Tuesday, 15 February 2011

Tuesday, 15 February 2011

Tuesday, 15 February 2011

Mr Speaker took the Chair at 2 p.m.

Prayers.

Visitors

Australia—Select Committee on Tourism in Tasmania, Tasmania Legislative Council

Mr SPEAKER: I have much pleasure in informing the House that the Select Committee on Tourism in Tasmania from the Legislative Council of Tasmania, led by the Hon Don Wing MLC, is present in the gallery. I am sure members would wish that the delegation be welcomed.

Questions for Oral Answer

Questions to Ministers

State-owned Assets, Sales—Terms of Investment Protocol with Australia

1. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: Does the investment protocol the Prime Minister will be signing with Australia include any provisions that would stop Australians from buying shares in New Zealand State-owned assets such as Meridian Energy, Mighty River Power, Genesis Energy, and Solid Energy, should a future Government privatise them?

Hon BILL ENGLISH (Minister of Finance): The Prime Minister has spelt out five clear tests that would have to be met for the Government to proceed with a mixed-ownership model for those four State-owned enterprises. One of those tests is that New Zealand investors would have to be at the front of the queue, and that we would be confident of widespread and substantial ownership by New Zealanders, in addition to the 51 percent stake that would certainly be owned by the Government. The details of the investment protocol will be announced tomorrow, but I can assure the member that the protocol is consistent with that test.

Dr Russel Norman: How can New Zealanders be at the front of the queue to buy shares in these partially privatised assets when by its very nature the investment protocol requires equal treatment of Australian and New Zealand investors?

Hon BILL ENGLISH: As I said before, the details of the protocol will be announced tomorrow, and the member will have an opportunity to scrutinise the protocol in detail. That may help lay some of his fears to rest.

Dr Russel Norman: Can he confirm matters that are already in the public domain, which are that under the investment protocol any investment less than $477 million from an Australian investor in a New Zealand company faces no scrutiny from our Overseas Investment Office?

Hon BILL ENGLISH: Again, the details will be announced tomorrow, but clearly the Government has been negotiating that matter, and I can assure the member that the tests we have set out for the mixed-ownership model are consistent with the protocol.

Aaron Gilmore: How much do New Zealanders have invested in Australia?

Hon BILL ENGLISH: When we are considering these issues of what Australians can invest here, we do well to remember that New Zealand benefits from a more than proportionate investment in Australia. In fact, recent figures show that New Zealanders have about $36 billion invested in Australia—that is, we have investments in Australia equivalent to about two-thirds of the size of our own stock market. The investment protocol will continue with a process that has been going on for 25 years, which is to move towards a single economic market. Up until recently that process was endorsed by all major political parties.

Hon Phil Goff: Has Treasury warned him that the privatisation or partial privatisation of the State-owned power companies within a decade will result in cornerstone stakes being held by foreign multinational companies in those power companies?

Hon BILL ENGLISH: No, because that is not true.

Hon Phil Goff: I seek the leave of the House to table a Treasury document that says precisely what I asked in the question, which the Minister of Finance denied.

Mr SPEAKER: Could the member—

Hon Phil Goff: The document is a Treasury document relating to Crown ownership of commercial entities, I think given to Cabinet around December last year.

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.

Dr Russel Norman: Does the Minister of Finance agree that it is one of the fundamental principles of these investment treaties that investors from different countries get equal treatment? How will he be able to discriminate against Australian investors after signing up to a treaty that actually guarantees them equal treatment?

Hon BILL ENGLISH: When the member has the opportunity to scrutinise the protocol in detail, he will be able to draw his own conclusions. But as a general point, it is not at all unusual for someone who is selling assets to be able to discriminate among classes of buyers.

Dr Russel Norman: Does he agree that New Zealand’s current account deficit is in large part made up of the investment income deficit, due to profits sent overseas by New Zealand companies that are owned by overseas owners, and that if we partially privatised those State-owned assets and they go into Australian or other ownership, that will simply add to the amount of money going offshore and make our current account deficit worse?

Hon BILL ENGLISH: We need to remember that the flows work both ways. As I said before, New Zealanders have $36 billion invested in Australia, and we believe that the Australian Government’s open policy of accepting New Zealand investment is beneficial to many New Zealand savers, who are able to get the benefits of investing in a large economy that at the moment has been performing pretty well. This matter is one of mutual policy positions where we are open to investment from Australia and they are open to investment from us. Some Australian investment has been here for a long time. I think AMP and ANZ have been here for almost 150 years.

