Tuesday, 21 March 2006

Tuesday, 21 March 2006

Tuesday, 21 March 2006

Madam Speaker took the Chair at 2 p.m.

Prayers.

Questions for Oral Answer

Questions to Ministers

Energy, Transport, Climate Change Issues, Ministers—Confidence

1. Dr DON BRASH (Leader of the Opposition) to the Prime Minister: Does she have confidence in the Minister of Energy, Minister of Transport, and Minister responsible for Climate Change Issues; if so, why?

Rt Hon HELEN CLARK (Prime Minister): Yes; because they are both hard-working and conscientious Ministers.

Dr Don Brash: Why yesterday, and as recently as this morning, did the Prime Minister continue to have confidence in Mr Parker in those portfolios, and can we take if from her acceptance of his resignation this morning that her judgment yesterday was wrong?

Rt Hon HELEN CLARK: What the member can take from it is the old adage that if one acts in haste one repents at leisure.

Dr Don Brash: What message does the Prime Minister intend to send to New Zealanders when she protects the Cabinet position of Mr David Benson-Pope, who misled Parliament, but required the resignation of Mr David Parker, who has readily admitted his mistakes?

Rt Hon HELEN CLARK: I set out my views yesterday on the seriousness for an Attorney-General in making the mistake that Mr Parker did. After further consideration overnight, Mr Parker has determined that he should not hold any warrants.

Dr Don Brash: How can she have confidence in the Ministers she has appointed to those portfolios today when all the appointments involve recycling Ministers into portfolios in which they have failed previously?

Rt Hon HELEN CLARK: On the contrary, I have great confidence in both Ministers.

Jeanette Fitzsimons: Does the Prime Minister have confidence that her new Minister of Energy will implement the Speech from the Throne delivered last November and prioritise energy from renewable sources, given her recent comments to the press supporting coal-fired power stations?

Rt Hon HELEN CLARK: I have great confidence in the Minister of Energy. I also happen to believe that coal is part of the mix in the New Zealand power supply. In respect of that particular station, I have passed no view on whether it should proceed. I actually told the Southland Times that it was a commercial matter for the company.

Jeanette Fitzsimons: Does the Prime Minister have confidence that the new Minister of Energy will be able to turn round New Zealand’s current trend where renewable energy is decreasing every year as a proportion of electricity generation; and does she support reversing that trend so that renewable energy grows as a proportion of total electricity generated?

Rt Hon HELEN CLARK: Of course the Government, like the member, wants to see the proportion of renewable energy grow. Unfortunately, we are not living in eras of the past where any river could be dammed at any time to achieve that. It has to be done through the more difficult route of getting planning permission for things like wind energy, which has not proved terribly easy.

Jeanette Fitzsimons: When the Prime Minister said that New Zealand needed coal-fired power plants because the weather did not always come to the party, was she meaning the recent droughts in Canterbury and yesterday’s Cyclone Larry in Queensland; and will she be advising her new Minister responsible for Climate Change Issues that changes in the weather mean we should reduce our reliance on fossil fuels and take climate change more seriously?

Rt Hon HELEN CLARK: I would love to see us reduce our reliance on fossil fuels, but frankly, if it is a choice between New Zealanders going without power and having a coal-fired power station to give it to them, I know what I am going to choose.

Hon Dr Michael Cullen: Is there any evidence that periods in New Zealand of low rainfall and lack of wind can be entirely be ascribed to climate change?

Rt Hon HELEN CLARK: No, I would not have thought so.

Sue Kedgley: Why, if the Government is serious about reducing our carbon emissions to 1990 levels, is the Minister of Transport, and the Government, supporting the building of new motorways that will significantly increase traffic growth and, therefore, carbon emissions, as well as our dependence on oil?

Rt Hon HELEN CLARK: New roading is part of the mix of solutions to a number of the local transport difficulties. I also am one who has considerable faith in technology. I know other countries are considerably more advanced than we are with flexi-fuel cars, triflex cars, and bio-fuels, and I hope that is a road we will be able to go down in greater haste.

Rodney Hide: Will the Prime Minister deny to the House that she has received new facts since yesterday that caused her to reassess David Parker’s suitability to be a Minister of the Crown in her Government?

Rt Hon HELEN CLARK: I have not received any new information, nor about the member, today.

Question No. 2 to Minister

JEANETTE FITZSIMONS (Co-Leader—Green): I raise a point of order, Madam Speaker. I ask you to clarify whether there any circumstances where you will not permit the transfer of a question, or whether that is now an automatic right of the Government. The point of my question, question No. 2, was to ask the Prime Minister for clarification of her statement of support for coal-fired power stations in the interview with the press. The newly appointed Minister of Energy has no responsibility for those statements made by the Prime Minister, so I am asking your guidance as to whether this means that there are no conditions under which transfers will not be permitted.

Hon Dr MICHAEL CULLEN (Leader of the House): Madam Speaker, the Speakers’ rulings are very clear. Only in exceptional circumstances would a question that has been transferred be referred back by yourself. In this case, of course, the principal part of the question is in relation to a statement in the Speech from the Throne. The Speech from the Throne is not a personal statement of the Prime Minister; it is a statement of all the Government’s policy, including all Ministers within the Government.

Madam SPEAKER: I draw the member’s attention to Speakers’ ruling 138(3), which states: “Ultimately, the Speaker could refuse to permit a question to be transferred to another Minister for answer if the responsibility for a subject is so primarily held by a particular Minister as to mean that the transfer of the question would be an abuse.” I follow that Speakers’ ruling.

Question withdrawn.

Prime Minister—Speech from the Throne 1999

3. Dr DON BRASH (Leader of the Opposition) to the Prime Minister: Does she stand by the statement in the Speech from the Throne in 1999 that her Government would “restore public confidence in the political integrity of Parliament and the electoral process.”?

Rt Hon HELEN CLARK (Prime Minister): Yes.

Dr Don Brash: Does the Prime Minister believe that it was compatible with those lofty sentiments that either she or people working for her made a decision in the final weeks of last year’s election campaign to continue campaign spending, knowing that to do so put them in breach of the Electoral Act spending cap, thereby committing what the Electoral Act calls “a corrupt practice”?

Rt Hon HELEN CLARK: As I have advised the House before, I am not responsible for the Labour Party’s spending, and I will not answer such questions in the House. I have no idea how much the Labour Party spent.

Dr Don Brash: How has public confidence in the electoral process been restored by the party that is the Government of New Zealand cold-bloodedly breaking the Electoral Act campaign spending limits, and then relying on the police and Crown Law to once again let it off the hook?

Hon Trevor Mallard: I raise a point of order, Madam Speaker. I would like to quote to you a new authority on the Standing Orders. That person said that Helen Clark has no ministerial responsibility for the Labour Party. That is what Don Brash was quoted as saying yesterday. This is clearly a question that should go directly to the Labour Party. Don Brash has indicated that he cannot ask such questions in the House. He is quoted directly as making that statement, and now he has asked a question about something that is a Labour Party responsibility, not a parliamentary responsibility.

Gerry Brownlee: I suggest that that Minister, who is now very burdened with additional responsibilities, take a good look at the question. At the heart of this matter is a $500,000 spend straight out of the leader’s office, which Helen Clark does have responsibility for.

Hon Trevor Mallard: If the Leader of the Opposition had properly linked his supplementary question to that, the question could well have been valid. He did not do so.

Madam SPEAKER: I ask the member to please restate the question in a manner that is consistent with the fact that no member in this House is responsible for his or her party activities. So I ask Don Brash to please restate his supplementary question.

Dr Don Brash: Does the Prime Minister have concern about the fact that the police and Crown Law have let the Labour Party off the hook again, and does she have concern that this may undermine public confidence in the Government, in Parliament, and in the electoral process?

Rt Hon HELEN CLARK: I do not accept the premise in the question. The police press statement, of course, makes it quite clear that the police decided not to prosecute the National Party, either, for what many would have seen as a very clear breach of the legislation, and I can assure—[Interruption]

Madam SPEAKER: Members are entitled to be able to hear answers.

Rt Hon HELEN CLARK: I can assure the member that in the review of the Electoral Act, the Government will be paying particularly close attention to third party advertising, like that solicited by Dr Brash from the Exclusive Brethren.

Dr Don Brash: Did the Prime Minister see in the media statement released by the police last Friday any suggestion at all that the police had established a prima facie case against the National Party for a breach of the Electoral Act?

Rt Hon HELEN CLARK: Perhaps I could read from the police statement, which stated, for some curious reason, that the police could not attribute responsibility for the mistake in GST overexpenditure to either the National Party or its media buying agency.

Dr Don Brash: I raise a point of order, Madam Speaker. The Prime Minister at no point tried to answer my question.

Madam SPEAKER: The question was addressed. No member is entitled to a yes or a no or a direct answer. That is what the Standing Orders provide. We could change them, whereby we have only factual questions and factual answers, and I suggest members may like to think about that.

Rt Hon Winston Peters: Is the Prime Minister aware of any failure, in the past, to declare GST that has led to criminal charges and criminal convictions?

Rt Hon HELEN CLARK: I would think that it is almost certainly true that a failure to declare GST has led to charges and convictions in the past. But, of course, the police could not find anybody in the National Party who knew anything about GST—including, presumably, Dr Brash.

Hon Dr Michael Cullen: How could the Prime Minister make that last statement and find it credible, when the leader of the National Party is the very man who chaired the Government committee established to introduce GST in the mid-1980s?

Rt Hon HELEN CLARK: That is only because I accept—as I would hope Dr Brash would accept—that he was not personally in control of the finances of the National Party.

Dr Don Brash: How is public confidence in Parliament and the electoral process to be restored when, on three separate occasions now, the police and Crown Law have found prima facie breaches of the law made by Ministers in the Government, including the Prime Minister, and by the Labour Party, but have exercised a discretion not to take any further action?

Rt Hon HELEN CLARK: I suggest that the Leader of the Opposition take advice about what “prima facie” actually means. It does not mean that there is evidence that would stand up in court—unlike the evidence that stood up in court and saw two National Party front-benchers convicted in court: Dr Nick Smith of contempt of court, and Gerry Brownlee of assault. They seem to have no difficulty in sitting on the front bench of the National Party.

Rt Hon Winston Peters: Has the Prime Minister received any reports as to how it could possibly be that the police were not able to establish more than a prima facie case, given that the party the police were investigating on a question of a failure to declare GST is led by an economic genius who claims to have had an unblemished record as the head of the Reserve Bank, has a number of lawyers in its caucus who are paid to be the brightest legal minds in this Parliament, and also has the only trained economist in this country, namely the leader of the ACT party, as one of its abiding, compliant principals?

Rt Hon HELEN CLARK: It is indeed strange, particularly when the National Party does not appear to have made the same mistake in any previous election.

Gerry Brownlee: Does the Prime Minister accept that $446,000-plus of the Labour Party’s election overspend came directly out of her leader’s budget for the illegitimate practice of spending on the pledge card, and will she now pay it back?

Rt Hon HELEN CLARK: The Labour Party, like all parties, awaits the outcome of the Auditor-General’s report on expenditure from leaders’ funds. And, of course, this little recruitment pamphlet, which was paid for out of parliamentary funds and liberally distributed by the National Party through the election campaign, will no doubt be of interest to the Auditor-General, as well.

Rt Hon Winston Peters: Does the Prime Minister remember when GST first came into this country’s law—how many years ago it was—does she know how many business people or, for that matter, contractors or people who are engaged in any sort of trade or deal know the law, and has she received any reports as to whether old age may lead to someone forgetting what the law is?

Madam SPEAKER: That is unnecessary.

Rt Hon HELEN CLARK: I would have thought that after 20 years of GST being in operation, ignorance of its existence is a poor excuse.

Gerry Brownlee: Can the Prime Minister tell the House whether Mr Peters will have to pay GST on the $40,000 he owes Bob Clarkson and has not yet paid?

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. All supplementary questions must bear some relationship to the primary question. The second thing—

Madam SPEAKER: No, I am sorry—long bows have been drawn on this particular question.

Rt Hon Winston Peters: I have spoken only one sentence—I have not finished.

Madam SPEAKER: Please be brief.

Rt Hon Winston Peters: What I really want to say to the National Party is this: laugh now, but cry later.

Madam SPEAKER: It was not worth waiting for.

Gerry Brownlee: I raise a point of order, Madam Speaker. I have asked a question of the Prime Minister.

Madam SPEAKER: I do not recall the question. The member got the call but did not actually ask the question.

Gerry Brownlee: Yes, I did.

Madam SPEAKER: Sorry—will the member please repeat the question.

Gerry Brownlee: Can the Prime Minister tell the House whether Mr Peters will have to pay—

Madam SPEAKER: That is where we are going again.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. The member has been around long enough to know that he should not trifle with the Chair.

Madam SPEAKER: This matter can be easily settled. As the member knows, one cannot seek a legal opinion through a question in the House. The member was seeking a legal opinion. He may rephrase his question.

Gerry Brownlee: I raise a point of order, Madam Speaker. I asked the Prime Minister whether she could advise the House. The Prime Minister said in her previous answer that after 20 years of GST, there should be no ambiguity about its effects. She has been answering questions about GST. I think my question is quite reasonable.

Madam SPEAKER: The way the member phrased his question was to ask quite specifically whether GST would be payable in a particular set of circumstances. That was, in effect, to seek a legal opinion.

Gerry Brownlee: OK, I will rephrase the question.

Madam SPEAKER: The member will ask a further supplementary question?

Gerry Brownlee: No.

Madam SPEAKER: I am afraid I ruled the previous question out of order.

Gerry Brownlee: I raise a point of order, Madam Speaker. If you had ruled the question out of order, you would not have taken those trifling points of order from Mr Peters when it was originally asked. I think you are being extremely unfair and are now costing us the opportunity to ask the question.

Madam SPEAKER: I ruled that those points of order were out of order. They were not supplementary questions. If they had been put as questions, they also would have been ruled out of order. I do not want any further discussion on that point. The member knows that he cannot seek a legal opinion. If he wishes to rephrase the question in another supplementary question, he is perfectly entitled to do so.

Gerry Brownlee: I raise a point of order, Madam Speaker. I would like you to look at the Hansard later today and explain to me how my question sought a legal opinion. It was a simple question about whether GST would be payable. Of course we are talking about circumstances; that is exactly what the Prime Minister has done in her answers today.

Madam SPEAKER: I am happy to look at it. Mr Hide, do you have a supplementary question?

Rodney Hide: Yes, I am sorry—I dozed off there.

Madam SPEAKER: I thank the member.

Rodney Hide: I ask the Prime Minister—[Interruption] Is it not great that Mr Peters, who cannot make his point when he asks a question and cannot make his point when he raises a point of order, wants to sit on the sideline—

Madam SPEAKER: Would all members in the House please settle. You know that when a member is asking a question, there should be no comment. You are all on a final warning.

Rodney Hide: Would the Prime Minister care to take the opportunity in the House to attempt to restore some integrity to herself and to her Government, by explaining—when the facts, by her own admission today in the House, did not change—how matters went from yesterday morning, when she was able to attack Investigate magazine for running a smear campaign and say that there were no questions to answer, to David Parker having to stand down as Attorney-General late yesterday afternoon but being able to stay on as Minister of Energy and Minister of Transport, and then this morning having to resign entirely his portfolios when, by her own admission, there was no change to any of the facts that she had at her disposal?

Rt Hon HELEN CLARK: I am very happy to oblige the member. I first heard of the matter at 6.30 yesterday morning. I immediately instigated inquiries among my staff and Mr Parker. That led to a decision by Mr Parker in the course of yesterday to resign as Attorney-General. He contemplated the matter further overnight, and came back to me this morning. Precisely 28 hours after I first heard of the matter, Mr Parker resigned all his portfolios. I believe that period of time was appropriate. A man’s career was at stake, and I believe he was treated fairly.

Dr Don Brash: Does the Prime Minister accept the findings of the New Zealand Police that there was sufficient evidence to establish a prima facie case against the Labour Party; if so, why will she not take the obvious step and pay the money back?

Rt Hon HELEN CLARK: The member is confusing a whole lot of issues. He is very confused. He probably does not realise that there are a number of different issues here, and the two he has connected are not connected in the way he tries to make them.

Accident Compensation—Levies

4. Hon MARK GOSCHE (Labour—Maungakiekie) to the Minister for ACC: What is the Government doing to reduce accident compensation levies for small businesses and self-employed people?

Hon RUTH DYSON (Minister for ACC): Almost 225,000 small businesses and self-employed people from 1 April this year will be able to apply for discounted accident compensation levies when they put workplace safety plans in place. That is very good news for those who run small businesses and for self-employed people in our country.

Hon Mark Gosche: How do today’s total average levy rates paid by self-employed people compare with rates from previous years?

Hon RUTH DYSON: The total average rates for self-employed people today are 14.6 percent lower than they were when the self-employed work account was created by the National Government in 1998.

Electricity Market—Information Accuracy

5. GERRY BROWNLEE (Deputy Leader—National) to the Minister of Energy: Does he believe the operation of the electricity market requires the provision of honest and accurate information from companies involved in that market?

Hon TREVOR MALLARD (Acting Minister of Energy): Yes.

Gerry Brownlee: Why does the Minister continue to have confidence in the Electricity Commission, which insists the lights will not go out this winter, when the major electricity generators advise that they fear the opposite and have gone over the head of the commission to appoint Toby Stevenson as dry winter coordinator for this year?

Hon TREVOR MALLARD: I think the idea that the generators work together in order to maximise power output from the available water and other resources is a very good one. That sort of coordination would have been possible in the old days before people hopped off the generation the way that the National Government did with Contact Energy.

Gerry Brownlee: I raise a point of order, Madam Speaker. The Minister cannot mislead the House, surely, with an answer like that and be allowed to get away with it. Everyone knows that 80 percent of the electricity industry is still owned by the Government.

Madam SPEAKER: That is a debating issue, not a point of order.

Hon Dr Nick Smith: How does having three changes of energy Minister in just 15 months help address the huge uncertainty over electricity supply?

Hon TREVOR MALLARD: The one thing the Government can say is that it has been much more consistent than the Opposition, which shuffles its spokespeople like nothing on earth.

Hon Dr Nick Smith: Does the new Minister stand by the statement of his predecessor in respect of electricity supply: “I do recognise it is my responsibility to ensure that the lights don’t go out in New Zealand.”?

Hon TREVOR MALLARD: I am absolutely sure he said that.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. The Minister’s response did not in any way address the question. It is a matter of public record, it is a record of this House, that his predecessor, David Parker, said that. The Minister’s answer is simply saying that that is what his predecessor said. It does not answer my question, which was whether, as the new Minister, he stood by that statement.

Hon TREVOR MALLARD: I shall answer the question again. I am quite happy to stand by the responsibility of the Minister of Energy to ensure that the systems work—

Hon Dr Nick Smith: Do you stand by the statement? Answer the question.

Hon TREVOR MALLARD: Take your pills.

Madam SPEAKER: Please just continue. Would the Minister please withdraw that comment and just answer the question.

Hon TREVOR MALLARD: I withdraw.

Rodney Hide: I raise a point of order, Madam Speaker. I do not think it is good enough for the Hon Trevor Mallard to just withdraw. If you reflect on that interjection, it was against you.

Madam SPEAKER: I am sorry; I have dealt with this, and, as the member is aware, once the Speaker has dealt with an issue, it is dealt with. Could we please just have a response to the question.

Hon TREVOR MALLARD: It is the responsibility of the Minister of Energy to ensure that the systems are such that sufficient generation occurs. There cannot ever be an absolute guarantee in a particular area, or at a particular time, that the transmission and generation systems will work entirely.

Hon Dr Nick Smith: Does the Government stand by the structure it has created in respect of transmission policy and investment with the confusing roles between Transpower, the Commerce Commission, and the Electricity Commission; if so, which should Parliament hold responsible if the transmission system fails?

Hon TREVOR MALLARD: I think there are a number of occasions when, and reasons why, transmission systems can fail. Clearly, climatic circumstances are the main cause of those, as the member who has an electorate in the Nelson-Marlborough area would be aware. But as the member is also aware, the House has passed legislation that will result at some stage in the Commerce Commission’s responsibilities being transferred to the Electricity Commission. The timing of that is a matter for the Government.

Child, Youth and Family Services, Minister—Physical Abuse of Child

6. KATHERINE RICH (National) to the Associate Minister for Social Development and Employment (CYF): Does she stand by her explanations to the House on 22, 23, and 24 June 2004 that a 6-week-old baby was placed with his mother, a woman who had abused and seriously neglected his two other siblings, as she “did not have a history of either physical or sexual abuse of her own children.”; if so, what is her definition of physical abuse?

Hon RUTH DYSON (Associate Minister for Social Development and Employment (CYF)): Yes, I do, and my comments have been affirmed by a case review undertaken by the office of the chief social worker. The definition of physical abuse is based on the department’s criteria, which were established in 1977 and are similar to those used overseas, such as in the United Kingdom. My comments do not in any way condone neglect as the member has implied in her media statements on this matter.

Katherine Rich: When she has stood in this House and confirmed her statements that there was no history of physical abuse, will she confirm to the House her view that the slow starvation of a 2-year-old boy so that he could not walk and weighed the same as an average 6-month-old baby is not, in her book, physical abuse, and that giving a child a black eye or throwing a telephone at the head of a child is not, in her view, physical abuse?

Hon RUTH DYSON: In answer to the former part of the member’s question, as I explained to her in the House on 22, 23, and 24 June the year before last, the assessment was that the woman concerned had no previous history of either physical or sexual abuse of her own children. In regard to the latter point, conflicting information had been given to the school, the social worker, and the police about how that child—who actually was not that woman’s own child—had received a black eye. The police decided that no further action should be taken.

Georgina Beyer: What further improvements have been made to the department since the Minister spoke about this case in the House in 2004?

Hon RUTH DYSON: There have been further improvements to the department’s ability to respond to notifications and to provide support for families. This includes a 32 percent increase in the number of social workers since 1999, and, despite a 22 percent increase in notifications compared with the previous year, a 16 percent drop in unallocated cases.

Katherine Rich: Is it true that this complex case dating back to 2000, which involved issues such as mental illness, drug addiction, violence, starvation, and neglect, was the very first case ever allocated to the junior social worker who worked on it?

Hon RUTH DYSON: I am not able to confirm that, no.

Katherine Rich: Why was the decision to place baby J with his two siblings, to be cared for by foster parents, overturned, and can she explain why her department’s sanitised report did not touch on the issue that there was major disagreement within that office about the overturning of that decision, which had dire consequences for baby J?

Hon RUTH DYSON: Since the member first made that allegation about the actions of a Child, Youth and Family Services social worker, I have asked for the issue to be investigated, and have been advised that no such information is recorded anywhere within the system; neither were any of the staff involved able to confirm that member’s allegation—yet again.

Katherine Rich: What kind of Minister has she become that she is comfortable standing in this House and implying that an unsafe house is fine for a baby if it is neglect, but is not if it is abuse, and does she think that her clever definitions mean anything to those siblings involved in this case?

Hon RUTH DYSON: The distortions that the member puts on just about everything presented from me to this House is not an acceptable way of conducting a debate about child abuse and neglect in New Zealand. The factors that led to the first two siblings being removed from the mother’s care were no longer evident. It was not a matter of their being acceptable; the living environment from which those two children had been removed had changed. Anybody who has changed his or her lifestyle, in my view, deserves a well-supported second chance.

Maternity Services—Improvements

7. MARYAN STREET (Labour) to the Minister of Health: What steps are now under way to improve maternity services in New Zealand?

Hon PETE HODGSON (Minister of Health): The Ministry of Health is currently leading discussions with leaders in the maternity sector, including the College of Midwives, the New Zealand Medical Association, the Paediatric Society, and many others. The talks are focused on achieving real improvements in maternity services through better coordination between lead maternity carers, primary health organisations, and hospital services.

Maryan Street: What other proposals has he seen on ways to address issues in maternity services?

Hon PETE HODGSON: I have seen at least two. One proposal calls for a review of maternity services; another proposal says that a review would be a waste of time and that the Government should instead encourage better coordination within maternity care. The problem is that both of these proposals come from the National Party. The first is from Tony Ryall and the second is from obstetrician and gynaecologist Paul Hutchison.

Dr Jackie Blue: How many more dead or brain-damaged babies will there have to be before the Government realises that there is a problem with the system?

Hon PETE HODGSON: A time-consuming review would stall the real progress that is being made in discussions led by the Ministry of Health. The ministry and the maternity sector are taking this approach because they know that action is needed now, not after a drawn-out review process. Further, of the 600 or thereabouts neonatal deaths that occur in New Zealand, that number has fallen sharply over recent decades.

Barbara Stewart: Does the national strategy for the development and retention of the medical workforce in New Zealand, which the Minister confirmed existed, during question time last week, include ensuring that an adequate number of midwives is employed by each district health board; if not, when will these midwife shortages become the responsibility of the Minister, if at all?

Hon PETE HODGSON: Midwife shortages, to the extent that they exist, are my responsibility now. There is an excess of midwives in parts of the country, and a shortage in other parts. Both of them are relatively minor. Both of them need constant attention.

Dr Jackie Blue: Why is the Minister’s committee looking to improve maternity data collection by proposing to collect information only on maternity deaths, but not on brain damage or other sad birth outcomes in live babies?

Hon PETE HODGSON: Plans are afoot to improve the collection of morbidity data, which indeed have been improved a lot since the late 1990s, but further improvements are due, and announcements will be made presently.

Conservation, Minister—Confidence

8. Hon Dr NICK SMITH (National—Nelson) to the Prime Minister: Does she have confidence in the Minister of Conservation; if so, why?

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

Hon Dr Nick Smith: Can the Prime Minister assure the House that in respect of the Whangamata marina, all her Ministers support Chris Carter’s decision?

Rt Hon HELEN CLARK: I do not have the slightest idea. It is not a Cabinet decision, it is a statutory decision by the Minister of Conservation.

Gordon Copeland: Does the Prime Minister believe it is fair that the Minister of Conservation can unilaterally veto the recommendation of the Environment Court, leaving the Whangamata Marina Society, which has followed due process, out of pocket by $1.3 million; if not, does she intend to address the issue of compensation, in the interests of fair play?

Rt Hon HELEN CLARK: I think it is important to be clear about the decision-making process here. One cannot, of course, veto a recommendation. A recommendation can be accepted or it can be rejected. The final decision maker on restricted coastal activities under the Resource Management Act legislation is, indeed, the Minister of Conservation. Whether that should be the case is an entirely proper matter for public debate, but it is how the law works as passed in 1991 by the National Government.

Gordon Copeland: I raise a point of order, Madam Speaker. The central point of my question was in relation to compensation of $1.3 million to the Whangamata Marina Society, following the decision to can that project. I do not believe that the Prime Minister addressed the major point of the question.

Madam SPEAKER: As I recall the question, it was in more than one part. In a supplementary question, the Minister has to address only one part of it, and the Minister did address the question.

Hon Dr Nick Smith: Has she seen the report in the New Zealand Herald that two of her Ministers thought the Minister of Conservation’s decision was wrong, and why should the public have any confidence in the Minister of Conservation if her own ministerial colleagues do not?

Rt Hon HELEN CLARK: No, I have not seen any such report. The Minister, of course, is the final decision maker under the law. The marina society has indicated that it will be appealing the matter. No doubt the lodging of proceedings is imminent, and the matter will be sorted out in court.

Hon Dr Nick Smith: Is the Prime Minister aware that the Cabinet Manual includes collective responsibility to apply to individual decisions of Ministers, and as such, does she think it is acceptable that the Hon Dover Samuels has said that the Minister’s decision with regard to Whangamata was convoluted and lacked certainty?

Rt Hon HELEN CLARK: I am not aware of the member’s comments as read by Dr Smith, but I will say this. An independent statutory decision made by a Minister in terms of the law is not something that a Minister takes to Cabinet for approval; nor should he.

Hon Dr Nick Smith: Will the Minister apply the principle of collective Cabinet responsibility to the decision of Chris Carter in respect of the Whangamata marina?

Rt Hon HELEN CLARK: No, because the Minister makes an independent statutory decision in terms of the law. The process I follow as Prime Minister is, where we make decisions together, everybody takes collective responsibility for them. Where a Minister makes an independent statutory decision, that is his decision and his decision alone, and it will be his decision that the Whangamata Marina Society challenges in court if it proceeds.

