Thursday, 25 October 2007

Thursday, 25 October 2007

Thursday, 25 October 2007

Madam Speaker took the Chair at 2 p.m.

Prayers.

Business Statement

Business Statement

Hon Dr MICHAEL CULLEN (Leader of the House): Next week the House will go into a 1-week adjournment. When the House resumes on Tuesday, 6 November, priority will be given to the first reading of the Land Transport Management Amendment Bill, if it is not finished today, and to the remaining stages of the Armed Forces Discipline Amendment Bill (No 2), the Court Martial Appeals Amendment Bill, the Defence Amendment Bill (No 3), the Court Martial Bill, the Terrorism Suppression Amendment Bill, the Human Tissue Bill, and the Education (Tertiary Reform) Amendment Bill. Wednesday is a members’ day.

KEITH LOCKE (Green): I raise a point of order, Madam Speaker. Will the Government be giving urgency to a new bill that I understand is in preparation after yesterday’s events—that is, the “Parliamentary Terrorism Suppression Bill”?

Hon Dr MICHAEL CULLEN (Leader of the House): I think those people who have ever been victims of real terrorism would regard that remark as particularly lightweight.

Points of Order

Code of Conduct—Members of Parliament

Hon PETER DUNNE (Leader—United Future): I raise a point of order, Madam Speaker. In the light of the reported events of yesterday and of the code of conduct that was submitted to this Parliament by the United Future, Green, Māori, and ACT parties earlier in the year, will you be drawing to the attention of the House the need for members to keep matters relating to other members’ families out of debate, to prevent a repetition of yesterday’s events?

Madam SPEAKER: I thank the member. As he knows, the code of conduct that has been proposed is before the Standing Orders Committee and will be considered there. I am sure the matter will be taken into account. Obviously, all members are aware of the unfortunate incident that happened yesterday. I understand that the members have apologised and have been spoken to by their respective parties. I think I should point out that as Speaker I do not have jurisdiction over the lobbies; they are the members’ territory. But I make the observation that the behaviour of the members reflects badly not only on themselves but—unfairly and unfortunately—on Parliament as an institution.

GERRY BROWNLEE (National—Ilam): I raise a point of order, Madam Speaker. I have no desire to rark up issues that for all intents and purposes have been dealt with, but I do not think your comments relating to the matter were helpful. In this instance there has been one apology, and that is the only apology that is necessary.

Madam SPEAKER: Well, the House has heard my comments and the member’s.

Resignations

Clerk of the House of Representatives

Hon Dr MICHAEL CULLEN (Leader of the House): I move, That this House place on record its appreciation of the long and distinguished service of David McGee as Clerk of the House, congratulates him on his appointment as Ombudsman, and wishes him and his family all the best for the future.

[Applause]

Hon BILL ENGLISH (Deputy Leader—National): I know that the motion is non-debatable, but I think I should take the opportunity, in recognition of the Clerk’s long and excellent service over many years—which will be recognised this afternoon at another function—simply to record the Opposition’s full support of the motion.

Madam SPEAKER: Well, it is non-debatable, but it is obviously being debated. Does anyone else, therefore, wish to make a contribution?

Hon PETER DUNNE (Leader—United Future): I concur absolutely with the comments. I do not wish to make a contribution to the motion as such—but not because I do not fully support it—but I recall that on the occasion of the retirement of Mr McGee’s predecessor, the House by leave did grant Mr Littlejohn the opportunity to make a few words of comment in reply. I wonder whether Mr McGee might wish to avail himself of a similar opportunity, were the House to provide it.

Madam SPEAKER: I thank the member. As he would know, the Clerk and I have discussed this, and those remarks will be made on another occasion in another place.

Motion agreed to.

Questions for Oral Answer

Questions to Ministers

Fiscal Policy—Reserve Bank Assessment

1. Hon BILL ENGLISH (Deputy Leader—National) to the Minister of Finance: Does he agree with the Reserve Bank’s assessment that “fiscal policy is contributing to inflationary pressure”; if not, why not?

Hon Dr MICHAEL CULLEN (Minister of Finance): No, I do not. I agree that ongoing inflationary pressures need to be kept in mind—by those who have such a thing—when considering fiscal policy. But fiscal policy currently remains very strong, and is stronger than was forecast at Budget time.

Hon Bill English: Does the Minister agree with the Westpac bank commentary that says: “The most extraordinary paragraph was devoted to fiscal policy. The Minister of Finance recently said it would be difficult to argue the Government is contributing to inflationary pressure. The Reserve Bank’s retort could not have been blunter. Despite ongoing surpluses, fiscal policy is contributing to inflationary pressure.”; and should we believe the Minister of Finance or the Reserve Bank?

Hon Dr MICHAEL CULLEN: It is clear that if we, at this point, were collecting $4 billion a year less than we are, as the National Party proposed, fiscal policy would be much weaker and inflationary pressures would be much stronger. The member yesterday was calling for a loosening of fiscal policy; today he is back to calling for a tightening of fiscal policy.

H V Ross Robertson: Has the Minister received any reports on the merits of this Government’s prudent fiscal policy?

Hon Dr MICHAEL CULLEN: Yes. I have seen reports from bank economists that highlight the importance of our strong fiscal position in counterbalancing the large current account deficit, which is a symptom of our poor savings record. I have also seen a multitude of conflicting reports calling for larger surpluses and for smaller surpluses. Mr English, no doubt, today will continue that track record of inconsistency.

Hon Bill English: Is the Minister aware that people who face mortgage rate increases of up to 2 percent may, in fact, believe the Reserve Bank, which says that the Government’s fiscal policy is inflationary and is therefore tending to push interest rates higher for longer than would otherwise be the case; and, given that the Reserve Bank makes decisions about interest rates, why should those New Zealanders believe him rather than the Reserve Bank?

Hon Dr MICHAEL CULLEN: It seems likely that at the moment we are actually still running a cash surplus. I do not know of any country in the world where a Government that runs a cash surplus is regarded as running an expansionary fiscal policy. I remind that member that not very long ago he was using the increase in mortgage rates as a reason why we had to have large tax cuts immediately, which would add to fiscal stimulus within the economy.

Hon Bill English: Is it now the Minister’s position that New Zealanders who face big increases in their interest rates face those increases because the Reserve Bank is wrong, that in fact there is no inflationary pressure from the Government’s fiscal policy, and that therefore the increases in interest rates they face are unnecessary?

Hon Dr MICHAEL CULLEN: The Reserve Bank has been tightening monetary policy for the last 3 years or more. During that entire period the Government has run surpluses that have been described as obscene by the member opposite—indeed, the senior Opposition whip nods her head; I think that is what was happening at that point. We are one of the few countries in the world to be running a cash surplus after all investment, after investing in the Superannuation Fund, and after paying for all capital.

Hon Bill English: Does the Minister believe that New Zealanders who face big increases in interest rates on mortgages, overdrafts, and credit cards should be pretty upset if they find out today that the Reserve Bank has pushed interest rates up, when there is no problem with Government spending simply because Dr Cullen says there is no problem?

Hon Dr MICHAEL CULLEN: The member may not have noticed this, but domestic inflation has been running at about 4 percent per annum or so for the last 3 years, while the Government has run very large surpluses. All prices have been rising. Commodity prices have been rising in general, including dairy prices, which affect the New Zealand consumer as well as our overseas earnings. Those rises, as the Reserve Bank itself says, are the major factors leading to inflationary pressures within the economy.

Hon Bill English: Can the Minister tell us, in his capacity as Minister of Finance, whether the Reserve Bank was right or wrong when it said today: “Despite ongoing surpluses … fiscal policy is contributing to inflationary pressure.”; is Alan Bollard right or wrong?

Hon Dr MICHAEL CULLEN: I think what the Reserve Bank is referring to is that the current forecast has fiscal policy looser than it was last year—what is called a positive fiscal impulse. On those grounds I think the member will find that the updated forecast in December will show that fiscal impulse is significantly weaker than was forecast at the time of the Budget, because the Government is running stronger surpluses. As soon as that figure is out in the public arena, the member opposite will be calling for large tax cuts, thereby leading to a weakening of fiscal policy and further inflationary pressures. He cannot have it both ways; he should leave that to some of his colleagues.

H V Ross Robertson: Has the Minister received any recent reports on the factors that ought to be taken into account when considering the nature and timing of tax cuts?

Hon Dr MICHAEL CULLEN: I have seen some very strange reports that seem to suggest that this Government’s four tests for tax cuts mean that tax cuts will not go ahead. One of those tests was that tax cuts should not add unduly to inflationary pressures. It is clear that Mr English believes that tax cuts should proceed, of whatever size he cares to think up and whatever the inflationary pressures may be as a consequence, but, of course, that a Labour Government should nevertheless run a tighter fiscal policy.

Hon Bill English: What does the Minister think of his legacy now after 8 years of mismanaging economic growth, whereby New Zealand is in the top half of the OECD, has the second-highest interests rates, and now has the 13th-highest tax burden?

Hon Dr MICHAEL CULLEN: I cannot think of another finance Minister in New Zealand who, after 8 years, could say that he or she had seen 28 percent growth, had seen unemployment nearly halved, had seen the highest participation rate in the labour market in New Zealand’s history, had seen a massive reduction in child poverty, had seen reduced costs of going to the doctor, and had seen significant reductions in the cost of attaining a tertiary education—and the Opposition can still only whinge pathetically.

Prisons—Complaints and Systemic Issues

2. NANDOR TANCZOS (Green) to the Minister of Justice: What recent announcements, if any, have been made to enhance the independent oversight of complaints and systemic issues in prisons?

Hon MARK BURTON (Minister of Justice): Today we released proposals that would give the Office of the Ombudsmen new responsibilities for conducting investigations of all deaths in custody and designated serious incidents, and for undertaking more reviews of systemic issues identified during visits of prisons as a result of incidents or complaints. The proposal has resulted from a package of work with the Green Party to examine victims’ rights and to ensure effective independent oversight of our prisons. I acknowledge the contribution of the Green Party and, in particular, justice spokesperson, Nandor Tanczos, for his input into these proposals.

Nandor Tanczos: Does the Minister agree that if the New Zealand public is to have confidence in the ability of a prison inspectorate to fearlessly and independently hold the Department of Corrections to account when investigating complaints, then the most effective way of doing that is through having an Ombudsman for prisons?

Hon MARK BURTON: Yes, I think this is a matter we have looked at very carefully and we have looked at the alternatives. I believe that the New Zealand Ombudsmen enjoy a uniquely high level of public confidence and trust, and that this is the right place to locate this important function.

Jill Pettis: How do these new responsibilities fit with the responsibilities of the Ombudsmen under the Crimes of Torture Amendment Act 2006?

Hon MARK BURTON: The role fits with the broader role of the Ombudsmen of examining and reporting on prison conditions and prisoner treatment as a national preventive mechanism under the Crimes of Torture Amendment Act. It is a good enhancement and is complementary to that function.

Simon Power: Can the Minister confirm that the Ombudsmen already deal with a high number of prisoner complaints—hardly qualifying as the new body that Labour promised the Greens in 2005—and how does he reconcile this initiative with the views of Damien O’Connor, expressed at a select committee last year, when he said: “I have to say that I personally don’t give it the highest priority. I think there are in place adequate avenues for prisoners who make complaints.”?

Hon MARK BURTON: I think it is evidence of the fact that we continue to think, work, and collaborate. The work that the Ombudsmen undertake currently is one of the reasons that when this was looked at very carefully by the Government and the Greens it was deemed a good fit.

Simon Power: It’s not new.

Hon MARK BURTON: Of course, if the member bothered to look at the detail he would see that the second-tier function, where much of the serious investigation work takes place, currently resides with the inspectorate under the authority of the chief executive of the Department of Corrections. It will now reside under the direct authority of the Ombudsmen. This is a fundamental shift of responsibility for the most important investigative work.

Nandor Tanczos: Can the Minister confirm that a key function of the prison Ombudsman will be to undertake own-motion investigations into systemic issues in the corrections system, that the Ombudsman will be funded to do so, and that that is an important element to pre-empt problems such as those that led to the tragic killing of Liam Ashley?

Hon MARK BURTON: Again, yes, the enhancement of the resourcing and the capability of the office will, I think, lead to a greater number of own-motion investigations. I think they are an invaluable part of the tool kit of the Office of the Ombudsmen in its expanded functions.

Simon Power: It happens now.

Hon MARK BURTON: For the benefit of the member opposite, I repeat that he should look at the fundamental transfer of the second-tier responsibilities that currently sit in law under the authority of the chief executive of the Department of Corrections. That function will transfer—there will be legislative change—and it will reside with the Ombudsmen directly.

Capital and Coast District Health Board—Wellington Hospital

3. Hon TONY RYALL (National—Bay of Plenty) to the Minister of Health: Does he have any concerns about the ongoing performance of Wellington Hospital and the Capital and Coast District Health Board; if so, what are they?

Hon PETE HODGSON (Minister of Health): Yes, I do have some concerns. It is well known that this district health board is going through some difficulties, not the least of which is the departure of a paediatric oncologist as reported this morning.

Hon Tony Ryall: Why has the Government neglected report after report, warning about the continued viability of child cancer services in Wellington—reports that go back to the very first month that Labour was in office 8 years ago?

Hon PETE HODGSON: They go back a lot longer than that. I think there was a report in the term of the National Government that suggested two tertiary paediatric oncology services. This country has three, and the problem we are facing in Wellington is that the clinical number—the number of children with cancer—is mercifully low, about 20 a year, about 12 of whom travel from outside Wellington to Wellington now, so clinicians are interested in whether a shared service between Wellington and Christchurch can be put together. The district health board has signalled again its determination to do so.

Hon Marian Hobbs: When is the next meeting of the paediatric oncology steering group, which the Minister may be referring to, and what are the issues it is seeking to address?

Hon PETE HODGSON: By coincidence it is meeting today and it has two broad issues on its agenda. The first is how to ensure that the provision of secondary paediatric oncology is maintained, and I suspect that the group will come to the view that that is not a difficult issue—that is the status quo; the question is how to maintain the status quo. The more difficult issue is how we rebuild up to the tertiary service that existed until a few months ago. That tertiary service, it is hoped, will be in place by January. Indeed, the original reviewer who said we can get a good tertiary service in place alongside Canterbury said that it should be done by January, if at all possible.

