives were identified as being of paramount importance. These were to ensure the regime focused on sensitive assets of critical interest, and to further reduce compliance costs in areas where that is feasible. The bill does that. Indeed, the second part of that has not been focused on at all during this debate.

I want to say quite clearly that it is critical for the future of this country, and for our social and cultural development, that we have a welcoming and open attitude towards inwards foreign direct investment. Indeed, I have to point out that today the Government announced new rules for the entrepreneur category, and it was attacked by the New Zealand First leader in his first press statement as being an attack upon inward-bound investment by foreigners. It is true that 45 minutes later he put out another press statement saying we were simply pinching New Zealand First’s policy, but, nevertheless, his first statement showed that party’s confusion on the issue of inward-bound investment. If this country relied on its own capital resources alone, we would not just not grow; this economy would shrink, because our investment levels would be insufficient to maintain our current level of economic activity. It is a bit like Arsenal, which had to bring in a Frenchman to be a decent coach, because it could not find anybody from its home area—I remind Peter Brown.

The second point I want to make is about this issue of reducing compliance costs. Today I have been going through, as usual, some Overseas Investment Commission recommendations on purchases. What the members opposite who voted against this bill might need to know is that the largest single category of investment that I have to approve at the moment under the law relates to, for example—today—the purchase by a supermarket chain, which is foreign-owned, of 1¼ hectares of land for a new supermarket in a small North Island town, simply because the land backs on to a drainage reserve, or something similar.

Clayton Cosgrove: Iconic drainage area!

Hon Dr MICHAEL CULLEN: Yes, an iconic drainage reserve, no doubt—in Dargaville, if one could imagine such a thing being possible. That requirement is stupid. It is stupid that we have a Government agency going through such stuff and Ministers’ time being consumed in approving things of that sort. This bill wipes out the requirement for approval in that kind of case. I have to approve, time after time, redevelopments in terms of urban subdivisions, because the initial purchaser of the land for subdivision is a Singaporean company, and, again, if it is a large subdivision, the chances are that it backs on to a recreation reserve or a drainage reserve. And those subdivisions are going to be sold off to New Zealanders at the end of the day, but we have to have Overseas Investment Commission approval for that to go through. It is a nonsensical piece of compliance cost and business cost, which we need to strip out of the system.

I make no apology for driving this measure through the policy process and driving it through Parliament. I thank those parties that have supported it for their sanity in that respect, because, bluntly, I have to read through all the pages of these reports—although, having read the first page, I have pretty much come to a conclusion—before I go any further. I am grateful that Ministers in the future will not have to do that kind of silly stuff.

Simon Power: We’re here to help.

Hon Dr MICHAEL CULLEN: Indeed, and we appreciate that help when it comes rarely from the National Party; a party, of course, that celebrates the fact that it is only 4 percent behind in the opinion polls, which is a sort of interesting commentary on the modern National Party.

Then we come to the issues of sensitive land. What Peter Brown tells us—from that vast North London farming experience he comes from; those broad acres of high-country sheep farms in Highgate, which are actually his background, or in Baskerville Hill, or wherever it was that he comes from—is that somehow or other, because foreigners have been allowed to purchase New Zealand land, the ordinary, average Kiwi bloke can no longer buy a high-country farm. As we all know, in that good, dim, distant golden age of the 1950s, good, average Kiwis down there in Sydenham could go down to the good old Post Office, get the 3 percent loan, and go off and buy themselves a decent property somewhere around Cromwell, or Queenstown, or wherever it might be, and, sadly, that is no longer true.

It is a bit like those people who write in the Listener—the true magazine for those with memories of the 1950s that are somewhat rose-coloured—that no longer can the average person own a seaside bach. Well, actually, in the 1950s it was always the middle class that owned the seaside baches; it is just that the seaside baches have become a lot bigger and more posh in the last 50 years than they used to be, and cost a lot more to buy. I grew up in Burwood, and people there did not have seaside baches. It was the people in Fendalton and Cashmere who had them. So let us not weep for a golden past that never was, which has always been the basic foodstuff of populist parties.

This bill gives us the capacity, when considering those applications, to ensure that we can address a range of important issues such as access, conservation values, historic values, and so on, and that is very, very good indeed. It can turn into a win-win situation.

Let me also make this point, because I am sick and tired of both the Green Party and articles in the Listener getting a fundamental point wrong. When foreigners purchase New Zealand land they are subject to New Zealand law in every respect, just like a New Zealander is. They do not have a separate Resource Management Act regime. They do not have a separate regime in any other sense. The people who are fighting improved land access up sensitive waterways for recreational purposes are not a bunch of foreigners; they are fifth-generation Kiwi farmers, most of whom inherited their properties. Let us be clear about where the problems are, in that particular respect. I have no time at all for this golden age rubbish and this strange xenophobia that insist that a New Zealand - born landowner is somehow kinder to New Zealanders than an American, a Canadian, or some other landowner might be. We have a damn sight more chance of tramping our way across Shania Twain’s property than we have of tramping across those owned by New Zealanders in that particular area. What is more, she can sing a damn sight better than most New Zealand landowners can, and, if I am allowed to say so in these PC days, she looks a damn sight better than most New Zealand owners. [Interruption]

I knew that would upset New Zealand First. It is not for me to mention that Craig McNair, that great New Zealand nationalist, worked for United Airlines, flying the friendly skies on behalf of Americans, and is an American citizen. It is not for me to mention these facts about our comrades opposite—Peter Brown, that well-known North Londoner, like myself; Dail Jones, who was born in Pakistan. My friend opposite is still trying to be quite sure about where he came from in the first place. We have all these sorts of things going on, from these latter-day converted Anabaptist New Zealanders over there.

The final point I want to make is that the bill transfers the administration of this very strange Overseas Investment Commission, which has a board comprising four people, and about five employees, into Land Information New Zealand, which will have the capacity to do the follow-up work. The bill improves enormously the penalties regime, so that we can actually enforce the conditions that are imposed, which we have had great trouble doing in the past. I think this is very good, balanced legislation. I thank those members who have supported it with coherent arguments. I thank those members who have opposed it with incoherent arguments.

PANSY WONG (National): The Minister of Finance is certainly enjoying himself! I invite him to treasure the dying moments of his role as Minister of Finance, because our good member John Key is waiting in the wings to take over.

