Tuesday, 5 September 2006

Tuesday, 5 September 2006

Tuesday, 5 September 2006

Madam Speaker took the Chair at 2 p.m.

Prayers.

Motions

Palestinian Parliament—Arrest of Members

KEITH LOCKE (Green): I move, That this House supports the right of parliamentarians to freely pursue their duties; notes the opposition of the Inter-Parliamentary Union and the European Parliament to Israel’s arrest of more than 20 members of the Palestinian Parliament; and calls for the immediate and unconditional release of the Palestinian Speaker, Abdelaiziz el-Dweik; the Deputy Prime Minister, Nasser al-Shaer; and the other arrested Ministers and members of the Palestinian Parliament.

Motion agreed to.

Questions for Oral Answer

Questions to Ministers

Savings—Support Mechanisms

1. SHANE JONES (Labour) to the Minister of Finance: What reports has he received on mechanisms to support savings?

Hon Dr MICHAEL CULLEN (Minister of Finance): I have seen a range of reports welcoming the passage of the KiwiSaver Bill last week, with only the National Party voting against the third reading. A number of those reports suggest the capped exemption from the specified superannuation contribution withholding tax will encourage greater savings.

Shane Jones: What other reports has he seen on the value of tax incentives for supporting savings?

Hon Dr MICHAEL CULLEN: I have seen a range of reports supporting tax incentives for longer-term savings, particularly from Mr John Key and Mr Bill English. Despite that fact, both of them voted against the changes in the House last week; they voted against a tax cut.

John Key: Has the Minister seen reports in the New Zealand Herald today suggesting that the Labour Party may be looking to underspend by $400,000 next year and the year after, so that it can pay back the $882,000 of taxpayers’ money it owes; is that his idea of savings?

Hon Dr MICHAEL CULLEN: I have seen frequent reports of a strange religious group spending $1.2 million on behalf of the National Party to save it from having to attribute that money in its expenditure.

Hon Mark Burton: I raise a point of order, Madam Speaker. I could not hear the answer to my colleague’s question, and I am sitting within 5 feet of him. I really do not think that is fair to members elsewhere in the House who would like to hear the answers to questions.

Madam SPEAKER: Yes, would the Hon Dr Michael Cullen please briefly repeat his answer.

Hon Dr MICHAEL CULLEN: I have seen reports of the Exclusive Brethren spending $1.2 million to support the election of the National Party, to save it from having to spend the money itself.

John Key: I raise a point of order, Madam Speaker.

Madam SPEAKER: Would the House settle. That was no better than the first time, so would members please enable other members to be heard when they are asking or answering questions. An essential right that members have in this House is to be heard.

John Key: I raise a point of order, Madam Speaker.

Madam SPEAKER: I am still dealing with this point of order; then I will take your point of order.

John Key: Madam Speaker—

Madam SPEAKER: I am asking him to repeat the answer, because no one could hear it.

John Key: It is a new point of order.

Madam SPEAKER: I know, and I will take a new point of order when we have dealt with this matter.

John Key: I raise a point of order, Madam Speaker.

Madam SPEAKER: I am continuing the point of order that was raised before, which was on whether the Minister could be heard. I am very happy to take your point of order, Mr Key, but I just want to finish this one first. Would the Minister please give his answer, as briefly as possible.

Gerry Brownlee: I raise a point of order, Madam Speaker. How on earth can the Minister’s answer be a continuation of the point of order? Where does that in any way comply with the Standing Orders of this House? If he is being asked to give an answer, that is one thing. But to turn down a member who raised a point of order because a Minister wants to give an answer is not within the Standing Orders, and it should not become a new rule for the House.

Hon Trevor Mallard: Madam Speaker—

Madam SPEAKER: No, I thank the member but I do not need any assistance. What I was trying to do, Mr Brownlee, was to maintain some order in this House by dealing with matters in a logical manner. I am quite happy if you want Mr Key to take his point of order, but it will not detract from the fact that we will go on, and every member in this House who is not heard, whether or not he or she is asking a question or answering it, will get the right to be heard—however long it may take.

Gerry Brownlee: I raise a point of order, Madam Speaker. With all due respect, a member giving an answer to a question would obviously be treated with respect if it were an answer to the question, and not some extraneous matter that was simply a red herring and a dodging of the issue that was put to a Minister.

Hon Dr MICHAEL CULLEN: That point of order could have easily been raised on the question, but since I regarded it as a patsy, I thought I would answer it.

Madam SPEAKER: I am not sure that either of those comments is extremely helpful. But the point is that one could hear whether it answered the question. That is the whole point, Mr Brownlee.

John Key: I raise a point of order, Madam Speaker.

Madam SPEAKER: No. I call the Hon Dr Michael Cullen.

Hon Dr MICHAEL CULLEN: As I said, I have seen reports of the Exclusive Brethren donating $1.2 million of pamphlets and other material for the National Party, to save it from having to attribute that expenditure.

Hon David Benson-Pope: I raise a point of order, Madam Speaker. I have my speaker turned on and I still cannot hear Dr Cullen’s answer.

Madam SPEAKER: I agree.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. You have been very strict in your rulings about members asking questions in areas for which they have responsibility. Dr Cullen does have responsibility for the Public Finance Act and compliance with it. He has absolutely no responsibility for how any private organisation—the Exclusive Brethren or otherwise—might spend its money. So I simply ask that you require Dr Cullen to answer the very reasonable question about savings in a specific vote covered by the Public Finance Act for which Dr Cullen is responsible, rather than allow him to stray into irrelevancies on which he has absolutely no responsibility.

Madam SPEAKER: I thank you, Dr Smith, and if I could hear the answer I would rule accordingly, if that were the case.

Hon Dr MICHAEL CULLEN: I have seen reports of savings being made, in terms of attributable expenditure, by the Exclusive Brethren donating $1.2 million for services to the National Party. [Interruption]

Madam SPEAKER: If members have cleared their lungs, we will now have a supplementary question from Doug Woolerton.

Lindsay Tisch: I raise a point of order, Madam Speaker. The member Mr Mallard has just called Dr Brash a liar. That is unparliamentary, and he should be asked to apologise and to withdraw that comment.

Madam SPEAKER: If the member did say that, I ask him to withdraw and apologise.

Hon Trevor Mallard: I withdraw and apologise.

John Carter: I raise a point of order, Madam Speaker. One of the things you are expecting of this House is some decorum, and, indeed, my colleague Nick Smith raised a point of order just before on which you said you would rule if the Minister strayed outside his authority to answer questions. There are two issues I wish to raise with you, Madam Chair—

Madam SPEAKER: Madam Speaker.

John Carter: Madam Speaker, I beg your pardon. The first is of course that the Minister did not refer in any way to the question that was asked of him by John Key about the statement in the paper, and the second one is that it is very likely that we will not have decorum in this House if Ministers keep misusing the truth. The fact is that that Minister knows that what he stated in his answer is quite inaccurate, and he is very likely to cause disruption and disorder in this House, along with any other Minister, if that is to continue. You may wish to rule on that matter.

Madam SPEAKER: This is a point of order; they are heard in silence.

Hon Dr MICHAEL CULLEN: The first point I would make is that despite the previous attempt by Dr Nick Smith to bring Mr Key’s question inside the Standing Orders, it had nothing to do with the Public Finance Act in terms of the way in which it was phrased. Indeed, it could have been challenged as being irrelevant. There is a longstanding rule in this House that if one makes a silly point or asks a silly question, if that is not challenged then one will get an answer back on a similar basis to the way the question was framed. Secondly, if Mr Carter wishes to state in this House, as a matter that is subject to challenge under privilege, that the Exclusive Brethren did not fund $1.2 million worth of pamphlets and other material for the National Party, then that would be very interesting indeed.

Madam SPEAKER: Well, I—[Interruption] I am on my feet.

John Carter: Point of order.

Madam SPEAKER: I have not finished ruling on this point of order, Mr Carter. I have heard what Dr Smith said and what Dr Cullen said, and I think that members should take note that if they ask and answer questions within the context of the Standing Orders, it would certainly contribute to the orderliness of this House. As it turned out in that particular matter, obviously members of the Opposition expressed themselves in such a way as to prevent me hearing all the answer.

John Carter: I raise a point of order, Madam Speaker. I am not privy to the donations made to the National Party—[Interruption]

Madam SPEAKER: This is a point of order, I remind members.

John Carter:—but I would make the point, Madam Chairman—

Madam SPEAKER: Madam Speaker.

John Carter:—Madam Speaker; I beg your pardon—that to the best of my knowledge the Exclusive Brethren spent their own money on their own pamphlets, and not on National Party pamphlets.

Madam SPEAKER: That is a matter of debate, not a point of order.

John Carter: I raise a point of order, Madam Speaker. I was challenged to make the statement, and I have made it. I want that to be noted in the House.

Madam SPEAKER: That may well be the case, but it is still not a point of order.

: I raise a point of order, Madam Speaker. I am looking here at a document where it states the Exclusive Brethren went to the Chief Electoral Officer wanting a budget to be spent of $1.2 million with the goal of “getting party votes for National”, which directly contradicts what the member said.Rt Hon Helen Clark

Hon Trevor Mallard: Pay it back!

Madam SPEAKER: Order, Mr Mallard, please. That was also not a point of order.

R Doug Woolerton: Does the Minister agree with Tower Group chief executive officer Jim Minto’s comments that the rejection of a compulsory savings scheme by New Zealanders in 1997 was the result of baby boomers being traumatised by the memory of the State-controlled Muldoon era, and of a desire never to return there, and that Winston Peters’ idea for a superannuation scheme was right on the money?

Hon Dr MICHAEL CULLEN: No and, somewhat sadly, no. I think the scheme actually was as well designed as any compulsory superannuation scheme could be, but it was overwhelmingly rejected by the public. As I said on the night, the number who voted for it was probably slightly smaller than the number who thought Elvis Presley was still alive.

Speech from the Throne—Political Integrity of Parliament and Electoral Process

2. 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, by keeping our promises—unlike National, which betrayed the electorate through the 1990s, particularly superannuitants.

Dr Don Brash: Does the Prime Minister now accept that her handling of the Taito Phillip Field affair over the past 12 months—[Interruption]

Madam SPEAKER: Would the member please contain himself.

Dr Don Brash: Does the Prime Minister now accept that her handling of the Taito Phillip Field affair over the past 12 months has damaged public confidence in Parliament and in the political process; and does she, with the benefit of hindsight, now wish to express any regret to the New Zealand public about her actions or inactions?

Rt Hon HELEN CLARK: No, because unlike Robert Muldoon I am not going to go around ordering inquiries into private members. If I did, I would start with Don Brash and the covert election funding.

Tim Barnett: Does the Prime Minister think that public confidence in the political integrity of Parliament is enhanced by a party leader denying knowledge of a campaign in support of his party and then later having to admit that he was briefed about it?

Rt Hon HELEN CLARK: Obviously, Parliament is damaged by such behaviour, particularly when one knows that Dr Brash met the group and planned the campaign.

Madam SPEAKER: It is questionable whether there was ministerial responsibility, but as no one heard the answer, we will move on to the next supplementary question.

Dr Don Brash: What is the Prime Minister’s response to the poll in the New Zealand Herald that showed that 81 percent of New Zealanders want the Labour Party to pay back the taxpayers’ money unlawfully spent on the Labour Party’s pledge card?

Hon Dr Michael Cullen: I raise a point of order, Madam Speaker. We are going to raise points of order from now on when unsubstantiated assertions are made. There is no published report yet that states that that spending was unlawful.

Madam SPEAKER: I remind members that that was a point of order. The member was talking to the point of order, and there were interjections. That is the last warning. Even if there is a barrage, those who interrupt during points of order will leave this Chamber.

Gerry Brownlee: I raise a point of order, Madam Speaker. Could the Leader of the House tell us, then, why the Prime Minister talked, as late as yesterday, about retrospective legislation being a possible direction from the Auditor-General in order to sort out this particular problem that the Labour Party has?

Hon Dr Michael Cullen: Madam Speaker, responding very simply—

Madam SPEAKER: This is a matter for debate, but please continue.

Hon Dr Michael Cullen: —I point out that there has been no Auditor-General’s report yet.

Gerry Brownlee: We can go round and round on this forever, but the reality is that the Labour Party has overspent the Parliamentary Service budget by some $446,000, and has overspent the electoral cap by at least a similar amount—

Madam SPEAKER: Please be seated, Mr Brownlee. There is no final report with a final determination yet. That is a fact. Once the report comes out, then everyone will know. Can we please continue.

Dr Don Brash: Will the Prime Minister please give a straight answer to the obvious question: if the Auditor-General finds that the Labour Party pledge card involved an unlawful use of taxpayers’ money, will the Prime Minister confirm that she expects the Labour Party to pay it back?

Rt Hon HELEN CLARK: I do not believe that rules should be changed after the event, otherwise we will be seeking the bill for Bill English’s commitment card released in 2002.

Gerry Brownlee: I seek the leave of the House to table the rules for Parliamentary Service expenditure that were changed early in 2003, late in 2003, and in 2004 in the year prior to the election, all of which were rules constructed with Michael Cullen very much to the fore in those discussions, which makes it very, very clear that it was not a problem in 2002 but it most certainly was in 2005.

Madam SPEAKER: Leave is sought. Is there any objection? There is objection.

Hon Jim Anderton: Can the Prime Minister advise how “public confidence in the political integrity of Parliament and the electoral process” can be restored by actions in the Wigram electorate on the day before the 2005 election, when tens of thousands of dollars were spent on full-page advertisements in local papers, and expensive full-colour leaflets personally attacking the sitting member were delivered to every household, supporting the National Party’s electoral campaign, all authorised by an unidentified person said to live at a property that was in fact vacant, and which later transpired to be the actions of the Exclusive Brethren?

Gerry Brownlee: I raise a point of order, Madam Speaker. Let me make it very clear that although the National Party has repeatedly stood against Jim Anderton since he first stood as an Independent in 1993, there is no way that we are in any way responsible for the deep dislike of him held by many of his constituents.

Madam SPEAKER: I am pleased we have got that sorted! I am not sure that it was a point of order.

Rt Hon HELEN CLARK: That spending would have been part of the $1.2 million campaign, with the goal of “getting party votes for National”, which the Exclusive Brethren mounted, and which Dr Brash, having originally denied knowledge of, finally fessed up about. Why did he not tell the truth all the way along?

Hon Harry Duynhoven: I raise a point of order, Madam Speaker. I was very close to the speaker turned on at my desk but I do not have a clue what the Prime Minister just answered to the House. The noise from the National benches continues when I am raising a point of order.

Madam SPEAKER: I must say that on this occasion the noise was coming from all quarters of the House. I ask you all please to give courtesy and respect to each other so that members are able to be heard. You can express yourselves in between questions and answers, but not during them.

Dr Don Brash: Has the Prime Minister been informed as to the total amount of the Labour Party leader’s 2005-06 budget, which was found by the Auditor-General’s draft report to have been spent unlawfully; if so, what was that amount?

Rt Hon HELEN CLARK: Labour played by the rules, the same rules that led to the National Party’s pledge card—the same rules.

Tim Barnett: Does the Prime Minister think that public confidence in the political integrity of Parliament is enhanced by one party attacking others for spending that is exactly the same as that party itself has undertaken in the past?

Gerry Brownlee: I raise a point of order, Madam Speaker. How can that question possibly be in order? It has already been made clear to the House today that the rules around the Parliamentary Service’s money expenditure were changed, largely at the behest of Dr Cullen, in 2003—ably assisted by the co-leader of the Greens at the time—and that those rules were exceptionally clear in 2004. So how on earth can there be an assertion that somehow some party has also breached those rules, when there has been no mention of that fact by the Auditor-General—other than the mention of the Labour Party’s pledge card?

Hon Dr Michael Cullen: I have in my hand the record of the rule change of 28 November 2003. The only change was that any publicly funded advertising had to display the parliamentary crest and a contact point; previously, it had had to display either the crest or a contact point. That makes no difference to the comparison between the 2002 National Party pledge pamphlet and Labour’s 2005 pledge card.

Madam SPEAKER: I will rule on the points of order. Those were not points of order; they were debatable points. I think we are up to answering the question on the table.

Rt Hon HELEN CLARK: Of course it does not enhance public confidence in Parliament for one party to say: “Yeah, our pledge card was all right.”—that is, the National Party one—and then not want anyone else to fund one. I say, further, that the real corruption in politics is Dr Brash’s “cash for policies” and refusal to say where his money came from.

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

Hon Annette King: It had better be one.

Madam SPEAKER: Order!

Gerry Brownlee: I will take it as a supplementary question, then.

Hon David Cunliffe: Point of order—

Madam SPEAKER: No, come on, let us be sensible about this. Does the member have a point of order?

Hon David Cunliffe: I raise a point of order, Madam Speaker. It may assist the House, but I suspect that the microphones, at least on this side of the House, may not be turned up appropriately. Like my colleagues, even with my ear to the speaker I cannot hear what the Prime Minister is saying.

Madam SPEAKER: I thank the member for that observation. We now have a supplementary question.

Dr Don Brash: What discussions did the Prime Minister have with the Ministers of Finance and Justice that caused their departments to commence work on legislation to validate the potentially unlawful spending by the Labour Party; and why will the Prime Minister not tell New Zealanders how much taxpayers’ money the Auditor-General has found to have been spent unlawfully?

Rt Hon HELEN CLARK: Of course, the Auditor-General has made no such finding. He has not made a final report.

Dr Don Brash: Does the Prime Minister not yet understand—

Hon David Benson-Pope: Tell us about the Business Roundtable.

Madam SPEAKER: Order! Continue please, Dr Don Brash.

Dr Don Brash: Does the Prime Minister not yet understand that displays of hubris and arrogance on her part are diminishing public confidence in her and her Government, by the day; and when will she and her Ministers start to show the public the respect they are due—

Hon David Benson-Pope: What is that member’s relationship with the Business Roundtable?

Judith Collins: Oh, how about his with a tennis ball?

Madam SPEAKER: Continue.

Dr Don Brash: Madam Speaker, I had understood that questions were to be heard in silence.

Madam SPEAKER: No, they are not heard in silence. Please be seated. No, I did not say that earlier on. I have given a ruling on this. Interjections are permitted, with questions or answers. It is when people cannot be heard giving them that in fact there is a breach of the rules. So, Dr Don Brash, please continue.

Dr Don Brash: Does the Prime Minister not yet understand that displays of hubris and arrogance on her part are diminishing public confidence in her and her Government, by the day; and when will she and her Ministers start to show the public the respect they are due, in relation to both the Taito Phillip Field affair and the use of taxpayers’ money to fund the Labour Party pledge card?

Rt Hon HELEN CLARK: The arrogance is being caught red-handed taking support from the Exclusive Brethren, which Dr Brash solicited and about which he did not tell the truth. I say to Dr Brash to tell the truth to Parliament today.

Heather Roy: Does she accept that members of Parliament, and especially the Prime Minister, are honour-bound to accept the findings of the Auditor-General as an independent Officer of Parliament when he makes adverse findings into their spending, even if it is financially uncomfortable?

Rt Hon HELEN CLARK: My understanding is that the report is about Parliamentary Service control of expenditure, and I would remind the member that her party is one of the parties that spent within the rules over which some retrospectivity is now being suggested.

Rodney Hide: I raise a point of order, Madam Speaker. With the greatest respect, I do not believe that the Prime Minister addressed the question. [Interruption] At least the member is staying awake. It was about the relationship of members of Parliament to any finding of the Auditor-General, given that he is an independent Officer of Parliament and the fact that we have to be honour-bound by his finding. What we got was a bit of a diatribe about the ACT party and nothing about the relationship of Parliament, the Prime Minister, and MPs to the findings of the Auditor-General.

Hon Dr Michael Cullen: The member’s question made an assertion about the nature of the inquiry. The Prime Minister responded properly, by questioning that assertion, which is a perfectly legitimate way of addressing a question.

Madam SPEAKER: I think that is right.

Rodney Hide: Actually, it made no reference to any inquiry.

Madam SPEAKER: As I heard the question, it made reference to the Auditor-General’s report.

Rodney Hide: It made reference to the fact that the Auditor-General is an independent Officer of Parliament and that if he makes an adverse finding about the way MPs spend money, whether we are honour-bound, as a consequence, to take heed of it. There was nothing about any particular report.

Madam SPEAKER: I think the difficulty here is that we do not have the report. As I understood it, the question made reference. The Prime Minister chose to address the context of the question and that was perfectly permissible. It may not be an answer that obviously the member wanted, but he wants to continue with his point of order.

Rodney Hide: The difficulty is that the Leader of the House said that we cannot make reference to the report, because it is not yet published. The Prime Minister is quite happy to make references in her answer to the report, which has not been published, when it suits her, but not when she is asked about it, because, again, it has not been finalised or published; yet here we were, asking our little supplementary question, and we have had to sit through Parliament all this time in order to ask it, and we got a dismissive answer. I believe that the issue of the relationship of MPs, of Parliament, and particularly of the Prime Minister, to the Auditor-General is one worthy of a proper answer being addressed by the Prime Minister. I ask you, Madam Speaker, to uphold the rights of smaller parties that have not yet been able to hear an answer, to get an answer to the question to which they have sat through all this time for an opportunity to ask.

Madam SPEAKER: I think the difficulty is that the House is dealing with hypothetical situations. Although the question did refer to the draft report, we do not have a finding. Until there is a finding, the Prime Minister is perfectly entitled to deal with the question whichever way she chooses to do so. Obviously, that is not to the satisfaction of the member. I am fully aware that his party has few supplementary questions, but I think the point has been made through points of order.

Hon Dr Michael Cullen: Can the Prime Minister confirm that so far the only identified and accepted unlawful overspending in the campaign was by the National Party, which failed to account for GST, and the person who pleaded innocence about that is the person who chaired the committee that set up GST in the first place, Dr Donald Brash?

Rt Hon HELEN CLARK: I can confirm that, and I can also confirm how wondrous it is that a man so involved in the design of GST does not understand it.

Dr Don Brash: Can the Prime Minister confirm that the National Party would like to amend legislation to enable it to pay back the money that is due, while the Labour Party is keen to amend legislation to prevent it from paying back money that is due?

Rt Hon HELEN CLARK: The member was free to pay the money back, but, of course, he knows he would have then overspent. He had buckets of covert money—cash for policies—that he will not tell the truth about.

Transport Network—Government Policy

3. DARIEN FENTON (Labour) to the Minister of Transport: What decisions have been taken recently to further the Government’s aim to provide a world-class transport network, which moves people and goods safely, sustainably, and efficiently, as a centrepiece of its drive to transform the New Zealand economy?

Hon ANNETTE KING (Minister of Transport): A very good question. Following the Government’s substantial funding allocation announced in the Budget, the Land Transport New Zealand board recently approved funding for several land transport projects, all of which contribute towards a world-class transport network. Those projects include funding for the construction of the State Highway 2 Dowse to Petone project, two major projects in the Waikato region, and the Kerikeri Heritage Bypass. Funding was also approved for the design and construction of ramp signalling in Auckland, and the design of the State Highway 1 Cambridge bypass. But there is even more. Funding has also been approved for the travel plan programme for Auckland, and for investigations into the State Highway 16 Te Atatu Road to Royal Road six-laning project.

Darien Fenton: How much will be spent on land transport this year?

Hon ANNETTE KING: Land Transport New Zealand will allocate $2.3 billion towards land transport activities this year. The Government is spending $360 million on passenger transport this year alone. This is a huge increase from the 1990s, when funding for passenger transport was frozen at $40 million for almost a decade.

Peter Brown: Is the Minister aware that 99-plus percent of New Zealand’s external trade comes and goes by ship, and does she, therefore, accept that if we want a world-class transport network and all that goes with it—as outlined in the principal question—the Government really needs to do something positive to expand our shipping industry?

Hon ANNETTE KING: Yes.

Jeanette Fitzsimons: Does the Minister agree that with rising oil prices and accelerating climate change, a world-class transport network must include a world-class rail system capable of moving people and goods between major cities; if so, how much of the $2.3 billion being spent this year on land transport is she spending on upgrading the rail system?

Hon ANNETTE KING: This Government has committed a considerable amount of money to rail. First of all, we have bought back the rail lines of this country. We are spending $600 million on rail in Auckland over the next 5 years, and we have committed $200 million to improving rail transport around New Zealand. I would have thought the Greens would welcome that. Certainly, this Government is committed to rail—something that was not happening under the previous National Government.

Jeanette Fitzsimons: I raise a point of order, Madam Speaker. There was only one question in my question, and that was how much of the $2.3 billion being spent this year is being spent on upgrading the rail system. I got a lot of figures about previous years, but I did not get any figures about this year’s spend.

Hon ANNETTE KING: Speaking to the point of order—

Hon Dr Nick Smith: She’s just hopeless.

Hon ANNETTE KING: Would that member who is interjecting like to take his pills?

Madam SPEAKER: We will call that a draw. There should have been no interjection on the point of order, and there should have been no retaliatory comments. We will start again.

Hon ANNETTE KING: The figures I gave were not past figures; they were forward figures.

Jeanette Fitzsimons: The Minister referred to repurchasing the rail track. That decision was made in 2003. She referred to the decision to spend $200 million to upgrade the rail track, which was made at that time. Very little of that figure remains to be spent in this Budget year—I think something like $180 million out of that $200 million has been spent so far. I am really searching for an answer to my question about how much of this year’s Land Transport New Zealand budget will be spent on the rail system.

Hon ANNETTE KING: Was that a point of order, Madam Speaker, or was it a question?

Madam SPEAKER: It was both, really. Could the Minister please clarify so we can then move on.

Hon ANNETTE KING: In my answer I outlined the $600 million we are spending on rail over the next 5 years in the Auckland area. I outlined the $200 million that will go—and some of it has already gone—into rail. But it is done over the course of a 5-year appropriation.

Peter Brown: Do the Minister’s comments today to the Maritime New Zealand conference that the “Maersk review has implications for you and for the whole transport sector” indicate that she is supportive of New Zealand coastal shipping, and will she, therefore, ensure that it plays a positive role in feeding cargo from provincial ports to the ports that Maersk would ultimately choose to serve?

Hon ANNETTE KING: My comments about Maersk today relate to the fact that a decision by Maersk needs to take account of all modes of transport, because moving freight around New Zealand—if Maersk decides to use two ports—would affect rail, road, and sea transport. We need to take account of all modes of transport, if that decision is made.

Jeanette Fitzsimons: Does the Minister agree with the purpose clause of the Land Transport Management Act that transport should be responsive to travel demand; if so, what has she done this year to re-balance spending in order to respond to the hugely increased demand for public transport—a more than 30 percent increase in patronage of commuter rail in Auckland, for example—and the reduced demand for new roads, with traffic levelling off and declining over recent months?

Hon ANNETTE KING: It is not just this year that the Government is taking account of the need to improve passenger transport; the Government has been doing so in each year that we have been in Government. As I said in an earlier answer, the National Government froze funding for passenger transport at $40 million a year; it is now $360 million. That has happened in the term of this Government. The commitment is to improve passenger transport, but one has to have roads on which buses can travel, as well as improving the transport system in terms of rail.

Immigration Intelligence Unit—Ministerial Briefings

4. Dr the Hon LOCKWOOD SMITH (National—Rodney) to the Minister of Immigration: Does the immigration intelligence unit contribute information to ministerial briefings on immigration cases when the Minister is considering whether to issue a special direction?

Hon DAVID CUNLIFFE (Minister of Immigration): I am advised that the immigration intelligence unit to date has not been directly involved in briefing Ministers on whether to issue a special direction.

Dr the Hon Lockwood Smith: What did the two members of the immigration intelligence unit do with the information emailed to them on 4 May 2005 by Mr James Dalmer, the branch manager of Immigration New Zealand in Apia, alleging that Thai nationals were working in Samoa for a Cabinet Minister for free and had “been promised work visas for New Zealand on completion of that work”?

Hon DAVID CUNLIFFE: I am advised that, as is normal practice, they would have passed that information through to the operational arms of the department.

Dr the Hon Lockwood Smith: To precisely whom, and to which sections of his department, was the further email drafted on 9 May 2005 by Mr James Dalmer, immigration branch manager in Apia, sent—the email that spelt out the fact that Thais were working for no pay on the house owned by “a Samoan and New Zealand dual citizen politician”—and what did those sections or individuals do with that information?

Hon DAVID CUNLIFFE: Paragraph 123 of the Ingram report indicates that that email was passed to the immigration intelligence unit and to the department’s Pacific division. Paragraphs 157 and 158 of the same report indicate that it was most probably not passed through to the Associate Minister.

Dr the Hon Lockwood Smith: What did the manager of the immigration intelligence unit do with the information he received during a discussion with Mr James Dalmer on 10 May, where they decided whether Taito Phillip Field’s name should be included in the email containing further information about Thai workers not getting paid for working on his house in Samoa and having been promised work visas for New Zealand on completion of that work?