Barbara Stewart: Does he consider that the resignation of the sole remaining child cancer specialist at Wellington Hospital is indicative of medical workforce shortages right throughout New Zealand; and what is his ministry doing to rectify this situation?

Hon PETE HODGSON: There are, from memory, about six paediatric oncologists in New Zealand. Given that there are about 20 patients going to Wellington each year, one would be hard-pressed to say that we would need more paediatric oncologists. What we need, however, are paediatric oncologists who are able to work with one another to keep one another clinically safe. I think that is the underlying issue.

Gordon Copeland: Is the Minister aware that a growing shortage of general practitioners in the Hutt Valley means that people are now phoning around half a dozen or more and are still unable to get an appointment, and that some retiring general practitioners have closed down because there were no buyers for their practices; if the Minister is aware of that, can he tell us what plans Capital and Coast District Health Board or the ministry have to improve this most unsatisfactory situation?

Hon PETE HODGSON: Capital and Coast District Health Board does not cover the Hutt Valley.

Judy Turner: Does the Minister consider that this district health board is experiencing greater staff retention and recruitment problems than other district health boards; if so, how does he account for this difficulty?

Hon PETE HODGSON: Certainly Capital and Coast District Health Board has had its fair share of difficulties, not only with paediatric oncology but with, for example, anaesthetists. On the other hand, it is well staffed in many other areas and leads the country in the provision of some of its services.

Hon Tony Ryall: Does the Government realise the domino effect that this will have on the viability of other paediatric services of Wellington, and what confidence can anyone have that the people who have the track record of neglecting this issue over the last 8 years, despite report after report, can actually fix the crisis that the families of Wellington are facing with paediatric cancer services?

Hon PETE HODGSON: As a citizen of Dunedin I well remember when paediatric oncology was shifted from Dunedin to Christchurch, and it was not a happy time. [Interruption] I am just replying to the member’s question. It did not, however, affect other paediatric services, which are in very good shape in Dunedin. I just remind the member that Capital and Coast District Health Board, even today, put out a statement, which I will quote from: “The board remains determined to pursue a return to offering a full tertiary paediatric oncology service.”

Hon Tony Ryall: Been saying that for 8 years.

Hon PETE HODGSON: The member keeps chipping that this has been going on for 8 years. I just say to the member that except for the past few months, there have been paediatric oncology services at the tertiary level at Capital and Coast District Health Board.

Katrina Shanks: What advice will the Minister give to Wellington parents when their children are diagnosed with cancer and they are forced to get treatment hundreds of kilometres away, for several months at a time, and does he think that this is an acceptable situation for the capital city of New Zealand?

Hon PETE HODGSON: I just repeat afresh, if I may, that we have three paediatric oncology tertiary services in this country, and right now the Wellington one is offering only secondary services. The intention of the district health board is to return to where it has been in the provision of tertiary services, almost certainly in partnership with the Canterbury service, because the number of children with cancer is sufficiently small, thank goodness, that there is a need for the services to be joined up in order to maintain clinical safety. That is the advice I am getting, time and again, and I am sure the steering group that is meeting today will reaffirm that.

Katrina Shanks: What assurance can the Minister give to the people of the Wellington region that this Government is actually going to do something about this crisis, when they have been ignored and neglected in report after report from the very first month the Government has been in office?

Hon PETE HODGSON: The member refers to report after report about, somehow, the absence of paediatric oncology at the tertiary level at Capital and Coast District Health Board. That service has been in place for all of the last 8 years, except for the past few months. That is the situation. The member, Mr Ryall, keeps shaking his head, and the other member, Ms Shanks, keeps shaking her head. They need to ring Capital and Coast District Health Board and ask whether it had a paediatric oncology service at the tertiary level, and the answer will be yes; and whether it is intent on returning to a paediatric oncology service at the tertiary level, and the answer will be yes.

Hon Tony Ryall: What confidence can he offer the parents of the Wellington region, when he talks about relying on the very people who for 8 years have ignored repeated warnings about the viability of child cancer services in the Wellington region; for 8 years they have had reports and concerns, and nothing has happened, and this Minister is happy just to rely on their assurance yet again?

Hon PETE HODGSON: Let me put it a little more directly. There are two ways to ensure viability of a tertiary-level service where one needs a throughput of patients to keep a paediatric oncologist in practice: one is more cancer, and the other is to join up with a second service, for example in Christchurch. It is the second of those two options that is under active exploration.

Hon Tony Ryall: I seek leave to table two documents regarding the warnings in respect of services at child cancer services in Wellington—

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

Incomes—Movements

4. CHARLES CHAUVEL (Labour) to the Minister of Finance: Has he received any reports on movements in real incomes?

Hon Dr MICHAEL CULLEN (Minister of Finance): Yes, a number. The real increase in average gross household income between 2000 and 2007 was 25.4 percent, or 3.3 percent per annum. The increase in real net income for someone on the average income was around $4,400, or 14 percent, over the same period. This was a result of the longest period of sustained economic growth in over a generation, combined with the lowest unemployment on record and more people working than ever before.

Charles Chauvel: Has the Minister received any alternative reports purporting to show changes in real income between 2000 and 2007?

Hon Dr MICHAEL CULLEN: Yes. I have seen a report that purports to set out the impact of inflation on taxation on one “Joanna Average”, and claims there was practically no real net increase. But this report is fundamentally flawed, as it confuses net and gross incomes and applies the consumer price index adjuster to the wrong one. Due to this error, the actual real net increase is more than three times higher than that suggested in the report. This is yet another example of what is coming to be called economic “Billiteracy”.

Sue Bradford: Is the Government considering doing anything at all to improve the incomes of the hundreds of thousands of individuals and families who are dependent on benefits, given that the 1991 benefit cuts were never restored and we now have an $8.7 billion Budget surplus?

Hon Dr MICHAEL CULLEN: Indeed, large parts of the Working for Families package apply to those on benefits with dependent children, including, of course, the very important $10-per-week per child increase that came into force on 1 April this year. That has probably done a very large amount to reduce the number of children living in poverty.

Charles Chauvel: Has the Minister received any reports on alternative ways of accounting for unpaid debts in the Government accounts?

Hon Dr MICHAEL CULLEN: Yes. I have seen a report suggesting that New Zealand should abandon accepted accounting procedures and treat unpaid debt that is not likely to be paid as if it were money we could spend on tax cuts. That is yet another example of economic “Billiteracy”.

Hon Bill English: Can the Minister confirm that what he has just said is a load of rubbish—that I did not make those comments—and that, in fact, I was pointing out something he did not point out to the public, which is that in this last financial year the Government wrote off $1.9 billion of debt in uncollected taxes and fines, when the usual amount is about $90 million, and that meant that the surplus came down from over $10 billion to $8.7 billion?

Hon Dr MICHAEL CULLEN: If that was all that the member had done, he would have just been pointing out standard accounting principles; he then went on to argue that it meant the Government could afford bigger tax cuts, because of the $1.9 billion write-off. That was the economic “Billiteracy”.

Rt Hon Winston Peters: Can the Minister of Finance confirm that anyone with any background in Treasury, particularly as a civil servant, would know that; and how would it be possible for someone to get the calculations so dramatically wrong yet be elevated so high in this Parliament?

Hon Dr MICHAEL CULLEN: The last point is easy: one has only to look at the alternatives. He was the best they had.

Electoral Finance Bill—Regulated Election Periods

5. Hon BILL ENGLISH (Deputy Leader—National) to the Minister of Justice: Has he been advised of any countries which have a regulated election period longer than the maximum period possible under the provisions of the Electoral Finance Bill; if so, what are those countries?

Hon MARK BURTON (Minister of Justice): In Canada there is a spending cap for political parties, but there is a non-specified regulated period. In other words, the entire electoral cycle is regulated. Every dollar has to be accounted for within the spending limits. Arguably, this approach is even more stringent than the one we have referred to more regularly in the House for the United Kingdom, which has a regulated period of 365 days.

Hon Bill English: Is the Minister aware that the United Kingdom, from which he regularly quotes, has in fact five different regulated election periods: for the Scottish Parliament it is 4 months, for the Welsh Assembly it is 4 months, for the Northern Ireland Assembly it is 4 months, for the UK seats in the European Parliament it is 4 months, and that it is only the Westminster Parliament that has an election period of 12 months; why did the Minister choose by far the longest of the periods in the United Kingdom?

Hon MARK BURTON: It may be a surprise to the member, but we are referred to as a Westminster Parliament.

Hon Bill English: When will the Minister tell the public that although he is imposing an 11-month period—in which all political opinion and spending will be tightly regulated—on all New Zealand citizens, he has in fact removed the 3-month regulated period that traditionally applied to members of Parliament, with the effect being that members of Parliament will be able to spend public money pretty much as they like, because it will not count as election expenses, but private citizens will be heavily restricted in what they can spend?

Hon MARK BURTON: As usual, the member misrepresents the facts. The fact is that members of Parliament have always been able to spend appropriately on parliamentary activity in their capacity as a member of Parliament, within their relatively modest budgets, for each of the 365 days of each of the 3 years of the electoral cycle. However, in their capacity as candidates, they are treated as any other parliamentary candidate.

Hon Bill English: Has the Minister seen submissions by independent bodies like the Human Rights Commission and the Law Society, who have made the point that the 11-month regulated period—which prevents private citizens from having any political opinion unless it meets the Government’s criteria—heavily weights the law in favour of the incumbent Government, which can spend without restriction on pushing its point of view; and why should the public believe the Labour Party, which stands to benefit from this law, and not believe the independent bodies like the Human Rights Commission and the Law Society?

Hon MARK BURTON: As usual, amongst those various questions there were a number of completely inaccurate assertions. The Electoral Finance Bill is about ensuring that we never again have a repeat of the appalling behaviour of the National Party and its Exclusive Brethren friends, where it sought to outspend and buy an election result.

Hon Bill English: Is the Minister disputing the fact that the Labour Party has written a law that heavily favours an incumbent Government because it can spend what it likes on pushing its point of view right through election year, heavily favours incumbent MPs because their public spending can no longer be counted as an election expense, and heavily regulates and restricts private citizens and political parties, who cannot have an opinion unless it meets criteria that the Labour Party has laid down?

Hon MARK BURTON: I absolutely disagree with all of the propositions the member puts forward.

Rt Hon Winston Peters: Can I ask the Minister as to whether—

Hon Bill English: I raise a point of order, Madam Speaker. A member called out a term that you have said is unparliamentary. He said: “Tell the truth.” You ruled that term out a few weeks ago.

Madam SPEAKER: I did not hear that because there is so much noise. But if the member did say that, he will withdraw and apologise.

Hon David Cunliffe: The inaccuracy to which I referred is that the member alleged that this is a Labour Party matter; the matter is before a select committee that represents all parties of the House.

Madam SPEAKER: I am not quite sure what relevance that has. I did not hear, because there is so much noise coming from the backbench. I did not hear the comment. If the member made that comment would he stand, withdraw, and apologise.

Hon David Cunliffe: I withdraw and apologise.

Hon Dr Michael Cullen: Madam Speaker, while we are still on that point of order—because you have not ruled and therefore the point of order was live—Mr Brownlee started yelling out across the House all kinds of abuse. I suggest that he might be required to stand, withdraw, and apologise. It might be a good day for us all to be slightly better behaved.

Madam SPEAKER: Will the member please do so.

Gerry Brownlee: I wish to apologise to the Hon David Cunliffe. I fully and totally withdraw my remarks.

Rt Hon Winston Peters: Can I ask the Minister as to—

Gerry Brownlee: Just write the cheque!

Rt Hon Winston Peters: When that member pays the GST back I will pay this back, yes. More important, I have spent more personal money on public causes than all those members together, plus the pack of hypocrites in the press gallery. If members doubt that, they should challenge me. Now back to the question of the day. Is the Minister of Justice aware that Canada—[Interruption] Well, all that member has done is pay his sponsors back, and most corruptly so.

Madam SPEAKER: We are going to have this question in silence because there is too much chipping across the House, and interventions.

Rodney Hide: I raise a point of order, Madam Speaker. I just want to clarify something. Is this the Minister in charge of this country’s diplomacy?

Madam SPEAKER: That is not a point of order.

Gerry Brownlee: I raise a point of order, Madam Speaker. It is inappropriate for any member to allege or assert in this House that any member of the House is under the thumb or the guidance of anyone from outside of the House. Mr Peters, I think, therefore should withdraw and apologise for that remark, lest we should start talking about honours lists.

Madam SPEAKER: Well, I was not quite sure who it was the comment referred to, but if that member has taken offence and asked for it to be withdrawn and apologised for, then it should be.

Rt Hon Winston Peters: I withdraw and apologise. I raise a point of order, Madam Speaker. Perhaps Mr Brownlee can make good his allegation by implication in his last statement, before he dropped to his knees, by getting up, showing some character, and backing up what he just said about an honours list—because I am prepared to give him the facts for that right now. I know the allegation the National Party has made, but I will give him the facts right now, which will show what a deceitful, misleading person he is. I ask him to do it now.

Madam SPEAKER: I know that the members want to give the Clerk a good send off, but I am not quite sure this is the way to do it. That was not a point of order. Would the Rt Hon Winston Peters please ask his question, in silence.

Rt Hon Winston Peters: I take that challenge as one I met and therefore the statement and allegation by implication were totally untrue at the start. My question to the Minister of Justice is this—

Nandor Tanczos: I raise a point of order, Madam Speaker. Given that most of the inappropriate comments are from the questioner, maybe the question should be in silence.

Madam SPEAKER: That is not a point of order.

Rt Hon Winston Peters: Is the Minister of Justice aware that both Canada and the UK are two of only nine countries that have had an unbroken line of democracy these last 153 years, and when did he last hear the allegation that the UK—that is, Westminster—or Canada, were fascist countries?

Hon MARK BURTON: Indeed, I believe the member is correct, and I think it is a matter of some interest to me that those who constantly attack the provisions that basically seek to align in reasonable ways with those jurisdictions seem to have some fundamental difficulty with the idea of protecting the participatory right of New Zealand citizens in their own electoral processes.

Jeanette Fitzsimons: I raise a point of order, Madam Speaker. There is a word beginning with “h” that members are not allowed to use in the House in respect of other members. Is it appropriate for a member to use that word about other people present in the House who are unable to stand and take offence or defend themselves—and I mean members of the press gallery, because a little earlier in this exchange the member accused members of the press gallery of being hypocrites?