As a member of the Finance and Expenditure Committee let me share with the House some of the proceedings at the select committee. [Interruption] The chairman calls out; I hope Clayton Cosgrove is going to take a call, because we have not heard enough from him. He must be falling short of being a favourite member over there. I have to share with the public that overseas investment is a very sensitive topic. Many, many submissioners came before the Finance and Expenditure Committee showing signs of anguish and insecurity at the loss of control of New Zealand business, particularly farmland and scenic icons. Part of that, unfortunately, was brought about because of a few very high-profile cases; the public perceived that the enforcement agent did not do its job, did not hold the overseas investors to fulfil their purchase conditions. I think some genuine grievances have been caused by the enforcement agent, the Overseas Investment Commission, not enforcing the law.

The enforcement agent assured the Finance and Expenditure Committee that that was due to the fact that it does not have a set of effective tools to monitor the situation. I raised this issue in the Committee stage with the Minister of Finance. I am still not happy with some of the wording in the legislation: the regulator “may” require information to enable it to monitor those investments; it “may” ask for information. I am assured by the Minister of Finance that the Overseas Investment Commission, or the regulator—which from now on is to be transferred from the Reserve Bank to Land Information New Zealand—will use this legislation to enforce the conditions that the investors agreed to.

To say that some of the arguments offered by New Zealand First were entertaining is to be charitable. The New Zealand First member seemed not to understand that successful people who invest in business do not want to dismantle the business, do not want to lock up the business. They want to expand it. If they make an investment, they want a return. When overseas investors purchase a business in New Zealand they employ people, they use consultants, and they purchase supplies from New Zealand. If the business makes a loss, they have to take that loss. If it makes a profit—why not? I do not think New Zealand wants to be known as a country where every investment will return a loss. Of course we want to show New Zealand as a country where people who invest will find it profitable. They will pay their fair share of tax, because we have tax legislation; we have legislation that all businesses have to comply with.

But there is another issue that we have to think about. I am sure that Peter Brown would take another call in this third reading. What if the Government passed a law to say that Mr Brown is allowed to sell his property to a certain sector only, or is not allowed to sell his property to anybody—

Ron Mark: What does China do now?

PANSY WONG: Well, actually, I have just complimented Dail Jones. He would have been a proud member of Communist China under Chairman Mao. Chairman Mao would have been proud of Dail Jones and the New Zealand First members’ speeches.

Ron Mark: What does China do now?

PANSY WONG: I am not too sure why that member keeps asking me about Chinese legislation. I can answer that I know New Zealand law much better. The member consistently has a problem. That member of Parliament apparently is not interested in what is going on in New Zealand. I feel really happy that New Zealand First takes so much interest in China and is pro-Chinese and pro-China. What a wonderful thing to discover tonight. One can always discover something. New Zealand First is pro - Chairman Mao and pro-Chinese. I think that is a wonderful discovery.

The only complication in the passage of this bill was self-imposed by David Parker. At the select committee David Parker had this great idea about how to lose his seat of Otago to National’s Jacqui Dean. Jacqui Dean will be a great member in the next parliamentary term. David Parker introduced a provision to create marginal strips around sensitive land such as lakes and rivers. But there is a problem. Labour wanted to create a marginal strip and give no compensation. Members should just imagine that a New Zealand landowner is trying to sell a piece of land from his or her farm to an overseas investor, when suddenly a marginal strip is imposed on the property. How would that affect the selling price? David Parker seemed to think it does not matter. And I was told he is a lawyer! That is when I thought that maybe the next Parliament should welcome in more accountants and economists. Maybe they would understand the issue better.

At this stage I acknowledge that at least United Future woke up to that, even if belatedly. Its members said in the select committee that they did not like it, but they were not prepared to stand up for their principles at that point in time, and they let the bill go through the select committee. But, belatedly, they did closed-door negotiations with Labour, and Labour has backed off from the provisions to take a marginal strip without compensation.

I finish by sharing why National can see some point in marginal strips being imposed on land purchased by overseas investors. My good colleague the Hon David Carter said that overseas investors might not understand that under New Zealand culture landowners allow access by the public, particularly to iconic sites. Marginal strips can be justified on that basis, but imposing them without compensation is simply not acceptable.

We welcome the introduction of the Supplementary Order Paper amendment that removes that draconian provision of creating marginal strips without compensation, and now National will support the passage of this bill.

CLAYTON COSGROVE (Labour—Waimakariri): I rise to meet the challenge of Mr Simon Power, and to support the bill as the chair of the Finance and Expenditure Committee, which considered the bill. I draw on a couple of points. This is a good bill, because, as Dr Cullen said, it tightens the enforcement regime in respect of the purchase by foreigners of New Zealand lands and other assets and investments.

I want to touch on one thing, which is that the Overseas Investment Commission will now be absorbed into Land Information New Zealand. This is a good thing, because, as the Minister pointed out, the commission has a staff of about five. Once it goes into Land Information New Zealand, of course there will be a greater resource of personnel who will be able to enforce the provisions in the agreements that are put in place for overseas investors.

One of the biggest concerns from submitters to the Finance and Expenditure Committee was that when overseas purchasers come to do the deal, to build the lodge or whatever, to employ X number of people, and to create economic growth and wealth, those commitments are not necessarily met. I think that concern has historically been quite valid. One of the committee members, Janet Mackey, pointed out that there was an investment in her patch where those commitments, as written in the agreements, had not been met. I think even the odd member of New Zealand First—or one member—would agree with that. Historically, overseas investors have come over and invested, said they will employ people, and said they will create jobs. They have done the deal, if you will, but have not lived up to the obligations. The feedback we got from a lot of the Kiwis who came to the committee was that they do not mind overseas investment, but if overseas investors are obligated to do certain things, then they should do them. So this bill seeks to tighten up that enforcement mechanism.

I see that the Greens are opposed, in their minority report, to the Overseas Investment Commission being absorbed within Land Information New Zealand. I have to ask why. Land Information New Zealand has more people, more resources, and more specialists to enforce agreements—to stomp the country if necessary and ensure that investors have lived up to and are meeting their obligations, such as employing people, building the lodge, creating some jobs, and creating some wealth for the country. I would have thought it was difficult to argue against those tighter enforcement measures.

