Thursday, 29 July 2010

Volume 665

Sitting date: 29 July 2010

Mr Speaker took the Chair at 2 p.m.

Karakia.

Business Statement

Hon GERRY BROWNLEE (Leader of the House): When the House resumes next week the Appropriation (2010/11 Estimates) Bill will be read a third time. The House will also consider the Parliamentary Service Amendment Bill and other bills on the Order Paper. Wednesday will be a members’ day.

Hon DARREN HUGHES (Senior Whip—Labour): I wonder whether the Leader of the House could indicate which select committee the Parliamentary Service Amendment Bill is likely to go to for consideration, and whether the Infrastructure Bill is likely to receive its third reading next week. The Infrastructure Bill seems to be taking quite a long time to move through Parliament, and we were operating under the assumption that it was part of the Government’s step change programme for the economy. I wonder whether the Leader of the House could let us know whether the third reading of that bill is scheduled for next week. Finally, I have an early question about the House sitting programme for 2011, and that is whether he has begun work on it, because it appears that the only area where he is indeed closing the gap with Australia is in terms of the number of House sitting days of the two Parliaments on either side of the Tasman.

Hon GERRY BROWNLEE (Leader of the House): Going in reverse order, I will let the member know how things are going in due course. Second, the Infrastructure Bill, of course, is available for third reading, and will be read a third time in due course, but the Government is making such extraordinary progress in advancing infrastructure throughout New Zealand that the urgency around that bill is not quite what it was just 18 months ago when the economy was found to be in such desperate straits. Finally, the Parliamentary Service Amendment Bill will be sent to the special select committee considering other constitutional bills at this time.

Questions for Oral Answer

Questions to Ministers

Economic Growth—Government Measures

1. CHRIS AUCHINVOLE (National—West Coast - Tasman) to the Minister of Finance: What measures has the Government taken to achieve faster economic growth and to help hard-working New Zealanders get ahead?

Hon BILL ENGLISH (Minister of Finance): A comprehensive range of measures. The Government has taken a long-term and vigorous view about fixing this economy after the damage done by the previous Government, and those measures include across-the-board income tax cuts, company tax cuts, investment in roads, broadband, and electricity transmission, cutting red tape, science investment, providing more money for tourism, getting aquaculture going again, trade negotiations, primary sector growth partnerships, controlling debts and deficits, and fixing the Resource Management Act, among others.

Chris Auchinvole: What reports has he seen about the economy’s current performance?

Hon BILL ENGLISH: The Government has maintained for some time that in an economy that is trying to reduce debt, the recovery will be a bit bumpy and patchy across sectors and regions. This morning the Governor of the Reserve Bank noted that he expected “respectable” GDP growth. The most pressure in the economy currently seems to be on the small and medium sized enterprise sector, which has been expecting New Zealanders to start spending again, but that spending has been slower. The sector is having some trouble, therefore, in raising more debt from the banking sector.

Hon David Cunliffe: Is he concerned about today’s warnings from economists that the economy is not rebounding as expected, with three consecutive drops in business confidence and very low business investment; and can he confirm that for many New Zealanders the recovery has failed to make its way into jobs and wages?

Hon BILL ENGLISH: As I said before, the Government has said for some time that in an economy that is trying to reduce debt, the road to recovery will be bumpy and the recovery will be somewhat patchy. I would, however, refer to the fact that although the Governor of the Reserve Bank has noted that the outlook has softened to some extent, he still expects “respectable” growth of over 3 percent, which is significantly higher than the growth rates in the last 2 or 3 years of the previous Labour Government.

Chris Auchinvole: What challenges does the economy face as the Government continues to build the recovery and tilt the economy towards savings, investment, and exports?

Hon BILL ENGLISH: I think there are several significant headwinds for the economy as it recovers. The first is that New Zealanders are being very careful with their spending and are not rushing back to the housing market, which means that the recovery will be a bit slower than is often the case after a recession. Secondly, the exchange rate has not dropped when usually it does, which means that our export sector will take a bit longer to get going. Thirdly, the world economy in which we borrow our money and sell our produce is undergoing a somewhat fragile recovery, with risks that it could slow down.

Hon David Cunliffe: Does he agree that for most New Zealanders this recovery is so bumpy that it has fallen into a hole the size of Gerry Brownlee’s mine—mine with an “e”, not a “d”—and that based on his own forecasts, New Zealanders will face 3 years of price increases outstripping wage increases, leaving New Zealanders further behind their Australian counterparts?

Hon BILL ENGLISH: Well, I wish that the recovery was as big as that member’s ego, but unfortunately it is not.

Mr SPEAKER: We have had our fun; the Speaker is on his feet. We have had our fun, and I call Chris Auchinvole.

Chris Auchinvole: What reports has he seen summarising some of the challenges facing the economy, and what are the recent trends in these areas?

Hon BILL ENGLISH: I have seen one report that said the economy is unbalanced because we borrowed too much from overseas lenders, building a huge national debt. That is correct. Our total debt to the world has risen from $100 billion in 2000 to $170 billion in 2008. I would like to thank the Opposition spokesperson on finance for pointing out in his blog these major shortcomings in Labour’s economic management, because the imbalances in our economy and the resulting unemployment and slow income growth are partly due to the mismanagement of the previous Government.

Vulnerable Citizens—Prime Minister’s Statements

2. Hon ANNETTE KING (Deputy Leader—Labour) to the Prime Minister: Does he stand by his statement “this Government is not prepared to turn its back on our most vulnerable citizens when they most need our help”?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Yes.

Hon Annette King: Does he receive information from his Ministers on the impact his Government’s policies are having on the most vulnerable New Zealanders? For example, has the Minister for ACC told him that the changes to the travel policy for accident compensation carers is denying a 91-year-old woman 1 hour a day of home support that is desperately needed, because the person providing the care would end up receiving $7 an hour as payment and cannot afford to take the job?

Hon BILL ENGLISH: Yes, the Prime Minister does regularly receive advice from Ministers about the impact of Government policies, and there has been consistent advice that the Government’s decisions to retain all transfer payments, such as Working for Families and national superannuation, and, in fact, to increase both of them in the Budget, are having a positive impact on the most vulnerable citizens. In terms of individual cases, the Prime Minister expects Ministers to look into those in detail, sometimes with the help of the Opposition, to make sure that New Zealanders are getting a fair go.

Hon Annette King: Has he been told about the growing concern being expressed by the Disabled Persons Assembly at his Government’s policies as they impact on disabled people, leading the organisation to say this week that the overall picture for disabled people’s welfare looks disturbing, and that the Government’s changes in the health area are likely to have negative implications for disabled people?

Hon BILL ENGLISH: Again, the Prime Minister has the benefit of Ministers who keep him informed and are very much attuned to front-line services. The member will be aware that the Government has committed to reducing the large, sprawling back-office bureaucracy built up under Labour and to moving those resources to front-line services.

Hon Annette King: Did the Minister of Finance discuss with him the decision to freeze funding set aside to establish safe drinking-water in small, vulnerable New Zealand communities; if so, was this unfortunate decision made by his Minister the reason New Zealand did not support the non-binding UN resolution seeking that clean drinking-water be a basic human right?

Hon BILL ENGLISH: The New Zealand Government makes decisions about water quality in New Zealand—not the United Nations. In fact, that fund would have been frozen along with just about all other items of Government expenditure except for the vital services of health and education. As a representative of probably more of those small rural communities than anyone else in the House, I have to say that many of them have found the Government’s regulation onerous and expensive.

Te Ururoa Flavell: Tēnā koe, Mr Speaker. He aha tāna whakautu ki te wero o te ripoata What Works Counts nō te rōpū Child Poverty Action Group e kōrero ana, nā te tirohanga whāiti o te Kāwanatanga ki te pūmahi o ngā mātua, kua mahue atu ngā tamariki ki te taha; ā, ka aha ia ki te whakaruruhau i ngā tamariki o ngā whānau e kainga ana e te pūtea mimiti?

[What is his response to the challenge from a publication by the Child Poverty Action Group, What Works Counts, which suggests that the Government’s single-minded focus on parents’ work status sidelines the needs of children; and what mechanisms are being put in place to protect the needs of the children in families who are vulnerable to falling income?]

Hon BILL ENGLISH: We do not agree with the Child Poverty Action Group that the Government is single-mindedly focused on parents in work—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I know that it is unusual to challenge the translation, but some of us try to follow both languages, and in some cases it does become clear when a clause of the member’s question was not interpreted.

Mr SPEAKER: The member used both words there; it is an interpretation that members are receiving. Obviously, the interpreter felt that he had interpreted the question that was being asked.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It may be that you could rule that a whole clause of what the member said was irrelevant, but I do not think it is right for the interpreter to do that. He finished before Mr Flavell did.

Mr SPEAKER: Certainly, his voice finished before Te Ururoa Flavell’s did, but I cannot determine whether he had completed his interpretation of the question being asked, and it is very difficult for me to rule on that. I can only assure members that our interpreters do their very best to deliver the question. I think the Minister heard sufficient of the question to be able to answer it, and I invite the Minister to continue to answer it.

Hon BILL ENGLISH: The Government does not agree with the Child Poverty Action Group that it has a single-minded focus on parents in work. I think the coalition is referring to an evaluation of Working for Families that attempts to assess whether the Working for Families system has some benefit for families. The Government has set up the Welfare Working Group precisely to address the issues of longer-term dependency—that is, those people who have been shut out of the workforce for many years now. I am advised that, as background to that work, over 80,000 New Zealanders are now classified as being long-term beneficiaries. We cannot afford to waste that much capacity in this economy, or to condemn those people to the less than full lives that they can live on a benefit for years, year after year.

Hon Annette King: In light of that answer, is it the Government’s intention to increase payments for the children of beneficiaries, many of whom are living below the poverty line?

Hon BILL ENGLISH: Well, in the first place the Government has done that; the last Budget increased those payments by indexing them. Secondly, that question is a bit rich coming from a member of a Government that was in office for 9 years and had the biggest surpluses that New Zealand Governments have ever had. Why did it not do it?

David Garrett: Does he agree that prison is no place for a 69-year-old man suffering from Parkinson’s disease and probable dementia, and what steps is he taking to ensure that such people can be remanded to a more suitable place?

Hon BILL ENGLISH: I understand that the Minister of Health has been briefed on this case. Information related to it cannot be released because of privacy considerations, but the public can be reassured that the Ministry of Health is acting appropriately and has ample resources to respond to this case.

Brendon Burns: Did the Government refuse today to support the UN resolution on safe water because at present about one in six vulnerable New Zealanders does not drink water that is known to be safe, or because a Government bill proposes to privatise ratepayer-owned water supplies for up to 35 years?

Hon BILL ENGLISH: The Government has to focus on the significant deterioration in water quality that occurred under the previous Government. Many of our rivers can no longer be swum in and the water is not potable, after 9 years of a Government that was meant to be focused on sustainability and the environment. We take that responsibility very seriously. It needs more direct action than some UN resolution.

Te Ururoa Flavell: Hei tā te United Nations special rapporteur a Professor Anaya, i kōrero nei, kei te pā atu ngā raru ōhanga, raru hapori hoki ki te iwi Māori, ka aha te Kāwanatanga ki te whakatika i tēnei āhuatanga?

[The United Nations special rapporteur, Professor Anaya, identified that the Māori people suffered extreme disadvantage in social and economic conditions; how will the Government rectify this situation?]

Hon BILL ENGLISH: The Government is working closely with the members of the Māori Party and a number of other leaders in the Māori community to make progress in this respect. The measures that the Government is focusing on currently are, firstly, getting on with Treaty settlements, and that has become a very positive and progressive process; and, secondly, the introduction of Whānau Ora, which gives us the opportunity to get much closer to the people and the problems that are holding so many Māori families back. I must say again that that has generated significant positive momentum in the Māori community, who are finding out that they now have a Government that respects their desire to take some control over their own destiny.

Roading, Tauranga—Eastern Link Road Progress

3. SIMON BRIDGES (National—Tauranga) to the Minister of Transport: What progress has been made on the Tauranga Eastern Link road of national significance?

Hon STEVEN JOYCE (Minister of Transport): I was in Tauranga this morning to announce Cabinet’s decision to approve tolling on the Tauranga Eastern Link—a 23-kilometre 4-lane highway from Te Maunga to Paengaroa. It bypasses Te Puke and is one of our seven roads of national significance. This approval, which is based on very strong local support, will allow construction to begin early next year—7 years earlier than originally planned. This project will bring huge economic and safety benefits to one of New Zealand’s fastest-growing regions.

Simon Bridges: What public support was there for tolling this new road?

Hon STEVEN JOYCE: The New Zealand Transport Agency undertook comprehensive community consultation last year with regard to tolling. I am pleased to report that over 90 percent of respondents either conditionally or unconditionally supported tolling to advance the project, and Cabinet took this high level of local support into account. Tolls are proposed to be $2 a trip for cars and motorcycles, and $5 for heavy vehicles. Once the borrowing has been repaid after 35 years, tolls will be removed. The existing State Highway 2 route through Te Puke will remain as a free alternative for drivers.

Simon Bridges: What benefits will this project bring to residents and the economy?

Hon STEVEN JOYCE: Let me count the ways. It is estimated that the new road, by avoiding Te Puke, will shave up to 24 minutes off travel time for a return journey on this very busy stretch of highway. This will substantially boost productivity and improve access for exporters to the Port of Tauranga. In addition, its new alignment will bring significant safety gains over the current road, which is ranked second-worst in New Zealand per kilometre for fatal and serious injury crashes by the KiwiRAP programme.

Inflation—Treasury Forecast for Year to March 2011

4. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: How much does Treasury forecast inflation will rise to in the year to March 2011, and what policy changes will contribute to this rise?

Hon BILL ENGLISH (Minister of Finance): In Budget 2010 Treasury forecast inflation at 5.9 percent for the year to March 2011. However, the inflation of just 0.3 percent in the June quarter was well below Treasury’s quarterly forecast of 0.7 percent. As a result of that, Treasury now expects inflation to peak at close to the Reserve Bank’s forecast of 5.4 percent. The member will be familiar with the one-off factors: the 2.5 percent increase in GST, which will be more than compensated for by tax cuts; a rise in tobacco excise, which the Opposition supported; and an amended emissions trading system, which adds only half the price increase of the version that the previous Labour Government supported.

Hon David Cunliffe: On the back of an inflation rate that is to be greater than 5 percent next year, is he concerned that today’s increase in the official cash rate will add further pressure to the stretched budgets of families, who are struggling to stay on top of price increases in food, petrol, and power—which have been affected by his emissions trading scheme—and, of course, struggling to stay on top of more GST on everything?

Hon BILL ENGLISH: It is a bit rich to hear Labour going on about the price impact of the emissions trading scheme, when its scheme was to have had precisely double the impact of the Government’s scheme.

Hon David Cunliffe: I raise a point of order, Mr Speaker. The Minister has no responsibility for Labour Party policy. [Interruption]

Mr SPEAKER: I say to the Hon Paula Bennett that when the Speaker is on his feet, or when a point of order has been called, she must not continue to interject.

The dilemma I have about pulling the Minister up is that the member, in asking his question, talked about the Government’s emissions trading scheme. Once the member introduced that into his question, I could not stop the Minister reflecting on the changes from the emissions trading scheme introduced by the previous Government. I cannot realistically stop the Minister from doing that. The remedy is in the member’s own hands when he asks his question.

Hon BILL ENGLISH: Firstly, the fact is that after 1 October a family will be $25 a week better off after the GST increase is taken into account. Secondly, somehow that member’s party increased inflation to 5.1 percent in 2008, with no compensation for anything.

Hon David Cunliffe: Can the Minister explain to New Zealanders who will face increasing mortgage payments why the economy is strong enough to raise interest rates but not to lift their wages and salaries as fast as Australia’s, when that was his Government’s No. 1 promise to New Zealanders?

Hon BILL ENGLISH: That is a question that the member should direct to the Governor of the Reserve Bank. I am surprised that he did not know that that is who sets the overnight cash rate.

Aaron Gilmore: Has he seen any reports on how current inflation compares with that in recent years?

Hon BILL ENGLISH: In the years up to 2008 inflation was regularly above 3 percent, and it peaked at 5.1 percent in the year to September 2008. No one got compensation for that. I will also point out that although the official cash rate today has gone to 3 percent, it peaked in 2008 at 8.25 percent, and first mortgage and floating mortgage rates were almost 11 percent. That was on the back of electricity price increases of 72 percent in the 9 years to 2008. So if anyone knows about inflation, it is the Labour members, and they know how to push it up.

Hon David Cunliffe: It is a shame that the Minister did not major in economics, rather than history. Given today’s increase in the official cash rate, together with a fall in business and consumer confidence and concern from the Reserve Bank governor and economists, which is true: that the recovery is “aggressive”, as John Key has said, or “bumpy”, as the Minister has just told the House?

Hon BILL ENGLISH: I think the consensus view is pretty much as I said earlier on. In an economy that is trying to deleverage and reduce debt, and in a world that is trying to reduce debt, New Zealand is going through a fairly orderly transition to a world where we live within our means. We have been able to do that with relatively respectable growth, as the Governor of the Reserve Bank has said, of 3 percent, and with unemployment now down to around 7.5 percent. We hope, of course, to make faster progress than that if possible.

Building Sector—Reduction of Bureaucracy

5. JONATHAN YOUNG (National—New Plymouth) to the Minister for Building and Construction: What progress has been made on cutting red tape in the building sector?

Hon MAURICE WILLIAMSON (Minister for Building and Construction): More good news! In fact, it is yet another stitch in the rich tapestry of success that this Government is having in building a brighter future. Earlier this month I announced the first of two MultiProof approvals, which are consents that volume builders can apply for. Once they have that consent, they can build their building as many times as they wish. I want the House to know how good it was to issue the first of those approvals, in Palmerston North. The company reported that it saved 45 percent of the cost of getting the consent for the building, and it got the consent in 3 days rather than the statutory 20 days that it normally takes.

Jonathan Young: What other measures is the Government planning to streamline consenting and to reduce costs in the building sector?

Hon MAURICE WILLIAMSON: My personal modesty would stop me from going through the entire list of the gains, but several measures are under way to get cheaper buildings in New Zealand while maintaining quality. The main one is the review of the Building Act, which is moving towards simpler, clearer, and more flexible building standards.