Hon Dr Michael Cullen: Unfortunately, there is nothing in the Standing Orders to prevent anything from being said about anybody outside the House; it is a matter of taste and convention. In this particular case, I am sure that those who have certain things said about them have ample retaliatory powers should they care to use them.

Madam SPEAKER: The Leader of the House is correct in that it applies only to matters in the House. I think he explained the point quite well in terms of one’s own defence.

Rodney Hide: In considering amendments to the Electoral Finance Bill, both at the select committee and in the House, was the idea of amending the regulatory time period entertained, or is that something that is set in stone; and is the real purpose of the bill simply to stop the National Party from erecting billboards in the new year?

Hon MARK BURTON: I think it is fair to say that the various provisions of the bill enjoy varying degrees of commitment and determination on the part of various parties in the House. There have been many submissions to give variation not only to the one the member refers to but also, as he will know, to spending caps and a number of other matters. As to the second part of his question, the sole purpose of the bill is certainly not to prevent National Party billboards from being erected, but, given the quality of them, it would certainly be a positive for the landscape.

ASEAN Countries—Trade

6. DIANNE YATES (Labour) to the Minister of Trade: What has been the level of recent growth in the value of New Zealand’s trade with ASEAN countries?

Hon PHIL GOFF (Minister of Trade): In the last 2 years New Zealand exports to ASEAN countries increased in value by 28 percent, from nearly $2.4 billion in the year to June 2005, to about $3.1 billion in the year to June 2007. In the last year alone, the value of our trade with ASEAN countries has grown by 16 percent. That represents excellent progress.

Dianne Yates: What progress has been made in our trade with Singapore and Thailand since New Zealand concluded free-trade agreements with those countries?

Hon PHIL GOFF: The New Zealand - Thailand Closer Economic Partnership Agreement came into effect on 1 July 2005. In the 2 years since then exports have increased by 36.5 percent. That is substantially ahead of the 14.1 percent average increase in exports to all destinations recorded over the same period. Trade with Singapore since 2005 has increased by a total of 22.8 percent. The growth of New Zealand exports to the region overall has been very impressive, and I think that the closer economic partnerships with those two countries have contributed to that trade growth.

Dianne Yates: What has the Government done to further develop New Zealand’s trade with South-east Asia?

Hon PHIL GOFF: New Zealand, together with Australia, is currently negotiating a free-trade agreement with the ASEAN countries as a whole. The conclusion of that free-trade agreement will clearly assist growth in trade, depending on its level of ambition. But even more important, it will increase our standing within the world’s most dynamic region, which is Asia. Recently in Jakarta I also signed a trade and investment facilitation arrangement with Indonesia, which will enhance our trade and economic relationship with the biggest market we have in South-east Asia. Our exports to Indonesia are now worth about $650 million a year. New Zealand Trade and Enterprise is also increasing its efforts—for example, by setting up a very successful Beachheads programme in the South-east Asia area.

Gerry Brownlee: Has the Minister of Foreign Affairs raised with him any concerns about the impact of the Government’s immigration policies on trade with ASEAN nations following his statement yesterday that “when you talk about an Asia disconnect or lack of relationship with Asia what you are talking about is a failed immigration policy.”; if not, what action does he intend to take with regard to the concerns of the Minister of Foreign Affairs about the Government’s policy having failed in this area?

Hon PHIL GOFF: No, the Minister has not raised that issue with me, but he gave a very good speech yesterday in the great hall next to this Chamber, launching a white paper on New Zealand’s relations with Asia. He said that “we should never underestimate the value of personal contact if we are to become truly engaged with Asia.” I would also say, as the member of Parliament representing the electorate with the biggest ethnic grouping within it, that the people of Asian origin within my electorate make a huge contribution to my community and to New Zealand.

Jeanette Fitzsimons: Can the Minister tell us what proportion of New Zealand’s imports of illegally and unsustainably logged timber and timber products originate from ASEAN countries, where 2.3 million hectares a year are being totally clear-felled, and would he be happy to see that part of our trade with ASEAN countries reduced?

Hon PHIL GOFF: This Government, and New Zealand, takes illegal logging—as it does illegal fishing—very seriously. We do what we can to prevent the importation into New Zealand of products that are so logged. I cannot give a specific answer to the member, because that would require details I do not have with me, but if she would like to put that question down in written form then I would be happy to get her the details.

Rt Hon Winston Peters: Taking up Mr Brownlee’s question, is there a reason for the business investors’ rules and also the full Immigration Act to be changed by this Government; does that not point out the wisdom of some of the comments that have been made about targeting for economic and social reason the right immigration into New Zealand, and do those two changes not underscore those policies?

Gerry Brownlee: I raise a point of order, Madam Speaker. Question No. 6 is set down for the Minister of Trade, not the Minister of Immigration. If you think about the content of that question, Madam Speaker, you would realise that it never mentioned trade, but simply immigration rules.

Madam SPEAKER: But it was related to a question that the member asked that was, in fact, related to it. Would the Minister address the question only in the context of his own portfolio.

Gerry Brownlee: I raise a point of order, Madam Speaker. How does that work? I asked a very specific question about the trade relationship with ASEAN nations. To suddenly get the Minister on his feet answering questions about the Government’s immigration policy and about changes to immigration laws, and other arrangements around immigration, hardly fits with a question about trade with ASEAN nations.

Madam SPEAKER: But, as I recall, the member also made reference to comments that were made by a Minister relating to immigration. So the Minister will keep within the rules if the Minister addresses only those matters related to the portfolio.

Hon PHIL GOFF: The presence within New Zealand of ethnic communities—particularly, for example, the Indian and Chinese ethnic communities—gives us a greater understanding, culturally, linguistically, and in terms of trade potential, of trade with the countries of origin from which those people come. In respect of the member’s question, I know that the Minister of Immigration has been addressing, over a long period of time, ways of improving the targeting of our immigration policy. But I reiterate that the people whom I deal with on a weekly basis within my electorate are hugely skilled people who come from Asia and who make a great contribution to our country. We should be grateful for that contribution.

Conservation, Department—Environment Court Case

7. Hon DAVID CARTER (National) to the Minister of Conservation: Does he stand by his answers in the House last week on the Bayly Trust Environment Court case?

Hon CHRIS CARTER (Minister of Conservation): Yes.

Hon David Carter: Why did the Minister say that the Department of Conservation pursued the case to the Environment Court because Bayley Trust was “not prepared to put the land into a covenant” when, in fact, the Department of Conservation never requested that at any stage?

Hon CHRIS CARTER: The Department of Conservation is not the consenting authority; the Department of Conservation’s responsibility is as the guardian. In fact, it has a statutory obligation to be the guardian and advocate for New Zealand’s unique biodiversity. The district council, in its granting of the consent, made reference to the covenant but did not put it into the paperwork. Because the Department of Conservation challenged and appealed the decision, we got a good outcome in the end.

Lesley Soper: What outcomes was the Department of Conservation seeking through its Environment Court action in the Bayly Trust case?

Hon CHRIS CARTER: The Department of Conservation has had a longstanding and well-known interest in the regionally significant mature kanuka forest at Waikatea. Although the landowners said they would develop a covenant to protect those values, they were never prepared to make specific commitments. Attempts were made to resolve this issue, but the landowner remained unwilling to provide specific guarantees that could be incorporated into a legally enforceable covenant. The Department of Conservation had no choice but to appeal the consent to the Environment Court. Informing its view on the application, my department was also mindful that the Bayly Trust had already sprayed 600 hectares elsewhere on the property that had been identified as a recommended area for protection. As I told the House last week, as a result of the court action my department has secured the protection of approximately 280 hectares of mature forest through a legally enforceable covenant, incidentally saving the taxpayer $2 million in carbon credits along the way.

Hon David Carter: Why does the Minister claim that the Department of Conservation’s Environment Court action—costing the taxpayer over $100,000—was necessary when, in fact, the Bayly Trust offered to protect 280 hectares of mature kanuka forest?

Hon CHRIS CARTER: I was reminded in listening to that question from the member of the wise old proverb: “Actions speak louder than words.”

Hon David Carter: Does the Minister think it is acceptable that the Department of Conservation’s primary ecological witness, Professor Clarkson, never even visited the farm; if so, why?

Hon CHRIS CARTER: What I can say is that Department of Conservation staff, including Department of Conservation scientists, on a number of occasions visited the property. This is a simply story. The landowner made all sorts of promises, but was never prepared to put them in writing. By taking him to court, the Department of Conservation has ensured that this area has been protected, and has saved carbon credits.

Hon David Carter: Why did the Minister claim in the House last week that court action was necessary because the landowner walked away from mediation discussions, when, in fact, Bayly Trust, Wairoa District Council, and Hawke’s Bay Regional Council were all keen to mediate a solution but the Department of Conservation was not prepared to negotiate?

Hon CHRIS CARTER: I am delighted to hear that. It does not really explain, though, why the landowners never turned up for meetings, it does not explain why they did not put the covenants into the deal, and it also does not explain why they still have not done that, in spite of being required to by the Environment Court.

Electoral Finance Bill—Multiparty Democracy

8. R DOUG WOOLERTON (NZ First) to the Minister of Justice: What aspects of the Electoral Finance Bill will enhance multiparty democracy in an MMP environment?

Hon MARK BURTON (Minister of Justice): The longer regulated period—which enjoyed some discussion earlier in the afternoon—during which third parties will have to declare their position, coupled with the cap on what third parties can spend in an election campaign, will mean that third-party participation in election campaigns is open and fair. It will also mean that the right of citizens to participate without having their voices overwhelmed by those who have substantial wealth to pour into the electoral process is well protected.

R Doug Woolerton: Would the Minister not agree that this bill provides an opportunity for all parties in Parliament, whatever their relative size, to work towards a fair and an equitable system, and that it provides the opportunity to shed some of the residual inherent bias in favour of larger parties that existed under first past the post?

Hon MARK BURTON: I think that the member is essentially correct in that regard, and I have to say it is something of a mystery to me why one of the old parties, the National Party, has no confidence in its ability to fight an election on the quality and merit of its ideas.

R Doug Woolerton: Is it not a fact that at the 2005 election we saw billboards appearing as early as February and March, huge spending by third-party interests—not just by the Brethren—and massive expenditure by both Labour and National, and that none of that is in the interests of new parties that are trying to seek representation?

Hon MARK BURTON: The essential point the member is making is fair—that is, during an election year the opportunity exists for all citizens, all groups, with a legitimate interest in our electoral system to have their say and to have their point of view reasonably expressed, but that none of them should be overwhelmed by the ability of a few to spend vast amounts of money.

Hon Bill English: Can the Minister confirm that during the 2005 election the Labour Party issued a pledge card on which it spent $800,000 of taxpayers’ money, and that that was found to break the rules, but that under his Electoral Finance Bill that will now be legal?

Hon MARK BURTON: No, I cannot confirm that. But I can confirm that the Exclusive Brethren spent $350,000 on a pamphlet campaign, plus a further million dollars on another pamphlet campaign with the sole written intention of supporting the election of the National Party to Government and with the specific intention of getting around New Zealand’s electoral law. That I can confirm.

Hon Dr Michael Cullen: Can the Minister confirm that during the 2002 election campaign the National Party ran paid advertisements in newspapers, which were pledge advertisements, and that those were paid for out of the parliamentary vote?

Madam SPEAKER: The Minister has no responsibility.

Hon MARK BURTON: Yes, I certainly can.

R Doug Woolerton: Is it not a fact that having unregulated and unrestrained third parties spending huge amounts of money in support of particular political parties stifles free speech, because those who seek representation in Parliament are potentially drowned out by the avalanche of well-financed spin from outside interests?

Hon MARK BURTON: Again, I think the member is correct. I refer members to the December 2006 report of the House of Commons Constitutional Affairs Committee. It concluded—and this is particularly relevant to the New Zealand situation—among other things: “It is essential that both in perception and in reality, money cannot buy undue influence or, indeed, buy an election result from within or outside the party.” I think members would do well to consider that advice.

Rt Hon Winston Peters: Could I ask the Minister—and this is a matter of reasonableness—why Fay Richwhite, as a third party, should not be able to pay the National Party a million dollars, as it did in a prior campaign, and then get all of the other assets around this country that had not already been sold flogged off to the company on the way through, so that its pay-off was to a factor of about 300:1?

Gerry Brownlee: I raise a point of order, Madam Speaker. This Minister has no responsibility for answering a question from Mr Peters that is entirely hypothetical, misleading, and names a political party quite untruthfully.

Rt Hon Winston Peters: I have asked on a question of principle as to what is wrong with a third party doing such-and-such a thing. Then I have given that example, which has never ever been denied by Fay Richwhite. If that member knew anything about the National Party’s workings, which I am sure he does—

Hon Dr Nick Smith: Tell us about the scampi.

Rt Hon Winston Peters: Of course I will tell him about the scampi; that is why I am suing two of his colleagues. That is why I won on 12 October. That is why—

Madam SPEAKER: If the member is making a point of order, would he please make it succinctly and without diversion.

Rt Hon Winston Peters: Well, exactly, but the member wanted to know about the progress of the scampi case, and I have said that I just won on 12 October. That is why the case is going on.

Madam SPEAKER: That is not a point of order. As the member who raised the point of order knows, of course hypothetical questions are asked. The general question was within the Minister’s responsibility. In replying to it he cannot, of course, answer in a way that addresses matters that are in the purview of the National Party alone.

Ron Mark: I raise a point of order, Madam Speaker. You possibly were—

Gerry Brownlee: New Minister?

Ron Mark: Well, that is my point of order. The interjection that came from Nick Smith was made during a point of order, which, as we know, is meant to be heard in silence. That created the disorder. You have just given me the call to make this point of order, which was immediately interjected on by Mr Gerry Brownlee. In the past, people have been thrown out of the House for doing that. I leave it to your decision.

Madam SPEAKER: That member may well be thrown out of the House for his implications, again. I have ruled; there were several interjections. The point of order was not a point of order, and it made points that did create disorder. I rule that if there are any further interjections, people will leave the House.

Hon MARK BURTON: I say to the member that what is wrong with his proposition is that New Zealand enjoys an electoral system in which the voices of ordinary people can be heard, considered, and weighed up by electors. Our electoral system has never been for sale—until perhaps 2005, when it ran the risk of that—nor should it ever be allowed to be for sale.