Then we have New Zealand First, which is opposed to any purchase by any foreigner of any asset, investment, or land in New Zealand. As the Minister pointed out, that is totally illogical. The last one out switches the lights off if we call a halt to any international investment in land in this country. The New Zealand First members say no. Again, I think most Kiwis would not agree with them.

This bill in total seeks to lessen the bureaucracy. It seeks to lessen day-to-day ministerial intervention in minor land purchases—over whether someone can purchase a piece of land to put a supermarket on, as the Minister said. I think this is a good bill. The Finance and Expenditure Committee members on both sides worked very, very hard to try to meet some of the concerns that New Zealanders put up. I think citizens in this country do not mind foreign investment if obligations are met by the investor. One of the things the committee has been at pains to do is to ensure that there are mechanisms in the bill that will meet that.

I conclude on one other point. There was a bizarre occasion at the committee when the Green member Rod Donald put up the following proposition. Say a foreign investor bought a flour mill—I think that was the example Mr Donald used—and then the market for flour went belly up. That investor was obligated to employ people to grind and produce flour, but could not meet those obligations because the market had gone belly up. Mr Donald said that if the foreign investor wanted to close the factory down and turn it into a different business—a shoe-making factory, for example—it should not be allowed. I have a couple of colleagues here who were on the committee, and I have to say that we found that proposition rather bizarre.

This is a good bill. It meets a lot of the concerns that New Zealanders have, and I support it.

CRAIG McNAIR (NZ First): In speaking in the third reading debate of the Overseas Investment Bill, I point out to the House that apart from the Government, which has to keep its numbers up, New Zealand First is the only Opposition party that has been keeping its numbers up and it is the only Opposition party that is truly passionate about fighting against the Government on this bill. The National Party has been voting at about 19 or 20 all day long. The Greens, ACT, and United Future are voting down at about five. It is just ridiculous that they get up in this House and say how passionately they are against this bill in so many ways. The National Party, which has been saying how bad the bill is, went and voted for it. What they are doing—and my colleague Dail Jones alluded to this earlier—is positioning themselves for a coalition. The National and Labour parties are showing New Zealand that they really are together on these issues and that they really are in unison as far as foreign ownership is concerned. The chairman of the Finance and Expenditure Committee, Mr Clayton Cosgrove, has not been here all day as we have been speaking to this bill. He is in the same boat as the other parties and is just as bad as the other parties that were voting down—

Simon Power: I raise a point of order, Madam Speaker. I know that Mr Cosgrove does not need my assistance on these matters, but it is completely contrary to the Standing Orders for a member to refer at any time to the absence of any member from this Chamber. The member should be reminded of that.

Madam SPEAKER: I thank the member. He is quite right on that. Perhaps the member would like to address the bill.

CRAIG McNAIR: I appreciate your ruling, Madam Speaker, as far as that is concerned, but I felt I was addressing the bill in the sense that New Zealand First is the only party that has voted consistently with its full numbers all day long. It has been putting its money where its mouth is.

Gordon Copeland: I raise a point of order, Madam Speaker. I know that in this Chamber the convention is that we cannot question a member’s word, but it will clearly be recorded in Hansard, of course, that United Future has consistently voted 8, which is our number of members, all day.

Madam SPEAKER: That was not a point of order, but it was an interesting point of information. Maybe we could get to the substance of the bill, if the member would like to continue.

Peter Brown: Speaking to the point of order—

Madam SPEAKER: I have ruled on the point of order, but if it is a new point of order—

Peter Brown: I raise a point of order, Madam Speaker. I just draw the House’s attention to the fact that the honourable member is not in the Opposition—he actually supports the bill.

Madam SPEAKER: I am sorry; this is getting a little silly. Let us get on with the substance of the debate please.

CRAIG McNAIR: In terms of National and Labour—Tweedledumb and Tweedledumber—being the same and joining together in coalition on this issue, I have to say they are not voting together just on this bill. The Hon Dr Nick Smith from the National Party has put up a member’s bill—it is in the Local Government and Environment Committee at the moment—that basically makes the same amendment that David Parker has tried to implement into this bill. David Parker probably agrees with me on that. It is basically the same issue. That was one issue in this bill that National said it would vote against, but a member of National has put up a bill, which National has voted for, that makes basically the exact same amendment that David Parker has put up. [Interruption] I say to Mr Parker that New Zealand First voted against that. New Zealand First does not change its position for political expediency. We do not do those kinds of things. Mr Parker put forward the amendment, probably after the call-up from Michael Cullen and the spin doctors up on the ninth floor. They would have said that Labour was in trouble on this bill and that they needed to put their heads together to make it at least look as though they were trying to be tough on foreign ownership and trying to protect New Zealanders and New Zealand’s interests. They decided to have a look at Nick Smith’s bill. David Parker thought he would tweak it a little bit and tinker with it so that it could be slightly different, then Labour chucked that in this bill. It is quite ironic that National and Labour—Tweedledum and Tweedledee—are joining together and doing the same thing they did in the 1980s and 1990s. It is just like when they jointly sold $16 billion worth of State-owned assets and $10 billion per year in profits went overseas. The National and Labour members think that that was a great thing for New Zealand.

I want to say one other thing about David Parker’s amendment. Whether or not one agrees with the amendment—Richard Prebble will probably agree with me; he can tell me whether he does or whether he does not—the fact is that Labour should have decided whether it would let foreign investors into our economy or buy certain pieces of land. It should have made up its mind and decided—yes or no. But it did not. It has tried to find this halfway house—this kind of “Mugabe amendment”—and say to foreigners that they can come in and buy our land but that the Government will take a little bit of it back. It should decide—yes or no. That is what I am saying. That is what this Government has tried to do. That is what the National Party is trying to do with Nick Smith’s bill. National members are trying to say that they do not agree with this, but they do, because they have shown their true colours in Nick Smith’s bill.

I want to highlight another issue. It takes us back to the first reading debate, when the Labour member Dover Samuels, the member for Te Tai Tokerau, talked about this great utopia, this great, amazing thing, that is going on in Northland. Foreigners are coming in and buying golf courses up in the far north. He was saying how great it is, because they are employing Māori to mow the lawns and cut the trees and hedges. He thought that that was a great thing. As I was hearing that, I could not believe it. Labour wants to make New Zealand a little Mexico. That is what this Government wants to do. This Government, along with the National Party and other parties in this House, want to subject the people of the far north—the people whom Dover Samuels represents—to being just the hired help. That is what they want to do. That is just what happens in Mexico City.