Hon Dr Nick Smith: Does she recall telling the local government conference last year that her Government believed in local decision-making by local people; if so, why did her Government overturn the decision of the Thames-Coromandel District Council and Environment Waikato?

Rt Hon HELEN CLARK: As I have said, the matter went right through to the Environment Court. The Environment Court made a report. The Environment Court is not the final decision maker; nor are the other bodies that the member referred to. The final decision maker on a restricted coastal activity is the Minister of Conservation. I might say I am aware that Dr Smith, when he was Minister, instructed the department to settle on the matter because frankly he has very little regard for the coastline of our country.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. Because the Prime Minister seems unfamiliar with it, I seek the leave of the House to table the Cabinet Manual, which makes it plain that individual decisions of Ministers still apply the principle of collective responsibility.

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

Smoke-free Environments Act—Impact

9. STEVE CHADWICK (Labour—Rotorua) to the Associate Minister of Health: What reports, if any, has he received on the impact of the amendments made to the Smoke-free Environments Act 1990?

Hon DAMIEN O'CONNOR (Associate Minister of Health): I have seen a report confirming that the majority of smokers support the smoking ban in bars and restaurants, and that the ban has delivered positive health, economic, and social outcomes.

Steve Chadwick: What other reports has he seen on the impacts of the amendment to the Smoke-free Environments Act?

Hon DAMIEN O'CONNOR: I have seen two. The first stated that the smoking ban was an example of the nanny State and went too far. The second stated that most New Zealanders had welcomed the move to restrict smoking in public places. The first quote was from Wayne “PC Eradicator” Mapp and the second was from the National Party leader, Dr Don Brash.

Madam SPEAKER: I just remind members that they must use members’ correct titles in the House.

Hone Harawira: What rationale does the Government have—given its stated support for a healthy population and its highlighting of the disastrous effects of cigarette smoking on the general population of this country, and in particular the Māori population—for spending only 1.5 percent of the nearly $1 billion in tobacco tax on smoking cessation programmes?

Hon DAMIEN O'CONNOR: I acknowledge that smoking is a huge health issue for the whole country, but more particularly for its Māori population. We are committed in a number of ways, including through the provision of Māori health providers themselves going to speak with Māori people, to reducing the rate of smoking in the Māori population. That is a determination of this Government, and we hope we get full support for that from the Māori Party.

Peter Brown: Is the Minister aware that there are several people who used to go to the pub to have a beer with their cigarette but who now go home and smoke in front of their families and children; if so, how does that deliver on the worthwhile outcomes he indicated earlier?

Hon DAMIEN O'CONNOR: We have a very active campaign that highlights the dangers of smoking in front of children. But I also remind the member that far more people go to the bars because there is now no smoking at the bars. So we have had a win for those bar owners, and with the campaign we are running to highlight the dangers of smoking in front of children, I am sure we will see a reduction in the incidence of that, over time, as well.

Hone Harawira: I raise a point of order, Madam Speaker. My original question, if I may just go back to it and shorten it, was: what rationale does the Government have for spending only 1.5 percent of the nearly $1 billion in tobacco tax on smoking cessation programmes?

Hon DAMIEN O'CONNOR: I have to say that we would like to spend far more on smoking cessation programmes, but we are committed to spending a lot of money actually dealing with the health problems that are the outcomes of people smoking previously.

Focus 2000 Ltd—Complaints

10. Dr PAUL HUTCHISON (National—Port Waikato) to the Minister for Disability Issues: Was she aware of complaints surrounding Focus 2000 prior to 2005; if not, why not?

Hon RUTH DYSON (Minister for Disability Issues): As Minister for Disability Issues, I have no record of receiving any complaints about Focus 2000 prior to 2005.

Dr Paul Hutchison: Does the Minister seriously expect New Zealanders to believe that although widespread allegations involving death, maltreatment, and abuse were documented as far back as 2002, she did not find out for over 2½ years?

Hon RUTH DYSON: As Minister for Disability Issues, I have no record of having received any complaints about concerns about Focus 2000 prior to the date that I have already confirmed, 3 weeks running, to that member in this House. What part of that does he not understand?

Dr Paul Hutchison: What has the Minister actually done, now that she is aware of the wide number of complaints surrounding Focus 2000?

Hon RUTH DYSON: I presume the member is referring, in terms of width, to the range of issues that have been raised, given that they range from literal abuse through to overpayment. As Minister for Disability Issues, I have discussed the matter with the Minister responsible for service delivery, and have confidence in the process he has in place for the auditing of those issues.

Sue Moroney: Has the Minister been made aware of any other complaints concerning disability issues?

Hon RUTH DYSON: I am aware of the very deep concern within the disability sector regarding comments that advocating for disability is too PC and divorced from the mainstream. Those comments were made by the National Party’s PC eradicator, Dr Wayne Mapp.

Dr Paul Hutchison: If the very serious 2002 complaints about Focus 2000 were kept secret by the Ministry of Health until recently, as is alleged by the New Zealand Herald, does she, as Minister for Disability Issues, agree that the Ministry of Health has covered up an issue that deeply affects thousands of disabled people?

Hon RUTH DYSON: In relation to the first part of that question, it is possible that on this one particular occasion the New Zealand Herald has got it wrong. I am not implying that; I just realise that it is a possibility. In response to the second part of the question, I suggest that if the member wants answers about issues relating to health services, he ask the Minister of Health.

Dr Paul Hutchison: Is the Minister not failing to fulfil her role as advocate for the disabled, when allegations including death by choking, maltreatment, and abuse remain widespread and are clinical issues very seriously affecting the disabled?

Hon RUTH DYSON: No.

General Practice Training—Funding

11. BARBARA STEWART (NZ First) to the Minister of Health: Is the Government planning on urgently increasing the number of general practice training places it funds each year; if so, by how many places?

Hon PETE HODGSON (Minister of Health): The Government has already funded an increase in the number of general practitioner training places, increasing them to 55, and is currently reviewing whether to lift that increase further.

Barbara Stewart: How is the Government planning to improve working conditions for general practitioners in order to ensure that those who have trained as general practitioners remain in that field, and has it considered providing more employment options for younger general practitioners than the self-employed or small-business model, which now appears to deter medical students from becoming general practitioners?

Hon PETE HODGSON: General practice is generally a private sector activity and not a public sector activity, so the Government does not employ very much at all in the way of general practitioner services. However, the Government’s Primary Health Care Strategy, which was described to me last week by a prominent general practitioner as one of the finest changes that there has been in health in 50 years, expressly addresses the issues that face general practitioners, namely by allowing funding to promote the use of the development of primary health care teams. That strategy is starting to address the very issues that the research of the general practitioner council of the New Zealand Medical Association is throwing up. So we have a very substantial solution coming in the form of the Primary Health Care Strategy. By 1 July next year, $560 million of taxpayers’ funding will be going into that sector.

Ann Hartley: What feedback has the Minister received from general practitioners on the continuing roll-out of the Government’s Primary Health Care Strategy?

Hon PETE HODGSON: Almost every general practitioner I have spoken to—and I have spoken to dozens so far—says that this Government has done more for primary health care than any Government in living memory. The well-known Auckland general practitioner leader whom I mentioned in my previous answer told me last week that this Government is responsible for the most proactive, enduring, and positive changes to primary health care in 50 years. The Primary Health Care Strategy is welcomed by the general practitioners of New Zealand.

Dr Jonathan Coleman: The member obviously has not spoken to me, but—

Madam SPEAKER: Would the member please be seated. We are really trying in this House not to preface questions with asides or comments. Would the member please just ask the question.

Dr Jonathan Coleman: Why, when the Government has data from 2001 that shows that it would require a 40 percent increase in general practitioners over the next 20 years, and given that it takes around 15 years to train a general practitioner, have we had to wait until the situation got to crisis point before we had any action?

Hon PETE HODGSON: A general practitioner who takes 15 years to be trained probably should have considered another career choice before he or she embarked on that training. However, the member may be interested to learn that the number of trainees who are sitting the Primex exam—the member will know what I am talking about—has increased from 66 in 2000 to 149 in 2004. So we have had an increase from 66 to 149 in a matter of 5 years—and that member says that this Government is doing nothing! That is a very substantial increase in quality for our registered general practitioners.

Barbara Stewart: Is it correct that the number of general practitioner graduates who are still practising in New Zealand 5 years after graduating is on the decline?

Hon PETE HODGSON: I am afraid I do not know, but I can tell the member that the number of general practitioners practising in New Zealand has risen by about 50 percent in the last 25 years. What is more, with the roll-out of the Primary Health Care Strategy and the increased involvement of practice nurses, physiotherapists, podiatrists, and a lot of other things that begin with “p” we will see the evolution of teamwork, which will allow doctors to spend more time doing what they are trained to do.

Taito Phillip Field—Conflicts of Interest Report

12. Dr the Hon LOCKWOOD SMITH (National—Rodney) to the Prime Minister: Has she been advised of the progress of the inquiry being undertaken by Dr Noel Ingram to investigate allegations of conflicts of interest involving the Hon Taito Phillip Field; if so, has she been advised of when she is to receive the final report?

Rt Hon HELEN CLARK (Prime Minister): Yes and no, but I understand that it is nearing completion.

Dr the Hon Lockwood Smith: What has she been advised by Dr Ingram are the reasons for the delay in the report of his inquiry, which was announced by her on 20 September last year and due to report its findings by 4 October, yet which has still not been received 6 months later?

Rt Hon HELEN CLARK: I have been saying throughout that 6-month period that Dr Ingram should take as long as he needs to in order to write a good report.

Ron Mark: Has she been advised of the progress of any other investigations being undertaken by any other ministries into any other members of Parliament, such as, for instance, the investigation being conducted by the Ministry of Foreign Affairs and Trade into the allegations of conflicts of interest and impropriety that involve the member for Wairarapa, Mr John Hayes; if so, what can she tell us about that inquiry?

Rt Hon HELEN CLARK: No, I do not have any information about that inquiry, although I am sure that if the activities alleged had been undertaken while the member was in the service of the ministry, then that would have been of considerable concern to it.

Madam SPEAKER: Would the members who were whistling in the House please refrain from doing so unless they wish to leave the Chamber. [Interruption] It is not a laughing matter; I take it very seriously.

Dr the Hon Lockwood Smith: Is she aware whether the inquiry is covering issues surrounding any involvement of Taito Phillip Field in prospective immigrants to New Zealand being offered jobs by Culvedern Group Ltd—trading as Pasifika Centre and Hospital—which is currently having its certification reviewed by the Ministry of Health, and which has some staff under police investigation?

Rt Hon HELEN CLARK: No, I do not have any advice on that matter.

Dr the Hon Lockwood Smith: What action does she as Prime Minister intend to take if, upon the receipt of Dr Ingram’s report, Taito Phillip Field is found to have been misusing his position as a member of Parliament?

Rt Hon HELEN CLARK: As Prime Minister I have responsibility for Ministers; I do not have responsibility for members of Parliament.

Question No. 4 to Minister—Amended Answer

Hon RUTH DYSON (Minister for ACC): I regret that the information I gave was incorrect. Instead of 225,000, as I informed the House, the correct figure is 185,000.

Urgent Debates Declined

Election Expenses—Decision on Prosecution

Madam SPEAKER: I have received a letter from the Leader of the Opposition seeking to debate under Standing Order 380 a decision by the New Zealand Police not to prosecute in relation to complaints it received that arose out of the 2005 general election. The decision of the Police is a particular case of recent occurrence, but I do not accept that it involves the administrative or ministerial responsibility of the Government. Under our system of Government, decisions on whether to initiate a police prosecution are made independently of the Minister. That has been the case for many years. I have to say that even if there had been ministerial responsibility, I do not believe that this matter would require the attention of the House by way of an urgent debate today. It is known that the subject matter of the complaints will be available for examination as part of the regular post-election review by the Justice and Electoral Committee. The substantive issues relating to the electoral law can be pursued there. This application is declined.

Urgent Debates

David Parker—Resignation from Executive

Madam SPEAKER: I have also received applications from the Leader of the Opposition and Rodney Hide to debate the resignation of David Parker. This is a particular case of recent occurrence involving ministerial responsibility, and I agree that it requires the immediate attention of the House. The application is therefore accepted. Dr Brash lodged this application first, so I call on him to move that the House take note of a matter of urgent public importance.

RODNEY HIDE (Leader—ACT): I raise a point of order, Madam Speaker. I am interested that you say Dr Brash lodged his first. What time did he lodge his application with your office?

Madam SPEAKER: The member can come and look at it at the Table. As I recall, it was a day or so ago. I am quite happy for the member to come and look at the correspondence.

Dr DON BRASH (Leader of the Opposition): I move, That the House take note of a matter of urgent public importance. Yesterday David Parker resigned as Attorney-General, saying that he was ashamed that over each of the last several years he has lodged false documents with the Companies Office. This morning he resigned his other ministerial positions. I say at the outset that lodging false documents at the Companies Office does not make Mr Parker an unmitigated crook and it does not make him an inherently evil man. Although I do not want to impugn the integrity of anybody else in this House, let me be so bold as to suggest that there are one or two other people in this House, potentially on both sides of the House, who may have been inadvertently guilty of lodging a false document with the Companies Office—though, probably not for 8 or 9 years in a row—but for a lawyer to make a false statement is a serious matter. Lawyers are the professionals we depend on in our society to ensure the accuracy of the documents that they sign. They should not sign documents knowing them to be false under any circumstances. For the most senior law official in the land, the Attorney-General, to have done so not once but on several occasions, is a serious matter. Mr Parker was right to tender his resignation. I commend him for that.

Two questions now arise. The first is: why did David Benson-Pope not take a similarly honourable course and tender his resignation after the police found a prima facie case that he had bullied pupils in his care while he was a teacher and—arguably, at least as serious—after it was clearly established a few weeks ago that he had misled Parliament last year when he claimed that in all his years as a teacher he had never had a complaint lodged against him? Surely, he should have tendered his resignation and, equally surely, Helen Clark should have accepted that resignation. Helen Clark was quick to accept David Parker’s resignation. She was quick to accept Lianne Dalziel’s resignation when Lianne Dalziel admitted misleading the public about the case of a Sri Lankan immigrant. She dismissed poor Dover Samuels for allegations that were swirling around. She dismissed Taito Phillip Field. She dismissed John Tamihere. She suspended Harry Duynhoven. She dismissed Marian Hobbs. She dismissed Phillida Bunkle. She dismissed Ruth Dyson. But she did not dismiss David Benson-Pope for what even she admits was an error of judgment.

The second question is: what next for Mr David Parker? If he is tried and convicted under section 377 of the Companies Act on the grounds that he lodged false documents with the Companies Office, it raises serious questions about his ability to remain as a member of this House. But if he is not even prosecuted, even more serious questions arise. How come Labour Ministers always seem to be above the law? How come the police found a prima facie case that Helen Clark had forged a painting but they decided not to prosecute? How come the police prosecuted a civilian driver and five police officers for racing through South Canterbury at breakneck speed, with Helen Clark in the back seat, and they did not prosecute Helen Clark when Helen Clark was clearly the person ultimately responsible for that incident? How come the police find a prima facie case against David Benson-Pope for bullying a pupil in his care but decide not to prosecute? How come the police find a prima facie case against the Labour Party for failing to show a Labour Party authorisation on the pledge card—[Interruption] I say to Trevor Mallard, how come the police failed to find a Labour Party authorisation on the pledge card, which was the centrepiece of the Labour campaign, but then decided not to prosecute? How come the police failed to find a case against the Labour Party for overspending the limit established by the Electoral Act when the Chief Electoral Officer and the auditor of the Labour Party’s expense return both agree that Labour overspent the limit by almost 20 percent if the pledge card is to be counted as election spending?

And, yes, establishing a prima facie case does not mean proving guilt beyond reasonable doubt. But as Scott Optican, associate professor of law at Auckland University, has noted: “A prima facie case means there is enough evidence so that a jury, instructed properly as to the law, could find on the facts that the defendant is guilty beyond a reasonable doubt.”, or as Gary Gotlieb, President of the Auckland District Law Society, has noted: “Prima facie means there is a sufficient case for the accused to answer.” In other words, establishing a prima facie case means that there is at least a presumption that the charges should be fully aired in court.

I do not claim to have evidence of political interference in the decisions of the police, but these cases do raise very serious questions. The questions are even more worrying when we reflect that, over the same period, the police prosecuted not one but two members of the National Party caucus—and for what? In one case the prosecution was for an offence that Parliament itself had decided should not be an offence. In the second case, the offence was so trivial that the judge himself said at the preliminary hearing that the matter should—

Hon Trevor Mallard: I raise a point of order, Madam Speaker. I think you turned down one letter asking for an urgent debate. I think that the member might have picked up the wrong set of notes.

Madam SPEAKER: That is not a point of order.

Dr DON BRASH: The second action taken by the police against one of my National Party colleagues was for an offence so trivial—

Hon Trevor Mallard: I’m right—it’s the wrong set of notes.

Dr DON BRASH: I raise a point of order, Madam Speaker. Could you please ask Mr Mallard either to leave the Chamber or to desist?

Madam SPEAKER: This is a debate, but—[Interruption] The member is on his feet and he has raised a point of order. I just ask everyone to calm down so that we can hear what the member is saying.

Hon Dr Michael Cullen: I raise a point of order, Madam Speaker. This is an urgent debate around a specific matter. A letter has been written on that specific matter: the resignation of Mr David Parker. I assume that there are some rules of relevance around the debate—that what we are debating is the resignation of the Minister and the reasons for that, and the implications of that, perhaps, for the Government. We seem to be debating a quite different matter. As my colleague implied, we seem to be debating the matter that was turned down for debate, in part. We are traversing now almost every issue except the issue surrounding Mr David Parker—perhaps because, as the member said at the start of his speech, the matter over which Mr Parker has resigned is one on which a number of members might find themselves exposed, and perhaps the National Party does not want to talk about that particular matter at any great length. [Interruption]

Madam SPEAKER: No—

Hon Dr Michael Cullen: The member himself said that, actually, as members opposite would know if they bothered to listen to their own leader—he said it. The point I am making is that this debate is about a specific matter, and this matter is not now being debated. The Leader of the Opposition has wandered out of the paddock, around South Canterbury, and goodness knows where else. We have yet to arrive back at the ministerial office.

Madam SPEAKER: I take the point.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. The leader of the National Party seeks your protection from proper examination by other members of Parliament as to the quality and quantity of his debating. With the greatest respect, I have never before seen someone who leads a political party being unable to carry the debate without the protection of the Speaker. [Interruption] National Party members can hiss all they like—

Madam SPEAKER: Would the member please address the point of order.

Rt Hon Winston Peters: The plain fact is that this is a robust debating chamber with a certain historic character—[Interruption] This is a point of order, by the way, Madam Speaker.

Madam SPEAKER: Yes, it is a point of order, and there will be an opportunity for further discussion on it, but I ask the member to stick to the point of order.

Rt Hon Winston Peters: My point is that we should not change the rules of this Chamber just because someone cannot hack it.

Gerry Brownlee: I have two points to make on that point of order. Firstly, Madam Speaker, I ask you to recall that the Prime Minister herself stood up in this House and asked for silence when she mounted a defence of the Hon David Benson-Pope. Secondly, it does seem interesting that the Labour Party does not want Dr Brash to apply some scrutiny to the fact that Mr Parker acted honourably and resigned when he got caught but that everybody else in the Labour Party—as long as they deny that it ever happened, even though the whole world knows it did—manages to survive. That is the hallmark of a corrupt Government. I am not surprised that Trevor Mallard does not want that matter discussed here today and that Michael Cullen wants to defend him for trying to prevent the discussion. There is nothing wrong with Dr Brash’s contribution to this debate. We know that it is hurting the Labour Party—otherwise its members would not be here in such numbers looking so very glum.

Madam SPEAKER: I thank all members for their contribution to the debate through a point of order. I rule, however, on the initial point of relevance. The debate does have to be relevant, so it should concentrate on Mr David Parker. But it can be put in the context of referring to other related matters, although these must be supplementary to the central issue.

Dr DON BRASH: I was making the point that if Mr Parker is not prosecuted for his offences, it raises some very serious questions. There has been a succession of incidents in recent years where Labour Party Ministers and the Labour Party itself have been found—guilty is too strong a word. But there have been incidents where a prima facie case, to be answered, has been established. A prima facie case has been found again, again, and again—“paintergate”, speeding through South Canterbury, David Benson-Pope, and now the police case last Friday. I was making the point that over the same period during which those events were occurring the police took action against two of my colleagues. I made the point that the first action was for an offence that Parliament itself determined should not be an offence, and the second action was for an offence so trivial that the judge himself said it should not have come before the court, and the prosecuting attorney said he was undertaking the prosecution on instructions from a higher authority.

That is what happened to the National Party, whereas, with the Labour Party, somehow the police found a prima facie case but say that, on balance, they will not prosecute. It is crucially important, as the old adage has it, that justice not only is done but is seen to be done. No member of the public can yet assess how serious Mr Parker’s offences are. Nobody can make that assessment. They may be much less serious for New Zealand’s long-term future than Mr Parker’s failure during his short tenure as Minister of Energy to recognise the seriousness of the electricity shortage now facing New Zealand, with spot prices at a level that are leading some major producers to cut back on their production. They may be much less serious for New Zealand’s long-term future than Mr Parker’s failure during his short tenure in the role as Minister of Transport to bring Transit to heel and ensure that New Zealand’s roading crisis is resolved in a timely manner. They are almost certainly much less serious than the difficulties he had dealing with the climate change questions, though, to be fair, he was not responsible for the ratification of the Kyoto Protocol. That was done by the new Minister responsible for Climate Change Issues.

What should worry all New Zealanders is that the Labour-led Government is so desperately short of talent that Helen Clark has had to recycle into the portfolios from which Mr Parker has resigned men who have failed in those portfolios previously. Pete Hodgson is the new Minister responsible for Climate Change Issues. As Minister responsible for Climate Change Issues, it is Pete Hodgson who carries responsibility for the appalling blunders around the Kyoto Protocol, for the “flatulence tax” proposed and abandoned, for the carbon tax proposed and abandoned, for the ratification of the Kyoto Protocol itself in late 2002 ahead of many of the largest emitters of greenhouse gases in the world, and for the assessment that participating in the protocol would be worth hundreds of millions of dollars to the New Zealand economy. He is the man who ridiculed critics who questioned his judgment on that but now has to admit that the cost to the New Zealand economy will be many hundreds of millions of dollars—as an optimistic assessment. He is the man back in the climate change portfolio.

Pete Hodgson is the new Minister of Transport. But, again, he was the Minister of Transport previously and, in many ways, is much more to blame than David Parker, who held the portfolio for a short period of time only. Trevor Mallard is the new Minister of Energy. It is hard to know who is most to blame for the mess in that sector. He was Minister of Energy in the period prior to the election, but only for about the same time as David Parker since the election. He certainly did not set any sensible new course for the energy sector, and we will hold him fully responsible for any shortages of electricity we have this winter.

So they are a very tired bunch, and the loss of just one man from Cabinet makes it clear just how desperately short of talent the Government is. In fact, it is a tired Government and an increasingly arrogant Government that is repeatedly dependent on the police and Crown Law not choosing to prosecute them, despite prima facie breaches of the law. Unless we get an early election, we face a very bleak 2½ years.

DAVID PARKER (Labour): I would like to explain to the House the circumstances surrounding my resignation. As I summarise it, the Investigate magazine article that came out yesterday effectively accused me of three things: firstly, that I swindled Mr Hyslop out of his money and caused his demise; secondly, that I attempted to bribe him; and, thirdly, that I filed inaccurate returns to the Companies Office. In terms of the first two allegations—that I swindled Mr Hyslop somehow and attempted to bribe him—I categorically reject those allegations and I will return to them. On the point of annual returns, that is different. I accept I have made a mistake and that is why I have resigned, and that is an issue I will return to as well.

In the early 1990s I retired from legal partnership to pursue business interests. I became involved in four ventures that involved Russell Hyslop, none of which succeeded. In relation to three of those ventures, I was left carrying the burden of sorting them out following Russell’s bankruptcy. I did so to the best of my ability. It took about 3 years. The outcomes were not what anyone desired, least of all me, but I made the best of what was a bad situation. I only just stayed afloat myself. Indeed, I contemplated taking the easy way out by voluntarily filing for bankruptcy myself and letting someone else sort out the mess.

I decided not to do that, and managed to avoid it at the suit of other people only by working very hard. I returned to work full time as a lawyer, while also attending to the resolution of the failed ventures. At the same time, I was involved in other ventures that were succeeding. I sold all but one of them, which at the time was not of great value. I ploughed all of my earnings into dealing with the consequences and keeping my head above water. I looked at selling my own house, but it was fully mortgaged to the bank and would not have released any money to creditors.

I have never hidden my failures. I succeeded before and after my dealings with Mr Hyslop. I never denied my share of the responsibility for the things that went wrong. I certainly shouldered my share of the burden of managing them when they went wrong, and I believe I acted honourably. Russell Hyslop looked for other people to blame following his demise. He is wrong to say that I caused his downfall. He made allegations of wrongdoing after his bankruptcy. The official assignee looked into the allegations before deciding not to pursue them; and he looked into them in some detail. The official assignee had three options. The first was to pursue the allegations through the office of the official assignee. The second was to allow Mr Hyslop to pursue the allegations himself. The third was to determine that no further action was warranted. To avoid any suggestion of bias, the official assignee in Dunedin referred the matter to the Christchurch office. The Christchurch office decided on the third option, which was to determine that no further action was warranted.

In terms of the allegations of bribes, Mr Hyslop distorts what happened. I never offered a bribe. I did try to reach agreements with Mr Hyslop, and I give an example. One of the developments the company had was a subdivision of land in Dunedin. It was obvious to me, if not to Russell Hyslop, that he was insolvent and that in due course he would lose his house in terms of bankruptcy. I wanted to help his family by obtaining a section on to which he could have moved a house— from another property that the company owned—that was scheduled for demolition or removal. That could have been achieved legally and at comparatively low cost. That did not proceed. Indeed, the land was sold, as one lot prior to subdivision, to another developer with whom Mr Hyslop was involved. That relationship soured too, and Mr Hyslop and he are now embroiled in litigation.

I also note that the events that surround the allegations of bribery now all happened prior to Mr Hyslop’s bankruptcy and if there were anything to those allegations, I would have expected they would be dealt with at the time. I lay all those events out, otherwise I will be accused of hiding them.

After 3 years I started again. I could go on further and tell members about all the details prior to those 3 years, but I do not have time. However, after those 3 years I did start again and I rebuilt my life. I re-entered business and I succeeded, and I am proud of what I achieved. Public office does expose one to criticism and the picking over of one’s life. If one has made mistakes, there are plenty of critics ready to stand in judgment, always looking to find the disgruntled and to dig up events that would not otherwise come to light.

I came into Parliament almost by accident. In 2002 I stood in a safe National seat and although I fought hard to win, I thought it was likely that I would lose. So I avoided asking myself the question of whether I really wanted my life to be picked over in the way that politicians’ lives are. But I was elected and I have always respected what politicians are supposed to achieve here. So I stayed and I have contributed. I am 46 years old. I have achieved quite a bit in my life, in business but also as a member of the wider community. I have made my mistakes and I can assure the House that I feel my mistakes so much more acutely than I do my successes. I learn from them. But I have never hidden them. Indeed, at times, I have almost advertised them.

In terms of the annual returns members might ask how this came to pass. It seems silly. Well, Mr Hyslop was a shareholder and director and he went bankrupt. The official assignee took no interest in Mr Hyslop’s shares in the company, because they were worthless. The affairs and conduct of the company were left to me. For the first 2 years I sent the relevant resolution to the official assignee before I filed the annual return. Yesterday, going from recollection, I said that I did that once. It now appears I did that twice. In subsequent years I cut a corner and I did not put the form to the official assignee. Why did I do that? Well, in my mind the official assignee, who stood in the shoes of the bankrupt, Mr Hyslop, had no interest in the company. I did not think about the issue clearly enough. If I had, the consequence I now face would have been easily avoided.