Legal Services Agency—Confidence

9. KATE WILKINSON (National) to the Minister of Justice: Does he have confidence in the Legal Services Agency; if so, why?

Hon MARK BURTON (Minister of Justice): Generally yes, but of course there is always room for improvement.

Kate Wilkinson: Does the Minister agree with the comments of Justice Duffy in Law News just last week that “Community law centres are under pressure and groan under a weight of bureaucratic expectations from the Legal Services Agency.” and “my own experiences in acting for two legally-aided persons last year did not encourage me to have further dealings with the Legal Services Agency.”, and what does he intend to do about it?

Hon MARK BURTON: I have not seen those particular comments but I am sure the member relays them faithfully to the House. I have ongoing work with the Legal Services Agency, looking at the effectiveness and efficiencies of its systems, including in relation to the agencies the member referred to.

Kate Wilkinson: Which statement is not correct: his statement on 1 March 2007: “the total listed legal aid provider number has increased”; the statement of Justice Duffy in Law News on 19 October 2007: “The number of lawyers prepared to act for legally-aided clients diminishes daily.”; or the Provider Remuneration Advisory Panel Report of September 2007, which shows, as a result of the analysis for the last 3 years: “a drop in civil providers … a large drop in providers with experience level 1, for family listed providers; a steady decline in active providers in most matter/law types … and … a steady decline in active family firms.”?

Hon MARK BURTON: The first problem—

Hon Dr Nick Smith: Caught out!

Hon MARK BURTON: Could Dr Smith please, for once, just be quiet. [Interruption]

Madam SPEAKER: Those members who cause disorder through interjections will be leaving the Chamber the next time that happens.

Hon MARK BURTON: The problem with the member’s question, of course, is that it takes three different statements from three different sources quoted at three different times. Therefore, the point of comparison may, first, not be particularly helpful. Second, I think it really depends on which selective number crunching the member wants to play with. What I can say to the member is that for the year ended 30 June, the number of active providers—and I think these are the critical numbers that we should all be interested in; they are certainly the numbers I am interested in—for family law reduced from 922 in 2005-06 to 900 in 2006-07, which is a reduction of 22; the number of active providers for civil law increased from 418 to 452, which is an increase of 44; and the number of active providers for criminal law decreased from 823 to 821, which is a reduction of two. Overall, that is an increase in active providers.

Hon Dr Michael Cullen: Can the Minister confirm that the question that has just been asked called for an increase in Government spending, and given the contrast with question No. 1 today, which accused the Government of increasing spending too much, does the Legal Services Agency provide for mediation services between National MPs?

Madam SPEAKER: The latter part of the question is not in order; the first part is.

Hon MARK BURTON: In answer to the first part of the question, that is certainly the case. I suspect that National members’ income levels would require they pay for their own mediation.

Kate Wilkinson: Why is the Minister advertising on TradeMe and Newstalk ZB for more legal aid applicants when he knows that the number of lawyers prepared to act for legally aided clients diminishes daily?

Hon MARK BURTON: First, I am not. Second, the numbers I gave the member in the previous answer clearly belie the assertion she has just made.

Health Services—Bureaucrats

10. MARYAN STREET (Labour) to the Minister of Health: Has he received any reports of increases in the number of health bureaucrats?

Hon PETE HODGSON (Minister of Health): Yes, I have, repeatedly. Only yesterday Tony Ryall tried one more time to run the cliché that there are armies of bureaucrats running the health system.

Hon Dr Nick Smith: There are!

Hon PETE HODGSON: Unfortunately for Mr Ryall, Mr Smith, and anyone else who likes to believe this cliché, the facts get in the way of their prejudice. Let me offer them a couple of examples. The first is that the Ministry of Health, which is of course the biggest collection of bureaucrats, manages to soak up less than 2 percent of the health budget; more than 98 percent of the health budget gets through to the front line. The second fact is that, across the whole sector, in recent years the proportion of health professionals has risen as a proportion of the total workforce, and the proportion of management, administration, and support staff has declined as a proportion of the total workforce. That is the case. Those are the facts. They are in the annual report. But, wait, there is one more little thing to be kept in mind here, and that is that if there were still further reductions in management, administration, and support staff, we would get into trouble because then we would have nurses answering the phones or doing the laundry, and that would not be very cost-effective, would it?

Maryan Street: Can the Minister advise the House again what the country gets for the massive reinvestment in health?

Hon PETE HODGSON: Immunisations are up; smoking is down; life expectancy has increased; 7,000 more Kiwis got elective surgical services this year; general practitioner fees have halved; most prescriptions are down from $15 to $3; 27 new hospitals are being, or have been, built; 1,000 more women are getting breast screening; and 50,000 more kids are getting fruit in schools each day. The list goes on and on. It is never enough, but those are facts, and they are all gains on where we were at the time of the change in Government.

Dr Jackie Blue: I seek leave to table two reports by the Minister of Health. The first report states “Wrong again Ryall”, and the second report admits that the Minister got it wrong.

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

Hon Tony Ryall: Since the Prime Minister promised to cut a swathe through the health bureaucracy, how many more people are employed in the Ministry of Health today compared with 6 years ago?

Hon PETE HODGSON: Since the Prime Minister said that it was important to cut a swathe through the health bureaucracy, this system has taken out an entire layer of bureaucrats. It used to be called the Health Funding Authority, before that it was called the Transitional Health Authority, and before that we had four regional health authorities. Guess what? They have all gone.

Births, Deaths, Marriages and Relationships Registration Amendment Bill—Amendments

11. SANDRA GOUDIE (National—Coromandel) to the Minister of Internal Affairs: Is he confident that his proposed amendments to the Births, Deaths, Marriages and Relationships Registration Amendment Bill will result in a workable bill; if so, why?

Hon RICK BARKER (Minister of Internal Affairs): Yes. The proposed amendments to the Births, Deaths, Marriages and Relationships Registration Amendment Bill contained in my letter to the select committee for its consideration seek to strike a balance between protecting private and personal information while still allowing access to that information for legitimate purposes. My proposals will require applicants for certificates and printouts of registered information to present adequate identification, create an access register so people can find out who has accessed their records, and enable persons, on request, to see that their records are not disclosed to the public. This would keep the bill workable and more agreeable.

Sandra Goudie: What benefit will be achieved by severely restricting access to public information, setting up more bureaucracy, and increasing costs for the New Zealand public?

Hon RICK BARKER: I think the member should listen to her staff member whom I am well advised expressed her dismay that her parents’ marriage certificate could be obtained and used to present for access to other services without her, her family, or anybody else being aware of it. Sandra Goudie’s member of staff expressed to her that no one should have access to her personal records or to her family’s personal records without their sanction.

Darien Fenton: What gave rise to the bill and the proposed excellent amendments?

Hon RICK BARKER: Identity fraud has been a growing problem in New Zealand and this is of growing concern to New Zealanders. This Labour-led Government is determined to take action on this. I am aware that in 2006 a Unisys security index survey found that 52 percent of New Zealanders were very concerned about unauthorised access or misuse of their personal information. In 2006 a fraud survey conducted by KPMG reported that 61 percent of respondents believed identity fraud was a major problem for business. It reported that it represents a reported 546 cases of identity fraud with a total value of $2.8 million. I would also draw to the House’s attention the concern raised by Sandra Goudie’s bench mate David Bennett, who wrote to me because he was concerned about one of his constituents whose birth certificate had been taken without authorisation. A driver’s licence was obtained and debts were incurred in that person’s name. David Bennett wrote to me and asked: “Could you please advise whether there are any plans to make the requirements more stringent when obtaining a birth certificate, in order to reduce the opportunity for identity theft?”. I suggest that National members get their heads together, see that this is a serious issue, and take a unified line on it.

Dr Pita Sharples: Tēnā koe, Madam Speaker. Tēnā tātou katoa. What definition of “whānau” will be applied in the amended Births, Deaths, Marriages and Relationships Registration Amendment Bill to ensure that tangata whenua have access to whakapapa information?

Hon RICK BARKER: Under the proposals that I put to the select committee there would be no requirement for a definition of “whānau”; any person would be able to obtain access to the records, providing that person correctly identifies himself or herself to the registrar. There would be no restrictions in that regard.

Sandra Goudie: Does he agree with the KPMG report that identified no link between identity theft or fraud and access to birth, death, and marriage information, and does he agree with the New Zealand Herald editorial that stated that the bill seeks to make a change that is wrong and to make it for the wrong reasons; if not, how has he managed to anger just about every interested party to this bill?

Hon RICK BARKER: It is very interesting to see in a recently published paper that a person has been convicted for stealing the identity of a baby born in 1962 by using the birth certificate obtained from the record. That person is now facing conviction. As for media commentators, I would make this point. They have no responsibility at all for protecting individual citizens from identity theft—they are merely commentators. This Government takes the protection of New Zealand citizens against identity theft very seriously, and we want to make sure we do the best job we can whilst maintaining the balance of giving legitimate access to these records for legitimate reasons.

Peter Brown: Will the Minister give the House a firm assurance that his proposed amendments to the bill will not impact adversely on adoptees and prevent them from obtaining, or even make it more difficult for them to obtain, relevant personal information?

Hon RICK BARKER: I give that member that assurance, yes.

Sandra Goudie: Why is he seeking to establish a costly bureaucracy to administer a problem that does not exist when the only person seeking to change the status quo is himself?

Hon RICK BARKER: I suggest that the member wake up to the reality that identity theft is a real problem. To have open and unrestricted remote digital access to New Zealand’s births, deaths, and marriages records would give an unparalleled scope for identity fraudsters. In this Parliament we need to be careful to ensure that we protect New Zealand citizens from identity theft. I take that responsibility seriously, even if that member does not.

Copyright (New Technologies and Performers’ Rights) Amendment Bill—New Legislation

12. CHRISTOPHER FINLAYSON (National) to the Associate Minister of Commerce: Does she stand by her statement regarding the Copyright (New Technologies and Performers’ Rights) Amendment Bill that “Under this Government there have been seven pieces of legislation concerning this matter, and indeed a number of new ones are coming through.”; if so, what are these new pieces of legislation and what intellectual property issues will they deal with?

Hon JUDITH TIZARD (Associate Minister of Commerce): Yes, I stand by my statement. I was referring to the intellectual property trademarks and patents work stream, where we are looking at opportunities to maximise the economic and cultural returns New Zealanders get from their intellectual property, while also ensuring that New Zealanders have good access to information, research, and creative and cultural innovations from the rest of the world. The new legislation includes a Patents Bill that will replace the Patents Act 1953 and update New Zealand’s patents regime, and the Trademarks (International Treaties and Enforcement) Amendment Bill, which contains provisions to allow accession to three international treaties concerning trademarks, and which will empower the Ministry of Economic Development and the New Zealand Customs Service to enforce criminal offence provisions for trafficking in counterfeit goods and pirated works. Other new legislation is being considered.

Christopher Finlayson: Why has she yet again failed to address the important issue of tribal ownership of intellectual property, particularly given that the World Intellectual Property Organization has been working on the issue for years, and Māori, quite apart from the claims under Wai 262, have been asking the Government that the issue be addressed in any intellectual property law reform?

Hon JUDITH TIZARD: The member confuses traditional knowledge with intellectual property. Those are two streams of work. There is extensive work going on. New Zealand is an active participant in the World Intellectual Property Organization, as it is in the Pacific Arts Festival and other international fora relating to traditional knowledge. We are also doing a great deal of work under the Wai 262 process, where we are waiting of course for a Waitangi Tribunal finding. Traditional knowledge is being addressed in a number of areas, but it is not intellectual property in most cases.

Dr Pita Sharples: Does she agree with Dr Paul Tapsell that the issue about the repatriation of toi or uru moko from the Museum of Natural History in Rouen is about the protection of the trade in human beings; if so, what action will she be taking to ensure that toi moko are returned from France?

Hon JUDITH TIZARD: I have not seen that quotation from Dr Paul Tapsell. However, I am aware of his concerns and of those of many other people. Te Papa is leading an extensive survey and programme of repatriation of toi moko.

Christopher Finlayson: Why has the current legislation failed to deal with person-to-person file-sharing and websites that encourage video sharing, and how will any new pieces of legislation, which she said yesterday were “coming through”, deal with those matters?

Hon JUDITH TIZARD: It is part of our work programme, and we will get it on to the legislative timetable as quickly as possible.

Christopher Finlayson: Why is it that new section 226D, inserted into the principal Act by clause 89 of the bill, means that any circumvention device would be able to be freely made and sold, simply because it could be used by someone for a legal purpose, and does that not mean that the ban on the circumventing of devices is almost irrelevant?

Hon JUDITH TIZARD: I understand that this matter can be debated in the course of considering the bill that is before the House at present. However, the general provision around technical protection measures includes, particularly, provision for people who have a sight disability or who are blind, and who therefore have good reason to be given access to information. All of this legislation balances the competing interests of people who have legitimate interests. My concern is to make sure that New Zealanders have the best access, and that the owners of intellectual property have the best protection that we can manage.

Dr Pita Sharples: What response will she make to Māori concerns regarding the intellectual property guide that she is launching tonight—concerns that Māori have consistently raised over the past 16 years in the Wai 262 claim—including concerns that it undermines the underlying principle that not all mātauranga Māori should be commercialised, and that new measures must be designed to protect the collective and intergenerational interests of iwi Māori in Māori biocultural heritage issues?

Hon JUDITH TIZARD: That issue is generally being dealt with under the Wai 262 claim. The Māori guide to intellectual property, which we are launching this evening, is trying to give a better description to all New Zealanders, but particularly to Māori, of what is intellectual property, so that they can gain whatever protection they seek in that area, recognising that all traditional knowledge is not necessarily intellectual property and therefore cannot be protected through that process.

Questions to Members

Electoral Finance Bill—Committee Timetable

1. RODNEY HIDE (Leader—ACT) to the Chairperson of the Justice and Electoral Committee: What is the timetable for the committee’s consideration of the Electoral Finance Bill?

LYNNE PILLAY (Chairperson of the Justice and Electoral Committee): The bill is still before the committee. Consideration of all aspects of the bill is ongoing, and a number of further meetings are planned.

Rodney Hide: Will the committee be considering further involvement of the Human Rights Commission in its consideration; if so, what and how?

LYNNE PILLAY: Yes; the Justice and Electoral Committee will be inviting the Human Rights Commission to have further involvement in its consideration of the Electoral Finance Bill. The committee today authorised advisers on the bill to consult the Human Rights Commission, and resolved to seek further comment from the commission on some of the committee consideration thus far. I thank the MP for Epsom for his constructive role.