I flew into Mexico City myself quite a few times a few years ago. We saw Mexicans running around in their little Coca-Cola vans, and big, beautiful Coke signs were all around the place. Those Mexicans were earning 50c an hour—and where did the money go? It went straight back to the United States, where the wealth is. That is what this Labour Government and the National Party—Tweedledumb and Tweedledumber—want to do. That is what they are proving with this bill. They are showing it to the people of New Zealand. The Government has come up with some stupid amendment—some “Mugabe clause”. It is in the name of Michael Cullen, but we know that David Parker pushed it. It is some kind of “Mugabe clause”—

Madam SPEAKER: I am sorry; I must intervene here. I understand that offence has already been taken at a reference to Mugabe in a previous speech in the debate. I ask the member to withdraw that.

CRAIG McNAIR: I withdraw. I am trying to say, without using the exact name of that person, that Labour is basically trying to—

Hon Richard Prebble: I raise a point of order, Madam Speaker. I am sorry, but I am having great difficulty understanding that particular ruling. The member said that the amendment was a “Mugabe clause”. Are we protecting Mr Mugabe by not using that phrase because he is another member of the Commonwealth? Is that the reason for the ruling?

Madam SPEAKER: No, the reason for the ruling is that previously in this debate offence was taken by a member at a reference to Mugabe, and the member who made that other reference was asked to withdraw it. So in the interests of consistency, it seemed to me that that was appropriate.

Hon Richard Prebble: I raise a point of order, Madam Speaker. It is a new point of order. I would really like you to think about it, because it appears to me that one can describe a clause of a bill in the strongest possible terms. It seems to me that a member could describe a clause as being a “Mugabe clause”, and that it would not be out of order to say that an honourable member is supporting a “Mugabe clause”. What would be out of order is to say that an honourable member is a Mr Mugabe, or is a Nazi, or something. But to say that the clause is a “Mugabe clause” appears to me to be valid. I raise this because I think it is quite important to be able to do that. In fact, I disagree with nearly all of Mr McNair’s speech except the statement that the clause is a “Mugabe clause”, and I think the honourable member should be allowed to say that it is.

Madam SPEAKER: I thank the member for that comment. If Mr McNair had just left it at that, it would have been fine. But he linked the remark with a specific member, and that member had previously objected to that reference. If Mr McNair had just left it at that, you would be quite right, and I would not have intervened. I ask the member to continue.

CRAIG McNAIR: This is the kind of outrageous bill we are talking about. I want to finish up with what United Future and Labour voted for in the commentary on this bill, which states: “The majority does not consider it necessary that all of the overseas investors involved in a particular transaction have relevant business experience and acumen.” Further down, it states: “Such an appointment may be made to recognise local customary roles and traditions,”. This is the kind of craziness that we find in this bill. There are no rules. The Government does not care who comes in. They will find any excuse to let whomever in. That is what this Government is all about. That is what this Government and the National Party—the coalition parties, Labour and National—are doing with this bill. New Zealand First says it is outrageous.

DAVID PARKER (Labour—Otago): It will take less than 30 seconds to show the illogicality of the previous speaker’s statements. He criticised amendments to the bill that would have imposed preconditions on eventually permitted sales to overseas parties as being improper, but he backs the total prohibition of the same sales. New Zealand First backs the total prohibition of sales of rural land to foreigners, yet it opposes the imposition of conditions relating to access. The two positions are irreconcilable. That took 30 seconds. I support the bill.

Hon RICHARD PREBBLE (ACT): I am sorry that Mr Parker did not take longer. It is not often that one gets an opportunity to speak at one’s own funeral, and I think he should have taken it.

Jill Pettis: Oh!

Hon RICHARD PREBBLE: Oh, this bill most certainly is Mr Parker’s funeral. Here is a member who is so ideological he does not understand what is in the best interests of his own constituents. I do not know whether Mr Copeland would like me to quote him, so perhaps I will not, but I will say that other members have questioned whether Mr Parker is aware of the fact that property values in his electorate have gone up because people have been able to sell their land to whomever they want. The passage of this bill will damage not just one person who was unable to put through a property sale; it will damage the value of every property in Central Otago. We need to ask on whose behalf Mr Parker thought he was acting. That is his first problem.

His second difficulty is that he was prepared to support an amendment whereby the State would take away property without paying compensation. That is one of the criticisms that is made of Mr Mugabe. Indeed, I am sure Mr Parker is aware of that, and I am certain that when it comes to Zimbabwe he is strongly opposed to the actions of Mr Mugabe. That is the contradiction that has been drawn to his attention. He has managed with this bill to offend every single constituency. He has offended the liberals, the conservatives, and those who own property—he has managed to offend everyone. I understand that the National Party has a rather good candidate in his electorate. I cannot remember her name, but I am told she is pretty good.

Brian Connell: Jacqui Dean.

Hon RICHARD PREBBLE: Her name is Jacqui Dean. I am sure she would not take just 30 seconds. Then again, given Mr Parker’s position, 30 seconds was probably the longest he could speak without making a further fool of himself.

David Parker: 1.8 percent.

Hon RICHARD PREBBLE: The member thinks that the truth of a proposition is in its polling numbers. If that is so, then he will accept his defeat with grace, will he not?

Let me turn to the bill itself. Firstly, the Minister of Finance is correct in saying that some provisions in the bill bring about some liberalisation. The law at present requires Ministers to plough through proposals that everyone knows will be agreed to. Who thinks a supermarket in Dargaville is a bad thing? Only someone who does not live in Dargaville or in another area without a supermarket would think that not having one was a good thing.

Brian Connell: Woolworths did.

Hon RICHARD PREBBLE: The supermarket operator’s opponents may object, but apart from another supermarket operator, everyone would agree that such a proposal is desirable. It is desirable to have a law that does not involve that sort of nonsense. But having said that, I must say that a great deal of this bill is completely irrational. The ACT party finds itself opposing the bill not for the reasons given by New Zealand First, which are, frankly, xenophobic—

Rod Donald: I’m not.

Hon RICHARD PREBBLE: The Green member interjects—and I am not objecting to that—to say that he is not xenophobic. I hate to break it to him but, in fact, the Green Party has expressed exactly those sorts of sentiments. I join with Mr Trotter in saying that it is a great disappointment to see that a party that was elected to this Parliament as a green party on environmental issues has decided that it wants to keep itself here by making ridiculous xenophobic statements against foreigners and suggesting that foreigners, and foreigners alone, are somehow an attack on the New Zealand environment.