Hon DAVID CUNLIFFE: As recorded in paragraph 210 of the Ingram inquiry report, I am advised that that information was considered not necessary or appropriate to pass on, because it was unconfirmed intelligence that, at that time, may not have been seen as reliable.

Dr the Hon Lockwood Smith: When on 27 May two members of the immigration intelligence unit received yet a further email from Mr James Dalmer regarding a member of Taito Phillip Field’s ministerial staff emailing the New Zealand Immigration Service to ask about Ms Phanngarm’s removal costs and stating that Ms Phanngarm was living in Samoa with her partner, who Mr Dalmer knew was the Thai working on Taito Phillip Field’s house, what did the immigration intelligence unit do with that third layer of information confirming Taito Phillip Field’s involvement with Mr Siriwan and Ms Phanngarm in Samoa?

Hon DAVID CUNLIFFE: The Phanngarm issue is not directly related, but I am advised that the same action was taken as per the earlier question: it was passed on to the operational branches of the department.

Dr the Hon Lockwood Smith: When on 9 June 2005 Mrs Maxine Field went into the Apia branch of the New Zealand Immigration Service with a copy of Taito Phillip Field’s letter claiming that the Associate Minister had agreed to 2-year work permits for both Mr Siriwan and his partner, Ms Phanngarm, and the Apia branch manager, Mr Dalmer, emailed the immigration intelligence unit asking bluntly whether the Associate Minister was aware of Taito Phillip Field’s involvement with those Thais prior to his decision, what did the immigration intelligence unit do with that fourth layer of confirmed information it had prior to Damien O’Connor making his decision on 17 June 2005?

Hon DAVID CUNLIFFE: Once again, this is very simple: it passed it through to the operational division—in this case the manager of the Pacific division, who, he said, attempted to pass it through to the private secretary in the Minister’s office. The Ingram inquiry clearly considers it unlikely that it was passed to the Associate Minister before he made his decision. [Interruption] If the member with the pills does not believe me, I suggest he read the Ingram report.

Madam SPEAKER: There was no need for that comment.

Members of Parliament—Payment for Services

5. Hon PETER DUNNE (Leader—United Future) to the Prime Minister: What did she mean by her comments yesterday “There can be no money sought, [or] offered, for giving a service to a member of the public”?

Rt Hon HELEN CLARK (Prime Minister): No money should be paid by anyone for work done by MPs for that person. Cash should not be paid for policy, either. That is why Labour will support changes to electoral law to flush out National’s covert funding.

Hon Peter Dunne: When the Prime Minister made her comment yesterday, was she taking into account the provisions of the United Kingdom House of Commons Code of Conduct for Members of Parliament, which states: “Holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends.”—incidentally, that builds on a principle first established in the House of Commons in May 1695—and do her comments now mean she considers that the time has come for something akin to that code of conduct to be applied in New Zealand to make clear what reasonable public expectations there are of the behaviour of members of Parliament in these types of situations?

Rt Hon HELEN CLARK: I agree with the contents of the code of conduct as read by Mr Dunne just now. Further, I understand that a code of conduct proposal is before the Standing Orders Committee and I support its members giving it their full consideration.

Hone Harawira: Has she read the statement from the Māori Party issued at 1 p.m. today that stipulates that any cash donation given to a member of Parliament will be processed through the party mechanisms, and does she believe that this is a policy that could be applied to all members of Parliament?

Rt Hon HELEN CLARK: Of course donations should be processed through parties, but I repeat that no money should be given for any service rendered by a member of Parliament. The National Party should not accept “cash for policy” either.

Gerry Brownlee: I raise a point of order, Madam Speaker. Can we assume that the 1999 union campaign to change the Government was repaid by the Labour Party in its Employment Relations Act policy that had special union education provisions for those members? If that was not “cash for policy”, who knows what was?

Madam SPEAKER: That is not a point of order.

Hon Dr Michael Cullen: I raise a point of order, Madam Speaker. The matter the member raised could be dealt with quite simply if the National Party showed the list of who actually gave them the money instead of the anonymous organisation covering 90 percent of it.

Hon Trevor Mallard: I raise a point of order, Madam Speaker. Mr Brownlee made an unparliamentary comment about members of the Government and I ask that it be withdrawn.

Madam SPEAKER: I did not hear what the comment was but if the member did, would Mr Brownlee please withdraw and apologise.

Gerry Brownlee: I said that the Government was corrupt. It has been said inside and outside this House for weeks and I am not withdrawing it.

Hon Dr Michael Cullen: Offence has been taken, in the same way I am sure that if Labour stated—as I think we did previously—that Dr Brash lied in saying he did not know about the Exclusive Brethren, we would be required to withdraw and apologise; Mr Mallard was previously this afternoon.

Madam SPEAKER: Previously objection has not been taken.

Gerry Brownlee: I understand the member’s sensitivities and I—

Madam SPEAKER: Just withdraw and apologise, thank you very much.

Gerry Brownlee: I withdraw and apologise.

Hon Peter Dunne: Is the Prime Minister—[Interruption]

Madam SPEAKER: Members, please do Mr Dunne the courtesy of allowing him to put his question so we can all hear it.

Sandra Goudie: The Speaker has ruled that interjections are allowed during question time.

Madam SPEAKER: Yes, the Speaker has ruled that, Ms Goudie. She has also ruled, in fact, that when those cannot be heard, they should be heard—[Interruption] I am on my feet and speaking. Would the member please leave the House.

Sandra Goudie withdrew from the Chamber.

Hon Peter Dunne: Is the Prime Minister concerned that a principle that has been established for some 400 years—about not accepting cash in return for services offered as a member of Parliament—may not be accepted by all members of this House; if so, what steps does she think ought to be taken to deal with that?

Rt Hon HELEN CLARK: It would be an appalling thing if that principle were not accepted, and that indeed is what would lead Parliament to adopt a code of conduct, which I would like to see covering National’s “cash for policies”, as well.

Hon Peter Dunne: I seek leave to table the United Kingdom Code of Conduct for Members of Parliament, prepared pursuant to a resolution of the House of Commons on 19 July 1995.

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

Election Advertising—Labour Party Pledge Card

6. GERRY BROWNLEE (Deputy Leader—National) to the Minister of Justice: Has he seen the file note dated 30 August 2005 of a phone conversation at 9 a.m. between David Henry, then Chief Electoral Officer, and Mike Smith, General Secretary of the New Zealand Labour Party; if so, what was the advice Mr Henry passed on to Mr Smith about the Labour Party’s pledge card?

Hon MARK BURTON (Minister of Justice): No.

Gerry Brownlee: Is he able to confirm that in the weeks leading up to the election, Mr David Henry made approaches to both the Labour Party and the Tauranga National Party candidate, Bob Clarkson, to warn them about the need to stay under the Electoral Act’s spending caps, and that while Mr Clarkson cancelled his planned advertising in order to stay within the law, the Labour Party just kept on spending and ignored the warnings Mr Henry had given?

Hon MARK BURTON: As I have explained to the House before, the Chief Electoral Officer is responsible for the preparation and conduct of parliamentary elections and the supervision of candidates’ expenses and donations. It is not appropriate for me to interfere in that process. [Interruption]

Hon Trevor Mallard: I raise a point of order, Madam Speaker. Nick Smith has just made an unparliamentary comment, and I have taken offence.

Madam SPEAKER: Did the member make an unparliamentary comment?

Hon Dr Nick Smith: I said they were corrupt cheats. That is nothing compared with what Mr Mallard—

Madam SPEAKER: Objection is taken. Would you please withdraw and apologise.

Hon Dr Nick Smith: I withdraw and apologise. I raise a point of order, Madam Speaker. I do find it ironic that the Prime Minister specifically made exactly that allegation against Dr Don Brash earlier in the day. You chose to take no action and Mr Mallard chose to take no action. I would like to know why there is a differing standard between what you expect from one side of the House and what you expect from the other.

Madam SPEAKER: No, there is no differing standard.

Hon Dr Nick Smith: Well, I ask that the Prime Minister be asked to withdraw and apologise.

Madam SPEAKER: No, I am sorry. You should have asked at the time, and if you had, I would have asked the Prime Minister to withdraw and apologise. Members have the solutions in their own hands.

Tariana Turia: I raise a point of order, Madam Speaker. We did not hear Minister Burton in the response that he gave.

Madam SPEAKER: Would the Minister please repeat it.

Hon MARK BURTON: The Chief Electoral Officer is responsible for the preparation and conduct of parliamentary elections and for the supervision of candidate selection, expenses, and donations. It would not be appropriate for me to interfere in his statutory responsibilities.

Lynne Pillay: Has the Minister seen evidence of correspondence from the Exclusive Brethren Church to David Henry, the then Chief Electoral Officer, in which the Exclusive Brethren ask: “if it would compromise National’s position if we communicate to MPs and candidates our strategy and show them draft publications before they are published.” ?

Hon MARK BURTON: As I have said to a number of members who previously asked me about records and correspondence from the Chief Electoral Officer, I do not routinely see them. It would not be appropriate to do so. But, frankly, it would not be a surprise to me if that were the case.

Gerry Brownlee: Is it a fact that nearly 3 weeks before the 2005 election, Mr Henry told Mike Smith, the Labour Party general secretary, that the pledge card was an election expense regardless of who paid the bill; and does he find it disturbing that the Labour Party then went on to spend over $1 million in advertising after that conversation, and breached the spending cap?

Hon MARK BURTON: Again, I repeat for the member’s benefit that I am not in receipt of the correspondence, or the file notes, from the Chief Electoral Officer to any political party, nor should I be. The statutory relationship between that officer and the Minister of Justice has to be kept at arm’s length.

Gerry Brownlee: Does the Minister find it concerning that after the phone call of 30 August warning the Labour Party that it was breaching the law, and a follow-up letter on 2 September confirming what the Chief Electoral Officer had previously said in a telephone discussion, Labour went ahead and spent $585,000 on newspaper advertising in the last 2 weeks of the campaign, in flagrant disregard of his advice, which led to a breach of the spending cap?

Hon MARK BURTON: It is another variation on the same question. The answer remains the same. It is not appropriate for me to be in receipt of the correspondence between that statutory officer and various members of Parliament. If I were, I may well have received the document the member, Lynne Pillay, referred to regarding National Party expenditure. I did not receive that either.

Gerry Brownlee: Would he find it concerning that after again receiving a letter from the Chief Electoral Officer on 12 September instructing Labour that its arguments against his decision were spurious, Labour spent $416,000 on advertising in the final week of the campaign, knowingly putting itself over the electoral spending cap; and would he not expect a party in that position to have tried to avoid overspending, or to at least have shown some respect for the Chief Electoral Officer and his opinions on those matters?

Hon MARK BURTON: As the member understands, I am sure, by now, I am not in receipt of that sort of information from the Chief Electoral Officer. Frankly, if I were, nothing I have heard today would concern me as much as the $1.2 million spent to buy an election on behalf of a political party.

Lynne Pillay: I seek leave to table an email of 8 June 2005 from a group of Christian businessmen who had put together extensive publications throughout New Zealand, about building trust in a Brash-led National Government.

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

Gerry Brownlee: Can the Minister of Justice confirm that if National were able to pay the $110,000 GST receipt currently owed, we would, even then, not breach the spending cap, unlike his own party, which, because of its having dipped deeply into the taxpayer’s purse, has well and truly breached the spending cap; and if he cannot answer that, why does he claim to be the Minister of Justice, who is responsible for electoral Acts?

Hon MARK BURTON: I cannot answer that for two reasons: firstly, I do not have ministerial responsibility for electoral spending; and, secondly, I do not have access to a critical piece of the information—even if I wanted to—that the member referred to, and that is the 80 percent of the National Party’s expenditure hidden inside trusts. I apologise; I would not want to mislead the House—it is 92 percent of the National Party expenditure that is buried and hidden in trusts.

Gerry Brownlee: Does it concern the Minister of Justice that a Labour back-bencher can claim to have emails that transferred between the Exclusive Brethren and the Electoral Office, which are available, apparently, for tabling in this House but that he himself claims he has no such knowledge of those various communications; and if in fact there is a breach of security around the Electoral Office, will he offer his resignation to the House?

Hon MARK BURTON: No, but I can perhaps help the member and introduce him to a facility that is available to parliamentarians and is called the Official Information Act, which is why some of the information his colleagues have is available for him to ask the very questions that he is asking.

Te Arawa Lakes—Settlement Process

7. TE URUROA FLAVELL (Māori Party—Waiariki) to the Minister in charge of Treaty of Waitangi Negotiations: Does he agree that the current approach to processes of iwi authenticity and mandate for the Te Arawa Lakes settlement are robust; if so, how does he justify the statement of his Associate Minister in the House last week that he was unable to give an assurance regarding Ngāti Rangiteaorere that iwi will not multi-vote, on the basis of whakapapa links to other iwi involved in the claim?

Hon MARK BURTON (Minister in charge of Treaty of Waitangi Negotiations): Yes, but I would note that the member seems to be confusing the Te Arawa Lakes settlement with the Ngā Kaihautū o Te Arawa Executive Council settlement, to which the Associate Minister last week was actually referring in his remarks.

Te Ururoa Flavell: How can settlements be robust when negotiators from iwi such as Ngāti Tama, Te Ātiawa, Ngāti Whātua, Ngāti Awa, Te Uri o Hau, and other tribal nations have concluded that the process is flawed and the rules are inconsistent?

Hon MARK BURTON: It remains my conviction that the process is indeed robust.

Pita Paraone: Does the Minister think that reference to the principles of the Treaty of Waitangi in the Te Arawa Lakes Settlement Bill will have any impact on the terms of the settlement and the effect of the bill; if so, how?

Hon MARK BURTON: Yes. I think they give effect to the intent of the negotiation in good faith between the two parties.

Te Ururoa Flavell: In light of the inconsistencies, how can any settlement be considered to be full and final, and what is the Minister’s response to the call from iwi to return to Parliament to seek a just, full, and final settlement?

Hon MARK BURTON: I think it is presumptuous for those not involved in a negotiation to call on those involved in a negotiation to return to Parliament when they have negotiated in good faith and reached settlement in good faith. I note that those settlements have been reached over a number of years by a number of Governments. I think we must respect good-faith negotiations properly concluded.

Te Ururoa Flavell: I seek leave to table a publication by the Crown Forestry Rental Trust called Māori Experiences of the Direct Negotiation Process: Case Studies and Personal Experiences of Various Negotiators on the Negotiation Process with the Crown to Settle Claims under the Treaty of Waitangi.

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

Prisoner Transfer—Service Delivery Agreement

8. SIMON POWER (National—Rangitikei) to the Minister of Corrections: Can he confirm that the agreement between the Department of Corrections and Chubb New Zealand Ltd for the provision of prisoner escort services includes a procedure to “Assess prisoner needs on assuming custody based on advice from authority handing over (risk assessment form): … youths under 20 to be segregated”?

Hon MITA RIRINUI (Associate Minister of Corrections) on behalf of the Minister of Corrections: Yes, that information is contained in the Chubb policy and procedures manual.

Simon Power: Can the Minister confirm the report in the Sunday Star-Times that security guards transporting Liam Ashley from the court were not given any risk assessment form, in contravention of the procedures agreed to with the Department of Corrections; if so, whose responsibility was it to ensure that this assessment was made and passed on?

Hon MITA RIRINUI: The tragic circumstances surrounding Liam Ashley’s death are currently under investigation, and I cannot comment before the report is released.

Simon Power: Can the Minister confirm that the Department of Corrections form entitled “Escorting an At-risk Prisoner” does not specifically refer to the offender’s age amongst the risk categories listed; why is that the case when the agreement between Chubb New Zealand Ltd and the Department of Corrections clearly states that prisoners under 20 are considered to be at risk and must be segregated?

Hon MITA RIRINUI: I am advised that that procedure is followed. I cannot comment on Liam Ashley’s situation until the investigation is completed.

Ron Mark: Can the Minister give this House an absolute assurance that all private security companies contracted to the Department of Corrections are properly licensed and that all of the security guards in the employment of those security companies are, firstly, properly licensed and, secondly, properly trained; if he can give us that assurance, can he tell us how?

Hon MITA RIRINUI: I am advised that the contractors’ performance and compliance with contractor legislation are monitored on a daily basis and reported on on a monthly basis.

Simon Power: Can the Minister confirm reports that Chubb New Zealand Ltd previously offered to introduce a specialised van with individual compartments, but the Department of Corrections turned that down because it was considered unnecessary and too costly; what actions has he taken to see that individual compartments are installed into prisoner transfer vans?

Hon MITA RIRINUI: I am advised that the Department of Corrections does have high expectations of Chubb Security when prisoners are being transported. Whether those standards were met in Liam Ashley’s case is something we will have to wait to see, as the case is subject to investigation.

Simon Power: Has the Minister followed the convention of individual ministerial responsibility and offered his resignation to the Prime Minister; if not, why not?

Hon MITA RIRINUI: No, because it is not necessary.

Rodney Hide: Has the Minister set a timetable for the completion of the investigation by the Department of Corrections into this tragedy; if he has not set a deadline, why not—does he not really want the report—and if he has set a deadline, what is it?

Hon MITA RIRINUI: No deadline has been set. I advise the member that there are currently five investigations taking place. We expect that it will take some time before we get to the bottom of the matter.

Rates Rebate Scheme—Response

9. STEVE CHADWICK (Labour—Rotorua) to the Minister of Local Government: Has he received any reports on the response to the Government’s newly expanded rates rebate scheme?

Hon MARK BURTON (Minister of Local Government): Yes. I have been advised that as at 1 September, rates rebates totalling over $10.8 million have been approved for 23,855 New Zealand households. This compares with just 4,200 households that received a rebate for the whole of the 2005-06 year.

Steve Chadwick: Has he seen any other reports welcoming the Government’s rates rebate scheme?

Hon MARK BURTON: Yes, indeed I have. I have seen the comment of the president of Local Government New Zealand, made in April 2005, that Local Government New Zealand is thrilled with the change. I have also seen a report from a Coromandel pensioner, Pat Williams, that the rates rebate offer was welcome. He said: “I am happy. I received the full $500 rebate. It’s a good thing.” He is absolutely correct.

John Carter: Is the Minister aware that the costs he and the Helen Clark Labour Government have loaded on to local government ratepayers are conservatively estimated to be at least $500 million—10 times the amount he intends to give in rates rebates?

Hon MARK BURTON: I am aware that the member keeps repeating things that, outside this House, I would describe with a three-letter word—but I cannot here, so I will not. That member is the member who constantly repeats that 67 pieces of legislation have been imposed that impose costs. Well, I can tell the House that of those 67 pieces of legislation, 26 have been shown to impose zero cost on local government, and 28 of them were introduced in part or in whole because local government had asked for them. This Government has contributed $661 million in the last 12 months. It is the biggest-growing contributor to local government coffers, bar none.

Peter Brown: Is the Minister aware of any reports, formal or otherwise, from local government on an independent rates inquiry that has been set up as a result of New Zealand First’s initiative?

Hon MARK BURTON: I am aware of numerous reports—far more than you would give me time to refer to, Madam Speaker—praising and acknowledging that this independent inquiry is indeed the appropriate way to proceed with looking at longer-term rating issues.

School-leavers—Qualifications

10. Hon BILL ENGLISH (National—Clutha-Southland) to the Minister of Education: What proportion of students leaving school in 2005 left without a qualification?

Hon STEVE MAHAREY (Minister of Education): Under the National Certificate of Educational Achievement (NCEA), students leave school with a Record of Learning that shows how many credits they have attained.

Hon Dr Nick Smith: Answer the question!

Hon STEVE MAHAREY: How long was the member deputy leader? I cannot remember.

Madam SPEAKER: Would the Minister please answer the question.

Hon STEVE MAHAREY: I will start again. Under NCEA students leave school with a Record of Learning, which shows how many credits they have attained. Students who gain 13 or fewer credits at any level are recorded as having little or no attainment. This figure was 13 percent for 2005. Above that, we record what students have attained. For example, in 2005, 67 percent of school-leavers achieved beyond level 1 in NCEA. As much as it is possible to make a direct comparison, in 1984, 43 percent of students left school with School Certificate.

Hon Bill English: Why did the Minister issue figures last week claiming that only 13 percent of students leave school without a qualification—with his definition of a qualification being students who earn 13 or more NCEA credits—when, in fact, students need 80 credits to gain even the most basic school qualification, being NCEA level 1; and were not his claims misleading?

Hon STEVE MAHAREY: As I understand it, last week the Ministry of Education released information on attainment at school. I thought it might be useful to explain to the member that under NCEA students get a record of attainment—that is, the number of credits are stacked up, and they are on their Record of Learning. Under NCEA they do not get a qualification like School Certificate; they get a Record of Learning.

Moana Mackey: What improvements were evident in the 2005 school-leaver statistics?

Hon STEVE MAHAREY: The figures show students are attaining higher levels of achievement. A third of students are leaving school now with a university entrance qualification in the sense that they have the number of credits needed to go to university. More are staying until year 13. As I said before, 67 percent of school-leavers are achieving beyond level 1, which is great. One of the good advantages of NCEA is that those leaving with partial attainment, or lower levels of attainment, can use those credits to build a qualification through, for example, an apprenticeship or polytechnic course, because their Record of Learning shows what they have achieved.

Hon Bill English: Can the Minister confirm that the true picture is this: 27 percent, or over 16,000 school-leavers each year, leave school with no formal qualification because they did not achieve NCEA level 1; and why did he issue figures showing quite a different picture?

Hon STEVE MAHAREY: No, I cannot say that. What I have to say to the member is that the way in which NCEA works is that students get a Record of Learning of what they attain. That is what they get. The member is stuck in the 1990s. I know that he favours School Certificate, but that is not how it works any more.

Hon Bill English: Why does the Minister continue to try to hide failure by removing from students’ Record of Learning any record of failure, and by now counting as students with a qualification students who achieved one-sixth—that is, 13—of the 80 credits required to get any kind of formal qualification; and does he not think that it misleads students to tell them that if they get 13 level 1 credits, they have any choice at all in life?

Hon STEVE MAHAREY: What students get is an accurate record of what they attain. For example, if they get 13 credits, they are told that they have achieved little or nothing. Above that, they are told what they achieve. I know that the member would like to have School Certificate back, but this system tells students what they get, rather than being the kind of pass/fail system we had before. And, no, I do not hide failure; I constantly tell people about the National Party.

Madam SPEAKER: That was not necessary.

Hon Bill English: Why is the Minister telling the public of New Zealand that 16-year-old students with 13 level 1 credits, which is less than someone can get from one weekend’s outdoor education, have a school qualification, when they need 80 credits to get a school qualification—and why does the Minister not sit down until the question has been asked?

Madam SPEAKER: Well—

Hon Member: Well, we thought it had finished.

Hon Bill English: Point of order—

Madam SPEAKER: Yes, I agree. Some of the questions get longer, as some of the answers do. Would the member please ask the question.

Hon Bill English: I will ask the short version, OK. Why is the Minister telling the New Zealand public that—even though students need 80 credits to get the most basic school qualification—if students get 13 credits, they have a qualification?

Hon STEVE MAHAREY: The Ministry of Education released the figures the member is referring to, and the ministry would record that students who got 13 credits got little or no qualification. “Little or no qualification” is what those students would be told. Above that, they would be told what they attained. The member insists on superimposing School Certificate on NCEA, because he likes norm-referenced learning, but he should get used to the notion that NCEA is the way we do things now, and he should keep up with the programme.

Marine Species—Benthic Protection Areas

11. METIRIA TUREI (Green) to the Minister of Fisheries: What concerns, if any, does he have that according to a 2006 NIWA report, the industry-proposed Benthic Protection Areas will provide less than a quarter of the protection for all marine species than would otherwise have been provided by an “equivalent area chosen solely for its biodiversity values”?

Hon JIM ANDERTON (Minister of Fisheries): I am aware of the National Institute of Water and Atmospheric Research report to which the member refers. It is one of many factors that will require consideration when the Government makes a final decision on the industry’s benthic protection area proposal. It is hardly reasonable, however, to claim that the industry proposal phase fails to achieve something it was never designed to realise. The industry’s proposal is about protecting the seafloor and what lives on it; it is not about protecting fish, which New Zealand does through the quota management system.

Metiria Turei: Would the Minister like to retract his comment that “It is untrue for anyone to suggest that the proposed areas have no value to the fishing industry.”, made in response to a question in this House in February, when the National Institute of Water and Atmospheric Research reports that “The BPA proposal has by far the lowest costs”, and “would result in a minimal loss of fishing opportunity”; and does that not just demonstrate the ridiculous inadequacy of the Minister taking a purely industry-driven approach to protecting the marine environment, including fish stocks, from bottom trawling?

Hon JIM ANDERTON: I repeat again that this is an industry proposal that the Government is considering, and it has been taken for wide consultation to industry as well as to non-governmental organisation stakeholders. I would have thought that an industry proposal to preclude bottom trawling from over 30 percent of the entire exclusive economic zone, which has not yet been touched by bottom trawling and which will be kept in pristine condition in perpetuity, would at least have been a glass half empty that the Greens and other non-governmental organisations could have welcomed.

Metiria Turei: Does the Minister accept the expert view of the National Institute of Water and Atmospheric Research that the fishing industry proposal is “a poor option for the long-term protection of fish diversity”, because the proposal focuses on areas that have “low fishing diversity and very low fishing value”, which is clearly indicated on the map I have here that shows the blue areas; if so, will he now re-evaluate the industry’s proposal to protect those areas, based on credible scientific research from the Government’s own Crown research institute, and not from the vested interests of the fishing industry?

Hon JIM ANDERTON: I reject the suggestion that the 30 percent of the exclusive economic zone being set aside under the industry’s proposal is of no conservational consequence. Thirty years ago many of the areas currently bottom trawled were un-fished, because technology did not allow such deep-sea fishing as technology does today. So we can now fish deeper today than ever before, and although the majority of the benthic protection areas proposed by the industry are in areas too deep to trawl now, they will be closed to preclude any further bottom trawling that new technology might allow. And because they have not been bottom trawled at all, they will be extraordinarily important in the scientific evaluation of areas of bottom trawling versus those not bottom trawled.

Metiria Turei: I seek leave to table a map of the trawling closure areas, which shows that the proposals of the industry include areas that have too few target fish, are too deep or too rough to bottom trawl, are already fished out, or are already designated a no-trawl area.

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

Land Tenure Review—Conservation, Department

12. Hon DAVID CARTER (National) to the Minister of Conservation: Is he satisfied with the Department of Conservation’s advocacy role in the land tenure review process; if so, why?

Hon CHRIS CARTER (Minister of Conservation): Broadly, yes. My department provides advice to Land Information New Zealand as part of the tenure review process, established by the Crown Pastoral Land Act of 1998.

Hon David Carter: Did the Department of Conservation sponsor the conference involving the New Zealand Ecological Society, held in Wellington between 28 August and 1 September; if so, why?

Hon CHRIS CARTER: The Department of Conservation funds and supports a range of different environmental conferences. If the member wishes to find out exactly what the level of our support was, I suggest he put in a written or oral question to me on that, and I shall provide the correct information.

Hon David Carter: I raise a point of order, Madam Speaker. I have just asked the Minister whether the Department of Conservation sponsored it, and the Minister’s answer was that if I wanted to know I should put it down as a question.

Madam SPEAKER: The Minister addressed the question.

Charles Chauvel: What conservation gains have resulted from tenure review?

Hon CHRIS CARTER: There are some iconic gains. The Labour-led Government has established six high-country parks by linking existing Department of Conservation land with land coming into protection. As a result of tenure review, the Birchwood Station purchase, and the Molesworth transfer, these parks are an enduring legacy for future generations of New Zealanders to enjoy. I am really proud I had a hand in making them.

R Doug Woolerton: What percentage of the land that has had its tenure review completed has gone to the Department of Conservation, and what percentage to farmers as freehold title?

Hon CHRIS CARTER: Since 1992, 58 percent of the land has gone into freehold to farmers—that is about 162,000 hectares—and 42 percent, some 117,500 hectares, has gone into Department of Conservation management, owned by all of us.

Hon David Carter: Is the Minister aware that the president, the vice-president, and two of the four councillors of the New Zealand Ecological Society are current Department of Conservation employees and that the conference was sponsored by the Department of Conservation, and does that demonstrate any conflict of interest?

Hon CHRIS CARTER: As I replied to the member earlier, the Department of Conservation funds and supports a whole range of different environmental conferences, initiatives, and workshops right around the country, and Department of Conservation staff are involved in a whole range of extracurricular conservation activities, which I am very pleased about.

Hon David Carter: Is it appropriate for this ecological society to put out a press release dated 31 August, entitled “Land Tenure Review Failing the Public Interest”, when the Department of Conservation is the main antagonist in the land tenure review process?