Christopher Finlayson: Can the member give this House an assurance that all departmental reports will be provided to committee members in a timely manner, so that the reports may be properly considered prior to deliberation, or will committee members be forced to have to continue to endure her chaotic chairmanship?

Madam SPEAKER: I do not think that last comment was appropriate. Would the member please withdraw it.

Christopher Finlayson: I withdraw.

LYNNE PILLAY: As the member is aware, or should be aware, that is committee business and is discussed in committee by committee members.

Rt Hon Winston Peters: I seek the leave of the House to table the membership of the Justice and Electoral Committee, which shows that Rodney Hide is a member, and was there but only for 15 minutes, so why on earth is he asking these questions?

Document not tabled.

Bills

Income Tax Bill

Third Reading

Debate resumed from 21 August.

Hon Dr MICHAEL CULLEN (Minister of Finance): The current bill, the Income Tax Bill, contains the redrafted parts from Part F to the end of the bill, which I think is Part Z by sheer coincidence, and re-enacts and consolidates earlier parts, renumbering various sections. It is the culmination of 15 years’ work towards making New Zealand’s most widely consulted law more accessible and user-friendly.

The Income Tax Act is a very old piece of legislation, dating back to 1891. Over the years it has been hugely amended and recast, and expanded significantly to reflect the changing nature of tax and business. It was not until the early 1990s that the legislation was comprehensively reviewed, from a basic structural and presentational perspective, by the Valabh committee, the consultative committee on the taxation of income from capital. That committee’s report highlighted various weaknesses in the legislation, and proposed a number of solutions. These included reorganising the legislation into a more logical and coherent structure, and consolidating certain parts of the legislation. It also recommended a commitment to modern drafting techniques and plain language in redrafting.

A major feature of this mammoth exercise has been the close collaboration, through all stages of the project, between the public and private tax sectors. Submissions from professional groups and individuals have played an important part in resolving a range of issues during the project, including the issue of transitional structural policy, and technical and drafting questions. The guiding principle throughout has been not to change the law as expressed in the current tax legislation but to re-enact it in as user-friendly a form as possible. The resulting bill, hopefully to be enacted later, is a tribute to the process, and to the people involved in bringing the bill to its second reading: the members of the rewrite advisory panel under Sir Ivor Richardson, the drafters, the tax specialists in both the private and public sectors, and the successive Ministers of Revenue, I think beginning with the Hon Wyatt Creech. He was the Minister who began this process of the rewrite of the Income Tax Act.

I finish by pointing out that we are the only country in the world that has successfully completed this project. Other countries have attempted to do so, but have had to abandon the project part-way through. That in part is because some of those countries have much more complex tax legislation than New Zealand—surprising as that may seem to many users of our tax legislation—and it is actually very, very difficult to complete the process.

Hon PETER DUNNE (Minister of Revenue): First of all I acknowledge the Minister of Finance, who moved the third reading of this bill a few weeks ago during my absence from the House while I was at a funeral. I am grateful for his taking charge at that point. It was appropriate, because he is one of those Ministers of Revenue he referred to as having been involved in the passage and development of this very lengthy legislation over the last 15 years.

The work began in the early 1990s, in the time when the Hon Wyatt Creech was Minister of Revenue. My own involvement began in 1996 when, after becoming Minister of Revenue for the first time, my first visitor was Sir Ivor Richardson, to update me on work with the rewrite project and to advise me that I would be overseeing the introduction of the second stage of the legislation, which was the core provisions section.

When I became Minister of Revenue again in 2005, my first caller was the same Sir Ivor Richardson, to advise me that one of my early tasks would be to oversee the introduction of the final stages of this bill. So I am personally delighted to see this five-volume rewrite exercise completed. I am delighted to acknowledge the work of Sir Ivor, Robin Oliver and the team at the Inland Revenue Department, the rewrite panel, and all who have been involved over the years in bringing to fruition a task that many would have thought was beyond us.

The Minister of Finance referred to the fact that we are the only country to have begun such an exercise and to have completed it. My understanding is that the United Kingdom began such an exercise, but after a length of time not dissimilar to ours, abandoned it because it was too difficult. The Australians began but stopped halfway through, and as a consequence now effectively have two income tax Acts, and more problems ahead of them.

That this exercise is significant should not be underestimated. For the first time we now have in plain English, and in one set of documents, our income tax law. It will make it easier for those who work with the law—the practitioners and the law officials themselves—to navigate their way around our complicated law. That in itself will assist in making compliance with our system that little bit better.

I will indicate the next stage for the rewrite panel. Now that the panel has steered this project through its various stages, one might be forgiven for thinking that we are quite happy to let the panel members enjoy a little bit of leisure. But I advise the House today that we see an ongoing role for this panel, in overseeing the processes of redrafting and in ensuring that public consultation has been brought to a successful conclusion. The panel will continue in operation to deal with any unintended changes that have arisen as a result of the rewrite of this law.

One of the things that we all know about tax law is that it is dynamic. It is never set in place for any particular period of time, and it needs to be constantly revisited. We are very fortunate to have a rewrite panel, under the calibre of leadership of Sir Ivor Richardson, to keep an eye on these things as we move through.

When I was in Canada a few weeks ago I was intrigued to be presented with a copy of that country’s first income tax Act, which was passed during the exigencies of war in 1917. It is a very slim document, not much thicker than one of our Order Papers. It has a couple of operative clauses to which I was attracted, and I was very tempted to move a late series of amendments to this bill to incorporate those clauses. The first clause states that the Minister of Revenue shall levy: “what taxes he sees fit upon what individuals he sees fit, and that in pursuing those individuals for those assessments he can employ whatever method he likes and can deputise whatever set of officials he likes to carry out that duty for him.”

I was very attracted to those provisions. They may well be the next stage of the rewrite process of this bill! It would be much simpler in many senses. But I think that in itself that demonstrates just how complex tax law has become right around the world since those days when income taxes were still a very novel concept.

This is not the sort of issue that will excite huge public interest, but it is one that people should be very satisfied at the outcome of. It has been one of the most mammoth projects that has been undertaken in the history of this Parliament. It is no coincidence that the consequence is probably the largest single piece of legislation ever to be passed by this Parliament.

I simply conclude by acknowledging again the contribution of the rewrite panel—in particular, the strong leadership of Sir Ivor. I acknowledge successive Ministers of Finance for their work, and successive Finance and Expenditure Committees for their work, as well. I also acknowledge all of those who have worked with the officials to bring this very important and lengthy project to what I regard as being a particularly successful conclusion.

Dr the Hon LOCKWOOD SMITH (National—Rodney): National will support this motion, because this really has been a bipartisan effort to rewrite New Zealand’s Income Tax Act. As has been acknowledged, it was actually started by the then National Government during the 1990s. The current Minister of Revenue, as he said, was involved in 1996 in that process.

Just reflecting on the comment the Minister of Revenue made a moment ago, I would hate the thought of someone like Dr Cullen having the power to levy whatever taxes he chose on the people of New Zealand. Dr Cullen has been proven to be one of the most rapacious tax collectors as Minister of Finance that this country has ever seen. It is just staggering to think that in the 7 years, almost 8 years, that this Labour Government has been in office, the average fulltime wage has gone up from about $36,000 to about $45,000, something like that. One would think that was quite a significant increase in income, yet after we adjust for the fact that a person has gone into a higher tax bracket after going over $38,000 of income—after we adjust for that fiscal drag and calculate how much tax they are paying today, and after we adjust for inflation over that time period—the average income earner in New Zealand under this Labour Government is actually worse off.

That is why I say that Dr Cullen has proven to be one of the most rapacious tax-gatherers this country has ever known. It is just outrageous that during a time of economic growth—not much to do with this Labour Government; world economic growth has been pretty good—because of the foundations laid by the third Labour Government in the mid-1980s and then by the National Government of the 1990s, the Labour Government has cruised under pretty benign world economic conditions. It was a wonderful opportunity to raise standards of living in New Zealand. But what has happened? The average income earner in New Zealand is actually—in real dollar terms, after accounting for tax—worse off than when Labour came into office. I think that is an indictment on this current Labour Government.

I, too, add my thanks for the work done by Sir Ivor Richardson and his team on this income tax legislation rewrite. I also acknowledge the massive input by a group of officials at the Inland Revenue Department, who I think serve New Zealand particularly well. I want to acknowledge one of the senior officials, Robin Oliver, who has done a lot of work for successive Governments on tax policy. He is an outstanding public official for New Zealand, and I acknowledge the tremendous contribution that he and his team have made to this daunting process.

When one looks at the bill on the Table of the House this afternoon, one wonders whether they actually have had to strengthen it to hold the bill, because 3,000-odd pages of it is certainly a weighty piece of legislation.

Having said that I congratulate those who were involved in this work, I do want to raise a concern that I have. One of the successes of the successive, ongoing rewriting of parts of this Act—as various parts have been rewritten over the years—is that there has been thorough examination of the rewriting work at the Finance and Expenditure Committee. New Zealand’s accounting experts have been able to come along to the select committee and argue fine detail, such as whether “place of abode” means the same as “dwelling place”, those kinds of things. It may sound meaningless whether “place of abode” is the same as “permanent dwelling”, or language like that, but in fact these issues were proven to be important for tax purposes. So the select committee had to reason with the officials, and make sure that the wording that was used in this new rewrite did not change the meaning of our tax law.

I believe that that was a very important part of the process, and that it helped make the successive rewrites of the various parts work for New Zealand. What happened in the final stages was that, right at the last minute, the Government brought into this House Supplementary Order Paper 136—a Supplementary Order Paper of 250 pages. That Supplementary Order Paper contained a rewrite of legislation that was passed by this House basically in the last 12 months—such things as the Taxation (Savings Investment and Miscellaneous Provisions) Act of 2006, which was the Act that brought in the very complex legislation around the changes to taxing offshore portfolio investment. That Act brought in what Labour calls the fair dividend rate. I would not call it a fair dividend rate, but that is what Labour chose to call it.

That Supplementary Order Paper brought a rewrite of those kinds of provisions into this rewrite of the Income Tax Act. What was important about it—and I really emphasised this at the Committee stage of the bill—was that the select committee never got to hear what tax experts up and down the country thought about the incorporation of those provisions, which were not written in the language of this rewrite. Those provisions were not written in the language of this rewrite of the Income Tax Act, yet they were incorporated into it. I presume the language was changed to actually make it consistent with the rewrite of this Act. The select committee was unable to hear any submissions on that work—and it involved a lot of work, because there were 250 pages of tax legislation in Supplementary Order Paper 136.

What troubles me still further is that during the final consideration of this rewrite by the Finance and Expenditure Committee, I questioned officials about some parts of the income tax that had not actually been rewritten at that stage. For example, parts covering Part M and Part N, but particularly Part M of the Income Tax Act, because Part M, in particular, covers the legislation surrounding the family tax credits. This Labour Government did not introduce these family tax credits—they were introduced by the then National Government, in fact, in the 1990s—but it has expanded them and made them hugely more complex since it has been in office.

What we were told at that final Finance and Expenditure Committee consideration of this legislation is that the material covered in Part M was just too complex to include in this rewrite—“too complex” was what we were told. People who are familiar with our Income Tax Act, and familiar with Part M—the whole Working for Families tax credit part—will tell one that it is incredibly complex legislation. Very few people understand it. That has now been incorporated into this rewrite that we are debating in this third reading this afternoon. The select committee has had no chance to hear tax experts’ views about whether the complexities of Part M have been adequately covered in this final version of the bill that we are debating in this third reading, and it will go into our law this afternoon.

That is what troubles me about this Labour Government’s final handling of this long and important rewrite—so carefully handled, right up until this last stage, and then at this very last hour, with Supplementary Order Paper 136 being rushed into the House, such complex and important parts of our legislation being incorporated into the rewrite without the chance for the select committee to debate or hear the views of our tax experts up and down the country on it.

Finally, let me make these points about this tax legislation, because the Income Tax Bill covers most of our tax law. Tax issues have become a major focus in recent weeks, with proposals by both major parties in Australia for a coherent programme of tax reductions. Under the proposals in Australia, low-income workers are going to be so much better off than will be the case under this Labour Government’s tax policy here. For example, a low-income person in Australia earning up to, say, $16,000 a year, once those proposals are implemented in Australia would be paying no tax—no tax at all. That same person earning $16,000 in New Zealand under this Labour Government’s tax laws covered in this bill will be paying $2,790 in tax. That is $2,790 more on $16,000 of income than someone would pay in Australia. That is almost $54 a week more tax paid here in New Zealand by a low-income earning person than in Australia.

That is just one issue. Take the Government’s much-vaunted Working for Families tax package. It says that it has raised so many children out of poverty. What the Government seems to ignore is the poverty trap, as so many women in this country try to work their way off a domestic purposes benefit. We all know the figures, or at least Labour should. If a person is earning $10,000 a year he or she is still getting most of his or her domestic purposes benefit. To get off the domestic purposes benefit, that person has to be earning over $25,000 a year. To earn that extra $15,000 a year that person basically has to work an extra 20 hours a week at $15 an hour—an extra 20 hours a week. At $15 an hour that person will get to keep about $1.60 of that $15 an hour. That is a poverty trap for low-income people, and these Labour members do not give a stuff about it. They do not care, because Working for Families at the last election was just a big vote-buy, just like interest-free student loans. They did not care a jot about low-income people, and all those anomalies are in this Income Tax Bill.

R DOUG WOOLERTON (NZ First): New Zealand First supports the rewrite of the Income Tax Bill. It is true, and I do not know whether everybody knows, but this rewriting of our tax legislation goes right back to the days of Roger Douglas in this Parliament. It has been a huge, huge task, and one needs only to look at the formidable tomes on the Clerk’s desk to see the size of the work. The rewrite was to bring the law into modern-day language. In many cases it was to line it up with Australian tax law. As Dr Lockwood Smith has said, it is ongoing, and he makes a criticism of that. But he does know, and he admits, that all tax law is ongoing. One can never capture it all in one lot and have the world stand still after that.