Health Services—Cuts

6. Hon RUTH DYSON (Labour—Port Hills) to the Minister of Health: Is he comfortable with the numerous announcements of health cuts in the last 20 months?

Hon TONY RYALL (Minister of Health): Contrary to the member’s assertion, the health budget in the last 20 months has increased by over $1.3 billion. There always have been, and always will be, changes to services, reflecting changing needs, but this Government is moving resources from the back office to improve front-line services, and engaging doctors and nurses in that leadership.

Hon Ruth Dyson: Can he confirm the reported comments of Lindsay Smith, clinical business manager at Dunedin’s Ashburn Clinic, that the clinic will drop 9.7 full-time equivalent staff due to a shortfall in funding; if so, is this work currently being done by those staff back room or front line?

Hon TONY RYALL: No, I am not able to confirm that quote.

Hon Ruth Dyson: Can he confirm the reported comments of resident doctor Julia Taylor, who says that weekend and night shifts at Christchurch Hospital are often understaffed, that it is stressful and unsafe for both doctors and patients, and that it is only a matter of time before a major incident occurs; if so, what, if anything, will he do about it?

Hon TONY RYALL: I have spoken to Alister James, chairman of the Canterbury District Health Board, as a result of these claims. Mr James assures me that no patient was at any risk of any harm as a result of staffing arrangements last week. Mr Alister James, who is known to the member opposite, advises me the Canterbury District Health Board is well staffed with senior doctors for the first time in quite some time, and that they are playing an active role in helping to manage staffing issues.

Dr Jackie Blue: Tēnā koe e te Mana Whakawā te Minita o Health. What reports has he received recently on improved front-line services?

Hon TONY RYALL: I have seen numerous reports of improved front-line services from around the nation. There is a record rise of nearly 13,000 extra patients receiving elective surgery in the 2009 year, much shorter waiting times for cancer treatment, and, for the first time in many years, we are closing the gap for 2-year-old immunisations.

Hon Clayton Cosgrove: Does he acknowledge that the cuts in after-hours general practitioner services in Rangiora, affecting 22,000 people, were done without consultation with the community?

Hon TONY RYALL: The changes to the after-hours services in Rangiora have been made by the general practitioners in Rangiora. Following representations from the Hon Kate Wilkinson, I am advised that discussions are under way between Pegasus Health, St John, and the acute demand programme about improving services in that area, and that we hope there will be some announcements following that shortly.

Hon Clayton Cosgrove: Why have his cuts forced the Canterbury District Health Board to do more with fewer resources, which has resulted in the removal of services from 1 July of after-hours general practitioner care for the people of Rangiora, a service they have enjoyed for 22 years?

Hon TONY RYALL: I can advise the member that the decision in respect of after-hours services in Rangiora was a decision of the local general practitioners. The scaling back of after-hours services started quite some time ago. But I can tell that member that this year the Canterbury District Health Board received a massive funding boost of $50 million, which is a 4.2 percent funding increase. This has allowed it to provide more cancer radiation treatments, more elective surgeries, and an improved emergency department.

Mr SPEAKER: I am not sure what was in the water at lunchtime today but I do not think that members need to carry on with that shouting in unison. It is not very becoming in the House.

Hon Clayton Cosgrove: Given that answer, does he agree with his colleague Kate Wilkinson, who said on Canterbury Television on 9 July 2010: “The service is definitely diminishing.”; and “The DHB is being forced to do more with less.”?

Hon TONY RYALL: I tell that member that Kate Wilkinson is absolutely right when she says that the district health board in Canterbury has an extra $50 million, and that as a result the latest data shows that we have had improvement in the number of nursing fulltime-equivalent staff by 170 extra and that the number of medical fulltime-equivalent staff has increased by 30 during that time. That is good news for the people of Canterbury.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I asked a very specific question as to whether the Minister agreed with the statements from his colleague that the service is diminishing and the district health board is being asked to do more with less in respect of resources. I gave the date; it was a singular question. He failed to go anywhere near that.

Mr SPEAKER: When members ask Ministers whether they agree with a particular statement that someone has made—if I remember rightly, the Minister answered that he did agree with a further statement attributed to Kate Wilkinson—it is very difficult to be pedantic about exactly how Ministers answer such a question. I am not going to put the heat on Ministers to really give a particular answer to that kind of question.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. In your summary you said that the Minister said that he agreed with another statement from Kate Wilkinson, and you were prepared to accept that. All I am asking is whether he is prepared to say he agrees with another statement from his colleague; I am simply asking him whether he is prepared to say whether he agrees or disagrees with the statement I put to him. How can both sets of answers be correct?

Mr SPEAKER: I just put it to the member that when members seek opinions in questions as to whether Ministers agree with something, then, unless it is absolutely at the heart of their portfolios in terms of something they have done or they have said themselves, it is hard for me to be too pedantic about answers to such a question. Where I insist on Ministers answering a question from an Opposition member I want to be satisfied there is a genuine public interest in this and it is not political point-scoring about whether a Minister agrees with it. The Minister is not strictly responsible for what Kate Wilkinson says; that is another difficulty I have. The Prime Minister is responsible for what his Ministers say but the Minister of Health is not at all responsible for what the Hon Kate Wilkinson might say. That is why it is difficult for me to insist on any particular answer. I am allowing time for this, to explain why I am ruling the way I have, and I do not intend to take a lot more time on it.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I will not take much time but I ask you to consider whether Ministers, in fact, can take their hats off and be speaking not as Ministers. The Minister, Kate Wilkinson, was quoted. She had been talking on an area for which Mr Ryall was responsible but the way that we were taught constitutional law, and again when we first became Ministers, was that Ministers are always Ministers and when they speak, wherever they speak, they speak on behalf of the Government.

Mr SPEAKER: I will hear the Hon Gerry Brownlee, because I have heard the honourable member.

Hon Gerry Brownlee: You will recall the various disruptions that occurred under the Helen Clark - led Government in the early part of 2002 where the House turned itself inside out on this issue of what hat someone was wearing. At the time, there was considerable disagreement between the Hon Jim Anderton and the Hon Laila Harré when the Opposition attempted to find out which public positions each of those Ministers was taking represented a Government position. It was made abundantly clear by then Speaker Jonathan Hunt that when Ministers were speaking in a capacity as a member of Parliament, they were not bound by that convention. For Mr Mallard to want to un-turn something—

Mr SPEAKER: The member will not criticise another member during a point of order; he had done well until that point. It is interesting. I accept that the points of order are well grounded, and it is an interesting point that has been raised, but I stick with my ruling that were the Hon Kate Wilkinson an Associate Minister of Health—and I do not believe she is—then the member’s point of order would have been absolutely right because the Minister would have some responsibility for what an Associate Minister has said. If the member was speaking within her portfolio area, then that would be a different matter. But I do not believe that the Minister is responsible. That is why it is difficult for me to pin down a Minister with that kind of question, because the Minister is not responsible for what another member says, particularly when that other member is not an Associate Minister or in any particular role like that. We must move on.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Can I then ask you to have a look at the general rules for authentication of substantive questions? It has long been ruled that Ministers can be asked whether they agree with particular statements, not only said by members of Parliament but also said by people outside of Parliament. For as long as this Parliament has been here, Speakers have ruled that Ministers can be asked whether they agree with things relating to their portfolios. No matter who made those statements, they are responsible for whether they agree, even if they are not responsible for the statement being made.

Mr SPEAKER: I hear the member; indeed, he is correct. But, likewise, with that kind of question, the answer that is given can cover a wide range. I did not rule out the member’s question. He is perfectly entitled to ask it, but the specificity of the answer will always be constrained by the fact that the Minister has no responsibility for what someone else might think. The questions are indeed allowed; the member is absolutely right. However, in terms of the Speaker then insisting on any particular answer, I cannot insist on a particular answer with that kind of question. It limits the value of that kind of question, and I think some members should reflect on that a little.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I have one last point. I think you have made considerable progress away from addressing questions to answering questions in your time as Speaker. This ruling that you have just made effectively means that you have gone back a long way and that Ministers do not even have to address the question that was asked.

Mr SPEAKER: I thank the member for his lecture. I assure him that I shall not be letting Ministers escape from sharp questions.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I want to take up with you two points you made, and perhaps you may want to give them a considered ruling. The whole thrust—[Interruption]

Mr SPEAKER: I ask members to please respect the point of order process.

Hon Clayton Cosgrove: The whole thrust of the question centred around cuts to health. It then gained further specificity as the supplementary questions went on to an argument, if you will, between both sides, with the Minister saying there were not cuts at the district health board and our side claiming that there were. The point I made through you in the question was that a colleague, who I agree does not have responsibility for health but is a Minister in the Government, of the Minister made an absolute claim—and I can table the quote, but you will not allow me to, because it is a matter of public record; I accept that—that the service was diminishing and that the district health board was being required to do more—

Mr SPEAKER: The member is now debating the issue—

Hon Clayton Cosgrove: No, I am not, sir.

Mr SPEAKER: The member will resume his seat—

Hon Dr Nick Smith: Sit down for a change.

Mr SPEAKER:—and there will be no interjection on the matter, I say to the Hon Dr Nick Smith. I apologise to him if I am pinning the interjection on the wrong member. The member Clayton Cosgrove is now getting into debate. I have made it very clear that the Minister is not responsible for comments that someone else might make. With this kind of question, as the members acknowledge, there is a difference of view as to whether cuts have been made. Members have asserted “cuts” in their questions; the Minister has refuted that. But when the member then wants the Minister to comment on whether a Minister agrees with a comment of another Minister that the Minister is not responsible for, I cannot require any specific answer from the Minister with that kind of question. If he had asked the Prime Minister it would have been a little different, because the Prime Minister is responsible for what all Ministers say. But a portfolio Minister does not have responsibility for what other Ministers say, unless he or she is an Associate Minister.

Pig Farming—Accuracy of Condition Reports

7. SUE KEDGLEY (Green) to the Minister of Agriculture: Is he taking any action in response to reports that the Pork Industry Board sought to avoid the public embarrassment of reporting conditions in New Zealand piggeries by deliberately evading the Official Information Act; if not, why not?

Hon DAVID CARTER (Minister of Agriculture): No, and for a very simple reason: I have no responsibility for the Pork Industry Board being compliant with the Official Information Act.

Sue Kedgley: Does he agree that it is a serious offence for a statutory board to seek to evade the provisions of the Official Information Act, and will he exercise his powers under the Pork Industry Board Act 1997 to remove directors who have conspired to circumvent the Official Information Act; if not, why not?

Hon DAVID CARTER: Because I have just explained to the member that under the Pork Industry Board Act 1997 I have no statutory role in respect of that particular board’s adherence to the Official Information Act. If the member has a concern about that, she should know to raise it with the Ombudsman.

Sue Kedgley: Is it not the case that it could take many months, possibly a year, for a complaint to be investigated by the Ombudsman, and is he really claiming that he has no power or no influence over the Pork Industry Board as Minister of Agriculture to force it to release these audits that it is seeking to suppress?

Hon DAVID CARTER: Yes, that is exactly what I am telling the member.

Sue Kedgley: Does he support the Pork Industry Board’s latest ploy, which is to introduce a new label to assure consumers that pork is “welfare approved” while at the very same time seeking to suppress critical parts of the Pork Industry Board’s audit on which the “welfare approved” label is based?

Hon DAVID CARTER: It is not for me to judge the effectiveness of the Pork Industry Board’s public relations exercise; that is for the consumers of New Zealand pork.

Sue Kedgley: Has he had the opportunity to view the footage of sows on an intensive pig farm that screened on television last night that showed sows with bleeding sores, abscesses, and flesh wounds; if so, does he agree with the piggery owner, Colin Kaye, that there are no welfare concerns at this piggery?

Hon DAVID CARTER: I did not have the opportunity to view any footage last night. I did see some footage—I think it was last Friday night—and to me some of the photographs of pigs were not satisfactory.

Sue Kedgley: When can we expect the new pig code to be released, given that he publicly promised that it would be released last year and submissions closed in April of this year?

Hon DAVID CARTER: It is certainly of some frustration to me that it has not been released, but, as the member knows, a legal challenge was threatened by the Pork Industry Board. At this stage, I understand that the National Animal Welfare Advisory Committee is close to finalising its submission process and delivering a draft code, which will then be subject to international peer review. So I hope to receive it sometime around October to November. It is certainly my intention to action it as quickly as possible.

Sue Kedgley: Does he agree that the public are getting fed up with the efforts of the Pork Industry Board to delay the release of the new pig code by legal obfuscation, to continue using sow crates, to hide information from the public, and to keep conditions on pig farms secret? Does he not think that the public will be incredulous that he as Minister of Agriculture is effectively sitting on his hands and doing nothing in the face of this prolonged procrastination?

Hon DAVID CARTER: We certainly want the process to be done properly so that it is thorough and long-lasting. It is worthwhile noting that there have been over 20,000 submissions on the draft code, and that is one reason why it has taken some time. The member knows that she was part of the process to wind up many of those 20,000 submissions.

Question No. 6 to Minister

Hon CLAYTON COSGROVE (Labour—Waimakariri): I seek leave to table a letter from me to the Minister of Health dated 9 July—some 3 weeks ago—regarding the cut in after-hours general practitioner services in Rangiora. To date he has not replied to me personally.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.

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

Employment Relations—Prime Minister’s Statements

8. Hon TREVOR MALLARD (Labour—Hutt South) to the Minister of Labour: Does she agree with all the Prime Minister’s statements on employment relations?

Hon KATE WILKINSON (Minister of Labour): Yes.

Hon Trevor Mallard: Was it the policy intention of the Government when it introduced the 90-day trial legislation that the general good-faith provision would override the specific exclusion of the requirement to give reasons for dismissal in writing?

Hon KATE WILKINSON: The trial period has always been designed to work in the context of good faith. One does not override another; they work in tandem. They both work together.

Hon Trevor Mallard: Was it her intention that the Interpretation Act would be overruled by her 90-day trial legislation?

Hon KATE WILKINSON: I think the member is asking me for a legal interpretation of how the Employment Relations Act interfaces with the Interpretation Act. Actually, as a matter of statutory interpretation, I would have thought that the Employment Relations Act was subject to the Interpretation Act.

Hon Trevor Mallard: Given her last answer, and given the fact that the Interpretation Act makes clear that the specific overrules the general, was it the policy intention of the Government when it introduced the 90-day trial legislation that the general good-faith provision would override the specific exclusion of the requirement to give reasons for dismissal in writing?

Hon KATE WILKINSON: The intention of the policy and of the legislation is that good faith applies during the 90-day trial provision, with the exemption of section 4(1A)(c).

Hon Trevor Mallard: Was it the policy intention of the Government when it introduced the 90-day trial legislation that the general good-faith provision would be equal to, override, or be subject to the specific exclusion of the requirement to give reasons for dismissal in writing?

Hon KATE WILKINSON: The intention of the legislation is that the good-faith provisions apply, and they require an employer to be responsive, communicative, and subject to good-faith provisions.

Question No. 7 to Minister

SUE KEDGLEY (Green): Tēnā koe, Mr Speaker. I seek leave to table the Pork Industry Board Act 1997—in particular, schedule 2, which allows the Minister—

Mr SPEAKER: Is the member seeking the leave of the House to table an Act?

SUE KEDGLEY: Yes, pointing out a provision—

Mr SPEAKER: We are not going to do that. Members have the statutes available to them every day.

SUE KEDGLEY: It contradicts what the Minister said.

Mr SPEAKER: No, the member will not use that provision to try to score points. Members have that information available to them endlessly.

Probation Officers—Recruitment

9. PAUL QUINN (National) to the Minister of Corrections: What progress has been made to recruit sufficient probation officers to meet the growth in the number of offenders serving their sentences in the community?

Hon JUDITH COLLINS (Minister of Corrections): I am pleased to inform the House that the Department of Corrections has now reached its goal of employing 246 new probation officers, following an injection of $256 million in last year’s Budget. Over the last 5 years the number of community-based offenders has risen from 24,000 to 38,000, and they are completing 45,000 orders. However, the previous Government failed to fund the department adequately, and it could not employ the staff needed to supervise these offenders. I have met most of the new probation officers at graduations around the country, and I have been very impressed with the knowledge, enthusiasm, and professionalism shown by these new staff members.

Paul Quinn: What other notable progress has been made by the Department of Corrections over the past 18 months?

Hon JUDITH COLLINS: There is too much to tell the member in one answer. I am pleased to report, though, that the department has just received its highest-ever result in the latest trust and confidence survey. Research New Zealand’s June 2010 quarterly survey showed that 61 percent of the respondents have confidence in the Department of Corrections. This is a significant improvement on the figure of 40 percent in June 2008, recorded by the previous administration under the previous Minister of Corrections, Phil Goff. The considerable progress made by the department over the last 18 months reflects the excellent work done by staff, and the importance that this Government places on its law and order responsibilities.

David Garrett: Does she agree that non-violent offenders whose offending primarily arises from drug and alcohol addiction are better and more cheaply treated in community-based facilities, rather than in prisons?

Hon JUDITH COLLINS: Generally, yes. But I am also aware that these same people have been known to kill others by drink or drug-driving, so the courts quite appropriately have the power to sentence such people to imprisonment.

Income Gap, Parity with Australia—Media Reports

10. Hon DAVID PARKER (Labour) to the Minister for Economic Development: Does he agree with the Sydney Morning Herald headline “NZ wage gap with Australia widens”?

Hon GERRY BROWNLEE (Minister for Economic Development): I do not have an opinion on an Australian newspaper’s headline.

Hon David Parker: Well, then, does he agree with Claire Trevett of the Dominion Post, who said of his performance yesterday: “the statistics proved him wrong no matter how they were presented.”?

Hon GERRY BROWNLEE: No. I can do no better than to quote the World Bank, which makes a comment about these things. It says, basically, that there are two ways in which those statistics can be calculated, but the method chosen by the member is, if I may quote, “likely to lead to unreliable” and misleading results.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. The member who asked the question has chosen no method in this question time today, so to rely on referring to “the method chosen by the member”, when I think the Dominion Post and the Sydney Morning Herald have been quoted, is, I think, misleading the House.

Mr SPEAKER: No, we will not go as far as that. But I accept that the Minister introduced unnecessary information in answering the question. Strictly, that should not be done.