I say to Mr Donald that overseas investors actually have a better record than New Zealanders on a whole range of things. Let me give just one example, which New Zealand First may identify with. We had a case known as the wine-box case in which a number of companies entered into a number of interesting arrangements to get out of paying taxes. Not one of those companies was an overseas company. All of them were New Zealand companies.

Gordon Copeland: Including State-owned enterprises.

Hon RICHARD PREBBLE: Of course—State-owned enterprises are well known for trying to avoid tax. When I was the Minister for State-owned Enterprises I discovered that a number of State-owned enterprises had gone into the sorts of tax arrangements that made the wine box look like nothing at all.

The point I am making is that overseas investors tend to be much more careful about obeying the law. There are some quite logical reasons why they should be. Just because a large number of submitters came before the Finance and Expenditure Committee and said that overseas investors do not obey the law does not make it true. Repeating a lie does not make it true. The evidence shows that overseas investors follow our laws. The evidence shows also that New Zealand is a much wealthier country today as a result of overseas investment. Dr Cullen is absolutely right—New Zealanders do not save enough. If we were to follow the logic of New Zealand First and the Green Party, this country would be much, much poorer today. I tell Mr Donald that there is no doubt about that at all.

Rod Donald: I agree.

Hon RICHARD PREBBLE: Mr Donald now says we should save more. He thinks that by preventing overseas investment coming here, somehow we will be able to pull ourselves up by our own bootstraps. That is nonsense.

Firstly, the ACT party is opposed to restrictions on private property. If one owns a property, one ought to be able to sell it to whomever one chooses, not just to those to whom Mr Donald and Mr Peters think it should be sold.

The second thing is this. We already have in this country a Securities Commission, monopolies laws, and a Companies Act. We have no shortage of regulations and controls that exist on investment. No case has been put up by any member, including those from the Government or the National Party, as to why there should be extra restrictions on people just because of their passport. No such argument has been raised, and that is why the ACT party is totally opposed to the bill.

We can see absolutely no reason for it, and it is a matter of regret that the bill can go through only because the two old parties support it—for electoral reasons, I think, not because they believe it. Dr Cullen does not believe in the bill and John Key certainly does not believe in it. The bill will go through because the two old parties looked at the polls and saw how well Mr Peters does in his anti-foreigner rants—helped by the Green Party, which is disgraceful in the case of that party, because at least it is a party that claims to represent principle; Mr Peters never hides the fact that he is a straight-out populist. The two old parties are pandering to the fact that there are many people in the country who have an irrational fear of foreigners. Shame on both those parties.

That is the reason why the ACT party is voting against the measure. We do not actually need it.

ROD DONALD (Co-Leader—Green): The Green Party is opposed to the plans of Labour and National to make it even easier for foreign investors to buy up our land, our buildings, and our businesses. We are not alone. Most New Zealanders remain opposed to the sell-off of businesses like Telecom New Zealand and Contact Energy to foreign investors. Most New Zealanders can see what a mess our rail network ended up in after foreign investors milked it dry. Most New Zealanders are not happy that more and more iconic land such as Young Nicks Head is being bought up by foreign investors who treat our country as a plaything. Young farmers are upset that the dream of owning their own farm is receding, because increasing overseas investment means farmland is being priced out of reach and beyond its agricultural earning capacity. Holidaymakers are finding that their favourite camping spots at the beach are no longer there because foreign investors have bought them up and built their mansions where Kiwis used to play. First home buyers are being deprived of their dream of owning their own home, because foreign investors are outbidding Kiwis at the bottom end of the property market as well as at the top.

So much for Labour’s ownership society. Any assistance the Government provides first home buyers fades into insignificance when one considers that property purchasing power, which is measured in terms of average house price versus average wage, is half what it was 25 years ago. That is because foreign capital has artificially inflated house prices, and that foreign capital has also driven up New Zealand’s current account deficit, which has made mortgage interest rates 1 to 2 percent higher than they otherwise would be. This double whammy is a direct result of the liberal foreign investment regime of National and Labour.

It is extraordinary that this Labour Government is proud that New Zealand has such a liberal regime. Dr Cullen said so in New York last November. That position is in stark contrast with the statement of Labour leader, Helen Clark, on 4 June 1995. Then, she said: “Labour would be strongly opposing the National Government’s efforts to liberalise restrictions on the foreign purchases of New Zealand land.” She also said that the Government of the time—a National Government—was completely out of touch with the strong views of the overwhelming majority of New Zealanders, who considered that encouraging more foreign purchases was unacceptable. As far as the Green Party is aware—and that is backed up by the 7,000 people who signed our petition calling for tighter rules on foreign investment—New Zealanders are just as opposed to increasing land sales to foreign buyers as they were 10 years ago. Now it is the Labour Government—not a National Government—that is out of touch and is pushing an unacceptable agenda on to the public.

We can only speculate—and I will in a minute—as to what has induced Miss Clark to change her mind so radically on this matter. In the Green Party’s view, she was right then and she is wrong now. Indeed, there is even more reason to be opposed to increasing foreign ownership, as the last 10 years’ bitter experience can attest. Only yesterday, Dr Cullen admitted to the Finance and Expenditure Committee that it would cost the taxpayer much more than the $200 million already allocated to fix the rail network, which was left in a decrepit state by its former foreign owners, who ran down the network, milked all the profits they could, and took the money and ran. Surely, that costly experience should be enough for Labour to understand that New Zealand’s foreign investment rules are not tight enough.

The so-called good-character test is a sham. Foreign buyers of businesses should have to meet at least the same national interest test that foreign land buyers need to pass. If companies like Juken Nissho had to sit even the weak national interest test we have now, they would fail. Juken Nissho operates wood-processing plants in Kaitāia, Masterton, and Gisborne. It has a horrifying health and safety record. It had 269 serious harm notifications from 1995 to 2003, and 11 convictions under the Health and Safety Act, with fines ranging from $6,000 to $10,000. In 1997 Juken Nissho was prosecuted for exceeding permitted emissions at its Kaitāia plant. There are numerous complaints from neighbours about the effect on their health. An analysis of Juken Nissho’s New Zealand accounts from 1999 to 2003 shows that it reported losses and paid no tax. It was totally debt-financed, and under normal circumstances it would be insolvent. Many of the company’s transactions appear to occur through related parties, and may provide a way to shift profits offshore and to avoid tax.