Hon CHRIS CARTER: I guess that is a lot more ethical than taking “cash for policy”, which the National Party does.

Madam SPEAKER: No, that is not relevant. That is not an appropriate reply to the question.

Gerry Brownlee: I raise a point of order, Madam Speaker. Is the member going to be asked to withdraw and apologise for his unfortunate remark? The Minister with responsibility for Auckland Issues—the woman who does no work at all—is laughing through a point of order.

Madam SPEAKER: Laughing is not interjecting.

Gerry Brownlee: Well, I suppose it is doing something, which is a little unusual—

Madam SPEAKER: I am asking the Minister to withdraw and apologise. Would the Minister please stand, withdraw, and apologise.

Hon CHRIS CARTER: I withdraw and apologise.

Madam SPEAKER: The Minister should now address the question.

Hon CHRIS CARTER: Could the member repeat the question.

Hon David Carter: I am only too happy to, and the Minister should listen carefully. Is it appropriate for this ecological society to put out a press release dated 31 August, entitled “Land Tenure Review Failing the Public Interest”, when the Department of Conservation is the main antagonist in the land tenure review process?

Hon CHRIS CARTER: The Department of Conservation is not an antagonist in the process; it is an adviser on significant inherent values of land going through the land tenure process. I cannot be responsible for what Department of Conservation staff do outside of their employment. I note that the member has not said that the Department of Conservation made such a statement.

Hon David Carter: What recent studies have been done by the Department of Conservation or Landcare Research to ascertain whether biodiversity has been lost, maintained, or enhanced within the Department of Conservation estate?

Hon CHRIS CARTER: A recent study put out by Dr Susan Walker of Landcare Research indicated that biodiversity values were not being met through the land tenure process. We are reviewing the process at all times and would like to see the best possible outcomes; the Minister for Land Information and I are both looking at the process at the moment.

Bills

Employment Relations Amendment Bill

In Committee

Debate resumed from 31 August.

Clauses 3A to 5, new clauses 5A to 5C, and clause 6 (continued)

COLIN KING (National—Kaikoura): The Employment Relations Amendment Bill, which we are presently considering, in no way resembles what this country needs to reinforce the words that were spoken in the Speech from the Throne this year. We need robust and vigorous laws that will encourage an economy to grow. What we are still confronted with is a Labour Government waxing lyrical in terms that would put the average working New Zealander to sleep. We are certainly nowhere nearly as motivated to the level we should be. The Employment Relations Amendment Bill is undoubtedly dumbing down the ambitions and enterprise of a whole generation. It is with much concern that National opposes this amendment.

I draw the Committee’s attention to the fact that this is the 15th amendment to the Employment Relations Act, and it reminds me of that Simon and Garfunkel song about how many ways there are to leave one’s lover. In actual fact, this Employment Relations Amendment Bill in effect is “15 ways to screw the nation and its enterprise”. It is hugely concerning. It reminds me very much of the Garfield comic strip. We see Garfield the cat, yawning away, dreaming about warm fuzzy moments and notions of self-interest, which serves only to reinforce bad behaviour. That is what we see within this Employment Relations Amendment Bill. In no way does it stir up and conjure enterprise within this nation. What we see is very similar to what we see in old Garfield the cat. Inside this tired and lazy Labour Party is corruption, slothfulness, and wastefulness. That tone is set from the very top, and it is flowing through society.

When we look at what is across on the other side of the Chamber, in a tired and wasteful Government, we see there are some old, burnt-out MPs whom the electorates said they did not want to see again. They voted them out. We see them sitting there, dormant, tired, and sleepy, although the electorates have said they do not want them. We now have in front of us legislation that New Zealand does not want to see. When we start telling an employer who he or she should take on and employ, it cuts across the enterprise that this country needs.

Dr WAYNE MAPP (National—North Shore): This bill, if ever a bill was, is truly legislation for money. Here it is, and this Government gets money from the trade unions. It knows that, and it delivers legislation—cash for policies, if ever there was such a case. A lot of people would say that is corrupt. When we pay money to a Government and get legislation, there is no other way to describe that than as a corrupt practice. We are getting used to that.

I want to say something to three Labour members sitting across the Chamber on the Government benches. They are all new, and at least two of them will be gone at the next election. So I say to them they should enjoy their 2 years or, more accurately, suffer their 2 years, because today’s question time is merely an example of what they can expect. We are angry, and the public are angry. They are saying to this Government it should be honest with the voters and pay the money back. The Government should listen to the 81 percent of the public who say that, because the public have no patience at all with a Government that would basically take money and deliver legislation.

The policy behind this bill is, in any event, fundamentally flawed economically, because the Government is trying to get new business owners to take on old employees under the same terms and conditions they had previously, or else to pay them redundancy. That is the choice. This Government obviously has not heard of the last 20 years of economic reform. Do those members not know how greater productivity is actually achieved? It means that we have to get more work—more productive output—from each employee. That is the only way productivity is increased. It may mean providing more capital or it may be a case of adopting better management systems, but whatever it means, it means change. We do not end up doing exactly the same job in the same way it was done before. We heard submitters say: “Woe is me, because in the last 20 years, my job has changed.” I would say to those submitters that they should get real and come into the real world, because work does change. There are more efficient systems, new technology, new machinery, and new management systems. Actually, that is how the economy was turned around over the last 20 years.

Government members have some fatally flawed idea of paying the unions back and adopting, until the point of bankruptcy, the ideology of their trade union mates. Here we have in the Chamber two members of that Transport and Industrial Relations Committee—trade union officials—delivering to their unions policy that the unions paid for. That is my definition of “corruption”. They are delivering here not just corrupt ideas around Government but also bankrupt policies, as well.

National is fundamentally opposed to this bill. We even suggested—and my colleague will talk about this—some modest changes to the bill in our minority select committee report. We said that we should at least exempt smaller employers, because we are faced with an absurd proposition. A small firm, probably consisting mostly of family members, will tender for a contract. It intends, of course, for its employees and team to take over the contract. But what does the Government say? It says the firm should forget about its own business, all the capital it has at risk, and all its new initiatives, because it has to take the old people on. Well, the very reason the contract is being changed is that the person who is changing the contract wants there to be a new team: the team presented to the person who is changing the contract by that new small employer to do the work—to do it more efficiently, effectively, and cost-effectively. My colleague David Bennett will talk on his proposition as to why the proposed change to the bill to address that issue is so desirable.

I do hope that New Zealand First is sympathetic today to the ideas and values of small businesses, particularly of family businesses. The New Zealand First member on the select committee, Peter Brown, well knows—because it was discussed in the select committee—that the proposal is aimed precisely at that group of people. I hope the New Zealand First members will stand by their ideology and support small business.

PAULA BENNETT (National): I rise today to speak in opposition to this bill, and it absolutely appals me to hear yet again the sort of language coming from the other side of the Chamber when Government members talk about protecting vulnerable workers. We have to realise that it suits Labour members to have workers feeling vulnerable. It suits them to have them needy and in a lesser situation, so that those workers feel indebted to the unions, and those workers do not have the means to be able to speak up for themselves and say what they really need. This bill is just another example of the sort of language coming from the left that likes to see everyone in a position of neediness and vulnerability, as if we cannot help or look after ourselves. What an absolute load of hogwash that attitude is!

One need only look at the unemployment figures these days to know that there is an across-the-board level of unemployment relating to cleaners and those affected by this bill. Those who have the means and are doing a good job will move into other work with no issues, at all.

I can see some understanding and logic around the district health boards’ position, which was aired during the select committee process. I personally have not had much to do with the district health boards and the workers involved with them. We heard arguments from them, and I certainly heard the argument from Labour members, about those workers who are going under six different contracts and who have their terms of employment changed six different times. Without a doubt, Opposition members have some sympathy for those workers, and we felt that that issue needed to be addressed. But, as usual, we have the big stick and the blunt instrument from the Government for a problem that will now affect all other small businesses, and we certainly have a high level of concern about that.

Small-business owners, often family-owned businesses, will be affected detrimentally by this bill, and the Labour Government simply does not care. It is not interested in those small businesses, and does not grasp the concept that they, too, will be affected by this bill. It is as simple as that, I tell Labour members, and they just need to listen to the argument that family businesses will be affected by this bill.

Sue Moroney: They deserve decent wages, too.

PAULA BENNETT: The member is right, and they deserve to be able to employ their own people and their own family. It is as simple as that. If those businesses are tendering for a contract, and they win it, then they should be able to employ their own family members in that business—not be obligated to take on another family that had the contract previously. It is as simple as that. If what the Government proposes in this bill happens, then that business will have to make their own workers and family members redundant. That is what will happen with those small-business owners and family-owned businesses, which is most of the problem with this bill. During that select committee process, there was no way that any Government members on the committee were willing to listen to the concerns that came out about that issue. Those members were not willing even to acknowledge them or even to listen to what effect this legislation would have on small businesses.

I think National members were the ones who put up our hands and saw that, through the district health boards and the examples given with those large cleaning contracts, we identified and agreed with them, at some level, that there was actually a means for it. That process is called listening and learning. But in no way, with Labour’s left-minded ideology about vulnerable workers, were those members prepared to go in and actually listen to what small-business owners had to say. They were not prepared to hear the effects those business owners struggle with, day by day, in addition to all the other obligations that are placed on them, and this requirement will become yet another level of obligation that those businesses simply will not be able to handle.

This is—and I would like members to listen to this—the 15th amendment to the Employment Relations Act that this Government has made. In 2000, the Government rushed that legislation through when it came into office, after promising to pay off the unions and telling the unions that it would do something. We have had to fix that Act 15 times, and Government members cannot tell me that doing that is a good use of this House’s time. They cannot tell me that there are not other things out there that they have stuffed up that we should be looking at fixing, because, goodness knows, there are. There are enough struggles going on out there that this House should be spending its time on fixing up. The Government rushed through with that legislation. It is now seeing all the mistakes and the stuff-ups it has made that we are repeatedly having to go back to fix.

PETER BROWN (Deputy Leader—NZ First): It is probably true that the Government has fixed the Employment Relations Act 14 or 15 times. That is only slightly more often than the National Party has had changes of leader and deputy leader since Helen Clark became the leader of the Labour Party. I think National has had about 10 or 11 new leaders and deputy leaders. What were those members doing then? Were they fixing something—was that a stuff-up?

New Zealand First will support this legislation with the Supplementary Order Papers. I will address the Supplementary Order Papers, because it is true we have concerns about this type of legislation, but we also believe there are vulnerable workers who do need a bit of legislative protection. So we have insisted, with the Labour Government, that there will be one Supplementary Order Paper, in my name, that will allow for a review of this whole amendment within 3 years. The second Supplementary Order Paper, which is produced by the Government—and which the Minister and I spent some hours negotiating—allows for full disclosure, and we will be supporting that.

The third Supplementary Order Paper is in my name, and it is a result of Mr Blumsky’s concern. I think his concern might be wrong, but he raised it while speaking in the Chamber, I interjected on him, and he approached me afterwards and elaborated on it. I think he is wrong. I spoke to the Minister as I promised Mr Blumsky I would. Both the Minister and myself believe there is no cause for concern, but we thought it was an issue that might arise if we were dealing with a devious or underhand employer. I do not know any such employers, but possibly National members do. So we took it on board, and in my name there is a Supplementary Order Paper that will amend the Minister’s Supplementary Order Paper along the lines that Mr Blumsky suggested. So I want to see how National will vote now, because it knows that this Supplementary Order Paper will improve the situation for employers, and that it had a hand in this. I would not mind betting that National will vote against it.

I want to talk about Mr Bennett’s Supplementary Order Paper. Mr Bennett approached me the other day and asked whether I would take it to my caucus. I did so, but the Supplementary Order Paper is flawed. I have explained that to him privately, as I have explained it to Mr Wayne Mapp. It is flawed, because it basically says that nothing in this part of the bill applies to small employers with under 10 employees—I think I have got that right. Well, excuse me, but the most vulnerable of vulnerable workers are probably those working for a small company. That Supplementary Order Paper just does not do the job.

New Zealand First members are, by natural instinct, not supportive of this type of legislation—I have to be honest—but we have listened intently to vulnerable employees. They can negotiate their wages and conditions up, and if we open the door for anybody to take a new contract or take over the firm—which is already covered in the earlier legislation—then those guys will start right on the bottom again. When one listens to their cases and the situations they have been in, one has to have some sympathy. People have told me privately that they had been doing their jobs and were regarded highly, but when a new contract emerged, one way or the other, they were told they could still carry on working there but would get paid less, or they would get paid less and have more to do, or things would be made much more difficult for them by undermining the very conditions they worked under. That is not fair. There is a genuine concern in New Zealand First for those people.

This legislation closes the Gibbs and others v Crest Commercial Cleaning Ltd loophole. We recognised that the Government produced legislation last term that addressed the principle of what happens when one company is sold to another, and we thought that on merit it is worth positively addressing this part of it. We were aware that the Government had the numbers, so our attitude in New Zealand First was to get the best possible deal.

MARK BLUMSKY (National): It is a big concern when I hear my fellow colleagues talk about 15 amendments to the Employment Relations Act. A bigger concern, and an even stronger message that this Labour - New Zealand First Government does not like small business, is that we are still, even today, making amendments to this legislation on the hoof, in order to crucify small business.

Let me explain exactly where I am going with this point. I stood in this Chamber just short of a week ago, and I raised some issues regarding the Supplementary Order Paper put forward by Minister Dyson. I raised some issues to do with the fact that there was no protection for small businesses if they were taking over the employment entitlements after successfully winning a contract. My friendly colleague on the other side of the Chamber, Peter Brown, who has just spoken, shouted me down at great length during the debate, saying that I was wrong and that the Supplementary Order Paper would fix that problem. After I had delivered that speech, I had a discussion with my colleague Mr Brown, who then made a representation to the Minister. A Supplementary Order Paper in Mr Brown’s name has been presented today because of the discussion I had with him. Mr Brown then had a discussion with the Minister, who has agreed to support the Supplementary Order Paper.

No further proof is needed of the messy, disruptive nature of this legislation—which is on its 15th amendment—than what we are currently seeing. That has to be a signal the Labour - New Zealand First Government is sending to small businesses that it does not like them because a lot of the Government’s mates, who actually fund it, are in unions, and it has to look after what they want. The Government is saying it is important that its mates, the unions who fund it, are well and truly looked after.

As I indicated in my last speech to the Committee, I get a lot of correspondence from small businesses. I will read from a letter from a Wellington business—it has been in business for 14 years and has had 60 employees—because it just typifies and underlines what I am trying to say: “The past 4 years have been a nightmare for our business, and we believe the reason is partly due to the overall climate and tone that now exists in this country, created by a Government intent on pushing employment policies that are not necessary, and political correctness that is way over the top and crazy.” I will drop down to another line that I particularly like, which I will share with members: “We believe the only way to get New Zealand back on track is to get rid of the current Government.” I suggest that is an incredibly inspirational piece of writing from that small business.

At the end of the day, we should not be distracted from the fact that this legislation is not good for business in New Zealand. It is messy—there are 15 amendments to the Act—and this is Supplementary Order Paper number whatever because of issues that were raised by myself in the very last debate on this bill. As I say, that is not the way we should be doing business. This Parliament needs to make sure New Zealand is moving forward. This Government needs to look at how it can lower taxes, give people incentives to get ahead, and ferret out the waste and the very many low-value programmes in the public sector, so that the public gets good value. The public is not getting good value from this legislation. The Government needs to stand up and apologise to businesses in New Zealand, because it is not giving them the respect they deserve. If we were the Government, we would ensure that the right climate was there and that businesses got the credit they deserved. Thank you, Madam Chairperson.

DAVID BENNETT (National—Hamilton East): I thank Mark Blumsky for that excellent speech. Today is a very disappointing day. A political party called New Zealand First campaigns year after year on keeping people honest, on standing up for individual rights, and on being there for all New Zealanders—and what has it done today? When it had the chance it just dumped the small-business man. New Zealand First members dumped the people who supported them, and they supported the Government in order to keep the baubles of power—so that its members could stay in the Cook Islands and sit on spiders. Well, that is not good enough for New Zealanders. We want to have a country that represents all New Zealanders. We want a Government that is actually prepared to make the hard calls—a Government that will move with the issues and with the people.

When we were in the Transport and Industrial Relations Committee, the issue of vulnerable workers was raised quite genuinely. There is an issue out there, and that issue will not be solved by legislation that is universal. There are two things that this legislation will not do, and those members opposite will destroy the vision and passion of ordinary New Zealanders—those people out there who set up a business to clean as a family unit, who employ fewer than 10 employees, and who want to transfer their business through. This bill kills them. They are stung by harsh legislation that puts far too many restrictions on them and their business capabilities. That is shocking. It is shameful, and there is only one word for it. It begins with “h”.

Secondly, this legislation indicates the intention of Labour and New Zealand First to keep the people under their little thumbs—to keep them under control. They know better than the people—that is their message. Labour and New Zealand First say that they know what is best for ordinary New Zealanders and that 60 of them can make a decision for 4 million people. They know, because they think they have this God-given right to tell everyone what they think. This is what they think, and that is what New Zealand First has been doing, just for the baubles of power. It has become part of the union movement now. It is part of the union movement; it is the Labour Government.

I refer now to some of the issues and numbers given to us in the Transport and Industrial Relations Committee—and heavens above, to think that this question might have been asked by Peter Brown! He might actually have asked in the select committee how many small employers there were. The answer was that for 1,417 sole traders there were zero employees. There were 737 businesses employing one to five employees, and 153 businesses employing six to nine employees. That gives a total of 890 businesses that employ between one and nine employees, or a total of 2,307 businesses employing fewer than 10 people. The sole traders are not even in the legislation.

If we look at the number of employees, we see that for businesses employing zero to nine employees, there are 2,860 employees. That is for 2,307 businesses. But there are 16,180 employees for the other 451 businesses that employ more than 10 employees, and those 16,180 people are the people this legislation is for. They are the real vulnerable workers.

The other 2,000 people are people in small businesses who are trying to make a go of it. What then does the Government do? It just goes and shafts them. And what does New Zealand First do? It supports the Government in shafting them. What did we have to do? We put up an amendment that would have given the opportunity for the political parties in this Chamber to stand up for what is right, to stand up for New Zealanders, to stand up for those working people who are vulnerable employees, and to stand up for those hard-working New Zealanders who want to start their own businesses. What happened? Those parties denied it. They said no to it, and moved on.

This legislation would have supported 16,000 New Zealanders, but 2,000 have been denied that support through New Zealand First’s inaction. We had the numbers here today. We could have got that amendment through. The parties around this Chamber all listened, apart from New Zealand First. Why did it not listen? That is my question to that party.

Dr WAYNE MAPP (National—North Shore): I have some very simple questions for the Government and for its puppy, New Zealand First. I ask the Government why it hates workers but loves trade unions. That is the difference, is it not? The Government hates workers but it will do anything for its trade union mates. New Zealand workers have voted with their feet. Eighty-five percent of New Zealand workers in the private sector have said no to the unions, because New Zealand workers hate unions. The Government loves unions. Do members know what unions do? They put their lackeys into Parliament. I am looking at two of them now: Darien Fenton and Sue Moroney. Do members know what Darien Fenton did? She stole workers’ union money to pay for the Labour Party campaign. That is what she did. That is the exposé in Investigate magazine.

I have a question for New Zealand First. Why does New Zealand First hate small businesses? Why has it sold out to the party of the unionists? It is truly appalling. The party that calls itself “New Zealand First” is in fact “trade union first”. It has sold out to the Government. The New Zealand First Party—

Darien Fenton: I raise a point of order, Madam Chairperson. I want to raise objection to comments made by the member—

Dr WAYNE MAPP: To what?

Darien Fenton: To the accusations the member has made about—

The CHAIRPERSON (Ann Hartley): I called a point of order. Will the member please be seated. The member will withdraw and apologise for speaking while that point of order was going on.

Dr WAYNE MAPP: I withdraw and apologise.

The CHAIRPERSON (Ann Hartley): OK, that is a final warning. The member has taken offence at the remark made by the member on his feet and I ask him to stand, withdraw, and apologise.

Dr WAYNE MAPP: Madam Chairperson, I surely have to know what the member has taken offence to before I do so.

The CHAIRPERSON (Ann Hartley): I think the member is very clear on what the member said, which was—

Dr WAYNE MAPP: She did not actually say.

The CHAIRPERSON (Ann Hartley): The member will please be seated.

Dr WAYNE MAPP: Point of order, Madam Chairperson—

The CHAIRPERSON (Ann Hartley): No, I will just ask the member to stand and clarify her point of order.

Darien Fenton: I take offence at the comments made by the member accusing me of taking money from the union to get myself into Parliament.

The CHAIRPERSON (Ann Hartley): The member has taken offence at that. Mr Mapp will stand, withdraw, and apologise.

Hon Maurice Williamson: Madam Chairperson—

The CHAIRPERSON (Ann Hartley): The member will please be seated. I have ruled on this—

Hon Maurice Williamson: Point of order—

The CHAIRPERSON (Ann Hartley): Please be seated, Mr Williamson. The member who has the call will withdraw and apologise. I have ruled on the matter.

Dr WAYNE MAPP: I withdraw and apologise.

Hon Maurice Williamson: I raise a point of order, Madam Chairperson. First of all, I disagree with your excluding me from making this point of order, because it was very relevant to the matter. Earlier, in the House during question time, the Speaker, Margaret Wilson, made it very clear to a member of the House that members cannot come back some time later and take offence at something. Members should take a point of order at the time something is said and say that they take offence, or the matter is gone and the House moves on. The Speaker was very clear on that. She did not allow the retrieval to be made against the statement the Prime Minister made against Don Brash, because time had moved on.

Dr Mapp had quite clearly moved on to a completely new issue. At the time the member raised her point of order Dr Mapp was talking about New Zealand First and its relationship with the trade unions. If Darien Fenton had taken offence, then according to Margaret Wilson’s ruling earlier, she should have got up at the time of Mr Mapp’s comments and raised a point of order saying so. She did not, and I think it is wrong for you, Madam Chairperson, to allow Darien Fenton to come back some time later and take offence when the Speaker would not allow Don Brash to do the same thing.

The CHAIRPERSON (Ann Hartley): I will make a ruling, but will make two points to the member first. The first is that it is the Chairperson’s responsibility to rule on a point of order as he or she sees fit. It is not up to the member to question that. The second is that the point of order was taken during the speech, not at a later point. Certainly, that is what I have ruled.

Dr WAYNE MAPP: Of course, the member Darien Fenton cannot deny that there is an article in Investigate magazine that talks about some very nefarious goings on to do with union moneys and Labour Party campaigns—very nefarious goings on, indeed. She was a candidate, and she managed to arrange money to be spent by the union without the permission of the members on Labour Party campaigns. There is a word for that. Certainly, Investigate magazine had no hesitation in using it. What disturbs me is this—

Hon Maurice Williamson: If it’s not true, she will sue, won’t she?

Dr WAYNE MAPP: Maybe she will—but will she? That is the question.

I have this question for New Zealand First. New Zealand First said that it is not part of the Government. Apparently, that is what it said. Most people do not believe that, and I am not surprised they do not believe it. But if a party says it is not part of the Government, then it does not vote with the Government every damn time; it does not vote for bills it does not even believe in. Time after time we see the spectacle of that party, the poodle party, voting always with the Government. If members of that party want to know why they are at 2 or 3 percent, that is the reason.

National is opposed to this legislation. We gave New Zealand First the chance to stand up for small business. We gave New Zealand First members that chance and what are they saying? They say they do not care, they do not want to support small businesses of New Zealand, they do not want to support family businesses, and they are going to vote against small businesses in New Zealand. I say to New Zealand First that they are going to be judged by the voters and the electorates in 2 years’ time. The voters will remember when New Zealand First abandoned small businesses, when they abandoned New Zealanders, and when they abandoned thrift, hard work, enterprise, and innovation. If Peter Brown, in his retirement in 2 years’ time, wonders why he is spending his time in Mount Maunganui instead of Wellington, he will remember this day—the day he voted against New Zealand’s small businesses—and he will say that is why he was retired by the people of New Zealand.

From time to time parties in this Parliament get choices, and those choices are based on their votes. Those votes are measured and counted and remembered by the people of New Zealand. We will say to the people of New Zealand that this was the day New Zealand First abandoned small business, abandoned voters, abandoned the people of New Zealand, and said they were with Labour and the trade unions.

Hon PAREKURA HOROMIA (Associate Minister for Social Development and Employment): The introduction of the Employment Relations Amendment Bill is quite specific. It states: “This bill is intended to protect certain categories of employees …”. When I listen to other people, I wonder, and I want to understand, why they have missed what this Government has done. Certainly, in relation to this bill, the minimum wage has increased six times in the last 6 years. The issues about employees’ rights are quite clear, and people revel in that. The macro level in this country—in the sense of small-business development—sings out and continues to say: “Long live the Labour Government!”. Well, I will continue to say that, because this Government has most certainly been the best friend of small and medium businesses that this country has had for a long time. What is so wrong with protecting employees’ rights? What is so wrong with doing that? What is so wrong with giving a fair toss for the workers? The Government is unlike some other organisations that have deep pockets of cash that they give away to run other agendas.

The bill is quite simple; it is no big issue. The bill is about people’s rights, and certainly the Transport and Industrial Relations Committee has worked hard on it. This Government has continued to develop the macro level, so that the micro-business structure in this country will survive for a long, long time. The advent and the wish of people, in the sense of keeping a strong, entrepreneurial-type economy alive, is something that this bill supports. The unions have done well in terms of participating in the economy, and so have employers. That is what this bill is about; it is about continuing to make sure that workers’ rights are recognised.

DAVID BENNETT (National—Hamilton East): It is amazing to hear a Minister—the Hon Parekura Horomia—talk about economic growth, when Labour is the Governnment that has managed to give us zero percent economic growth from last September to March of this year. This Government has given zero percent when our trading neighbours are growing at 9 to 10 percent a year. This Government has killed our economy. It has strangled what was a strong economy, good economic times, and good commodity prices. Now we are at the bottom of growth rates; at zero percent for 6 months. That is completely unacceptable. We need to be growing at least 3 or 4 percent to be competitive with Australia and our neighbours who are at 9 to 10 percent. Why are we growing at zero percent? It is because this Government has constantly fiddled with the economic fundamentals that National set up in the 1990s and Labour set up in the 1980s—the fundamentals that set this country on the right track.

Today we have seen a New Zealand First Party that has said that it was not going to turn its back on the small businesses of New Zealand, do exactly that. This is the New Zealand First party that voted against this legislation in the first place. New Zealand First members voted against this legislation, and now they are supporting it while they are in Government. Can members figure that? Why did they vote against it, and now why do they vote for it? Well, there has been a general election and they got the Ministry of Foreign Affairs; that is why they voted for it—

Hon Maurice Williamson: Baubles!

DAVID BENNETT: Yes, exactly—they have changed their vote to go for legislation that they were against 3 years ago. That is a shame for this Parliament and for this country. We do not want to see that word beginning with “h” used again, but it can apply to only one party here, and that is New Zealand First. It had the chance to stand up for all workers.

The thing about this legislation is that it is about vulnerable workers, the people who need assistance from government—the 16,180 people who are in businesses with more than 10 employees. But the other 2,860 employees and 2,307 businesses need the discretion and the ability to grow their businesses. They need a Government that will actually back them. This concept—to back our people, to give them a chance, to trust our people to make the most of their opportunities—would be so foreign to Labour. Labour members could never do that. They cannot have people given a chance, because they cannot control them. If you cannot control them, they will not vote for you—that is the theory they are working on. So they continually try to control everyone, and they will not even let 2,860 people who are in 2,307 businesses live their own lives and make their own decisions about their futures. They will not give them that chance. They do not want to see someone progress. They just want to see 451 big employers, and that is against the rationale of this legislation.

This legislation should be for vulnerable workers. How can you have legislation for vulnerable workers, and at the same time, you crucify them by saying you cannot grow out of vulnerability? You are always going to be working for a big employer. That is what Labour and New Zealand First are doing here today. They are saying if you are in those occupations—such as cleaning—you have to work for a big employer. Why do you have to work for a big employer? It is because you have to pay a union fee, and if you pay a union fee, you get that party back on the programme—and they dearly need that money at this time.

So keeping people under control is a fundamental part of this legislation. It is not about vulnerable workers’ rights, it is about union control, union domination, and stifling the ambition and hard work of ordinary Kiwis. When we see New Zealand First members in the election campaign next time, if they stand up and say they are going to keep the Government honest, if they say they are there to allow New Zealanders to grow and make the most of their opportunities, then we can say: “You had your chance 2 years ago. You could have voted for this legislation—you did not. You gave the people a slap around the face. You will pay the price in 3 years’ time, and so will the Labour Government.”