Hon David Parker: Will the Minister now announce measurable interim targets to close the wage gap with Australia, so that New Zealanders can hold National accountable for its election promise?

Hon GERRY BROWNLEE: I fully accept that the nation will hold National accountable for its election promise, just as it did Labour, which promised to get New Zealand into the top half of the OECD but failed to do so during its 9-year term.

Hon David Parker: If the Government will not give New Zealanders those milestones, will the Minister at least give them a date by which the New Zealand - Australia wage gap will be reduced to what it was at the time of the last election?

Hon GERRY BROWNLEE: I believe that the very extensive economic development programme that the Government has put in place will see those results become available to New Zealanders very, very soon.

Hon David Parker: Why can the Minister not see that his unwillingness to agree to any milestone for closing the gap before 2025, plus his refusal today even to give a target date for getting back to where we were at the time of the election, makes a mockery of National’s central election promise to close the wage gap?

Hon GERRY BROWNLEE: The first point I make is that New Zealand has been on the track of a widening gap between New Zealand workers’ wages and Australian workers’ wages for over two decades. I think that to expect that we would put in milestones just 18 months into our programme is completely unreasonable. I know that New Zealanders understand that we are engaged in a comprehensive relook at the New Zealand economy, whereby we are expecting growth to occur that will deliver higher incomes.

Hon David Parker: If the Minister is not willing to give any target date to reach the interim target for closing the gap, will he at least come to the House and give us a date by which he expects that the gap will stop growing wider?

Hon GERRY BROWNLEE: I think it is very unwise for the Labour Party to mention anything to do with closing the gaps, which was one of Labour’s targets that was also a spectacular failure. The Government is engaged in an extensive programme to encourage growth in the New Zealand economy, and New Zealand workers will feel the effects of that in due course.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think that was a tight supplementary question. I know that you will not insist on a yes or no answer, but I think that the question, in summary, was—

Mr SPEAKER: In the interests of saving time I invite the Hon David Parker to repeat his question, because I must confess that I did not hear a lot of answer to it.

Hon David Parker: If the Minister is not willing to give any interim targets as to the date by which the gap will close, is he at least willing to come to the House and give us a date by which the gap will stop getting wider?

Hon GERRY BROWNLEE: The two questions are simply the reverse of each other. I have already answered the question in that regard.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think that saying a question has already been answered used to be allowed in this House, but I do not think it is now, unless it is obvious to all members. Without bringing you into the debate, Mr Speaker, I could see from the height of your eyebrows, which were nearly as high as mine, that you did not understand the answer, just as members on this side of the Chamber did not.

Mr SPEAKER: Today has been an interesting question time in relation to points of order around the adequacy of answers. I have ruled on a couple of occasions that Ministers do not have responsibility for certain things, but on this occasion this Minister has made statements about closing the gap with Australia, and the question did ask whether the Minister would be prepared to come back to the House to tell it when the gap would stop increasing. The Minister could say that he is not prepared to do so or that he would be prepared to, and that would be an answer, but to say nothing related to it is hardly an answer. This is an issue of public interest, and I would not mind hearing an answer.

Hon GERRY BROWNLEE: I will give that some consideration.

Youth Parliament 2010—Reports

HEKIA PARATA (National): Tēnā koe e te Mana Whakawā, huri noa i tō tātou Whare e whakanui nei i te wiki o te reo Māori.

[Greetings to you Mr Speaker, and to us throughout our House as we celebrate Māori Language Week.] [Interruption]

Mr SPEAKER: The Leader of the House should show some courtesy to his colleague, who in Māori Language Week will be asking her question in te reo Māori.

11. HEKIA PARATA (National) to the Minister of Youth Affairs: Tēnā anō koe e te Mana Whakawā, huri noa i tō tātou Whare e whakanui nei i te wiki o te reo Māori, tēnā koutou. Mō ngā kaupapa Rangatahi, he aha ngā pūrongo kua whiwhi i a ia mō te angitu o te Taiohi Pāremata rua mano tekau?

[Thank you kindly, Mr Speaker, and greetings once again to you and to us throughout our House as we celebrate Māori Language Week; greetings to you collectively. What reports has she received on the success of Youth Parliament 2010?]

Hon PAULA BENNETT (Minister of Youth Affairs): Ngā mihi ki te mema. I have received a number of reports on the success of Youth Parliament 2010 in bringing together 122 Youth MPs to debate issues facing New Zealand. I would like to table in the House the report on Youth Parliament 2010. It includes the Hansard of question time, the general debate, and the debate on the age of majority bill, and the select committee reports. This report will also be released on the Youth Parliament website.

Hekia Parata: He aha tāna ka taea te mea mai mō te pire i whakaaroarotia e te Taiohi Pāremata?

[What can she tell us about the bill that Youth Parliament considered?]

Hon PAULA BENNETT: The Youth MPs looked at a mock bill that, if enacted, would have taken the legal age of majority from 20 to 18. In the 32 speeches we heard a range of arguments that were well-researched and well-thought-out. Some argued that the age of majority should remain at 20 years, citing tradition and maturity, or that it ought to be considered case by case; others argued that the bill was required to abolish age discrimination. The bill was passed by the Youth Parliament with 64 Ayes, 49 Noes, two abstentions, and seven absent.

Trade, Minister—Perception of Conflict of Interest

12. Hon PETE HODGSON (Labour—Dunedin North) to the Minister of Trade: What steps, if any, is he taking to manage his interests in the 40,000 shares he owns through a trust in New Zealand Farming Systems Uruguay Ltd to dispel any perception of a conflict of interest as Minister of Trade?

Hon TIM GROSER (Minister of Trade): I am going to do two things. First, I am going to carry through on the additional disclosure I made to the Cabinet Office about the shares I put my retirement funds into, additional to the requirements of the Register of Pecuniary Interests, and I am going to take all necessary steps to avoid any conflict of interest in the unlikely event that one would occur. The second thing that I am going to do is ignore this beat-up and get on with the job that I am appointed to do.

Mr SPEAKER: That is enough interjection.

Hon Pete Hodgson: Why did he quit the India trade group so quickly last year when his co-owner Dr Richard Worth started to get into a pickle, but has not quit this much more valuable asset that some might say leaves Uruguayans feeling like tenants in their own country?

Mr SPEAKER: I apologise to the honourable member but I could not hear the question. I invite the member to start again with his question, and I ask members to keep the level of interjection down so that at least the Speaker can hear the question being asked; otherwise I cannot determine whether it is in order.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. I ask where the ministerial responsibility is for anything in that question.

Mr SPEAKER: If I heard the question correctly, the member asked the Minister about certain actions he had taken some time last year. If I remember it, the question started with asking why he quit something. I presume that is asking the Minister something to do with his interests. Therefore, I believe that the Minister has responsibility for that.

Hon Rodney Hide: I raise a point of order, Mr Speaker. I think, with the greatest of respect, you need to think a bit more carefully about your ruling, because you are saying that if Ministers are asked anything whatsoever about property or their personal details, then they have a responsibility as a Minister in this Parliament to answer it. I do not see how a Minister could possibly be answering a question in this House as a Minister about why he or she might or might not sell particular shares. It seems incongruous to me.

Hon Gerry Brownlee: Further, Mr Groser answered the first question very, very appropriately, I think, and made it clear what the situation is. I think that for him to then be put through a bit of a test as to why he did that last year when he is doing this this year, steps far too far. He has been very open with regard to the Register of Pecuniary Interests of Members of Parliament—that is why the Opposition is able to ask the question. But I think that if you were to look at that particular question again, you would see that it steps well outside what might be reasonable for Ministers to answer in this House.

Mr SPEAKER: I appreciate the points raised by members, and this issue needs to be handled carefully by the Speaker; I fully accept that. I accept the point made by the Hon Rodney Hide that individual Ministers are not responsible for the Register of Pecuniary Interests. That is a thing that members of Parliament are required to comply with. However, Ministers are responsible for their management of conflicts of interest, and it was my interpretation of the question—and I would not mind seeing whether the Clerk agrees with my view on this, but it is my view—that where there is a potential conflict of interest with the Minister’s portfolio interests, then there is a legitimate ground for questioning. But I certainly confirm that the Minister is not responsible as Minister for the issues surrounding the declaration of pecuniary interests. I think on this occasion, rather than have me rule out the question, the Minister would be capable of handling it, but he is required to handle it only in so far as it involves conflicts of interest relating to his portfolio interests. On that basis, I invite the Hon Tim Groser to answer it.

Hon TIM GROSER: Well, there is a very straightforward answer, and it is that I resigned as a director of the company because I was told it was not appropriate to be a director of the company and a Minister.

Mr SPEAKER: The Hon Pete Hodgson has a further supplementary question?

Hon Pete Hodgson: That answered the first part of the question, but that will do. Now that he has told the media that he did not tell anyone that he owned shares in Uruguayan land because no one had asked him, but “if anyone had asked me, I would have told them”, will he list what else his trust, Jolimont, owns—because I am asking him?

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. It is not appropriate to ask members of this House, whether they are Ministers or otherwise, whether they will do something that is not required by the Standing Orders, and if this question stands, then we are in very deep trouble. Therefore, we should be able to ask Mr Hodgson whether he is a KiwiSaver, where his KiwiSaver funds are going, what shares his KiwiSaver fund holds, and what interest he has to declare to the House when it comes to voting on matters that might affect those shares. It has been widely accepted for a long time that where members of Parliament have an interest that is no greater than any other member of the public or is no less available to any other member of the public, then that is not a conflict of interest. That question opens this thing up very, very widely, and I suggest that no one in the House could cast a vote on any matter if that type of question will call his or her integrity into public scrutiny.

Hon Rodney Hide: I think that this is an important issue, because it is impossible for Ministers to have any responsibility as Ministers for where their superannuation funds might be invested or where, maybe, trusts that they are involved in invest money. Ministers are required to declare their pecuniary interests. That is not what is in play here; what Mr Hodgson is attempting to do is to ask a Minister about his personal investments, which, as a Minister, he surely is not responsible for. He is responsible for that as an individual member of Parliament but not as a Minister.

Hon Trevor Mallard: I think all of that would be right if the original question was not predicated on the conflict between the role of the Minister of Trade and his personal arrangements. I think that is where this issue goes to. The question could not have got there if there was not at least a perception of a conflict of interest; and the question, I think, is then properly asked as to whether the Minister has other conflicts of interest with his role as Minister of Trade. He has already accepted, I think, in this House, that there is one. He has got rid of part of it and has retained some of it, but the point I am making is that we need to know that Ministers do not have that conflict of interest. For Rodney Hide to indicate that it is not possible for a Minister to have a conflict of interest—of course it is—

Mr SPEAKER: I think—

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

Mr SPEAKER: No, I have indicated that I do not need to hear any more on this matter. What the Hon Trevor Mallard just said was correct if the Minister had been asked about conflicts of interest, but he was not. He was asked whether he would list in his pecuniary interests any further interests or shareholdings a certain trust might have, and that is not within the Standing Orders. Even though the member might say that the Minister said he is happy to make a declaration of pecuniary interests, in making that statement the Minister cannot actually be questioned on that statement, because it has nothing to do with his portfolio area. Members asking questions need to be very clear on that. Members cannot question Ministers on their declaration of pecuniary interests, as the Hon Rodney Hide pointed out. What members can question them on is their management of conflicts of interest, indeed, and normally Ministers can be questioned on any statements that they make. But where a statement relates to a declaration of pecuniary interests, the Minister is not answerable on that statement in this House. So I have to rule that question out.

Hon Pete Hodgson: Does he agree with the remarks made by the Prime Minister earlier this month about China and New Zealand working together in agriculture where “they put up capital, we develop farms in Latin America and export food to China,”; if he does agree, does he also agree that as soon as China does enter the market, the value of his shares are likely to rise?

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. If that question is accepted, then the Speaker is effectively accepting the speculation that the member includes in it. It is nasty, it is guttersnipe—

Mr SPEAKER: The member will sit down. There will be silence. This is a very serious issue and has to be treated with respect by this House. Members in this House have a right to hold Ministers to account. Where questions relate to conflicts of interest, those questions are perfectly proper. This question asked whether the Minister agreed with the statement relating to a trade matter—and the Minister did not need to answer the second part, because there were two parts to the question—and then went on to ask about whether that trade prospect could influence the value of shares. I do not see that question as being out of order, because it relates to a statement in the trade area, and it has an implication of a possible conflict of interest. I believe that Ministers do have to be mindful of the management of conflicts of interest. I invite the Hon Tim Groser to answer the question.

Hon TIM GROSER: The answer to the first part of the question is, absolutely, yes. On another occasion I would welcome the opportunity to expand on this theme, because I think this is absolutely central to taking New Zealand forward in terms of getting the intellectual property of our extraordinary agriculture system and exporting it not just through exports but through the services that New Zealand—almost uniquely, in some areas—has. So I think this will be a huge and interesting question before New Zealand agriculture in the next 20 years. In respect of the second part of the question, I could imagine an argument that would draw exactly the opposite conclusion in respect of investment in another country.

Hon Pete Hodgson: Can he confirm that earlier this month another company, a Singaporean company rather than a Chinese one, did just that—entered the Uruguayan dairy market—and that his shares rose from 41c to 55c in 2 weeks, as a result?

Mr SPEAKER: That question is totally out of order. The Minister has no responsibility for what a Singaporean company might do—no responsibility whatsoever.

Bills

Infrastructure Bill

In Committee

Debate resumed from 22 July.

Part 4 Amendments relating to affordable housing (continued)

MOANA MACKEY (Labour): When the Committee was last debating Part 4, the Minister for Infrastructure was making a number of comments that I believe members on this side of the Chamber want to address. The Minister, in his comments on affordable housing in New Zealand and what the solutions might be, showed the very problem that we have with this Government not taking the issue of affordable housing seriously. The Minister in the chair, when he stood on his feet when we debated this, simply engaged in a vitriolic attack on members on this side of the Chamber.

Simon Bridges: That was Pete Hodgson just now; what a disgrace!

MOANA MACKEY: Not once did he talk about affordable housing, I say to Mr Bridges.

Simon Bridges: What an absolute disgrace from Pete Hodgson.

MOANA MACKEY: It is funny, is it not? Simon Bridges over there did not care about the personal attacks coming from his own side of the Chamber, but when this Opposition asks a question to a transparent and responsible Government, suddenly Mr Bridges is outraged. Well, I think he might like to take a long, hard look in the mirror, because the Opposition does require transparency and does require accountability—

Simon Bridges: I will, and I like what I see.

MOANA MACKEY: —I say to Mr Bridges. When we come back to Part 4—

The CHAIRPERSON (Eric Roy): Let us just have a little more decorum. This is the first speech of the afternoon of the House in Committee. There will be opportunities for members who want to make a point to take a call.

MOANA MACKEY: Thank you, Mr Chairperson. I advise Mr Bridges that he might want to scream at me from his own chair if he is going to barrack across the Chamber like that.

The issue of affordable housing is incredibly important. The Minister in the chair took a call towards the end of the last debate that showed the very problems New Zealanders are having with this Government in terms of whether it is taking the issue seriously. As I was saying, all he was interested in doing was piling vitriol on members of this side of the Chamber for daring to suggest, firstly, that the repeal of the Affordable Housing: Enabling Territorial Authorities Act should not have been hidden away in the Infrastructure Bill; and, secondly, that it should have gone to a select committee so that we could have had a discussion about how, perhaps, the legislation could be improved. I do not think that Labour did everything right in the area of affordable housing; there was a lot more that we could have done and there was a lot more that we wanted to do, and we would have been very supportive of this legislation going back to the select committee in order for it to try to work on it.

This type of approach to affordable housing, and the Affordable Housing: Enabling Territorial Authorities Act that is being repealed in Part 4 of the Infrastructure Bill, works very well overseas. Yes, the economy in New Zealand has changed, and, yes, this type of mechanism works better in the type of situation that we had a few years ago, when we had high levels of development activity and difficulty in finding the available land to do that, but we will one day get back into that situation. I will tell the Committee what we are doing. Let me be clear: this was not a requirement on local authorities. They did not have to use this if they did not want to. It was another tool in the tool box, if you like, to deal with affordable housing. Again, as I said, it was a tool that we would have been happy to see go back to the select committee for further work if that is what the Government felt should be done, but it was not compulsory. Because the economy has changed, and because development activity has changed, the Government has now said that it will holus bolus throw it away and get rid of it.

When we go back into a situation of high development activity, councils will wish that they had this mechanism to use. It will take us for ever to get it through Parliament, even with this Government’s approach to hurrying legislation through without sending it to a select committee. It still takes time. We will be in a situation again of trying to pass legislation when there was no reason why it could not have been left in place, and that is why one of the amendments in my name is to remove Part 4 from this bill. It should not have been there in the first place. It should not have been hidden away in this bill. But, more important, there is no reason why it could not stay in the legislation.

Let us be honest: local authorities have to be part of the solution when it comes to affordable housing, because they are absolutely integral in the supply of land. If we look at Māori land, we see that it is zoned rurally, and it is very difficult for Māori to be able to get the kind of development on it that they want. Local authorities have to be part of the solution. We cannot do it without them. Providing mechanisms like this allows them the flexibility and, more than that, the certainty to know that they cannot be legally challenged when they do this. They will know that they cannot be taken to court by developers who say that the local authorities do not have the powers to require the developers to provide affordable housing, to pay a levy that gets put towards affordable housing, or to provide a certain number of houses for affordable housing. Retaining this mechanism would provide the legal certainty that, yes, they do have the power to be able to do that, and that they would be able to then go forward, knowing that they are not putting their ratepayers at some kind of risk of being taken to court and being challenged by developers who have very deep pockets and who do not want to see this kind of affordable housing become part of their developments.

I do not know who has got to the Government on this issue. I do not who has been in its ear. I do not know which big donators that go through the trusts of National members said to them that they do not like it and they do not want to have to provide for this mechanism, and that they are worried that they will have to reduce the overall profit that they make on their developments. But the fact is that it does not matter which local authority we talk to; it will tell us that affordable housing is an enormous issue. From the smallest council like Ōpōtiki District Council up to the biggest councils like Auckland City Council, Christchurch City Council, and Wellington City Council, councils will tell us that affordable housing is a major issue. They know that they will be pivotal in any Government response to addressing affordable housing. Yet here we are, in Part 4 of this legislation, taking away one of those tools. Could that tool be made better? Possibly—probably. We would be willing to work with the Government to go back to the select committee to find out what we could do to allay any of the concerns.