Dr Russel Norman: Does he agree that the transfer of profits involving the Australian banks has been a very significant drain on the New Zealand economy—possibly in the order of $2.5 billion a year—and that if we have further foreign ownership of the New Zealand economy, it will make that problem worse?

Hon BILL ENGLISH: The member is generally correct. The answer to that question is the answer that New Zealanders are now coming up with, which is to save more so that there is a bigger pool of capital in New Zealand for us to do things like buy back the banks or buy into any other asset New Zealanders feel they can control. Fortunately, at the moment, because of Australia’s open investment policy, New Zealanders are able to buy shares in those banks. So if New Zealanders think those banks are excessively profitable, they can benefit by buying shares in them.

Dr Russel Norman: For the purpose of clarity, will the Minister guarantee that the investment protocol between New Zealand and Australia will guarantee New Zealand investors preferential treatment in any partial privatisation of New Zealand’s State-owned assets?

Hon BILL ENGLISH: As I have said to the member a number of times, when he has the opportunity to scrutinise the protocol he can then make up his own mind about it. I can say to the member that the protocol is consistent with the test the Government has set, which is that we would like to see substantial and widespread New Zealand ownership under the mixed-ownership model.

State-owned Assets, Sales—Shares

2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Why does he want to sell shares in State-owned enterprises?

Hon SIMON POWER (Minister for State Owned Enterprises) on behalf of the Prime Minister: The member is getting ahead of himself, as no decision to sell shares has been made. The Minister of Finance and the Minister for State Owned Enterprises have asked Treasury for advice on whether extending the mixed-ownership model can meet the five tests the Prime Minister has outlined before—namely, retaining majority control, prioritising New Zealand shareholders, providing good investments, using capital to purchase other public assets, and protecting consumers. As the Prime Minister said in his speech last month, the Government is interested in making smarter use of its assets, which will both reduce our reliance on debt and provide savings opportunities that are an alternative to the housing market.

Hon Phil Goff: Why has the Prime Minister justified selling Kiwi assets in order to reduce Government debt when he has admitted that New Zealand has one of the lowest Government debt rates in the world—because Labour repaid it—and that “We don’t owe very much.”?

Hon SIMON POWER: Yes, the Prime Minister is very happy with the equation of debt being included in the five considerations that Treasury will take into account before a final decision is made in this policy area.

Hon Phil Goff: Did the Government’s December Investment Statement show that total shareholder returns from all of the State-owned enterprises exceeded 15 percent, on average, over the last 5 years while the average 10-year bond rate was around 6 percent, showing that investments comfortably exceeded the cost of capital; if so, why does it make any sense to sell off those assets to repay debt?

Hon SIMON POWER: I believe that the December statement did indeed reflect the first figure the member referred to. One of the interesting things about the total shareholder return model is that it does not require one specific type of valuation to be carried out, meaning that a mixed matrix of valuations would apply across those State-owned enterprises. Interestingly, one of the things that is not taken into account when we are talking about the cost of borrowing is that the missing component, as the former Minister for State Owned Enterprises well knows, is the component of risk.

Hon Phil Goff: Did Treasury tell the Government that selling the State-owned enterprises would not significantly improve their financial performance?

Hon SIMON POWER: I cannot recall exactly the reference the member makes, but I would also remind the member that the final policy in this area has not been confirmed yet, until the five tests are met.

Hon Phil Goff: I seek leave to table an excerpt from a Treasury paper, Crown ownership of commercial entities, which stated that there is little evidence to suggest that privatisation would significantly improve the financial performance of many of the State-owned enterprise companies.

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.

Hon Phil Goff: Did Treasury tell the Government that foreign corporates would end up with a cornerstone shareholding in the State-owned power companies within a decade if they were sold?

Hon SIMON POWER: Well, it may have, except I would say this: it is impossible to have a cornerstone shareholder offshore if the Government retains 51 percent of the companies.

Hon Phil Goff: How much of the $700 million paid by the three State-owned power companies to the Government in the last year was used to meet any social services or purposes beyond reinvestment in those companies, thus helping the New Zealand taxpayer, who is a shareholder in those companies?

Hon SIMON POWER: I would not have an exact figure as to what proportion of that income was used for those specific appropriations or votes that the member refers to. If the fundamental question the member is asking is why forgo the dividend in that situation, then it is a fair question for the member himself to answer. He pondered on radio the week before last why the Government would forgo $700 million in dividends and, in the very next sentence, said that it was collecting too much in dividends.