The CHAIRPERSON (Ann Hartley): Can I just say to the member who has just sat down—and I have given this ruling several times—he knows he cannot bring the Chair into the debate. He did it many times.

PETER BROWN (Deputy Leader—NZ First): I want to respond to some of the remarks that Wayne Mapp and David Bennett have made against New Zealand First. First of all, it is true that we voted against the Employment Relations Amendment Bill at the first reading and we are now voting for it, but there are some significant changes to the bill—

Katherine Rich: Baubles!

PETER BROWN: I do not know whether I have any more baubles than she has—maybe she would like to tell me where my baubles are. We changed our minds simply because we struck an arrangement—a deal, if you like—to improve the legislation, which is something the National Party would have really liked to achieve. We have achieved full disclosure of everything, and a review will take place within 3 years.

Mr Bennett believes that he is an advocate for small business, but if I were a small-business person with a staff of fewer than 10 and I were in the position of tendering for a contract, I would like to think there was a good chance that I could win it. If I had full disclosure, I could win it. If I did not have full disclosure, I would probably never win it.

Sue Moroney: That member understands small business. Good on him!

PETER BROWN: I support small business. If I were an employer who had a contract that was going out for tender and I employed fewer than 10 people, I would like to think that if I lost the contract, my people would be looked after. But under David Bennett’s amendment, they would get the sack. They would be out the door—whoops! If that is looking after small business and looking after vulnerable workers, then I am a Dutchman with plenty of baubles.

New Zealand First has put some common sense and fairness into this legislation. Wayne Mapp knows that. He is sitting over there in Opposition, envious that we can represent the business community. I tell him to talk to his employer mates and ask whether they appreciate legislation that requires full disclosure both in the public sector and the private sector. The honourable member spoke to me privately a little while ago and admitted that David Bennett’s amendment was flawed. Mr Bennett knows that it needs to be amended to cover employees working for small business. He knows it is unfair. He knows that if an employer who employed fewer than 10 people lost a contract, then those guys would be out of work. In his heart he knows that, yet he stands up and rants and raves and says he is the champion of small business.

If David Bennett is the champion of small business, then he knows that small businesses must look after the people who work for them. I invite members opposite to think about that. Let us say that a small business, or even a large business, employed these vulnerable workers, who had over a period of time upped their negotiating strength and, as a result, had received increased wages and better conditions, and then because of this legislation those people lost those conditions overnight. Is it fair for them to have no protection? Those people are at the bottom of the heap, anyway. They need to have a bit of legislative protection. All they have is the protection of the minimum wage, which New Zealand First is doing it darnedest to get up to $12 an hour within this term of Parliament.

Hon Members: Oh!

PETER BROWN: Members opposite should think about the hardship that those vulnerable workers go through. A whole host of them came before the Transport and Industrial Relations Committee and outlined their concerns. They need to have some legislative support.

The New Zealand First members were convinced that if we could make amendments to this bill by means of a Supplementary Order Paper, we would be doing the best for small businesses and for the people who work for them. I am very proud to say we approach this sort of legislation with an open mind. We are not committed to ideology, unlike the crowd opposite me in this Chamber.

COLIN KING (National—Kaikoura): It is interesting to hear comments by the member from New Zealand First. It is significant there will be some very hard calls required in the near future for his party, because it is facing a problem where it is seen to be in Government with Labour and therefore guilty by association. I do feel very sorry for that outstanding member Ron Mark from down my region, who is respected but is soiled with such filth and utterly deplorable legislation. It is very, very scary because it is against everything that has made this country great.

When we look at the way provincial New Zealand voted during the last election, I believe we will see the completion of the New Zealand convergence to come in behind National, to be the only solution to take this country forward and to maintain that high quality of life that we have become used to. When we see that we have had 15 moves to get this bill to a stage where Labour can be satisfied with it, knowing that 15 movements beforehand it was totally unacceptable to its comrades—the unions—we can see why one would call the bill the “Labour (Union Movement Close Relationship) Amendment Bill”. Certainly, it is nothing to do with looking after those people whom the Government labels “vulnerable”. The people whom I come across who are vulnerable are mostly those who are ripped off continually by the behaviour of the Labour Government. It is very, very recognisable that many, many people are coming to the understanding that the only way forward is through supporting the way forward with the National Party.

There are 300,000 businesses involved, and it is a bit of a shame when we hear the president of the Council of Trade Unions talking in glowing terms about innovation, productivity, and suchlike, yet enshrined in this legislation is the deplorable activity of beating up on business. The bargaining of an employee is open to abuse, when we get to a situation where somebody wins a contract, and I would be hopeful, from my own experience of taking over businesses, that it would be done with due diligence, and that one would convince oneself there was a degree of rigour inside the accounting processes, and that people came on board subject to their satisfaction and one’s own satisfaction over a period of time.

So on that basis I can see a lot of logic behind Wayne Mapp’s 90-day probation bill, on the basis that it gives everybody the opportunity of being comfortable. On that basis we look forward to that engagement as well. But I would imagine that the insidious behaviour of the union movement has so turned the tables on what is good for this country that we will be confronted again with this deplorable activity where we end up with consumption speeding away and burning up our economy, while the export base is eroded. So when we think about those sorts of things we can understand why the National Party is so clearly opposed to this legislation.

I would like to recall the situation with Garfield the cat—that deplorable beast that we all recognise within ourselves as that tendency we must resist, where we yawn and dream away about those warm fuzzy notions of self-interest. That is what we are seeing inside this sort of legislation—the “Labour (Union Movement Close Relationship) Amendment Bill”. This bill does nothing to create the robust, innovative, competitive environment with rigour and what is necessary to grow this economy. What we are seeing is Labour waxing lyrical in some dreamy fantasyland that will have us all come home rich and abundant, but just for the pure effort of keeping this Government in power. It has nothing to do with vision, nothing to do with leadership. Good, hard-working New Zealanders will recognise that.

When we look for examples of how we get performance, we look at the export sector of this country, and globally we lead the world around creating the incentives whereby we stand on our own two feet. At the end of the day, everybody on this side of the Chamber prays that we will continue to produce sufficient people in this country able to stand on their own two feet.

DARIEN FENTON (Labour): I move, That the question be now put.

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

Ayes 68

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

Noes 50

New Zealand National 48; ACT New Zealand 2.

Motion agreed to.

The question was put that the following amendment in the name of David Bennett to clause 4 be agreed to:

to add to Part 6A the following new section:

69OE Exemption for small businesses

Nothing in this part applies to a business that has fewer than 10 employees at the time that the provisions of this part apply to that business.

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

Ayes 53

New Zealand National 48; United Future 3; ACT New Zealand 2.

Noes 68

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

Amendment not agreed to.

The question was put that the amendment set out on Supplementary Order Paper 53 in the name of Peter Brown to clause 4 be agreed to.

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

Ayes 68

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

Noes 53

New Zealand National 48; United Future 3; ACT New Zealand 2.

Amendment agreed to.

The question was put that the amendments set out on Supplementary Order Paper 55 in the name of Peter Brown to the amendments to proposed new subpart 1A of Part 6A in clause 4, and to proposed new clause 5B set out on Supplementary Order Paper 54 in the name of the Hon Ruth Dyson be agreed to.

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

Ayes 68

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

Noes 53

New Zealand National 48; United Future 3; ACT New Zealand 2.

Amendments to the amendments agreed.

The question was put that the amendments as amended set out on Supplementary Order Paper 54 in the name of the Hon Ruth Dyson, be agreed to.

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

Ayes 68

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

Noes 53

New Zealand National 48; United Future 3; ACT New Zealand 2.

Amendments as amended agreed to.

A party vote was called for on the question, That clause 3A, clause 4 as amended, clause 5, new clauses 5A to 5C as amended, and clause 6 as amended be agreed to.

Ayes 68

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

Noes 53

New Zealand National 48; United Future 3; ACT New Zealand 2.

Clause 3A, clause 4 as amended, clause 5, new clauses 5A to 5C as amended, and clause 6 as amended agreed to.

Bill to be reported with amendment presently.

Bills

Child Support Amendment Bill (No 4)

In Committee

Part 1 Amendments to Child Support Act 1991

JUDITH COLLINS (National—Clevedon): Not everything in this part of the Child Support Amendment Bill (No 4) is bad. There are some good points about it, and I will let the people who support the bill promote those, because, after all, they are supposed to do something for the salaries they receive—unlike Taito Phillip Field, who is not expected to do anything, which is a bit of a shame, really. But one of the things about this bill that the National Party simply cannot support is the attitude that liable parents, who have an obligation to pay something—not everything, but something, and even, in some cases, as little as $11 a week—towards the upkeep of their children should have penalties just thrown away and dismissed on the basis that that will somehow encourage them to meet their obligations towards their children. It simply does not work. In 2003 the Government’s own figures told us that from those New Zealand liable parents living in Australia, $73 million was owed to New Zealand, either to the Government on behalf of the taxpayer, or to the custodial parent. What has happened under this Labour Government? That figure has ballooned to $281 million. That is over a quarter of a billion dollars.

The Labour Government likes to say that a lot of that is penalties. Actually, a lot of it—more of it—happens to be actual debt. It is the actual amount owed. I am so proud that in my party, the National Party, we can stand up for those custodial parents who look after their children, who pay their way, who have to be both mum and dad, and who have to go and tell their children why they cannot have school trips because they cannot afford it, while the other parent—who has skipped off to Australia—has decided that he or she does not have to have any obligations. Those people are all about the culture of entitlement that so pervades this Labour Government and everything it touches.

I will be interested to see how New Zealand First will vote today. As a member of the new “Poodle Party” for the Government, Mr Woolerton is not sure. How is he going to vote today?

R Doug Woolerton: I don’t know—

JUDITH COLLINS: Mr Woolerton says he does not know. He will find out from Helen Clark how he will vote today. Well, I suggest that that party should be renamed the “New Zealand Second Party”. That is because it is second to the baubles of office that encourage that party to keep propping up this corrupt Labour Government, which is trying to send to those liable parents who are not paying their way, the message—

Hon David Parker: I raise a point of order, Madam Chairperson. I draw your attention to the comment of the speaker, who used a word that is unparliamentary. I seek that it be withdrawn.

The CHAIRPERSON (Ann Hartley): Yes, it certainly is. The member will stand, withdraw, and apologise.

JUDITH COLLINS: I withdraw and apologise. I will not say that word again. I will say, however, that this Government sends the message that people can just take somebody’s money, use taxpayers’ money, not pay it back, and then it goes and changes the law so that it can get out of it. That is exactly what this bill is all about. This bill is all about using taxpayers’ money and then not paying it back. In fact, people get rewarded for it, under this Government. They get told they do not have to pay it back, because, after all, why should those absentee mums and dads pay back the money? Why should they?

This Labour Government is supported by that other party that should be called “New Zealand Second”. What is the message that they are sending? It is that if Helen Clark does not have to pay back what she owes, why should they? That is actually a reasonably cogent argument. These men and women, who do not want to be mums and dads any more, moan about how they never see their children except in photos—because they never pay anything towards their children. I can understand why they might get the message that people do not have to meet their obligations. This Government has a culture that is all about entitlement. Nothing in that culture is about responsibility—that is the attitude this Government is forcing into New Zealand. Many people here in this Parliament are parents, some are not and would love to be, and some say honestly that they did not want to be. I am one of the people who wanted to be a parent. I say to this Chamber that when we send out a message that fathers and mothers do not have to have responsibility for their children—that they can flit off to Australia and owe the New Zealand taxpayer and custodial parents so much money—that message is wrong.

ANNE TOLLEY (National—East Coast): Judith Collins put it succinctly—when we take a situation where you have used taxpayers’ money wrongly and you refuse to pay it back—

The CHAIRPERSON (Ann Hartley): The member is a whip, and she knows not to bring the Chairperson into the debate. That is about the third time today—

ANNE TOLLEY: This is the first time I have been on my feet today.

The CHAIRPERSON (Ann Hartley): No—I said this is the third warning I have given to speakers from the member’s party today.

ANNE TOLLEY: When someone uses taxpayers’ money for a purpose that was not intended and then refuses to pay it back, this Government passes legislation retrospectively and wipes that debt. There is a name for that but we are not allowed to use it.

As a member of the Social Services Committee, I sat through the representations from the Inland Revenue Department about the purpose of this bill, and I want to read to the Chamber a quick sentence from its briefing to the select committee: “The main outcome sought from the changes proposed in this bill is an increase in the collection of child support through improved levels of compliance.” I do not actually have a problem with that. I support that—I think it is great. The briefing goes on to state: “Under the major change proposed, the Government will forgo the collection of some incremental penalties to provide an incentive for non-payers to begin making payments of financial support again.” I have not understood that, and I have asked the officials all the way through this process how it is going to work. I did not understand the philosophy—that is, until I saw what has unfolded in this House over the last few months regarding the Labour Government’s spending of taxpayers’ money.

Hon David Cunliffe: I raise a point of order, Madam Chairperson. Unless I am misinformed, the purpose of the Committee stage is to discuss the select committee report on the Child Support Amendment Bill (No 4), the purpose of which is to increase the compliance of parents who are failing to meet their obligations. This line of argument seems to me to be very clearly irrelevant to that bill, and therefore outside the proper scope of the debate.

ANNE TOLLEY: Speaking to the point of order, I question the Minister on that. The line I have taken is, I think, quite clear. I am discussing the philosophy that was put to the select committee by the Inland Revenue Department, and that is entirely relevant to the bill. In fact, I read from the briefing made to the select committee by the Inland Revenue Department. I am discussing the philosophy of the changes proposed in Part 1.

The CHAIRPERSON (Ann Hartley): I take what both members have said, but I remind the member that there has been quite a lot of irrelevance during the speeches, and members need to come back to the bill.

ANNE TOLLEY: The difficulty I had with the proposals in this bill was the wiping of penalties of half a billion dollars owed to the New Zealand taxpayer in order to promote the nutty idea that by getting rid of debt we will encourage more people to pay their child support. That philosophy was, to me, completely unsubstantiated until I saw the behaviour of this Government when it applied this philosophy to other instances where it spends taxpayers’ money and, when called upon to repay it, brings into Parliament legislation to account for and legalise such activity retrospectively. That is exactly the same—

Hon David Cunliffe: I raise a point of order, Madam Chairperson. I ask you to reflect on the fact that the member herself has just taken this debate to other bills, which, by definition, must be outside the scope of this bill.

ANNE TOLLEY: Speaking to the point of order, I raise again the fact that I am discussing the philosophy behind the changes proposed in this bill. In order to discuss the philosophy behind the changes, it is entirely legitimate that the changes are compared to those in other bills that may or may not appear in this House.

Hon David Cunliffe: Earlier in the member’s speech she began down the path of election-spending issues, and one can only assume that the legislation to which she now refers is legislation that has not yet been introduced into the House. It rather bemuses me how it can be relevant to this bill for her to speculate about a bill that has not been introduced by the Government on a political issue that is completely separate from and irrelevant to this bill. I invite you, Madam Chair, to consider whether it would bring disorder into this Chamber for MPs on the Government side to begin an analysis of the Opposition’s acceptance of trust funds from secret donors or whether that would be outside the scope, in its view.

The CHAIRPERSON (Ann Hartley): The member needs to come back to the bill and look at what is in this bill, not what might be in another bill. I caution the member to come back to the bill.

ANNE TOLLEY: The purpose of this bill before the Committee today is to wipe the almost half a billion dollars owed by people who have used taxpayers’ money to support their children and who are now refusing to pay it back. This bill wipes that debt, with the concept that in doing so—as the Social Services Committee was advised by the officials—other people will be encouraged to pay their child support.

All the way through this process I have questioned that philosophy. I do not understand how wiping people’s debt when they refuse to pay will encourage them to continue paying any child support. I make the point again, without reference to any other bills that may or may not come into this Chamber: I did not understand the philosophy until I saw the behaviour of the Government, but I understand it now—we can use other people’s money to pay our bills. When called to account, we can bring into the House legislation that retrospectively gets rid of debt, in order to move forward. That is a philosophy, it is the philosophy behind this bill, and it does not make sense.

I do not understand why we are in this Chamber wiping off half a billion dollars of debt—of taxpayers’ money owed by parents who have not bothered to support their children or who have not bothered to come forward to make arrangements when their circumstances changed. This Government says it is OK to take taxpayers’ money. It says it will forgive that debt. This Government will look forward and move on, having passed legislation that wipes the debt, and will start off with a clean slate. It believes that, somehow, that action will make people suddenly come forward and pay their child support.

The National Party believes that parents should support their children and that children have a right to expect that their parents will support them. But we also have a right to have a Government that abides by a philosophy that treasures and values the money people pay in taxes, and gives some account to the fact that people have paid their taxes and that the money is not there to be used at the whim of a Government as it sees fit. It is a very bad signal to bring retrospective legislation into the House to wipe those debts, whether they are in bills before us or in bills that have been talked about in this House. That was the first point; the first role of this legislation.

The other big change this bill produces is the ability to allow the commissioner, not just custodial parents, to initiate a review of the financial affairs of liable parents. There were a great many submissions on this matter, some of which informed a rather surprised Social Services Committee that, in fact, this bill was not needed and that there were avenues.

Hon DAVID CUNLIFFE (Minister of Immigration): I want to take a brief opportunity to correct some factual inaccuracies and points made by the previous two speakers. The first of those was a misinterpretation of the purpose of the bill. It is clearly stated that the bill’s purpose is to increase the compliance of parents currently failing to meet their obligations to their children. I do not think there is a member in this Chamber who would not want parents to fulfil their obligations to their children and who would want to weaken those obligations. Certainly, the Government wants to see those obligations met and strengthened. That is why this bill, in part, creates the power to administratively review child support levels where there is reason to believe that parents may be hiding the true level of their assets and income—more on that later.

The second inaccuracy, from the previous speaker but one, was that most of the outstanding debt is in the underlying debt and not the penalties. In fact, there is $1,012 million in outstanding child support, of which $584,000, or a little over half, is currently owed in accumulated penalties.

But, of course, the largest flaw in what the Opposition is saying is the argument that we are somehow letting parents off scot-free by giving away all the penalties. In fact, the substance of the bill is quite different from that, and members know that. The bill allows individuals to enter into a binding scheme of arrangement with the Inland Revenue Department to pay off their arrears. If they do, and only if they do, then a proportion of—that is, some of—their penalties will be remitted as an incentive. If they do not enter into such an arrangement, they will receive no write-down of penalties, but, in any case, the bill provides that they cannot have all of their penalties written off. So, disappointingly, we are seeing a degree of hyperbole and exaggeration creep into the speeches of Opposition members.

That brings me to the final point, which is that the Opposition seems to think this is an opportunity to take the debate into places that are not relevant to it. I ask Opposition members to reflect on the fact that clauses in the bill would allow the Inland Revenue Department to look through income to assets and wealth. There are a number of rich parents—particularly, it has to be said, some rich dads—who are not being frank with people about how many assets they have and where they spend money. Trust funds are often employed to hide that money, and that is not the only circumstance in which those trust fund arrangements are used. One would ask Opposition members whether they really want to go there, because I for one can think of a number of other trust funds that could be drawn into the debate.

PAULA BENNETT (National): Thank you for the opportunity to speak on the Child Support Amendment Bill (No 4) and the purpose of it. There are elements of this bill that one would easily agree with, and I look forward to the opportunity to speak on them a bit further on, particularly when we talk about the level of sexual violence and the fact that the bill lets victims off having to pay child support.

The Social Services Committee also heard some good submissions on under-16-year-olds being let off child support payments until they are over 16 and are actually earning an income. That allows those young people the opportunity to get on with, hopefully, some schooling without having to think about gaining an income. Those arguments had a lot of logic, and we are pleased to see this provision coming through, as those arguments make a lot of sense.

I note that there are members from the select committee here who have heard those submissions, but that most of them are from this side only of the Chamber. Of course, I expect that the Minister in the chair, David Cunliffe, would have read every submission in detail. What grabbed me and everyone else on the select committee, no matter what parties members came from, was that this is an extremely emotive issue. What happened with a lot of the submissions was that people went off the subject of this bill, but without a doubt what they had to say related to children, to emotions, and to finances. When we put those three things together what we got was a lot of people who were very hurt and confused, and it was very personal for them. From going through the submission process, I know that there was a lot of discussion at the select committee about stuff that is perhaps outside this bill but is, of course, very relevant to child support issues.

Given that some of the members of the select committee who heard those submissions have not taken the time to come to the Chamber now, I thought I might go through some of the matters that do not come out in this bill but meant a lot to people. A lot of stuff that came out was about parents who care for their children for 40 percent of nights having to pay child support at the full rate, as though they do not care for their children. At that level, they still have to pay full child support. As soon as they go one night over 40 percent, their level of child support starts changing. What really struck me throughout this whole process—and I am sure the advisers will agree with me, because they identified this issue, as well—was that it does not induce people to talk to people.

One thing that really came out is that the power is put in the hands of one parent while the other is marginalised. One has to question how that can possibly be what is best for the children, because at the end of the day that is what it is about. That is what really struck me throughout the whole process of talking to advisers and to submitters, and of doing a lot of reading on the issue myself. I have to tell members that I did not grasp it easily. It is a very in-depth and explicit piece of legislation that has a combination of all the emotional stuff and the technical issues involved. In all honesty, that was not my strength, and it took me quite a bit of sitting down and working through those formulas. I still would not have the courage to stand here now and try to speak on those matters in technical detail.

What really struck me the whole way through was the way in which the bill seems to set people up against each other. There can be little doubt that what we stand for is—and I do not want to agree with the Minister, but there is a level to which we do agree—that parents have to pay for their children. There has to be that level of responsibility. Where I think we will differ is on whether we think this bill takes that far enough, whether it actually accomplishes what we want to do, and the philosophy around writing off penalties. I agree that it is not about writing off the debt.

I took a lot of time to try to understand this bill, because I saw it as being so important to so many people and as deserving the due courtesy of having that kind of detailed consideration. What worries me is not so much the purpose, in that I get that the Government is trying to get some of that money back, and that the way to do it is to reward people for paying that money; it is just the philosophy of it. At the end of the day, people have got themselves into that situation, there is a level of self-responsibility, and someone else should not have to pay.

Dr PAUL HUTCHISON (National—Port Waikato): Thank you very much, Mr Chairperson, for the opportunity to speak on the Child Support Amendment Bill (No 4). I note that the purpose of the bill is to improve the level of compliance with financial support obligations, so that more children receive the financial support to which they are entitled, and so that the Government maximises revenue receipts to offset the cost of State provision of financial support. But, as my colleague Judith Collins so aptly pointed out, this bill will waive $500 million that should have gone to children, and that signal is one we would hope would not come from a responsible Government in New Zealand. The Labour Government is clearly encouraging New Zealand parents to be irresponsible. I think my colleague Judith Collins mentioned that in 2003 the debt owed by liable New Zealand parents in Australia amounted to about $80 million, but in 2006 the debt owed has now increased to a whacking $280 million. This Government said that it would increase measures to track down those liable parents. How successful has it been? It has been successful 400 percent—in the diametrically opposite direction.

The fundamental reason for the Child Support Act 1991 was to ensure parental responsibility for the support of children. We in National believe that that sentiment is absolutely appropriate. But we see the dismal record of the Labour Government’s rhetoric; we see that not only have liable parents in Australia increased their debt 400 percent over 2 or 3 years, but the Labour Government is about to waive $500 million that should have gone to children. That is the sort of money that could go to child health, that is the sort of money that could go to child education, and that is the sort of money that could shorten waiting lists for children.

I am deeply concerned about several things in this bill, and they are these. The chairman of the Social Services Committee, Georgina Beyer, has said that the bill should be rushed through, because it is so important to reset the situation and ensure that the collection of that revenue takes place in a much more efficient, effective way. The bill was introduced on 5 August 2005. As my colleague Paula Bennett pointed out, this bill engenders huge emotions amongst submitters, and amongst many, many liable parents throughout New Zealand. The submissions that came in were very critical of the Inland Revenue Department, very critical of the way the Labour Government has arranged collection methodology in New Zealand, and very critical that this bill will not solve the problems.

In fact, an authority, Judge Walsh wrote to Judge Boshier, the Principal Family Court Judge, regarding new Part 6B, inserted by clause 24—the part that allows departure from the formula assessment of child support, and is one of the major areas of the bill. He said: “After reflecting on the whole scheme of Part 6B, I am left with the impression it will be, effectively, a toothless provision.” It is a huge worry that the major part of this bill is judged by one of the practitioners who really know what goes on in courts to be a “toothless provision.” The purpose of inserting new Part 6B is to ensure that parents’ child support liabilities accurately reflect their ability to provide financial assistance for their children. We heard some pretty heart-rending submissions in regard to the way that, under trusts and various other mechanisms, liable parents can hide those funds.

Hon DAVID CUNLIFFE (Minister of Immigration): I will take an opportunity to briefly respond to the two previous speakers. Firstly, I express appreciation to the previous speaker but one, Paula Bennett, the list member from my own area of west Auckland, who I think very honestly portrayed her level of interest and concern about the bill. It is an important bill and it really does affect the lives of a lot of children and a lot of families. I thank her for emphasising the common ground across all sides of the House—that we all care about kids, and that we all want to see parents meeting their obligations to kids; that is not in dispute. We are reasonable people but as in all things we can disagree, of course, about whether the mechanism proposed is able to deliver on that objective.

On that, I have two comments. The first is that nobody on our side of the House is suggesting for a moment that we should weaken people’s individual responsibility. However, I am reminded of a constituent who had got so far behind in his—and, yes, it was a he—child support payments that the sum amounted to several hundred thousand dollars’ worth of penalties and base debt, and he was on an income of about $30,000. There was no way, after tax, that he was able to save fast enough to offset the mounting penalties. He was bankrupted, his house was sold in a mortgagee sale, and his kids received nothing. Nobody won. The point is that some people can get themselves so far beyond the pale that there is no way back without the kind of measure proposed in this bill. Let us face it: I think Opposition members know in their heart of hearts that most parents, despite their circumstances, want to do the right thing for their children. There can be no more basic human instinct than that.

I draw attention to a couple of points made by the previous speaker, Dr Hutchison, who noted an apparent increase in debt owed by liable parents in Australia, and he somehow portrayed that as a debt mountain spiralling out of control. The interesting thing, of course, is that the reason the reported debt of liable parents in Australia has gone up is quite simply because we have referred more cases to the authorities in Australia for collection, because we have allocated more resources to that task, and because we recognise that that is a very high priority. I imagine that the Opposition—

Dr Paul Hutchison: Why didn’t you do it in 2001, or 2000, or 1999?

Hon DAVID CUNLIFFE: Well, there we are; the member is asking why we did not do it earlier. That implies he supports this move. That is a welcome gesture of support, and I thank Dr Hutchison. But then, that no doubt means he would accept that part of the reason that reporting figure is going up is because we are doing the right thing.

The second thing to say is that the Australian authorities, partly at our urging, are gathering better information on the true level of the incomes of liable parents. That is enabling and empowering us to do a better job at cracking down on them. As I say, we have roughly doubled the amount of budgetary resource to allow the Australian authorities to make that crackdown, and we make no apology for that. Because, like with the Opposition, it is common ground here that liable parents have obligations, and that those obligations must be met.

At the same time, there is only so much pressure someone can be put under, and I ask members and listeners to reflect upon that case from my electorate—a quarter of a million dollars of debts and penalties, with a $30,000 income and $20,000-odd after tax. The situation was impossible; the numbers did not add up. Of course he should not have got into that situation, but hindsight is always 20/20. Parents do love their kids, and they do want to do the best for them in most cases. The few ratbags who do not want to will face the full force of the law and compliance action from the Inland Revenue Department—and so they should.

JUDY TURNER (Deputy Leader—United Future): I want to take just a brief call on this part, but I say first of all that it is important to note the quality of submissions we received. I think a lot of us on the Social Services Committee discovered that aside from what this amendment tries to do, the most interesting thing that came out of the submissions was the distance we in this Parliament need to go at some stage—and I hope that that is in the not too distant future—to relook completely at how we calculate liable-parent payments and the mechanisms we use for payment, to take into consideration some of the concerns raised, by both liable parents and custodial parents, about the system as it currently exists. We need to look to other jurisdictions to see what they are doing, because some really innovative things are happening overseas that we could well learn from. Other countries are further down the track, in terms of the reforms they are bringing in.

However, those things being taken into consideration, we do need to focus on what this amendment bill seeks to do. I agree with the Minister, that although all of us have this nagging sense of injustice when we feel that people have been let off the hook, my understanding from what the officials told us is that something like half of liable parents are currently in arrears. This is a problem that, for some, is getting bigger and bigger. Some of them are in the situation where the debt is just not recoverable. They have got themselves into such a pickle financially that the tendency to walk away from responsibility becomes a great temptation. What this amendment bill is trying to do is to reconnect liable parents with their responsibilities, and with the department, so they can pick up their responsibilities and start paying once again, and to remove the barriers that would stop them doing that.