So why does Labour want more investment from companies that behave so badly? Why does Labour refuse to introduce a code of corporate responsibility that would hold the Juken Nisshos of this world to account? A responsibility code for foreign investors is neither a radical idea nor a new one. New Zealand is already a signatory to the OECD guidelines for multinational enterprises. Indeed, our Government has undertaken to promote the guidelines, although there has been little noticeable activity. This is unfortunate, because the June 2000 revisions contain, in the words of Australian Treasurer Peter Costello, who was chairman of the ministerial committee, “far-reaching changes that reinforce the economic, social, and environmental elements of the sustainable development agenda.” Given that the Government endorsed those OECD guidelines at the time, the Greens believe that the Government should incorporate them into even more explicit legislation that must also include penalties—and not the light-handed ones in this bill—for corporations that do not meet their responsibilities. Those penalties should be serious, so that corporations that do not meet their responsibilities are held to account.

Labour will not do what most of its own supporters want because it wants to keep onside with the big boys’ club, rather than with the citizens of New Zealand. That is clear, because we know from the General Agreement on Trade in Services negotiations that a major demand of our trading partners is for us to scrap the Overseas Investment Commission. That is exactly what the bill does, and it will allow foreign firms and individuals almost unrestricted access to New Zealand property and businesses. So the big boys’ club will be happy, as will the United States, which made it clear in its free-trade negotiations with Australia that it wanted to reduce or eliminate restrictions on overseas investment. If the United States wanted it for there, it will want it for here as well, which means that Labour is in a better position to do a deal with George Bush and to cuddle up to the Americans for a free-trade deal.

In the meantime, we should not forget that foreign investors already control half of the New Zealand sharemarket, that 41 of the top 100 companies operating in New Zealand are 100 percent foreign-owned, that over 1 million hectares of land is already foreign-owned, including at least 157,000 hectares of high-country leasehold, 2,720 hectares of offshore islands, and 57 kilometres of coastline. Those figures do not disclose ownership below the threshold, or undeclared purchases. As a former Overseas Investment Commission staff member, Mark Dunlop, said in his submission, his experience has left him “with the distinct impression that there is widespread evasion of our overseas investment rules relating to land.” That revelation highlights the need for a proper monitoring regime, so that the true extent of foreign ownership is disclosed. We know from Statistics New Zealand that foreign investment in New Zealand now exceeds $208 billion, and that the cost of that investment in the form of interest and dividends reached $8.9 billion for the 2004 calendar year. It is no wonder that New Zealand’s current account deficit was $9.3 billion for the same period. That is unsustainable.

I do agree with Dr Cullen on one thing—we Kiwis need to increase our savings rate if we are ever going to reverse that appalling situation, and get our economy out of the red and back in the black.

In closing, I have to say that for all New Zealand First members’ bluff and bluster, they acted like lambs when it came to this bill. They did not put up any of their own amendments, and they did not support the majority of my amendments. The Green Party proposed improving the scrutiny on foreign investment by changing the rule from 25 percent ownership to 10 percent; New Zealand First opposed that. We wanted to extend the coverage to aquaculture; New Zealand First opposed that. We wanted to reduce the threshold from $100 million to $10 million; New Zealand First opposed that. We wanted to bring in Crown pastoral leases; New Zealand First opposed that. We wanted to extend the national interest test to significant business assets; New Zealand First opposed that. We wanted to bring in import substitution as a criterion; New Zealand First opposed that. All in all, New Zealand First is all bluff and bluster.

GORDON COPELAND (United Future): I would like to use my third reading speech on the Overseas Investment Bill just to tie up a few loose ends from my point of view.

The first I would like to mention is that during the Finance and Expenditure Committee’s consideration of this bill, I spent quite some time wrestling with the good character test set out in the bill—namely, that one of the criteria that has to be satisfied is that foreign people who are buying business assets of more than $100 million in this country are of good character. I wanted to explore the possibility of putting something in the bill that would actually stop a repeat of the disastrous New Zealand Rail sale. In other words, I wanted to think of a way whereby we could maybe safeguard ourselves, to ensure that we would not sell our large companies again to investors who were merely asset-strippers.

The officials working on the bill were very patient in that regard. They went away and got a lot of information. They came back and they told us about our World Trade Organization obligations, our various free-trade obligations, and so on and so forth. But the clincher for me in the end, of course, was just to realise, as the Hon Richard Prebble pointed out, that the problem with the New Zealand Rail sale was not that it was made to overseas buyers or foreign investors but that it was made to a consortium that included Fay Richwhite—New Zealanders. It was Fay Richwhite—and I say this under the privilege of this House—that then led the charge, disgracefully, to strip out every single dollar that New Zealand Rail had, and to leave our rail system in disarray to the great detriment of New Zealand and its citizens. It was a disgraceful action, but it was actually perpetrated on New Zealanders by other New Zealanders who had given in to unbridled greed, and who were quite prepared to make money at the expense of their fellow citizens. I believe that that was a disgraceful episode in New Zealand’s history. It was the unacceptable face of capitalism, yet it was not done by foreigners but by New Zealanders.

Rod Donald mentioned that 41 of our top 100 corporations in this country are foreign-owned—

Rod Donald: 100 percent foreign-owned.

GORDON COPELAND:—100 percent foreign-owned, and I would like to ask him whether there is any problem with that. Are any of those companies asset-stripping? I think most of them are doing a very, very good job. They are good corporate citizens and they are making a huge contribution to this country. We do not need in any way to restrict their operations.

I want the New Zealand First members to think this through for a moment. Why do they conclude that people born in this nation somehow have superior characters and business ethics to people from overseas? Really, when I analyse it, I tell those members that the bottom line is that it is xenophobia—it is xenophobia pure and simple, and they cannot escape that conclusion.

Ron Mark: I raise a point of order, Madam Speaker. Given that the member has just specifically addressed his question to New Zealand First, could I ask, through you, that he yield the floor and allow me to answer that question?

Madam SPEAKER: There will be an opportunity for New Zealand First to respond. That is not a point of order; it is a debating matter.