I notice that when I go through the Housing New Zealand Corporation report that we were given at the select committee, which outlines the reasons why this was done, the word “may” was used a lot, but the word “will” was not. The report said: “It may do this.”, “It may do that.”, and “We do not know.” Clearly, even the officials were not certain that it was going to have the negative outcomes that the Government seems so certain it will have. So a lot more work could have been done in this area. It is tragic that at a time when housing affordability continues to be one of the biggest issues in the country, we are here repealing affordable housing legislation. We should put that on top of the fact that we have lost shared equity. We had a 2-year pilot where 20 months of the 24 months of that pilot were under this National Government, and what did it do? National told Housing New Zealand Corporation to stop promoting it. Then the Government complained about the low level of uptake and used that as an excuse to ditch the entire programme altogether, despite the fact that shared equity, like legislation that empowers local authorities, is an integral part of the housing affordability mix in every single other country around the world. It has worked.

In the United States, ironically, this kind of stuff is considered par for the course in many states. If there is a big development like a shopping mall, it is seen as just a natural requirement that the developer will be made to, for example, provide workers’ housing, to provide the infrastructure around that workers’ housing, and to provide affordable housing. The citizens who live in those areas think that it is absolutely fair that if someone is going to use the land and a lot of public resources, the developers should put something back in as well. We do not want to get to the situation where no one wants to develop, but that has not happened in other countries where this type of legislation has been used. Of course developers are going to say that they do not want this mechanism. They will not want to do anything like this that might impinge on the bottom line. Of course they will say that. I absolutely expect it and it is absolutely their right to say it, but a Government has to take a more critical approach than the one that we have seen here. I noticed that the Minister of Housing is always saying that no one took it up. Well, I look at the advice from his own department, Housing New Zealand Corporation. It says that since the Act was enacted in 2002, there has not been an opportunity for territorial authorities to implement it. The reason that the Government had not implemented it was not that it did not like it; it was that it was gotten rid of so quickly after the election. The Government had made it clear that it would be going after the election. The Government did not implement it, because it was not going to be there any more.

This is like that shared equity argument all over again: do not tell anyone that it exists, and then act surprised when no one takes it up. It is the same thing here. The Government tells people that the mechanism is going and then says that the reason it is going is that no one is using it. The Minister’s own officials told him that the reason people were not using it was that they did not have the opportunity. The fact still remains that this kind of approach is used everywhere in the world. Could we have done it better? Maybe. I ask the Minster whether he should we have sent it back to a select committee. Yes. Should it have been hidden away in the Infrastructure Bill? Absolutely not. I commend the select committee clerk and all the select committee staff for the work they did in trying to make sure that people knew this was happening. They made sure they got in touch with as many people as possible. We were on a quick report-back time. It was hidden in the Infrastructure Bill.

Housing affordability is becoming more and more of an issue. I strongly believe we would have had a larger number of submitters on this bill if they had had the opportunity to know about it.

CARMEL SEPULONI (Labour): I support what my colleague Moana Mackey has just said in respect of this bill, the Infrastructure Bill. Labour remains opposed to the repeal of the Affordable Housing: Enabling Territorial Authorities Act, under Part 4 of this bill.

It is appropriate that I speak on this bill today, because on Monday night in Waitakere we held a public meeting on housing. It was a big coincidence, given the spotlight on housing in Waitakere this week. Things that came up at the meeting that are pertinent to this bill were the crisis that is occurring in housing and that not only do people not have access to appropriate social housing but there is no access to affordable housing as well. Both of those things were the big themes that were heard at the public meeting held on Monday night.

It makes absolutely no sense, first and foremost, that the repeal of the Affordable Housing: Enabling Territorial Authorities Act was placed in the Infrastructure Bill. As my colleague said previously, it is almost like an attempt to hide it away so that no one would know what was going on.

Most New Zealanders still agree that owning a house is a big part of being a Kiwi, as is being able to raise children in the same place, in a community where they can access the same sports clubs, go to the same schools, and grow up alongside the same children. But what we now see, because of a lack of affordable housing, is that many of those children are in transient families. They move around from one suburb, one town, or one city to another, as their parents struggle to find not only employment but also adequate, affordable housing for their children.

It makes sense that local authorities play a part in providing affordable housing, and play a part in the provision of social housing for their communities, because they are at the coal-face in respect of the needs of their communities and they know what is required. The Government keeps saying over and over again that it is not for central government to dictate what happens nationally. However, the Government is taking away the rights of local authorities to have a say on social housing and affordable housing in their communities. Members on this side of the Chamber think that a slight contradiction is occurring at the moment, in respect of this legislation.

The problem with repealing the Act is that members on that side of the Chamber have been trying to tell people that it was almost like it was compulsory for the councils to provide social housing and affordable housing, but that was merely an option in the Act, which local authorities could take up if they saw the need for it to occur. If we repeal this part of the legislation, we will take away that option. Instead, the developers will have every right in the world to develop property purely because of their bottom line, their profits, with no recognition of the social needs that may be required in communities. Members on this side are incredibly concerned about that.

A couple of things came up at the public meeting on Monday night that are pertinent to this bill. One is the ageing population, and how much trouble this country will be in if elderly people do not own their homes and we do not have social housing or affordable housing in place. Down the track, our younger generation will have to ensure that elderly people are adequately housed. Why would we not do something now to ensure that we are putting the structures in place to make sure that we can look after the elderly in the long term? It makes sense to do that. It is common sense, but unfortunately members on that side of the Chamber do not seem to know what common sense is. We are concerned.

There are a number of other things that I know my colleagues wish to discuss in respect of this bill. Labour has put forward two typescript amendments, for which I thank Labour’s spokesperson on housing, Moana Mackey. One typescript amendment provides for the protection of affordable housing by removing the proposed changes from the bill. By doing that, the Government will ensure that our local authorities will still have a say in what goes on in respect of putting the necessary infrastructure in place for affordable housing and social housing.

In respect of the other typescript amendment that my colleague Moana Mackey, who is Labour’s spokesperson on housing, has put up, Labour is disappointed that the Government has decided to remove the prohibition of the restrictive covenants that aim to exclude affordable housing. This is something else that needs to be discussed in detail. It is about protection. It is about ensuring that our councils have a say on where our social housing goes.

Hon MARYAN STREET (Labour): I rise to speak to the Infrastructure Bill, and to Part 4 in particular. This part would repeal the Affordable Housing: Enabling Territorial Authorities Act 2008. I want to back up a little bit. This legislation had my name on it as the Minister of Housing at the time. I ask the Government to reconsider the inclusion of the repeal of this Act in the Infrastructure Bill.

The Affordable Housing: Enabling Territorial Authorities Act 2008 was enacted as a deliberate and constructive method of addressing a problem that had become endemic, and that was the lack of affordable housing across New Zealand. The lack of affordable housing, along with other influencing factors, had led to an extraordinary surge in the price of houses between 2000 and 2007. Between those years we saw the average cost of houses in New Zealand increase by 80 percent. This was part of the problem that has led to banks irresponsibly lending to people who would not normally have any way of repaying such loans, and that has led to the escalation of private debt in New Zealand. However, banks continued to lend to people as land prices and house prices escalated during those 7 years.

The Labour Government knew that something had to be done about this situation, if ever we were to have another generation of New Zealanders who could get their feet on the bottom rung of the housing ladder and so have the kind of security that all of us aspire to have for ourselves and our families—that is, the ownership of our own homes. That ownership of our own homes is very fundamental to New Zealanders’ views of ourselves and to the kind of lifestyle and the quality of life that we generally wish to uphold and improve on for ourselves. However, affordable housing was escalating out of the reach of first-home buyers, so the Affordable Housing: Enabling Territorial Authorities Act was one method—not the only one—that the Labour Government brought in, in order to alleviate this problem.

The Government we have now has done nothing to address the lack of affordable housing, nothing to address the inability of families on low and middle incomes to get the kind of independence and security that they can get by owning their own house. This Government is, in fact, working in the opposite direction, and the repeal of this legislation is part of that reverse direction.

When I was putting forward the legislation, I went to a number of developers. I went to the big developers—those who are responsible for large residential housing developments and construction. I asked them what was wrong with this bill and what their objection to it was. They said that they made more money out of building one McMansion than they did out of building 10 affordable houses. They said that there was no economy of scale for them in building 10 affordable houses, and that they could make a fortune out of building one or two McMansions in Botany Downs rather than providing affordable housing in South Auckland. I asked them to explained to me how that worked. They went through it and said: “Well, you do this much for plumbing and electrical wiring. You add these kinds of overheads in if you make it two storeys.” On they went and explained it to me.

About 8 months later, when the bottom was falling out of the building and construction industry, those very same people were coming and knocking on my door and saying: “Minister, have we got a deal for you. We can build 10 affordable houses.” Suddenly they saw the building and construction opportunities drying up before their eyes. If anybody was able to provide some leverage to enhance building and construction it was the Government, because building on Crown land was one of the few options that the building and construction industry had left available to it. And this Government calls this legislation the Infrastructure Bill!

If the Government were serious about infrastructure, if it were even halfway serious about creating jobs, it would look at the leverage that the Crown has in all its Crown landholdings—such as the land in Hobsonville—and it would start to release that land for the building of affordable houses. Not only would the Government then create jobs and stimulate apprenticeships, because apprentices would have somewhere to go, but also it would provide through that mechanism the means for new families, young families on low and middle incomes, to get into the housing market. This Government continues to pull up the ladder behind it. There are people in that Government who have benefited in the past from Government assistance to housing, and now the Government continues to pull up the ladder.

Please forgive me if I am raising my voice, but this really riles me. There is nothing more fundamental in this country than the right to shelter, and the ability to have and own one’s own home has forever been part of the Kiwi dream. This Infrastructure Bill might as well be called the “Destruction of the Kiwi Dream Bill”. This is a nonsense. If this Government goes around the country one more time saying: “Look what we’re doing in infrastructure.”, then I want every other New Zealander to ask: “How does that work in housing again?”. Mr Joyce thinks that he is improving infrastructure by rolling out roads. I suggest that he would do better by improving public transport. But what is happening in the building of houses?

Even this very small measure, this optional measure, this provision that local and territorial authorities were not obliged to take up but could benefit from taking up, is being taken away. Not only has this Government, on 1 July, axed the shared equity scheme—which was a way that the Government could assist low and middle income earners into their first home, by providing some capital investment, which, over time, a family could buy the Government out of—but also it now wants to take away even a provision that was optional and that local authorities could use to good advantage in order to encourage residential housing developments in their areas. Local authorities could do that through the provisions of this affordable housing legislation. But, no, far from encouraging infrastructure, this Government is depleting infrastructure. It is denying jobs, it is denying skills training, and it is denying people the opportunity to buy their own house, their first house, and to get on to the bottom rung of the homeownership ladder, which allows people to improve their prospects, lever themselves out of minimal wages, and improve their standard of living. This measure is an injurious provision to put into this legislation.

Hon STEVE CHADWICK (Labour): I am proud to take a call on Part 4 of the Infrastructure Bill. The Committee can see by the passion of the Opposition that we feel incredibly strongly about the mechanism that the Government is employing today in this Committee stage in bringing this housing measure through by stealth. It is absolutely being done by stealth. The Government is sticking it into an Infrastructure Bill that deals in Parts 1, 2, and 3 with roads, motorways, rail corridors, and the New Zealand Railways Corporation. Then we find that Part 4 is about housing. When we are look at what is in it for New Zealanders, we should be seeing something about the Kiwi dream of affordable housing. But by stealth, this part repeals the Affordable Housing: Enabling Territorial Authorities Act. Labour will definitely be voting against Part 4 of this bill.

What we are really sad about is that when we were previously in Government, the Opposition spokesperson on housing at the time, Phil Heatley, continually railed against us, saying we were doing nothing about affordable housing for New Zealanders, even though we were addressing that issue. Here today we have legislation that sits on the books as enabling legislation for local authorities, and by stealth it is being repealed.

Moana Mackey: It’s not compulsory.

Hon STEVE CHADWICK: It is not compulsory; we did not say it was something that every territorial authority across the land had to do. We said that legislation was one mechanism that might be useful in some districts.

If I recall the situation correctly, Queenstown mayor Clive Geddes said there was an amazing tourism boom going on there—at that time, under Labour—and Queenstown did not have accommodation for service workers. Service workers were staying in buses, tents, and camping grounds. Mayor Clive Geddes said that was an embarrassment, and Queenstown was a community that understood that people who worked in the service sector needed to have a decent place to live. He said those people needed to be given a start in getting their own homes; otherwise, they would have to be railed or bussed into Queenstown to work in the tourism boom that was going on. That request came from the mayor of a local authority who had a sense of decency and of pride about his community, and today, purely out of political pique, a fantastic enabling tool for local authorities is simply being repealed. I think all Government members should hang their heads in shame today, because we have not seen anything else that gives Kiwis the chance to have a decent start in life or that gives families a sense of pride about having a home—a place that is warm and secure for their families.

My husband and I started with a Housing Corporation loan. We did not get enough money together to get a deposit, and without some assistance from the Government with the right incentive, we would never have had our first home when our children were little. We thank the Government of the time for that. When Maryan Street was the Minister of Housing, she looked at what we could do and at the tools that we could put in place as a Government to encourage people to get into their first homes.

I put it on the record that the Human Rights Commission says affordable housing is a critical component of having an adequate standard of living, and it regrets this mechanism to repeal that Act today, especially without there being anything else to replace it. Age Concern has registered its “disapproval about what appears to be a process of ‘repeal by stealth’.” That is becoming the modus operandi of this Government. If the Government does not want there to be a lot of exposure of something, it does it by stealth in this way. This is definitely a mechanism that the Government hopes people will not notice. The National Council of Women of Aotearoa is concerned that a really laudable section on restrictive covenants is being watered down in the revisions to the Property Law Act made in this bill. These are organisations with sensible, fair approaches to life and in their opinions about what people deserve when they live and participate as workers in New Zealand. Affordable housing is the first rung of the ladder and, as Maryan Street said, the Government has lifted it up.

CATHERINE DELAHUNTY (Green): Tēnā koe, Mr Chairperson. Tēnā koutou katoa. I rise on behalf of the Greens to support the Labour Party’s call for a review of Part 4 of the Infrastructure Bill. We are supporting the bill, but we are really disturbed at this attack on affordable housing. It is absolutely essential that we do something about the housing crisis in this country at every opportunity. This is a retrogressive part of what would otherwise be a reasonable bill.

I agree with previous speakers who said that infrastructure, which is a wonderful word, must be about something as basic as a roof over one’s head. We are very deeply concerned about the repeal of an optional mechanism for local authorities that could have been a real incentive for change. Some local authorities have taken housing seriously in the past, and some of them really have not. We need to encourage and facilitate through legislation that kind of change.

I lived on the East Coast, Tai Rāwhiti, for 8 years before I moved to Hauraki. I and a former member of this House, Sue Bradford, who everyone knows was very concerned about poverty, visited a number of housing activists in communities such as Tokomaru Bay and other places on the East Coast. These organisations and individuals, who were trying to help their people into housing, were blocked by poverty and lack of opportunity for housing because the mechanisms were so difficult for people to get through. When we have a mechanism that would have improved that situation, the last thing we should do is block it in this Chamber. The local government in that region was not well known for its commitment to addressing poverty or its recognition of housing as part of its responsibility, and it needed encouragement and leadership from this House to make sure it stopped being a barrier and started being a facilitator. The kinds of housing instruments discussed in the Chamber today could have been encouragement for places like Tai Rāwhiti.

Sue and I went into homes that were unfixable; one housed a family of a single mother with seven children and no running water. The mother could not get the Rural Housing Programme to fix her house, because it was so far gone that it was unfixable. Yet she had no opportunity to get the money to get a new house. For all the rhetoric about fixing up rural homes, etc., or getting into new housing, it was just not working for these people. There was no way. We started building a process to change that—programmes like shared equity—and it is really disturbing to see that it will be ignored. We were very keen to see change, and we will be voting against this.

If one cannot get into housing, one cannot get to first base. I think that in other countries it is really easy to talk about long-term leases and rentals, because they have the infrastructure for long-term leases and rentals. It is OK if one does not own a house. But in Aotearoa New Zealand one is really unfortunate if one cannot get past that first base. If members have family members living in places like Auckland, as I do, who are young and poor, they will know that there is absolutely no way that they can even consider getting past first base.

We need to be listening to the community housing activists, not just the developers. The community housing activists in this country—the third sector on housing—have strategies, ideas, and mechanisms that we need to listen to so that we can break some of the bottlenecks around Māori housing, housing for young families, and housing for beneficiaries. At the moment those people are in crisis. We do not need to block them in this way. It is very disappointing. Cynicism develops when one sees a bill about infrastructure that is actually about blocking in part some of the most positive mechanisms to help break the bottleneck.

When I was young I lived in a very old house that needed a lot doing to it, but I was able to get a family benefit change, which allowed me to get into housing. I was able to build my life and my family’s life from that base. But I know that nowadays lots and lots of people, because times are a lot harder and property is a lot more expensive, will never get that opportunity. Plus there are those who have student loans and debt before they reach even the age of 25 that I could not have even dreamt of when I was a young, broke person. We have to think about the conditions that the next generation faces in terms of housing. It is not good enough to just wring our hands and allow legislation to go through that undermines these mechanisms, just because it is convenient for whatever reason.

I know that there is good local authority effort on housing in this country, but I also know that there is a lot of complacency. If one goes to other places like London, one sees that housing is vital.

Hon MARYAN STREET (Labour): I will try not to raise my voice quite so much this time, but members should not let a lack of volume or intensity make them think I do not feel strongly about this issue. I will take a moment to explain how the Affordable Housing: Enabling Territorial Authorities Act 2008 was to work, because I think people are overlooking that, and I wonder whether anybody on the Government benches actually knows how that legislation was to work and what it was to do.