I am told there are bound to be other members in the Parliament who have made similar mistakes. That is probably true, but how I respond is a matter for me. I have always thought that my business record would be thrown at me here and I have always been ready to answer those criticisms. The allegations about annual returns did surprise me. It was so easily avoided and I kick myself for not avoiding it. After it was raised yesterday, I quickly formed the view that I should resign as Attorney-General. I thought I saw a fair line between that portfolio and my other ministerial responsibilities, but the questions that journalists asked me caused me to reflect on that overnight. I think they were right. So following the Westminster tradition that I believe in, I resigned my other portfolios this morning. I will join the back bench and I will work hard on the difficult issues this Parliament always grapples with.

I shall respond to one other issue raised by Dr Brash, concerning standards of law being upheld. I do believe that the same standards of law applied to others are applied to parliamentarians, and that is how it should be. In terms of Mr Benson-Pope, who really believes that Mr Benson-Pope should be hauled over the coals for his actions as a teacher all those years ago? Incidentally, he continues to deny those allegations of wrongdoing, as is his right to do. If a member should be hauled over the coals for his or her actions all those years ago, where does it end? If it ended as Dr Brash would like, really would this country get the politicians it needs? I do not know that it would.

GERRY BROWNLEE (Deputy Leader—National): I begin by acknowledging the comments made to the House this afternoon by the honourable David Parker. When a member speaks in the House his word is to be taken, and the National Party accepts David Parker’s word and the comments he has offered the House this afternoon.

I reiterate the points made by Don Brash when he started the debate this afternoon. There is no question as to whether David Parker is a bad man. There is no question as to whether some further pernicious action should be taken against David Parker. But there is a real question about the integrity of this Government, when, as we have just heard, a Minister can come to the conclusion on his own that he should not sit in a Cabinet and should not be part of ministerial decision-making, at least for a time, because of an action that was taken some time ago, albeit inadvertently or mistakenly. David Parker walked out saying that he was not fit, that he needed to be rehabilitated, and that he was going of his own volition. He accepted that the standard he was accused of, or had set, was not acceptable.

That contrasts very sharply with the Prime Minister, who asked her secretary to paint a painting for her. She then signed the painting and said that she did it—that it was hers—and continued to say so until she was outed. She was investigated by the police, she was found to have committed fraud prima facie, and she then weaselled out of it by saying that others were doing it and why should she not get away with it. Then we have the Prime Minister apparently in a hurry to get to the rugby. She put no pressure on the police, because they do not interfere in operational matters. She did not say to the policemen that they needed to catch that plane at a particular time and that they would have to go a little bit quicker across the Canterbury Plains. No, she sat in the back of the car, apparently unaware it was doing speeds of up to 160 kilometres an hour. I have to say in her defence that if I were sitting in the back of a car with Jim Sutton I would think that time had stood still as well. However, the police set up barricades from one end of the island to the other, the car flew through the countryside like a rocket, and the Prime Minister sat back and said that it had nothing to do with her. Five policemen and a civilian driver had to go to court. They got punished and their reputations were snotted all over the place, but the Prime Minister did not accept one iota of responsibility herself.

Then there is the latest debacle where $446,000-plus of the leader’s office funding, which is under the direct authority of the Prime Minister, has quietly slid into the Labour Party election coffers. The Prime Minister says that she did not know about it. She had no idea, it was not her, she was not responsible, and she will not own up. That repeated behaviour stands in stark contrast to the honourable David Parker and the way in which he has handled this situation.

When will someone point out to the Prime Minister that we have a case here of the two Davids? One is the favoured and one is the vanquished. It is OK to lie to Parliament, apparently, but it is not OK to make a mistake on a defunct company return. Well, as a nation we will be in severe trouble if we keep tolerating this sort of nonsense from the Prime Minister. It is time that people start to ask her to be accountable. That is when we will see the shaking starting.

We notice today that the portfolios David Parker was given just 6 months ago have quietly gone back to the people who had them before that. Remember the carbon tax? That was Pete Hodgson. He was the genius who told New Zealanders that we would make money out of the Kyoto Protocol. He was the genius who said that a carbon tax would be good for them, and he was the Minister who got the boot because the Prime Minister backed off. I want to know where the Prime Minister is setting her goals, given that she told the House today that New Zealand has a great future in burning coal for energy and that she has a Minister who has long been on the record as saying “no way”.

Then we look at the interesting appointment of Trevor Mallard as Acting Minister of Energy. He is the guy who sat with that ministry for over 9 months last year, and who presided over what will be cold, long nights for New Zealanders this coming winter because he sat on his hands. Today he tried to tell us that because there is conflict in the electricity industry—the generators, the Electricity Commission, and Transpower have all got big issues going on with one another—we are better off than we have ever been before. Well, when the cold nights come it will be Trevor Mallard who bears the price.

Then, of course, the role of Attorney-General has gone to Michael Cullen. Well, we will see how that goes. Michael Cullen is not a lawyer. We know that he has in the past expressed views—I am going down a track I will not go—that relate to judicial appointments that, I think, are quite despicable and quite inappropriate.

But one can see the real problem the Labour Party has when one looks at its back bench. I want to know when Ross Robertson will be made a Minister. Why can he not be in Cabinet? I want to know when the great white hope, Shane Jones, is going into Cabinet.

Hon Tau Henare: Tomorrow, tomorrow!

GERRY BROWNLEE: He must be. I want to know when they are going to bring George Hawkins back, because he was a very capable Minister in comparison to Mr Hodgson and his debacles, Mr Mallard in his non-attention, and Dr Cullen’s lack of interest in the portfolio.

There is also, of course, the wider issue of how the Labour Party will present this particular situation to the public, because at the end of the day the public are not silly. My call would be that most people—most fair-minded New Zealanders—looking at this situation and reading the report tomorrow on David Parker’s comments to the House today will see that this guy has acted pretty honourably. They will ask themselves how it is that Helen Clark can justify doing so very little about her own situation and so very little about Mr Benson-Pope’s situation, and how she can justify trying to tell New Zealanders that if she does something it is OK. Remember those great words that by the very definition a Prime Minister cannot leak? Do members remember that? Let us just extrapolate that out a bit. What the Prime Minister was really saying was that by definition she cannot break the law. That is what was implied by Helen Clark, that is what is meant by Helen Clark, and that is, of course, what she is now hoping New Zealanders will turn their eyes away from.

I want to reserve my last comments in this debate for the Rt Hon Winston Peters—a man who used to have a lot of promise, a man who readily now leaps to the defence of this rotting Government, and a man who stands up in the House day after day extolling the virtues of Helen Clark and her co-Ministers. All I can say to Mr Peters is that he should get out the cheque book, he should write a cheque for 40 grand, and he should post it to Bob Clarkson, MP for Tauranga.

Rt Hon WINSTON PETERS (Minister of Foreign Affairs): I want to say to Mr Brownlee that, unlike him, I have spent some money in my career on things I believe in, not once but countless times, and I have counted it as an honourable and professional thing to do. Whereas Mr Brownlee has never spent 5 cents on any matter of principle, ever, other than himself, I have spent hundreds of thousands of dollars on great causes—and most of them I have won.

Gerry Brownlee: I raise a point of order, Mr Speaker. I want to concede to Mr Peters that that is true: he has spent thousands of dollars on issues that he believes in—and, what is more, there are bar owners all around this country who would agree with him.

The ASSISTANT SPEAKER (H V Ross Robertson): No, no. I ask the member to withdraw and apologise. That is a personal reflection, under Standing Order 116.

Gerry Brownlee: I withdraw and apologise. I raise a point of order, Mr Speaker. Surely, in fairness, you would note that that same Standing Order should have been applied to Winston Peters when he started the nonsense lines in his speech earlier.

Rt Hon WINSTON PETERS: If you can’t take it, then don’t dish it out.

The ASSISTANT SPEAKER (H V Ross Robertson): Can I just say to that honourable member that when a point of order is being heard, that is done in silence. It is a courtesy to other members.

Rt Hon WINSTON PETERS: The fact of the matter is that if that member of Parliament cannot take it he should not dish it out. He had hardly got back to his feet and dropped to his knees when he was exposed as the sham he is—the pretender to the throne of the National Party, who is about to be deposed by his back bench. That is what will happen; I know that party. The leader of that party will be Tau Henare. The leader of that campaign will be people like Nick Smith. Members should watch them. They are up against a grindstone already. They just cannot wait.

I think that what David Parker did today was a very honourable thing. It is far too infrequent in this House, and in that respect it is almost unique. He said that he had made a mistake and that he wishes to pay the price for it. I think it is a terrible price, frankly, because one could come to the view, as a lawyer, that someone adjudged a bankrupt has no right to be involved in any management of a company, at all. That is a simple legal principle—that anyone adjudged a bankrupt is not entitled to be associated with the management of a company.

Rodney Hide: It’s easy to see why he’s been through some court cases.

Rt Hon WINSTON PETERS: I have not finished, but I could talk about Fiji, of course—which is where that member went to take part in what was a totally corrupt investment programme. He was paid a whole week’s salary to stay in a bure—which included lodgings and food, day and night—and never declared any of it. That is the truth. He will not answer any questions about the people who lost tens of thousands of dollars. And who was that for? It was for a man who is currently in jail in the United States. That is the kind of Shylock and charlatan he associates with. He is the same member who left his taxi book in a taxi one night and then claimed it was in a restaurant—

Hon Member: In a restaurant?

Rt Hon WINSTON PETERS: No, no, he left it in a taxi. Members can imagine how that would happen. Then he claimed it was in a restaurant, so I have to assume that the taxi was in a restaurant! But it was in a taxi, and for a whole month the staff went home on the taxpayer. Did he say anything? No. Did he declare a loss? No. When he was found out he rushed to try to rectify it. But he still has not apologised for his attempt to cover up.

The ASSISTANT SPEAKER (H V Ross Robertson): This is a narrow debate.

Rt Hon WINSTON PETERS: No, no, my point is this: by way of comparison, David Parker’s course of action was more than honourable.

Rodney Hide, of course, is the exact opposite in every respect. He is a man who leads a political party that has falsified its tenancy returns for the last 3 years in this Parliament. Is that true or false? Ah, I know what the member is thinking. He is thinking he got away with it. I am sorry but that is tomorrow’s news, and there will be more about that later.

The ASSISTANT SPEAKER (H V Ross Robertson): Could I just bring members back to the debate.

Rt Hon WINSTON PETERS: I want to tell David Parker that I hope he comes back as a Minister, because I think he has ability. I think he has integrity, and I think, frankly, that though the papers should have been filed, and they should have been filed with a resolution that was unanimous, one could easily have come to the opinion, as a lawyer, that a bankrupt individual in whom the official assignee had lost interest was not a requirement for that unanimity. It is not a great sin in that respect—not like the ones I have seen over there on the Opposition benches on so many occasions in my political career.

Oh, yes, I saw those people cover up the wine-box inquiry. Day after day and month after month they tried to cover up hundreds of millions of dollars of fraud. Yet people like Mr Brownlee have the audacity to get up in this House and spout as though they are now somehow the paragons of virtue. Have members seen the likes of it? And there is not so much as a blush on his face.

Darren Hughes: Poor old pensioner!

Rt Hon WINSTON PETERS: Yes, who on earth would believe the National Party when it comes to that?

There is also the example of the man who went off to court and it was found that he had not told the truth.

Hon Dr Nick Smith: Tell us about the baubles of office.

Rt Hon WINSTON PETERS: National members seem to have trouble with the English language. Do they know what a bauble is? I want to tell them, and I want to tell those in the ignorant press gallery, as well. Let me tell people in the ignorant National Party and the literarily untrained press gallery that a bauble is a trinket not worth having—so of course we do not want those. Sometimes, as the English say, the malady of the ignorant is to be ignorant without knowing it. The joke is on both those groups of people.

JEANETTE FITZSIMONS (Co-Leader—Green): On behalf of the Green Party, I say that I am disgusted and sickened at the way the business of this House for days, weeks, and months has been diverted from the serious issues facing this country into mudslinging and character assassination. We have become a Star Chamber, and McCarthyism is alive and well. It is the last resort of a desperate Opposition that has no ideas and no policies to attack individuals through character assassination.

The disappointment of Opposition members was palpable today when David Parker did the honourable thing so quickly that they could no longer use all the questions they had laid down in question time for the purpose for which they had laid them down. They suddenly had to do a lot of research on the electricity situation and various other things because they could no longer use their questions to try to lampoon the Minister, who had just resigned.

Failure to report accurately to the Companies Office is not trivial. It does reflect on the office of Attorney-General, and I think it is commendable that David Parker took only hours—less than a day—to reach that conclusion and to tender his resignation as Attorney-General. But I think he has been too hard on himself in assuming that it disqualifies him from being the Minister of Energy, the Minister of Transport, and the Minister responsible for Climate Change Issues, on which he was starting to make a real impression.

I ask other members in this House to reflect seriously on how many of them have never done anything that they regret. How many people in this House have never done anything in their lives that they would be ashamed to have dragged in front of this House, exposed for scrutiny, and exaggerated by other members? How many of them have never broken the law in any respect whatsoever? I think that if people were honest about this, they would realise that we are pretending to set up parliamentarians in some kind of glass cage as people who must be perfect in every respect, so that we can have enormous fun dragging them down when we come across some misdemeanour in their past. That is not what the New Zealand public expects them to be.

I am not the only person in New Zealand—and the Greens are not the only six people—who is sickened at the way Parliament has gone on and on and on about one Minister after another because the Opposition cannot find anything else to talk about. We had weeks of it with David Benson-Pope. We had weeks of it about the pledge card. But we do not hear much from the Opposition about its overspending. We do not get any acknowledgment from Opposition members that they colluded with and encouraged a religious sect to spend half a million dollars on their behalf distributing outright lies about the Green Party to every letterbox. We do not hear that said very much at all by the members on those benches.

David Parker is an honourable man. He is one of the most honest and straightforward people I have dealt with in this Parliament. I worked with him closely over the last 3 years on the Local Government and Environment Committee. I found him to be utterly scrupulous, even declaring conflicts of interest to the committee when most of us would never have thought there was a conflict of interest, at all. I hope that his extreme honesty and scruples today will not prevent his coming back as a Minister at some stage in the future, because I think he has a great deal to offer.

Meanwhile, will this Parliament take anywhere near as much interest in the questions facing this country as it is taking in this kind of debate? Will we see the threat of climate change, which is already under way—and New Zealand’s so far rather pathetic response to it—debated with as much passion as we have the misdemeanours of individual people in the House? Will we see peak oil and the threat that that poses to our way of life, our transport system, our production, our trade, and our economy debated with anything like the seriousness with which these personal matters are debated? If members want to have an easy life in Opposition, it is too easy just to focus on slinging the mud rather than doing the real work and getting stuck into the real issues. But New Zealand is the poorer for it.

People out there hold Parliament largely in contempt. As a member of this House it gives me huge sadness to say that our standing in the community is not high. That is why there is so much support for having 20 fewer of us. Of course, whether it would be the right 20 who go would be another question. The public does not seem to have quite worked out that it will not necessarily get rid of the 20 that it thinks are the biggest problem. It is time that Parliament took seriously its lack of standing with the community. The first way to do that would be to stop this mudslinging and personality and character assassination and actually get on with the issues that are important to people.

The future will not condemn this Government because some Ministers erred in roles that were not part of their ministerial warrant. Future generations will be much more concerned about whether this Government took serious action on the big issues facing our country, particularly the issues that David Parker was in charge of—climate change, peak oil, and transport solutions.

The ASSISTANT SPEAKER (H V Ross Robertson): Before I call the next member I advise the House that the Māori Party has agreed to share its speaking time with the ACT party.

TE URUROA FLAVELL (Māori Party—Waiariki): Tēnā koe Mr Speaker, tēnā tātou katoa. Me kī pēnei nā, i runga i ō tātou marae, ko te tikanga, ko ngā mea kua hē ka tae ki mua i te aroaro o te iwi. Ka mutu, ka kōrero rātou, ka noho wahangū te iwi. Kia mutu te kōrero, ka rongo te mea whakahē i ngā painga, i ngā kino ka puta i te kōrero. Kia mutu te kōrero, me noho rātou mai i te tīmatanga ki te mutunga o te kōrero. Ko tāku, ko tā mātou o Te Tōrangapū Māori, ko te mihi ki a Mr Parker i tae mai i te rā nei ki te whakamārama mai i tana hē. Ka mutu i reira.

[An interpretation in English was given to the House.]

[Greetings to you, Mr Assistant Speaker, and to us all. Let me say this: the custom on our marae is that those who have erred must appear before the people. After that, they present their case, and the people remain silent. After the delivery, the ones in opposition hear the positives and negatives that emerged. At the end of the delivery, the people must remain for the entire discussion from the beginning to the end. For me personally, and for us of the Māori Party, we commend Mr Parker, who came here today to explain where he erred. My address ends there.]

RODNEY HIDE (Leader—ACT): This Parliament has a rare form of unanimity today. Everyone in this Parliament now agrees that David Parker should not be the Attorney-General, should not be the Minister of Energy, and should not be the Minister of Transport. The Prime Minister, Helen Clark, and the Labour Party agree on that point. The National Party agrees on that point. United Future agrees on that point. I believe that New Zealand First agrees on that point. I think the Greens say that David Parker did the right thing. I believe that the Māori Party says that Mr Parker did the right thing. So, too, does the ACT party. But I want to contrast this with the situation just a little over 24 hours ago. Helen Clark miscalculated, she has lost her touch, and she has misjudged. I want to take members back to just over 24 hours ago, to Helen Clark when this story first broke. Helen Clark said that there was no need for a public investigation, and she did the classic Labour Party trick of attacking the messenger. So Ian Wishart was attacked, and his magazine Investigate was attacked—attacked by the Prime Minister of this country, and she said it was nothing. Let us just understand what was done.

This Parliament has passed a law that says that if someone files a false statement under the Companies Act, he or she is liable to a fine of $200,000 and 5 years in jail. If that is nothing, why did Parliament pass that law? It is important, because a decision is made not to audit a company’s accounts; not to provide a true and accurate statement of accounts. That is why one has to go around and get every shareholder’s permission. David Parker knew he had to do that, because he got his father’s permission, and he got his own permission, but he did not get Mr Hyslop’s permission. David Parker cannot claim that he is ignorant of the law, because the Labour Party has been telling us for years and years that he is a hotshot lawyer.

We also learnt that Mr Parker set up the arrangements for Mr Hyslop so that he would be financially disadvantaged at every turn in this deal. The Labour Party, which is supposed to stand up for the poor and downtrodden, stood up and ripped this gentleman off, and Mr Parker admitted this to the official assignee. [Interruption] Labour members pull faces. The article states: “ ‘Mr Hyslop was therefore effectively in a different position in relation to the project from you and your father, is that correct?’ ‘Yes.’ … ‘If the project failed would that not place him in a much less advantageous position than the position that you and your father enjoy?’ ‘That is correct,’ confirmed Parker.”

But Helen Clark said it did not matter. A false statutory declaration had been signed, a false record under the Companies Act—it does not matter. Then, later on in the day, it became clear that Helen Clark decided Mr David Parker was not fit to be the Attorney-General, because essentially he had filed a false statutory declaration. It is no small matter. But, we were told, he could be a Minister of the Crown. So one can be a Minister and demand that every poor businessman and businesswoman in this country comply with the hefty red tape laid on them by this Government, but the regulations do not apply to the Minister. That is what is happening under Helen Clark, with this Government. There are two rules: one for every New Zealander, and for the Opposition, and a special rule for Labour Ministers, Labour MPs, and the Labour leader. They carry a “get out of jail” card everywhere they go. That is what happens if one is a Labour Minister.

Then Helen Clark attacked me. She said it was my fault that David Parker is in trouble. I want to put on record in this House that I had nothing to do with that company. I gave no legal advice to David Parker. I did not know Mr Hyslop. I did not fill out the form. I did not give David Parker the pen. He did all that on his own. I say to the Prime Minister that it was David Parker who filed the false statutory declaration—not me, not Ian Wishart, and not Investigate magazine. I say to the House again that if it is no small matter, why is there a $200,000 fine and the potential for 5 years in jail? Helen Clark said that he made a mistake. That is a bit like saying: “I broke the law, no one has been hurt. I made a mistake, therefore it is OK.” Funnily enough, if no one has been hurt then maybe it should not be a crime, but we let Parliament make that decision. In this case, Parliament has decided that it is a crime, and that rule should apply, surely, to those who make the rules—Ministers. But Helen Clark says no. And David Parker says: “Oh, I cut a corner.” If one is a small-business man and one breaks the tax laws of New Zealand—or the company laws, or the occupational safety and health laws, or the electoral laws—and then says: “Oh, look, I’m sorry but I cut a corner. I made a mistake. It’s OK.”, it will not wash.

Everyone has agreed that David Parker should not be a Minister and should not be the Attorney-General, so how come Helen Clark took so long to reach that view? How come Helen Clark and the Labour Party attack everyone for simply pointing out what David Parker had done, as though it was their mistake? I say to Helen Clark that her Government now lacks integrity and honesty. I think that filing a false statement, a statutory document, when one is the Attorney-General and a Minister of the Crown is unacceptable. I think this issue does need a full investigation. I say to the House that it is an important job to hold Ministers to account. That is what Parliament does—that is our Westminster parliamentary democracy. But Ministers can be held to account only if they give truthful answers. What we have seen in this House is Ministers giving untruthful answers. That is the parliamentary crime of David Benson-Pope. He has given untruthful answers in this House, and therefore we have no accountability in this Parliament. That is the tragedy of this Government.

The ASSISTANT SPEAKER (H V Ross Robertson): Can I just say to the member that “untruthful” means “given to lying”; it is diverging from the truth. A generalised charge that a person is untruthful cannot be permitted, but a particular reference to an occasion on which a member has admittedly diverged from the truth in a certain statement is not unparliamentary. I just caution the member on the use of his language.

HEATHER ROY (Deputy Leader—ACT): I want to carry on in this urgent debate from where my parliamentary colleague Rodney Hide left off. Helen Clark left the media, the public of New Zealand, and this House in no doubt today as to where she stands in relation to matters such as those that arose yesterday and today with David Parker. There are important points of principle here that we should pay very serious attention to. The stance that Helen Clark has taken in trying to belittle what has happened—and that the Green Party speaker Jeanette Fitzsimons took when she stood and said we should get on with important parliamentary business, when in fact we have a very important point of principle here today—is nothing short of selling New Zealanders short.

Helen Clark tried to tell us that Mr Parker made a simple mistake. I think that he himself described it as cutting some corners. But there is much, much more to this matter than that. This House agrees that David Parker has done the right thing in resigning, firstly, from the position as Attorney-General, and, later today, from his other portfolios. That indeed is the right course of action, because one thing that members of Parliament must have is integrity. They must be able to stand in this House and speak from a point of principle and with integrity. However, what have we seen over the past 6½ years with this Government? We have actually seen a complete lack of integrity. Nine Labour Government Ministers have lost their ministerial positions because of a complete lack of integrity of various sorts, with the misleading of both the media and this House, the “paintergate” and motorcade incidents, and the belittling of all those actions. In front of New Zealanders and this House, there has been a complete lack of integrity.

Not just this week but ever since the election, this tired-looking Government’s position has not been one of “do as I do” but one of “do as I say”. There is one rule for the Labour side of the House and a completely different rule for the other side. This Government takes the position that we should do as it says, not as it does.

Twenty-four hours ago Helen Clark was backing David Parker, saying that he had made a simple mistake. What he in fact did was make a false statutory declaration. As Attorney-General that was clearly an intolerable position for him to be in, and he has done quite the right thing in resigning from that role. He misfiled an incorrect document under the Companies Act. We now know that a person found guilty of doing that can be punished with 5 years’ imprisonment or a $200,000 fine. That clearly is intolerable, and a full investigation must be undertaken.

I ask members what they think would have happened had Mr Parker not resigned from his positions. Would the Prime Minister have continued to back him in the way she has backed other Ministers, particularly Mr Benson-Pope? Would the police have found a prima facie case that, again, would have gone absolutely no further?

New Zealanders want their politicians to come to this House and act with integrity, to do the right thing, and to get on—as the Green co-leader Jeanette Fitzsimons said—and debate the real issues. The problem is that over the last 6 years we have had so many issues in relation to Labour Government Ministers who have been given responsibilities for portfolios but who have acted without integrity. They have come before this House and they have not filled their positions honourably. They did not do what they should have done. New Zealanders who voted them in want them to come to this House to represent them with honour and integrity. Signing paintings, saying you painted them yourself when you had not—

The ASSISTANT SPEAKER (H V Ross Robertson): The member is bringing the Speaker into the debate.

HEATHER ROY: I apologise, Mr Assistant Speaker.

Acting in those ways and misleading the House and the media, as Lianne Dalziel did, is not what people expect of their politicians. It would be great if the Opposition could stand here and, rather than having to hold Ministers to account, instead hold the Government to account for its policy decisions and debate the real issues. The problem is that we have had nine Ministers who have not allowed the Opposition to do that. We cannot stand here and do our job by allowing Ministers in place who act with no integrity at all—[Interruption] Those members over there might like to shout, but that is just part of the Labour Party spin machine, too, is it not—to make as much noise as possible to divert attention from the real issue, which is that of Ministers who cannot do their jobs properly because they lack integrity. There have been nine such incidents with Ministers in 6 years. One such incident could be considered unfortunate. Over a 6½ year period, I suppose a loss of two or three Ministers might be considered unfortunate, but nine Ministers? I would say that something is wrong with this tired Government when nine Ministers have fallen by the wayside.

Prime Minister Helen Clark stands up and says that this Government is an honourable Government, that it has integrity, that it does its job, and that it is acting in the best interests of New Zealanders. But this Government does one thing and tells New Zealanders to do the other. I do not think that the Prime Minister any longer has the moral authority to govern this country. Something is lacking when nine Ministers fall by the wayside. This is a tired Government that lacks integrity. What we need as a result of yesterday’s and today’s revelations—firstly by Ian Wishart, then, as things have come to light, by others—is a full and thorough investigation into this matter so that we can get to the bottom of everything. This country needs to think very carefully about whether it has a Prime Minister and a Government that have the moral authority to govern properly—to govern this nation, to lead it, and to make policy decisions on behalf of New Zealanders. We need to think very carefully about that.

Today’s issues are not just about making simple mistakes. This was not a little mistake; it was a serious error of judgment. It was made not once, not twice, but over a series of many years. David Parker has done the right thing in resigning from his positions. He took 2 days to come to the decision to resign from his other portfolios. But it raises much greater issues that New Zealanders need to consider carefully. We should be asking whether the Prime Minister has the moral authority to continue to govern. Do her Ministers have integrity? How many more cases do New Zealanders have to put up with before we can get to the real issues? People in this House keep talking about them, but we are prevented from debating them properly because of other issues that should not get in the way, but do.

Hon PETE HODGSON (Minister of Health): I rise as a friend and a colleague of David Parker to put on the public record some matters that I think should be put on it at this time. I say at the outset that I support David Parker’s decision to resign and that I am saddened by it. I support it because I spent time with David over the last 24 hours, and I can say freely that he would not have felt comfortable had he stayed. He would not have felt comfortable within himself had he stayed. He has always, in my experience—and I have known him for years, though not decades—acted honourably. “Honourably” is a reasonably old-fashioned word. It is widely used around here—some would say overused—but it is a word that I apply to this man’s life within this place and outside of it. He has always acted honourably in his dealings with people in business, in politics, and in civic affairs. It is a remarkable trait that he has. He is not the only person I know who has it, by any means, but this is an honourable man in the original sense of the word.

I am saddened by his resignation because he has a remarkable talent. That talent will now be put on hold for a time as the result of this mistake, or series of mistakes, of his. I am saddened—and Jeanette Fitzsimons touched on this a little more strongly than I intend to—because the court of public opinion that is represented here, loudly, allows someone who has made a mistake to be heard only if he or she resigns. Someone who seeks to try to give an explanation or to speak calmly instead of resigning is subject to a blood-lust from political opponents that readily crosses the line from transparency and accountability.

Transparency and accountability are, of course, good things in a strong democracy, and essential things in a functional democracy. In Parliament there is a higher level of accountability and transparency than is to be felt amongst the ordinary citizenry, and that is how it should be, but it often crosses that line into harassment and bullying, and invented froth and anger. We have seen that trend in New Zealand in recent times, and I think the possible extensions of that behaviour are troubling. In the extreme—and it would be in the extreme—we would need to think around America in the McCarthy era, and the Weimar Republic in Germany. They would be extreme examples, and New Zealand must not go there.