Encompassed in this, of course, are the new changes that Dr Smith talked about. New Zealand First has been a particularly strong advocate of the Working for Families package that is an add-on to this tax law. We are fans for that legislation because we do not believe that flat tax cuts right across the board do the job any more in New Zealand. We believe they are unsophisticated. We do not believe that they send the right messages. We do not believe they reward the right people, and we do not believe that they do the right thing for the economy. Everybody knows that a tax cut right across the board will reward those who earn more money to a greater degree than those who earn less.

It is true that the Working for Families package came out at about the time of the last election. I used to tell people that my son and his wife had just had another little child and my daughter-in-law had given up working for a period of a year or so. I said that the tax cuts that were proposed by one side of the electoral spectrum at that stage would have given me, personally, about a $90-a-week tax cut, and would have given my son, his two young children, and his young wife nothing. In fact, the Working for Families package gave him in excess of $100—just over, I think—per week, and gave me nothing. I think that that was right. I thought that was right and proper then, and I think that is right and proper today.

As well as that, Dr Smith talked about an issue that I know genuinely concerns him, and I respect his concern. He talked about the poverty trap and getting out of poverty, and he talked about the area we call “round the margins”, where one goes back to work and is reasonably highly taxed on the first few dollars earned over a certain level. That is recognised in the Working for Families package, and I say with due respect that it was criticised by the National Party because it goes right up to a household income of $70,000 or thereabouts. That was the way that we got around that poverty trap business. I think everybody would accept that although $70,000 is not a king’s ransom, it is certainly a long way from poverty. I think it is right in this modern age that we first of all look at the income for the household and that we take—

Dr the Hon Lockwood Smith: You are still facing a 60 percent effective marginal tax rate at $70,000.

R DOUG WOOLERTON: Yeah; at the margins. I understand that argument and accept it, and I know the member is genuine about that. But we have here a solution to that. We can provide that solution by messing around at the margins or by taking the tax cut higher up the scale, which is what the Government chose to do. We think that that is the more elegant solution. There is always a problem around the margins when people move on to the next tax rate, but we believe that it can be dealt with better if people are getting a tax cut to that level. I do not believe, as I said before, that a tax cut of the same percentage across all income levels provides justice. I think it would provide more inequities than the solutions that the Labour Government—ably supported by New Zealand First, I might add—has come up with.

Having said that, I think it is appropriate to congratulate the people who have involved themselves in this huge task. I understand that a tax rewrite has been undertaken in Australia and also in England with varying degrees of success. But we have a bill before us; it is here, and I think it is a wonderful achievement by the people who have embarked upon it. I must admit that some members of the select committee were rather more into the detail than I perhaps was, and I am sure that they will speak in more detail on the bill. But I pride myself on the fact that while there are others to do that level of detail I will look at the overall effect. I am happy to do that, and it does not worry me at all that I did not go through every page. We have people far more qualified than members of Parliament to do that, and they do literally slave over every word that is in these huge tomes we have before us.

Before I sit down, I want to talk about tax compliance in this country. Tax compliance waxes and wanes, but although tax is compulsory it is far better morally and legally if we can have a high level of voluntary compliance. In other words it is far better if people do not have to have the tax department sending them letters, piling on the compound interest, and threatening to take them to court and from there to jail. I have to say that in the past the people who have been in charge of our policy and our taxation system in New Zealand have understood absolutely that in this country we do rely on a high level of voluntary compliance. They have altered the structures so that if a business is contemplating a deal, shall we say, it can go to the tax department and it can get, if not a binding opinion, an opinion on whether it will meet the criteria. I think that a taxation system and regime that allows that to happen and encourages working with the department and vice versa is absolutely what we should have in an enlightened country like New Zealand.

I am not saying that people enjoy paying tax. I am not saying that they should not work sensibly and within the law to get around paying excessive amounts of tax, but we should never have a situation that allows tax cheats and we should always have a situation that encourages compliance. At the end of the day it is tax that pays for schools, hospitals, roads, railways—

Craig Foss: The surplus.

R DOUG WOOLERTON: —and many of our other services. The surpluses will, I have no doubt, in time be used for those purposes, which are needed by us and by all citizens.

CHRIS TREMAIN (National—Napier): Mr Woolerton does himself a disservice in terms of his acknowledgment of his contribution to the Income Tax Bill. He, like other members of the Finance and Expenditure Committee, did pay strong attention to the detail of the bill. I agree that all of us did not read through every page of the 2,704 pages that comprise the bill, but we certainly paid due consideration to the anomalies that were raised by the submitters on the bill and by the officials. I think Mr Woolerton—like all members—paid due heed to those anomalies in consideration of the bill. Today, I join with him in supporting this motion going forward.

Before discussing some of the detail of the bill, I will take just a minute to acknowledge the work of David McGee. As a new member of this House I want to put on record the enormous support he has provided to new members. He has been an extremely approachable man and is extremely knowledgable. He has been highly supportive of new members of the House in all aspects. I want that to be put on record.

The Income Tax Bill marks the final chapter in a project that began back in 1992. I do not want to spend a lot of time on that, as Ministers Cullen and Dunne have canvassed the issue. It was commenced back in 1992 with Wyatt Creech, who was the then Minister of Revenue. It began in 1992 with the Valabh committee, which recommended that the structure of the Income Tax Act be simplified, made easier, and refined, and that it should be rewritten in plain language. That has been the whole objective of this particular bill. Seventeen years later we stand to debate the final stages of what has been a truly mammoth bill. Members of the gallery might want to have a look down on the table at the size of the legislation we are debating here today. My congratulations go to Sir Ivor Richardson and to the officials for undertaking this behemoth—this huge review of the tax legislation. I say well done to those people; they should take a bow.

The purpose of the bill is to make the legislation easier to understand. On behalf of accountants in the Hawke’s Bay and in Napier and of friends in the accounting fraternity—the likes of Andrew Bayley, Tony Mossman, and Giles Pearson, who are simply salivating over this new legislation and its simplification and over what that has done for them in their particular roles—I tell members that the fact that it is in plain language will be a big help for them. Its language is clearer and more concise. The writers of the bill have managed to get rid of a lot of the legal or archaic terms that have been associated with the historical legislation. It has been consolidated with far greater clarity and a heap of repetition has been cut down.

In terms of the bill’s style, the changes are significant, but its overall intention remains exactly the same. That intention is the framework that holds together the policies of progressive Governments on the way New Zealanders are taxed. Under this Labour Government, new records have been set in the policy, in terms of the levels of taxation that hard-working Kiwis are now being asked to pay. My able colleague Dr Lockwood Smith referred to the rapacious—I think that was the word he used—ability of Dr Cullen to collect tax. We need only look at the statement of financial performance of the House in 2007 to see that the total revenue levied through the Crown sovereign power is some $56 billion—$56 billion is being levied by the Crown right now. We have only to go back to the same financial statements on 30 June 2000 to see that the level of tax that this Government was taking from hard-working Kiwis was $34 billion. We have seen an increase of $22.1 billion in the space of 6 or 7 years. It is unbelievable. That is a whopping $5,525 of additional tax per man, woman, and child in this country collected over just that short period. That is a 64 percent increase in direct taxation of this country. It is huge.

Under this Government there is unlikely to be change any time soon. This Government—in the Prime Minister’s words—is intent on building up the kitty. It is building up the kitty for this Government to fight in the next election. I have the proof. It is good that Minister Cunliffe is in the Chamber today, because he will be able to verify the proof of this building up of the kitty. I would like to refer him to the Cabinet paper from Michael Cullen’s report dated 19 April of this year. I specifically refer him to point 23 of that Cabinet paper. It states: “To maintain our commitment to the long-term fiscal objectives,” which is Cullen-speak for building up the kitty, “I may need to make some adjustments to future Budgets. These are likely to be:”—members should listen for it—“… that we do not adjust tax thresholds in the medium term thereby retaining fiscal drag and potentially allowing tax to GDP ratios to rise slightly.”

Chris Auchinvole: Which means?

CHRIS TREMAIN: I will get to it. The members of the gallery and public probably have no idea what it means. I will certainly explain it. The paper states: “Accordingly, this paper seeks Cabinet’s agreement”—which the Cabinet signed off on; I am sure Minister Cunliffe will agree with that—“to rescind our previous decision to adjust income tax thresholds … Within the projection period (i.e. from 2011/12 onwards) we will adjust tax thresholds for inflation, but some portion of fiscal drag might need to be retained to finance our decisions.”

Let us ponder some of those statements for a minute or two. Firstly, the report states that the Government will not adjust the tax thresholds. That means that as one’s income goes up one will be taxed at higher levels of taxation. One will simply fall into higher marginal tax brackets, so will be taxed more. Secondly, the report states that in the medium term the Government will not adjust anything. Medium term tends to be 5 to 15 years, so we are looking at a Government that will not do anything for our taxation in the medium term. It is in this Cabinet paper. The Government will retain fiscal drag. It will actually allow hard-working Kiwis to end up in higher tax brackets, paying more tax on their earnings. What is more, the Government acknowledges that it will allow the tax to GDP ratio to rise. That means that, going forward, it is prepared to collect a higher amount of tax over the whole national income.

The Government is acknowledging that it is not prepared, despite this massive tax take, to give any back to hard-working Kiwis.

Chris Auchinvole: Is Dr Cullen a historian?

CHRIS TREMAIN: Yes. So how can hard-working Kiwis trust this Government when its members now stand up and say they might think about tax cuts at the next Budget, but in this Cabinet paper, signed off by the Minister across the House there, Cabinet says it is not going to adjust tax thresholds in the medium term, it is going to retain fiscal drag, and it is going to allow tax to GDP ratios to rise? That is what they are saying, and they say it in this Cabinet paper. So the talk we get over there about maybe having a look at tax cuts in the next Budget does not stand up to muster, because the truth is in this Cabinet paper, signed off in April 2007. I want Kiwis to have a good long think about that.

In summary, we are here debating this Income Tax Bill tonight. It has been a mammoth piece of work. It sets the foundations for the wider tax structure—the framework within which policies of Government around tax are set. But, Mr Assistant Speaker, I have to tell you that the way this current Government is taxing hard-working Kiwis, it is no wonder that more and more Kiwis are leaving this country, going overseas, and seeking careers in other countries. Thank you, Mr Assistant Speaker.

Hon DAVID CUNLIFFE (Minister of Immigration): We are debating the Income Tax Bill at its third reading, and it is an appropriate opportunity to reflect upon the hard work of the Finance and Expenditure Committee, its advisers, and the Inland Revenue Department over a very long period of time doing a mammoth task of cleaning up a bill that had been sequentially amended, with sticking plasters in patches, and had become very, very difficult legislation for both practitioners and members of the general public—like Craig Foss—to interpret. The advantages of the rewrite are that it is a comprehensive rewrite, that it is in plain English, and, importantly, that the rewrite itself does not change tax policy.

Some time ago, when I was a member of the Finance and Expenditure Committee working on earlier stages of this bill—which probably shows how long it is that it has been in the pipeline—it was very clear, and it has remained clear since, that this is not a vehicle for changing tax policy. There is a generic tax-policy process that we follow to do that involving extensive consultation with the industry and with the public, and this is not that. This is a tidy-up, it is a rewrite, it is a once-in-a-generation clean slate for legal draftspeople, which will leave both the practitioners and the public better off. In that regard it is something that, really, no reasonable person anywhere in this House would disagree with. It makes sense to have good, plain English law. It makes good sense to have a rewrite of legislation—mammoth task as it was—that helps everybody to understand his or her obligations.

So what, then, has the Opposition done with this debate? Rather than looking like a Government-in-waiting—which would imply that it had a certain seriousness about its approach to Government, governance, and policy; that it had done the hard yards in the back rooms; and actually had some ideas to contribute that would help grow our country and make us more productive—the Opposition has used this serious opportunity to repeat some old saws of economic “Billiteracy”. In the House today the Minister of Finance again drew attention to some of the rubber numbers that Mr Bill English, the Opposition finance spokesman, has used in regard to the hypothetical “Joanna Average”. The only good thing about that example is that it was nice to see the National Party departing from its historical sexism and actually calling the person “Joanna”—we give it some compliments for that.

But the issue is that National members got the numbers wrong; they got the numbers way wrong. The situation of the sole income worker without children on the average wage was calculated on the basis of using gross income instead of net income, and that error meant that Mr English understated the net increase in income by a factor of three—that is, the $500 increase, according to Mr English, was, in reality, according to Treasury figures, a $1,751 increase. We cannot have a shadow Treasurer who cannot do maths—

Hon Harry Duynhoven: Let alone work out GST.

Hon DAVID CUNLIFFE: —let alone work out GST, and let alone tell the difference between gross and net income. We in Labour can tell the difference between gross and net income and we can tell the difference between gross and net debt, which is why we know that under Dr Cullen’s prudent stewardship we have gross debt down to around 20 percent of GDP and we have net debt down to below 0 percent.

The New Zealand Government’s books are in credit for the first time since we built the railway tracks in the 19th century. That is how good we are in terms of prudent governance, and it is a very, very important thing to remind members opposite—like Mr Foss, who sees the Finance and Expenditure Committee as a private tax consultant—that New Zealand’s fiscal strength is the foundation of all other growth.

It is the core business of a Minister of Finance to mind the cheque book, without which our accounts would slide into disarray. Why is that? There are three key reasons. Firstly we must maintain the debt anchor at prudent levels, and, as I have described, we have more than achieved that. Secondly—and members opposite may not have twigged to this fact—New Zealand has a very significant savings gap. New Zealanders spend about $111—this was the figure last time I looked—for every $100 they earn. That gap is reflected in our national accounts and in our external accounts. The Government has to maintain a surplus, because Kiwis maintain a deficit. If the Government did not do that, there would be the giant sucking sound of foreign capital leaving the country as our credit rating took a nosedive. The Government is encouraging better private savings habits. That is why we have the Superannuation Fund, that is why we have KiwiSaver, and that is why we have KiwiSaver Plus, all of which will make an immense strategic difference to New Zealand. But there is a third reason—which is extremely important as well—which is that we are an economy running at full speed at the moment, or as near to our non-inflationary maximum as we can sustainably go. The Governor of the Reserve Bank is warning that any further fiscal pressure would have an upward impact in interest rates.

It may not have dawned on members opposite that Government spending and tax cuts are both inflationary. It is one thing to have a strong balance sheet, it is one thing to have a strong fiscal position, but it is quite another to be able to spend that money without encouraging inflation. What does that mean for mum and pop Kiwis? It is very simple. There is no point in giving them a $20 a week tax cut if their mortgage goes up by 100 bucks a week. They would be 80 bucks a week worse off. That is the kind of maths that the Opposition—soon to be Opposition again for another 3 years—just cannot get its head around. Prudent fiscal management means looking at the Government’s accounts, and it also means looking at the macroeconomic balance, and the two have to be handled in tandem.