I share the concern that we are encouraging indebtedness and encouraging a reckless attitude towards being a liable parent. However, at the same time, we have large numbers of parents who are already in big trouble, many of whom would like now to pick up their responsibilities as their situation has changed, but are very nervous and anxious about the amount of debt they will have to service. When the interest they now owe is larger than the principal, we are into a bit of a nonsense. We are happy to support this bill.

I think it is worth noting the changes to Part 1 that the Social Services Committee has put forward. Firstly, we wanted to ensure that the mandatory write-offs of incremental penalties relate to the exact amount. There was this potential, prior to the work of the select committee, that a person who had his or her debt written off could end up in credit in a way that is, obviously, not helpful. We have changed clause 32, and put a new formula in place so that cannot happen. There is also an allowance for the offsetting of child support payments to be automated where both parents are liable for child support and one parent is in receipt of a social security benefit. That new technology is now available to the Inland Revenue Department, it can now start to use it, and I think that is helpful and positive. We have also included an ability to ensure that living allowances are inflation adjusted. Those are some very positive things.

Much of what submitters put before us that also needs addressing did not fall within the framework of this amendment bill, but, as I said earlier, they are fodder for thought. I hope that all social service spokespeople and committees within different caucuses will start to look very seriously at this. I think we all need to be of the mind to see some reforms in this area—certainly, United Future is.

Dr JACKIE BLUE (National): I rise to speak on the Child Support Amendment Bill (No 4), and I will deal with Part 1, and clause 32 in particular. I would like to acknowledge my colleagues, many of whom sat on the Social Services Committee. I was not fortunate enough myself to sit on the committee. When we hear the submissions and hear the public speak, I appreciate the emotion and the honesty that come through. I applaud the comments of my colleagues today who have experienced that, together with their knowledge of the committee.

However, I have had a look at this bill and I have to agree with my colleagues. I think this bill is wrong. It is sloppy. It is flawed. I know that it does deal with situations where the commissioner may grant relief in respect of penalties that are payable by a liable person. Certainly, our view is that we do not support the premise that this clause will help by writing off about half a billion dollars of debt. We have to remember that half of that debt is from expatriate parents—people who do not reside in New Zealand. They reside outside New Zealand. They are not paying taxes. They have made the decision, for whatever reason, to isolate themselves geographically from their children, and by virtue of doing that have removed themselves from all responsibility for being a parent. I do not believe that this bill, at the stroke of a pen, will suddenly change these parents into responsible parents who will want to sign up to any type of contract and pay back the money owed. I believe that by their actions, which are loud and clear, they do not want to take responsibility for being a parent. I do believe it is simplistic to think that this bill will suddenly change that, when there is a clear action by these parents, half of whom have gone overseas.

I acknowledge the sentiment behind the bill. I think it is very laudable, and it is hopeful that it will increase the compliance of parents who are not currently meeting their child support obligations. But, again, I think that is being simplistic. Apart from being simplistic, I think it sends the wrong signal, and the legislation is also a little dishonest. I have already alluded to the legislation being flawed and simplistic. I do not believe that the bill will turn irresponsible parents into responsible parents. It is a sad fact of life that some parents, unfortunately, look upon their children as an appendage rather than as children who need to be nurtured and cared for. This clause will not make them into responsible parents. The problem goes much deeper than that, and legislation will not right that particular wrong.

The bill sends the wrong signal. It sends a signal to the parents who have paid their money on time and in full, and without getting behind: why bother? What is the point, when people can delay their payments and then do a deal with the Government and get some money off, and it is sweet? That is wrong. It discourages responsible parents, and rewards irresponsible parents. It sends the completely wrong message, and that is why I think the legislation is wrong and flawed. It says to the irresponsible parents that nanny State will look after their children, and that is wrong. This legislation will not change parents’ personalities or their obligations, at the stroke of a pen. It is simplistic to think it will.

I believe that this clause is not fair. I have a thing about fairness and being fair. This clause is not fair to other groups. I apologise if I deviate from the legislation, but we have to look at the situation of a family that perhaps has got behind in its mortgage payments and is about to lose the family home.

Judith Collins: And paying taxes.

Dr JACKIE BLUE: Yes, and they are paying taxes. Will this Government race to that family’s aid? I do not think so. I know of a private health contractor in Auckland that has got into difficulties with paying its tax penalty payments. It does a great job, by the way. It is one of those deserving little groups that just keep on going, battling away. Do members think the Government will race to its aid? No, I do not think so. This is all about fairness, and this is not fair legislation.

I will come to my last point. I think it is quite dishonest that this clause is attempting to disguise the fact that a debt is owed, and to wipe it away as if it never existed. Yet again, the hard-working taxpayer has to carry the can. At the stroke of a pen, half a billion dollars will vanish that could be collected, put back into the coffers, and back into the sector to help irresponsible parents to become good parents. The bill is not helpful. It is not dissimilar to the student loan scheme in the message it sends. Students borrow the maximum amount of money and there is no incentive to pay it back any earlier than they have to.

BARBARA STEWART (NZ First): Thank you very much for the opportunity to take a call in this debate. New Zealand First believes that the Child Support Amendment Bill (No 4) is an attempt to take some action on this very difficult issue. This issue has needed to be addressed for quite some time, and when we look at what was reported in the Christchurch Press about the $281 million that is owed by Kiwi parents in Australia, I think that tells us that action needs to be taken. We are very aware that there are flaws in this current system, and other speakers have already pointed out many of them. We want to see liable parents encouraged in some way to take responsibility for the problem of child support. It is a big issue. To totally ignore the situation and not even think up any answer to this problem is not providing a solution for anybody. I think that is where we are at at this particular point in time.

I was very pleased to hear from the Minister that action is to be taken against those parents living in Australia. We know that if we leave this particular issue and there is total inaction on this problem, that is being totally irresponsible. We know that all the parties in this House—and I have heard many debates over the past two parliaments—believe that some sort of action is necessary, particularly where half of the liable parents we are talking about are in debt to the Inland Revenue Department.

This bill is some attempt to reconnect parents with their responsibilities. As the Minister has pointed out, this bill provides only limited relief and it is not the total solution for all of those parents. The arrears that responsible parents sometimes find themselves falling into do not mean that those parents are totally irresponsible—and I think that is in contrast to what we have heard from one of the previous speakers from the National Party. Non-payment of child support, which is what we are talking about, is a very serious and important issue. We know, too, when reading the bill, that this provides only very limited relief. I know that parents must still pay some of the arrears they owe, including some of the penalties. There is a provision in the bill for reviewing this particular clause if liable parents default on their obligations.

What we are really attempting to do in this bill is, basically, to acknowledge that liable parents are financially responsible for their children. In this case, it is better to get some money from those liable parents rather than no money. We need to encourage the compliance of parents who fail to meet their child support responsibilities. We know that both parents have a collective responsibility for their children, and it is always a challenge when this particular issue comes up. As previous speakers have said, it is a very emotive issue and a very technical issue. We know that, when it comes down to it, one parent is the loser in many of these cases, and we can only feel very sorry for them—but we definitely feel sorry for those parents’ children. We want the children to benefit from the full payment of the financial obligations of both parents.

So New Zealand First will be supporting this part. We believe that some action is better than no action. This bill might not be the perfect vehicle but it is a start in the right direction, and we can only applaud that.

Hon DAVID CUNLIFFE (Minister of Immigration): I will make just a very brief couple of comments. The first is to rebut the contention that this is in any way a dishonest bill that seeks to hide debt. Frankly, I think that was a very unworthy suggestion, made by the previous speaker bar one. Of course, the bill does not hide debt; it does not even reduce debt unless it is repaid by the liable parent. So the only way that debt would go down is—and it is good news—that the kids have received the outstanding money. Neither does the bill hide penalties, because the penalties are not reduced on the Inland Revenue Department’s balance sheet unless and until the underlying debt has been repaid, and then only in keeping with the terms of the binding arrangement. If that arrangement is not met, the full penalties stay on the books.

In contrast, I would like to thank the previous speaker, Barbara Stewart from New Zealand First, who has, I think, stated the issue very plainly. This is a hard problem. It is hard emotionally. We are dealing with families at the most difficult and critical point in their lives—at the time of a relationship break-up. We are dealing with parents in trauma and kids who are displaced. Of course, if it was an easy problem, it would have been solved years ago. But at least, despite the emotional and technical difficulties of the issue, we are honestly trying to do something about it. I am not saying that this solution is perfect. The Social Services Committee did not think it was perfect, but it thought it was worth doing, and we have a solid majority behind getting this legislation passed.

I guess that my challenge to the Opposition is: if not this bill, then what does it propose? The job of an Opposition is not just to oppose but also, occasionally, also to propose a better idea than the Government proposes. Any Opposition that looks as though it may, one day, come into Government should be able to demonstrate to the public that it can think up policy and do policy. So far there has been no evidence at all from a single Opposition speaker that Opposition members have a single positive idea to contribute about how to solve this problem. I challenge them to tell us what those ideas are, if they have any. If not, frankly, they should put up or shut up.

JO GOODHEW (National—Aoraki): Well, it is interesting. The Minister has said that this issue is about kids in trauma and that it is a hard issue, and he has admitted that he does not think this solution is a perfect one. Well, that really says it all, does it not? The Child Support Amendment Bill (No 4), which I rise to oppose, brings me to wonder what the main message here is. The purpose is, apparently—I think it is perplexing—to “increase the compliance of parents who are not currently meeting their child support obligations”. I believe that the obligations of a parent should be heartfelt. Personally, I do not believe that this bill will encourage any heartfelt obligations to be met.

How big is the problem? We have half a billion dollars in penalties and nearly as much again in original debt, so it is a big problem. But what message will the bill send? Well, the message being sent to liable parents is to hold off paying long enough and the Government will reward the people who have not paid, and if they ignore their obligations for long enough, the Government will feel sorry for them when they do not pay and send along a reward—a reduction in what those people owe. The message is being heard loud and clear. Retrospectively wiping debt—the liable parents’ debt—seems to be the flavour of the moment. That is how we could describe this bill.

What would happen, I might ask, if I was late in paying my tax and incurred a penalty? What would happen if I was late in paying my GST? Let me tell members that I know what would happen. One day I sent off in the same envelope two cheques for GST. I must have been in a dream when I filled them out, because I filled them out for the right amount, but I put one date on one cheque and another date on the next. I was wrong by 1 day—and I received a penalty. The cheques were in the same envelope and I received a penalty. Maybe I should have waited around a while in the hope that someone would bring in a bill that would mean the debt would be wiped, in order to encourage me to pay properly the next time. Really, the encouragement that I needed was just to pay up what I owed, which was that GST on the correct date. I learnt that lesson the hard way.

Liable parents visit my office, not to ask me how to avoid paying what they owe but mostly to tell me about how hard they are working to pay what they owe. They often talk about the fact that they feel they are paying much more than what they owe, and that it is not being credited to them. They are the very responsible liable parents who are forgotten about. They are not the ones who have almost a billion dollars’ worth of debt—half of that in actual debt and half in penalties. We have heard from my esteemed colleague Judith Collins about that $281 million worth of debt owed by overseas-based liable parents, and it is important that that money be recovered. We have heard from Paula Bennett that there are agreeable elements in the bill, and the Minister has praised her for bringing those forward.

But what evidence does this Government have that wiping the half billion dollars’ worth of penalties will, in fact, send any message other than “Get out of jail free”? That is the message this bill will send. If people doubt my use of the “Get out of jail free” phrase, I refer them to the fact that our jails are increasingly becoming more full of fine defaulters. That is what we do with other fine defaulters, yet these people will escape the responsibility of their debt. If they had paid their debt from day one, or whenever they could have arranged to pay it in the early days, it would not have become so insurmountable.

This bill was an election year creation, and the cynic in me says that it was to show that the Government was willing to tackle the enormous debt that had been identified by organisations other than the Government. I note that my colleagues have expressed some disappointment in the mechanism of this bill. I was not present in the select committee to hear the submissions, but I have heard, disappointingly, that the bill does not address many of the concerns that were raised by submitters to the Social Services Committee. I agree that supporting children is a parent’s primary responsibility, but I do not believe that this bill will necessarily bring that about.

NICKY WAGNER (National): As members have heard, National opposes the Child Support Amendment Bill (No 4). Although in theory the bill is designed to make sure that parents meet their obligations in terms of child support, we do not believe it sends that message. The whole issue of child support is extremely emotive and complex. It probably involves the most important and emotional flashpoints in one’s life: children, broken relationships, money, love, hurt, and being alone. Within that heady cocktail it is not easy to conclude what is fair and what is not fair when it comes to child support. But I do not believe that this bill is much help.

I believe that one of the most difficult things Parliament has to do when creating legislation is to identify the behaviour that it is trying to encourage. In this case it is straightforward: Parliament wants to encourage the conscientious payment of child support by liable parents. So, logically, we should reward those parents who pay consistently and penalise those parents who do not pay. That is plain common sense, and we all understand it. But in this legislation Labour is suggesting that we write off half a billion dollars’ worth of penalties for parents who have not met their responsibilities. Let us get this clear. The bill does not suggest that people who have paid consistently and well should get a discount for doing the right thing—absolutely not. Labour is suggesting that if someone does the wrong thing, then he or she should get the reward.

The fact that this Government needs to write off this debt at all reflects incredibly badly on its financial management and its slack attitude to the control of money. Every small business knows just how hard one has to work to collect debt, because however well intentioned people are there are always competing demands on their money, and unless debts are really closely monitored and consistently collected, they grow. Many small businesses have gone bankrupt because they have not collected their debts. In this case the Government has stood idly by as the child support debt has ballooned, as we have already heard, from $400 million to $1 billion over the last 5 years.

Now the Government’s strategy in collecting that debt is to write off $500 million. As many of us have already said, we struggle to understand the logic of that argument. I am not alone in that. The Rt Hon Winston Peters, in puzzling over this issue, has already asked why, if someone is not penalised for failing to pay his or her debts, that person would bother to pay them.

Hon Member: Why is he talking on it?

NICKY WAGNER: I think that is a very good question. At that time David Cunliffe replied: “because parents should love their children,”. I think that is a good answer, but it is not very realistic in the face of a billion dollars’ worth of debt. Then Mr Cunliffe continued: “because this Government is not, and has never said it will be, wiping off all penalties—”. Yeah, right, Mr Cunliffe—only $500 million is being written off! And that is a real slap in the face for responsible, hard-working, conscientious parents. When liable parents do the right thing, nobody gives them another thought, but if they do the wrong thing—run out on their kids or skip the country—then old muggins the Government will bail them out. That is great lawmaking!

Unlike Labour, National believes that Parliament must send a clear, consistent, and an unambiguous message, which is that parents are responsible for the financial welfare of their children, because it is only fair that all kids get a decent start in life. National will work long and hard to develop a consistent and an equitable payment regime.

SUE MORONEY (Labour): I move, That the question be now put.

Motion agreed to.

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

Ayes 71

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

Noes 50

New Zealand National 48; ACT New Zealand 2.

Part 1 agreed to.

Part 2 Amendments to Tax Administration Act 1994

JUDITH COLLINS (National—Clevedon): This is a particularly interesting part of the Child Support Amendment Bill (No 4), because many people have wondered just how many people it was meant to assist. Part 2 is really about stopping people from having to pay the liable parent contribution if they have been the victims of sex abuse, rape, or things like that. It is also about getting information through about sex offenders for the purposes of those child support exemptions. So it is about providing exemptions.

Many of us on the Social Services Committee wondered just how many people we were talking about here—how many people who had been the victims of sex abuse would end up being liable parents. If a woman who has been a rape victim is now a liable parent, that implies to me that the rapist or the rapist’s family has custody of the child. For the life of me, I could not quite understand why we in this country would be letting rapists and their families have custody of a child.

Paula Bennett: The Minister could take a call on that.

JUDITH COLLINS: The Minister may be able to set us right, because certainly in the select committee we did not seem to get any sensible argument on that issue, or any indication as to why that would be the case. Some of us thought that maybe it was to address the situation of a young man being sexually abused by an older woman, and that is a possibility. Perhaps that is the situation that the Minister is trying to deal with, but many of us were quite puzzled because we did not hear any particular evidence of that happening. Given that this is quite technical legislation, we could not quite understand how that measure fitted into the whole tenor of the bill and its writing-off of penalties.

Certainly, the Minister has taken some calls about how parents want to be good parents. I am sorry to tell him that although most parents are good parents and want to be good parents, there are some ratbags out there. I see he is agreeing with me. Unfortunately, just saying to those who wish to be ratbags, who are ratbags, and who think only of themselves—not of their children—that their penalties will be written off if they are good and pay the arranged amount will not bring about a change of heart.

I will go into a slightly personal matter here, if I may. I had a grandfather who, just before the Great Depression, skipped off overseas back to England, leaving my poor old grandmother with seven little children and without a scrap of maintenance during that time. He left her and ran off with another woman—as men do; and, no doubt, with a younger, flasher version than my grandmother. Having seven kids to look after—in her case it would have been eight, but one child died—does not do a hell of a lot for the figure, frankly, and neither is it likely to do much for one’s disposition, particularly when one has a feckless husband. I do not think for a moment that anyone told my grandfather that he needed to pay any penalty, and at no stage in his life did he ever front up with anything for poor old grandma and the children. So I do not quite understand why we are supposed to believe that feckless blokes, and a few women as well, will suddenly have a change of heart and become wonderful, nice, kind people who take their responsibilities seriously and look after their children, when, frankly, they have never done so.

This part also contains particularly important information about the information that the Ministry of Justice and the New Zealand Police are able to provide concerning sex offences for the purpose of child support exemptions. That is not particularly an area the National Party has any great problems with, although we would want to make sure that persons who have been the victims of sex offences do not have their private information unduly displayed to the whole of the Inland Revenue Department. I would like to hear from the Minister about that, because I think it would be very difficult for people who have been rape victims to come out anywhere and say to a stranger working in the Inland Revenue Department: “Hey, look at me. I’m a rape victim.” I just wonder how those people will be protected, and I think it is incredibly important that we understand what this part is supposed to deal with.

Hon DAVID CUNLIFFE (Minister of Immigration): I rise to speak very briefly. A question has been raised by members opposite about the clauses surrounding victims of sexual abuse. In part, this arose from the gender-neutralisation provisions that are now in the Crimes Act. Most frequently, this would arise when a young male could be abused, potentially by an older woman who subsequently has a child. It could also arise when the child of a female victim of abuse is placed with foster parents.

Beyond that, I comment briefly that Judith Collins, the member who has just resumed her seat, has had a very expensive speech—expensive in terms of votes, I imagine, for the Opposition—because I cannot imagine that too many separated fathers would be likely to vote for National after having been impugned by her in such a sad way. If her best argument against this bill is that anybody who has got himself or herself into a separation situation is liable to continue to default and treat this as an incentive, then I think that simply does not accord with the reality of the situations people find themselves in. I say to Ms Collins that she might pause to reflect on her colleague who took the debate to the area of GST repayment—of itself a fascinating subject, but one that we would leave for another day.

ANNE TOLLEY (National—East Coast): I thank the Minister in the chair, David Cunliffe, for explaining that point to us. In fact, Part 2 is a very small part of the bill. It is very technical and quite specific. One of the submissions to the Social Services Committee raised the issue of sexual abuse. It states—and this backs up what the Minister has just said—“The Act is so fundamentally flawed that no amount of tinkering can fix its many anomalies. Having said that, there are some positive improvements in this bill. Most notable is the exclusion of liability of young boys who have been sexually abused. The time it has taken for this change demonstrates how sexist this legislation is. Can anyone imagine a girl who is sexually abused having to pay money to her abuser?”. In fact, the bill also makes provision for that second example, when—as I understand from the Minister—the subsequent child is then placed in a foster home.

Part 2 makes amendments to the Tax Administration Act and does things like requiring secrecy about the information that is shared, making sure that the information is shared with the right people only, and allowing for the transfer of information between the New Zealand Police and the Ministry of Justice in order to confirm the information regarding those sex offences and the victims. I think it would be fair to say that this permanent exemption in the bill for victims of sex offences was something all of us on the select committee agreed was timely and was something we wanted to see happen—notwithstanding that the National Party is opposing the majority of the bill. The concept of someone who had gone through the trauma of being abused sexually then having to take financial responsibility for the upkeep of the child resulting from the rape—whether or not the victim of the rape was male or female—is quite abhorrent and not one we would want to see continued in legislation.

Mr Chairperson, I am sorry you curtailed the debate on the earlier part, because Part 1 is the substantial part of the bill, and here we are left debating Part 2, which is very narrow in terms of what can be discussed. It relates entirely to provisions that make this exemption for victims of sexual offences not liable to financial contributions for ongoing child support. The new exemptions are included in a new Part 5A of the Child Support Act 1991, and that restructures those provisions that relate to the exemptions, making some remedial changes to them. It also contains provisions that allow hospital patients a period of 3 months after discharge in which to apply for an exemption.

Another provision in the legislation grants an exemption where a young person who is liable to pay child support attends school. The select committee agreed that the focus of that young person should be on attaining some educational achievements and qualifications rather than on having to leave school in order to provide an income to support the child. So there were exemptions for young people under the age of 16 in order that they could remain at school and attain some educational qualifications. In making that sort of decision we are balancing the needs of the child to have a reasonable amount of support from his or her parents with the responsibility, I guess, that falls upon the State to ensure that young people have the opportunity to create options in their lives. In that instance, the State then accepts the responsibility of looking after the child.

Dr PAUL HUTCHISON (National—Port Waikato): Thank you, Mr Chairman, for the opportunity to speak on Part 2 of the Child Support Amendment Bill (No 4). This is the part that deals with amendments to the Tax Administration Act 1994 and also where information regarding sex offences for purposes of child support exemptions is dealt with.

I must say that I, too, was deeply disappointed that the Labour Government chose to cut off the important debate on Part 1, because it does relate, very much, to Part 2. I see the Government member Sue Moroney is shaking her head and saying that this was not important. Can I tell her that Part 1 was the substance of this bill, and it is very interesting that the Labour Government has chosen to cut off the debate abruptly so that it is not embarrassed by it any further. The Government should be embarrassed by it.

As I said, Part 2 is confined to amendments to the Tax Administration Act and the area of providing information concerning sex offences. I think it is really important that the Minister said the Government has a very hard problem with this bill and that it honestly wants to do something about it.

Judith Collins: Yeah, right!

Dr PAUL HUTCHISON: Yeah, right! But he also said that the solution is not perfect.

As I went around New Zealand and heard some of the submissions, I heard that right now the collection agencies get it wrong time and time again. In fact, one liable parent told me that, firstly, he had an estimation that his liability was $270,000. He rang back 24 hours later and was told the figure was $3,000. He did not know where it was. He was absolutely deeply upset by this. He rang back again and was told that the person he had spoken to had gone on holiday, that he could not speak to that person, and that someone else would talk to him. That person would not be at the call centre down in Dunedin where he had rang last time, but would be up in Whangarei. This is the sort of mismanagement that typifies this Labour Government right throughout its rotten core.

The problem that so many liable parents find is deep frustration with the inability of the Labour Government to be able to properly govern and to organise good, effective, and sensitive management of liable parents. Some of them become so upset by the system that, basically, they are unable to cope. They get into a revolving situation where they increase their debt and things get worse and worse.

When we see clause 51 and clause 52, “Officers to maintain secrecy”—

Judith Collins: Do we believe it?

Dr PAUL HUTCHISON: That is absolutely right—do we believe it?

Judith Collins: Look at the threats of the Minister. The Minister has been making threats about it.

Dr PAUL HUTCHISON: Well, the Minister has been making threats and that is of great worry. When we see this question of the officers having to maintain secrecy, of course they should maintain secrecy. But with the frustrations liable parents find when they have to go from one end of the country to the other and go from one call centre to another, and not one individual is responsible to go round and ensure that an appropriate deal is worked out for that individual, it is no wonder that this Labour Government is actually wiping off $500 million of debt.

The other area in Part 2 is new section 85K, “New Zealand Police and Ministry of Justice to provide information concerning sex offences for purposes of child support exemptions”, and new section 85L, which are to be inserted in the Tax Administration Act by clause 53 of the bill. Like many other members, I think this is a sensible part of the bill. It was interesting to hear submissions about some situations most of us had not thought about—for instance, that of a young male child who is abused.

The CHAIRPERSON (H V Ross Robertson): I advise the member, when he has finished his speech, to look at Speaker’s ruling 74/1(1).

Dr PAUL HUTCHISON: I look forward to looking at Speaker’s ruling 74/1(1). I will finish my speech by saying that I vividly remember a situation at Wesley College in my electorate, where a young male was abused by one of the teachers. Under the old system, if that teacher had become pregnant, perhaps the young male could have been made liable for the support of the baby. It is quite right that this exemption is there. Obviously, when a young female has been abused and does not keep the baby, it is exactly the same situation. National agrees that this small part of the bill is sensible and appropriate. There are other exemptions extended to people in hospital, people in jail, and people attending school. We think that these exemptions are right and proper.

But, as I said before, I am deeply concerned that there was a cut-off of the debate on Part 1, which is inextricably related to Part 2, by this Labour Government. It is almost certainly because the Government is embarrassed by the fact not only that the bill is sending the wrong signals to responsible New Zealanders by waiving $500 million but also that major technicians—the Law Society, the Chief Judge, and the New Zealand Society of Accountants—have made submissions on this legislation and all have grave concerns about it.

We had the chairperson of the Social Services Committee saying that the bill should be rushed through. This is a bill that should not have been rushed through. As the Minister in the chair, David Cunliffe, has said, it still has many imperfections in it—and the Labour Government is cutting off the debate at a time when it is very, very important. This is typical of a Labour Government that just cannot really organise anything, let alone a very important bill that deals with children.

Hon DAVID CUNLIFFE (Minister of Immigration): Some time ago I had the privilege of being the Associate Minister of Revenue, and back in those days I was involved in the Cabinet process around the early design of this Child Support Amendment Bill (No 4). I raise that because it was indeed several years ago. It is a pleasure to see the bill before the House today, but I think that nobody in the House would call that process rushed through. Rather, we commend the Social Services Committee for its thorough consideration of the submissions, and commend its report to the House. It contains a strong majority recommendation that the bill be passed forthwith.

Perhaps I could repeat my offer to the Opposition that if its members have any constructive suggestions to add as to how the problems might be resolved, then I am sure the public of New Zealand would be very interested. At the moment, the Opposition gives every impression of being a tired, hopeless Opposition, which has consigned itself to those benches opposite for many, many years to come.

JUDY TURNER (Deputy Leader—United Future): I want to refer to a couple of submissions that relate to Part 2 of the Child Support Amendment Bill (No 4). One was a submission—I think it was submission No. 3—from Robert Kilkolly who talked about the fact that the contribution made by liable parents should entail a fair and equal share of child-related expenses from both parents, by taking into account the income of both parents.

This is one of those issues that fell outside the framework of this amendment bill, but in the notes that members of the Social Services Committee got from the officials, there was a very encouraging note made on the submission to say that the very excellent Minister of Revenue has already instructed officials to consider whether recognition should be given to lower levels of shared care than the current threshold of 40 percent of nights. That is a very encouraging thing. I think it is good to note that while we are dealing right now with some recognised issues, the ongoing work on this matter is being done.

The other thing I want to talk about is the area of exemptions, which is clarified in this legislation, particularly the area of exemptions for victims of sexual offences.

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

JUDY TURNER: Just before we broke for tea, I was talking about exemptions for liable parent payments. Those people fall into two broad groups. The first group is those who are not earning income. They are “kept”, in the sense they are either in long-term hospital care or in prison and therefore unable to contribute to liable parent payments. The second group, which has been mentioned by earlier speakers, is those who have been the victim of sexual offences. I do not think anybody has mentioned the point that the last thing victims want is ongoing contact of any kind with their assailant. They do not want that person’s money or to have any information that links them to any Government department whereby their names are linked through a process by which payments are made. They want to have no contact at all. This provision acknowledges that very real requirement on the part of victims and honours it.

Part 2 tidies up a lot of bits and pieces. I mentioned earlier some concerns raised by submitters about fair and equal sharing of child-related expenses, taking into account the income of both parents. This is one of those issues where political parties, irrespective of party affiliations, should make some commitment to see that cause advanced in the future. I mentioned earlier that the Minister of Revenue, the Hon Peter Dunne, is aware that submitters raised a whole lot of extremely worthwhile issues for future consideration. He has already instructed his officials to consider whether the current 40 percent of nights threshold for child support should be reviewed. He considers that to be a very blunt instrument, and when we look at what has been happening with new amendments to the law in Australia, they are looking at the whole issue of how much it costs to raise a child and whether we should have some fixed cost that we all acknowledge is maybe age-appropriate in terms of its determination.