Let me tell members a little about the David Parker I know. David Parker is a bright guy. He managed to get himself through a law degree, a commerce degree, and his professionals in 5 years at Otago University. He worked while he was doing that as a woolstore worker, on roading gangs, in the port, and as a gardener. Soon after he graduated he also was one of the people—he would want me to make it clear, I am sure, that he was not by any means the only one—who began the Dunedin Community Law Centre, which became a model for community law centres around the country. He then spent time as a lawyer in London before returning to Otago.

He worked in Central Otago for a time, and then in Dunedin he joined Anderson Lloyd, which is the largest law firm in the South Island. When he was about 28 or 29, in my recollection or his, he was a civil litigation partner in that law firm, and he then became a managing partner before leaving the law and moving into business. One of the reasons he left law initially was that he was troubled by the high costs of civil litigation, and it did not suit him to continue to work in that area. So he started up the Percolator Cafe, he had a forestry partnership floated, and so on. Then he entered into a bunch of business ventures, which he has explained in some detail, with Russell Hyslop. I will not say too much about Russell Hyslop except that he is well known in Dunedin and to a number of people who sit at the Cabinet table. It is fair to say that a trail of half-finished business and wrecked relationships follow in his wake, and I will leave it at that.

After Russell Hyslop’s bankruptcy, David return to work full-time as a lawyer for 3 years, as he has explained. Then, because of his efforts he came to the attention of a number of business people in Dunedin who saw that he had corrected a bunch of errors and had worked hard to do that. He had taken insolvent companies through to a point of neutrality. He was involved with a number of people who were business leaders in Dunedin: people like Jim Guthrie, Max Shepherd, Tak Hung, John Farry, and the late Howard Paterson. Those people worked with David and saw him as a skilled person. He was therefore involved with a number of biotechnology companies. The best known is probably BLIS Technologies, where he was the inaugural chief executive, and he took it through on to the main board of the New Zealand Stock Exchange. He was also the inaugural chief executive of Botry-Zen and PharmaZen and was involved, a little less directly, in A2 Corporation. That was the range of his business activities.

He then decided that he wanted to give voice to his interest in politics, and it was at that stage that he became more strongly involved in the Labour Party in Dunedin North. Around 2001, I think, he became the chair of the Labour electorate committee in Dunedin North, where I was, and am, the member. In 2002 he decided to stand for Otago, and he won the seat, surprisingly. Bill English, who was the leader of the National Party at the time, is on public record saying that that loss—because National lost a number of seats in 2002—was the one that hurt him the most. The reason is that it was a seat that on paper Labour should not have won. David Parker won it. In 2005 the same thing happened. He lost the seat, of course, but he lost it by a margin narrower, in my analysis, than he otherwise might have. So David Parker has two important electoral competitions to his credit. He has won one and lost one, but he has done better than expected in both. In Cabinet he had four portfolios, three of which I know well and which I would regard as complex portfolios, and the fourth as Attorney-General, which is a pure mystery to me. I wish him well and I hope he returns to a New Zealand Cabinet table soon.

Dr Brash said that David Parker’s actions do not make him a crook or an unmitigated bad man, and I think that is a wise position for Dr Brash to take. I think it is almost beyond doubt that David Parker is not the only person in this House who has taken short cuts in the filing of Companies Office returns. Then Dr Brash, regrettably, made a fool of himself by suggesting that the police were biased in favour of the Labour Party when they announced last week they were not going to prosecute the National Party either—and they did that in the very same press statement. Nonetheless, he accused the police of bias and said that we should pressure them to prosecute David Parker under the Companies Act—as if that is not a step towards a police State. Dr Brash did not acquit himself well.

Mr Brownlee has his own history, of course. He assaulted someone. He was not prosecuted by the police, but a civil charge was taken and won. Mr Brownlee lost that civil case, on the assault charge. As for Mr Hide, I would simply say that he is a man cheated of an opportunity to get angry, who got angry anyway. He did not explain to the House why he routinely refused on Morning Report to answer the question of whether he had been to Dunedin and had been involved in this. He did not respond to Mr Peters’ allegations regarding the returns on Pipitea Street, and he did not explain how he got so much speaking time. I can tell members that it was because the Māori Party gave it to him.

The debate having concluded, the motion lapsed.

Bills

Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill

Second Reading

Hon ANNETTE KING (Acting Minister of Trade): I move, That the Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill be now read a second time.

Dr the Hon Lockwood Smith: Jim did most of the work on this.

Hon ANNETTE KING: Dr Smith is quite right. I thank the Foreign Affairs, Defence and Trade Committee for its consideration of this bill, and for reporting the bill back to the House in the short space of time the House requested of it. The committee’s majority recommendation is that the bill be passed with no amendments. Although the time available for the select committee consideration was short, the committee was able to consider the bill in light of submissions made during the committee’s earlier consideration of the national-interest analysis of the Trans-Pacific Strategic Economic Partnership Agreement.

This bill amends New Zealand’s domestic legislation to enable New Zealand to become a party to that agreement: a four-way economic partnership between New Zealand, Chile, Singapore, and Brunei. The Trans-Pacific Strategic Economic Partnership Agreement is a treaty that liberalises and facilitates trade in goods and services, improves the business environment, and promotes cooperation on a broad range of economic areas of mutual interest in all four countries. The agreement offers real gains to New Zealand exporters through the establishment of a free-trade area that spans the Pacific and joins Latin America, South-east Asia, and New Zealand. The agreement serves the objective of wider trade liberalisation within the APEC region as a whole.

The bill amends the Tariff Act 1988 in order to bring it into line with the Trans-Pacific Strategic Economic Partnership Agreement. The passage of the bill will allow New Zealand to ratify the agreement, which will enter into force 30 days after ratification by at least two of the four signatories. The bill contains an amendment to the Tariff Act, to enable preferential tariffs conferred by the agreement to be applied to the parties to the agreement. The tariffs conferred by the agreement are included in the preferential tariff column of the New Zealand tariff. The actual rates of duty, as spelt out in the agreement, will be added to the tariff by subsequent Orders in Council.

Initial tariff cuts will take place when the Trans-Pacific Strategic Economic Partnership Agreement comes into force for each party. In the case of Chile, that will result in the immediate elimination of tariffs on 89 percent of current New Zealand exports to Chile, while all remaining tariffs on exports to Chile will be phased out by 2017. Brunei will bind at zero tariffs, covering 92 percent of New Zealand exports to that country, with remaining tariffs to be eliminated by 2015. Tariffs between New Zealand and Singapore are already zero under the existing New Zealand - Singapore closer economic partnership agreement.

In order to help secure those gains on trade and goods, the Trans-Pacific agreement contains rules that govern the free-trade area. Those include rules to determine which goods qualify for tariff preferences, as well as rules to counter unfair trade. The agreement also includes broad coverage of services, which will make it easier for New Zealand service providers to operate and compete in the markets of Chile, Singapore, and Brunei. In this and in other ways the agreement will assist in improving the business environment, and will open up opportunities for New Zealand businesses.

The Foreign Affairs, Defence and Trade Committee considered the agreement under the international treaty examination process. Its report to the House notes that the agreement serves New Zealand’s objective of broadening relationships with Latin America and Asia, as well as promoting New Zealand’s wider trade policy interests in APEC and multilaterally. Issues relating to the agreement were raised at the select committee. It was acknowledged that the Government’s aim in entering negotiations for closer economic partnerships is to provide new opportunities for exporters, and to guard against the erosion of benefits for New Zealand exporters from preferences afforded third parties. The report also recognised that the framing of the service commitments in the agreement provides legal certainty and transparency for New Zealand’s service exporters, while it retains New Zealand’s ability to protect sensitive sectors such as social services, water, and marine resources.

A minority view presented in the select committee report raised concerns about the economic benefit to New Zealand of the agreement. Those concerns were based, in part, on a perceived failure of the bilateral closer economic partnership agreement with Singapore to advance New Zealand’s economic interests. Contrary to that belief, since the Singapore closer economic partnership agreement entered into force in 2001, and despite the downturn in the Singapore economy between 2001 and 2003, there has been a large increase in investment and service activity between New Zealand and Singapore. Between 2003 and 2004 New Zealand exports to Singapore increased by 21 percent. The Singapore closer economic partnership agreement, like this agreement, has a strategic focus that is intended to foster partnerships between the private sectors of its parties, and it has been very effective in doing so.

We have every confidence that the Trans-Pacific Strategic Economic Partnership Agreement will produce even better results for New Zealand. That confidence is shared by a wide range of New Zealand businesses and industry groups, and by educational and scientific institutions, which have publicly welcomed the successful negotiation of this agreement, and which are looking forward to its entry into force. Ratification of this agreement will reinforce New Zealand’s credentials as a forward-looking, open economy and a progressive free-trade agreement partner. It represents significant economic and strategic opportunities for New Zealand. I commend the bill to the House.

Dr the Hon LOCKWOOD SMITH (National—Rodney): Let me be very clear from the outset that National supports the Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill, which is very important for New Zealand’s future. It saddens me a little that the Hon Jim Sutton did not speak first to the second reading of this bill. Although I have nothing against the Hon Annette King—apart from the fact that she is a Labour Minister—Jim Sutton deserved to be speaking first on the bill because he did most of the work to get the negotiating behind the legislation in place, and I want to acknowledge his work in that area.

Although National supports the bill because it is so important for New Zealand—not just in our trade with the particular countries involved but because of its strategic value for New Zealand, and I will come back to that later—I want to raise an issue that I think is unfortunate and sad. The Minister, in moving the second reading of the bill just now, mentioned that the phase-out of New Zealand’s tariffs on products coming into New Zealand from both Chile and Brunei will extend through to 2015 in some sectors—notably the clothing, textile, footwear, and carpet sectors.

The reason that is unfortunate is that the development of this strategic trade agreement, just like the original Singapore agreement that preceded it, was designed to galvanise APEC development. When New Zealand was chairing APEC in 1999, and even in the time leading up to that, it was clear then that a huge challenge for APEC—the Asia Pacific Economic Cooperation group, which covers half of global trade—was to meet the 1994 Bogor goals of free and open trade among the developed members of APEC by 2010 and among the developing members by 2020. One of the reasons that the National Government initiated negotiations like that when I was the Minister for International Trade was to try to bring some leadership to APEC, because we could see the real challenge to meet those Bogor goals that were so important to liberalising trade globally.

With this agreement, just like with the free-trade agreement with Thailand that the Labour Government agreed to, the New Zealand Government is itself breaching New Zealand’s commitment to APEC, because it has made a commitment to APEC that we will have free and open trade, that we will liberalise trade, by 2010, as a developed member of APEC—unless the Labour Government considers that, under its stewardship, New Zealand has slipped from being a developed member to being a developing member of APEC. We have made a commitment to free and open trade by 2010, yet this strategic trade agreement and this legislation breaches that commitment, because our tariffs will continue beyond 2010 for certain imports from Chile and Brunei.

That is unfortunate, but it is not without precedent—Labour agreed to that in the free-trade agreement with Thailand. It is unfortunate that New Zealand has failed to show leadership in sticking to our APEC commitments, since those trade negotiations were originally all about galvanising the APEC process.

I want to come back to that. All of that started back in the late 1990s, when New Zealand was planning for its chairmanship of APEC in 1999. I mentioned a moment ago that we were concerned about the challenges of progress, so when George Yeo was the Trade Minister for Singapore, we initiated that free-trade agreement negotiation with Singapore, the whole idea being to show other members of APEC that countries could get on and actually negotiate far-reaching free-trade agreements. It was not the trade between Singapore and New Zealand that was relevant; it was its strategic value and the demonstration to other APEC members that these things could be done and that we could get on with it. My goodness, I think it is fair to say—and I see the Hon Jim Sutton nodding his head—that the negotiation of a free-trade agreement with Singapore had a profound impact on the thinking of other APEC members, including Malaysia, Australia, and even Chile.

At that time, New Zealand had initiated that negotiation with Singapore. That agreement was initiated between me, as New Zealand’s trade Minister, and George Yeo, as Singapore’s Trade Minister. In fact, my good colleague here Tim Groser was our chief trade negotiator at the time, and he did the real hard work on that trade negotiation.

At the same time, though, we had a bigger strategic vision. There were key players in APEC, involving the US Trade Representative, the New Zealand trade Minister—myself—the Chilean vice-Minister of trade, Alejandro Jara, the Singaporean Trade Minister, George Yeo, and the Australians. In fact, Tim Fischer was the Deputy Prime Minister and Trade Minister of Australia at the time.

We had a bigger strategic vision that we called P5. That whole concept was to really bring some progress to APEC by linking up APEC members right across the Pacific—the United States, Chile, New Zealand, Australia, and Singapore. It would have been a magnificent trade deal. When President Clinton was in New Zealand during his State visit following the APEC leaders’ meeting in 1999, he told the Shipley Cabinet at that time that he liked the idea of P5 and that he was keen to see it pushed ahead. I know that his Trade Representative, Charlene Barshefsky, who remains a very good friend to this day, was totally behind that trade deal. George Yeo and the Singaporean Prime Minister were totally behind P5. Chile was behind P5 as long as it did not cut across Chile’s long-promised free-trade agreement with the United States of America, which Chile had been promised for many years. Finally, even Australia, which maybe was not quite so enthusiastic initially, came to the party as well and said that it wanted to be in that. It was sad that we ran out of time. We saw the elections in the United States that changed the Government there and the elections in New Zealand that brought in the Labour administration, and that changed totally the dynamics between New Zealand and the United States that had seen the concept of P5 almost advanced to fruition in late 1999.

At the time, we realised that P5 might not be as easy as that. We knew that the United States trade agenda at the time was very full with giving China permanent most favoured nation treatment in US law. Getting major trade legislation through the United States Congress is always challenging, and at that same time the United States had to get that legislation through its Congress. So we knew that P5 was always going to be difficult, which is why Tim Groser and I worked with some key players, notably Alejandro Jara, who is now a deputy director-general at the World Trade Organization, and Ricardo Lagos Weber, the son of a former President of Chile, who I think is now Trade Minister for Chile.

We were working at the same time on this concept of P3. P5 was the big strategic picture. If P5 could not go ahead for whatever reasons—maybe Australia was not totally enthusiastic, or maybe the United States was too preoccupied with China’s accession to the World Trade Organization and making China a permanent most favoured nation—we wanted to make sure that there was a strategic concept that would advance APEC’s trade liberalisation goals. So P3 was initiated as a concept way back in late 1999. Tim Groser reminds me of the work we did on it at the Carlton Hotel as we were chairing APEC at that very time.

So these developments do not happen in a short time. It is now almost 7 years later that we are passing this legislation. Where New Zealand is fortunate is that we have bipartisan recognition in our Parliament, at least in recent years. When I was trade Minister, I have to say that I did not get all the support from Labour that Labour has had from us on these trade issues, but at least now that Labour is in Government it has shown that it realises the vital importance of trade liberalisation, not just to New Zealand but to global economic development. I think we are fortunate in New Zealand that our major political parties do understand the importance of trade liberalisation, and that these kinds of strategic agreements and legislation have the almost unanimous support of this Parliament. It puts New Zealand in a hugely strong position to lead these kinds of strategic developments internationally. It is an important role we have, and it is just a shame that Labour breached that leadership role in allowing our tariff phase-outs to go beyond our APEC commitment of 2010. Despite that issue, National is totally supportive of this legislation.

DIANNE YATES (Labour): I rise to speak on the Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill, and I want to thank the previous speaker for his comments and the support of the National Party for this legislation. It is an interesting process, because the actual legislation is only about a page long. It is the culmination of a treaty-making process. The amount of time spent on the bill by the Foreign Affairs, Defence and Trade Committee was very short indeed—in fact, it was just one meeting—with the reason being that the bill is the culmination of several years of work, as Dr Lockwood Smith has just pointed out. A lot of hard work was done by a number of people over a period of time, so perhaps the more important debate was the debate we had on the national interest analysis some weeks ago in this House, when we looked at the submissions from members of the public and the statements in the national interest analysis. In fact, the committee reported the bill back to the House in one sentence, and referred to that analysis.

The bill, as we have seen, amends the Tariff Act 1988 to enable the Trans-Pacific Strategic Economic Partnership Agreement to be brought into force. That is why it is such a short bill and why it will not take up a great deal of time in the House. As has been pointed out, that agreement has been signed by Brunei Darussalam, Chile, New Zealand, and Singapore. I wish to thank the Hon Jim Sutton for the work he has done on this agreement for the Hon Phil Goff, and I also thank the Hon Annette King for the contribution she made today. I also thank all the officials involved in the whole process, throughout the period of time spent both on the bill and on the national interest analysis. So a big “Thank you” goes to those involved in getting this bill back to the House in a timely fashion and, in particular, I thank the members of the select committee, who have worked very well together in bringing that about.

We have talked about the importance of this agreement to New Zealand’s economic growth prospects over a period of time. We have also pointed out that this is the first agreement with a Latin American country, and it is New Zealand’s first multiparty agreement spanning the Asia-Pacific region, as Dr Lockwood Smith just pointed out. We have noted that the majority of the members on the select committee were in favour, and that there was one opinion against from the Green Party. That has been referred to in the report back, and especially in the report back on the national interest statement.

The committee has noted that the agreement is not expected to have discernibly negative social effects, and that there are no adverse cultural effects, although there were some questions about that. In particular, on the national interest analysis it was reported back by us that we were aware that in the creative areas an exclusion was inserted to clarify that New Zealand could take action to support creative art of national value. The provision has several caveats, ensuring that it does not constitute an exclusion for the creative industry sector, but we noted that National Party members had a minority opinion on that section.

When we considered the national interest analysis, we noted also that there were only three submissions. Two of those submitters were concerned about the risk contained in the negative list. I will read from our report back to the House: “The negative list approach means that if a service sector is not listed in the services schedule then it is bound by the national treatment, market access and most favoured nation obligations. The point was raised that these commitments will apply even if the list contains errors, if new technologies alter the way services are delivered, or if market failures require the government to re-regulate. Further, it was suggested that the ratchet clauses may have negative repercussions by allowing the Government to introduce policies that could not subsequently be reversed.” We were assured, and we understand, that the negative list has been framed to ensure that future Governments can adopt restrictions in far more sectors than our laws currently require, and we were also assured that New Zealand is more likely to benefit from that provision than to suffer from it.

We point out that as there were only three submissions on the national interest analysis, the committee did not call for submissions on the bill itself. The national interest analysis included a huge number of submissions, and the whole issue had been taken around the country through an extensive consultation and communication programme. One of the people who came to the select committee said that there had not been enough time to look at the analysis. I wonder how much time some people need, when they have actually had years to look at some of these provisions. The consultation programme on the national interest analysis included everybody from trade unions to Māori authorities to chambers of commerce, and there are many pages that list people who are considered to have had input. So the select committee felt that the complaint about lack of time was not warranted in that case.

We commend this bill on its second reading. We look forward to its speedy passage through the other stages in the House, and to the final ratification of the treaty.

JOHN HAYES (National—Wairarapa): I rise also to support this legislation, primarily because we on this side of the House want to see a free economy and a free trading system. A free economy and a free trading system is the only way to create wealth and prosperity, which this country badly needs. Prosperity alone will give us the resources to pay for better services to the community and better services for those in need. The attack on private enterprise by the Labour-led Government through its highest tax structure has made certain that nothing will be available for improvements in the social services area for some years to come. We need to get the private sector generating wealth, not just to put more money in pockets but so that we can give more money to those who need help: the old, the sick, and the handicapped. This trade agreement will make a minute impact on economic growth, but because it will make a positive impact on economic growth we support it.

I suspect that the trade agreement has actually cost more to negotiate than it will deliver. If we refer to the national interest analysis we see clearly that this agreement will cost us about $472,000 each year to operate. Of that, $150,000 annually has been set aside by the bureaucrats for their administration fee. Then we will lose some money from tariff revenue, to the tune of about $320,000 for Chile and about $1,800 for Brunei. The gains from this agreement are estimated to be about $2.2 million in reduced duties paid by our exporters to Chile and about $50,000 in reduced duties to Brunei. The total gains as a result of this agreement look to be $2.25 million, and the cost is about $472,000, so the equation has a positive balance of $1.78 million. Therefore I support it.

However, I come back to comments made by the Hon Dr Lockwood Smith. He has pointed out that this agreement is missing the involvement of Australia and the USA. I do not see that changing under this Labour-led administration. That is a big pity, because we could turn this minute benefit into something of serious significance for our country.

We support this agreement because it will help our casein exports and facilitate coal exports to Chile. It should also make it easier for our business people to operate in Chile and Brunei. It is also worthy of note that benefits will accrue to New Zealand if the other partners to the agreement enter into new trade agreements with other parties and gain greater benefits than the agreement provides for at present. Those benefits will eventually accrue to New Zealand. But I warn people in my electorate that we will have increased competition from both Chile and Brunei in the areas of forestry and wine. The value of this agreement—$1.78 million annually—is less than 50c for every man, woman, and child in this country. It really is a pretty poor effort for a huge amount of work. We must seriously focus our trade negotiations on agreements that will deliver bigger benefits than this one will. But this is certainly a start, and that is why we support it.

KEITH LOCKE (Green): The Green Party opposes this legislation. It is legislation required to implement New Zealand’s adherence to the Trans-Pacific Strategic Economic Partnership Agreement, which the Greens oppose as not being in accord with New Zealand’s best interests. This is an ideological agreement that wrongly sees free trade with the countries involved as the answer, even though we are not on a level playing field with them in terms of wages, environmental and labour standards, or State support systems. As I said in the first reading debate, the Green party supports trade agreements but not ideological free-trade agreements. We support the CER agreement, which has brought many benefits to New Zealand and operates in tandem, on both sides of the Tasman, with Buy Australian and Buy New Zealand Made campaigns. The Green Party, under the terms of its relationship with this Government, is in charge of a “buy New Zealand” campaign that we hope will produce benefits within the framework of the CER agreement. The CER agreement has some downsides as well, which are outlined in the relevant report—and particularly in my minority comments on it—presented by the Foreign Affairs, Defence and Trade Committee a couple of parliaments ago.

In my first reading speech I covered the range of Green criticisms of the Trans-Pacific Strategic Economic Partnership Agreement. I will not repeat all of them now. In this speech I want to concentrate on the service component of the agreement that this bill implements. I am particularly worried about the negative list of commitments New Zealand and the other three countries make in the services area of the agreement. This is quite new. It does exist in the CER agreement, but in free-trade agreements generally it is a new approach. It means that if New Zealand does not put a certain sector on the negative list, from then on that sector has to be open to foreign providers—for New Zealand and the other three countries to be on an equal footing. As things roll on with other free-trade agreements—bilateral agreements, multilateral agreements, and the World Trade Organization General Agreements on Trade in Services (GATS) negotiations—that access to our service sectors will be extended to other foreign providers.

I want to go over some of the problems that the negative list produces in the services area. First, there is the problem of a Government making a mistake in failing to list a particular sector of importance to the New Zealand people. That failure will then bind future Governments. We already have the problem, for example, in relation to a mistake made by a previous Government in the GATS commitments relating to audio and visual products, which means that it is hard for New Zealand to introduce local content quotas for radio and TV other than voluntary quotas.

Second, a sector can be left off the list and then technology may change in a way that was not foreseen. New Zealand then becomes defenceless in terms of upholding its interests against foreign providers, because it is no longer able to deny them the same treatment. The United States had this problem in the area of betting services when it allowed foreigners in. Internet gambling then came along and, although the United States Government wanted some local control in the area, the cat was already out of the bag. Antigua and Barbuda took a case to the WTO against the US on the Internet gambling issue and won.

Clearly, the whole information technology sector is one in which all kinds of changes may occur that we do not foresee at present. In New Zealand, we have already found that we are hamstrung in the information technology area by Telecom, which has a monopoly over the local copper wire loop. Under the agreement and the whole GATS approach that New Zealand has committed to, if we are bound into commitments, when confronted by problems like this we must use the least intrusive means of regulation, which of course plays right into the hands of organisations like Telecom. Telecom is arguing that its approach to broadband is the least intrusive approach and that it should be the one that the New Zealand Government adopts. Surely the New Zealand Government should reserve its right to intervene on a whole range of sectors without such restraints, particularly if players who are effectively monopolies are stuffing things up and not investing properly in the sector, etc. We have seen tragedies across a range of infrastructures—for example, rail with Tranz Rail, airlines with Air New Zealand’s earlier failure, and also in the telecommunications area with Telecom.

As with a lot of legislation that passes through the House, there is now sometimes a tendency to look at it in terms of how a Labour-led Government might implement it, as opposed to a Government of the future that might be further to the political right. Take, for example, the reservations on the negative list of services under annex IV of the agreement. They include reservations over social services established for a public purpose, such as public education, public housing, public training, public transport, and public utilities. That sounds good on the surface, but then what happens when, for example, a future Government applies voucher-type solutions in those areas, as National and ACT tried to do? Already, the public support for housing—the accommodation supplement—goes mainly to private housing. So there is a difficulty in disentangling the public and the private in terms of those reservations.

If National brought in education vouchers as its prime means of funding education, with no discrimination between their use in the public and private school sector, then the reservations in the bill would mean little. The present Government is really keen on making the provision of private education open to international providers, partly because New Zealand private providers are selling services in other countries. But could our whole education system here in New Zealand not be distorted in favour of private providers and foreign private providers if the open foreign access was combined with a new voucher system introduced by a future Government?

The public transport reservation could also be bedevilled by open access to foreign passenger-transport providers, private providers, or private road builders under moves towards public-private partnerships that move to the provision of private roads, which the National Party is talking about increasingly. Future right-wing Governments might go down that track. How does the reservation in the agreement apply under that scenario? Because of the ratchet provision in the agreement, once a future right-wing Government goes down what is effectively a privatisation track, a future centre or centre-left Government would find it very difficult to reregulate without affecting the agreement rights in the system of those foreign providers.

We already have light-handed regulation in areas like taxis, construction, and the provision of private education services—and we know that every time we see a huge queue of taxis at the airport, hear about more leaky buildings, or read about dodgy foreign education providers with inadequate courses. Under article VI of the GATS, we are not supposed to reregulate once we have deregulated. Would the public utilities reservation in annex IV of the agreement include environmental services or waste facilities? It is not clear. There is no specification in the annex. And who would determine if they are covered? That would be done by an international arbitration mechanism. It would not necessarily go New Zealand’s way. There is a lot of looseness there.

Also interesting is the reservation for maritime and port services. It is true that, up until now, we have not had foreign provision of those services. But now we see Hutchison Port Holdings—a huge multinational company run by a Hong Kong billionaire—being offered control of the port by the Christchurch City Council. That will not be in the interests of Canterbury or New Zealand, so it is hard to see how those mechanisms in the agreement will help the New Zealand people.

TIM GROSER (National): I am also rising to support this bill. My two colleagues earlier explained our general political position on it. From Keith Locke we have just heard what I would describe as an entirely consistent view from the Green Party. It is basically a view that sees the restraints on sovereignty through international trade treaties as an encroachment upon the rights—as I would put it—of Governments to mess up our own economy. So I think that that is the only fundamental difference in this House. Yes, we have a couple of small points to make; we would have liked to have seen some slight changes to this agreement. But they have been touched on by other speakers, so I will not go into them now.

What I want to do on this occasion—the second time I have spoken on the agreement—is to explore a little more deeply the broader strategy behind the agreement. The title is quite a mouthful: the Trans-Pacific Strategic Economic Partnership Agreement. But although it is rather a mouthful, and one might also say slightly pompous, the title is correct. The agreement is not fundamentally about advancing our economy by any appreciable amount. We all know that the net benefit is trivial. It really requires a deeper understanding of the strategy behind this agreement to understand why it has been worth negotiating. So, from that perspective, I will go back in history a little.

I would describe New Zealand about 25 years ago as being up the creek without a trade policy paddle. We had no way, multilaterally, through the GATT, because agriculture—our chief interest—was outside it. We had only one very poor-quality bilateral agreement—the so-called New Zealand - Australia Free Trade Agreement—and nothing else. It was a very difficult environment, made more difficult—as all members in the House will know—by the decision of the United Kingdom to join what was then a completely unreformed common agricultural policy going mad. As a very small country with very little leverage—friends but no leverage—the situation in the early 1980s was extremely bleak for this country.