The whole point of the Affordable Housing: Enabling Territorial Authorities Act was to provide local authorities with the ability, should they so choose—it was not mandatory—to require developers to set aside a portion of any residential housing development, say 10 percent, for affordable housing. So if a developer was about to build 200 houses, the local authority could say that 10 percent of those houses needed to be affordable, within an affordable purchase range, for that area. This was to be done by the local authority. It would have been compulsory for the developer to adhere to that provision. As a result, out of 200 residential properties being built, 20 would have been available for purchase by low and modest-income families. That is not such a big ask.

My colleague Steve Chadwick referred to Queenstown as one of the areas where this was seen as a very desirable thing. I spent some considerable time with the mayor, councillors, and staff of the Queenstown Lakes District Council talking about affordable housing. There they were with a grand plan to make Queenstown a tourism Mecca, not just in the winter months, when it is, but also in the summer months when people do not automatically think of Queenstown as a tourist destination but head for the beach.

In order to make Queenstown a year-round tourist attraction, what were needed were some employees who could work in the service and tourism industries that would serve that town and that district. In order to get those people in, there needed to be affordable housing, because the housing in Queenstown cost so much that people in low-wage service occupations did not have a hope in Hades of renting or buying a residential property.

Along with purchase prices, there are ratchet rents. As purchase prices go up, so do rents. Council rates go up and landlords require more rent to cover the rates increases that are on the rateable value of the land. As that increases, so rents increase. So Queenstown, Auckland, Wellington, Christchurch, and Nelson, where I live, were the top five most expensive cities and towns in which to buy a house in New Zealand. Property prices were the most expensive in those five areas of New Zealand, and they still are. Tauranga is beginning to catch up; I think it might be No. 6 now. But, certainly, those five areas remain the most expensive areas in which to buy a house. So the provision that was made available to local authorities in respect of affordable housing was another tool in their tool kit. It went alongside the waiving of development levies—they could waive development levies in order to get these properties built—and could have provided housing for workers who were needed for the kind of growth that was being anticipated in Queenstown.

The same is true of Nelson. I spent time with the mayor and councillors of Nelson and with the mayor of Tasman District. The areas adjoin—the boundary goes down the middle of Champion Road in Nelson—so they are affected by similar movements: industrial growth, population development, and so on. In Richmond, in the Nelson electorate, there are great hopes and plans for industry development, for value to be added to the wonderful primary produce that happens in the Richmond, Nelson, and Tasman areas. With industrial growth come jobs, with jobs come workers, and with workers come their families. If the mayor of Tasman District Council wants the industrial growth that the council was planning for, and is continuing to plan for, in the Lower Queen Street part of Richmond, then affordable housing suddenly becomes critical. The rents in the Nelson area, including Richmond, are exorbitant, and they make it very difficult for young families to live.

So all of this was part of a plan, and it is as clear as day that in the repeal of this modest provision—which, as the Minister of Housing, I never claimed would fix the affordable housing problem; it was one mechanism for addressing it—the Government is exposed again as having no plan for economic growth; no plan to assist families into their first homes; no plan to increase jobs; and no plan to upskill young people, introduce them to trades, and develop the skills that could have been encouraged by rescuing the building and construction industry through a method of this kind.

The whole purpose of being in Government is to use the leverage of the Government for the advantage of citizens. That is the whole purpose of being in Government. If this Government cannot see that purpose, and if the only citizens it is interested in advantaging are that narrow elite of its mates who donate to the National Party, then let us see it for what it is. Let us see this ignorant bill for what it is.

The Minister of Housing has had no ideas about how to address housing affordability. I suspect he must be masquerading as an idiot, because surely we cannot have a Cabinet Minister who is an idiot. This man, Phil Heatley, masquerades as an idiot. Everything he has done diminishes the opportunities for New Zealand families to own their own homes, and diminishes the opportunities for investment in the building and construction industry, which could generate jobs, encourage apprenticeships, and train up and provide a future for young people.

Every turn this Minister of Housing takes leads us in exactly the opposite direction, negating opportunities, stifling job creation, and limiting possibilities. That is something a Government should never do—never do. That is what the Government is doing with the repeal of this provision, which is optional. I toyed with the idea of it being mandatory, but it is only optional, and it is a travesty for this Government to repeal it.

The CHAIRPERSON (Lindsay Tisch): The first amendment in the name of Moana Mackey, to omit Part 4, is out of order as being a direct negative under Speakers’ ruling 111/4.

The question was put that the following amendment in the name of Moana Mackey to clause 54 be agreed to:

to amend section 277A(1) by omitting “a principal” and substituting “one”.

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

Ayes 52

New Zealand Labour 42; Green Party 9; Progressive 1.

Noes 67

New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.

Amendment not agreed to.

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

Ayes 67

New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.

Noes 52

New Zealand Labour 42; Green Party 9; Progressive 1.

Part 4 agreed to.

Schedule agreed to.

Clauses 1 and 2

MOANA MACKEY (Labour): I am happy to stand and take a call. Labour will be supporting this Infrastructure Bill. We were disappointed, though, that we were not able to appeal to the Government’s sense of social responsibility when it came to Part 4. But we support the bill as it comes.

I think that members may consider some alternative titles appropriate for this legislation. Now that we have had the debate on the different parts of the Infrastructure Bill and we have seen its layout, it would be timely to rename it the “Infrastructure (Housing Is Not Infrastructure) Bill”. Clearly, this Government does not think that housing is infrastructure. We are being told that the purpose of this legislation is to support infrastructure development and to align the needs of the different utility operators. In fact, in the Chamber today Mr Gerry Brownlee stood up and told us that we did not even need the Infrastructure Bill, at all. He did not think that it needed to be progressed rapidly, because he thought he was doing such a fabulous job on infrastructure. I point out to the Minister in the chair, the Associate Minister for Infrastructure, that his “Holiday Highway”, which will help him get to his holiday home, will not address the issues of housing in New Zealand, so I think that it is only right that this bill is renamed the “Infrastructure (Housing Is Not Infrastructure) Bill”.

If we look at Australia, we see that exactly the opposite is happening. Australians see housing as an integral part of any infrastructure package. Australia managed to keep itself out of recession. One of the things it did was invest heavily in social housing, and it is continuing to do so. If we want to keep looking at the areas where the gap between New Zealand and Australia is widening under this National Government, then a commitment to social and affordable housing has to be one of the biggest areas.

Perhaps another name for this bill could be the “Infrastructure (National - ACT - Māori Party Government Does Not Care About Affordable Housing Any More) Bill”. It was clear in the debate today on Part 4, when no one from the Government stood up to defend its decision to repeal the Affordable Housing: Enabling Territorial Authorities Act, that affordable housing is off the agenda for this Government. All we have seen since those members came into Government is a lot of theatrics. We have seen a lot of song and dance on the other side of the Chamber from the Minister of Housing, Phil Heatley. If pantomime could build houses, then housing supply would not be a problem in New Zealand. But, unfortunately, pantomime cannot build houses, and this Government has shown no commitment to doing so.

What has this Government done? It has got rid of the shared-equity pilot. That scheme is an integral part of any affordable housing policy everywhere else in the world, but it has gone. There was a 2-year pilot; 20 months of that 24-month pilot were under this National Government. What did it do? It told the Housing New Zealand Corporation to stop promoting it. Then at the end of the 2-year pilot the Government said that it would not continue funding it, because there was a really low uptake. Well, there was a really low uptake because no one knew that it existed.

That raises another question: what is the point of spending money on a pilot that no one knows about? It would be a huge waste of money. I will tell members the answer to that question: it was so the Government could claim that it was doing something about affordable housing, and could claim that it was taking shared equity as an option seriously, when we know that it was not. We were just very lucky that an honest Housing New Zealand Corporation staff member came out and said that staff had been told to stop promoting the pilot. Guess what! That staff member probably had to apologise to the housing Minister, Phil Heatley. It was just like the Housing New Zealand Corporation staff who went to the Local Government and Environment Committee on the Resource Management Act reforms and said that the reforms would do nothing for affordable housing. Those staff members were dragged in and had to apologise to Phil Heatley for being honest to the select committee.

I come to my second point, which is that we could also call this the “Infrastructure (National - ACT - Māori Party Government Thinks Tax Cuts and RMA Reform Will Fix Everything) Bill”. I did not speak on this matter in the debate on Part 4, because I ran out of speaking slots, but I will bring members’ attention now to the advice we had from officials on this part of the legislation. It was pointed out that the Government had announced a two-phase review of the Resource Management Act, and had said that faced with the Resource Management Act it might consider a range of options for land supply, but that it would do nothing to address affordable housing. Affordable housing measures were not considered as part of the Resource Management Act’s two-phase review. So when Government members get up and say that they will fix the problems of affordable housing—firstly, by tax cuts, and, secondly, by Resource Management Act reforms—they are not telling the public that housing affordability is playing no part in those Resource Management Act reforms.

The second part of this “Infrastructure (National - ACT - Māori Party Government Thinks Tax Cuts and RMA Reform Will Fix Everything) Bill” is the tax cuts. The Minister of Housing, Phil Heatley, said that tax cuts are National’s No. 1 policy for affordable housing. Let us investigate that a little bit further. Someone on the minimum wage is getting $3 a week in tax cuts—$3 a week. The Minister of Finance tells us that that will compensate for increases in GST, but he does not mention that people on the minimum wage spend pretty much all of their income on things that attract GST, so the measure is very regressive. They will be even more impacted on. That $3 a week is also meant to cover off the costs of rising inflation and any rent increases, and apparently it will also fix housing affordability. New Zealand families would have to be pretty good at budgeting to spread $3 a week as far as that. It just is not going to happen.

Once again we come back to the central point of this “Infrastructure (National - ACT - Māori Party Thinks Tax Cuts and RMA Reform Will Fix Everything) Bill”. It will not fix everything. Every single piece of international evidence tells us that we need a mix of policies to address housing inaffordability, because a whole range of different things cause housing unaffordability. Land supply is one. Regulatory reform to ensure that it is cheaper and easier to build homes is another. There is a whole range of things, including wages and incomes. They are incredibly important when it comes to housing unaffordability. No one is claiming that there is a silver bullet, but allowing territorial authorities to require that developments that happen in their own patch include a component of affordable housing or social housing is an important part.

My next suggestion is around the area of restrictive covenants. Another name for this bill could be the “Infrastructure (National Thinks It Is OK for Restrictive Covenants to Exist for Affordable Housing) Bill”. This was cloak-and-dagger stuff. The Minister went out and said the Government would get rid of that power for local authorities, but it would keep the provision on restrictive covenants because it agrees that they are wrong. He said he would just transfer it to another piece of legislation. We thought that was fair enough and at least there was a silver lining to this cloud. However, National members did not tell us that they had changed the wording of what they were transferring. The original wording in the existing Act deals with covenants on land, and these covenants affect all future landowners. It is an agreement between landowners. There are covenants that say there cannot be educational, health, social, or any of that kind of housing in those areas. National members did not say that they were removing housing affordability from that provision. We said in the Affordable Housing: Enabling Territorial Authorities Act that there could not be these restrictive covenants for social housing or for affordable housing. National took out the provision regarding affordable housing. They think that it is OK to have covenants against affordable housing.

Secondly, we said in that Act that if any purpose of a restrictive covenant was to stop social or affordable housing, then it was illegal. We said it could be any purpose because we were told by the Human Rights Commission that it had seen cases where developers were saying that the primary purpose of a covenant was amenity value, but that it also had an unintended consequence of stopping, for example, disabled access being added to the property. We closed that loophole in the law at the Local Government and Environment Committee and we said that if any purpose was to stop the building of social or affordable housing, then the covenant could not happen.

So this Government—and it did not tell people it was doing this—said that it was going to go back to the “principal purpose”. It created a huge loophole, just like it did with the 90-day bill. It thinks that as long as it does not tell people that it is discriminating against disabled people, elderly people, or poor people, it can do that. It is exactly like the Government’s rhetoric and its theories on the 90-day bill—that is, as long as people do not say that the reason they are firing someone is that person’s ethnicity or gender, it is OK. It is the same with restrictive covenants. As long as we do not tell people that the reason the covenant is in place is to stop disability housing, mental health housing, social housing, or affordable housing, and as long as some other principal reason is made up, such as that the developer wants all the houses to look a certain way, or whatever reason might be given—such as amenity value, or that it is to get the sun in certain ways; we have heard of a whole lot of reasons through the Human Rights Commission—then it is OK and we will be able to stop social and affordable housing from going in. A huge loophole is being opened up.

Clause 1 agreed to.

Clause 2 agreed to.

The Committee divided the bill into the Utilities Access Bill, the Infrastructure (Amendments Relating to Utilities Access) Bill, the New Zealand Railways Corporation Amendment Bill, and the Affordable Housing: Enabling Territorial Authorities Act Repeal Bill, pursuant to Supplementary Order Paper 152.

Bill reported with amendment.

Report adopted.

Bills

Insurance (Prudential Supervision) Bill

Second Reading

Hon BILL ENGLISH (Minister of Finance): I move, That the Insurance (Prudential Supervision) Bill be now read a second time. I want to begin by thanking the members of the Finance and Expenditure Committee for their prompt but rigorous handling of the bill. This is fairly complex legislation that brings prudential regulation to an industry that has not previously been legally subject to such requirements. The bill has been widely consulted on with stakeholders prior to the select committee, which received and considered 57 submissions and heard 31. Not unexpectedly, the submissions covered a broad range of issues. The committee is to be congratulated on the depth of its analysis and its unanimous recommendations. I think that unanimity may well have come from the fact that this Parliament has spent a good deal of time in the last 3 or 4 years, under the previous Government and this one, updating the regulation of the whole financial sector.

The key purposes of the bill are to promote the maintenance of a sound and efficient insurance sector and to promote public confidence in that sector. It will achieve this through the establishment of a framework for the prudential regulation of insurers, including the licensing of insurers; imposing prudential requirements on them; providing for the supervision by the Reserve Bank of insurers’ compliance; and conferring certain powers on the Reserve Bank to act in respect of insurers in financial distress or other difficulties. The bill focuses on the licensing and prudential regulation of insurers carrying out business in New Zealand. It does not offer New Zealand licensing to insurers that do not carry on or propose to carry on business in New Zealand or that do not have New Zealand policyholders.

Overall, the provisions and requirements of the bill are generally aligned with established worldwide insurance regulatory practice and, despite imposing new requirements on insurers, they are not radical in comparison with other measures internationally. The industry has generally acknowledged this approach, and as a result is in general support of the regulatory model in the bill. Compliance costs associated with this bill are not considered to be high, with a largely self-administering approach being applicable to compliant insurers.

The bill contains a strong emphasis on the obligations and accountability of directors and senior officers. The committee has recommended a number of practical refinements to clarify the scope and application of the bill. Refinements are recommended to the key definitions of “contract of insurance” and “carrying on insurance business” in order to avoid the unintentional capture of certain activities that are outside the scope of the bill, such as discretionary mutual providers, and trade associations and union groups that provide limited insurance coverage that is incidental to the primary purpose of those organisations. In addition, and as a means of ensuring that compliance costs are not disproportionate for very small insurers, limited exemptions from certain compliance requirements are recommended for existing very small insurers with premium levels below a specified level and for friendly society insurers.

Considerable thought has been applied to the treatment under the bill of overseas insurers carrying on insurance business in New Zealand. The bill will continue to allow overseas insurers to operate New Zealand branches. The Reserve Bank will publish a listing of overseas regulatory jurisdictions approved as satisfactory for overseas insurers seeking the home host exemptions potentially available to them in respect of the fit and proper requirements, the solvency standards, and the statutory fund requirements. The approval of an overseas regulatory jurisdiction as satisfactory will be conditional upon the regulatory standards in the home overseas jurisdiction being comparable with the New Zealand standards.

In respect of the solvency standards that will attach to the bill, the committee has recommended that the Reserve Bank must have regard to similar standards in relevant offshore jurisdictions for the purpose of ensuring that solvency standards do not apply in an unreasonable manner as a result of an insurer’s country of incorporation, whether that is here or overseas.

In addition, the bill now provides for matters relating to minimum capital requirements for insurers. Recommended changes to the licensing requirements within the bill include a requirement that all licensed insurers must meet the qualified person criteria contained in section 13(a) of the Financial Service Providers (Registration and Dispute Resolution) Act, regardless of whether or not the licensed insurer is required to register under that Act.

With regard to the financial strength ratings of overseas insurers, the bill now requires rating agencies to refer to any overseas policyholder preference that may apply. In addition, the disclosure requirements relating to ratings have been amended slightly to make them more practicable and cost efficient. In areas such as fit and proper requirements and statutory funds requirements, a reasonable amount of technical detail has been transferred from the bill to regulations. This will make the bill less complex as well as enabling more flexibility if future changes are required, which is entirely possible with a new regulatory regime.

A number of changes are recommended that are intended to improve the practicality and efficiency of the bill. These relate mainly to requirements in areas such as solvency standards, statutory funds, transfers and amalgamations, and disclosure and confidentiality of information.

There have also been a number of minor drafting changes. I will take this opportunity to signal my intention to introduce at an appropriate later stage a Supplementary Order Paper to deal with some minor technical drafting issues discovered since the bill was reported back, and also to clarify the commencement provisions of the various sections of the bill.

The enactment of this legislation will repeal a number of existing and outdated pieces of insurance legislation in New Zealand, and it will remove inconsistent legislative application between different insurance sectors. It will bring New Zealand more into line with international standards and benchmarks and with expectations around the financial services sector. Although the New Zealand insurance industry is not considered to be an industry in distress, this legislation is intended to ensure that the industry collectively and its insurers individually will be well positioned to manage such distress should such a situation arise in the future. It is pleasing to be part of a process that is regulating the sector ahead of a time of crisis or a time of distress, by getting the Reserve Bank in place as a regulator and putting in a new framework for the individual insurers.

I must pay a compliment to the industry. It has taken a constructive role in this process going back a number of years, including under the previous Government, which has helped to improve this legislation. I commend the bill to the House.

Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to commend the Insurance (Prudential Supervision) Bill to the House in its second reading, and to support, in large part, the comments of the Minister of Finance, who has just resumed his seat. I note that there is bipartisan support for this bill, that the genesis of the bill lay with the previous Labour administration, and that its execution and implementation have been carried on with thoroughness and efficiency by officials of the Reserve Bank of New Zealand, under the stewardship of the current Government. I commend the Finance and Expenditure Committee, its chairman Mr Craig Foss, its members on all sides, and the officials who have supported it. I also commend the insurance industry, which I believe has taken a broad and national interest - based view on the very serious matters that are the subject of this bill.