GORDON COPELAND: As we all know in life, sometimes the truth hurts. The other thing I really want to recognise, though, as a New Zealander, is that one of the great things about growing up in this country and being a New Zealand citizen is the freedom we have. We have the freedom to leave this country at any time. I have the freedom to leave here if I want to, to go overseas and live there, and, hopefully, to buy a home there, and so on and so forth. That is something we value when it comes to us, but we do not seem prepared to extend the same freedom to other people.

When we think about it, we realise that a restriction on freedom like that in any part of the world is a danger to world freedom, world democracy, and basic fundamental human rights. We saw that kind of thing existing in the world under communism, where those countries built walls to keep their people in. It exists in Cuba today. Cubans cannot go overseas, and until quite recent times most Chinese could not go overseas. That is actually what we are talking about here—the basic, fundamental human right for people to be able to travel freely, invest freely, and interconnect as equal human beings with equal dignity, and I resist very, very strongly any attempt in this House or in New Zealand outside this House to categorise people on the basis of nationality, origin, race, colour, or language. Such categorisation is seriously wrong and needs to stop. I hope one day that more of our fellow citizens will come to that simple conclusion, and will start to treat all people in the world with the dignity and respect that is their inherent, God-given right.

I want to make another point, too, which I think was unconsciously made by Rod Donald. He said this bill is such a terrible animal that the day could come when people from overseas could buy up all the assets New Zealand has. It just showed me how much he misunderstands the process of buying and selling assets. Because of course, if that were to happen, the net result would be that we New Zealanders would be the wealthiest people on the face of the earth. We would have sold our assets at top dollar to other people, and would have greater wealth and huge assets. I make that point because people seem to misunderstand that if we try to stop foreign investment, at the same time we deny New Zealanders the right to get a decent price for their properties. There are two sides to the equation, and it is time, I think, that the Greens in particular, and New Zealand First, woke up to the fact that when one buys and sells there are two parties to the process. It is mutually beneficial, which is why people buy and sell by agreement, and the funds that swap hands are going from out of the pockets of foreigners into the pockets of New Zealanders. How that can be bad for this country is beyond me to understand. It simply leaves me to say that the analysis and understanding that go into that opposition are shallow in the extreme.

One other loose end I would like to mention is to do with the Hon Nick Smith’s Overseas Investment (Queen’s Chain Extension) Amendment Bill, which arose out of the unsatisfactory situation on D’Urville Island. As Clayton Cosgrove has pointed out, this bill ensures that that unsatisfactory situation will not be repeated in the future. It brings in a very, very strong enforcement regime, with powers given to the court, powers to set aside contracts, etc., to ensure that non-resident New Zealanders who buy sensitive land in this country will be forced to carry through with the conditions that apply to that privilege. I think that is a very, very good move, and I think that the situation that arose in D’Urville Island was totally satisfactory. We did not have legislation previously with enough teeth to ensure that people who undertook obligations were forced to actually carry them through. There were no consequences of departing from the terms of the approval given, and that has now been fixed in this bill. If we really think it through, we know that it makes Nick Smith’s member’s bill redundant, so we should bring it back to the House and discharge it. The problem he identified—quite correctly, by the way—has now been fixed.

BRIAN CONNELL (National—Rakaia): Here we are on “14 June” at 9 o’clock, and I thank the Government for taking us into urgency because it enables the National Party to build the collegial spirit that is so important when a party is about to go into Government. National members are very appreciative of that opportunity. We support this bill for the reasons I am about to outline. I cannot understand the attack that was made upon me by Gordon Brown.

Hon Maurice Williamson: He’s the Deputy Prime Minister of Britain.

BRIAN CONNELL: Mr Brown, I apologise—Peter Brown. Members can see how badly he has wounded me; I cannot even remember the member’s name. However, I said I could not understand that attack, and I still struggle with that.

Peter Brown said I had built an argument that anyone can come to New Zealand regardless of any criteria, invest in this country, and then take those resources out of this country and suck the country dry. I refer the member to my Hansard record, which will specifically state that I welcome foreign investment into this country, subject to it meeting strict criteria, and those criteria were set down in this bill. That is why National agrees with the thrust of this bill. It was not lost on me that Peter Brown was building an argument that there should be no foreigners or foreign capital coming into New Zealand. There he was, espousing that in his strong English accent. The irony of that might have been lost on the members of New Zealand First, but it certainly was not lost on me. I notice that Dail Jones has not jumped up to make an argument either, given that he was born in Pakistan, as I recall. Of course, members of the National Party are not as difficult to deal with as some members of New Zealand First. We welcome the New Zealand First members to New Zealand and to Parliament, because their diversity adds to our rich tapestry.

Some of the arguments I have heard from members who are opposed to this bill remind me of Luddites who would like to turn the clock back. People who want to come to New Zealand to invest—

Peter Brown: I raise a point of order, Madam Speaker. The honourable member opened his speech by attacking Gordon Brown, I think it was, the Chancellor of the Exchequer in Britain, but he then went on to say that in very short order he would explain why National supports this bill. He is running out of time, and we are sitting here keenly waiting to hear that.

Madam SPEAKER: No, that is not a point of order. I do not need any assistance with this. [Interruption] That is not a point of order, either, but I am sure the member is about to get to the bill.

BRIAN CONNELL: I will now turn my attention to the bill. The bill will guarantee that New Zealand’s assets will be protected, not just for the benefit of the current generation but also for future generations, because it will continue to build on New Zealand’s reputation for encouraging foreign investment in this country. Those members who would build the argument that foreign investment is not important, or that it has not made a contribution to New Zealand, really do not have a very good understanding of economics.

Arguments were built that New Zealanders were missing out on the ability to buy high-country stations. As Dr Cullen pointed out—and I do not find myself agreeing with him very often, but he was right on this occasion—how many ordinary blokes can run down to the South Island and buy a high-country station? Very few ordinary blokes can. A few people get together, form syndicates, and buy high-country stations, but very few ordinary people can do that. There are some clear exceptions, and they were detailed in my earlier calls when I spoke on this bill.

Ron Mark: The Hon Lockwood Smith could buy one!