We then saw through the 1980s a slow shift in that fundamentally bleak position, as a result of a number of factors. One was internal economic reform, which changed the economic prospects of this country from very poor to average, or to a little better than average, OECD levels—although it took 5 or 6 years to have any effect, starting from 1991. Internationally, also, the cynicism that was felt in this country about the multilateral option—the GATT as it was then called—began to be addressed as people began to incorporate agriculture for the first time in the Uruguay round. So that very bleak situation multilaterally started to shift to our country’s favour in the 1980s.

Around about the early 1990s, after several failed attempts by New Zealand to try, as I have put it in the past, to find dancing partners—that is, some countries that we could negotiate with beyond CER-type deals—the National Party formulated a trade policy strategy called New Zealand’s multilateral trade policy, which was launched by Jim Bolger and the then trade Minister Phillip Burdon. That basically put down three propositions for us, none of which were mutually exclusive. The first was that we would proceed on the multilateral track. Second, we would continue unilateral reform of trade policy, because it was in this country’s own interest to accelerate that at a faster pace than negotiations would allow, and, thirdly, we would negotiate this type of agreement, the bilateral track.

That strategy I believe is still valid today, and this decision that we are debating tonight is absolutely an outcrop of that strategy. With regard to the multilateral track, which is under way in the Doha round, we must remember that that is far more important than any of those agreements—including a free-trade agreement with the United States, and including a free-trade agreement with China by whatever name, because some of the instruments of trade policy that New Zealand desperately needs to reform can only be done multilaterally. Export subsidies are the most important and the most obvious example of that.

The second track, the unilateral track, has run its course. We have cleaned out the mess that was New Zealand’s frontier policy. There are a few small tariffs in textiles and clothing but, frankly, the recent shifts in the last few weeks and the exchange rate show us how relatively unimportant those are. Where that policy used to be a huge issue, it no longer is.

So the real issue here is the third track, the bilateral track, and this is where this deal assumes some strategic significance. Now, it has always been central to the bipartisan position of successive National Party caucuses and Labour Party caucuses that certain basic principles should be followed in the construction of those agreements. The most important principle is comprehensive commodity coverage in the area of goods. Members will understand that there is a basic divide between services and goods. I have never argued for comprehensive coverage in services, for a number of reasons, but there has been absolutely an article of faith that we do not agree to exclude our key sectors of export interest. We can live with the second principle—progressive liberalisation after comprehensiveness—in order to deal with the political realities involved, because often our main exports are extremely sensitive. The reason why, after several stillborn attempts with Chile, it has taken so long to get the Chileans to the table here, is the huge concern in Chile over what is really a very, very small tariff on dairy products. Chileans see us as the competitive threat.

So the first and key principle is comprehensive coverage—that is, we should never go into an agreement that excludes our main export interests—and, secondly, to make that realistic, we must agree to progressive liberalisation. We do not have to insist on too ambitious a timing formula to deliver very real benefits to New Zealand in those highly sensitive agriculture areas. There are some other principles underlying the agreement, but they are the two key ones.

When we look at this agreement, we note that it is of trivial—it is of possible, but it is of trivial—trade significance. Dr Lockwood Smith earlier sketched some of the political background to it, but I think we should also see that as New Zealand’s plan B, if the multilateral option were to fail. Personally, I think it is less likely to fail than to succeed, and I have already given the House the dubious benefit of my views on that, but, of course, failure is possible and cannot be completely excluded.

What we have put before the House today is our plan B, and it is absolutely vital that New Zealand, which has so little leverage in the Asia-Pacific region, aggressively promotes every opportunity it can find. It was quite a coup to get those four countries together across the Pacific to have this agreement. It was not obvious, and it is exactly the sort of agreement that opens up policy space for us in the future. I personally do not think that we as a country need to be obsessed with the Asia-Pacific region. I think the old slogan “Asia first, but not Asia first and last.” applies to New Zealand. I would not even exclude some type of more structured relationship with the European Union, if its own reform of its agricultural policy progressed to the point where that became a more realistic option from the union’s point of view. But the key focus is in the Asia-Pacific region and this agreement brings in some of the APEC members. It has synergies there into the APEC formula. It also continues to breach into the ASEAN area that is of fundamental importance to New Zealand. Other negotiations are taking place there. I think that that is entirely complementary.

Once again, I want to go over the basic strategy behind this agreement. It is a long-standing strategy. It is a strategy that the two major parties have bought into, and it avoids what I call “trophy agreements”, which have given away the shop—as it were—just for something to hang on the wall and enable us to say that we have an agreement with this or that country. So it is a substantive approach. I think that it is in New Zealand’s interests that we support this bill and I am very pleased that we are able, once again, to expedite its passage and come together in this House on a near consensus.

Dr PITA SHARPLES (Co-Leader—Māori Party): When the Māori Party addressed this House at the first reading of this bill, we raised the notion that the Treaty of Waitangi statement in the national interest analysis could have been an excellent opportunity to see this bill as a test case for really understanding the implications of the Treaty. We have the unique situation in this Parliament of being flush with members’ bills that place before the House the concept of the principles of Te Tiriti o Waitangi, and yet, ironically, here was an opportunity for the Government to demonstrate leadership about that area, which it has overlooked, or worse yet, actively neglected.

The national interest analysis included the statement that there is nothing in the agreement that will prevent the Government from fulfilling any obligations under Te Tiriti o Waitangi. How much more proactive it would have been to see the Government honour its obligations, instead of the rather pitiful and negative response highlighted there. We could have had a strong statement about the Crown committing itself to being the guarantor and protector of the Māori interest, and of the implications that would bring with it for largely unexplored relationships between the two signatories.

This nation is on the brink of a major change, and the conduct of the affairs of the nation must be interpreted in ways in which taonga Māori are actively protected. This bill could have been a starter in exploring even tentatively those implications. Article 2 of the Treaty is relevant in fulfilling the aspirations of Māori to live according to kaupapa, or values, and tikanga that derive from those kaupapa. But so, too, is article 3. The guarantee of article 3, the investment in the survival of Māori as citizens of the nation, could lead to fresh thinking in all aspects of the policy programme.

How would that work in the tariff bill? The real impacts for tangata whenua that will emerge from that agreement are to do with investments, economic development, and employment options that may be adversely impacted upon. Have the officials involved in putting together the agreement understood the likely implications for Māori women who may lose their jobs in the clothing and textile industries? What impact will increased foreign ownership of New Zealand assets and resources by investors from Chile, Brunei, and Singapore have for tangata whenua? How will the employment and cultural development of Māori be affected by the agreement? Will it have any downstream effects for the embedding of intellectual and cultural property rights? Taking the time to flesh out in more detail the development of mechanisms, both legal and policy, to protect Māori cultural heritage, including mātauranga Māori, or Māori knowledge, is a way of giving life to Te Tiriti o Waitangi as the foundation of our nation.

The Māori Party supports the continuing development of international standards to protect the world’s oral traditions, intangible cultural heritage, and endangered languages, and supports the promotion of cultural and linguistic diversity. One would also hope that the Government would be aware of existing indigenous declarations, including the Mātaatua Declaration on Cultural and Intellectual Property Rights of Indigenous Peoples, and be proud of them as a means of distinguishing Aotearoa on the world scene. I note how the performance of the haka at the Melbourne Commonwealth Games is being lauded as one of the symbols that makes us different from the rest of the Commonwealth and, indeed, the world.

I have taken the time to give detail to what it would mean to apply treaty principles to the nation-to-nation strategic economic partnership agreement under discussion here, as I fear that all too often in this House point-scoring and derision can mean opportunities for learning and challenges are missed. The relationship with Chile, Brunei Darussalam, New Zealand, and Singapore is an opportunity for tangata whenua to be involved in the decision-making process on international trade, providing us with a reason to scrutinise trade treaties as to their compliance with the Treaty of Waitangi. It is of vital importance that we open our lines of inquiry about the processes by which international agreements are made, and monitor them to ensure our nation’s well-being is protected, supported, and enhanced.

As an example of that approach I want to turn to another relationship document, the Draft Declaration on the Rights of Indigenous Peoples, to show how we need to improve upon our position in respect of international agreements. The Minister of Foreign Affairs recently reported that four factors must be understood about New Zealand’s position on the draft declaration: first, it must be consistent with New Zealand law and policy, second, it must be consistent with existing human rights law, third, it must protect the rights of all citizens, and, fourth, it must safeguard the territorial integrity and political unity of States as well as the responsibility of democratically elected Governments to govern for the welfare of all of their citizens. That was a fascinating statement of subterfuge, which mentions all citizens twice and yet fails to mention the indigenous people: tangata whenua; Māori. The Minister was explaining the Draft Declaration on the Rights of Indigenous Peoples, and not once was the word “indigenous” used.

In defending his statement, the Minister explained that the imperatives New Zealand requires in the declaration are legitimate ones for any democratically elected Government. Other States take a similar position on those imperatives, including Australia and the United States. Of course, I do not need to point out to this House the value, or otherwise, of comparing the profile of how this nation addresses the status of indigenous peoples with that of how the Australian nation addresses its Aboriginal communities or how the United States addresses its Native American First Nations people. But the question I do want to raise is the bizarre circumstance of a policy about indigenous people that twinks out “indigenous” and replaces it with “all citizens”. Hence we get the situation of a position on New Zealand’s indigenous people that fails to mention them, or of a visionless Budget Policy Statement released last May that forgot to identify Māori as part of the citizens of this land, or of a foreshore and seabed policy that extinguished the rights of the indigenous people in the interests of all its citizens, so that all New Zealanders could have a picnic on the beach.

When will we become brave enough to be proud of our indigenous people and showcase our distinctive relationship with our First Nations people through Te Tiriti o Waitangi? One has only to look at the Commonwealth Games to understand how critical those relations are with indigenous societies. When Moss Burmester won the 200 metres butterfly final at the pool on the opening night of swimming, the haka that the New Zealand team performed in his honour sent ripples throughout the Commonwealth. It has got people talking, trying to understand the relevance of the cultural honour accorded through that practice.

While athletes are competing in the games venue, a parallel cultural event entitled the Stolenwealth Games is happening in another part of Melbourne. Thousands of Aboriginal people from around Australia and across the globe have made their presence felt in drawing attention to the ongoing injustices of the Government-enforced destruction of indigenous societies. They are gathering on Bunurong land known as Kings Domain under the banner of the Black GST, which stands for genocide, sovereignty, and treaty. Black GST elder Robbie Thorpe described the event as demonstrating to the world the history of the Commonwealth in oppressing indigenous people across the globe, in a common experience of exploitation over generations.

I raise this issue today as I believe it is always important to look beyond the rhetoric of documents negotiated by officials to see what the situation is for the peoples of the affected communities. If we are to seriously enter into the trans-Pacific economic partnership, we must, as a first point, ensure that the indigenous people of this land are protected and actively involved in the decision making, and must concurrently ensure that the indigenous people of Chile and of other nations in the economic partnership are likewise involved, with their particular interests taken care of. A trans-Tasman agreement, say with Chile, could be beneficial if it helped to facilitate economic and cultural linkages between Māori and Chile’s indigenous people, including the Mapuche from mainland Chile, as well as the Rapanui of Easter Island who have historical linkages with Māori.

The Māori Party urges all New Zealanders to become better informed about the Treaty of Waitangi, including the rights and obligations of both the Crown and Māori, and about the rights of indigenous peoples under international law. We need to seek constructive dialogue rather than divisive statements from our politicians. We need continued tolerance and enthusiasm on all sides. Until we are in that position, it may be better just to sort out our own backyard.

A party vote was called for on the question, That the Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill be read a second time.

Ayes 111

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; United Future 3; ACT New Zealand 2; Progressive 1.

Noes 10

Green Party 6; Māori Party 4.

Bill read a second time.

Bills

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

Instruction to Committee

Hon PETER DUNNE (Minister of Revenue): I seek leave for the Committee to have power to consider, and if it thinks fit, adopt the amendments set out on Supplementary Order Paper 16.

The CHAIRPERSON (Ann Hartley): Is there any objection to that course being followed? There is not. That is agreed to.

In Committee

Part 2 Amendments to Income Tax Act 2004

Dr the Hon LOCKWOOD SMITH (National—Rodney): This is a very complex bill that deserves the Committee’s focused attention to make sure that the detail of the legislation that is passed, which in principle I think has widespread support in this Parliament, has been given full attention to make sure that it is in New Zealand’s best interests. Much of the legislation, and certainly the provisions contained within Part 2, is business-friendly. It is legislation that does a range of things to improve the taxation arrangements of businesses and individuals in New Zealand. So, in principle, much of the legislation is supported.

I want to focus on one or two clauses in Part 2. The first relates to the issue that I think is covered in clause 77. I give notice to the Committee that I have proposed some amendments to these provisions, and in particular to clause 77D. Clause 77D relates to transitional provisions for residents coming back to New Zealand and how their foreign income is to be taxed. The bill proposes to introduce some measures under clause 77D that will make it possible for a New Zealander who has lived out of the country for 10 years or more to come back to New Zealand and not be taxed in New Zealand on his or her foreign income for a period of 4 years. The select committee suggested that the period should be for 4 years.

While I think it is a step in the right direction to make New Zealand a more attractive place for returning residents and new immigrants, it has become clear to me since the select committee looked at this issue that the measures do not bring us into line with Australia. I believe that the amendments proposed in a bill introduced in Australia on 16 February this year—the Tax Laws Amendment (2006 Measures No. 1) Bill 2006—would provide a measure to enable temporary residents in Australia who are already resident in Australia, but only temporarily, to gain the benefits of the tax concessions for their offshore income. Yet the New Zealand measure does not do that in any way. The reason it is significant is this: we are not only trying to attract high-worth new residents to New Zealand to contribute to our economy, but also we want to keep temporary residents who have come to New Zealand to contribute to our economy yet who could go elsewhere. Those temporary residents could go offshore—they are not locked in here permanently.

It is not something that I have come up with just off the top of my head. Murray Sarelius, tax partner at KPMG, recently raised this issue in a press release in which he stated that the officials report to the Finance and Expenditure Committee states that those who arrive in New Zealand before 1 April 2006 will not be sensitive to New Zealand tax as they have already chosen to come to New Zealand. What Murray Sarelius says is: “Officials appear not to have fully understood the nature and needs of the mobile, global workforce. We cannot simply assume that international executives currently in New Zealand are here to stay—assignments need to be extended, contracts need to be renewed.”

He is saying that officials have failed to understand not only that this measure needs to attract people with potential to New Zealand, but also we need to keep people here who are mobile. So I am proposing an amendment to clause 77D that I have tabled, which would amend new section FC 24(3) by shifting back a year the application of the transitional provisions. That would mean that someone who arrived in New Zealand under residence arrangements whereby he or she is still a mobile citizen could gain those benefits after 1 April 2005, instead of if they arrived after 1 April 2006 as it now states.

For example, a high-value person here on a work permit could disappear out of the country if there was a more attractive opportunity offshore. What Murray Sarelius, the tax partner at KPMG, was saying is that we need to recognise that it is not just prospective new residents to New Zealand whom we need to be mindful of; we need to be mindful of people already in New Zealand. I have tried to come up with an amendment to deal with this. I would like the Minister and his officials to think about whether there is any way we can make this transitional measure also help us keep high-value people in New Zealand who are here on a temporary basis, yet could skedaddle very easily at the end of a current contract for delivering work in New Zealand. That is the first point I want to make. When I get further opportunities I will come back with further amendments.

Rt Hon WINSTON PETERS (Minister for Racing): I appreciate the chance to tell drive time radio listeners just exactly what is going on in the New Zealand racing industry.

Darren Hughes: Lockwood has scared them all off!

Rt Hon WINSTON PETERS: Ha, ha! I point out that there are two amendments in my name, to do with Part 2 and Part 4 of this legislation, and they go to the core of the changes announced last week to the racing industry in this country. Those developments are hugely significant for the racing industry, both to create an equitable basis for it to conduct its business and to foster an environment in which the industry can begin to reach its economic potential.

Achieving the changes has been a priority for New Zealand First and for me since becoming the Minister for Racing, in order to ensure that the inherent unfairness of the duty levied on racing, which nearly every political party had to acknowledge by the end of the last election campaign, was rectified. We also wanted to ensure that the racing industry would be put in a position to reach its economic potential, and particularly its export potential.

I thank the people from all three sections of the racing industry who have contributed greatly to the announcements, and particularly those on the New Zealand Racing Board. I also offer my thanks to Cabinet for recognising the need for urgency in making the changes. As members know, the changes were part of the confidence and supply agreement between New Zealand First and the Government, and it is pleasing to be able to deliver them so soon.

The key changes are, first, a reduction in totalisator duty, which is down from a headline rate of 20 percent to 4 percent of gambling profits—that is, amounts bet less amounts paid out—so as to make it just the same as it is for casinos. The second is a decrease in the write-down period for stallions from 4 years to 2 years. Third, there is a decrease in the maximum write-down period for brood mares from 8 years to 5 years, or, if they go into breeding at 2 years, which would be extraordinarily rare, it will be 6 years. Brood mares that commence breeding at age 8 and over will be written off in full in the first year of breeding.

The changes will come into effect at the start of the next racing season, on 1 August 2006. I note that already one of the racing entities in this country has just put back its sale by 2 weeks, so that it can avail itself of the 1 August deadline we have set for this legislation.

Lindsay Tisch: They still don’t get the benefit of the write-down until the year of 2008.

Rt Hon WINSTON PETERS: The member is quite wrong; he is utterly and totally wrong. A brood mare, at age 3 years, is written off at 20 percent or thereabouts each year until year 8. If it goes into breeding at year 8, it is written off when it reaches year 9. Those are the fundamental facts.

I am not listening to the National Party on this matter. It went to our website in 2005, stole our policy, and had the audacity to go to Te Rapa and try to read it in its name. If anybody doubts that, let me say this: he or she should look at the National Party’s 2002 website. What will people see on racing? A doughnut—a zero; nothing! Imitation is the most sincere form of flattery, but it is a disgrace to go around purloining other parties’ policies and not to have the integrity to say where they came from.

Lindsay Tisch: The industry knows where it came from—that’s for sure.

Rt Hon WINSTON PETERS: The industry knows where it came from, all right. The member should go and see who the big players were who backed New Zealand First in 2002 and 2005. Did anybody from Fair Tax support National? No, so the member should stop making it up as he goes along. He should stop stealing other people’s policies.

Dr the Hon Lockwood Smith: I raise a point of order, Madam Chairperson. I think the member has been in this House long enough to know that the Committee stage of a bill requires the focusing of attention on the detail of particular clauses. The member is meant to sit down while a point of order is being taken. Are you going to apply the Standing Orders of this House, or not?

The CHAIRPERSON (Ann Hartley): The member will continue.

Dr the Hon Lockwood Smith: The member should know that he should focus on the detail of the clauses. That is what the Committee stage of a bill is all about. I suggest you bring him to that point.

Ron Mark: I am sure that you will also know from your knowledge of the Standing Orders that the Hon Lockwood Smith, who has been here a very long time and should know them completely by now, also knows that one can respond to interjections, and that if people want to broaden the debate with their inane interjections, then the person on his or her feet, speaking, has every right to deal with that. I ask you to go one step further and rule that spurious points of order that are not points of order, that are irrelevant, and that are raised only in order to interject on and break up a member’s speech, should be called to order at that point.

The CHAIRPERSON (Ann Hartley): I will respond to the point of order. Certainly, the member Ron Mark does make a point. There was an interjection that did take the member along that line. He was responding to it, so members do interject at their peril to that extent. However, the member now needs to come back to the bill.

Rt Hon WINSTON PETERS: Madam Chairperson, you will note again how the interjection illustrated precisely New Zealand First’s point. I was challenged on the detail, and I gave the facts. The Opposition spokesperson on racing, of course, did not know anything about them because he had stolen the policy from us. It is one thing to steal a man’s horse, stumbling outside the saloon; it is much harder to stay on its back as one tries to ride out of town. Mr Tisch has just fallen off.

The changes I have announced are about achieving a fair income for racing and creating a level playing field. It is an exciting development for the racing industry, and I want to pay tribute to the perseverance and hard work of a long-suffering industry that has waited all these years for some fairness to be returned to it.

Hon Member: Where is it?

Rt Hon WINSTON PETERS: Why does the member not go and read the reaction from the industry, when it went to the announcement last week and found out the Government’s policy would be that articulated by New Zealand First in the supply and confidence arrangement? Every one of the people concerned came out and applauded that. In fact, I have been dealing with invitations from Ireland, Dubai, all around Australia, Hong Kong, and elsewhere to come and talk about the exciting changes to the New Zealand industry. I can see people coming in from overseas. I can see them relocating their studs to Cambridge. It is all good news.

LINDSAY TISCH (National—Piako): It is interesting to follow the Minister for Racing. National supports his Supplementary Order Paper 15, because this policy mirrors National’s policy of 2002.

Rt Hon Winston Peters: Oh, rubbish!

LINDSAY TISCH: Here we have New Zealand First’s policy of 2002; it is dated 2 July 2002. We had a very comprehensive policy in 2002, which I wrote. [Interruption] Well, no other policy is mentioned anywhere else; I have done a search of the web and the press releases, and I can show that this is the only mention in 2002 of anything that New Zealand First ever did. In 2005 we released our policy well in advance of what New Zealand First did. Of course, the point is that its policy was just a reiteration of what we said in 2002. Our policy was actually released in 2002.

I say to the industry that National supports the Supplementary Order Paper. As the Minister said, this measure is good for the industry. National would be the first to acknowledge the importance of it to the racing industry. I have been dealing with the industry over the last 6 years. I am not just a johnny-come-lately on this job. I have been around the race meetings and I have met with the industry players in the three codes.

Rt Hon Winston Peters: And they’re still laughing.

LINDSAY TISCH: I say to that Minister that I am still meeting with them. They acknowledge the work that National put in that enabled this measure to be brought to the fore—to where it is now. But I do have some questions of the Minister in the chair, Mr Dunne, because I have a major concern about what the write-offs mean. Of course, a lot of people call it depreciation when in fact it is a specified write-down of the values of brood mares and of stallions. The officials who are here may be able to answer one of our concerns, because I do not think the Minister for Racing, Mr Peters, is right.

I know that if we were to look at what happens today, we would see that most breeders have a balance date of 31 July for their business. There are a few who do not, but the majority do. I have talked to accountants today about the actual balance dates for their clients, and 98 percent—probably even more than that—have a balance date of 31 July. There are a couple who have balance dates later than that. I am told that one has a balance date at the end of August, and one has a balance date in September. We need to look at what this legislation means with its write-offs—and they are generous write-offs; once again, they are in line with what we have advocated, so we have no difficulty with that. If someone were to buy a horse today—be it a brood mare or a stallion—that person would not get any benefits, if his or her balance date is 31 July, until the 2006-07 year, but he or she would not get any benefit in monetary terms until March or April of 2008. So anybody who thinks he or she is on a win because of what we will pass today will be sadly disillusioned.

Rt Hon Winston Peters: Wrong. Don’t know accountancy, either.

LINDSAY TISCH: I am asking the Minister in the chair to respond, as the advisers are here. The accountants whom I have talked to today say there will be a delayed benefit for those people who have a 31 March balance date. I have it here that New Zealand Bloodstock will shift its national brood mare sale, set down for 23 and 24 July, back to the first week in August, but people who have a 31 July balance date still will not benefit. That is the issue. The accountants are saying those people will not get any tax benefit until 2008.

This is a huge question. As the advisers are here, I would like to think we could have a rational response to the questions I am raising, because the industry as a whole does not understand the issue. The accountants who have to deal with the books understand it, and they have told me in no uncertain terms that in essence the provision is great but it does not actually—

Rt Hon WINSTON PETERS (Minister for Racing): The first thing one has to know, when one is involved in the racing industry, is that in the southern hemisphere the critical date is 1 August. That is the first thing every moron knows, around the racetrack. But that is not the case for the National Party guys.

Lindsay Tisch: I raise a point of order, Madam Chairperson. The member implied that I was a moron.

Hon Member: He didn’t.

Lindsay Tisch: He did. He said that every moron knows that. That is unacceptable, and I take offence at that comment.

Rt Hon WINSTON PETERS: Speaking to the point of order, Madam Chairperson. I said that everyone knows that the southern hemisphere breeding year is from 1 August. Every moron around the racetrack knows that, except for the National Party spokesperson. Those were my words, almost to a word.

The CHAIRPERSON (Ann Hartley): However, the member has taken offence at being included in the words. I ask the member to withdraw that remark.

Rt Hon WINSTON PETERS: I withdraw and apologise. National members are very sensitive, are they not? Let me put it this way: every moron who has anything to do with racing, except the National Party spokesperson, knows that the breeding year is from 1 August.

The second thing—[Interruption] Probably, I have more of an interest in horses than he has.

Lindsay Tisch: I’ve got a horse.

Rt Hon WINSTON PETERS: What is its name? Does the member remember what it is called? It is probably by “Banality”, out of “I’m Looking After Myself.” Those will be its breeding lines. The second thing is that people can change their accountancy year. In business, they can change their accountancy year.

The third thing is that one would not believe what happened in 2005. There was to be a big meeting about the racing industry at Te Rapa in the Waikato, to be attended by 600 people. The day before it happened, can members guess what happened? The National Party members jacked up a meeting at Trentham and got themselves in the Dominion Post, except that anybody who knew anything about racing knew that no race meeting was to be held at Trentham on that day. People wondered what was going on. What was happening was a jack-up in order to try to jump the announcement of every other party’s policy. I got up at the meeting at Te Rapa and asked: “Which one of you guys tried to jack up the meeting with the National Party, with Mr Tisch and Don Brash?”. Those members, I might add, would not know one end of a horse from the other—and it shows.

Lindsay Tisch: I raise a point of order, Madam Chairperson. National is treating this debate very seriously. We want to support the racing industry. The Minister for Racing is making a farce out of it, by talking about things he has no knowledge of. He is degrading the debate. We want to get down to the issues, because we want to be able to support the racing industry for what it adds to the value of our economy and to New Zealand as a whole. But here, in the Committee stage, the Minister is talking about something that he could talk about in the third reading debate, if he wants to—

The CHAIRPERSON (Ann Hartley): The member needs to come to the point of order. He has not made a point of order yet.

Lindsay Tisch: The point of order, quite clearly, is that we should confine our comments to the clauses affected by Supplementary Order Paper 15 in the name of the Rt Hon Winston Peters, which the Minister is referring to. Talking about other issues is not relevant. I have asked you to bring him back to the point, so we can talk about the things that are important to racing.

The CHAIRPERSON (Ann Hartley): The member is quite right. However, there has been a continual stream of interjections, which the member has responded to.

Rt Hon WINSTON PETERS: Let me make it very clear—

Dr the Hon Lockwood Smith: I raise a point of order, Madam Chairperson—

Rt Hon WINSTON PETERS: This is deliberate.

The CHAIRPERSON (Ann Hartley): A point of order has been sought. The member will please be seated.

Dr the Hon Lockwood Smith: I raise a point of order, Madam Chairperson. It is totally out of order, when I have raised a point of order, to have the Minister on his feet, saying: “This is deliberate.” You know that members must immediately resume their seats in silence when a member raises a point of order. The Minister cannot make those kinds of accusations. This Committee must see the Standing Orders being applied.

I want you to rule on the relevance of what the Minister is talking about. You are correct that there have been interjections. When the Minister trails off from the bill and talks about what the National Party may or may not have done at some race meeting, then of course there will be interjections. You have allowed the Minister to get miles away from the bill, and I call on you to bring the Minister back to the clauses of the bill.

Darren Hughes: The National members are deliberately breaking up the speech being made by the Minister for Racing. First of all, in both the contributions the Minister has made, the National Party interjected to ask him about the extent of the clauses that are being debated. Then, when the Minister replied to that, he was met with a barrage of interjections, including interjections from the cross-benchers of the National Party, in spite of an understanding that Ministers who speak from the cross benches are not to be interjected on by back-bench members who sit on the cross benches. A member over there shakes his head, but if he looks the matter up he will find that is the case. Then, when the Minister more than adequately replied to the points being made by the Opposition members, they took a point of order and complained that he was not talking about the sorts of things they wanted him to talk about. I think it was a deliberate attempt to break up the Minister for Racing’s speech, and I think those members should be called to order.