I want to make one point in that regard, because several submitters felt very aggrieved that as their wages went up, if they got a second job, or if their financial situation improved, the requirement by the Inland Revenue Department for their payments went up as well, and they felt very concerned about that. We should remember that we are talking about the needs of children, and, in a family where mum and dad are together, if their financial circumstances improve then the children are the beneficiaries of that improvement. When we adjust liable-parent payments to reflect improvements in income, because it should not make any difference whether mum and dad are together or are living apart, the child should be the beneficiary of those changes.

PAULA BENNETT (National): I am very keen to talk about Part 2, and must admit that I too felt a bit confused about the issue of sexual victims not being liable, and that side of things, but having had the officials explain it a bit more, I find it quite necessary in many respects and see the understanding around sex offences, for the purposes of exemptions from child support payments.

I suppose that brings up the whole exemptions thing, and it is something I have been quite surprised about in the debate. Minister Cunliffe mentioned it many times, and that is the huge amount of debt. At times the Minister was talking about $270,000, I heard him throw out. I heard similar calls about the level of debt, and I wonder why we do not ask how and why that level of debt is accumulating. That is the big question. The Minister gave the example of someone earning $30,000 who has accumulated a debt of $270,000, and in the Minister’s words that is “penalties and debt” in all fairness, and the person was in a situation of not being able to repay the debt because it was too big. But how did someone get into that situation in the first place?

I am pleased to hear that United Future is looking at addressing some of the other things in the bill, because nothing else gets to us more than just how wrong so much of it is. I cannot stand here and come up with all the answers, although Minister Cunliffe kept asking us to come up with the answers, because he seemed incapable himself. We cannot come up with all of the answers in this case, but there are far more questions raised. What came out of the submission process was a lot of extremely upset people, and one wonders how they accumulate all of that debt. A degree of them must be getting into that level of debt purely because they do not think they should pay.

The National Party wholeheartedly and vehemently believes that the department should be coming down hard on those people. In no way should they be looking at having anything written off—whether it is penalties or debt for repayment. If they believe they should not be paying, then if anything we should be coming down harder on them.

But that is not the whole picture, and that is very much how it has been painted—that everybody gets themselves into a bit of debt, and everybody who has got themselves into a bit of trouble is the bad person. We hear a bit about angry men but I can say there are some angry women out there, as well. It is across the board.

Judith Collins: They are busy being mothers.

PAULA BENNETT: They are busy being mothers. I think the big question that is not being addressed, and that I would be interested in the Minister addressing, is how we are getting into these sorts of situations and how it is that presumably quite good people find themselves in a place where they do not get the answers they need and are confused about their repayments. At one stage we heard so many examples in the submission process of someone who one week gets a bill for $3,000 and the next week a bill for $18,000 and rings up and is told that the department actually owes that person. That sort of stuff really raises alarm bells for us because we wonder how we can have people feeling like they are paying fairly.

I want to stress that what really hits us hard with this one is those people who believe that they do not have to pay. They believe they can leave a relationship and, as such, they can leave the children. They cannot, because they have an obligation and a responsibility. We will fight that to the day we die because it is something that we stand for, and we will not ever back away from it. It is about responsibility and self-responsibility. Those people who believe they should not be looking after their own, those people who believe they can be hands-off, are the ones who need to front up, and they should not have those sorts of penalties withdrawn. If anything, we should be increasing the penalties, when it comes to it.

I was looking at the administration side of things in Part 2 and amendments to the Tax Administration Act 1994, and was reading through with regard to sex offences. Before the dinner break, I note, the Minister in the chair, the Hon David Cunliffe, decided to bring up section 85I, “Use of information supplied under section 85H”. He thought he would be a wee bit funny—

DIANNE YATES (Labour): I move, That the question be now put.

PAULA BENNETT (National): As I was saying, I was quite disturbed to hear the Minister mention “trust accounts and the National Party” and what that would mean in respect of the use of information provision. I say that is absolutely appalling, because the bill talks about any information via the Inland Revenue Department. The Minister in the chair before dinner—[Interruption] Minister Benson-Pope obviously was not listening, so let me remind him. Minister Cunliffe took a call and we were talking about privacy and people’s information being safe. That is extremely important to us. Those sex offenders, those people who are sex victims, and those sorts of people—we were very concerned about their information being private, and their privacy. However, the Minister in the chair, the Hon David Cunliffe, felt that that was an appropriate time to make a crack and a bit of a joke about trust accounts and the Inland Revenue Department. I would like to say that I found it absolutely appalling, given the Act and the amendments to it in this bill that are looking after these important issues, that he should be entering into that sort of debate. It is certainly not an issue that we take lightly and we find it so important that people have their information treated accordingly, as it deserves to be treated under Part 2. Thank you very much, Mr Chairman.

Hon MARIAN HOBBS (Labour—Wellington Central): I move, That the question be now put.

Motion agreed to.

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

Ayes 71

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

Noes 50

New Zealand National 48; ACT New Zealand 2.

Part 2 agreed to.

Clauses 1 and 2

JUDITH COLLINS (National—Clevedon): I must say that in this debate I have been very disappointed in the Government. I do not believe that any of the Government members on the Social Services Committee who looked at the bill have bothered to take a call. I can say only that the Government is clearly not interested in this legislation. Government members have left it to the Opposition, and to United Future and New Zealand First—who are actually part of the Government, really—to do all the work for them. That is because, of course, the Labour Government does not really support parental responsibility.

One of the things I thought was quite good in the bill when I first saw it—I think it is good to give credit when it is due, because it is not very often I get to do that with Labour—was the promotion of the idea that the Inland Revenue Department can go in and look at situations where, for instance, a liable parent has a lot of assets in his or her control or even owns a lot of assets, or has a lot of income frozen around various companies and trusts. The Inland Revenue Department can ask how much money that man or woman actually has and whether they should be paying more than the minimum amount of about $11 a week. I thought that was quite fair, frankly, because I know of many parents, particularly women, who are sole parents looking after their children, who are working and not on the benefit—they are actually earning and receiving their own money—but who are being ripped off by former partners who are hiding behind various schemes. So I thought that was a good idea, and so did the whole of the National caucus.

Then officials from the Inland Revenue Department turned up to the select committee. We said to them that we had a submission from a woman who had given us full details of every asset her former partner owned and controlled. He had hundreds of thousands of dollars’ worth of classic cars. He had millions of dollars’ worth of property. She provided the officials, and us, with certificates of title references, valuations, addresses—she provided us with everything. We asked the officials from the Inland Revenue Department whether she would be one of those people whom we could help through this bill, because we would love to be able to do that—she is a good person, she is on to it, she is trying to do her best, but she has got that person out there who was a partner, and who is, supposedly, the father—and who needs, frankly, something I cannot say in this Chamber because I would be called unparliamentary, but he certainly needs that done to him, and I think we can all agree. But the officials said: “Oh, maybe … possibly … well, that would depend.” They gave us no undertaking that they would investigate that rotter—because that is what he is. They did not exclaim that that was exactly the sort of situation the bill provided for; they said it would be up to the commissioner.

Well, what is the point of this legislation if on the one hand we are going to write off a whole lot of debt owed by delinquent fathers and mothers and say: “Oh, it does not matter. We will just forgive that—and if you are really good we will not give you any more penalties.”? They are not going to pay. They have skipped off to Australia, anyway, and they are thumbing their noses at us, the taxpayers. According to the Government’s own figures those liable parents just in Australia owe $280 million at the moment, let alone those further afield. Then we had the Inland Revenue Department officials saying they might act—but they might not. They could not give us an undertaking that the properties this chap had—a couple of pages’ worth of them—would be looked into.

Paula Bennett: What’s this going to do?

JUDITH COLLINS: It will not do a thing. This bill is yet another bandaid to keep people happy. This bill is simply being used to buy votes. That is what is up. The bill is about saying to liable parents that it is OK and that the Government forgives them for being delinquent. It is too bad for the poor old taxpayer, and $280 million—what does that mean? Well, it is only a few billboards, frankly, under Labour. On the other hand, they are saying to custodial parents—parents who are trying to do their best—that they will do something for them. They are not going to do a thing, and that was made absolutely plain to us at the select committee.

We were really hopeful when this bill first came in. We on this side of the Chamber all gave speeches about it. We said that we had some hope for the bill. It was an attempt to deal with the really difficult situation of fathers and mothers who wish to be, basically, sperm and egg donors only, and who are, quite frankly, quite happy for every other parent to pay their way for them.

ANNE TOLLEY (National—East Coast): We are looking now at the final debate in Committee on this bill. I have to say that I was absolutely appalled to hear the Minister in the chair, David Cunliffe, say during earlier parts of the debate that the bill is not perfect. That is an appalling confession for a Minister to make. He has been in Government for 7 years, and this child support bill affects thousands of New Zealand families. For a Minister to stand in this Chamber and say that the Government accepts that it is not perfect but, hey, it is better than nothing is not good enough.

When I look at the history of the legislation, I see that it really has not had a good review since 1994. I know that the Labour Government fiddled with some of the child support income levels in 2002, but when the weight of submissions to the Social Services Committee were arguing about some of the fundamental basics of this bill, and when the Government has done nothing to address those concerns for 7 years, for the Government to bring a bill to the House that the Minister confesses is not perfect is appalling. But perhaps we should not be surprised. In fact, I got the impression at one stage that he was imploring the Opposition to put up some sensible amendments to try to make the bill perfect. Of course, that is not our job, and this Government has had 7 long years to do something.

I want to come to a couple of the points that were made in the select committee that relate specifically to the title of the bill. The first one is about the definition of “parent”. We heard a lot in the select committee about parents. We think of them as being mothers and fathers. Mr Kilkolly brought a petition to Parliament, then came and spoke to the select committee. He talked about the concept of shared parenthood, which seemed to be a novel thing for anyone looking at the bill to consider. He mentioned Australia, which is not too far away, which considers the income of both parents. I think he made some very good points about the definition of what a parent is or should be.

The other point, which was made by many submitters, that relates to parents and their liability to look after their children is the ability to prove whether one should be liable. Many of the men said they would like to be able to take a paternity test, because they disputed that the children were theirs. Under the current legislation, the child’s mother can block the taking of a paternity test. Here we have people who are being held liable and accountable by the State who are not able to prove or disprove that liability.

Finally, there are the exemptions for some parents, which I mentioned earlier—for those who are youngsters and at school, which allows them to finish their schooling, and for victims of sexual assault. There is a great deal left undone around the definition of “parent” and parenting, when we talk about child support, that this bill could have addressed and does not.

The main purpose of this bill is to allow for the write-off of half a billion dollars of debt owed by liable parents of New Zealand children. That is an extraordinary amount of money to wipe off the slate. The premise for doing that, we are told, is to encourage people to start paying their child support. I have discussed that philosophy at length in this Chamber. It completely escapes me how the Government can say to people that if they do not pay their child support, and amass debt, then the Government will write it off.

Dr PAUL HUTCHISON (National—Port Waikato): Thank you, Mr Chairman, for the opportunity to speak on this Child Support Amendment Bill (No 4). This is the final debate in the Committee stage, as my colleague mentioned. The officials sent us a summary of what this bill is about, which stated that it amends the Child Support Act 1991 and that one of the principal changes is to write off penalty debt. We are aware that the fundamental reason for the Child Support Act 1991 was to ensure parental responsibility for the support of their children.

Here we have a Labour Government writing off at least half a billion dollars. There is a certain irony about this. Here, on the one hand, it is writing off half a billion dollars that should have gone to children, and, on the other hand, it is refusing to pay $500,000 that it should have paid for a pledge card. It is absolutely outrageous. Minister Cunliffe said that this was a very hard problem and that his Government was honestly trying to do something about it. “Yeah, right!”, said one of my colleagues.

Mr Cunliffe went on to say that the solution is not perfect. As I pointed out in the debate on Part 2, I keep hearing from submitters and liable parents all over New Zealand that the governance and mechanisms of collecting support in New Zealand are an absolute shambles. I described how one individual was told one day that he owed $270,000, then 24 hours later was told it was $3,000, then 24 hours after that was told that the case manager looking after him had gone on holiday and that he would have someone else allotted to him, but at a different call centre at the other end of the country. I keep hearing this sort of thing all the time. Surely, the Labour Government should put its own house in order before it writes off half a billion dollars of taxpayers’ money.

It was very relevant to me that the technical practitioners who were involved with this bill had grave reservations about it. That included the New Zealand Law Society, Principal Family Court Judge Boshier, and Judge A P Walsh. I will go over again what Judge Walsh had to say with regard to the question of the departure from formula assessment child support initiated by the commissioner: “After reflecting on the whole scheme of Part 6B, I am left with the impression it will be effectively a toothless provision.” That is what he thought about it.

This is a bill that the Labour chairperson of the Social Services Committee, Georgina Beyer, said we ought to rush through, and the Government cannot even get the fundamentals right. A technician like Judge Walsh said that he was left with the impression that the bill would be effectively a toothless provision. He said in that context: “I note that the creation of family trusts and the incorporation of companies are now routine procedures for minimising income tax liability,” etc. He stated: “While there may well be numerous legitimate procedures adopted by a liable parent to achieve those ends, the strategies and devices employed end up benefiting a liable parent when it comes to payment of child support.”

Judith Collins: I raise a point of order, Mr Chairperson. Can I just check whether the Minister’s microphone is live, because during the speech from my colleague Dr Paul Hutchison, which I did not want to interrupt, the Minister was making comments from time to time. They were quite loud, and I am sure they were contrary to the Standing Orders.

The CHAIRPERSON (H V Ross Robertson): I can assure the member that my finger was on the button and that the microphone was not live.

Dr PAUL HUTCHISON: I want to finish off this point, because I think it is very important when professional technicians comment adversely on a very, very important child support bill that is being rushed through in this untimely manner. Judge Walsh went on to state: “If the proposed provisions remain, I can see the whole process being undermined by the court and being effectively hamstrung through a lack of information that is otherwise available to the commissioner.” That is what he said.

Practitioners from the family law section of the New Zealand Law Society said they saw some positive things about the bill. I will not hide from what they said. They said the bill “has a number of positive features including the exemptions in Subpart 2 for hospital patients and prisoners … Other sensible provisions are … the arrangement for offsetting where there is shared custody and the inclusion of priority payment for the qualifying custodian when he or she is not in receipt of a benefit.” But they go on to criticise the bill. They criticise it, in my view, in a very serious way. They say, for instance: “It appears that the new process whereby the Commissioner is able to initiate a review will not be any better, since the qualifying custodian will not be entitled to information about the liable parent unless the Commissioner received that information after the review was commenced.” They further submit a whole raft of concerns that have not been addressed by this Labour Government.

Finally, I will just make a comment on what the Institute of Chartered Accountants of New Zealand had to say about this bill, which is being rushed through by this Labour Government. It is a bill that affects children, and the Government says the primary purpose of the bill is to ensure parental responsibility for the support of their children. What does the institute say? Its submission states: “In any event we have serious misgivings with the proposal as currently drafted in the Bill, both with the law and the practical and administrative implications. It is too wide, provides no objective test, does not clearly specify the purpose, and provides inadequate controls and safeguards.”

This bill, as I have said, is very important. It is a bill National would have liked to support if it could, but it has been rushed through thoughtlessly by a Labour Government that put it up as a bit of an election bribe. The bill has wound up as custard in the faces of Labour members as, on the one hand, they merrily go about waiving $500 million of taxpayers’ money and, on the other hand, refuse to pay $500,000 that they should be paying back for a pledge card.

PAULA BENNETT (National): That was an excellent speech by Dr Hutchison. He made some amazing points and I will not repeat them, because I do not think I can do them justice. I am going to come up with a couple of other points I want to address in regard to the Child Support Amendment Bill (No 4).

We listened to the submissions and looked at this as a case, and a point that National members would like to make is that most parents are good parents. Most parents, whether they are the fathers, the mothers, the caregivers, the grandparents, or whoever they are, actually want to do what is best for their children. Most parents, when they find themselves in the incredibly emotional and distressing time of having a relationship or marriage break-up when children are involved, want to do what is right by the children.

Judith Collins: And most do.

PAULA BENNETT: And most of them do, too. We really need to make that point, because tonight we have been hearing a lot about the other kind of parent.

If I were to make a point to the two people who are listening out there in radioland, I would say that if people were to find themselves in the situation of a relationship break-up and having to decide custody, liability, and money, then wherever possible they should try to keep the State out of their affairs. They should try to keep the State out of the decision-making process. If people can make those decisions amicably and come to an agreement that is best for their children, then we certainly support them having that responsibility and being able to do that for themselves. What we have here is a bill for a lot of those people who cannot do that.

In many cases a relationship has broken down even further, and in those cases it is really clear that a few people do not think they should have to pay. Those people may be withholding money as an emotional and financial bribe.

Judith Collins: Or bullying!

PAULA BENNETT: And bullying. Financial control is used detrimentally in such situations, there is no shared responsibility, and those people do not believe they should be paying. Why on earth would we be thinking about writing off any penalties for them? How have those people got themselves into that position of debt? Those few people are in that position because they do not believe they should have to pay.

National members believe that, if anything, we should come down harder on those people. About 3,000 liable persons currently owe penalty debt only. We are not asking why they owe that penalty debt. How have those people got themselves into the situation of owing hundreds of thousands of millions of dollars? We should be concerned about that situation, but it is not even addressed in this bill. We do not actually look at the problem. What we are looking at in this amendment bill is a bit of a fix for those who owe too much money so that we might be able to get a few of those dollars back.

There is something fundamentally wrong with the whole philosophy surrounding this issue. There is something wrong when we are letting those few bad ones off and letting them go. Most people do not do that, and that is something we need to remember. National members do not agree with writing off about half a billion dollars in unpaid penalties owed by liable parents. They have that debt for a reason. They have an obligation and a responsibility, and, if anything, we believe that the Government should be getting those people. Is the bill sending the right message? Is that the question we are asking out there? We talk a lot about this being about the children and about it being a cross-party issue that everyone in here cares about. But are we really sending that message when we look at a bill like this?

This bill does not sufficiently protect responsible parents and their children from those liable parents who hide assets and income in order to escape their obligations. It is on that basis that I am appalled, and we certainly will not be supporting this bill. Thank you, Mr Chairperson.

The CHAIRPERSON (H V Ross Robertson): I know the previous speaker is a new member, but I suggest she looks up Speaker’s ruling 45/2. The discussion is directed to the Chair and members in the Chamber, not anybody else.

BARBARA STEWART (NZ First): On behalf of New Zealand First it is my pleasure to take a call in this debate. We believe that this is a very important bill. This bill is essentially about supporting children. We always say that children are our future and they deserve the support of both of their parents. Therefore, it is essential to ensure that liable parents meet their financial obligations towards their children. We want to ensure greater compliance than there currently is. We are very aware that non-payment of child support is a very serious issue and, of course, the State picks up the responsibility for those people who do not pay.

Judith Collins: You mean the taxpayer, Barbara.

BARBARA STEWART: The taxpayer picks up that cost and ensures that parents receive some money to look after their children. So really we are saying that measures need to be put in place. We want the taxpayers’ liability reduced. We realise there will always be challenges with any bill that deals with this type of issue and we want to see genuine action taken, as this bill is attempting to do. We want to encourage parents to pay their child support. We note that there is an incentive that includes the writing off of certain debt payments for parents whose payments have lapsed, but parents must still pay the arrears they owe, including some of the penalties. We believe that only limited relief is offered here and we understand too that there is provision for reviewing this if liable parents default on their obligations.

We acknowledge that basically parents are financially responsible for their children. We know that parents are skipping the country and not paying, and this is an attempt to ensure that some of those lapsed parents get back on track. We want to increase the compliance rate of parents who fail to meet their child support responsibilities. We do not want the State to have a greater bill. We know that parents have a collective responsibility for their children. It is always a challenge when parents structure their financial affairs to reduce their personal incomes and their financial liabilities. It is a shame that in these instances the loser is always the children.

I hope that this bill will encourage lapsed parents to re-enter the system. We need to get them back into the system. This may be one way to try to ensure that liable parents re-enter the system. We believe that this is a first measure. It is a genuine attempt to take some action on this issue. New Zealand First will be supporting this bill.

Dr JACKIE BLUE (National): I rise to speak on the title of the Child Support Amendment Bill (No 4), but I actually think it is the wrong title. It should probably be the “Let’s Discourage Good and Responsible Parents and Let’s Support the Irresponsible Parents Bill”.

Judith Collins: That’s it.

Dr JACKIE BLUE: That is right. The Minister in the chair prior to the dinner break, the Hon David Cunliffe, spoke and he admitted, as my colleague has just mentioned, that it is not a perfect bill. He was absolutely right; it is very imperfect. As my colleague Paul Hutchison said, it was too rushed, it was not thought through, and it was not well prepared. I was appalled when, before the dinner break, the Minister made veiled threats to my colleagues on this side of the Chamber. I was very disappointed to hear those veiled threats. I thought a Minister would be above such comments, but clearly I am wrong.

Paula Bennett: Not a Labour Minister.

Dr JACKIE BLUE: Yes. This bill is a patch-up job. Although I did not have the opportunity to sit on the Social Services Committee, from reading through the bill I was very concerned about the timing. The timing was very interesting. I understand that in 2000 the total debt owed by parents was $400 million, yet by August 2005 it was up to $1 billion. That was a huge jump, and suddenly this Labour Government had to act, and a month or two before the election rushed legislation was introduced into the House. We have to ask why that was the case—why Labour had to rush this legislation through. Was it embarrassed that that debt had grown so hugely over ensuing years? Was it an election bribe, or was it vote-buying?

Judith Collins: I think it was votes for cash, wasn’t it?

Dr JACKIE BLUE: It could have been. It could have been a combination of all the above. But I am not making any apologies: I will be saying how disappointed I am that this bill has come to its final reading stage. National has a number of concerns about this bill, and we do not believe that it will do what it says—that is, turn irresponsible parents into responsible parents. I mentioned a number of concerns in my earlier speech, and I will mention them again because they are important.

We believe that this bill is flawed and simplistic because it is not a magic wand that on being waved will make parents who have not been paying child support suddenly become responsible. I say that because half of the parents who owe that debt are living out of New Zealand. If they have left New Zealand, I ask whether they are responsible parents. They have removed themselves geographically from where their children are, and that would tend to suggest they do not want to have the responsibility as parents to bring those children up and be close by. With half the debt being owed by parents living overseas, I do not believe that, because of this bill—which allows parents to have a deal with the Government in order to pay the money back—those parents will suddenly rush over the Tasman, sign up to a contract, and start paying the money back, when they have not done that to date. I think this bill will fall down in that particular area.

This bill sends the wrong signals. With it the Government discourages all the responsible parents, who have been paying their child support upfront, on time, and in full—who have been doing the decent thing by their children, by society, and by themselves—and rewards the irresponsible parents, who do not want to pay their child support, who have moved out of New Zealand, and who do not really show any responsibility. At the end of the day it will not be legislation that changes those parents, or those future parents, who do not want to have responsibility for their children. I agree with all the comments from all my colleagues on all sides of the Chamber that we want strong families and we want parents to nurture and bring up their children, but legislation and nanny State will not do it.

The bill also sends the wrong signal in terms of fairness. This bill is not fair to other groups in the country. This Government is applying retrospective legislation to irresponsible parents who do not want to front up, but what about all the other groups in this country who have been paying up, who have been paying their taxes and GST, and who have been doing the right thing? What about the family that has got behind in its mortgage repayments? Will this Government rush to its aid by passing retrospective legislation, or help pay that family’s bills? I mentioned a health group I have met with, which has struggled. It is a non-governmental organisation in the mental health area that is struggling, and it has got behind in its tax bill for no particular reason.

JUDY TURNER (Deputy Leader—United Future): I rise to speak to clauses 1 and 2. In terms of the naming of this bill, I suspect that the only other title I could suggest is the “Additional Resources for the IRD to Catch Liable Parents Amendment Bill”. It is not too late for the Minister in the chair, Mr Benson-Pope, to take a call on this. The one question I have for him is: with the new role of the commissioner that allows him or her to make determinations regarding an inquiry as to whether a liable parent is paying the right amount, will additional resourcing be given to the Inland Revenue Department? I think all of us in the Social Services Committee were moved by stories of parents who knew full well that items that appeared on business returns as “plant” were often toys for the enjoyment of liable parents—and they were not declared. Those parents, through business mechanisms, were able to conceal their true incomes and pay the absolute minimum rate as liable parents. Those stories were very compelling.

What this bill does—and what I was just referring to when I wanted to rename the title of the bill—is give the Inland Revenue Department the opportunity to investigate when it suspects that parents are short-changing their children on the matter of child support. But for that to work, and for this amendment to be implemented, one would have to assume that the Inland Revenue Department is going to add some additional staff to its current staffing levels in order to be able to police the provision, so that the commissioner has some evidence and is able to instigate an investigation. The legislation will require additional resourcing. So although United Future is supportive of this bill and believes that it is very, very important to create a place where liable parents who have got behind in their payments can approach the department and negotiate a point of return to a place where they are making contributions and dealing with the debt they have—this bill creates that legal opportunity for them to do that, and we support that completely—we do have a concern. I call on the Minister in the chair to answer the question about whether the department plans to add additional staff to, and put resourcing into, the Inland Revenue Department so that the important level of investigation can happen and the commissioner is able to intervene when necessary.

DIANNE YATES (Labour): I move, That the question be now put.

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

Ayes 71

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

Noes 50

New Zealand National 48; ACT New Zealand 2.

Motion agreed to.

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

Ayes 71

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

Noes 50

New Zealand National 48; ACT New Zealand 2.

Clause 1 agreed to.

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

Ayes 71

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

Noes 50

New Zealand National 48; ACT New Zealand 2.

Clause 2 agreed to.

Bill to be reported without amendment presently.

House resumed.

The Chairperson reported the Employment Relations Amendment Bill with amendment, and the Child Support Amendment Bill (No 4) without amendment.

Report adopted.

Bills

Standards and Conformance Bill

Second Reading

Debate resumed from 30 August.

Hon LIANNE DALZIEL (Minister of Commerce): I thank my colleague the Minister of Justice for moving the second reading of this bill on my behalf. It is certainly very pleasing to see the progress of such important legislation, and I thank the Commerce Committee for the work it did on this bill. I also thank the submitters, because there was a significant number of submissions in terms of legislation that was quite narrow in its construct.

Since the time the bill was introduced into the House I have released a discussion document on the review of the standards and conformance infrastructure. I should say that it has been very well received by those who realise just how important standards and conformance are to individual businesses, but, more important, to the economy as a whole. I would say, particularly for businesses in export markets, New Zealand’s standards and conformance infrastructure is extremely important.

This bill itself represents an important first step towards improving New Zealand’s standards and conformance system, and I believe that its key role is the fact that it will clarify the roles of the Standards Council and the Testing Laboratory Registration Council and improve their efficiency and effectiveness. It is important to New Zealand that these institutions maintain their high international reputation.

To help achieve this, the bill is designed to clarify that the Testing Laboratory Registration Council does not have the ability to accredit certification bodies. It confirms that the council does have the ability to accredit inspection bodies. It makes the council’s provision of certification services discretionary rather than mandatory. It clarifies and expands the scope of the Standards Council’s functions to include the preparation of codes of practice, handbooks, specifications, and other material currently produced by international standards development bodies, and it improves the nomination processes for appointments made to the Standards Council.

The bill also contains a number of minor and technical amendments. On that basis I commend what is, in fact, a rather technical bill to the House.

Hon Dr NICK SMITH (National—Nelson): Standards New Zealand was created in 1932, in the wake of the Napier earthquake, as part of establishing a national building code. I put it to the House today that the leaky homes disaster affecting 15,000 homes is on an equal scale of calamity to that earthquake and should trigger not just the tinkering that is in this bill but a major restructuring of Standards New Zealand. Things went wrong in 1988 when the Government, at the height of Rogernomics, removed all State funding for Standards New Zealand, unlike standards authorities in Australia, the UK, Canada, and the US. The implications of that, combined with other State sector reforms, are that Standards New Zealand’s technical committees have become dominated by commercial interests, and the consequence of that for consumers has been a disaster.

This evening I want to expose just how rotten things have become in the timber industry. The mischief began in 1995, when timber industry advocates persuaded Standards New Zealand, against the advice of the Forest Research Institute, to allow untreated kiln-dried timber. Let me make it plain that untreated timber is not the only cause of leaky homes. Other causes, like poor design, sub-standard construction, and inadequate inspection, also played a part. However, the scale and cost of the problems would be only a fraction of what they are had all those homes been constructed of treated timber. The Government made the right decision, despite vehement industry opposition, to require full treatment in 2003. The new standard 3640 required framing timber to be fully treated, and the key words in that standard are that the treatment must fully penetrate the sapwood.