BRIAN CONNELL: I would not say he is an ordinary bloke. He is a strong contributing member of the National Party, which does not make him ordinary—it makes him outstanding. The point I want to make is that despite who was buying high-country stations in New Zealand, before foreign capital took over some of them, the stations were underperforming. They were hardly economic units. In short, they were undercapitalised. I say to Mr Mark that he and I know very well that a farm cannot be turned into a productive unit unless there is sufficient capital. As a result of foreign capital being introduced to some of the high-country stations, they are now strong contributors to the local community. They are employing not just one or two people but significant numbers of people, and are contributing to not only the farming economy but also the tourism economy of the area, because they have been able to diversify. That is what foreign capital does for the high-country farming areas around Canterbury, for example.

I ask this question of members: where has the hysteria come from that says it does us harm when people come from overseas and buy our land? If one looks at most examples—

Craig McNair: $10 billion a year going out of New Zealand.

BRIAN CONNELL: We have listened to the member make a fool of himself, so he should just be quiet for a while. If one looks at most of the examples of land purchases, one sees the very converse of that takes place. Foreign investors come into New Zealand, risk their capital, and as a consequence jobs are created, infrastructure is developed, and no harm is done. The arguments presented by some members tonight are xenophobic. I am afraid that knowing some of those members as well as I do, I find it difficult to say that about them, but in this case I think it is very, very true.

Let us also talk about the idea that people are coming to this country and closing up high-country properties. The very converse of that is happening, in fact. The people who close the gates in high-country stations are members of the Department of Conservation, not foreign investors. Another example that Michael Cullen furnished was that of the singer Shania Twain. What has she done for access to the environment for people around Cromwell? She has created walkways and opened up that environment, so people have more access to that countryside than they ever had before.

I just want to finish by drawing the House’s attention to the “Mugabe clause”. I termed it that, and I will not back off that one iota. That clause ran to 10 pages in this bill, and it suggested that the Government would annex private property from New Zealanders. I am not joking; that is what was being suggested. That in itself was bad, but even worse was that no compensation would have been offered at all. I ask members of this House to run the rule of fairness over that. Which Kiwi voters would have said that was fair? Very few. I do not hear barracking from the New Zealand First members now, because they know they could not get on to the hustings and say that they were defending that. It is simply not fair. Michael Cullen had to come to the rescue and introduce Supplementary Order Paper 376 in his name, which took right out of the legislation the “Mugabe clause” that his colleagues in the Finance and Expenditure Committee were trying to foist on to the people of New Zealand. That is why the New Zealand National Party was strongly opposed to the bill in the first instance. Only when that clause was removed did National say it would lend support to what was otherwise a very sensible and well-argued bill.

Madam SPEAKER: Before I call the next speaker, I would ask members to keep the level of chatter down a bit, please.

PETER BROWN (Deputy Leader—NZ First): I have to say that I do not know where that honourable member has been during this debate, because New Zealand First opposed that clause as strongly and as strenuously as the National Party did.

Hon David Carter: And you opposed everything else.

PETER BROWN: We did, but we certainly were not having that bill put through with that clause in it.

A few speeches ago, Clayton Cosgrove said that the average New Zealander does not mind foreign investment, as long as there are obligations.

Clayton Cosgrove: And they’re enforced.

PETER BROWN: Actually, he did not say that, but he is adding to it—and they are enforced. That is exactly New Zealand First’s position. We do not mind people coming here with suitcases of money, as long as they make a permanent commitment to this country to participate both economically and socially.

Hon Maurice Williamson: Did the member have suitcases of money when he came in?

PETER BROWN: No, I probably did not—I had a trunkful. We live in a world where investment does advance the country, but there are many organisations in this country. Let me name a few that have taken their money offshore—thanks, in large part, to the difficulties this Government imposes on them. Electricity lines companies cannot invest in electricity in this country, except in a modest way. So what are they looking at doing? They are investing in Australia—as are some of our power companies. Māori corporations—and my colleague Ron Mark will tell people more about this matter in some detail at some other time—are looking at investing offshore because of the difficulties in investing here. Private fishing companies are looking at investing offshore. These are New Zealand entities that are keen to invest in this country, yet this Government—helped by its old buddy, the National Party—wants to open the door and let in anybody with any amount of money, and they can then move out. They can leave the money and move out. The ACT member Deborah Coddington said this afternoon that she did not mind being a waitress in a cafe, and that it would do us all good.

New Zealand First stands for controls and restrictions on foreign investment. We oppose making it easier for foreigners to come into this country, leave their money, buy the businesses, buy our homes, and buy our land.

Hon Maurice Williamson: Tell them to leave the suitcases and go.

PETER BROWN: The member might make light of it, but this is a serious issue, and it will be an issue that the average New Zealander will show his or her support for come the next election. In the next few weeks, average New Zealanders will show just where their thoughts are.

Dr Cullen was so hard up in his attempt to substantiate his facts that he had to refer to the French manager of the Arsenal Football Club, as a poor example. He had to refer to Arsene Wenger, the manager of Arsenal, as a poor example. Arsene Wenger has made an absolutely fabulous commitment to Britain. He lives there, he has put his life on the line, and he is doing a fantastic job for a major football club. I thought that that was actually a poor example to give, when one is trying to illustrate where things are going wrong, because, in fact, they have not gone wrong in that instance. [Interruption] The members muttering away behind me have confused foreigners coming here with their money, with people coming here who want to stay and invest in the country. New Zealand First has no problem at all with anybody coming here—

Hon Ruth Dyson: What did you bring with you to New Zealand?

PETER BROWN: The member has asked a question that would take me too long to answer. [Interruption]

Madam SPEAKER: Let the member continue.

Hon Member: The member should answer the Minister for Disability Issues.

Hon Member: Did the member ship the money out of the country?

PETER BROWN: I will answer the member with a disability. Never have I shipped money out of the country for any ulterior motive. This is a serious issue, and New Zealand First is very strong on having restrictions on just anybody coming here to take over our businesses and our homes. It raises the cost of business in this country, the cost of homes, and the cost of land, and puts them beyond the reach of the average New Zealander. I think that much has been said in the debate on this bill, but after this bill goes through it will make it harder for New Zealanders to buy land, homes, and farms—and it is hard enough now. [Interruption] The member disagrees, but I can tell him that he has got it wrong. New Zealand First opposes this bill.

A party vote was called for on the question, That the Overseas Investment Bill be now read a third time.

Ayes 84

New Zealand Labour 51; New Zealand National 23; United Future 8; Progressive 2.

Noes 27

New Zealand First 13; ACT New Zealand 6; Green Party 7; Māori Party 1.

Bill read a third time.