Hon David Carter: I cannot let that point go by without pointing out to you, Madam Chairperson, that in fact questions have been raised of the Minister. The Minister in the chair is the Hon Peter Dunne, and he has not taken the opportunity, as yet, to respond to them. The questions that are raised are addressed to the Minister who is in the chair during the Committee stage, not to any other Minister who happens to be in the Chamber.

The CHAIRPERSON (Ann Hartley): On that point the member is absolutely right. Obviously, the Minister in the chair is the Hon Peter Dunne. However, the constant interjections have taken this debate down that track. I ask the Minister to continue and to speak to the amendments.

Rt Hon WINSTON PETERS: There is an old saying that when the cat is away, the mice will play. Well, the cat is back. What is happening here is that those members can dish it out, but they cannot take it. They just will not take it.

First of all, Mr Tisch claimed that what was being announced last week and during the election campaign was National Party policy. That is demonstrably false. Let me ask this question: who did Sir Frank Hogan advertise for in the 2002 campaign in the Waikato? The National Party?

Hon David Carter: Who’s that?

Rt Hon WINSTON PETERS: Oh, listen to that! The member asks who Frank Hogan is. That man must be one of the most recognised, esteemed racing personalities worldwide, and the National Party asks who he is. Can members believe that?

Hon David Carter: I raise a point of order, Madam Chairperson. It may help the knowledgable Minister for Racing if I point out that it is not Frank Hogan; it is actually Sir Patrick Hogan.

The CHAIRPERSON (Ann Hartley): That is not a point of order, either.

Rt Hon WINSTON PETERS: Well, we all make mistakes, but only temporary ones. The real point is this: who did Sir Patrick Hogan place those advertisements for in 2002 in the Waikato? The National Party? No. New Zealand First? Yes. In 2005 was it the National Party? No. Was it New Zealand First? Yes—as did Fair Tax.

It is one thing to be able to con the ignorant, but it is a somewhat harder thing to con people who have been in the industry for 20, 30, or 40 years. They regard the National Party’s tutelage of the racing industry, all the way back to John Falloon and beyond, as an absolute betrayal of the industry. Those are the facts. The ignorant, like Mr Carter from down in the South Island, who probably has a couple of donkeys as well, can laugh, but those are the facts. Come 1 August the policy that I have referred to will be the law in this country. In practicality, come the end of this week it will be the law in the legislative sense, and we should not deny that.

I want to say to those who are listening on drive time radio as they drive home tonight that if they are interested in the racing industry, then they should hang on, because help is on its way.

LINDSAY TISCH (National—Piako): I want to make very clear what we are debating here in terms of the balance dates for businesses involved in the bloodstock industry. Those in the industry who have a balance date of 31 July cannot change the date. Although the Minister for Racing says that they can do this and they can do that, the racing industry is one industry where they cannot do that.

Hon Mark Gosche: How big is the member’s horse?

LINDSAY TISCH: It is actually a very good horse, and when it wins, the member will know about it. I want to reiterate the points I made earlier, so that the matter is very clear. If I buy a horse, whether it is a stallion or a brood mare, today or before 1 August, I have to use the old rates. They will apply regardless. One cannot change an old rate to the new rate. That is the first thing. But if I buy after 1 August, which the Minister said will be possible because New Zealand Bloodstock will change their brood mare sales—

The CHAIRPERSON (Ann Hartley): I am sorry to interrupt the member, but the time has come for the dinner break.

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

LINDSAY TISCH: I reiterate the points I made about the balance date for those involved in the bloodstock industry. Ninety-nine percent of those involved in racing—be they breeders or investors—have a balance date of 31 July. In terms of the changes in Supplementary Order Paper 15 that we are looking at tonight—which National supports—people with a balance date of 31 July, if they were to buy a horse, would not accrue a benefit until March or April of 2008. The very small number of those in the bloodstock industry who have a balance date later than 31 July—for example, 31 August or 30 September—will get a benefit 12 months earlier. I made the point that although the provision sounds very good—and that is the reason why National is supporting it—not everybody will benefit immediately from those changes.

One way to rectify that would have been to change the date. People cannot change the balance date of their accounts, even though the Minister for Racing said they could. [Interruption] He would not know. But what could be done, and what we could advocate, is that the date, rather than being in August, could be moved forward to, say, April or May. Then everybody in the industry would benefit from those changes. I hope the Minister in the chair, Peter Dunne, who has advisers here, will be able to give me an answer. This is not only my interpretation of the situation; I have spoken today to a number of accountants who specialise in the bloodstock industry, and this is their interpretation of the meaning.

I canvass another major point relating to Supplementary Order Paper 15. Subsection 7 of new section EZ4B, inserted by proposed new clause 76BA, relates to “Definition of item in formula”. The small print states: “Defined in this Act: bloodstock, broodmare, …”, etc. The question I have is what is a brood mare. A brood mare, in common terms, is a horse that has been put to stud. But many horses are still racing when they are mated, so they are not necessarily called brood mares. I ask the Minister whether all females from age 2 are covered by this definition of brood mare. If they are not, then the owners are no better off than they are under the current provision. The current provision is quite clear, but nothing I have read or have been told by the accountants I have been speaking to today tells me whether, in essence, the term “brood mare” applies to all female stock. Let us take as an example the horse that won the New Zealand Oaks race at Trentham last Saturday. It was a 3-year-old filly by the name of Legs—a great name for a horse. It comes from Matamata—the heart of racing—which is why I am so familiar with it and take such an interest in it. If I own this 3-year-old filly, am I able to write it down as a brood mare? It is only 3 years old and could well be put to stud.

Those questions that I would like clarified are important for the industry and for investment in the industry. Racing is an iconic industry, and National’s policy back in 2002, and again at this last election, was to give support and recognition to this very important industry.

The second issue goes back to breeding statistics and why New Zealand is being left behind. Australia does not analyse reports or whatever; it takes action. If we analyse the results of breeding over a number of years, we see that the number of registered brood mares has dropped from 9,700 in 1999-2000 way down to, now, fewer than 8,500. The number of stallions has dropped from 268 to 199, of which about 15 are shuttle stallions. Part of the taxation regime that National has advocated, and it is included here, is that if investment is made attractive by people being able to write-down breeding stock much more quickly—over a 2-year period, rather than 4 years, with stallions—we will have better investment in the industry. That will be good, because it will create a climate for confidence and make it worthwhile for people to invest in the industry. At this time New Zealand is being sorely left behind.

We really have only one stallion. It is Zabeel, which is 20 years old. There is a promising one in Matamata by the name of Pins—a horse owned by Waikato Stud. That horse is 10 years old now, and it is proving its worth and is going to be very, very good. New Zealand is competing with Australia, which has about 26,000 in-foal mares compared with the number we have. Out of that, the Australians will get about 17,500 foals, of which they will sell 7,000. I ask why Australians and people from Hong Kong, Singapore, Ireland, the United States, and the UK would want to come to New Zealand, when our industry is in decline.

Dr the Hon Lockwood Smith: Dubai.

LINDSAY TISCH: Yes, Dubai, as my colleague mentions, is another very important area where New Zealand horses are doing extremely well. But we need to ask why, although we have had quality bloodstock here, we are losing out to other countries. The incentives that are put in place by the Supplementary Order Paper are certainly to be encouraged.

The diminishing value concept of valuing livestock is very good. I note that at the moment the percentage is going from 37.5 percent to 75 percent. That means that someone buying a horse will be able to write off its value very quickly. For a stallion of $4 million, $3 million can be written off in the first year—that is great. In the second year, it will be 75 percent of the remaining $1 million. That initiative is certainly very encouraging.

These are some questions that I hope will be answered. I look forward to the Minister of Revenue’s contribution. National has allowed the Supplementary Order Paper to come in without it going to a select committee. Bearing that in mind, National members are supportive of it. We have questions for the Minister that we think need to be answered so that we can give certainty to the industry as a whole.

Hon PETER DUNNE (Minister of Revenue): I take a quick call to answer the two points that have been raised by Lindsay Tisch, the member who preceded me. Firstly, in respect of the definition of brood mare: in short, a brood mare is bloodstock that is used for breeding. So the issue of whether it is 3 years old, 4 years old, or any other age is not really relevant in that consideration. So that deals with the member’s point reasonably succinctly.

As far as the first set of questions he raised regarding balance dates and purchase dates is concerned, it is important to note that Supplementary Order Paper 15 will come into effect on 1 August 2006. So if one takes his example, the person who makes the purchase on 31 July will not be caught by the new regime. Flippantly, my advice would be to delay the purchase until after the start of the new year. In terms of when the regime is paid to the recipient, that is not part of the regime per se; that is for the way in which the recipient organises his or her own affairs. So the Supplementary Order Paper takes effect from 1 August this year, and the taxpayer gains the benefit from that time. How the taxpayer’s affairs are organised in terms of his or her balance date will be what determines when the payment is made. So the issue of whether it is 2008 or some other time is to do with the way in which the taxpayer organises his or her own affairs, it is not to do with the provisions of the regime that is being introduced.

So that should give some clarity in respect of the people whom the member was talking about, and, hopefully, the earlier answer addresses his point, as well.

CRAIG FOSS (National—Tukituki): I would like to take members out of the TAB and back to the more mundane parts of the bill, particularly Part 2. The bill is very technical in parts. First of all, again, I acknowledge the input of the various officials who assisted in its formulation and their assistance to the Finance and Expenditure Committee as we considered the bill.

National will support the bill. It is very business-friendly, but it is only a step—or perhaps a big toe—in the right direction. I pick up on what my colleague the Hon Dr Lockwood Smith was speaking about earlier, particularly around the returning migrant issue, tax holidays, etc. We should ask whether the bill—the 346-odd pages that it is—will pass the threshold in terms of attracting New Zealanders back to New Zealand, and whether it will stop them from leaving in the first place. Will it help us go up the OECD rankings? Will it help New Zealand’s productivity? Will it even address some of those issues?

Regarding migrants, etc., my colleague Dr Lockwood Smith proposes two amendments that we will obviously support, particularly the amendment to clause 77D, which deals with changing the time spent away from New Zealand, by looking at a period of 5 years rather than the proposed 10 years. We also propose to move the concession. One way of looking at the concession is that it currently offers a zero percent tax break for 4 years. We are looking to take that tax break to 5 years, again, in order to attract New Zealanders back to New Zealand. That is based on their overseas income to bring them back and to build up the capital base of New Zealand. Again, that is great in theory, but in practice we need to be bolder and to do a lot more on that. We have to address why those people are leaving New Zealand. In respect of the 10-year threshold, I quote Steve Camage of PricewaterhouseCoopers: “Ten years is too long … Kiwis who’ve been abroad for 10 years or more are probably well established in their new life and less likely to return home just for a tax break.” He is quite right—why would they do so?

We can also address the issue of why on earth they left in the first place. One of the points here is that the discussion around the returning migrant does not seem to be bold or new; it merely seems to copy what is happening in Australia at the moment. We never like to be beaten by the Australians in any way, shape, or form—they are still not eating our apples; we will get there in the end. We need to go further than Australia, because if we do not, we will cement where we are right now—be it in respect of per capita income, New Zealand’s tax structures, or the continued flow of good New Zealanders who are essentially funding the growth in Australia at the expense of growth in New Zealand.

One may think that is just a debating point in the House, but I would like to put a real-world touch on the issue. An article in this morning’s New Zealand Herald addresses whether New Zealanders should stay or go. The headline states: “it’s all down to money”, and the article goes on to say: “The average income across the Ditch is 32pc higher and the middle-aged are valued for their skill and experience”. Those are exactly the people whom we need to stay here; we should not have to offer some tax package—it is almost a tax bribe—to bring them back in the first place. In another real-world example from the same article, a 54-year-old electrician—I will not mention the gentleman’s name—has moved to Australia and doubled his after-tax pay. If the construction of the New Zealand tax system provided incentives for that gentleman to stay here in the first place, he would not have left. Because all those New Zealanders are leaving for Australia, the same article refers to New Zealand incomes being about 78 percent of Australian incomes. That is why they are leaving in the first place.

So let us concentrate not just on putting on a Band-Aid to try to wave some white flag and bring them back. Let us really address the core and hard issues of why they leave in the first place. Another graph in this article shows that 22,000 New Zealanders net have left for Australia in the past year. Members should look at the logic of the bill, because we are trying to bring those people back to us.

Dr the Hon LOCKWOOD SMITH (National—Rodney): I will take over from where my good colleague Craig Foss stopped and focus particularly on the measure in Part 2 to try to make New Zealand more attractive to highly skilled, mobile, international employees. Often New Zealanders have been working offshore, and the whole idea of clause 77 is to try to make New Zealand more attractive in order to bring those people home, and more attractive to highly skilled potential migrants. National commends what the Government is trying to do. I say to the Minister in the chair, the Hon Peter Dunne, that we agree with what the Government is trying to do, but we are focusing tonight on whether it is doing this as well as it needs to be doing it.

Our immediate competitor in this part of the world is Australia. Australia has also recently announced measures to make the Australian tax regime more attractive both to temporary residents in Australia and to people with international occupations coming back to Australia. We have to recognise that if we do not match Australia in this area, then the measure will not be successful, and Parliament is wasting its time in passing legislation if it will not be successful.

As I see it, three elements are quite crucial to this. The first is in respect of residents—and this is where Australia has gone further than New Zealand—who might have come to New Zealand in the last 12 months on a temporary arrangement. At the moment this legislation does not cover them. These are very mobile people. They may have the chance to extend their contract in New Zealand, or they may go. If our legislation provides no relief for them on their foreign income, then we do not match Australia and we are not competitive. That is the first issue—temporary, high-value residents who are already in New Zealand.

The second issue relates to New Zealanders living offshore whom we want to bring back to New Zealand. We are saying in this bill that those people must have been offshore for 10 years before we will give them the tax concession on their foreign-earned income—on investment, or whatever, income that has been earned offshore. The top tax specialists of not only PricewaterhouseCoopers but also KPMG have said that that incentive is too tough, and that if we want the measure to work, the time period for someone to have been offshore should be no more than 5 years. Dr Cullen, when he spoke in the second reading on this bill, admitted that there is nothing magic about a period of 10 years. We need to find the right time period. Maybe 5 years is too short, but I think 10 years is too long, because by the time a Kiwi has been offshore for 10 years, he or she is well settled offshore. If we want to attract our really skilled people back to New Zealand with this tax concession measure, then we have to think about trying to attract back those people who have not become totally settled and involved in their new home environments. So I urge the Minister to give some thought as to whether 10 years is too long. Senior partners in both KPMG and PricewaterhouseCoopers have suggested that in their experience it is too long, and they are the kind of people who are involved in trying to bring those high-value New Zealanders back home to New Zealand.

The third key issue that we want to debate more this evening is the concession, or exemption, we are giving, which the legislation, after being amended by the Finance and Expenditure Committee, now proposes should be a 4-year exemption from tax on offshore income. People are not exempt on the income they earn in New Zealand, of course—that is taxed like the income of any other New Zealander. The exemption is only on certain aspects of offshore income. The exemption in the bill is now 48 months. Again, we are not matching Australia, because Australia is saying that for the period of time that a person is a temporary resident, the State will provide the exemption for that time.

I have not heard the full debate over whether 4 years is sufficient to match the Australian provision. I have suggested an amendment, which is on the Table, to extend that time from 48 months to 60 months to make sure that we are competitive with Australia, because that is what this measure is about. Australia has recently introduced legislation. It has changed what it said it would do. Australia originally had that 10-year provision and those time constraints, and it has freed it up.

I would like to focus now on the amendments that National is proposing, because I know that the Minister in the chair will take these issues seriously and will comment on them. I will deal with my first amendment—it is to new section FC 23, which clause 77D proposes to insert into the Income Tax Act 2004. I propose to replace the phrase “at least 10 years” with the phrase “at least 5 years”. This amendment would have the effect of reducing the time that New Zealanders would have to be resident outside New Zealand before coming back to New Zealand to qualify for that tax exemption on certain aspects of their offshore income. At the moment the bill states that New Zealanders have to be resident offshore for a minimum of 10 years. National members, and a lot of senior tax experts in New Zealand, are saying that 10 years is too long because we will not get those New Zealanders back. So with this amendment we are saying that we should make the period at least 5 years. I would appreciate hearing the Minister’s argument, if he does believe that we should stick with 10 years, as to why he disagrees with those top tax specialists. They were quite strong in their advocacy. Although they supported the idea of the measure and they have no argument with what the Government is trying to do, they are saying that the Government is very severely limiting the value of this measure by having that 10-year limit. At least one of those senior tax partners suggested the 5-year substitute, which is why we have proposed that amendment. That is the first amendment National is proposing.

The second amendment relates, again, to clause 77D, which also proposes to insert new section FC 24 into the Income Tax Act 2004. The amendment would substitute, in paragraph (b)(ii), the phrase “the last day of the 48th month” with the phrase “the last day of the 60th month”. That is intended to extend to 5 years the tax exemption on offshore income. I stress that the reason is that Australia has removed time limits. Australia originally suggested and proposed 4 years, which is why I think New Zealand initially matched that 4-year period. Australia has now removed that 4-year limit. If we want to match Australia, I suggest we extend the exemption to 5 years, because Australia originally said 4 years but, in the bill introduced there in February of this year, that time limit was removed. I would like the Minister to think about it, consult with his officials, and advise us whether we are matching Australia adequately, because Australia is our big competitor for those high-value, internationally mobile employees.

My third amendment is, again, to clause 77D. It proposes to make a change in clause 77D(3) to the dates in respect of a person’s residence in New Zealand for which the tax exemption would apply. The intention of that amendment—and only officials could tell us whether it will adequately deliver what we want it to do—is to make sure that high-value employees who are temporarily employed in New Zealand at the moment, who do not have access to this tax exemption, and who, once Australia enacts its new law, could be attracted offshore to Australia very easily, are captured in this measure. The provision should be designed not only to attract high-value people to New Zealand but also to keep in this country high-value residents who are already here in New Zealand on a temporary basis. Again, those senior tax partners, who are major tax specialists in New Zealand, have been very strong on this point. Although they support what the Government is trying to do here, they say the Government is ignoring the reality of high-value people who are temporarily resident in New Zealand, and that once Australia enacts its legislation, those people could shoot off to Australia—and we would lose them. We would lose their skills and their value to our economy. Keeping high-value people who are already in New Zealand is just as important, if not more important, than trying to attract people who are currently offshore back to New Zealand.

So those are the three amendments we are making. They are totally consistent with the principle that the Government is pursuing with this legislation, but they address the issue of whether we are adequately competing with Australia, pointing out that Australia changed in its legislation what it said it would do. I suspect, from looking at the nature of our legislation and at what Australia said it would do, that our legislation is very consistent with what Australia said it would do. But Australia changed its legislation when it was introduced in February—16 February, I think—and we should look at it very hard to make sure we remain competitive.

Hon PETER DUNNE (Minister of Revenue): I want to respond to the matters the previous speaker has just raised. The starting point has to be: what is actually being offered in Australia, and how does that compare with what is being promoted in New Zealand? There are some key differences, and I think those differences go some way towards explaining the different regimes that are being proposed for the two countries.

For a start, New Zealand’s proposed regime applies to New Zealand citizens who return to this country, as well as to people of high net worth from elsewhere. But the Australian regime does not apply to returning Australians. Returning Australians are not caught by the Australian regime. The New Zealand regime basically applies to any person coming back to this country, regardless of whether he or she intends to stay here long term. The Australians have the concept of a temporary resident’s visa; we do not: one is either a permanent resident or one is not. One may be here either on a short-term work visa or on a visitor’s visa, but the temporary visa notion that the Australians have does not apply here. So someone coming to Australia in the circumstances the member describes would have the exemption for the duration of his or her visa. In New Zealand, because such persons would be either permanent residents or returning citizens, they would have the duration for the length of time they were in the country. That is their call, not the term of their visa.

As far as the issue of whether the duration is 5 years, 10 years, or whatever is concerned, I note that the Finance and Expenditure Committee in its consideration made a move away from what we had originally—I think it was 3 years and 5 years, and it drew the line down the middle at 4 years for everyone. As the Minister of Finance said at the second reading, there is no magic about this, and I concede that. We took the 10-year figure because we thought initially that the 10-year limitation was a safe period to address. I am not persuaded that we should seek to shorten that at this stage. I am quite happy to see how the regime works in practice, then to see whether we ought to adjust it.

Craig Foss: What’s that review time?

Hon PETER DUNNE: I do not have a specific review time in mind, but I think that the impacts will become fairly obvious very quickly.

My next point may help answer the member’s question. Dr Smith rightly draws attention to the fact that Australia is our major market and that in this area, as in just about everything, competitiveness with Australia is important. Incidentally, this is one of the issues we are facing with the business tax review—where do we pitch ourselves vis-à-vis Australia, bearing in mind that a move we make today may be overtaken by a move Australia makes tomorrow? To some extent there will always be an element of this. So although the Australians have made some adjustments to what they originally proposed, I think we need to be careful not to get trapped into thinking that every time they move we have to move. We need to strike a regime that is fair and effective as far as we are concerned and gives us the benefits we want. I made the point earlier that this regime as it applies to those people coming to New Zealand is, in fact, more broadly based than the Australian one. It gives us an advantage, and I do not think that is widely appreciated.

So at this stage, although I appreciate the tenor and the spirit of the amendments the Opposition has put forward, I am not persuaded that we should support them this evening. But this is an area where we will need to keep on our game as the situation unfolds. I make the observation—and I do so not in any churlish sense; I do not want to be misinterpreted—that because these amendments have financial implications and were not lodged within the 24-hour period, we could apply a veto. We will not do that, because I think it would be counter to the spirit in which the amendments have been put forward. I say that to the member in good faith. We will not support the amendments at this time, but the issues he has brought forward will be among those we will want to continue to work our way through as this whole process unfolds. That is something we may well return to at a later date. I do not have much more to say on that point.

CHRIS TREMAIN (National—Napier): Firstly, I acknowledge our friends from the Inland Revenue Department. It is great to see Robin Oliver and his team here.

Secondly, I go back to the point made by the Rt Hon Sir Winston Peters—

Rt Hon Winston Peters: You’re almost there!

CHRIS TREMAIN: That is where we got confused in the first place, over Sir Patrick Hogan. I had to check during the break who the heck Frank Hogan was. I got confused as to whether he was Frank Hogan the car salesman, Frank Hogan the broadcast pioneer, or Frank Hogan the playwright. Obviously it was none of them, and it was indeed Sir Patrick Hogan whom we were dealing with. So I apologise to Sir Patrick Hogan, who is up there with the greats like Colin Meads, Sir Brian Lochore, and Sir Ed Hillary. I apologise on behalf of Parliament to Sir Patrick and Lady Justine Hogan.

I rise tonight to speak on the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill, and particularly on Part 2. This is the first legislation we have seen in this House for some time that goes some way to improving business conditions in this country. From that point of view, I am extremely in favour of this bill. If we look at the current statistics, just from our library, we see economic growth in 2004-05 down from 4.3 percent to 2.7 percent, inflation up from 2.7 percent to 3.2 percent, the current account deficit up from $8.7 billion to $12.9 billion, and interest rates up from 6.83 percent to 7.53 percent. So it is great to see legislation like this coming into the House—legislation that will actually have a positive impact on business and will help to turn round some of the factors that are affecting the country right now.

I will talk about Part 2 and particularly about clause 56. I want to focus on the tax depreciation rules that the Minister has brought into this bill. The bill, in clauses 53 to 80, including Supplementary Order Paper 382, introduces a number of changes to the tax depreciation rules, intended to align depreciation rates more closely with the commercial reality of an asset’s economic life. Now that, to me, is sensible legislation. For people out there in the business community investing in assets, it is only sensible to set depreciation rates that match the commercial and realistic life of those assets.

In addition, an increase of the low-value asset threshold is proposed, which will allow taxpayers to write off the value of an asset immediately, by lifting the level from $200 to $500. Submitters to the Finance and Expenditure Committee generally supported the changes to increase tax depreciation rates, but they criticised the changes seeking to reduce depreciation rates, and considered that changes to the low-value asset thresholds did not go far enough. That was interesting.

I want to focus on the lower depreciation rates for buildings. This is something that the Minister might like to comment on. On one hand we are taking assets, such as computers and other investment assets of a business, and applying depreciation rates that are more closely aligned with how those assets will be written off over the period of their useful life in the business, yet on the other hand we are changing depreciation rates for buildings in the other direction.

The reality is that most submitters to the select committee—in fact, just about everyone who submitted on this particular matter—supported a reduction in depreciation rates for buildings. They reasoned that the pace of change, and particularly in technology in terms of consumers’ preferences, means that the useful life of some buildings is shorter than the 50 years proposed in the legislation. I think that if we are aiming to use this bill to help improve the productivity of the nation and to allow better investment in capital assets, then we should make sure depreciation of buildings, in particular, closely reflects the exact duration of their useful life. Lifting the rate is the wrong way to go.

The next thing I want to focus on is the changes in clause 56 to low-value asset thresholds. The bill proposes to change the low-value asset thresholds, with an immediate deduction for capital expenditure of less than $500. This is indeed a sensible solution. It certainly does not go as far as many submitters to the select committee wanted—they would have liked to see the threshold up around the $1,000 or $1,500 level—but it is certainly a big improvement.

Rt Hon WINSTON PETERS (Leader—NZ First): I rise to correct a few misrepresentations that were made to the House before the tea break. For example, New Zealand First’s racing policy was not on the website in 2002, as Mr Tisch told the House, but on 18 July 2001. If one is going to steal someone else’s policy—

The CHAIRPERSON (H V Ross Robertson): Is this a point of order?

Rt Hon WINSTON PETERS: No, no—this gets to the substance of what this legislation is all about.

The CHAIRPERSON (H V Ross Robertson): OK. I thought the member was making a point of order on misrepresentation.

Rt Hon WINSTON PETERS: In particular, it goes to the two Supplementary Order Papers that stand in our name.

The second thing I want to say to Mr Tisch is that if we look at the various divisions of racing we see that on 16 March, shortly after the announcement of the policy, New Zealand Bloodstock announced a date change for national brood mare sales.

Lindsay Tisch: We’re not arguing about that.

Rt Hon WINSTON PETERS: Actually, you were.

Lindsay Tisch: No I wasn’t. I’m talking about the—

Rt Hon WINSTON PETERS: Do you think that the people in the racing industry—

The CHAIRPERSON (H V Ross Robertson): Order!

Rt Hon WINSTON PETERS: Does the member not think the members of the racing industry, and the thoroughbred industry in particular, are people with some serious discretionary cash, because they are successful businessmen and women? That is why they are in racing—because they know a bit about it. Those people deal in the hundreds of millions, as opposed to that member and his party. New Zealand Thoroughbred Racing Inc. put out on 10 March a statement that it was thrilled with the announcement on tax—nothing so miserly and mean as National sought to state in the House this afternoon.

Lindsay Tisch: We’re actually supporting this.

Rt Hon WINSTON PETERS: Well, the member should support it with generosity, not with the pretence that it is actually the policy of the member’s party, when he knows full well that that ain’t true. One headline read: “landmark package to racing & breeding industry”. Another press release—and I could go on; this is only a sort of montage—announced that Harness Racing New Zealand, which is a pretty big division of racing in this country, was “delighted” by the tax equity decision. There is nothing about what Mr Tisch talked about. But, of course, they might know a bit about racing, and the member does not. Even the Southland Times—way down in the far reaches of the deep south, which is a very forgotten territory, but no more when it comes to racing—states: “Duty reduction pleases industry”, and on and on it goes. The New Zealand Herald is hardly known as being a fan of New Zealand First—and even less a fan of Winston Peters, the Minister for Racing—but it states: “Peters onto a racing winner”. I say to the gentleman that sometimes, as Ronald Reagan used to say: “You can’t argue against success.”

Dr the Hon Lockwood Smith: Winston ran out of puff.

The CHAIRPERSON (H V Ross Robertson): The member may not refer to members by their first name. It is either their full name, their title, or their portfolio.

CHRIS TREMAIN (National—Napier): I will just finish where I got to prior to the call on the serious issues of changes to the low-value asset threshold.

Rt Hon Winston Peters: I raise a point of order, Mr Chairperson. I know that in recent years National has got pretty lax on the issues of protocol and the Standing Orders, but to make sure that the new member does not fall into the same mistake, he should be asked to address the person he is talking about properly, not just carry on.