I reflect upon the fact that the context for the genesis of this bill was a series of extraordinary events that brought the world economy itself to the brink of a depression unprecedented since the 1930s. In October of 2008, on a day I will never forget, we received news that Lehman Brothers, the American investment bank, had collapsed. Lehman Brothers was at the heart of the New York financial infrastructure, so world credit markets froze. In the weeks and months that followed, the Reserve Bank of New Zealand rose to probably its toughest challenge, and it did so with grace and rigour. It was not many months later that the world’s largest insurer, IAG Group, sought a bail-out by the US administration. The world was advised that there was a real prospect that global credit card payment systems would be suspended, and that every New Zealander would have—

Craig Foss: AIG.

Hon DAVID CUNLIFFE: Thank you—AIG; I have “acronym-itis”, and I thank my colleague for the correction.

Every New Zealander who had a credit card would have noted the situation and would have felt the disruption that that caused. So we have a bill here that sets about bringing the insurance industry and the re-insurance industry within the prudential supervision purview of the Reserve Bank of New Zealand. In doing so, the bill further underscores the importance of New Zealand having what is known as a “full service” Reserve Bank, one that is responsible for both the conduct of monetary policy and the supervision of the printing issuance of currency, and also for the integrity of financial markets, in noting that financial stability is so much more than simply price stability.

That brings me to the key provisions of the bill. We will debate these provisions in the Committee stage in more detail so I will not go through them now, other than to single out the issue that was of most concern to the committee, which was the treatment of overseas insurers operating in New Zealand. When I reread some of the language in these notes, I believe that some clarification is merited. The committee wrestled with the issue of whether New Zealand - based insurers would be disadvantaged by the provisions of this bill, which allows the Reserve Bank to grandparent foreign, mainly Australian-based, insurers into the New Zealand market. We spent hours discussing and receiving evidence on whether New Zealand - based insurers—and I can say publicly that AMI is the key example there—would be disadvantaged. On balance, the committee was reassured by officials that there would be no such disadvantage in the way in which this legislation was implemented. But I do want to lay down a very serious marker, which is that the Labour Opposition will remain vigilant on that matter, and that the sovereignty and strength of the New Zealand financial markets is a matter of the highest national importance. We have a continuous bleed on our external accounts because most of our financial systems are overseas-owned, and we must not hollow that out.

Let me come to the second major theme that I wish to advance today—that is, that the extension of prudential supervision to the insurance sector has clearly required legislation. It is also appropriate that the extension of the current Reserve Bank role to macro-prudential supervision of the monetary system, and the counter-cyclical use of macro-prudential policy, should have legislative amendment akin to this bill. The counter-cyclical use of a prudential policy to achieve monetary policy objectives is not provided for explicitly in the Reserve Bank of New Zealand Act as it currently stands. It is not provided explicitly in that Act as it currently stands. The Reserve Bank is interpreting the Act as being broad enough to accommodate both roles. The Labour Opposition, as part of its extensive review of monetary policy, recommends—

Mr DEPUTY SPEAKER: We have a speaker on his feet speaking, and there is a cross-dialogue going on here that has nothing to do with the debate.

Hon DAVID CUNLIFFE: It is a matter of great regret that given the seriousness of the financial issues that surround our economy, this matter of the extension of the Reserve Bank of New Zealand Act into macro-prudential policy has not yet been accommodated.

A third theme that I wish to advance today is that ensuring the integrity of insurers goes to the heart of our financial system. The insurance industry requires public confidence, just as the institutions of Government more broadly require public confidence. That is why we have a Cabinet Manual, that is why we have the Standing Orders, and that is why we require Prime Ministers to enforce the provisions of the Cabinet Manual for all Ministers. If they do not do so, the public has no insurance that those who operate to supervise their markets and their country are acting with integrity. It is a matter of great sadness and some concern that the public of New Zealand—

Paul Quinn: The events of this afternoon?

Hon DAVID CUNLIFFE: Mr Quinn would do well to note that the public of New Zealand hold politicians to be less trustworthy than prostitutes. This matter is a matter of grave concern. The member may laugh, but on a day when it has been revealed that New Zealand’s Minister of Trade has used information found during his conduct of ministerial duties to enrich himself through the shadowy operation of a private trust, and has failed to declare that publicly, that is a matter of concern, because it corrodes the integrity of the Government and of this House. I wonder why the Prime Minister of New Zealand has lowered the standards of ministerial accountability—standards that are so far lower than those that patently apply in the New Zealand Labour Party—because Ministers in this Government are allowed to enrich their private interests when on public business; they are allowed to buy and trade shares—

Craig Foss: Point of order—

Mr DEPUTY SPEAKER: We are getting into the territory of accusing a member of points that are not part of this debate. I ask the member to withdraw that comment and to proceed.

Hon DAVID CUNLIFFE: I withdraw the comment made in relation to any particular member, but I trust that you, Mr Deputy Speaker, will not require me to withdraw the sentiment that ensuring the integrity of our political institutions, including our Cabinet, is a matter of the highest national importance. In that regard, it has to be regretted when a Prime Minister lowers those standards of accountability. The Minister of Finance might smirk about that matter because he has been on the receiving end of that leniency on several occasions, and other members might find themselves in need of such leniency, but the net effect for this country is that the public’s esteem of the Government will fall further. How can the public be sure that when a Minister is gaining information about markets, the information will be used for the public interest and not the private interest?

CRAIG FOSS (National—Tukituki): I will talk to the Insurance (Prudential Supervision) Bill. I acknowledge the points made by the previous speaker, the Hon David Cunliffe, in the first half of his speech about the bill. I tend to agree with most of what he said about the bill. Unfortunately, he went off the track a bit by talking about trust and integrity. In a hypothetical situation, if someone was lurking around sending letters, perhaps under the cover of darkness, but was caught out by security cameras, it would not look good in terms of trust and integrity. Of course, there are also interesting issues of privacy, etc., and, in terms of how people get access to confidential information, which is something that the previous member spoke about, it would be interesting to also raise issues of confidential video catalogues and recordings of proceedings in various places. We should all be vigilant, and we thank the member for acknowledging the point that some politicians need to be careful and constantly vigilant. It is well noted.

I will return to the bill. First of all, I thank the members of the Finance and Expenditure Committee for scrutinising the bill; the previous speaker is a member of this committee. The committee as a whole came together in respect of this bill. Quite a few changes were made to the bill, some of which were more major than others. We had a very active submission process, and I think we drew on the ability of those around the table, and particularly of officials, to get to some of the points and changes that we have made. I acknowledge the officials and the Reserve Bank of New Zealand, which sponsored and worked on this bill. It is not very often that we get a bill—“driven” is not quite the right word—managed, perhaps, by the Reserve Bank itself.

I acknowledge not only the work of the commercial sector but also the parallel process that officials went through, as issues arose in ongoing consultation with the committee. That process works very well, because we catch up and we do things cumulatively. As we can see from the changes to the bill, this system has worked, although not necessarily to the satisfaction of all submitters. Some submitters were very active in their proposals around their particular part of the sector, but, again, as the previous speaker started to speak about, there are some risks to the New Zealand financial system. I note, again, that this bill is called the Insurance (Prudential Supervision) Bill. Thus it relates to the insurance sector, which is part of the finance sector. We need to be constantly vigilant. We are very lucky in this country that we have not had any major insurance incidents. Another member talked about an American company, but that was not in respect of any insurance company failure through this process having created a problem. Some of the investment banking and highly leveraged stuff had created the problems in the first waves, if you like. But the concerns are acknowledged.

Just quickly, I will mention a couple of changes that I like in particular—and I know that another member may talk to some issues, as well. Of the 57-odd submissions made to the committee, several were in respect of smaller entities. The industry is pretty much split into some very small players and some very large players. The very small players argued—some quite successfully—that, firstly, they were not really in the insurance business, and, secondly, that they were self-contained, if you like, or had not done much in quite some time. So I acknowledge the Minister, the officials, and the committee for coming to recommendations and conclusions, and for proposing the amendments that we see in the bill now. The recommendations carved out the small players and looked after them. There was no particular mischief going on, in a prudential sense, and, of course, those entities are also covered under other legislation and regulation, anyway. But the larger players have been picked up by this legislation.

Finally, I will make a couple of points about the recognition of other regulatory agencies, or, basically, other central banks. We had quite a discussion about that. I think that the point that we have got to in this bill is very helpful, in respect of the commitments from the Reserve Bank as it goes through the process. We have provided greater clarity than was in the original legislation. Also, I note for participants in the New Zealand insurance industry that it has been about 18 months since the first signals were given—probably longer, because the previous speaker noted that this legislation started under the previous Government—of some of the changes in respect of the conservative or prudential ratios that were going to arrive for this industry. There is also a lead time, once this bill is passed. There is still quite some time for balance sheet management to occur, so there should not be any sudden shocks to the shareholders of those particular companies, their unit holders, their local shareholders, or whatever they may be.

I commend the bill to the House. I again acknowledge the ongoing hard work of the select committee. Again, putting politics aside for a moment, I say the way that the select committee dealt with this bill across the parties produced good public policy and a good document for New Zealand. I acknowledge the contribution of all members of the select committee, as well as the contributions of the officials and the sector. Thank you.

BRENDON BURNS (Labour—Christchurch Central): I acknowledge, first, the role that Craig Foss, as chair of the Finance and Expenditure Committee, played in this Insurance (Prudential Supervision) Bill. He did indeed steer it through the select committee well.

Hon Member: Don’t go too far.

BRENDON BURNS: I do not want to go too far. I will comment on the background to the bill and about a particular aspect of it that, as my colleague David Cunliffe has indicated, the Labour members on the committee will be watching to ensure that it works in the way that the Reserve Bank has assured us it will work. I will also look at a missed opportunity in respect of this bill.

The background to this bill was the collapse of financial markets 2 years ago in the United States, which spread across the rest of the world. We have seen moves in this country to reinforce regulation of the way in which banks and financial institutions operate, and that left the question of where the insurance industry was. Although the insurance industry in New Zealand was not in any distress, the global financial crisis illustrated very clearly the vulnerability of the financial sector as a whole; hence the emergence of this bill through that process. The bill requires all insurers operating in the New Zealand market to be licensed and supervised by the Reserve Bank, and to comply with minimum prudential requirements. Compliance will largely be self-administered under the bill, but the Reserve Bank has an important supervisory role.

The Labour Party supports the bill. But one comment Labour members would make is that it does not go far enough in dealing with one of the key economic issues that we face as a nation—that is, the need to put exporters at the centre of monetary policy. If we needed a further illustration of that today, I guess it came in the announcement, not unexpected, from the Reserve Bank governor that the official cash rate will rise by another 0.25 basis points, to 3 percent. This is not an unexpected decision, but one that reflects on our current monetary policy settings. Indeed, the Reserve Bank governor has little choice. Given the focus of the current Act, he must reflect his concerns for the future rise of inflation. That is the only policy setting he has to pay any real regard to.

We note that in the last 3 weeks the Prime Minister was in my electorate of Christchurch Central to address a forum of exporters. He stood up and said—with some audacity, I have to say—that the monetary policies of this country were “the best in the world”. If the best in the world means that our exporters continue to get stick because of the settings of monetary policies—

Hon Dr Jonathan Coleman: So what changes are you making, Burnsey?

BRENDON BURNS: We have indicated very clearly. Phil Goff has given a speech, which the Prime Minister chose to pan, in which he said that we should be looking at monetary policy settings. We can be bipartisan. We have indicated a wish to be bipartisan on many measures within this bill, but we cannot let it go without any commentary suggesting that if we are to be bipartisan on the future of the insurance industry, then why can we not be bipartisan on monetary policy?

Hon Dr Jonathan Coleman: You guys can’t even be bipartisan within your own party at the moment.

BRENDON BURNS: The exporters of this nation are telling MPs like Jonathan Coleman, every day in his electorate, that it is screwing the scrum in respect of their capacity to export and earn for this nation. There is no one magic bullet on monetary policy, but there is a need to review the settings, as Australia has done.

We hear often from members on the other side of the House that New Zealand wants to catch up with Australia. It has been indicated in the last couple of days, of course, how well, or not, we are doing in that respect. The Australian Reserve Bank looks at a number of factors, including the inflation rate. It looks at the whole issue of the state of the economy. It looks at employment, it looks at the dollar, and it looks at the health of the economy. Those are important factors when we are considering the role of the Reserve Bank in monetary policy settings.

Therefore, we say that this was another opportunity that the Government has missed. The Government could have widened; it could have looked at the issue of monetary policy and made a decision to review the current obsession with inflation. It is not that this is not a crucial factor in economic settings, but we cannot play the whole game on one ruling. That is why we say we had an opportunity here. The opportunities are still before the Government, and it is disappointing to see that when Phil Goff gives a speech that says we could consider a review of monetary policy, there is an instinctive response to bag it. The Prime Minister had the audacity to stand up and tell a Canterbury exporting audience that our monetary policy settings are the best in the world. We see the results today with, presumably, a rising dollar and rising interest rates.

Let us return to the substance of the bill, which concerns the prudential supervision of our insurance industry. One of the key elements of the bill is the impact on the New Zealand insurers and overseas insurers that are covered by the extension of prudential frameworks. Most particularly, there are questions around whether this bill would disadvantage New Zealand - based insurers that are subject to the regimes, whereas an insurance company based in another country that meets the agreed requirements of the Reserve Bank can operate under the prudential regime of that host country.

I disagree, in part at least, with the Minister of Finance, who affirmed in his commentary on the bill earlier that no real cost was involved for our insurance companies to meet in this bill. We had a submission from AMI Insurance, which is New Zealand’s largest New Zealand - based insurance company, that suggested meeting the cost of the new prudential regime—meeting the cost of the new capital adequacy ratios—was in the order of $35 million. That is not a sum to be sneezed at, even for a relatively large corporate like AMI Insurance. I think most New Zealanders would acknowledge that AMI Insurance is a very good insurance company, wisely based in the Christchurch Central electorate.

We were assured, however, by the Reserve Bank officials—and the select committee spent considerable time on these issues—that the regime as proposed in the bill would not disadvantage New Zealand insurers. There are exemptions in the bill in relation to a number of clauses for overseas-based insurance companies. But those would be granted only if the insurance company operating from overseas was subject to a home jurisdiction that met the standards of the Reserve Bank. The regime of those foreign-based companies, taken as a whole, would actually meet the standards of the Reserve Bank’s prudential regime.

The select committee, as I mentioned, did hear some concerns still expressed by entities, including AMI Insurance, which noted the difference in capital adequacy ratios between Australia, specifically, and New Zealand—quite a difference—on various aspects of investment, but we will monitor how this works. We will see whether the Reserve Bank’s assurances are borne out as the legislation takes effect and the industry makes its changes.

Obviously one of the great concerns we have at the moment is that a great bleed of capital goes on. Our current account balance has never been in the black since I was a schoolboy, which is a wee while ago. We will watch to see whether overseas-based insurance companies come back and use the legislation in respect of whether they can take further insurance moneys back out of the country. That should be a concern to members opposite, given that our current account balance has been in the red and is heading further into the red. That is an issue that “New Zealand Inc.” needs to take note of.

We know that we need to have regulation of financial markets; Labour has never been shy of regulating financial markets or any markets. Some members opposite do not believe in regulation. They say the market will always rule—

Hon Steve Chadwick: I raise a point of order, Mr Speaker. I am sorry to interrupt my colleague, but because of the interjections coming from the other side, I cannot hear him.

Mr DEPUTY SPEAKER: That is a fair comment. I have raised this point before. Members should be listening to the speech. If they want to interject against the speaker, that is fine, but the cross-barraging of other points that bear no relationship to the debate is unacceptable.

BRENDON BURNS: As I was saying, regulation needs to be judicious and it needs to make sure that it works in the interests of New Zealand, so we will watch to ensure that the exemptions that have been provided by this legislation to overseas insurers do not do so at any disadvantage relative to New Zealand insurers, which have to meet the New Zealand Reserve Bank’s requirements. On balance that was the decision the select committee took.

The exemptions in the law before us are there because a strong argument emerged about not duplicating regimes in one country and another. We were advised that duplication of the Australian prudential regime, for example, for New Zealand would be inappropriate. We have accepted that advice on the basis that the Reserve Bank’s assurances are that this is the best way to go forward, but we will watch very, very carefully to ensure the judgments that the Reserve Bank makes as it sees this law come into effect do not create any particular disadvantage to New Zealand - based companies such as AMI Insurance.

DAVID GARRETT (ACT): This is another one of those pleasant occasions for me as a new member where all sides of the House agree, including the Greens; there is no imprisonment involved in the Insurance (Prudential Supervision) Bill, so they are in support as well. All sides of the House have come together to support this sensible legislation. Who can downplay the importance of insurance in an uncertain world? The vicissitudes of life can affect all of us, and the one thing standing between us and perils of many kinds is insurance.

There are many kinds of insurance. Some of them are sourced from within New Zealand, but other types are more traditionally sourced from overseas. I think particularly of maritime and shipping insurance, which, of course, is the preserve of Lloyd’s of London. But another specialist area of insurance, also frequently offered from overseas—and I raise this because this bill particularly deals with overseas insurers—is employment protection insurance. Being found without a job can be a devastating event for anyone, and anyone can be exposed to that peril; even members of the House can find themselves without a job suddenly and without warning. All of us, I think, would have to admit, as I do, that we are here on 3-year fixed-term contracts with no right of renewal.

Grant Robertson: Very true for that member.

DAVID GARRETT: Absolutely; I have maintained my income protection insurance, I tell that member, because I am very aware of that—

Grant Robertson: So have I.

DAVID GARRETT: I note the member has, too. So we are two prudent members, and this bill is the Insurance (Prudential Supervision) Bill. We need income protection insurance, and mine, perhaps like Mr Robertson’s, is underwritten by an overseas insurer, like AIA Group in my case. This bill serves to ensure that that insurer is able to meet claims when claimants suddenly find themselves, for whatever reason, expelled from employment; they are terminated, kicked out, and unable to continue the lifestyle that they have been accustomed to. On that point, if people have become accustomed to a particularly lavish lifestyle, and then suddenly find themselves—

Hon Members: Overseas travel? Flowers?