The subsequent attempts and tactics by some in the timber industry, firstly, to get around, secondly to fudge, and now to change the requirement for full timber treatment have me very concerned. The new timber treatment standard was first got around by the now-defunct Building Industry Authority, in 2004, approving a surface-only treatment known as T1.2. That had several major problems. First, the alternative solution mechanism was never intended to override the standard and was intended only as an exceptional circumstance. Second, the product was cunningly marketed as T1.2 and misrepresented as being the same as the H1.2, or fully treated, complying product. Third, the conditions of its use were impractical and not followed. Nor was the testing and trial of that surface-treated product nearly robust enough to replace 50 years of experience with the fully treated boron timber product.

After those concerns were publicly highlighted by scientists, certified builders, building certifiers, building consultants, and myself last year, the product collapsed. The public did not want a product that did not comply with the new standard. The aftermath of that episode is that Dr Wakeling and myself face a $16 million writ each, and that the chief executive officer of the Certified Builders Association was pushed out, after industry pressure over his public statements, which were similar to ours.

Another new product, Tru-Core, was also launched at about the same time. Today it is marketed and widely sold as a product that is compliant with the new timber treatment standard. Tru-Core, unlike T1.2, claimed it complied with the H1.2 standard. Again, it sought to avoid the traditional pressure treatment process by a process involving a spray-on, and then a heating, of the boron. In March I received a copy of a report written by scientist Dr Robin Wakeling, showing that of 120 samples of the Tru-Core product, taken from stores in Whangarei, Rotorua, Palmerston North, Feilding, and Taupō, 88 percent of them failed. I wrote to the Timber Preservation Council, questioning what it intended to do about that deeply concerning report. It said it would do nothing and, further, it refused to disclose to me its test results concerning the compliance of that Tru-Core product, saying, for goodness’ sake, that they were commercially confidential.

I also want to draw to the attention of this House the fact that when test results on the Tru-Core product were first reported by Veritec—and that is a Crown research institute—they showed 100 percent penetration of the timber on all the samples. It was later found, on questioning, that Veritec had found anything but 100 percent penetration of those samples, as required by the standard. In fact, across a 50 millimetre cross-section of a typical timber member, penetration ranged from only 3 millimetres to 9 millimetres, with an average of just 5 millimetres. The explanation by Veritec of why it had reported the results in that way, which was that that was what the industry had requested, raises very serious questions about the integrity of that Crown research institute’s reporting of laboratory test results.

In June the Building Industry Federation’s chief executive sought a meeting with me, because the federation had seen the Wakeling report on Tru-Core timber. He advised me that the federation had sighted a further report from another scientist, Neil Mora, an employee of AgriQuality, that confirmed Dr Wakeling’s concerns. He agreed to arrange a meeting between Mr Mora and myself. A week later the American company behind Tru-Core, Kop-Coat, had Russell McVeagh serve another set of writs on Dr Robin Wakeling personally for doing no more than testing the product for compliance with the standard and informing relevant bodies of the concern. Not surprisingly, Mr Mora, the AgriQuality scientist who had similar test results to Dr Wakeling’s, has subsequently decided not to allow his test results to be available because he, too, feared receiving writs for millions of dollars. It is that sort of heavy-handed silencing of scientists and stonewalling, citing commercial sensitivity, that leaves me feeling uneasy about whether houses today are being built of treated timber of sufficient quality to last.

A further dimension to the issue is the bid by Kop-Coat, the owners of the Tru-Core product, to water down the timber treatment standard and allow timber that is surface-treated with boron for hazard class 3 uses. On 11 May of this year the technical committee of Standards New Zealand had a vote on that matter. Two men, Neil Mora and Paul Oliver, voted against the change, which meant that it failed. In June, those two members were sacked, as a consequence of industry pressure. Standards New Zealand then, by a unanimous vote, agreed on 18 August to that amendment to water down the standard, making a complete mockery of the standards process.

In a surprising move, the department issued a press release on 21 August, distancing itself from the new standard and stating it was not satisfied that the product met the requirements of the building code. I suspect that the department, too, feels distinctly uncomfortable about that process. The Certified Builders Association, rightly, issued a press release last week, stating it was “infuriated” at the situation whereby the Department of Building and Housing and Standards New Zealand had different views on whether the surface-treated timber was OK. The Minister of Commerce, Lianne Dalziel, has stated that changes in the standard would be made only by consensus or, on rare occasions, by an 80 percent vote. That has not occurred in respect of this amendment. At a time of huge sensitivity over timber treatment, we have two Government agencies saying different things. The message to homeowners and builders, 4 years after the whole issue of rotting homes broke, is that we still do not have our act together as to what is required with regard to timber treatment.

To summarise, a new timber treatment standard was adopted in 2003 and we have had repeated efforts to get around it, to fudge it, and now to water it down. We have had multimillion-dollar writs flying, scientists who are fearful of speaking freely, standards committee members being fired because they opposed lesser standards, Crown research institutes producing grossly misleading laboratory test results, and Standards New Zealand and the Department of Building and Housing at odds over what is required.

I put to this House that our building industry deserves better than that mess. Questions need to be answered. A fresh, new look needs to be taken at our building standards—how they are set, who funds them, and how they are enforced. That is the key to regaining public confidence in the $13 billion a year building industry. This bill will not do. Far more substantive reform of Standards New Zealand is required.

I seek leave to table a number of documents that I referred to in my speech. The first is a report on the testing of 120 samples of the Tru-Core timber product that was produced by Dr Robin Wakeling and submitted to the Timber Preservation Council.

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

Hon Dr NICK SMITH: The second set of documents are both my letter to the Timber Preservation Council about that report and the council’s response, refusing to release its test results.

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

Hon Dr NICK SMITH: The third document I seek leave to table is the report from Veritec, which is a subsidiary of Scion, formerly the Forest Research Institute, which shows quite misleading test results on those timber samples.

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

BRIAN CONNELL (National—Rakaia): The report of the Commerce Committee stated that the key “objective of the bill is to ensure that international and domestic confidence is maintained in the standards and conformance infrastructure.” The Government and the institution of Parliament form part of New Zealand’s infrastructure, so I want to take time this evening to examine the standards this Government has set itself and its conformance with them. The first standard was set in 1999 in the Speech from the Throne, when Helen Clark stated that her Government would “restore public confidence in the political integrity of Parliament and the electoral process”. So how has the Government shaped up in the standard of the electoral process? “Not achieved” or “failed miserably” would be a kind interpretation. “Stole $882,000 from the public purse” would be a more accurate description. “Lowered standards to an all-time low”—

Maryan Street: I raise a point of order, Mr Speaker. Can you assist me as to whether this speech is in any way related to the legislation before the House? If it is, how so? If it is not, should it be continuing?

BRIAN CONNELL: I was quoting specifically from the commentary on the bill, where it states that standards and conformance are about the infrastructure of New Zealand. I am talking directly to that point.

The ASSISTANT SPEAKER (H V Ross Robertson): I say to the member that his speech must be relevant to this bill. It is not a general standards debate, but relevant to this bill.

BRIAN CONNELL: Well, I was quoting directly from the bill when I raised that point.

The ASSISTANT SPEAKER (H V Ross Robertson): I have made the ruling.

BRIAN CONNELL: Before I was interrupted unnecessarily, I was saying that this Government has lowered the standard to an all-time low, and that is how this standard will be scored in my scorecard, and in that of the public of New Zealand. Now Government members want to do something even more cynical. Rather than conform to the standard, they want to change it by retrospective legislation. So if that was a baddy, let us see how the Government goes against the standard on the integrity of Parliament. Members in the last Parliament remember a Minister called John Tamihere, who was convicted of fraud. He forgot to pay tax on a golden handshake—[Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): The member will be seated; I am on my feet. When I point to the bill, I want the member to speak to the bill. Thank you.

BRIAN CONNELL: I am happy to speak to the bill; I am speaking to the bill on the part that states “integrity of Parliament”. I am comparing the Government’s performance against that standard. The police had a prima facie case against David Benson-Pope—members might recall that.

The ASSISTANT SPEAKER (H V Ross Robertson): I say to the member that this bill is not concerned with electoral standards or parliamentary standards. It deals with functions of the Standards Council, which has no responsibility for elections or parliamentary standards. They are two different issues, and I would ask the member to come to the bill.

BRIAN CONNELL: I raise a point of order, Mr Speaker. I am speaking directly to this bill, because the commentary specifically states that one of its objectives is to deal with the infrastructure of New Zealand. The integrity of this Parliament is a key component of that infrastructure, and I think I am entirely at liberty to speak about it.

The ASSISTANT SPEAKER (H V Ross Robertson): The member has been here for some time now. He is an experienced member, and he knows better. This is his first yellow card.

BRIAN CONNELL: Thank you for your direction, Mr Assistant Speaker. I refer the House to clause 7(5), which allows for the Minister to direct the Standards Council to perform any function that the Minister sees fit. I am sure you cannot yellow card me, Mr Assistant Speaker, for raising concerns about having a member of the Government with that type of unfettered power, particularly when that Government has a record of lowering standards in this House. That is something that is a legitimate debating point.

But I will move on to something else that concerns me and my party deeply. My party will not be supporting this bill, for a number of reasons. I have already articulated some of those reasons, and I know that Government members do not like the truth being rammed home to them, but it is the truth nevertheless. What concerns my party most is the lack of rigour around compliance analysis in this bill. The business compliance cost statement accompanying this bill lacks detail. Lianne Dalziel, the member who introduced this bill, said in the House a few days ago that she is a believer in full disclosure. Well, it is a pity she did not make that comment to David Parker or Taito Phillip Field at some stage. When she drafts the regulations, she should give those members a hand-delivered copy.

What bothers me most about the analysis is that it is simply woeful. The compliance statement in the bill states: “The implications of this are difficult to assess.” We have a Minister who was on her feet in this House saying she believes in full disclosure of compliance costs, yet she tells us that the compliance costs are difficult to assess. The statement continues: “If other countries do not have confidence in the New Zealand system for the accreditation of certification bodies, New Zealand exports in a range of sectors, including the food, building, financial services, tourism, and education sectors, could be negatively affected.” That is how important it is, but we are told in the compliance report that the implications of this bill are just too difficult to assess. That level of analysis is astounding.

Maryan Street: It’s streets ahead of yours!

BRIAN CONNELL: It is astounding because an economics student, even one as poor as the member who is blabbing her mouth off at the moment, would know better than to put into a bill the statement that compliance costs are just too hard to assess. Even the most fundamental matters of this bill, such as the increase in fees that the two certification bodies will face following the transfer of powers from International Accreditation New Zealand to the Joint Accreditation System of Australia and New Zealand, are not identified. Why are those things happening if it cannot even be identified what they are? Why is an increase even necessary? Is it the cumulative effect of the hidden compliance cost in a bill of a technical nature, just like this one that hit out at small businesses? Compliance costs in this country are driving businesses to the wall. When the Minister responsible for this bill has an opportunity to demonstrate that she is on top of the bill—and when she has a statement and a commentary on the bill that says it is critical to maintaining confidence in New Zealand’s infrastructure—she says, despite her rhetoric to the contrary, that the compliance costs are too hard to assess.

In a speech to the Business Roundtable, Lianne Dalziel promised that regulatory impacts analysis would become fully integrated into the policy development process, and that means clearly identifying the objectives. Well, has that been done in this bill? No. Does this bill consider any existing regulatory frameworks, does it set out options, making a risk and opportunity check, and always asking whether the response is proportionate? Well, it is all very fine rhetoric, is it not, but when push comes to shove the Minister’s response has been woeful. Not one member of the Government who has taken a call on this bill will be able to contradict me, because the Labour members on the select committee know I am correct.

There is something else that bothers us. I am looking again at the commentary on this bill under the heading “Committee consideration”. The commentary states: “Issues raised by submitters related to compliance costs,”—I have covered that—“appointments to the Standards Council, clarity of accreditation and certification roles, and the transitional provisions. We are satisfied that the bill addresses these issues, and do not recommend any amendments.” That is simply not true. The House cannot accept that, when the National Party has a minority report in the commentary that specifically states that it does not agree and is not satisfied that the compliance costs of this bill have been satisfactorily addressed.

Hon Rick Barker: Get a haircut and get a real job!

BRIAN CONNELL: Sober up, Minister.

Hon Rick Barker: I raise a point of order, Mr Speaker.

Mr DEPUTY SPEAKER: I will hear no point of order from you, thank you. Sit down, please.

BRIAN CONNELL: Exactly—if the member does not like it, he should not give it. [Interruption] The member is in his seat now, and we are grateful for that. What we need him to do now is zip his mouth up.

I will conclude by saying that the National Party simply cannot support legislation that has not gone through a due process of compliance analysis. This bill falls woefully short of that standard—it does not matter which way one does the analysis.

Maryan Street: That is absolutely pathetic—just pathetic. Talk to your own colleagues.

BRIAN CONNELL: Mr Deputy Speaker, are you going to allow that type of personal attack? I am a sensitive new-age guy; I am not sure I can handle it. [Interruption] Judging by the way the member walks in here, I can tell he has obviously been in a place where he should not have been for a long, long time. While he is here he makes very personal comments, and you are letting it go by. I am deeply offended, Mr Deputy Speaker—deeply offended.

BARBARA STEWART (NZ First): On behalf of New Zealand First I rise to support the second reading of the Standards and Conformance Bill. I must say that it is a real pleasure to follow a member like Brian Connell. He is erudite and intelligent—but in this case he is totally wrong.

It is very important in today’s world to be aware of the necessity to have complete confidence in all of the products we purchase, particularly those we export. One way to do that is to ensure we have product conformity—products aligned to an internationally recognised standard. It is only by a product having conformance to an internationally recognised standard that we can be assured of the product’s consistency. Of course, all of our overseas customers increasingly want this, so it is important to ensure that confidence is also maintained in the standards and conformance infrastructure. We need to have one standard if we are going to have a standard at all.

It is really pleasing to see that the Joint Accreditation System of Australia and New Zealand will continue to have the role of registering certification bodies here in New Zealand. We need to set standards that cannot afford to be compromised. Prior to coming to Parliament I was closely involved in ensuring that international standard ISO 9002 standards were maintained in my workplace—those standards were administered in those days by Telarc—so I am very aware of the importance of compliance in one’s work. Any business that wants international accreditation for its products is very aware of the compliance costs for that. I must say that these costs are very often a part of doing business overseas and locally, and they are costs that one must know totally all about before entering into the compliance area.

As the Minister explained, the bill aligns the functions of the Testing Laboratory Registration Council, and the Standards Council, with international standards in conformance, norms, and practices. Because of the importance of our standards and conformance infrastructure to New Zealand’s trade, health, safety, and environmental objectives, it is absolutely essential that we get the process right. As these international norms and practices have evolved over time, our legal framework has basically not kept pace. This bill brings us up to speed.

In particular, international practice requires that only one body in any country has the function of registering certification bodies. In essence, we have ended up with two—the Joint Accreditation System of Australia and New Zealand, which is a joint trans-Tasman body with genuine international standards, being a member of the International Accreditation Forum, and the Testing Laboratory Registration Council, which still has this function as a result of the 1972 legislation. This bill removes the function of the Testing Laboratory Registration Council for registering certification bodies. It gives that body the function of registering various types of conformity assessment bodies, except for certification.

The Commerce Committee, I read, received seven submissions and heard only three submitters. Issues raised included compliance costs, appointments to the Standards Council, clarity of accreditation, certificate roles, and transitional provisions. New Zealand First notes that the report states that the committee is satisfied the bill addresses these issues, and the committee has not recommended any amendments.

One issue is of concern to New Zealand First, and that is the point expressed in National’s minority report. New Zealand First has always resisted provisions and objectives to promote social responsibility. We are very aware that this type of provision is difficult, if not totally impossible, to implement and then to audit against—hence our policy and our legislation around the principles of the Treaty of Waitangi. So New Zealand First will be scrutinising the provisions to increase the Standards Council’s objectives to promote sound responsibility. We support the bill and look forward to seeing it go through its various stages.

TE URUROA FLAVELL (Māori Party—Waiariki): Tēnā koe, Mr Deputy Speaker. Kia ora tātou katoa. As this bill has moved up the Order Paper, a release issued from the Australian Government’s Department of Health and Ageing described the commitment of both Governments to the establishment of the Australia New Zealand Therapeutic Products Authority. Then last week the Associate Minister of Health Peter Dunne went to Sydney and Canberra, I am told, to discuss the development of a national medicine strategy for New Zealand—a New Zealand strategy, in Australia. This new bill—third strike lucky—is yet another attempt at a trans-Tasman relationship. But for the Māori Party it is third strike out.

As with many bills of this nature, this bill initially appears to be merely a technicality. It amends the Standards Act and the Testing Laboratory Registration Act to improve the efficiency of the Standards Council and the Testing Laboratory Registration Council, or Telarc. It also transfers authority to register certification bodies in New Zealand from Telarc to the Joint Accreditation System of Australia and New Zealand. Well, that all sounds very good. The Māori Party, as the independent Māori voice of this Parliament, is absolutely committed to standards being protected, maintained, reviewed, and improved. So the proposals to improve the efficiency and effectiveness of councils are welcomed.

But many questions arise. The bill guarantees that a standard is set and met, but there is no guarantee of a quality focus. Technically, conformance to standards does not in itself guarantee a quality standard or improvement. But the bigger question that has been exercising our minds is the context of the Government’s programme of strengthening trade between New Zealand and Australia. This is a major area of debate that we as a nation need to be having. What will the nature of the relationship between the two jurisdictions be? What capacity will our Government here in Aotearoa have to retain our own independent processes of review of our domestic standards and protocols?

A number of the submissions to the Commerce Committee, as I understand it, raised the irony of the bill going through before the Ministry of Economic Development’s review of New Zealand’s own standards and conformance structure is completed. Indeed, a number of the submitters, including the Construction Industry Council, are of the view that given that nothing in the bill requires urgent attention, it would have been prudent to wait until the recommendations from the ministry’s review were known before proceeding.

But there is another element, of course, to the trans-Tasman relationship that the Māori Party wishes to raise in this debate, and that is the aspect of consultation with indigenous peoples to achieve social responsibility, to agree to specific standards, and to guarantee the rights of tangata whenua as enshrined in Te Tiriti o Waitangi. There is a very real school of thought that suggests that the ceding of sovereignty to a trans-Tasman body not only limits the capacity of the New Zealand Government but also potentially enables the Government to abdicate its obligations to tangata whenua under Te Tiriti o Waitangi. And why would the Australians need to include any references to Te Tiriti o Waitangi when this Government is supporting the removal of any references to it from legislation here in Aotearoa?

The other issue that is associated with the trans-Tasman alliance is its possible impact on current negotiations between Māori and the Crown relating to the use of native flora and fauna and their traditional applications. Hearings of the Wai 262 intellectual property flora and fauna claim are currently scheduled before the Waitangi Tribunal. As this House will be aware, the Wai 262 inquiry has resumed in the Waitangi Tribunal under the chairmanship of Chief Judge Joe Williams. Judge Williams has set a timetable to complete the hearings by the end of March 2007. The inquiry will consider big issues for Māori—issues such as whether the Crown has an obligation to protect Māori knowledge and indigenous flora and fauna. Significantly for this bill, it will also consider whether New Zealand’s obligations under any international agreements adversely affect New Zealand’s ability to protect Māori knowledge and indigenous flora and fauna. The Māori Party has reviewed some of the submissions to that body, including that from Nga Ringa Whakahaere. They are increasingly concerned that the Crown and transnational entities are presuming to own, regulate, and use aspects of Māori cultural and intellectual property, and the native flora and fauna species of tangata whenua.

When we come to this Standards and Conformance Bill we have to ask the question whether the Government has consulted with its Treaty partner before signing trans-Tasman agreements. We ask the House today—and we will be interested to hear the Minister speak about it—whether tangata whenua have been, or indeed will be, specifically consulted. Tangata whenua, as the partner of Te Tiriti o Waitangi, must be engaged in decisions about whether to sign trans-Tasman agreements. Making sense of the Treaty in the context of this bill’s proposals would mean that tangata whenua would be consulted in developing and recommending specifications to minimise environmental risks and promote social responsibility, and in developing standards by which we can properly measure genuine progress. When we took a call on this bill in the first reading, we supported the bill going to the select committee in order to address issues of national sovereignty and Treaty obligations to consult. The parliamentary record reveals that these issues were not addressed or raised in any way.

Summing up, then, a transfer of authority lessens our sovereign ability within Aotearoa to determine our own domestic standards and conformance. There are other wider and more important issues facing standards development in our jurisdiction than those dealt with in the bill, and consideration of the bill should not be undertaken in isolation from these issues—issues such as Wai 262 and the Ministry of Economic Development review.

Two weeks’ ago, after a closely fought 34 to 27 win at Eden Park in Auckland, the All Blacks clinched the Tri-Nations for another year and completed the clean sweep over their trans-Tasman rivals. The match was full of drama and tension. If members recall, the Wallabies dominated the lead for most of the match, until our guys got going, and then it was all on. Richie McCaw was spear tackled by Lote Tuqiri in the 45th minute, in an ugly incident that commentators thought should have led to Tuqiri being sin-binned. Rocky Elsom looked to have knocked-on the ball but the try was awarded by the television match official. Indeed, from my position as an armchair authority, I might have been heard to mutter: “Where was the one standard for all?”.

It is an issue that we cannot abdicate in any trans-Tasman relationship. Will aligning our functions with those across the Ditch mean a lowering of our current New Zealand standards? How can we assess and improve the overall quality of standards if we are not equal players? It is in light of these curly issues that the Māori Party will oppose the bill’s second reading. Kia ora tātou.

CHRIS AUCHINVOLE (National): The Standards and Conformance Bill is very important legislation. But, as with so many of the supposed initiatives of the Labour-led Government, it falls short of the mark. It seems there is a fundamental difficulty in their ranks and it emerges every day in the House. We heard my colleague and friend the Hon Nick Smith speak on the vacillations of certain players in the timber industry, where truth itself seems to have been compromised and anyone who purports to present it afresh is put under incredible pressure not to speak out.

One of the advantages of entering Parliament following a fair stretch of a career in business and commerce is that one does not carry too many illusions over the need for authoritative standards to be set for the public’s protection. This bill falls short of the mark in trying to do this. If one also has experience in dealing with the standards—or lack of them—in other jurisdictions in overseas countries, then one can see the experienced level of protection that is required to protect the innocent, the unassuming, and the trusting. The bill falls short of the mark in doing this.

I never expected to hear in this House revelations of such an appalling lack of standards in the building industry as detailed by Dr Smith today. The reality is that ordinary people without an in-depth knowledge of building materials and that which constitutes effective remedies for rot—people like myself—do not have the capacity, time, inclination, or knowledge to look beyond the claims made for a product on the manufacturer’s label. But it is clear we are now living in a new era—an era where things have been changed and socially structured to meet the ideological requirements of the present Labour Government. Instead of being able to depend on things as we used to, “buyer beware” has suddenly taken on a whole new meaning. Buyer beware—beware not only of faulty products but beware of not being able to depend on the standards that have been set. The bill falls short of the mark in correcting this.

We have heard that the leaky home disaster—affecting 15,000 homes—is a calamity equal in scale to the Napier earthquake. Standards New Zealand was created as a consequence of the earthquake. Surely the adjustments in this bill before us now should seek to do more than tinker with the standards. But are the members on the Government side of the House open to bringing about real change and acknowledging the true state of things? I guess, in our experience, no. In the leaky homes business, I remember the Minister at the time doing very little in public to even acknowledge there was even a problem. Everybody else who could watch television news, read a paper, or speak to builders seemed to know there was a problem, but I recall that at the time, Mr Hawkins, explained he had not been told by the industry that there was a problem. Everybody else knew, but he had not been told through official channels and therefore he felt there was not a problem.

I was put in mind of this situation more recently in listening to the Hon David Cunliffe, Minister of Immigration, addressing questions regarding the Taito Phillip Field affair from Dr the Hon Lockwood Smith about the transmission of information from the Immigration Service through to the Associate Minister of Immigration at the time, the Hon Damien O’Connor. In this case we have not quite been told that Mr O’Connor did not receive the information, but we sure as hang have not been told that he did receive the information. So I guess the question is: which was it—did he or did he not? I find it deplorable that a member of the House—regardless of which party—can be left in a position by his colleagues to the extent that the House does not know the level of information he received or did not receive. This uncertainty or paucity of standards leaves individual members at risk of suggestions that they were complicit in the whole scheme—the grubby sequence of events. Again, this is an example of this present Government failing to come up to the mark.

Standards are what we are ultimately judged by—not spin or subterfuge, and not by addressing questions instead of answering them. I like to think I would be the last to expect of others those standards that I would not be prepared to adopt myself. Therein lies the veracity of the National Party calling for the Government to behave in a way that avoids any suggestion that it may be pursuing corrupt practices either in the Taito Phillip Field affair, or in the question of election overexpenditure using taxpayer funds.

If I was a young person with a scant experience of life beyond Parliament then perhaps I may be a little easier to convince of the transparency of the Labour response to situations that embarrass them. The reality is that after serving Her Majesty in a couple of armies and having a career in the New Zealand Dairy Board as an export trader operating throughout the South Pacific, I am not inclined to accept such bland explanations as those currently on offer from Labour. Labour members must think all of us on this side of the House came floating down the Hutt River on a water biscuit if they really expect us to believe their rhetoric on the issue of Taito Phillip Field’s activities, let alone the use of taxpayer funds in the pledge card business.

But there are two other aspects about the standards being reflected by this Government towards its own misdemeanours. The first is the real horror that they believe their own rhetoric. The second is that they expect the public of New Zealand to swallow it too. I return to speak specifically to the bill before us, noting as I do so that it calls for the addition of the terms “minimising environmental risks” and “promoting social responsibility”. Sitting in the Commerce Committee, I have not heard from members with anything like a satisfactory explanation for what the implications of adding these terms will be.

Similarly, the business compliance costs statement accompanying this bill lacks detail despite the shrill protestations and giggles from Minister Dalziel that they are committed to reducing compliance costs. Well, the Minister can be as shrill as she chooses, but the talk in the market place is that the punters are not holding their breaths. The statement on compliance costs does not qualify the increase in fees that the two certification bodies will face following a transfer of power from International Accreditation New Zealand to the Joint Accreditation System of Australia and New Zealand or even why an increase is necessary.

I seek the indulgence of the other side of the House—

Steve Chadwick: This is dreadful.

CHRIS AUCHINVOLE: The member is quite right—this is dreadful. I seek the indulgence of the other side of the House to actually debate some of the issues. I recognise that would be difficult for them; I have heard very little by way of debate coming from that side in the year that I have been part of the House. It would be good if they did decide to debate and to give an explanation of the terms “minimising environmental risks” and “promoting social responsibility”. They have failed to come to the mark. All we hear is oft repeated statements in a sort of endless and mindless cant, not showing thought, not showing insight, just plugging the gaps and papering the cracks. The present Government should be aware that promoting social responsibility is part of the brief of us all and should be shared like the warmth of a fire. It is not something that should be put in legislation to be open to unspecified interpretation by Ministers at their whim.

To conclude, this bill falls short of what is required. It will not do. A far more substantive form is required. It needs to be able to address the matters that were raised by the Hon Dr Nick Smith. It should reflect the need for standards that was recognised and initiated in 1932, following the Napier earthquake. It needs to be a leading piece of legislation that governs the standards in those areas that it is specifically designed to deal with, and it needs to reach beyond by way of example. The present Government needs to consider the way it behaves in presenting to the public.

I would be less concerned if the Government were to be the only recipient of fall-out from its truth-avoiding explanations, but the reality is none of us in this House can effectively insulate ourselves from one another’s parties, so we are separately and jointly judged by the public we represent. The lack of standards that the present Labour Government is now associated with is causing a stain on the floor of the House. That stain will spread not just throughout New Zealand but will start to affect our reputation overseas, as honest brokers to deal with. That does not augur well for any of us. We do not want to be a country that comes up short of the mark in standards.

A party vote was called for on the question, That the Standards and Conformance Bill be now read a second time.

Ayes 67

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

Noes 54

New Zealand National 48; Māori Party 4; ACT New Zealand 2.

Bill read a second time.

Bills

Insolvency Law Reform Bill

Second Reading

Hon LIANNE DALZIEL (Minister of Commerce): I move, That the Insolvency Law Reform Bill be now read a second time. The bill will reform New Zealand’s personal and corporate insolvency laws. It will streamline the personal bankruptcy process and provide individual debtors with greater alternatives to bankruptcy. The bill encourages investment and innovation by providing a new business rehabilitation regime, known as voluntary administration, for New Zealand companies that are insolvent or on the verge of insolvency. The adoption in the bill of the United Nations Commission on International Trade Law model law on cross-border insolvency further encourages foreign investment, and promotes efficiency in conducting cross-border insolvency cases for the benefit of New Zealand creditors.