The CHAIRPERSON (H V Ross Robertson): The member had a throw-away line and I drew it to his attention that it was improper to refer to a person by just his or her first name. The member must address the member by his full name if calling him.

Dr the Hon Lockwood Smith: I raise a point of order, Mr Chairperson. I must not allow my colleague to carry the rap for a breach that I made. I apologise to the House, but it was me who called out that Winston had run out of puff; it was not my colleague. I apologise for that.

The CHAIRPERSON (H V Ross Robertson): Thank you, Dr Smith. I am sorry.

CHRIS TREMAIN: I will address a couple of closing remarks to the Minister, particularly in terms of the changes to the low-value thresholds, which are addressed in clause 56. The bill proposes an immediate deduction for capital expenditure up to $500. I previously said I was in favour of that, even though many submitters to the select committee proposed that it be higher than $500. But, in saying that, it is good legislation and it gives businesses the ability to write off assets at that lower level, and I think that is excellent.

The last thing I will address tonight is assets that reduce below the $500 threshold. What I am talking about here are assets that initially come into the books at, say, $2,000. A good example may be a computer. With a 40 percent depreciation rate, that will very quickly be down below the $500 level. The ability to write off that asset once it gets below a $500 value is an issue we raised a number of times in the select committee. Under a diminishing value system, there is a situation where the value of the asset goes on and on and remains in the fixed asset register for many years.

We initially proposed that that fixed asset would be able to be written off once it had dropped below the $500 level, but it was very clear from Robin Oliver and his team that that would have a huge fiscal implication if it was immediately written off when it got under the $500 level. In saying that, National believes that there needs to be a threshold at which assets can be written off. Tonight, Dr Lockwood Smith is proposing a level—and I will speak to that in a minute—that is significantly below that.

I speak as a businessperson who has had businesses throughout his life—

Rt Hon Winston Peters: Like what?

CHRIS TREMAIN: I will tell the member exactly what I will talk about. There are a number of businesses that I own—

Dr the Hon Lockwood Smith: He is asking about the threshold of $10.

CHRIS TREMAIN: The threshold that we will propose is $10, which is significantly down below $500.

When one owns a business, year after year the assets on the fixed asset register continue to depreciate to the point where one does not have a clue where many of them remain in one’s business. The compliance cost of checking to see whether those assets remain in one’s business is huge. It can take many hours to go around and check whether assets remain on the register, particularly for small businesses.

So we are proposing tonight that there be a threshold put in place that would allow assets, once they got down below that bottom level, to be able to be written off immediately so that we do not continue to carry along assets in the register at $2, $4, and $6—ridiculous levels. In fact, I would prefer it to be higher, but we are trying to be practical with the recommendation. So members will see that in new clause 56B to insert after clause 56: “Assets with very low tax values … (1C) This section applies when a person in an income year has an item of depreciable property that has an adjusted tax value at the start of the income year of $10 or less.” We believe that would reduce compliance cost, get it off the asset register, and move it on.

Hon PETER DUNNE (Leader—United Future): I am happy to yield to the member if he will be brief, and then we will wrap it up.

Dr the Hon LOCKWOOD SMITH (National—Rodney): I would like to pick up from my good colleague, Chris Tremain, who was speaking just now. It is interesting that on this side of the House, there are a number of people who have been, and still are, involved in running small businesses. I have some experience in this issue—practical, down-to-earth experience, not textbook stuff or theory stuff. Chris Tremain has run a number of businesses. I continue to run a small business. The issue of the asset register has been something that strikes us all as being crazy, because, at the moment, it is impossible to get an asset off one’s register if the depreciation rate on that asset is a percentage depreciation. It is mathematically impossible to get it off one’s asset register. So long as the asset exists there somewhere in the business, one cannot expense it, because it still depreciates. It might be down to $5, and if it is depreciating at 20 percent, then take another 20 percent off, so it keeps going down. It results in an asset register a mile long.

Rt Hon Winston Peters: Write down it was stolen.

Dr the Hon LOCKWOOD SMITH: The Rt Hon Winston Peters suggests that we should write it down as having been stolen. It is that kind of improper behaviour that has seen a Cabinet Minister resign today. That is the kind of thing where a return to the Companies Office was not strictly correct. We have seen a Cabinet Minister resign over it. The Rt Hon Winston Peters has suggested it to the House—and some people probably do that—but honest members on this side of the House try to make sure that their asset registers are correctly administered.

I appeal to the Minister on this. If one is serious about complying with the law, one does not write those things off as being stolen if they are still there. Yet the problem for busy small-business owners is that it does take quite a lot of time to go round and check on all those assets on the asset register. There are heaps of them, and one thinks: “Good God. Where the hell’s that one now?”.

So the $10 threshold that we propose is a very simple, practical measure. I realise it has a fiscal implication and I realise the Minister can therefore outlaw it. We have put the smallest possible threshold we could devise of any relevance to make sure the fiscal cost was so low that it would not cause the Government a problem fiscally, yet would establish the principle of a threshold for expensing assets when their value becomes so low they can be written off the schedule.

It kind of makes sense that the Government is recognising that there should be a threshold for the purchase of new assets. In fact, I think we learnt at the select committee that the Inland Revenue Department does not capitalise assets unless they are over $2,000 purchase price, for some reason or other. I am not sure, but my notes from the select committee meeting suggested that. So it is recognised that there should be a threshold for purchasing new assets. What we are saying here is that this is a chance to establish a threshold—albeit a very low one—for assets as they depreciate on a percentage basis so that one can get them off the asset register so that it can become a more meaningful document that is of value to a business in managing its asset base. So, technically, I accept that my amendment may not be within the Standing Orders, because it has fiscal implications and was not submitted 24 hours in advance, but it is a simple, practical measure with very low fiscal cost that could have real meaning for smaller businesses.

Hon PETER DUNNE (Minister of Revenue): Very quickly in response I shall point out that the key point here is that the raft of changes being introduced by way of changes to depreciation rules are hugely significant and financially substantial. This package has an all up value of around $1 billion over the 4-year forecast period. So there is a huge shift and, frankly, a line has to be drawn at some point.

The member made a comment about the appropriate use of asset registers. The issue that then arises is what the best form of depreciation is to get those low-value items expensed quickly. With straight line depreciation, for instance, we do not need to have the item added to the register, and that has some attraction.

In conclusion, I make the point that I respect what the member is trying to do. The Minister of Finance and I have already had a brief discussion about that issue in a broader context. We will not move on the amendment this evening, but the points the member has raised are ones we are certainly happy to keep under review as the ongoing review of depreciation policy unfolds.

The point I want to stress is that there is a fiscal cost. The Crown is giving away a billion dollars over a 4-year period in these changes. The Crown is happy to concede that very significant, beneficial cost in the interests of this package—

Rt Hon Winston Peters: It’s a very big tax cut.

Hon PETER DUNNE: The member is absolutely right, but the point is that at some point the line has to be drawn. Now the line has been drawn where it is at this stage, and is something that we will keep under active review. At some point in the future, if circumstances permit, then it can be addressed.

CRAIG FOSS (National—Tukituki): I would like to address a few more points, particularly in Part 2. First, I congratulate my colleague Mr Tisch on the awesome racing policy he formulated, which the National Party took into the election that resulted in our party’s vote going to 48 seats from 27 seats. Obviously, real New Zealanders out there appreciated that policy big time. Well done, I say to Mr Tisch.

I have a couple of points to make. One of the comments that has been made—and I guess I was guilty of this myself earlier—was we talked about the thrust of the bill being slightly business-friendly, as I have stated. Yes, that is true, but again, like so much of the Government’s nice intentions, etc., the implication and execution of this legislation has been absolutely lousy. I make an example of the change of commencement date for one of the most business-friendly parts that was publicised with this bill—that is, the combination of GST and provisional tax payments—from what was to be 1 April 2006 to 1 April 2007.

Someone from Deloitte Touche Tohmatsu made a comment in one of its tax news releases—and it is interesting that this House is now busy discussing this bill, which may well get through tonight, I suppose, on tenterhooks—to ask why, if the Government is business-friendly, businesses are having to suffer for 1 more year. The Minister of Revenue has announced the provision was to be delayed until 1 April 2007, but, in contrast, the Government was able to introduce the urgent measures bill on 8 November 2005 and have that legislation enacted before Christmas. That Act made good on election promises such as interest-free loans for student borrowers, amnesties, working families, etc. OK, those were election promises, bribes, or pledges—whatever one likes to call them—but the point is that the Government’s prioritisation is round the wrong way.

We are trying to grow New Zealand and add value, yet we can rush through zero percent interest on student loans. Yet another 365—

Rt Hon Winston Peters: I raise a point of order, Mr Chairperson. I know that those members have been here about 5 minutes, but they cannot talk about bribes. Members cannot get up in this House and accuse other parties of bribes. It might be a familiar conversation amongst themselves, but it is not with the rest of the House.

The CHAIRPERSON (H V Ross Robertson): I thank the member. I am sorry, I did not hear that. I was otherwise engaged. However, the member is completely right. Members must not make allegations of such nature. They can be taken as a personal reflection against a member. The member will withdraw and apologise, if that is the case.

CRAIG FOSS: I withdraw and apologise. I am sorry if I caused offence.

I was speaking on why this provision should be delayed 1 more year, from 1 April 2006 to 1 April 2007, when businesses out there are trying to plan and get their cash flows ready. Suddenly, when something nice and good was dangled in front of them, it has now been whipped away because another bill—which, I believe, in the greater scheme of things, is not really good for New Zealand—managed to be passed through in about a few weeks. The effects of the student loan bill, as opposed to this one, will not come into reality for quite some time.

Also, with regard to payroll agents, it will be the same thing. Yes, it is a good measure for businesses to be helped and to be able to write off contributions to payroll agents, especially once they will have to deal with yet another 346 pages of tax law—so they will have a big job in the future. But again, that change has been delayed until 1 October 2006, not 1 April 2006. Again, what was thrust out to be nice and business-friendly, has not come through.

In the second reading the other night I pointed out that the bill also touches on share lending, equity lending, or the repo market, and I would like to go on record as saying that, quite honestly, I am nervous about this move. Quite simply, yes, it is a step in the right direction, but what was thrown in the too-hard basket is, in fact, a part of the global financial market, which is massive and is a multiple of shares equity, rather than just on balance sheet items. I mentioned the other night derivatives and credit derivatives that are derived from share equities, etc. It is very technical stuff, I know, but I would like to note that members have to be very wary, because I have been told things can happen off the balance sheet—not just on the balance sheet—that various auditors and others look at.

I also note we are starting to look at addressing some research and development write-offs in this part, as a member commented before. Again, I would like to point out what we are up against when I keep saying that we are not being bold enough in New Zealand. We are tinkering here. The other day I heard that China is offering 150 percent research and development write-offs. I also heard that in Kuala Lumpur a business can go for 5 years without paying any tax on any research and development write-offs. I am not saying that New Zealand goes there right away, but that is what we are up against. That is why we have to be bolder and harder.

Rt Hon WINSTON PETERS (Minister for Racing): I seek leave for the amendments standing in the name of New Zealand First and my name to be taken as one question.

The CHAIRPERSON (H V Ross Robertson): Is there any objection to that course of action being taken? There is not.

The question was put that the amendments set out on Supplementary Order Paper 15 in the name of the Rt Hon Winston Peters to insert new clauses 49BA to 49BAD and new clause 76BA be agreed to.

Amendments agreed to.

The question was put that the following amendment in the name of Dr the Hon Lockwood Smith to Part 2 be agreed to:

to insert the following new clause:

56B Assets with very low tax values

(1) In section EE 32 the heading is replaced by “Items no longer used or with very low tax values”.

(2) After section EE 32(1B), the following is inserted:

“(IC) This section applies when a person in an income year has an item of depreciable property that has an adjusted tax value at the start of the income year of $10 or less.”

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

DAVID BENNETT (National—Hamilton East): I raise a point of order, Mr Chairperson. I understand that one of the rules we have been told of is that voting is to be held in absolute silence. The Minister of Foreign Affairs spoke out of turn during that vote.

The CHAIRPERSON (H V Ross Robertson): I thank the honourable member for drawing that to my attention. Members well know that under Speaker’s ruling 63/2: “No other comment at all is allowed.”

Rt Hon WINSTON PETERS (Minister for Racing): I raise a point of order, Mr Chairperson. You had not called for the vote from Mr Anderton’s party yet.

The CHAIRPERSON (H V Ross Robertson): Yes, that has been done.

Rt Hon WINSTON PETERS: Hang on. That member was raising a point of order smack in the middle of the vote. That is my point. The point he seeks to make he ends up making against himself.

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

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

Ayes 48

New Zealand National 48.

Noes 71

New Zealand Labour 50; New Zealand First 7; Green Party 6; Māori Party 4; United Future 3; Progressive 1.

Amendment not agreed to.

The question was put that the following amendment in the name of Dr the Hon Lockwood Smith to clause 77D be agreed to:

to omit from new section FC 23(b) the words “at least 10 years” and substitute the words “at least 5 years”.

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

Ayes 48

New Zealand National 48.

Noes 71

New Zealand Labour 50; New Zealand First 7; Green Party 6; Māori Party 4; United Future 3; Progressive 1.

Amendment not agreed to.

The question was put that the following amendment in the name of Dr the Hon Lockwood Smith to clause 77D be agreed to:

to omit from new section FC 24(b)(ii) the words “the last day of the 48th month” and substitute the words “the last day of the 60th month”.

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

Ayes 48

New Zealand National 48.

Noes 71

New Zealand Labour 50; New Zealand First 7; Green Party 6; Māori Party 4; United Future 3; Progressive 1.

Amendment not agreed to.

The question was put that the following amendment in the name of Dr the Hon Lockwood Smith to clause 77D be agreed to:

to omit from new section FC 24(3) the words “before 1 April 2006” and substitute the words “before 1 April 2005”.

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

Ayes 48

New Zealand National 48.

Noes 71

New Zealand Labour 50; New Zealand First 7; Green Party 6; Māori Party 4; United Future 3; Progressive 1.

Amendment not agreed to.

The question was put that the amendment set out on Supplementary Order Paper 19 in the name of the Hon Peter Dunne to clause 99 be agreed to.

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Amendment agreed to.

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

LINDSAY TISCH (Senior Whip—National): I raise a point of order, Mr Chairperson. It is obvious that Green Party members want to vote against something, but they need to call out at the time because we cannot hear. They obviously want a party vote on this question. So if they could call out a bit louder it might help us.

The CHAIRPERSON (H V Ross Robertson): Could I please ask the Green Party member to stand and call out, because I did not hear. I was under the impression that the question was passed. Is the Green Party calling for a party vote?

Sue Kedgley: Yes.

LINDSAY TISCH: It is probably easier when those members call out the vote that they vote “No” and then go for the party vote. At the moment after the vote is taken we then hear they want a party vote. I think they need to call out “No” at the time. Then, if they want to abstain, they should do that during the party vote process.

The CHAIRPERSON (H V Ross Robertson): I thank Mr Tisch, but it is my understanding that the voice does not have to follow the vote. But I think the member has made a good point, and I would suggest that the member from the Green Party take note.

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Part 2 as amended agreed to.

Part 3 Amendments to Tax Administration Act 1944

Dr the Hon LOCKWOOD SMITH (National—Rodney): In debating Part 3, I hope the Minister will talk about at least part of his Supplementary Order Paper 19. When the Finance and Expenditure Committee was hearing submissions and considering this bill one of the clauses in Part 3 brought up an issue that at least the National members, and I must say Gordon Copeland also from United Future, became quite focused on. I think it was clause 180 in Part 3 that really gave rise to the issue, because that clause inserts new section 141EA.

Various bits of section 141 cover issues, as I understand it, relating to what is commonly called an unacceptable tax position. It sounds pretty weird to talk about an “unacceptable tax position” but let me explain what that means. Under current law if a taxpayer, let us say a GST-registered business, files a tax return but the business makes a mistake, but then finds it has made a mistake and corrects the mistake, and, in fact pays the correct amount of tax to the Inland Revenue Department by due date, that business, because it originally filed a return that contained an unacceptable tax position, can still be penalised.

The select committee’s commentary on the bill points out that the penalties can be quite severe—that is, the lesser of either 1 percent of the total tax figure or a quarter of a million dollars. So where there is a lot of tax involved this kind of unacceptable tax position could result in a penalty of up to a quarter of a million dollars, even though the business had told the department that the business got it wrong and paid the correct amount of tax by due date. Under current law the department does not have the power to say: “OK, we accept that you told us wrongly, but you fixed it up and paid the right amount of tax, so that’s the end of the matter.” Under current law the business involved is subject to “unacceptable tax position” shortfall penalties.

Certainly the National members of the Finance and Expenditure Committee believe that that was totally unacceptable. Our tax system depends on taxpayers of all kinds being honest with the Inland Revenue Department. Our tax system requires voluntary compliance. Sure, the law is there, but the department cannot go around checking that everyone has complied with the law. It requires goodwill and an acceptance by taxpayers that they will comply with our law. Where taxpayers come along and say: “Look, I got this wrong.”, and pay the correct amount of tax by the due date, we should not be penalising them because they are being upfront and honest. It is really important that we do not penalise them when that is the case.

I congratulate the Minister on bringing in the Supplementary Order Paper to alleviate this problem, but I want to be sure that businesses can be satisfied that the problem is dealt with. As I read the Minister’s amendment, it looks to me like it is the new clause 180B in Supplementary Order Paper 19, which inserts new section 141KB, “Discretion to cancel some shortfall penalties”, that is the appropriate provision. As I read the Supplementary Order Paper, it gives the commissioner a lot of discretion about whether a business will be excused a shortfall penalty for having taken what is technically an unacceptable tax position.

What I would like the Minister to make clear for us is, if a business acknowledges its mistake and pays the correct amount of tax by due date, whether the Minister would no longer have discretion in that case and the business would be absolutely assured of no tax penalty. I will continue for just a moment while the Minister in the chair, the Hon Peter Dunne, consults his officials. What I am trying to get clear is that although there may be some circumstances in which I can understand reference to the discretion of the commissioner is often a sensible way to draft the law, I want to ensure that the Supplementary Order Paper delivers for a business that advises of the mistake, corrects the mistake, and pays the correct amount of tax by due date, and that it will not be subject to a discretionary decision that it should still be penalised. I want to ensure that this Supplementary Order Paper gives businesses absolute certainty that if they go through those steps and pay the correct amount of tax by due date, there is no discretion whereby they might still be penalised—that they have absolute certainty that they will not be penalised if they do those things. There may still be a necessity for the commissioner to have discretion around circumstances that are not as clear-cut as that, but I want to be absolutely certain about the Supplementary Order Paper provisions because the select committee has not had a chance to hear submissions on them.

I appreciate the Minister’s acknowledging that, and I appreciate his bringing in the Supplementary Order Paper, because we argued strongly with his officials about this matter. I acknowledge that the Minister’s colleague, Gordon Copeland, was very supportive of this effort. We argued strongly with the officials that we want this provision to deliver certainty to businesses that if they acknowledge the mistake, correct the mistake, and pay their due tax there will be no discretion about whether they are free of penalty—they will be free of penalty in those circumstances. If the Minister could confirm that absolutely for us I think it would give us a degree of comfort in relation to Supplementary Order Paper 19, which we have not been able to hear submissions on.

Hon PETER DUNNE (Minister of Revenue): I have a remarkable sense of déjà vu about this particular debate this evening because the original penalties provisions were brought in in legislation that I introduced 10 years ago when I was last Minister of Revenue. At that stage, as the member quite rightly observes, there was a very strong emphasis on voluntary compliance and on getting our system geared towards one whereby individuals and businesses would self-declare their liabilities and accept the consequences when they got it wrong. What I think has happened very clearly over the intervening decade is that the system, by and large, has worked well, but there have been instances when good-faith errors—if there be such a thing—have occurred and people have ended up incurring significant penalties. In fact, 20 percent is the penalty rate, and that can accumulate into a massive sum very quickly. I think it was never intended originally that the law be interpreted in that way as broadly as perhaps it has been of late, whereby people who are essentially making a judgment in good faith get it wrong, then bear the penalty.

Bearing in mind the agitation and the representations from a variety of people, the amendments in Supplementary Order Paper 19 are designed to give the commissioner the flexibility to be taxpayer-friendly. When an unacceptable tax position has clearly occurred in an erroneous position, the commissioner has the power to waive the penalties and impositions that might otherwise have occurred. That also means, if I hear the member’s point correctly, that in exercising that discretion it is not envisaged that the commissioner would exercise it negatively—in other words, that he or she would look at a case and say: “Oh, hang on, you are not paying the 20 percent penalty at the moment. You ought to be.” There is not the intention that this provision be exercised in a way that is contrary to the interests of the taxpayer. It is to be taxpayer-friendly, bearing in mind the range of circumstances.

I have indicated that this is essentially an interim measure. I am keen to look at the wider range of application for penalties regime and see what changes we might want to make moving forward—bearing in mind that it is now 10 years old—and whether it is still working in exactly the way it was intended. I think that is a good principle to be establishing. Today’s proposals are essentially a short-term measure designed to deal with what is a very real problem. I think it is a constructive way through. I am simply giving notice that a wider review is to be undertaken around this point. Although I would not envisage that the outcome of that would in any way be contrary to the provisions I am proposing this evening, I do see tonight’s move as but the first step. I think the member’s points are addressed by the discretion given to the commissioner here in all cases. I would not envisage, and frankly would not expect to see, a situation where that discretion was exercised against the interests of the taxpayer.

CHRIS TREMAIN (National—Napier): I rise to speak on Part 3 and to talk about further progress towards improving the position of business in New Zealand. I specifically want to talk about the provisional tax alignment dates with GST. Nothing is surer than the fact that we need legislation like this to take our businesses forward. Although our OECD rate still puts us at No. 21 out of 30 countries, we need a raft of legislation like this to take us up that ladder and put us into the top half of the OECD, if not higher. There is no silver bullet that will take us up that list, so it is fantastic to see bills like Wayne Mapp’s Employment Relations (Probationary Employment) Amendment Bill coming in and having a major impact. Those members in this Parliament who have employed people in their life will know that legislation such as that enabling a probationary period will have a major impact for employers and employees in this country. It is interesting to quote one example. Recently I was at the Wattie’s factory in Hawke’s Bay. It is the fourth-largest Heinz factory in the country. People there made significant compliments about that legislation, and said that the company closed a factory in Australia because employment legislation over there had got out of control. So I compliment the Minister on bringing in this bill.

I particularly want to talk about the provisional tax period and the alignment with GST. I want to focus on clause 161 because I think it is important. The aim of that clause is to reduce the tax impediments for businesses, and to make changes to the way that provisional tax and GST are paid and the way that provisional tax is calculated. It is a major step forward for business in New Zealand.

Perhaps I can use an example. It is a pity that the former member for Tauranga is unable to be here tonight, because I want to use the example of a company that has a turnover of around $200,000. Under the current situation it would be looking to pay provisional tax in July of $22,000, in November of $22,000, and in March of $22,000, adding up to the $66,000 that would be required for provisional tax. That does not allow the company to account for any unexpected major changes that may have occurred throughout the income year. For instance, let us say the company was involved in a court case that happened late in the year, in January, and it incurred a $40,000 fine. That is an expense that a company would be unable to predict. It would have had to pay provisional tax on the basis of its estimated income throughout the year, without understanding how that $40,000 would impact on the business. Right now, being able to pay on the GST basis would allow the company to take in that additional cost later in the year and account for it, so that the company would be far better able to predict its income tax liability throughout the year. I think that is a good step forward, and it would certainly help the former member for Tauranga with his case that is before the courts.

The other important provisions in Part 3 are sections 185C and 185D, inserted by clause 189. Again, I compliment the Minister on the subsidy for payroll agents. That is a step forward for small business. Many small businesses struggle with the compliance costs around meeting the ongoing issues of employing people, paying PAYE, and dealing with accident compensation. I think that this is indeed a step forward, and I would like to compliment the Minister.

The question was put that the amendments set out on Supplementary Order Paper 19 in the name of the Hon Peter Dunne to Part 3 be agreed to.

Amendments agreed to.

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Part 3 as amended agreed to.

Part 4 Amendments to other Acts

The question was put that the amendment set out on Supplementary Order Paper 16 in the name of the Rt Hon Winston Peters to insert new clauses 221B and 221C Part 4 be agreed to.

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

Ayes 109

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; United Future 3; Progressive 1.

Noes 0

Abstentions 10

Green Party 6; Māori Party 4.

Amendment agreed to.

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Part 4 as amended agreed to.

Schedule 1

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Schedule 1 agreed to.

Schedule 2

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Schedule 2 agreed to.

Schedule 3

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Schedule 3 agreed to.

Clauses 1 and 2

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Clause 1 agreed to.

The question was put that the amendment set out on Supplementary Order Paper 16 in the name of the Rt Hon Winston Peters to clause 2(13) be agreed to.

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Amendment agreed to.

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

Ayes 113

New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Māori Party 4; United Future 3; Progressive 1.

Noes 0

Abstentions 6

Green Party 6.

Clause 2 as amended agreed to.

Bill to be reported with amendment presently.

Bills

Legal Services Amendment Bill (No 2)

In Committee

Part 1 Amendments to principal Act

The CHAIRPERSON (Hon Clem Simich): The debate on this part includes debate on schedules 1 and 2.

Hon GEORGINA TE HEUHEU (National): I am pleased to stand in the Committee on the Legal Services Amendment Bill (No 2), but I have to reiterate that National does not support this bill in its present form. We would have wished, as part of our policy, for a more sweeping review—one that looked better at issues of eligibility for legal aid, both in criminal and civil proceedings. We do not think this bill does that. We also would have wished that a proper review and a proper approach to this matter would look at the excesses of the current system, and we do not think this bill has done that. Although the intended outcomes of the bill seem laudable enough, National believes that the bill falls short of achieving them—namely, a fairer, more credible, and more effective justice system, one that is underpinned by the rule of law and where justice services are equitable, credible, and accessible.

We believe that the bill fails, mainly on two grounds. First of all, we do not think that the rules of eligibility for legal aid in both civil and criminal proceedings are as clear as they ought to be. Of course, if the processes have no clarity, then we are looking largely at uncertainty. We believe that an effective justice system should be one that aims for certainty in its processes. This bill does not do that. Also, we think that too much discretion is left in the provisions and that, in effect, applicants for legal aid—and probably those who are considering eligibility, as well—are left in a position not much better than what happens currently. We think that the Government’s bringing in this bill and not addressing those issues has led to a bit of a waste of time. Certainty is a value that we would have looked for, but we do not think this bill achieves certainty.

The second ground on which we feel the bill fails badly is that it unfairly discriminates against lawyers who undertake legal aid work, as opposed to those who are prosecuting on behalf of the Crown. We do not think there is any proper case for that sort of discrimination. I will say more about that in a moment.

If we look at the detail of the changes in Part 1 that relate to the granting of legal aid to an applicant in respect of criminal proceedings, we will see that they are subject to an overriding consideration of “the interests of justice”. An attempt has been made to identify the relevant criteria, but those criteria are subject to an ability that the Legal Services Agency has in relation to section 8(4), inserted into the principal Act by clause 5. Section 8(4) states: “When considering whether or not the interests of justice require that the applicant be granted legal aid, the Agency may have regard to any other circumstances that, in the opinion of the Agency, are relevant.”

We believe that puts in far too much discretion. The bill already sets out about three or four criteria that supposedly fall under the overriding banner of the interests of justice, requiring that the applicant be granted legal aid. Then, as I have said, section 8(4) gives too much discretion to the agency as to whether an applicant qualifies.

The provisions for the granting of legal aid in civil matters are set out in section 9, inserted into the principal Act by clause 5. Without at this point referring to those provisions, that section also allows for far too much discretion. Therefore, we do not think that this bill in any way leads to the outcome that I mentioned before, which is an effective, more credible, and more equitable justice service. We think that this bill in fact adds uncertainty, and that legal aid applicants will be no wiser at the end of the process than they are under the present legislation as to whether they are likely to be granted legal aid. So that is a big disappointment, and colleagues of mine will certainly be making some comment on that matter as we go through the Committee stage of the bill.

The second point I referred to was a provision that we believe discriminates against those undertaking legal services for applicants. There is discrimination between those who undertake that work and those who work for the prosecution.