So how does the Opposition resolve this conundrum? Quite simply, it does it by flip-flopping. Bill English is contradicting himself virtually weekly, and John Key just does not know how to put a sock in it. He is so desperate to be liked by everybody he talks to that he just keeps talking. He keeps talking to the point where he keeps contradicting not only himself but also his finance spokesman. Take the example of broadband. Mr Key said: “We’re going to invest big in broadband.”, Mr English said: “No, we’re not.”, then Mr Williamson said: “Yes, we are.”, and Mr English had to say: “No, we’re not.” Who knows what the National Party position is; it would just be better if it formed it in private, rather than in public debate. In the last week Mr English has said that the Government keeps too much of its surplus. Then he said that the Government spends too much of the surplus. The National Party says it will not spend any more. Bill English said: “We are going to bring some discipline to Government spending.” That sounds fantastic, but at the same time it is criticising the Government for having too much discipline! Come on, National Party! Give us a clue; what is National’s policy? What would it do if it were in Government? Here is a hint: if it does not give the public the impression that it could actually govern, it will never get the chance. Goodness me, the Greens have more chance of finding their way to the Treasury benches as prudent fiscal managers than the current Opposition does, because at least the Greens are consistent.

Craig Foss: They know their numbers.

Hon DAVID CUNLIFFE: They know their numbers. They want to run an expansionary fiscal policy in virtually any circumstance. But at least they are consistent. Bill English cannot tell the difference between expansion and contraction; he revolves the two weekly, like a revolving exit door.

I think the National Party needs to put Tau Henare in charge of its Treasury portfolio. There is a man with clear views. There is a man with clear opinions, who has the almost universal respect of his party. He is a paragon of virtue, a paragon of consistency, and would never fall into Bill English’s trap of contradicting himself and his leader on an almost weekly basis. Maybe a great brown hope is soon to emerge from west Auckland, and I do not mean John Tamihere—nor do the people of Waitakere. But that is another matter.

To sum up, this is not a tax policy debate. It is not—nor should not be—a fiscal policy debate. This bill is a once-in-a-generation tidy-up of legislation that has had layers of amendments laid down on it like sediment on the seafloor. It was time to give it a good dredging and clean it up. That is what has happened.

If I can end as I began, it is a matter of enormous credit to the Finance and Expenditure Committee over many years, enormous credit to its professional advisers, and enormous credit to the members who have worked long and hard on this bill that it is here in the House for its third reading. Mostly, I want to pay due respect to the Minister of Finance, Dr Michael Cullen, who has led this process over the last few years, determined as he is to match good law with sound and prudent fiscal management. That has been the foundation for the longest sustained expansion in New Zealand’s post-war history.

Dr PITA SHARPLES (Co-Leader—Māori Party): Tēnā koe, Mr Assistant Speaker. For most tangata whenua across Aotearoa, today will not be remembered for being the day the Income Tax Bill passed its third reading in the House, but today may have taken on some interest if tangata whenua had been aware of the connection that can be made between this Income Tax Bill and the seventh Māori monarch, Kīngi Tuheitia Paki.

Tuheitia is a direct descendant of King Tāwhiao, who lived from 1825 to 1894. Tāwhiao, the second Māori king, was absolutely committed in his drive for Māori autonomy. He established a Parliament, Treasury, and a bank to house Treasury. His Cabinet included Ministers of Pākehā affairs—that sounds good—lands, justice, laws, and taxes. Revenue was raised by voluntary donations, ferry charges in Waikato, tithing, taxes, fees, and fines taken by the local rūnanga. It was all paid into the king’s Treasury. Indeed, as the record goes, it was King Tāwhiao who had the first banknote in New Zealand printed. So significant was this early monetary foundation that, to this day, the Reserve Bank of New Zealand retains King Tāwhiao’s profile in its formal coat of arms.

Having established the symbolic relationship that exists between Tūrangawaewae Marae in Ngāruawāhia and the debating chamber, it remains only to be seen what practical, contemporary relevance the Income Tax Bill has for tangata whenua today. Has the pursuit for rangatiratanga that was first anticipated by King Tāwhiao borne fruit in the way in which the current Act will apply to income derived in the 2008-2009 and later income years? Did the drive for the Bank of Aotearoa anticipate that in 2007 only 10 percent of Māori would make it to the top income quintiles, as compared with 25 percent of Pākehā? Did the Māori people, in their desire for financial autonomy, ever expect that many of them would be unable to retain a high proportion of income through the impact of GST, student loans, and now KiwiSaver?

The Income Tax Bill is motivated by the objective of making the legislation clear, while also minimising changes to the effects of the legislation and the associated compliance requirements of the Act. It all seems so uncomplicated—the genuine desire to rewrite the law to make it clear, plain, and consistent. They are laudable goals. The problem, however, is not just in the remedial amendments and corrections to the Act; the problem lies in the very nature of the taxation system, which is for the benefit of some users and not others.

Over the last few months we have seen New Zealanders placed in a precarious financial position due to the market failure of their investment in Bridgecorp, VTL, and Nathans Finance. We have also witnessed a Hamilton businessman from Rafia Trading Company being able to clock up evaded GST and income tax payments of more than $1.1 million, with associated interest and penalties of about $2 million, and New Zealanders who have either been dealt a savage blow by the vagaries of an uncertain market, or who themselves have dodged and deceived their taxation responsibilities. But the criminal offence that we find most objectionable is the deliberate cryptic and complex confusion the State has instituted in the wilful elimination of some families from the tax credit system.

We have talked previously about the way in which the Government has bracketed together three component parts of the existing taxation structure: minimum family tax credit, which used to be family tax credit; in-work tax credit; and family tax credit, which used to be family support. We are to refer to them now as the singular Working for Families tax credit.

If all of that sounded scrambled to us, just imagine what it is like for so many families who do not know the actual value of the component parts of the system, who are not able to calculate their entitlements and abatements, and who are therefore unable to know how to work the system to maximise their income, and to know when and how abatement makes it unprofitable.

The very real fear we have is that too many families will find it too confusing to apply for their tax credits and will simply miss out. The system reeks of the emperor’s new clothes. The obvious truth is that Working for Families and the in-work payment discriminate against specific, targeted parents, despite the proclamation by the Government that it is a Government that cares. It is a Government that says it cares for young trainee apprentices, even though the majority—54 percent—of those enrolled in 2001 and 2002 dropped out of the Modern Apprenticeships programme.

It has taken 15 years to rewrite the Income Tax Bill into its current version of some 3,041 pages. It was a pleasure to note the recommendation of the Finance and Expenditure Committee that Part M should be redrafted to give effect to the purpose of clarifying and simplifying the legislation. Given the complexity of the Working for Families tax credits, the select committee recommended that any review of Part M should be taken separately. Those are views we certainly support.

We endorse the intention of promoting accessibility of the rewritten version to be easily understood by non-specialists, but we remind the House that it is not simply a matter of renumbering or reformatting on the basis of the advice of the Rewrite Advisory Panel that the House is being asked to consider this afternoon.

Today we are considering the influence of the neo-liberal policies that, at the very least, have not created the equitable distribution of wealth through wages and benefits. This has resulted in large disposable income increases for high-income earners, in direct contrast to ongoing decreases for low-income earners. At the very minimum we would expect that the worst-off families in Aotearoa have an adequate income to invest in and sustain their children’s future.

Back in 1886 the prospectus of Te Maungatautari Whare Utu, the Bank of Aotearoa, included the following statement: “whereas the Māori People so banking have been grievously wronged in their dealings with these Europeans, who have largely profited thereby: and whereas our hearts being greatly grieved at this robbery of our people: be it known therefore that we the Chiefs of the tribes aforementioned, in council assembled, have decided to start a Bank for the use of the Māori people.”

The quest for self-determination resulted in the establishment 121 years ago of the Māori bank. In 2007 there is continuing and solid evidence to support the initiative of such an institution, but the ongoing responsibility and opportunity provided within the Treaty partnership should also be seen in income tax reform and based on the equitable distribution of wealth.

The Māori Party suggests that at its very basic form the income tax rewrite project could have provided the means to progressively transform the in-work payment into a form of family support that could be transferred and that could benefit all children on the same basis.

The ultimate outcome of the transformation project could have been to achieve a universal family benefit that truly acknowledged the unique role of parenting and caregiving, and that treasured and valued the significance of children as the wealth of the nation. Now that would have been a day that all New Zealanders would remember this third reading of the Income Tax Bill for.

CRAIG FOSS (National—Tukituki): It is a pleasure to speak on the third reading of the Income Tax Bill, volumes 1 through to 5. I follow some very good and informative speakers, and I follow some quite hopeless ones. I was very interested to see that the Minister of Immigration spoke on this bill. I do not think he has spoken on the bill in its earlier readings—perhaps he did; I am open to be corrected—and perhaps that gives us yet another clue as to the various changes in the upcoming Cabinet reshuffle.

The Minister of Immigration got up and started to accuse the National Party speakers of not talking about taxation, then wandered into talking about broadband himself. I do not know quite what is going on there, but he did give a very nice accolade to his master, Dr Cullen. Obviously, the Cabinet positions have not been settled yet.

The bill is five volumes and 3,031 pages long—I think a couple have sneaked in since last time I looked—and, yes, this is its third reading. The bill has been 15 years in the making. Yet I note in the commentary that time constraints have prevented some issues from being addressed, which personally I find quite amusing. Two items in particular that will not be addressed by the rewrite are legislation surrounding KiwiSaver and changes to the foreign investment taxation rules and regulations, which are covered in the commentary on page 2.

As a member of the Finance and Expenditure Committee, I note that hardly a week goes by without there being yet another change, Supplementary Order Paper, or amendment to existing legislation or bills currently before our committee that cover KiwiSaver or the various foreign investment tax rule changes that were announced last year. I think it would have been quite a good measure to allow a bit more time after the 15 years to get those changes incorporated into this simplification of existing law.

I acknowledge the chair of the Finance and Expenditure Committee, Mr Shane Jones, who helped us get through this process. I wonder who will be our next chair as Mr Jones also nudges someone aside in the upcoming Cabinet reshuffle. I acknowledge my fellow committee members and the former members of the committee, as previous speakers have acknowledged. We have gone through, I think, four or five Parliaments during this rewrite, as well as Governments led by both the major parties.

I acknowledge Sir Ivor Richardson in particular. He is a mountain in New Zealand parliamentary legislative history and an absolute rock. Whenever he spoke to our committee there was silence. Everyone paid a lot of attention to him and to his writing and various opinions.

I was very pleased to hear the Minister of Revenue say earlier that the tax rewrite committee will be staying together to make sure there are no issues surrounding what we end up passing here. I think that is a very good idea. We could extend that idea not only to other legislation but perhaps to various rewrites of other legislation. Perhaps we could address some termination clauses in much of the legislation this Houses passes.

There was much collaboration across parties, and also consultation with interested parties and experts from many Government departments, particularly the Inland Revenue Department, of course. I note, though, that the collaboration and cooperation seen around this legislation rewrite could serve as a lesson. Would it not be nice to have such an approach by the Government of the day, whoever that might be, to fundamental changes to various New Zealand laws, such as the Electoral Finance Bill, which is currently being bulldozed through various select committees by the current Government and which is probably one of the most Draconian pieces of legislation this country has ever seen?

What is missing from this bill? There is no mention of indexation. Yes, the Income Tax Bill is a rewrite of existing legislation but it does not really allow for a framework of indexation. In fact, as my colleague Mr Chris Tremain, the MP for Napier, said earlier when he pointed out the absolute deceit of Dr Cullen in Cabinet papers, essentially what Dr Cullen is doing is pumping up the economy, inflation, and interest rates. That therefore drags people into a higher tax bracket and gives Dr Cullen more money to spend and spray around in election year.

Perhaps we could rename election year as the year in which the Labour Government talked about tax cuts, because it is the only time that tax cuts seem to have even been on the agenda. As we recently witnessed last term with the infamous “chewing gum” tax cuts—as miserly as they were, at least they were something—as soon as the election was out of the way and the Government had just scraped in, the tax cuts were snatched off the table. That was outrageous. Funnily enough, the Government has moved on to run even greater and higher surpluses—or, to translate, it has continued its overtaxation.

Of course, the Income Tax Bill we are talking about here, which is having its third reading, does not mention Australian tax law, although it does touch on various international relationships. But it would be very interesting to talk to some of those 500,000 Kiwis who are enjoying Australian tax law and tax rates. It is also interesting that the two major parties in Australia, both the incumbent and the challenging Labor Party, endorse the philosophical righteousness and the correctness of taking only as much revenue from hardworking workers—Aussies and Kiwis over there—as is needed to run the Government in the best possible and most efficient way. They see the multiplier; they do not see the static. They are not stuck in the mud like the current Government over here. They see not taking as much in tax revenue from Australians as being an investment in Australia. Their aim is not to keep the punters down and control them, as the current Government here constantly tries to do.

I would like to raise another very, very important matter. Tax is very complex, and taxation law is very complex. Indeed, we have five volumes of it here. New Zealand income tax is even more difficult and complex because we have so many tax rates. Many, many taxpayers need to contact the Inland Revenue Department to ask questions about various tax matters. Funnily enough, the department runs various tax helplines and 0800 numbers for people with questions about GST and income tax, etc. People can call a certain number in a certain area if they want to ask about tax law.

I asked the Minister of Revenue how many phone calls, broken down by year and number called, had been made to those various helplines over the past 5 years. It was a pretty simple question. I imagine that data is held by the Inland Revenue Department, because it seems to manage to give us average waiting times for all the people who have called, for example.

I asked the Minister how many people are calling each number. It was very, very surprising to me, and I am sure to other members, that when the Minister replied he was not prepared to answer the question. He did not think it was in the public interest to do so. He did not think it was in the public interest to know how many people are calling which helplines to ask about income tax.

Here we are, after 15 years, passing a bill about income tax. I think that is absolutely outrageous. I have a lot of respect for our Minister of Revenue, but on this issue I am afraid he let me down. I will be asking further questions about it, because the answer I was given was absolutely outrageous. There will be further questions and further commentary about that issue. How can it be? How can the Government know whether the income tax law is working if it does not know how many inquiries the Inland Revenue Department is getting—according to the Minister?