The Commerce Committee has considered the bill and reported back in support of the key principles behind it. The committee has recommended a number of amendments to better reflect the policy intent of the bill. I would like to discuss some of those changes, because I think the committee has assisted a great deal in fine-tuning this bill.

The committee has recommended some important refinements to the proposed new no-asset procedure scheme. The Official Assignee will be able to apply to the court for a preservation order over the assets of a debtor who misled the Official Assignee or concealed assets at the time of making an application for entry to the no-asset procedure. Assets would be subject to the preservation order until the application for the debtor’s adjudication of bankruptcy is heard by the court. This will prevent the assets from being on-sold or dissipated, and will therefore preserve the assets for the future benefit of creditors.

The committee recommended a further change to the no-asset procedure that relates to the creditor’s right to object to a debtor’s entry into the no-asset procedure. Creditors are no longer restricted to a set number of days within which they can object to a debtor’s entry into the no-asset procedure. Therefore, creditors can raise objections while a debtor is in the process, thus providing a check on the debtor’s honesty and integrity. The changes recommended by the committee not only tighten the no-asset procedure and prevent abuse of the process for the benefit of all creditors, but also protect, in my view, the integrity of the no-asset procedure.

The committee has also recommended that a summary instalment order register be established for debtors who are in summary instalment arrangements with their creditors to pay the debts. This register would be maintained in the same way as the current bankruptcy register and the proposed new register for debtors under the no-asset procedure. The register will alert potential creditors that a debtor is currently subject to a summary instalment order, and assist them in making an informed decision before entering into a credit transaction with the debtor.

On the issue of appointment of liquidators, the committee recommended that a company be restricted from going into voluntary liquidation and appointing a debtor-friendly liquidator at the eleventh hour when there is a pending creditor’s application to wind up the company before the court. The bill now provides that a company can voluntarily liquidate and appoint a preferred liquidator within 10 working days of receiving a notice from the court advising that a creditor has applied to wind up the company. The petitioning creditor will have the ability to ask the court to review the appointment of the liquidator chosen by the company. This amendment to the bill allows for a liquidator to be appointed who is objective and looks after the interests of the creditors. This amendment also preserves the company’s right to place itself into voluntary liquidation to prevent further deterioration of the company’s financial affairs and assets, to the future benefit of all creditors.

The changes in the bill to voidable transaction provisions have raised concerns amongst practitioners that it would be costly for a liquidator to set aside transactions and charges, as the liquidator would have to start a court proceeding where a creditor objects to a liquidator’s decision to make a transaction void. I agree with the committee’s recommendation that when a notice of objection to a transaction is lodged, it should contain full particulars of the reasons for objecting, as well as specifying the documents that substantiate the objection. This should assist the liquidator to make an informed decision on whether to pursue the matter further in court, to make the transaction void or uphold the transaction as valid. This will reduce the liquidator’s costs and give creditors more certainty in their dealings with the insolvent company.

In addition to the amendments I have already highlighted, the committee has recommended a number of other amendments that clarify the policy intent of the bill, some of which I will mention briefly. The committee has recognised that solvent liquidations do not pose any risks to creditors, and has allowed the solvent company to appoint a person as a liquidator if that person, or that person’s firm, has provided professional services to the company in the previous 2 years. In order to safeguard the interests of creditors, these persons cannot be appointed as liquidators in an insolvent liquidation.

The bill now, where appropriate, reflects the terminology and definitions used in the Personal Property Securities Act 1999, thus avoiding confusion for practitioners. With the increased threshold for entry into the summary instalment order process under the bill, the committee has recommended that the supervisor should provide, at the request of the Official Assignee, any document under the supervisor’s possession or control that relates to the debtor’s property, conduct, or dealings. This provides a check on the supervisor, and is consistent with the Official Assignee’s responsibility for administering the summary instalment order process under the bill.

Recognising that a bankrupt can still make payments towards his or her debts while in bankruptcy, the committee has proposed that the bankrupt be obliged to disclose any change in his or her income to the Official Assignee. This will allow the Official Assignee to adjust contributory payments being made to creditors by the bankrupt. Liquidators currently have the responsibility of reporting any offences committed by the company, or any director, officer, or shareholder, to the relevant authorities. The committee recommended that the same responsibility should be extended to administrators of the proposed new voluntary administration regime.

I would also like to mention the recommendation of a majority of the committee to maintain the Crown’s priority as the preferential creditor in the bill. Under the Companies Act, the Inland Revenue Department is listed as the preferential creditor, which means that the payment to the Crown of PAYE, GST, resident and non-resident withholding tax, child support, and student loan payments are prioritised over payments to unsecured creditors of the insolvent company. One of the main objections to the retention of the Inland Revenue Department’s preference was the concern that it could undermine the new voluntary administration regime proposed in the bill. I agree with the recommendation of the majority of the committee that retention of the Inland Revenue Department priority will not undermine the new voluntary administration regime.

I further agree with the committee’s recommendation that the Australian-style director penalty notice provision—which is the quid quo pro, if the National Party is saying that that is what we should do—should not be adopted in New Zealand to replace the Crown’s preferential creditor status. If the National Party’s position is that there should be Australian-style director penalty notices, then I am happy to inform New Zealand business that that is the position of the National Party. The director penalty notice provisions make the director of the company personally liable for the company’s tax debts, if he or she does not take the appropriate action to pay the Australian Taxation Office within a certain time period. The select committee was concerned—by a majority, and, in my view, rightly so—that not only would that be a significant increase in directors’ liability, and walking away from the whole principle of limited liability companies, but it would erode the fundamental concept that is the premise of our company law.

The committee received a number of submissions recommending the regulation of insolvency practitioners. Officials are currently working on a discussion document for public consultation on this issue, which will be released in the next few months. It is expected that any policy proposals on the regulation of insolvency practitioners will be reported to Cabinet mid to late next year.

The Insolvency Law Reform Bill is an important part of the Government’s economic transformation agenda. This becomes evident when we look at the objectives that have been set and achieved through the legislation: to encourage investment by providing a predictable and simple insolvency regime that can be administered quickly and efficiently for the benefit of local and overseas investors; to promote innovation and entrepreneurialism by providing companies with alternatives to liquidation; to promote international cooperation in cross-border insolvency cases where assets of New Zealand companies are held in different jurisdictions; and to provide better returns to creditors involved in both personal and corporate insolvencies.

I wish to thank members of the Commerce Committee for their work in considering this bill. I know they gave it detailed consideration. I would also like to acknowledge the helpful contribution of submitters. I commend this bill to the House.

KATHERINE RICH (National): I rise to speak on the second reading of the Insolvency Law Reform Bill. I would like to acknowledge the comments from the Minister Lianne Dalziel regarding the work the Commerce Committee did. There was a lot of unanimity around the table, in particular amongst members who have a long-term desire to create a business environment within our country where we can minimise the number of insolvent liquidations and attempt to increase the number of business successes, as opposed to failures.

The bill deals with a regime when things do not go well in business. I know the Minister talked about solvent liquidations, but when the rubber hits the road for a lot of businesses we need very good rules in order to be able to deal with business situations when things do not go to plan and people are looking down the barrel at a failure. I think this bill does aim to deal with situations when things do not go to plan either in business, where the bill aims to look at changes to the Companies Act 1993, or when things do not go well for individuals, by reviewing the Insolvency Act of 1967. I accept that as we have seen changes to law over a period of four decades, it was time for another look at rules relating to insolvency.

National opposes the bill because there are some areas that it thinks require additional work. For us, the key question is whether the new regime of voluntary administration will work. It is a new regime for New Zealand and, although the committee looked at the processes put in place in Australia, National has some concerns about the differences in the scheme as proposed for New Zealand.

There was quite a bit of discussion about retaining the Inland Revenue Department’s status as a preferential creditor under schedule 7 of the Companies Act 1993. That was an area that consumed almost every submission. All the submitters who came before the committee said that they agreed with having a new voluntary administration procedure, but they had concerns about putting in place the new regime and retaining the Inland Revenue Department’s preferential status. The thinking behind the Crown priority is that the Crown should have the ability to have first call on any moneys and, in particular, moneys collected through tax, such as PAYE, GST, resident and non-resident withholding tax, child support, and student loans, deducted by the company from wages and salaries.

The thinking behind the preferential status is that the Inland Revenue Department does not have any choice when extending that credit, and so there was concern from officials and, as we heard, the Minister about changing that position. All the submitters said to our committee that if it did not address the issue, the whole efficacy of the voluntary administration regime would be affected. They said the Crown priority undermines the effectiveness of the proposed voluntary administration scheme and that the Inland Revenue Department will be put in a position where it will vote against deeds of company arrangements amongst creditors, and against any firm going into voluntary administration procedures. The argument they gave was that the Inland Revenue Department, in having Crown priority, has every incentive to push a company into liquidation, because if it does that it has first call on the money. In moving into a voluntary administration regime, the Inland Revenue Department has the status of any other creditor, and is therefore treated as any other creditor and does not have any special status. So although the Inland Revenue Department could imagine it could get 60 percent of its debt repaid under the current regime, its concern was that on moving into a voluntary administration regime where it would stand side by side with a long list of other creditors it would lose its special status, and there would be no incentive to get its debt repaid.

Submitters also argued that the Inland Revenue Department is an inefficient tax collector and, in fact, if it continues to retain its Crown priority status, it does not have any incentive to go out and collect the money. I am not sure about that as an argument, because the Inland Revenue Department will get criticised for going too hard on businesses, as well as going too soft.

The final point, which I think is the major one, is that although New Zealand is basically copying the regime in Australia, we are not copying it on the issue of Crown priority. Therefore, we are out of step with Australian and British insolvency law, as they have not retained the Crown priority. When Inland Revenue Department officials came before the committee, it asked them how much would be at stake in respect of taxpayers’ money if we removed the Crown priority—the committee was trying to balance up the benefits of taking away the priority, and, hopefully, moving more companies into a voluntary administration regime and saving more, allowing them to trade out of their difficulties. The amount was a very small amount. The Inland Revenue Department officials said there was only about $5 million of taxpayers’ money at stake, and the committee felt it was worth considering further, very carefully, the issue of Crown priority, because, when it looked at the benefits of ensuring that the voluntary administration regime worked, it thought there was merit in doing that.

The committee listened very carefully to what submitters said and they were unanimous on this point. So I am interested that the Minister said that although she has listened to information from submitters, she is not prepared to budge on that point. I would ask her what she knows that the committee did not, and what advice she has received that rebuts, or is at odds with, the advice the committee received from industry practitioners—people who are involved in insolvency situations every day. The issue of Crown priority is one of the reasons why the National Party will not be voting for this bill—albeit that we will watch its progress with interest.

Another point we thought was worthy of seeking change on was related to the watershed meeting that creditors have before voting on a deed of company arrangement. In Australia, a total of 50 percent of creditors, who must make up 50 percent of the value of a debt, must be in agreement in order to move to a deed of company arrangement. Here in New Zealand we set the bar a lot higher, requiring that 50 percent of creditors, representing 75 percent of the value of the debt, have to be in agreement before moving into the voluntary administration regime. Many practitioners said that was setting the bar far too high, and that it would be almost impossible to ensure that this benchmark was met in order for companies then to vote on moving to a voluntary administration.

Finally, there was a huge area of concern to us about the move to a no-asset procedure for individuals. The National Party thinks it sends the wrong message about personal responsibility when the Government says to people that they can rack up $40,000 worth of debt, and that once in their life they will have the opportunity to write it off totally—no questions asked, all is forgiven. Our view is that a lot of young people, in particular, many with student loans, could use this as an opportunity just to get rid of their debt and start afresh. We believe that people need to understand the implications of taking out debts. To remove people’s responsibility for repaying them sends the wrong kind of message. When has the answer to issues of debt been to forget about that debt, and to say that all is forgiven and there will be no consequences? We think that this is a wrong step for this country. The National Party has concerns about this bill and hence will be opposing it in its second reading.

CHRIS TREMAIN (National—Napier): I rise to speak on the second reading of the Insolvency Law Reform Bill. Before I do that, I wish to commence by pointing out section 6A of the Tax Administration Act, which makes it clear that it is the Commissioner of Inland Revenue’s statutory duty “to collect over time the highest net revenue that is practicable within the law”. This section of the Tax Administration Act outlines the Inland Revenue Department’s statutory obligations that lie at the very heart of why the National Party will vote against the Insolvency Law Reform Bill. Voluntary administration lies at the very heart of the Insolvency Law Reform Bill. In fact, voluntary administration is being introduced under this bill in accordance with New Zealand’s obligations under the Memorandum of Understanding on Coordination of Business Law signed by Australia and New Zealand in 2000.

In a nutshell, National believes that voluntary administration has significant merit, but only under the right conditions. This is a very important point and one that I intend to elucidate on. National believes that the retention of the Inland Revenue Department’s priority above unsecured creditors, coupled with the responsibility, which I talked about before, to collect over time the highest net revenue that is practicable within the law, will ensure that the department votes in favour of liquidation and recovery itself as opposed to supporting voluntary administration. This is a very important point. When the Inland Revenue Department sits in a position of priority and is able to make the decision to go with liquidation versus voluntary administration, I am sure that we will see many situations whereby liquidation stays in place and the voluntary administration procedure—on which we in the Commerce Committee spent so much time and hard work looking at the options—will not be implemented. That is a key point.

National believes that without Inland Revenue Department support, voluntary administration is doomed from the start, and that is why we will not support this bill. The minority view from National reads that all submitters on voluntary administration provisions “were unanimous in their view that unless the Government addresses the issue of priority status for IRD, the voluntary administration scheme will be severely compromised.” That was the summary of submissions. The minority view further states: “We do not believe that Parliament should pass another piece of redundant legislation when there is a groundswell of opinion from practitioners who believe that it will not work, without the removal of Inland Revenue’s priority status.”

I would like to review some of the merits of voluntary administration when it has worked in countries where the priority has been reduced. As I said earlier, voluntary administration was introduced under the auspices of the Memorandum of Understanding on Coordination of Business Law signed by Australia and New Zealand in 2000. It aims to replace the seldom used compromise scheme that is already available to New Zealand companies that are in financial stress. Currently, if we look at the compromise situation that is already available in the law, we see that it is seldom used, because the incentives to get majority creditors to consent to a compromise are just not there. In addition to that, with the priority status that the Inland Revenue Department already has, the compromise situation just does not eventuate, because we see liquidation happening time and time again before a position of compromise can be reached.

Voluntary administration was introduced into Australia in the early 1990s, and many other jurisdictions have now introduced it, but in different ways. In the Commerce Committee we compared it only to the Australian model, and there was this insistence that if we were to get rid of the Inland Revenue Department priority, we had to bring in additional director liability, when, in fact, in other jurisdictions that was just not the case. I believe that as a select committee we did not look hard enough at the different options from different jurisdictions.

Effectively, voluntary administration allows an insolvent company, the court, or secured creditors to put a company into voluntary administration and to appoint a voluntary administrator. While under voluntary administration there is a stay on creditor enforcement, so the merits are excellent in that it allows a company potentially to trade out of a difficult situation. The administrator manages the company, calls the meetings of the creditors, and develops a restructuring plan on which creditors are able to vote whether they will go forward with that plan or put the company into liquidation. A majority of creditors determine whether the company is restructured or, as I have said, placed into liquidation. That has proven popular in Australia, but only with the Australian tax authority’s drop in priority.

Directors in New Zealand now have a number of unappealing options, and that is why the voluntary administration scheme has been put in place. The options that face them include, first, requesting that the bank appoint a receiver; secondly, appointing a liquidator; thirdly, attempting an out-of-court restructuring—we could count on the fingers of one hand the number of those that happen—and, fourthly, attempting a creditor compromise, which I have already canvassed this evening and said has been very ineffective across New Zealand companies.

In the main, the four options currently available have no prospect of retaining any level of shareholder value. The unsecured creditors do not get paid and, of course, they lose another customer, and employees lose jobs, which is not what we are all about. In contrast, voluntary administration provides directors, shareholders, and creditors with a process that protects the company from enforcing remedies during a reasonably short period. In effect it provides a breathing space for that company to get on with its business or to restructure to allow it to go forward.

During that period the voluntary administrator develops a restructuring plan that potentially allows the business to maintain enterprise value and to deliver a better outcome for creditors, employees, directors, and shareholders. On the face of it, it appears to have merit. In fact, it does have merit—it has been proven in other countries to have merit—but, as I have mentioned previously, the Inland Revenue Department becomes a critical factor in its success or failure. And what have we done as a select committee? Despite all of the evidence, we have left the Inland Revenue Department’s priority status in place. Can members believe it? That is what has happened, and that is why National is voting against it.

In any voluntary administration the Inland Revenue Department is likely to be the significant creditor. Why would that be? Well, one can continue to run a business for some time without paying GST, PAYE, and fringe benefit tax, but it is very difficult to run a business when it gets into a difficult situation without paying the telephone bill and the power account—without paying the core essentials of running a business—because the business will be closed down overnight. But one can get away without paying PAYE, GST, and provisional tax over a period of time.

If the Inland Revenue Department priority is retained, as it has been in this bill, the Inland Revenue Department will be compelled to evaluate its recovery from entering into a voluntary administration versus entering into liquidation. Guess what, every time it will choose liquidation. Remember that if a company is put into liquidation the Inland Revenue Department priority debt ranks ahead of all other unsecured creditors. Under voluntary administration, unsecured creditors will be expected to be treated pari passu—that great legal term meaning to be treated equally—with the Inland Revenue Department. By retaining Inland Revenue Department priority there is a statutory incentive to vote against voluntary administration in favour of liquidation to ensure that the Inland Revenue Department gets better recovery.

As I said earlier, section 6A of the Tax Administration Act ensures that the Inland Revenue Department has a statutory duty to vote for liquidation to ensure that it collects the highest net revenue. If the Inland Revenue Department is compelled to vote against voluntary administration, I cannot see how it will have the success that it has had overseas.

I realise that my time is running out. I could speak for a lot longer on this subject. The National Party stands firm in its corner on the basis that voluntary administration will not succeed without a change in the priority status of the Inland Revenue Department, and that is why we are voting that way.

PITA PARAONE (NZ First): Tēnā koe, Mr Deputy Speaker. I stand on behalf of New Zealand First to take a call on the second reading of the Insolvency Law Reform Bill. I say from the outset that New Zealand First supports this reform bill. The introduction of voluntary administration brings New Zealand into line with Australia, the United Kingdom, Asia, and Europe. We believe that it is in New Zealand’s interests to adopt a statutory procedure capable of delivering increased returns to creditors from corporate failure. The introduction of similar legislation in Australia saw the immediate take-up of voluntary administration. It is now the dominant proceeding over liquidations and receiverships.

New Zealand First is aware of concerns that the Inland Revenue Department retains its preferential creditor status. If the House gives this issue a bit of thought, rather than react as some parties have done, members will see that there can be no other fair way to go. If other creditors are given precedence over the Inland Revenue Department, then all New Zealanders suffer from the reduction in funds available for services provided by the Government.

New Zealand First is a party that has always wished to protect the New Zealand tax base. We are a party that advocates positive Government intervention on behalf of businesses and exporters. We are pleased to note that after examination of this bill, the Commerce Committee recommended that it be passed, but with some amendments. As a party, New Zealand First campaigned for excellent public health and education. Those things can be provided only by taxation, and the protection of the tax base is in the interest of all New Zealanders. Therefore, we believe that it would be unwise to remove the Inland Revenue Department’s preferential creditor status in the bill.

New Zealand First continues to support this bill, particularly with the amendments recommended by the select committee. We note there is a continued and marked increase in the number of bankruptcies of those we shall call private people—not through a case of their going broke through enterprises they had started up, or through a turn for the worse in circumstances their businesses, large or small, had been involved in, but just through sheer consumerism. They had gone out and spent. Unfortunately, that is something that has become symptomatic for many people here in New Zealand.

The bill is important because it brings into line consistency with other legislation, particularly in the area of the Personal Property Securities Act 1999. It is intended that this bill should be consistent with that particular Act. A number of submitters in the select committee process, we understand, raised some of the differences in terminology between the bill and that Act. The other Act this bill is providing some consistency with is the Companies Act 1993, and I note that the select committee recommended there should be some changes in order to bring the bill into line with the Companies Act. Another Act that this reform bill will align is the Lawyers and Conveyancers Act 2006.

In conclusion, I say that New Zealand First supports this bill in its second reading, notwithstanding some of the comments made by those who intend to oppose it. Kia ora.

HONE HARAWIRA (Māori Party—Te Tai Tokerau): Tēnā koe, Mr Deputy Speaker. Tēnā tātou i te Whare. This bill assumes we need change because the current insolvency laws are not working properly and everyone is losing out, particularly with the growing number of businesses going under. So, as with every other issue the Māori Party addresses, we want to look at the bigger picture and consider the changes being proposed here.

In speaking to the Insolvency Law Reform Bill, I would like to paraphrase the words of one of the world’s greatest citizens, Dr Martin Luther King. When the architects of this great land signed up to the Treaty of Waitangi, they were signing a promissory note to which every citizen of Aotearoa was to fall heir: a promise that all peoples of this land would be guaranteed inalienable rights. It is obvious today that New Zealand has defaulted on its promissory note insofar as her citizens of colour are concerned, for instead of holding the sacred obligation Māori have been given a bad cheque—a cheque that has come back marked “Insufficient funds”. But we refuse to believe that the “Bank of Justice” is bankrupt.

We come to the debate on the bill with those words ringing in our ears. How can we say the “Bank of Justice” is pushing Māori to the brink of bankruptcy when so many Māori workers are underutilised, and when the massive levels of unemployment for Māori can be described by the Business Roundtable as both economically wasteful and socially damaging?

Members should make no mistake: like the proposer of this bill, we welcome the introduction of systems for dealing with bankruptcy and the imposition of minimum costs without stifling innovation. But the bigger question remains. An article by the chairman of the New Zealand Business Roundtable in yesterday’s Dominion Post summed the issue up best: “Today the general unemployment rate is down to 3.6 per cent, yet the Maori unemployment rate remains more than 8 per cent, the same as the general rate in 1994. Worse, the Maori youth unemployment rate is a tragic 18 per cent.” Yet how rarely do we hear politicians and commentators saying that that rate is unacceptably high. Well, this is one political party and we are four politicians, but we have been saying for the last 12 months that the rate of Māori unemployment is unacceptably high.

When we look at this bill, surely the most important thing to look at in terms of these changes is how to prevent financial strife from happening in the first place. But our current tax laws themselves are a big part of this strife—too many, too costly, and too clumsy. It is a wonder that more small businesses do not fall over. We need to review our business tax system to help businesses grow, just as we also need to support growth in employment, higher wages, investment, research and development, and innovation. As part of that review we must also ask why the Government insists that it always be first in line to get its money back, while everyone else can wait.

We agree with the amendments to the voluntary administrative regime, whereby a bankrupt company voluntarily puts its affairs into administration to either help save the business or help the creditors get a decent return. But we know that submitters to the Commerce Committee were also concerned that giving the Government first dibs on creditors’ money would make it harder for businesses to agree to the voluntary administration process in the first place, because they would always be second in line.

The Māori Party will support the second reading of this bill because we believe that small businesses will benefit from early intervention and appreciate the help to manage their way through hard times. Initiatives in the bill will help many businesses to stay afloat or wind up, with minimum costs and better returns for creditors, and will allow people to move on. These initiatives will help Māori to enhance their responsibilities, while maintaining an open door to future innovation and growth.

The Māori Party continues to defend Māori rights and advance Māori interests for the benefit of this great nation of ours, Aotearoa. Although things are tough, just like the great Dr Martin Luther King we too refuse to believe that the “Bank of Justice” is bankrupt. Kia ora tātou.

GORDON COPELAND (United Future): I rise on behalf of United Future to take a call on the Insolvency Law Reform Bill. It is an important bill, because it revises and updates New Zealand law in relation to both personal bankruptcy and company liquidation or insolvency. I think it is very important to put this bill in some sort of context when it comes to companies and insolvency.

It is, I think, very much a public-good goal to ensure as much as we can that when companies that are growing encounter difficulties, we have a method that will enable as many of them as possible to go through that experience and come out the other side without going out of business altogether. Under the current regime, statistics show that companies that go into receivership almost always end up in liquidation. Unlike regimes, for example, in the United States, and in particular under its chapter 11 provisions, and now in Australia with its voluntary administration scheme, our companies do not get a second chance very often to go on and be successful. That is tremendously important, because there are many, many examples around the world of very successful businesses and very successful businessmen or businesswomen who have been through an insolvency or a bankruptcy in their lives. They say it was the lessons they learnt through that experience that gave them the expertise next time around to be successful.

It is much, much more efficient to our economy if an orderly process can be worked through. That is what the voluntary administration, which is at the heart of this bill in many ways as far as companies are concerned, is all about. It is about endeavouring to ensure there is a system in place whereby, through a voluntary process, the directors of the company and others can get together and decide to go through that period of administration. When we look at that from the point of view of creditors, I think the outcome for them is pretty much the same as it is for the Commissioner of Inland Revenue—namely, that creditors want, over time, to have the money they are owed paid to them in full, 100c in the dollar, and also to have an ongoing business relationship with that company into the future. In a very real sense I believe that the interests of creditors, and the interests of the Crown through the Commissioner of Inland Revenue in respect of what is called the Crown priority, are aligned to some extent, and therefore they should, hopefully, act in concert when it comes to voluntary liquidation.

As other speakers have mentioned, a lot of the time at the Commerce Committee was taken up with debating the question of Crown priority. Let me concede immediately that it is true that the practitioners who came to the select committee spoke with some passion about the need for New Zealand to do away with Crown priority. They gave us instances of companies that had gone into liquidation, and only at that point did the creditors who were supplying those companies find that the Inland Revenue Department was owed taxes, such as PAYE, GST, family support, and other payments, some of which had been outstanding for several years. During all that time other creditors had continued to trade with those companies, completely oblivious to the fact that they were heavily in debt and getting further into debt to the Inland Revenue Department week by week.

On the front page of the Dominion Post here in Wellington about a month ago, there was a classic example of that situation. Right on the front page was a story about a well-known woman who ran a number of restaurants in Wellington, including Kopi, a Malaysian restaurant, and several others. Her businesses had gone into liquidation. It was revealed that for a 3-year period—I believe the time was from about 1997 to 2000—those companies had not paid any PAYE, GST, or other payments of that sort over to the Inland Revenue Department, yet the department had let those companies continue to trade. There on the front page of the Dominion Post were the figures, which showed that that group of companies then owed the department about $1.3 million, and all other creditors combined were owed, I think, about $260,000. That was a classic case right here in Wellington that demonstrated the problem with the Crown priority—namely, that it is unfair to creditors who are just completely unaware there is a problem with a company not having paid its GST.

Therefore, the committee gave the matter of Crown priority very, very serious consideration. We went back to the department not once, not twice, but three or four times, I think. Finally, we had the commissioner himself write us a letter, stating in black and white that the department, under this new legislation, would cooperate with a voluntary administration regime. Let me say that United Future, for one, therefore decided to go with the Crown priority, based on the written assurances given to us by the commissioner himself. It will now be up to the department to follow through on that commitment and to ensure that it becomes partners with the other creditors in voluntary liquidations, and that it does not rely on the Crown priority itself to impede, or in any way delay, that process. That will be the test, and only time will tell whether the department delivers on it.

However, in addition to that, I inform the House that we have also, to some degree, moved towards a system somewhat similar to that of Australia in relation to Crown priority. With reference to Crown priority, we set out in our commentary, very clearly, the following words: “Submitters believe this is an unfair and unjust outcome for such creditors. They argue that if trade creditors had been aware of the tax arrears they would, in all likelihood, have initiated a liquidation order themselves at an earlier date, thus mitigating their ultimate loss. Some of us therefore believe that when PAYE, GST, child support, and other similar payments due to Inland Revenue are unpaid for two consecutive ‘payment due’ dates,”—that is, one misses two payments of PAYE or two payments of GST—“Inland Revenue should be obliged to notify company directors of the position. This will ensure that directors are aware of the tax arrears and encourage early intervention, which may take the form of corrective action or consideration of voluntary liquidation.”

I need to say that that was a bit more than just a recommendation from the committee, because we called officials in from the Inland Revenue Department and discussed it with them, and they quite readily agreed they would adopt the practice henceforth. They will revise their manuals, and so forth, so that when two payment periods for GST or PAYE have been missed, they will then notify the directors of that company that the GST or PAYE has not been paid, and they will encourage the directors to address the issue immediately. I think that that is probably not a bad compromise between the complete removal of the Crown priority, which many submitters wanted, and the evidence presented to us that that would probably have been a risk to the Crown revenue. So I think the committee made a reasonable compromise and I, for one, hope we will see that initiative followed through in reality.

Debate interrupted.

The House adjourned at 10 p.m.