CHRISTOPHER FINLAYSON (National): A very senior QC, John Rowan, wrote about criminal legal aid in this month’s edition of the New Zealand Law Journal. In it he referred to something he wrote in 1993, and it is very germane to this debate in Committee tonight. He said that there are few, if any, votes for a Government in legal aid, but that the provision of proper legal advice and representation must be one of the hallmarks of a civilised society. The provision of proper legal advice and representation is critical, and this bill does not address that central issue. It deals with a number of laudable matters. It makes improvements in a number of key areas, but in the critical area of providing adequate criminal legal aid rates, it totally fails.

I will start by dealing with new section 92A, inserted by clause 33A, because the National Opposition says that that is not an adequate response to the problem. That clause provides that the Legal Services Agency “must from time to time review its rates of payment in respect of legal services …”. That will not, of itself, address what John Rowan describes in the March 2006 New Zealand Law Journal as the chronic disparity between the sums received by criminal legal aid defence lawyers and the sums received by Crown solicitors. This is not an issue about National looking out for its mates in the legal profession; this is an issue about justice for the poor. [Interruption]

The Minister in the chair, Mark Burton, laughs, but he ought to listen very carefully to this. Because of this increasing disparity, and the miserly sums that are paid, there is an exit from this type of work by experienced practitioners. The cost of this situation to the justice system is summarised in this way: because people are exiting—particularly leaders and experienced counsel—the supervision and modelling for junior counsel is simply not occurring. There is a huge pressure on the part of junior counsel to take short cuts and to not do the necessary preparation. The real costs to the justice system are seen in the expanding number of criminal appeals that increasingly involve allegations of the competence of counsel.

Finally, no doubt, criminal accused are being convicted when they should not be, or are being convicted of charges that are more serious than should be the case. These are matters that are not addressed in this legislation, and that is the primary reason why the National Party opposes this bill. In principle, the bill may have what could be called pettifogging, minor improvements, but it does not address the key legal question it should.

As the previous speaker said, there are also problems with new sections 8 and 9, inserted by clause 5. The particular complaint the National Party has is with new section 8, which outlines the circumstances when legal aid may be granted in criminal matters. One of the criteria set out is that the Legal Services Agency may grant legal aid if “it appears to the Agency that the interests of justice require that the applicant be granted legal aid.” Thereafter the section sets out a number of factors that may appear to the Legal Services Agency to constitute the interests of justice. But after providing a very lengthy list, subsection (4) is a model of vagueness, because it simply states: “When considering whether or not the interests of justice require that the applicant be granted legal aid, the Agency may have regard to any other circumstances that, in the opinion of the Agency, are relevant.” In our submission, that is too vague and open-ended. Applicants for criminal legal aid should be entitled to know as early as possible what the circumstances are that justify the grant of legal aid to them. This provision is too vague and open.

Whilst we are looking at section 8, there are a couple of other points that could be made. Importantly, the majority of members on the select committee have inserted new paragraph (aa) in subsection (3). National has no real objection to that because the provision addresses a very important point; namely, whether the applicant has any previous conviction. That is important because even if a person is not going to be found guilty of an offence that may result in a term of imprisonment, the consequences of a previous conviction can be very serious indeed. A person may be denied entry to, for example, the United States, if he or she has a conviction that, although not susceptible of a period of imprisonment, is none the less serious enough to warrant the American authorities denying a visa. That is the kind of improvement that the committee made and that National is quite happy to go along with. But the overarching problems with new sections 8 and 9, inserted by clause 5, outweigh the good.

The second point, which I mentioned in the second reading, I emphasise from the point of view of those who are required to oppose cases brought by those on legal aid. It concerns clause 26, which inserts new sections 40 and 41. The reality of the matter is that it will be a very rare case indeed where circumstances are such that a legal-aided person will be liable for costs, much less that the costs of the successful opponent of the aided person will actually be borne by the Legal Services Agency. Section 41(3) refers to the factors that the agency must have regard to in determining whether to pay out to a successful opponent of a legal-aided person. From experience I can advise the Committee that it is virtually impossible to recover costs, so justice is not achieved in that regard, either.

In conclusion, National regrets that it has to oppose this legislation. It deals with a number of points. It expands the financial thresholds for legal aid eligibility but it does not address the critical question that is confronting the criminal justice system in particular at the moment, and that is the appalling rates of payment for criminal defence lawyers. These rates are turning into a real and serious barrier to justice. It is unfortunate that an enormous amount of work went into this legislation, but that the critical issues that I have endeavoured to outline in this speech have not been addressed. For those reasons, National opposes this bill.

Hon MARK BURTON (Minister of Justice): I will make just a brief comment in response to the member who has just resumed his seat. Firstly, I acknowledge the points he made highlighting a number of reasons why he could indeed support the bill. I submit to him that he and the National Party should support the bill. Even if I accepted his arguments—which, of course, I do not in their entirety—as to the shortcomings that he proposes the legislation has, they are, none the less, alongside the things he has already explained eloquently to the Committee, good reasons to support a bill that at least, even by his own definition, advances things in the direction he would generally approve of.

I therefore fail to see the logic of why the National Party would knock the opportunity to make some progress, by its own definition, simply because it cannot have everything it wants. I urge the member to have another think and perhaps to discuss with some of his colleagues what is an opportunity to make some progress today, and to live to fight another day on those matters that he perhaps is not satisfied with.

I acknowledge the work of the Justice and Electoral Committee in relation to the advances made to clause 5. It is a good example of a further insertion in the victims’ claims area to ensure that the principles that this legislation seeks to advance are better met. The bill is improved by the considerable work and effort that the committee has put into it.

Again, I urge the member who has just resumed his seat to have another think about supporting the bill and to look at the advantages of making this progress, and there are other matters that we may well advance elsewhere on another day.

KATE WILKINSON (National): We know that the main aim of the Legal Services Amendment Bill (No 2), which amends the Legal Services Act, is to update the financial eligibility criteria for the granting of legal aid, and to improve the repayment of legal aid and the administration of the legal aid scheme. The bill would enable about 1.2 million New Zealanders to be eligible for legal aid—an increase from some 765,000.

But the bill is not about lawyers; it is about access to justice. In the words of the New Zealand Law Society, the right to legal representation is worthless if effective representation is not available. We are nearly doubling the number of legal aid recipients, yet anecdotal evidence shows a decreasing number of lawyers—an exodus of lawyers who are willing and available to do legal aid work. Both sides of the coin must be addressed: that of the user of legal services—the client—and that of the provider of legal service—the lawyer. The bill does not do so. It seems to take as a given that there will be enough able, qualified, and willing lawyers to cope with the increased case load that would result from increasing the legal aid eligibility. But firms are declining to take on legal aid work. Fewer and fewer lawyers are willing to take on the work. That is not justice, and neither is it access to justice. Because of a shortage in the supply of qualified and experienced lawyers, a miscarriage of that justice is more than likely to occur. As an example, part of the legal aid regime requires a solicitor, in order to qualify for a particular legal aid rate and level, to have spent 3 days in a court under the supervision of another lawyer. That sounds great in terms of quality control and standards, but the fact of the matter is that for those 3 days neither of the lawyers can charge their rates at all. They simply do not get paid. It is little wonder, therefore, that lawyers are turning their backs on legal aid work, and this bill does nothing to attract them back.

We have a prima facie case—and we all know about prima facie cases—that through the bill access to justice is being threatened, not just for the criminals and the gang members but for any New Zealander who is financially eligible, including victims of domestic violence, wrongly accused victims seeking to prove their innocence, and those who may have simply made a mistake. Those people all need legal representation and they all need justice. Lawyers generally agree that they themselves feel an obligation to provide legal aid services as an integral part of the issue of access to justice.

But it is not access to justice when defendants who are defending their innocence have fewer resources, and when their legal counsel has less time to prepare the case—fewer resources at less cost—than their prosecuting counterparts. It is not access to justice when victims of domestic violence who are in desperate need of prompt, competent advice have to shop around for a lawyer who is willing to do legal aid work. It is not access to justice when clients do not have the opportunity to engage sufficiently qualified, experienced, and able counsel. Counsel of choice is an important hallmark of our legal aid scheme, as my learned colleague has already alluded to, and by not addressing the issue of legal aid providers the bill limits the choice of legal representation.

It is not access to justice when one first has to jump through the uncertainty of the eligibility rules. The Legal Services Agency has such discretion that it leads to such uncertainty. Is this the right group to determine, for example, the interests of justice? Is the Legal Services Agency the right group to determine, for example, the likelihood of sentence of imprisonment? Is the Legal Services Agency the right agency to determine whether the proceedings involve a substantial question of law? Is the Legal Services Agency the right group to determine the prospect of success in, for instance, family and domestic cases? Such uncertainty is not access to justice.

RUSSELL FAIRBROTHER (Labour): I was sitting in my office listening to the debate, and I heard my good friend Mr Christopher Finlayson demonstrate that the move from skilled lawyer to cant-uttering politician can be rapid, in some cases. The law reports are redolent of Mr Finlayson’s cases of finely argued matters of law based on evidence. As I sat in my office in my jeans and open-necked shirt, ready to go home, I listened for evidence in his dissertation on the problems facing the legal aid scheme. Then he mentioned the blaming of counsel as a cause for retrial. I thought that was interesting, because recently I heard Mr Finlayson say that the Court of Appeal dealt with about 490 criminal cases a year. I thought back—I did not have time to refer to the law reports—and I could think of just one case in the last year when the decision has been overturned for that reason. There may be more but we are looking at 0.1 percent, at the most. Given that the criminal courts handle tens of thousands—perhaps hundreds of thousands—of cases a year, his argument in fact justifies the system we have at present, whereby legal aid is delivering competent counsel to accused people.

Before we take the broad brush of criticism to the bill, we must ask what the debate is about. The debate is not about the adequacy of the legal aid rates; it is about the thirst of the profession to earn a higher and higher fee, which drags up the level of legal aid remuneration. If someone tells any motor mechanic that the lawyer who acts for his or her spouse is grizzling that he or she is being paid $140 an hour and can barely afford to run the case, the motor mechanic may forget to put oil in the engine of that person’s vehicle. Quite simply, $140 an hour is a large sum to be paid. Someone might say to a Crown prosecutor that he or she does not deserve to earn more than the defence lawyer, because he or she can act for the Crown all the time on Crown solicitors’ rates. But the defence lawyer, if he or she is competent, may do a legal aid trial one week and the following month earn three times the amount by way of private instruction. The Crown prosecutor will wonder where the parity of arms is in this case, when the defence counsel appears in court and earns three times what he or she earns without having to prove a thing. Where is the parity of arms, and where is the equal basis on which the law is practised? So if one compares apples and oranges, one will get different results.

The Legal Services Amendment Bill (No 2) is about rationalising a process that has emerged. One of the first things the bill does is widen the eligibility criteria so that a greater number of people can qualify for State-funded aid. It is up to the law profession to try to determine how much public good is left in the practice of law. If the law profession departs any further from the concept of public good, then that may see the encroachment of the State into more provision of legal services, and that would be a sad thing.

In addition, my friend Mr Finlayson lamented the number of people who are now appearing in court. I thought back to the days when I started doing legal aid. Then, one was paid $13 for a plea mitigation; now it is $300. People were saying: “Why do you bother doing this? You can earn more in other areas of law.” That is so true. Back in 1978 there was a paucity of lawyers at the criminal bar, which has been a factor right through. Now, of course, the major law firms do not train their lawyers in advocacy. We have reached the stage that when someone takes an associate lawyer in a large firm head-on, and says: “We’ll go to court on this.”, that person will find that the lawyer will start to talk about a settlement, because many of those so-called senior litigators are gun-shy. The reason is that the process in their firms takes lawyers out of court. They are very good at arguing the case in telephone conferences, at writing pleadings, and at preparing briefs of evidence, but when it comes to the threat of a cross-examination, or of having their case tested in court, they talk settlement. So that is not legal aid; that is the private system failing its clients by training lawyers to earn more money rather than to provide good advocacy.

The problems that Mr Finlayson speaks about are not an indication of the failure of the Legal Services Amendment Bill (No 2); they are an indication of the abrogation of the Law Society in its public-good obligations to the public at large. No longer is it adequate for us to say that the State is not providing enough legal aid. We should be asking the law profession whether the new lawyers and conveyancers legislation will take lawyers back to the public-good element that 5 years of study warrants.

So I stand here acknowledging that although the Legal Services Amendment Bill (No 2) may not be perfect, it does provide a level of remuneration that most people in New Zealand would consider adequate for a person to earn per hour. Sure, if one wants to have a lot of secretaries, a flash office, and sweets that have the name of one’s firm on their wrapping paper, then one cannot do it on legal services rates. But if one wants to provide good honest service, this bill will do it.

DAVID BENNETT (National—Hamilton East): The National Party does oppose this bill.

I am interested in clause 33A of the bill. Clause 33A inserts new section 92A into the Legal Services Act 2000. It relates to the Legal Services Agency’s ability to review payment of legal services. The new section states: “(1) The Agency must from time to time review its rates of payment in respect of legal services provided under this Act by listed providers on a contract for services.” What does that mean? It means simply that at some unspecified point in time the agency has the ability to review the rates of payment for legal aid. This definition causes a number of problems. First, the time frame for reviews is not specified. Secondly, the quantum of any increase, or even a potential decrease, is not specified. Overall, there is a lack of detail, which will create uncertainty amongst practitioners, and there is also inconsistency with specific details given for the rights to obtain legal aid. But there are no specifics on how to pay the practitioners for the increase in services they are expected to provide.

The intention of the bill is to promote access to justice. The Hon Phil Goff described this in the first reading as: “More people will qualify for legal aid.” It is expected that as a result of the opening up of eligibility for legal aid, there will be a further 25,000 grants of legal aid per year. Those grants will be inflation-proofed by linking the thresholds for financial eligibility to movements in the consumer price index. Each year the threshold will change. If we compare that with section 92A, where we have only a vague ability to review the rates of payment, we see the first inconsistency in the bill. We are providing a specified regime for dealing with increased caseloads, but at the same time we are providing no specific regime for how to pay the providers of those services for their increased costs of providing the service. All we have is an undertaking from the Hon Mark Burton in the second reading that: “I have indicated that a review will be considered after the implementation of this bill.” That gives neither any certainty nor any consistency for legal practitioners.

The Government’s coalition partners, “Ron’s Mob”, have taken the approach that this is some kind of attempt to lobby for higher fees. The reality is that we face a segment of the profession that is in crisis. The reality is that practitioners are deliberately shying away from legal aid work because of the administration required, the low payment fees, and the lack of resourcing for their activities. That potentially affects the poor more than any others. For example, there are no practitioners willing to do family law work on legal aid between Taumarunui and Te Awamutu. The result is that that service is not provided in small towns in areas of low socio-economic demographics. Where it is provided in those areas there are real concerns over the level of service provided and the ability of the legal advice.

Some people may not see that as being a problem. One of the things I remember from working in a law firm was the case of a young man who was needlessly sent to prison. He had suffered the effects of a big night out and had committed certain acts he should not have. After a few days on remand he was brought before the judge. OK, that judge had a propensity to convict, but the young man stupidly stood in front of the judge and told the judge that he deserved a sentence of imprisonment. He got that—a sentence he should never have had to suffer and something that probably sent him down the wrong path in society. If he had been given sufficient legal advice, his life would have followed quite a different path, but, unfortunately, he was just one of the many. Some people do not know how to help themselves in those cases.

The Government has a responsibility to provide for those sorts of circumstances with sufficient legal representation. Under this bill there is an expectation for greater numbers of legal cases, but not the legislative intention to provide an adequate level of service for those concerned, and that is especially true for the youth in our community. The failure to provide adequate representation for those in need of protection, such as our youth, is contrary to the early intervention principle and is a failure for those most in need. Sure, the bill brings in a new repayment regime, but many such individuals will never be able to meet those commitments. We are also seeing trends in legal aid whereby clients are treated differently in terms of scheduling and in the quality of staff and advice provided. Combined with a Legal Services Agency that acts more like a court in determining appropriate cases, we are failing the most vulnerable in our society.

An important concept in representation is equality of arms—that both parties have a comparable level of representation. The current inequality in payments for prosecutors and defenders is that fewer people are doing legal aid work, as such work is not compulsory. That in turn limits their choice of clients. Often questions of competency arise from inappropriately paid representations, and there is the possibility of a greater risk of errors. The key concept of the bill is access to justice, but to achieve that we need an appropriate level of service from legal aid lawyers. This bill fails in providing access to appropriate levels of service.

The bill intends to increase access without having respective increases in the funding of the service. It sounds familiar—just like a Labour Government policy of devolving the costs of services to local government bodies. All that is provided is a time to time review process. “Time to time” is undefined and could be as long as anything—the time taken to address our roading needs, the time taken to achieve the elusive tax cuts, or possibly the time taken for an old sailor in New Zealand First to retire. The amount of any change is similarly vague, but we are used to vague concepts of values from this Government—of carbon tax estimates and student loan scheme costings.

RON MARK (NZ First): I guess that speech just about sums up why we do not need to be listening to calls to pay lawyers more. If that was a speech delivered by a man who has practised law, who has to read everything out word for word, who has to pre-prepare, and who is not able to come to this Chamber, listen to a debate, formulate his own views, and articulate them clearly and succinctly without having to write one note down on a piece of paper, then we are in dire straits out there in the legal fraternity, for we do not have good quality lawyers.

Mr Chairperson, you may be noting that I am not speaking from notes. All I have in front of me is a blank page right now. Let us go one step further to take the next argument that has been touted by ex-lawyer after ex-lawyer, no doubt to be followed by ex-lawyer after ex-lawyer. The one thing they want is—

David Bennett: I raise a point of order, Mr Chairperson. Is the member not supposed to address part of the legislation? We have heard nothing like that at this stage.

The CHAIRPERSON (Hon Clem Simich): Thank you. I am sure the member will come to that. He is just making a few comments. He is working his way into it.

RON MARK: I am simply replying—and here again, it reinforces the substandard we seem to have dropped to in the legal fraternity. If the man cannot understand the Standing Orders, which give a speaker the right of reply to comments that have been made in the previous speech, then he is a loser from day one, and will continue to be until he reads the Standing Orders.

The debate from the National Party team has been structured around fair compensation for lawyers who take up legal aid work. I repeat what I said in the report back: those members should help New Zealand First members make up their minds whether to listen to them. Those members from National should tell New Zealand First how much they want lawyers to be paid per hour, per day, per week, and per year for doing legal work so that that can be factored into the Budget, so that we can decide whether the amount can be afforded on a national scale, and so that we can put a price tag firmly on what National is saying today. I do not mind people arguing for more money for lawyers. I could listen to that all day, just as I will hear people arguing for more money for rehabilitation schemes. But pray tell me—how much more dost thou speak of? I cannot make a decision on a “gimme me more please” plea.

I simply say to the former lawyers now acting as members of Parliament, and particularly to the previous speaker, Mr Bennett, that they should come to the House prepared. They should act like good lawyers. They should represent their cases well and articulate them well. They should do so without writing notes, and—please—without reading their notes to us. If Mr Bennett wants to do that, he should table his speeches and spare us all the agony. We will read them in our own time. I ask those members who come here and support this bill to do so with good, reasoned arguments and not to ask the House to give lawyers more money until they are prepared to say how much more they want, so that we can be very clear about what they are asking for.

NICKY WAGNER (National): Although this bill is called the Legal Services Amendment Bill (No 2), it focuses on only one legal service: legal aid. National, like most Kiwis, supports the philosophy behind the bill, which is the right of all New Zealanders to have an equitable, credible, and accessible justice system. All New Zealanders should have confidence that each and every one of them will get equitable treatment in a court of law. It is not right that different people should get different results from the justice system because of their age—as Mr Bennett has told us—their sex, their colour, their knowledge of the system, or—and this is why the bill is so important—their ability to pay for representation and the quality of that representation.

The cost of going to court is a vexed issue for all who face legal proceedings, whether they are eligible for legal aid or whether they have to pay their costs themselves. In a criminal case, a person has very little choice. It is always wise to have legal representation, because there is no doubt that with a competent lawyer a better result should be expected.

Ron Mark: Is this competent lawyer reading again, too?

NICKY WAGNER: This is not about being a competent lawyer; it is an argument for the importance of legal aid.

New Zealanders believe that it would be a miscarriage of justice if a person were unable to be represented in court simply because he or she could not afford a lawyer. A civil case is somewhat different. In civil cases complainants have more choice about whether it is worth going to court. They need to weigh up whether the result is worth the cost. Many people say that going to court, however right a case may appear, is a lose-lose situation simply because of the stress and the expense. Many people choose to settle out of court simply because the cost of going to court is not worth even a successful result. People who are not eligible for legal aid make those decisions every day, and they often decide that their day in court is not worth the expense. That cost-benefit analysis is a valid way of dealing with civil issues.

Getting legal aid should not encourage or promote litigation; nor should it lead to court proceedings continuing indefinitely simply because the State is paying the costs. We have seen situations where legal aid has paid for appeal after appeal on often quite spurious grounds. Although it is estimated that this bill will increase the percentage of legal aid recipients who are required to make repayments from 14 percent of those receiving support to 26 percent, it will still mean that nearly three-quarters of the people who get legal aid will repay nothing. Legal aid in those cases should perhaps be called a legal grant.

But the main reason National does not support this bill is that it does not address the issue of remuneration for lawyers and how they undertake legal aid work. The bill revises the terms of eligibility for legal aid and makes rules about merit testing and debt management, so the mechanisms for providing representation are dealt with, but the bill does nothing to guarantee the quality of that representation. This issue was brought up time and time again in the Justice and Electoral Committee.

If we are to provide a legal aid system where everyone has a chance of receiving equitable treatment in a court of law, we must be able to ensure that a competent lawyer will take the case. Right now, that outcome must be debatable. With legal aid payments set at the 1996 remuneration level, individual lawyers and whole practices are turning down that type of work. It is rare to see senior lawyers in court doing legal aid work, which means that younger and less experienced new lawyers are left to carry the responsibility.

A lack of involvement in the legal aid scheme by experienced and skilled lawyers destroys any chance of the equity of justice that is the whole purpose of legal aid and of this bill. So National opposes this bill, because if we cannot guarantee the quality of legal representation, how can we deliver equitable, credible, and accessible justice?

Hon MARK BURTON (Minister of Justice): I just want to recap what we have heard from both sides of the Committee, Mr Chairperson, because I sense a degree of repetition in the debate that I am sure will lead you to the inevitable conclusion shortly. We have heard about the content of the bill, and almost universally from members—including the National members—we have heard nothing but acceptance, praise, or agreement that for the main part the things this bill does around the redesign of financial eligibility, changes to the proceedings that are eligible for legal aid, the redesign of the payments scheme, and so on are all good and all positive.

The one outstanding matter that seems to stand in the way of the National Party supporting the bill is the remuneration rate. I again urge our colleagues on that side of the Committee to consider that if there are so many things right with the legislation, and that the one thing—

Hon Georgina te Heuheu: Who said that?

Hon MARK BURTON: Each member that has stood up. With respect, I have heard a number of the member’s colleagues acknowledge there are a number of meritorious aspects to this legislation, but they take exception to the fact that $165 an hour is not adequate remuneration. That is the top rate. I am minded, as I look around the House at the expressions of some surprise, that that is the top rate—$165 an hour.

I simply want to say to the member—and I acknowledge our New Zealand First colleague Ron Mark has raised a very important point—that if members opposite genuinely want to engage in debate around the issue of the top rate of $165 an hour being inadequate, they should say how much would be adequate, and what the budgetary implications of paying that rate would be. That would then be lined up against all of the other issues those members raised as their priorities. The reality is that those costs have to be stood alongside every other matter that members opposite—and, certainly, members in the Government—have to determine as matters of financial priority on a daily basis.

So if members opposite are not willing to support legislation, which, by their own admission, has a great deal of merit, because of the single matter of remuneration, I would simply invite them to at least front up to the House with some clear numbers as to how much they would be willing to pay and to let us know what other policies that payment would be instead of, for that is the choice of any responsible political party that would be Government. How much would those members pay, and instead of what?

Hon GEORGINA TE HEUHEU (National): Is Ron Mark not a clever boy, then? He can stand up there without any notes, with just a blank page in front of him, and he can make a great speech—according to him. What a clever boy, is he not?

Hon Member: Put him in your pocket and take him home.

Hon GEORGINA TE HEUHEU: No, thank you; I have better choices. I would suggest to Ron Mark that he remember his first year in this place and his first few speeches in the House. The people who he is ridiculing here tonight—

Ron Mark: They are lawyers.

Hon GEORGINA TE HEUHEU: It does not matter in the least whether one was a lawyer, teacher, or farmer before coming here. Standing and making speeches in the House is not necessarily the same for a lawyer as making a speech out there in the forum he or she is used to. Anyway, is he not a clever boy? He should be a little bit generous and realise that some members in here are still finding their feet. He used to do that when he was here in his first year. He used to have notes, too—we all did. There is no shame in standing there and having notes. He should not put an argument down just because a member cannot do it from a blank piece of paper. We are not all clever like Ron Mark, but of course, he is feeling extra clever, because he has latched himself on to the Government. That member probably does not even like the Government, but for whatever reasons his party has, this time around, latched itself on.

I come back to the bill though. Labour likes to suggest and likes to pretend that it is a party for the poor, the disadvantaged, the low-income person, and all of those things. We know that it is not. In terms of access to justice it proved itself not to be the party for disadvantaged and low-income people when it put court fees up by a huge amount 3 years ago. Which people most suffer from that? It is the ordinary man and woman in the street. Ordinary New Zealanders are the ones who feel the brunt of those high court fees today. It is a little bit rich when Labour members want to turn this debate—their Committee stage contributions—into a debate about National looking after its rich friends. They should get over it; they should get rid of that envy. It is no sin to be well off. Actually, a lot of people work hard to be well off. So let us not focus National arguments on that issue, because that is not that issue at all.

I worry that if senior experienced defence lawyers are leaving that work to more junior people—which they are entitled to do—then who will suffer the most from that? It is probably the relatives of Ron Mark, myself, Hone Harawira, Pita Paraone, and other Māori in this House. It is probably our relatives who suffer most if legal aid work is not properly compensated for. I see Russell Fairbrother nodding. He knows that, because a large part of his defence representation was of low-income and disadvantaged people. So he knows very well who is likely to be affected first by those changes that do not adequately take into account the fact that poor people are entitled to access to justice.

Part of that access to justice is the role of the legal profession. Steve Chadwick knows that very well. She knows how hard her husband, John Chadwick, has worked in the years he has been in the law profession, representing those on low income, the disadvantaged—all the underdogs. I am sure that she knows very well how much of a burden that has been to her family, because it ain’t no Christmas party. It is all very well for one of the members on the other side to suggest that lawyers in private practice can make up for what they are missing out on with legal aid work by, basically, charging high fees for other things. That does not apply to a lot of defence lawyers who take on that work—it does not apply in the least. If one is a lawyer whose practice is largely Māori based and criminal work, one never makes up for it. Believe me, one never makes up for it.

So I say to those members on the other side who like to pass off National members’ arguments on the grounds that we are looking after our rich friends, we are not. I certainly am not.

HONE HARAWIRA (Māori Party—Te Tai Tokerau): I first of all would like to congratulate Mr Fairbrother on all the work that I have heard he has done in terms of legal aid for a lot of people who really cannot afford decent lawyers, and I also congratulate others who have been involved in that kind of work. I congratulate them all because it is not easy work.

I myself have been up to court on many, many occasions, and only once when I was a teenager did I use a lawyer. Every time after that I defended myself.

Pita Paraone: Did you get legal aid?

HONE HARAWIRA: I defended myself. The reason why I defended myself, even though I am not a lawyer, is because I could not trust the quality of the legal aid lawyers available. So I defended myself.

Progress to be reported presently.

House resumed.

The Chairperson reported the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill with amendment, and reported progress on the Legal Services Amendment Bill (No 2).

Report adopted.

Members’ Bills

Members’ Bills

Hon Dr MICHAEL CULLEN (Leader of the House): Following discussion at the Business Committee earlier today, I seek leave for a ballot to be held tomorrow to draw one member’s bill for introduction.

The ASSISTANT SPEAKER (H V Ross Robertson): Is there any objection to that course of action being taken? There appears to be none.

The House adjourned at 9.57 p.m.