I quote from the intention and objective of this bill: “The objective of the rewrite project is to make the legislation clearer so that taxpayers can more easily determine and observe their income tax obligations.” I suggest to the Government that it opens up the lines of communication, otherwise it will be in further trouble.

I would also like to address a matter that a previous speaker, the Minister of Immigration, muscling his way into the finance portfolio, alluded to earlier. He talked about New Zealand debts being at a prudent level. He said that gross debt was 20 percent and that our net debt was zero. He is wrong; debt is about 17.5 percent gross and is positive about 3 or 4 percent net. He said that is prudent; it is imprudent.

Dr Cullen will get up and rave on about borrowing for tax cuts and about how outrageous it is. Dr Cullen is borrowing for tax cuts. He issues Government bonds. Government bonds are 70 percent owned overseas. The Government does not need to borrow that money, so how is he funding the corporate tax cuts he announced in the last Budget? How is he funding the $1 billion of corporate tax cuts he announced in the last Budget? He is borrowing. We should not let him get away with it. He cannot have it both ways. The Government is not prudent; it is imprudent.

There is one other point I want to make before I sit down. Minister Cunliffe, who spoke previously, asked where National’s taxation policy is. If the Government were to announce the 2008 Budget tomorrow, then National would be announcing its policy not far behind. When the Government announces its 2008 Budget, we will give more details of our policy. We are supporting this bill. Thank you very much, Mr Deputy Speaker.

Bill read a third time.

Bills

Land Transport Management Amendment Bill

First Reading

Hon HARRY DUYNHOVEN (Minister for Transport Safety) on behalf of the Minister of Transport: I move, That the Land Transport Management Amendment Bill be now read a first time. It is my intention to move at the appropriate time that the Land Transport Management Amendment Bill be referred to the Transport and Industrial Relations Committee for consideration, that the committee report by 25 March 2008, and that the committee have the authority to meet at any time while the House is sitting, except during oral questions, and during any evening on a day on which there has been a sitting of the House, and on a Friday of a week in which there has been a sitting of the House, and outside the Wellington area during a sitting of the House, despite Standing Orders 192, 194(a), and 195(1)(b) and (c).

The Land Transport Management Act 2003 fundamentally shifted the way land transport in New Zealand is funded and managed. I am pleased to be introducing this amendment to the Land Transport Management Act and associated legislation on behalf of my colleague the Hon Annette King. This bill arises primarily from a number of reviews into the land transport sector that were aimed at improving value for the massive financial investment that the Government is making into land transport. In particular, the Next Steps review of the New Zealand land transport sector identified a number of issues that needed to be addressed. The bill addresses the issues raised in those reviews and provides a mechanism for regions to accelerate capital works through a regional fuel tax, if the regions wish to.

The bill provides for a Government policy statement to provide additional strategic guidance to the land transport sector. The New Zealand Transport Agency, replacing the existing Crown entities Land Transport New Zealand and Transit New Zealand, will give effect to the Government policy statement when it develops and manages each new 3-yearly National Land Transport Programme. Other land transport stakeholders will need to incorporate the Government policy statement into their decision making. For many years our land transport planning and funding system has been based on an annual cycle. Because the proposed National Land Transport Programme will need to be produced only every 3 years, compliance costs will be reduced and certainty will be increased.

The Government also proposes to change the way that territorial local authorities, regional councils, and others plan their land transport projects and services. This bill means that land transport projects and services will be consulted on at the regional level by all the agencies responsible for funding and delivering land transport activities. This will facilitate the development of integrated transport packages.

The new regional land transport programmes will be put together by regional land transport committees. The committees will need to prioritise land transport activities for their regions, including those concerning State highways, with some exceptions. The Government policy statement will ensure that national priorities, such as preserving the State highway network and enhancing public transport services, are maintained. Local road maintenance and minor capital activities, as well as existing public transport services, will be included in regional land transport programmes but will not be prioritised by region. This reflects the need to recognise local government autonomy and accountability.

I propose giving greater legislative guidance to the membership of the regional land transport committees. Some committees have become large and unwieldy. Each committee will have two representatives from the relevant regional council, one from each territorial authority, and one from the New Zealand Transport Agency. Reflecting current arrangements, there will also be one member to represent each of the five objectives listed in the New Zealand Transport Strategy and one member to represent cultural interests. These six members will participate in discussions on regional land transport programmes and will vote on regional land transport strategies. In regions where there are unitary authorities—Gisborne, Tasman, Nelson, and Marlborough—the membership arrangements need to be different but will reflect the general scheme for other regions.

Transport structures in Auckland will be reflected in the different arrangements for regional land transport programmes there. This means that the Auckland Regional Transport Authority will be responsible for developing Auckland’s regional land transport programme. We are also leaving the regional land transport committee membership requirements in Auckland unchanged while the Auckland governance proposals develop.

This bill will consolidate all land transport planning provisions into one Act. We are also extending the planning horizon of land transport strategies to 30 years to reflect the long-term nature of transport planning. The strategies will be reviewed every 6 years rather than every 3 years.

The creation of the New Zealand Transport Agency will integrate decision making and improve accountability. The new entity will be a Crown agent as defined under the Crown Entities Act 2004. It will have all the functions that Land Transport New Zealand and Transit New Zealand currently have except for the power to declare and revoke State highways, which will become the responsibility of the chief executive of the Ministry of Transport. The functions of the Director of Land Transport, which cover a number of regulatory licensing and law enforcement roles, will also be transferred to the board of the new agency.

Because the new agency will both deliver its own projects and services and fund the activities of others, the Government has been mindful in the bill of the need for robust accountability requirements. The new Government policy statement and regional prioritisation will also play a role in ensuring accountability. The Government policy statement will establish the amount of funding available to be allocated to all activity classes, including State highways. The agency will not be able to fund projects and services that are not contained in a regional land transport programme, with the exception of some nationally led programmes such as road policing and research, education, and training.

The Government proposes that all fuel excise duty obtained from motorists will be reserved for land transport purposes. This will ensure that the public will see what they are getting from the petrol excise duty and road-user charges they pay. The bill will also allow the Minister of Transport and the Minister of Finance to allocate fuel excise revenue received from pleasure-boat users to activities such as maritime search and rescue, boating safety education, and maritime safety services.

The bill will allow regions to levy regional fuel taxes in order to allow regions to bring forward capital projects, should they wish to. Limiting the use of regional fuel taxes to capital assets will ensure that the public understands the purpose of the tax, and will provide an end date for the tax. The tax will be limited to up to 10c per litre of petrol or diesel, with a limit of 5c per litre to be spent on roading. The Auckland region will be able to identify up to 5c per litre’s worth of projects, and the Ministers of Finance and Transport will be able to identify an additional 5c worth of regional land transport projects within the 10c regional limit.

Regional land transport committees will be required to prepare and consult on proposed regional fuel tax schemes. Once the regional council is satisfied with the proposed scheme, it must be lodged with the Minister of Transport and the Minister of Finance. The Ministers may then decide to recommend to the Governor-General the making of an Order in Council to approve the scheme. Once a regional fuel tax has been introduced in a region, wholesale distributors will make payment to the New Zealand Transport Agency. The agency will be responsible for refunding commercial non-road fuel users and for distributing the net revenue to the agencies responsible for projects under the relevant scheme.

The revenue guarantee for the National Land Transport Programme, and the funding guaranteed for the State highway construction programme announced in 2006, will no longer be required in the new planning system. That is because a high level of certainty on overall funding levels and activity class levels will be provided through the Government policy statement, through a new system for adjusting fuel excise duties and road-user charges, and through the ability for the National Land Transport Programme to go into deficit.

The measures set out in this bill will allow New Zealand’s land transport system to move forward in a fully integrated manner. I am pleased to be presenting this bill on behalf of the Hon Annette King, and I urge members to support it. I commend the bill to the House.

DAVID BENNETT (National—Hamilton East): I thank the Minister for that introduction to the bill, which was a synopsis of what has been put into the legislation. I think that before we talk about the bill, it is important to look at the background behind it. The land transport sector has been vaunted by this Government as something it has put a lot of money into. Government members have always gone out there and said that they have put a lot of money into land transport, and they have given comparative figures on the spending between now and the 1990s. Well, some home truths need to come out about that transport funding.

This bill is the direct result of the inefficient use of funding on a scale that has been demonstrated in a number of reports that have come through to the Minister of Transport. This legislation is a direct result of those reports. It all started with the Ministerial Advisory Group on Roading Costs. Its report was basically a destruction of the Minister, her achievements in this area, Transit, and Land Transport New Zealand. It was scathing in the sense that those organisations involved in land transport were not providing the value for money that people would expect of the sector. It was a huge hit on the Government and on the Minister, because transport policy had been a flagship policy in which the Government had said it had been doing so well. The fact that its own people came out and said that it was underperforming, that it had no idea of where it was spending its money, and that it had no accountability—and, what is more, no governance over that spending—has resulted in this bill.

The Ministerial Advisory Group on Roading Costs was set up as an independent panel to look at funding of roading costs in New Zealand. Things have to get pretty bad for a Government to set up an independent panel in the first place, but when that independent panel basically slates the Government, it tells us that the Government is not doing a very good job. That is the history behind this bill.

The transport sector has had some money thrown at it, but, on a percentage basis, it is still less than what National put into it. It is a sector that has not delivered. Considering the money that has gone into it, it has not delivered. The sector has been plagued by cost overruns, and by inefficiencies in planning, direction and governance. The ministerial advisory group’s findings led to the Next Steps review. The Minister used this review to say, basically: “Well, I know there is a problem; let’s do something about it.” Well, she should have been doing something about that years ago. These problems did not come up overnight. They have been obvious to people in the sector for a number of years. This Government has sat on those problems year after year, and it has not delivered. The Government just says it will do this and that in its Budgets, and, for pure political convenience, it has not actually looked at how it is spending its money.

The Next Steps review was equally scathing of the Government. It set out some findings. It found that the central, regional, and local land transport plans are not fully aligned. It found that expenditure pressures are not being addressed strategically. It found that there was inconsistent planning and funding for policies, which distorts incentives within the sector; that the roles of Government land transport agencies remain unclear; and that some functions are duplicated. It is another big cross against this Minister and this Government for inefficiencies in this sector.

Then the Government came up with this legislation. This is supposed to be the answer to those problems. Well, this legislation has not been thought through. There are a number of difficulties in it, which need to be addressed through this process—through the select committee and by the Government. But the Government will not address the hard issues that need to be sorted out; it will address only some of the minor ones, and we will come back to those hard issues that are not being addressed in this legislation. But having said that, there are some good things that needed to be done and have been done.

We need to see some planning in land transport. If members talk to anyone in the land transport sector, they will find that their major problem is that they do not have consistency of planning and they do not know what will happen in the next 3 to 6 years, the next 10 to 20 years, or the next 20 to 30 years. So we welcome the legislation’s provisions in relation to planning. Those achievements in relation to planning are valuable, and they are needed in the land transport sector. They are only part of the solution, but they are one of the parts that the National Party will support; it is something that has been waiting to be done for a number of years.

When we look at what we do find problems with, we see that one of those things is the issue of regional fuel taxes. The history behind those regional fuel taxes involves State Highway 20, a major road in Auckland. A poll of the Auckland community found that the community did not want to pay a toll. The result of the community not wanting to pay a toll was that the Government decided it could not put a toll on people as it was politically incorrect, so it decided that it would have a regional petrol tax. So everybody has to pay a regional petrol tax to pay for the road—a road that somehow goes through the Prime Minister’s electorate, no doubt. The rationale behind it—and it is fine if one lives in Auckland—is that the tax would be, possibly, 10c, 5c of which would be for public transport, and that, partly, would to pay for electrification in Auckland.

That is fine for Auckland, but what about other regions around the country that do not have such pressing public transport needs? If members look at the situation in the Waikato, they might wonder what the point is of having a regional petrol tax of 10c with 5c of it having to go to public transport. Our big issue in the Waikato is building the Waikato Expressway. That would be where we would want to put the 10c of regional fuel tax. We would not want to put 5c of that into public transport in the Waikato.

We have Mr Duynhoven here. I would love to see him go to his regional council in Taranaki and ask that council what it wants. I bet the council would tell him that it wants the whole 10c for its own roads. I tell the Minister that it would not want to have to spend 5c on public transport. The Minister should go and ask his constituents this weekend what they want. They will tell him that they do not want that regional fuel tax to be 10c that is broken down to 5c for public transport and 5c for roading. They want the whole 10c put on roading, because that is the big issue in Taranaki. If the Minister drove into New Plymouth between 3 and 5 in the afternoon he would realise the congestion problems of getting into the city that he represents. He is not letting the constituents in his city use the regional petrol tax in the manner that they want, so there needs to be some degree of amendment to that regional petrol tax to take into account the differing needs around the country. That is something we hope will be addressed through a Supplementary Order Paper during the Committee stage.

The other part of the legislation that we have great difficulty with is in the merger of the office of the Director of Land Transport and Transit New Zealand. Certainly there is need for reform in this area, and nobody is in any doubt about that. However, the merger goes back to what was set up a number of years ago. Those organisations were actually divided for a reason. They were divided so that the provider arm and the funder arm were in separate bodies. That is quite a rational division, and that is what local government lobbied for. They were joined at one stage, and local government went to central government and said: “No, we can’t make that work; we want it divided.” So it was divided. Now the Government is bringing that situation back. Well, it will get the same problems we had 10 or 20 years ago; it is just dressing them up differently. Those problems will just be in a new vehicle, and it will take a couple of years for them to come through.

This Government needs to take a good hard look at its transport policy. This bill is a quick-fix measure. It has taken a year of reports to identify the problems, and, suddenly, within a couple of months, the Government can merge these organisations together and get it sorted out. Well, it does not work like that. The Government needs to do some more strategic planning in the reorganisation of the transport sector. It needs to take a good look at what the actual issues are. The actual issues are that the big roads—the big, political roads—are not getting built. This change in framework will not solve that problem. This Government is taking a quick-fix solution here, and that means that all those organisations that are now having to be merged are actually going through tremendous pressure. Those organisations do not know where they stand, and they see great difficulty in the proposals of this legislation. The National Party has great difficult in supporting those parts of the legislation.

Debate interrupted.

The House adjourned at 4.58 p.m.