DAVID GARRETT: —without an income, then, bang, they need to fall back on income protection insurance. The point I am working up to is that any insurance contract is only as good as the company behind it. It does not matter what sort of flowers are on the front of the document or how ornate, elaborate, coloured, and pretty the contract is. If the underwriter of that contract is no good—if the underwriter has “feet of clay”, as we say in the legal trade—then that contract is no good. So this bill is to be welcomed, particularly by those of us who have employment protection insurance, by those of us who may be thrown out without warning, even short of our 3-year fixed-term contracts, for whatever reason. Misconduct could be one of those reasons.

Aaron Gilmore: Can you think of anybody that it might apply to?

DAVID GARRETT: I tell Mr Gilmore that it could apply to anyone. That is the point, and that is what insurance is about. It protects us from the vicissitudes of life that come out of nowhere. People can be going along and doing their job to the best of their abilities, or so they think, and all of a sudden something happens and they are gone. It can happen very, very quickly, sometimes within hours or several days. They are left unable to pay their mortgage, or, for example, unable to pay for the overseas trip they booked or the new suit they ordered. If people do not have income protection insurance backed up by a company of sound and prudential renown, they are in trouble, in the colloquial sense. They are in an unenviable position with no income and a lavish lifestyle, and they are cast out. So this bill is to be welcomed.

As I have said, the bill has particular emphasis on overseas companies to ensure that they are supervised properly in a prudential sense. If our hypothetical employment protection insurance contract needs to be honoured—if someone is forced to call upon it unexpectedly, without warning, as is the way of life, sadly—this bill ensures that that company will be sound and that the holder of that contract is at least cushioned to some degree from the harsh, cold reality of finding himself or herself suddenly without a job. We in the ACT Party are very happy to join with other parties in the House to support this bill, and we applaud it. Thank you.

AMY ADAMS (National—Selwyn): It is a great pleasure to take a call in the second reading debate on the Insurance (Prudential Supervision) Bill. As has been mentioned, this bill spent some time at the Finance and Expenditure Committee, which is ably chaired by my friend and colleague Craig Foss. He did an excellent job of shepherding a very difficult bill through the committee. It was a bill that the committee worked very well on, certainly very cohesively, and with one purpose in mind, and that was to ensure that we got the best legislation we could get in this important area.

In my first reading contribution on this bill I spoke about the importance of trust and confidence in our financial sector. I think that given the years just behind us—not only in New Zealand but also in the world—everyone is very aware of the importance of that trust and confidence, and how easily it can be damaged, and also the damage that can be done when confidence and trust fall. We have seen all sorts of examples, even in more recent times, of what happens when there is no confidence in our very important financial sector. Insurance is an important part of that. When we have been looking at reform of the financial sector, a lot of the focus has been on finance companies and the like, but in this legislation we are focusing on the insurance sector. It covers life, medical, non-life, and, as my friend Mr Garrett talked about, employment protection insurance for people who suddenly find themselves in a less secure employment position than they might have been at the start of the day.

This is a strong regime and an important regime. The committee had to get a balance ensuring that the response was enough to protect New Zealanders who rely on the financial sector and the insurance sector, and ensuring that it was not overly onerous for companies and did not go any further in terms of red tape and bureaucracy than we needed to go. That is where a lot of the committee’s work was focused.

As we have heard, the bill requires the licensing of all applicable insurers. A big part of our work was determining who should fall outside that catchment. We spent a bit of time talking about overseas insurers and to what extent the bill should cover them. The decision was that it should not apply to anyone not carrying out business in New Zealand. The two exemptions I want to briefly touch on in this contribution are the exclusions we recommended for trade associations and other professional associations that offer discretionary voluntary insurance benefits as part of their work. I think it is important that we are careful we do not bring into the ambit of a bill like this any organisation that was not intended to be caught. Clearly, the mischief we are trying to deal with in this legislation is those organisations in the insurance sector proper, not those that offer some discretionary membership benefits and are not really in the nature of a pure insurance company as we would think of it. We recommended that some work be done on excluding those associations from the bill.

We also spent time thinking about small insurers and ensuring that we do not apply overly onerous requirements to them, particularly around some of the solvency requirements of the bill and the financial strength ratings. Existing insurers will have the ability to be exempt if their gross annual premium income is over a figure that will be set; we are thinking it will be in the region of $1 million to $1.5 million of gross premiums a year. Existing insurers in that category will be able to be exempt from the bill but, as I said, not all of the conditions of the bill—primarily financial strength ratings, some of the capital adequacy requirements, and some of the solvency requirements. I think that is an important part of the bill. As I said, we do not want to be unduly onerous on small insurers who are in business and are carrying on their work adequately, and who certainly were not expecting this when they set up their business model.

Those are the two exemptions I wanted to touch on in this contribution; I know that other members will address other parts of the bill. I think the committee can be rightly proud of the work it has done. Certainly, it is not an easy area; it is a complex one. Under the careful chairmanship of Craig Foss, I am very happy with where the bill has come to. Thank you.

Hon SHANE JONES (Labour): Kia ora nō tātou e te Whare. Ko Te Wiki o Te Reo Māori, tēnā koutou, tēnā koutou, tēnā tātou katoa. There is such randomness in the life of a politician. Given that I have enjoyed a promotion on to the very fine and powerful Finance and Expenditure Committee in the last week, it falls to me to support Mr Burns and Mr Cunliffe, to show that our party, the Labour Party, supports the Insurance (Prudential Supervision) Bill, and to say that the legislation was actually Labour Party policy. It was part a suite of options that we introduced to ensure that institutions essential to good commerce are adequately regulated.

The ideas lying behind this bill serve as a very timely reminder that those of us who are parliamentarians need to be vigilant when problems strike the commercial sector, so it is very sad that I cannot say that about my colleagues on the other side of the House. Mr Hotchin and Mr Watson live free, but they hound Hubbard. This legislation, based not on rumour but on institutional transparency in the insurance industry, ensures that people will be held to account for their decisions, and will demonstrate the commercial discipline that we expect in key institutions in this sector.

This bill has had a long gestation period. Its gestation period, unfortunately, has been held up whilst our colleagues over there visited their attention on relatively petty things, and on their impact on the economy. That is why there is a great deal of support for it on our side of the House. We want to see that those New Zealanders who rely on insurance institutions have institutions that not only are adequately managed and capitalised but are held to account in a very strong, transparent way. That is why this bill will enjoy support from our side of the House.

My colleagues have turned the debate on to a very important but largely unseen area, and that is prudential circumspection.

Paul Quinn: Leadership!

Hon SHANE JONES: I tell Mr Quinn not to get that word wrong. Circumspection will reign very highly to ensure that when people save, when people dedicate funds, and when overseas investors come here, they will know that our institutions are regulated to the highest standard possible.

David Garrett: They will be held to account; that is what it’s all about.

Hon SHANE JONES: I do not want to have the debate deviate on to people with mental problems being put in prison; that lies with Mr Garrett. Let me come back to the actual purpose of this legislation, which in a broad global sense ensures that New Zealand has maintained its high-quality reputation. A bit of work has taken place in the broad area of where savings are held, how equities might be invested in, and how people can take confidence that once they need help, either from a bank or an institution such as an insurance company, it will be there. But in order for that to happen, capital needs to flow. The Capital Market Development Taskforce with its fantastic ideas repudiated, was in large a very good idea. It was picked up by our leader but parried aside by the other side of the House. That shows that there is a broad level of interest in these commercial matters.

There is one thing on which I must agree with the South Island member Amy Adams. She correctly pointed out that smaller organisations will not be afflicted by this tide of red tape that we are seeing day after day, whether that is because of foolish notions or an unwillingness of courage to make the right decisions—about driving regulations or making the connection between alcohol and bad decision-making. It is not that I can blame alcohol, but we have had an enormous amount of bad decision-making over the course of this week from that side of the House.

This bill will finally come to pass as a consequence of our support, and of the Government taking forward the original policy, which was laid down by that peerless parliamentarian Dr Cullen. Was he dwarfed by the current Government front bench? No. Had it not been for his commitment to savings and his conservative macroeconomic management, the current Government would not have had the opportunity to make even the puny attempts that it has made to improve the prospects of our economy.

When prudential regulations, for example, are made, we need to ensure that they are adequately scrutinised. We cannot suffer a further reversion to Muldoonism, which we are beginning to see signs of from that side of the House. That was a style of Government where regulatory-making power was used holus-bolus, without the quality of parliamentary scrutiny over such important issues as regulating the commercial sector when people’s savings or wellbeing were at risk at vulnerable points in their life.

David Garrett: There’s been some scrutiny upstairs today, Shane.

Hon SHANE JONES: The member from ACT has talked about his impending vulnerability. After the “three-strikes” debacle he has much to thank the insurance industry for, because it will be his sole source of livelihood. He will no longer be back in this House, and that will be an interesting episode in our recent political history: how a person from relatively obscure origins could come, distort the criminal code, and then go. But that is another matter.

A key part of what the insurance industry has to deal with is distress management. Today and yesterday we saw a fine example in Mr Brownlee. He stood up and lectured us on gaps. But beneath his rhetoric was evidence of great distress, because that man identified the standard that he desired to be judged upon—that is, the gap between the earnings of a Kiwi and the earnings of an Aussie. He has demonstrated, despite his inviting the rest of the country—and indeed us, perish the thought—to judge his performance on that basis: firstly, that he did not understand it; secondly, that he no longer believes in it; and, thirdly, that he is reverting to half-recalled, vague recollections to do with the OECD. That is why not only is the insurance industry successful in identifying distress; we as parliamentarians on this side of the House have seen an example of distress management in the form of Mr Brownlee.

I turn my attention to another reason why we will support the entirety of this bill, which is recovery plans. I find that that particular segment of the bill, the recovery plan, has a certain resonance. We need to ensure that all institutions that respond at a point when a society, firms, or individuals suffer a calamity, have the ability to rise again.

As a member of the Finance and Expenditure Committee, and as a proud member of my caucus, I look forward to enabling this bill to actually play a key role—a key role—in ensuring that people do not disappear or lose the ability to cope with stress. We have seen an inordinate amount of it in the front benches today; I do not have much to say about Mr Groser. The Prime Minister is completely and utterly incapable of articulating how he might see such an essential institution in the world of commerce as the insurance industry play a role.

The key point I will finish on is that we look forward to supporting this bill. We know that the thousands of New Zealanders listening as the bill goes forward will thank us for that. Kia ora tātou.

AARON GILMORE (National): If ever there was a moment to talk about insurance, it is right now, with a particular gentleman and the Labour Party’s needing insurance. One cannot insure political parties, unfortunately. The Insurance (Prudential Supervision) Bill is about insurance. One cannot insure against mislaid documents, and one cannot insure against misused bits of paper that disappear, but one can insure against other financial misfortune. That is what this bill is all about: the ability to take into account prudential issues in the insurance sector. Every now and again people might get waylaid, documents could get misplaced, or things could go disastrously wrong, and in those situations one never knows what might happen or where things might end up.

David Garrett: Vicissitudes.

AARON GILMORE: Exactly.

I will talk seriously about two aspects of this bill, which are issues around the solvency requirements. It is very important that insurance companies are kept solvent for Kiwi mums and dads. We never know who may have invested their money in insurance companies, to cover unexpected circumstances such as death or loss of income. We never quite know when we might need income replacement insurance. Some people might be very interested right now in how safe their money is. I must say that I am quite relaxed about that. I am lucky; I am fortunate. I am very happy with my insurance situation at the moment. My life insurance is invested with a very safe company, and it will only be made safer by this bill. I think that is a great thing.

The solvency requirements in this bill will improve the safety of the insurance companies that Kiwi mums and dads have invested in. If I were in the Labour Party, I would be worried about where its investments might be in terms of solvency, whether it has invested in real estate or in other things. The Reserve Bank has put in place some very good rules to make sure that the money that Kiwi mums and dads invested in insurance companies is nice and safe.

I will talk quickly about one other thing: the issue of captive insurance companies. This bill allows captives to thrive, and, particularly, New Zealand - based captives to be able to operate within a regulatory arrangement. That is good for big companies in New Zealand that operate large infrastructure businesses. I know we debated the Infrastructure Bill earlier. These sorts of companies like to self-insure their major assets through New Zealand - owned and operated captives, and this bill goes a long way to assist them in continuing to operate. I think that is a really good thing, particularly for big State-owned enterprises like Solid Energy, KiwiRail, and Transpower, as well as other big entities operating in the infrastructure sector. I think it is highly positive that the hard-working people who use those services will have the trust and the knowledge that those assets will be better looked after and more safe because of this bill.

During the debate of this bill, some members touched on the great work that the Finance and Expenditure Committee did. I thank my colleague the deputy chair, Amy Adams, who did a lot of the work during the submission phase. Amy Adams has to be congratulated on the work she did in that area, particularly because the chair was quite busy doing other things every now and again. I thought she did a very, very good job dealing with issues brought up by the submissions. There were about 50-odd submissions, and we heard about 30 of them. They were very varied. I vividly remember the one from the Air Line Pilots’ Association. There were many comments about its worries about insurance. Many comments were made about pilots’ worries about insurance. People who fly a lot would be very concerned to ensure the pilots were adequately insured in order for the planes to keep flying so that members of Parliament, if they so choose, can continue to travel overseas.

I will wrap it up there. This bill is pretty much self-explanatory. Members are comfortable with it across the House and there is pretty much a unanimous perception that it is a good step in the right direction by the hard-working, John Key - led Government.

STUART NASH (Labour): I rise to support the Insurance (Prudential Supervision) Bill 2009. The aim of this bill is to reform and extend the present law relating to the prudential supervision by the Reserve Bank of New Zealand of the insurance industry in New Zealand. This bill establishes a licensing regime for insurers, and prudential regulations, with compliance largely self-administered, while supervision is provided by the Reserve Bank. The bill will cover most entities that undertake insurance business in New Zealand, including life insurance, health insurers, captive insurers, and the insurance activities of incorporated societies.

This bill is important to the people of New Zealand for three reasons, and it is those reasons that I will outline and elaborate on. The first is that this bill is another step in achieving clear, robust laws and regulations across the financial sector. The second reason is that it will provide a much higher level of scrutiny and security to New Zealanders with exposure to the insurance industry. The third reason why this bill is so important is that it tidies up legislation in a sector where there is an unacceptable level of uncertainty at the moment. Tightening legislation, regulating an important sector of the financial industry, and providing certainty are the three reasons why Labour is supporting this bill.

This bill will provide confidence for all New Zealanders that their Parliament is working together to further protect their rights and their money. We all know that New Zealanders have lost a significant amount of money during this economic recession—New Zealanders who have worked incredibly hard, saved hard, dreamt and aspired, and who should be allowed to live and retire with dignity. Those dreams have been taken away. There was an expectation that the courts would punish accordingly those who had perpetrated those crimes, but there was also an expectation that Parliament would put laws in place that would mitigate the risks of this type of financial destruction from ever happening again.

Within the New Zealand financial industry the insurance sector was not generally in distress as were other parts of the industry. It was unlike that of the US, where one of the world’s largest insurers, AIA Insurance, went bankrupt, with dire consequences for the US’s financial system. The global financial crisis did, however, demonstrate the vulnerability of the sector as a whole.

Parliament has already legislated in several areas to tighten or to make laws in areas where there was a real deficiency in the financial sector. This bill is just another step in ensuring that hard-working Kiwis can have confidence in the sector as a whole. That is what I mean when I say that this bill is another step in achieving clear, robust laws and regulations across the financial sector. Not only is that sensible but it is absolutely necessary in this day and age. It is why we worked together across parties on this legislation. For once National has put together a piece of financial legislation that benefits all New Zealanders.

The compliance costs for the industry are not high. The Finance and Expenditure Committee worked hard to ensure that this bill would not provide any level of competitive advantage to overseas firms operating in the New Zealand market. Having said that, I tell members that the committee’s main objective was to ensure that the regulations and rules governing the industry provided the level of security, transparency, and accountability that New Zealanders now expect from any sector in the financial services market.

The second reason why I support this bill is that it provides a much higher level of security to New Zealanders with exposure to the insurance industry. Currently New Zealand does not have the framework for prudential regulation and supervision of insurers. Current insurance legislation is outdated, and is inconsistent in its application across the diversity of the New Zealand insurance market. This bill requires most insurers to have a current financial strength rating that is given by a rating agency approved by the Reserve Bank.

There has been extensive consultation within the industry about the provisions of this bill. The select committee considered 57 submissions and heard 31 oral submissions from a range of industry and interested participants. A draft version of the bill was released for consultation well over a year ago. The draft bill reflected policy approvals by Cabinet in December 2007 and in August 2008—a Labour Cabinet. Prior to that, proposals originated with the Review of Financial Products and Providers work stream. A discussion document was released by the Ministry of Economic Development in September 2006, and a further consultation paper was released by the Reserve Bank in May 2008. This bill had its genesis in the previous Labour Government.

We have ended up with a bill that requires all insurers operating in the New Zealand market to be licensed and supervised by the Reserve Bank, and to comply with minimum prudential requirements. The Reserve Bank will have the powers to act in respect of insurers that are in distress or in other difficulties.

Having said that, I tell the House that, in the end, the new regime has been designed around the self-managing approach—for example, insurers are expected to devise and adhere to their own fit and proper risk management policies, subject to bank oversight. The costs to the Reserve Bank associated with the insurance proposals are estimated to be in the range of $2.5 million to $4 million per annum, on an ongoing basis once the prudential regulation proposals for insurance have been fully implemented.

The third reason why I support this bill is that it tidies up legislation where existed an unacceptable level of uncertainty—that is, uncertainty for the industry itself and uncertainty for ordinary New Zealanders. Taking away that uncertainty is paramount in order for the New Zealand public to have confidence in this sector of the financial industry. The compliance costs for the industry are not high, and the committee worked hard to ensure that compliance costs were kept to a minimum.

The main areas covered by this bill are as follows. First there is the licensing of insurers, which ensures that a consistent set of minimum standards is met by all insurers. The standards must be obtained to receive a licence, and once a licence is granted, an insurer is able to be monitored against those standards. That reduces the need for consumers to make complex inquiries regarding an insurer’s financial strength and other indicators. That is a very important piece of the legislation, because in the past ordinary, hard-working New Zealanders have actually not had the financial ability to wade through complex prospectuses and financial statements to determine for themselves whether an insurance company or any sort of organisation was in fact meeting the requirements necessary for sound investment. This licensing arrangement, monitored by the Reserve Bank, actually puts that in place, therefore protecting New Zealanders to a large extent.

Insurers covered by the new regime will need to be licensed before the bill comes into force. The bill will come into effect 18 months after it has received the Royal assent. After that date it will be an offence to carry on, or hold out to carry on, insurance business in New Zealand without a licence. That is why I say that a high level of certainty has been granted to the New Zealand public as a result of this bill.

There are other important parts in this bill, as well. Under fit and proper risk management requirements, for example, insurers will be required to consider the qualifications, background, and experience of key personnel. That lines up with another bill we passed in this House that regulated the financial services sector. There are to be statutory funds and separation for life insurance and similar long-term insurance funds. Capital advocacy, insolvency standards, and appropriate financial regulatory reporting, are again most important to all New Zealanders, to ensure that they can have confidence in this sector. There will be insurer credit ratings, as I have talked about before, and a supervision framework, including effective distress management provisions.

As I outlined, there are three reasons why I support this bill and why Labour supports this bill. It is another step in achieving clear, robust laws and regulations across the financial sector. We do not want to see ever again the carnage wrought by this last financial recession. Secondly, this bill will provide a much higher level of security for New Zealanders with exposure and investment in the insurance industry. Finally, the third reason it is important is that it tidies up legislation in a sector where there was an unacceptable level of uncertainty for both the sector itself and for New Zealanders. As a result of this, I commend this bill to the House. Thank you.

PESETA SAM LOTU-IIGA (National—Maungakiekie): I also rise to support the Insurance (Prudential Supervision) Bill. As has been acknowledged across the House, the bill was required to consolidate the industry and bring it under prudential supervision. The bill is part of a suite of reforms that this National Government has put in place to return confidence and trust to our capital markets, and to return confidence and trust to our businesses, and to our export businesses in particular.

This bill replaces outdated and disjointed legislation. It fills some of the gaps that currently exist in the prudential regulation of this industry, and it removes some of the inconsistencies in the legislation for the insurance sector. In a light-handed way it provides for the delivery of regulation so that we do not mire the industry in a compliance mentality. The bill focuses on licensing and prudential regulation, as many speakers have already alluded to. It provides for all insurers to be licensed and supervised by the Reserve Bank and to comply with its prudential regulations. The Reserve Bank will act as both the regulator and the supervisor.

As I have already stated, this bill is part of a suite of measures to promote a sound and efficient insurance industry and to promote confidence. This year we have already provided legislation for financial service providers and financial advisers. We are reforming securities trustees legislation. The Financial Markets Authority legislation will be in the House later this year. It is part of a comprehensive review of securities markets—the Securities Act, in particular—that will come into this House early next year.

The bill covers a number of categories of insurers—life, non-life, and medical. It did present some issues, particularly amongst non-resident insurers and foreign insurance companies, that we had to deal with in terms of providing a level playing field for our local insurers, which some speakers have already alluded to. In considering those matters, I thank the officials, some of whom are here, for the work that they did on what is a reasonably complex area of the law, and for helping of the Finance and Expenditure Committee assess some of those complex issues. We heard about 31 submissions orally, and 57 were submitted in written form. I commend the industry for bringing a lot of those submissions and a lot of the issues contained in the initial bill to our committee. The nature of its submissions was quite comprehensive.

So what does the bill do? I will touch briefly on a couple of issues, because we will be dealing with specific clauses in the Committee stage. One submission was to put certain categories of provider outside the scope of the bill. We have already heard about discretionary mutuals, trade associations, and union groups, which provide limited coverage that is incidental to their primary purpose, and that is really important. We had similar carve outs in the financial service providers legislation, which we dealt with last month. Similarly, it was important to recognise that we do not want to over-regulate those enterprises and organisations that do not properly fit within the category of insurance companies. We also dealt with the smaller type of insurance company. We limited the exemptions in that regard because we wanted to manage some of the compliance costs that these types of businesses experience.

There are a whole host of other recommendations in the select committee’s report back to the House. One of them was that the Reserve Bank publish a list of approved overseas regulators for assessing home and host regulatory recognition treatment of branches of overseas insurers. That provision was particularly important, too.

This bill has received widespread support across this House. It is a bill that was started under the last Labour Government, but the National Government is happy to take it on, implement it, and enact it. I commend the bill to the House.

CHRIS TREMAIN (Senior Whip—National): I raise a point of order, Mr Speaker. Before we vote on this legislation I seek your advice. Given recent announcements regarding expulsions from the Labour caucus, I want to be clear about the numbers with which the Labour Party will be voting on this legislation.

The ASSISTANT SPEAKER (Hon Rick Barker): That is not a point of order. The matter of how people cast their votes is entirely in the hands of the whip, as the member well knows. The member is responsible for making sure that he has sufficient people in the House, and votes accordingly. This is a matter of trust, and by asking this question the member is doubting the trustworthiness of other whips. I do not think that fits very well with the kawa of this place. It has always been taken that when the whips speak, they speak with honour. I will not have anybody breach that.

Bill read a second time.

Bills

Legislation Bill

First Reading

Debate resumed from 28 July.

Hon CHRISTOPHER FINLAYSON (Attorney-General): This is a very important issue of black-letter law, and I am excited by this legislation. But it would be quite remiss of me, on this red-letter day for the Labour Party, not to express my sympathy to that party for its ongoing problems. I am especially sorry for my good friend Trevor Mallard, who has today lost his special buddy at pump class at Bodyworks on Thorndon Quay, Chris Carter.

Grant Robertson: You’ll still be there for him, though, won’t you?

Hon CHRISTOPHER FINLAYSON: I will not be there for him, because—

Grant Robertson: No, you will still be there for him.

Hon CHRISTOPHER FINLAYSON: No, I say to Mr Robertson, I will not be there, because while Trevor does pump classes, I am upstairs lifting the real tin. But I digress, and we have important issues to concentrate on this afternoon.

Grant Robertson: A challenge, does the Minister have?

Hon CHRISTOPHER FINLAYSON: I will challenge him any day. I doubt whether he could lift what I lift.

Paul Quinn: Too busy sunning himself.

Hon CHRISTOPHER FINLAYSON: Oh, he is too busy sunning himself, which is why he looks like an orange.

The Law Commission proposed that the Parliamentary Counsel Office should be given enhanced powers of editing when producing reprints of statutes, and this recommendation is implemented in full.

Very importantly, the commission also recommended that there should be a systematic programme of statute law revision. This is a process whereby an Act is re-enacted with all the amendments made to it over time incorporated in one single statute. One concern that is often expressed about New Zealand statute law is its inaccessibility, and that is what we are trying to address here. Under this bill, Attorneys-General will be required to produce a programme of statutes to be revised during each Parliament. The Parliamentary Counsel Office will then be required to draft revision bills in accordance with that 3-yearly programme, and Parliament will be able to agree that revision bills will progress through Parliament under a streamlined process that will be set out in the Standing Orders.

Part 3 deals with subordinate, or secondary, legislation. Importantly, it makes provision for disallowance. The categories of instrument that are subject to the disallowance process have been revised. Until now, it has not always been easy to determine whether a delegated instrument was disallowable, and this bill addresses that issue. Part 3 also makes provision for the incorporation of material into legislation by reference to another document. This is a drafting technique whereby a document is given legal effect by being referred to in secondary legislation without being copied out in full or redrafted in some way into the legislative instrument.

Finally, Part 4 makes provision for the Parliamentary Counsel Office by updating the provisions in the Statutes Drafting and Compilation Act 1920. The commission recommended that the Parliamentary Counsel Office should no longer be an Office of Parliament but that it should continue to be outside the core Public Service and that it should remain under the Attorney-General’s control.

The Legislation Bill represents a very significant step in the process of improving and modernising the New Zealand statute book. It brings together law on drafting, publication, and the disallowance of legislation for the first time, and it ensures that legislation is made available to the public through the most appropriate and convenient method. It preserves and enhances the powers of this House to scrutinise and challenge delegated legislation and, importantly, it preserves the independence of the Parliamentary Counsel Office, which has done such an outstanding job for Governments of all hues over many years to ensure that legislation is drafted carefully. I commend the bill to the House.

Hon DAVID PARKER (Labour): I say to Mr Tremain that he might still be suffering under a mystery by the end of the sitting today, because I suspect that the vote on the Legislation Bill will not go to a party vote, either, so he might have to wait.

As the Attorney-General has said, this is mechanical legislation, which none the less is very important. It relates to the rules that go to ensuring the integrity of our legislation. I think the Law Commission put it very well when it stated this in its report: “The state has an obligation to make law accessible to citizens. People have to obey the law; ignorance of it is no excuse. So they need to be able to find it and understand it. They will not respect the law if they cannot. Moreover, law which is not accessible is expensive in terms of both time and money.” So the objective of this legislation is to make sure that the law is accessible to people, and that the content of what is printed is reliable in terms of what this House has passed.

I will deal with a couple of the issues that the Attorney-General has touched upon. The first is the issue of the Chief Parliamentary Counsel being able to include amendments in reprints. Clause 24 of the bill states that changes authorised by clauses 25 and 26 may be made in a reprint. It states that they “do not permit any change of text that changes the effect of the provision”, and of course we all agree that that is an appropriate intention. Then, in clauses 25 and 26, the bill sets out some examples of changes. Clause 26 deals with changes to format. They are potentially less contentious than some of the changes that are made pursuant to clause 25.

These things are apparently simple, but at times they will be difficult, because the changes that are permitted to be made include changes to punctuation to make legislation consistent with current drafting practice.

David Garrett: Nothing’s simple, David.

Hon DAVID PARKER: Well, that is an admirable ambition, but as Mr Garrett and, I am sure, the Attorney-General will agree, at times changes to punctuation will change the ambiguity of legislation. We have legislation that is currently ambiguous, and it will be interesting to see whether, faced with ambiguity, the Parliamentary Counsel Office tries to fix it. I would suggest that it ought not to; it is actually for Parliament to fix ambiguity. It is not for parliamentary staff to choose which of two meanings it thinks is appropriate. That is one example of where we need to take a wee bit of care in the drafting of this provision and to have a bit of a think as to whether we have the wording of clause 25 quite right.

Clause 25(1)(h) states: “conjunctives and disjunctives may be inserted, omitted, or changed so as to be consistent with current drafting practice:”. Again, I am sure the Attorney-General will have had similar experiences to me in finding conjunctions used in current legislation that are ambiguous as to whether “and” means “or” or whether “or” means “and”. Depending on whether “or” is used in a way that means “and” or a way that means “or”, the meaning of the statute is different. So, again, we have to be a bit careful that we are not giving carte blanche to the authorities to change wording in cases where they might see ambiguity, because Parliament might have intended something different. If there is ambiguity it is for the courts to resolve, and if the courts resolve it in a way that Parliament does not like, then it is for Parliament to change the law. If we do not like the ambiguity in the meantime, then it is up to us to change the law; we ought not to be relying on parliamentary draftspeople to do it.

Some other changes have been made. I like the idea that we will be moving to more regular, systematic revision of Acts. I think that is a good thing. It is made easier these days because of electronic technologies. We might as well take advantage of those changes in technology and move to that more systematic system of revising Acts and, as the Attorney-General has said, include in those reprints all of the amendments that have been made to the Act, rather than asking people who are reading those Acts to read the principal Act, then refer separately to an amendment Act for a provision that is not caught by an annotation, because it is not a minor change to an existing Act but a substantive change.

David Garrett: Handwritten annotations have always caused problems in my experience, Mr Parker.

Hon DAVID PARKER: Handwritten annotations always cause problems? Well—

The ASSISTANT SPEAKER (Hon Rick Barker): The debate is through the Chair. We are not having subcommittees in the House.

Hon DAVID PARKER: One of the other changes being proposed is the change to the modern drafting style. I am not sure that all of this is progress, I say to the Attorney-General. In fact, he may know one of my former partners, Stuart Walker, who has been one of the leading proponents of plain English drafting for decades. He and I were, sadly, I have to admit, talking about this very issue a couple of months ago and lamenting the fact that maybe it is because we are used to the previous style of drafting that we find some of the drafting devices used by the Parliamentary Counsel Office these days harder to understand than the previous versions. They might be briefer but they are harder to understand. That is probably not something we can fix through this legislation, but we need to take care that the ambition here is to have easily understood legislation. To the extent that we can make it simpler, that is good, but the greater and more important objective is clarity. So we ought not to pursue simplicity to the extent that we sacrifice clarity of meaning.

The other changes that have been made to the Act largely update the existing legislation. I do not think I can spin this speech out to 10 minutes, so at this point I will resort to saying that I am somewhat surprised that when there is such a big wage gap with Australia, we are not debating something of somewhat more important economic input—

Hon Christopher Finlayson: This will be important economically.

Hon DAVID PARKER: Well, I am not denying that it has some importance, but I do not think it will cause a substantial bridging of the wage gap with Australia. On that note, I say that Labour will be supporting this bill going to the Regulations Review Committee.

CHESTER BORROWS (National—Whanganui): I am sorry that I cannot get as excited about the Legislation Bill as my learned cousin, friend, mentor, and colleague Mr Finlayson, or say that I would raise it in conversation, like the previous speaker, Mr Parker. I am glad that Mr Parker takes a significant interest in it, though, because in respect of the language he certainly has saved the rear end of the chair of the select committee, on which committee the member sits on a regular basis.

I am pleased to note that this bill is embracing new technology. We as New Zealanders need to know what the law is so that we can live within it. I note too, in a recent occurrence, that the House voted fully in favour of the Courts (Remote Participation) Bill, and I am pleased that that support is replicated here tonight. Members will recall the prolific use of the audiovisual link that we will soon have in our court system. I am pleased that Labour has embraced that, too. In recent times, as I understand it, Labour has relied heavily on the audiovisual link, closed-circuit television, and the other mechanisms around the House. It is important for us to know, though, when exactly that will be applied so that we know what law we need to live under, and the bounds that we must remain within.

It will also be interesting to see whether Labour fully embraces some of the things that it has not voted for necessarily in the past—for instance, supervised bail, and the provision of ankle bracelets to keep track of who is who, where they are, and whether they are not moving outside the bounds of the precincts where they should be. When National was in Opposition, Labour members were strong proponents of the microchipping of dogs so that when we find a rogue mutt hanging around places where it should not be, we would know who its owner was, the owner’s address, and where the dog could be returned to.

Chris Tremain: Especially if it is caught on closed-circuit television.

CHESTER BORROWS: Especially if it is caught on closed-circuit television, or through the use of an audiovisual link, or if its tracking bracelet has fallen off and it gets lost. It will be good to know who is who, where it should be, and in what kennel it should be tied up.

Hon Steve Chadwick: I raise a point of order, Mr Speaker. I wonder whether the speaker opposite could come back to the Legislation Bill.

The ASSISTANT SPEAKER (Hon Rick Barker): I think the member should take the point. I am not sure I have read a lot in the Legislation Bill about closed-circuit television, and so on.

CHESTER BORROWS: I will take that advice. I will then move on to the wage gap between Australia and New Zealand, if that would be a little more appropriate. In any event, I am pleased that once again the House is speaking with one voice. I am proud to support this bill.

Hon MARYAN STREET (Labour): It is a pleasure and something of a surprise for me to rise and speak on the first reading of the Legislation Bill. Although the nature of this bill has occasioned some hilarity because people consider it to be somewhat technical and dull, I will say that as somebody who has never had legal training but who had the privilege of serving on the Regulations Review Committee for 2 years in my first term in Parliament—and it may say more about me than anything else—I actually find this legislation quite interesting.

I say to the Attorney-General, who may take note of this, that although Labour will support the bill to go to a select committee, I personally have a concern, shared by my Labour colleagues, about any proposed change to the disallowance mechanisms. I had occasion to swot up on the disallowance provisions, being something of a girly swot, and I found the Regulations (Disallowance) Act 1989 and the provisions surrounding it in the course of my work on the committee. The disallowance provision is Parliament’s nuclear deterrent. It is the final shot against regulations that can be drawn up by a Minister, approved by Cabinet, and signed off by the Governor-General.

Regulations go to the Regulations Review Committee for scrutiny—they do not come to Parliament—and that committee decides their fate. I had a couple of years of poring over things that people would find quite dull if they were not intimately acquainted with that particular subject. We pored over lots and lots of civil aviation regulations, for example. Why is that important? If we look at the news in the last few days, we see the importance of the Civil Aviation Authority, and of regulations such as might detail the specified times before dark when a pilot may take off from Queenstown Airport. This is the trivia upon which people’s lives hang, from time to time.

The particular instance when I needed to investigate the disallowance regulations and provision arose from a case that will be familiar to National. It concerned the fact that the Nursing Council wished to change the title of “enrolled nurses” to “assistant nurses”. As it was done outside of legislation—it was done by a statutory body, but was affected by regulation—it never came to Parliament. There was a moment in, I think, 2006 when it looked as though I might have had to rise in the House and exercise the provisions of the disallowance legislation.

I go back to my notes of 2006. It takes only one member of Parliament who is a permanent member on the Regulations Review Committee to give notice, and then a regulation is automatically disallowed, unless it is overturned by virtue of debate within 21 days of a parliamentary sitting. If no member of Parliament rose and contested the disallowance of a regulation, then that regulation, as I understand it, would be disallowed and things would be changed without parliamentary scrutiny. It is like the final strike. It is like a nuclear deterrent on regulations.

I think this area in particular requires careful consideration by Parliament. We pride ourselves on being a very open and transparent democracy, and we are. We usually come second equal in the global transparency index of Transparency International. We come second only to Iceland, and that country might wish at the moment that perhaps it was not quite as transparent as it is. We have generally come second equal with Denmark or Finland in recent years. That is something to be upheld, and something to be proud of.

We need to ensure that no provision allows regulations to be changed through the measure of this bill without proper scrutiny, either by the Regulations Review Committee or by the House itself. The disallowance provisions, I suggest, need close scrutiny.

Debate interrupted.

The House adjourned at 6 p.m.