Hon Phil Goff: With regard to the Minister’s last answer, has he considered that privatisation prevents the Government from returning some of those dividends to the electricity consumer by way of a reduction in price or rebate?

Hon SIMON POWER: That question may well have applied to the 72 percent increase in power prices over the 9 years that that member’s Government was in charge. I also note that that is now the third position I have heard today about dividends. The first was to ask why we would give them away, the second was that they were too much, and the third is that we should not collect any, to offset power prices.

Export Sector—Performance

3. CRAIG FOSS (National—Tukituki) to the Minister of Finance: What reports has he received on the recent performance of New Zealand’s export sector?

Hon BILL ENGLISH (Minister of Finance): Statistics New Zealand data show that, month on month, the value of New Zealand’s exports has increased by about 15 percent in the past year. This is largely due to record-high commodity prices, which have risen by about 16 percent over the last year. The challenge now is to increase the volume of our exports, to take advantage of these high prices. That is why the Government is focused on policies that shift resources from the less-productive non-tradable sector into the high-productivity tradable sector.

Craig Foss: How have New Zealand’s domestic and internationally competitive sectors performed respectively over the past decade?

Hon BILL ENGLISH: There are different ways of measuring that, but between 2003 and 2009, the non-tradable sector, which includes housing and retailing—the domestic part of the economy—grew by about 20 percent, mainly fuelled by borrowing. In the same period the export sector shrank by 6.3 percent because of poor Government policy settings, rising interest rates, and a fairly high dollar. That means that our internationally competitive industries went into recession from about 2005.

Craig Foss: How has the respective performance of the tradable and non-tradable sectors been reflected in jobs?

Hon BILL ENGLISH: From 2003 to 2009 non-tradable jobs grew by 270,000, so we had strong job growth in the domestic part of the economy, but that was fuelled by unsustainable borrowing and unsustainable Government spending. By contrast, the export sector lost 55,000 jobs over the same period. So this Government has the task of crafting an economy that produces new jobs and job growth from the export sector, because the domestic part of the economy is not growing very fast.

Craig Foss: What signs of progress has he seen in new jobs in the tradable sector since 2009?

Hon BILL ENGLISH: Fortunately, job growth is starting to look more balanced and positive. In contrast to the period up to 2009 export sector jobs are now growing—in fact, they have increased by 25,000 in the last year and a quarter, or by about 6 percent. Of those new jobs, 17,000 are in the manufacturing sector, which has been doing reasonably well because Australia is in good shape and it is our biggest market for manufactured products. Job growth in the non-tradable economy is pretty flat, and it will probably remain so because the housing market is flat, the Government is not growing nearly as fast as it was, and people are being careful with their retail spending.

Social Development and Employment Programmes—Minister’s Satisfaction

4. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister for Social Development and Employment: Is she satisfied that her programmes are working for New Zealanders?

Hon SIMON POWER (Acting Minister of Social Development and Employment): Yes. For example, approximately 70 percent of Community Max programme graduates who finished the programme have not gone back on to any benefit.

Hon Annette King: Why should New Zealanders believe the figure the Minister has just given us on the success of her make-work programme, because she has actually given three different answers to the number of people staying off benefits having been through the programme, each time reducing her so-called successes?

Hon SIMON POWER: As far as I am aware, I gave only one answer.

Katrina Shanks: Has he seen any recent reports on the Community Max programme?

Hon SIMON POWER: Yes. I have seen a report in which a reporter visited a Northland Community Max project called Paikauri Reserve. The reporter turned up 8 months after the project had ended, and failed to mention that of the 24 participants in the project, as at today 13 remain off the benefit altogether.

Hon Annette King: Will she provide better information on the success or otherwise of her make-work schemes, which are costing taxpayers over $100 million, before Bill English commits any more funding, which is likely to be wasted on empty pumpkin patches, tracks to nowhere, and abandoned sewing classes?

Hon SIMON POWER: I raise a point of order, Mr Speaker. I am sorry but I missed the first part of that question. I apologise to the member.

Mr SPEAKER: I ask the honourable member if she would not mind please repeating her question, and I ask members to show a little courtesy so the question can be heard.

Hon Annette King: Will she provide better information on the success or otherwise of her make-work schemes, which are costing taxpayers over $100 million, before Bill English commits any more funding, which is likely to be wasted on empty pumpkin patches, tracks to nowhere, and abandoned sewing classes?

Hon SIMON POWER: Better information will always come to hand and will be made available as all information is, under various avenues. I have to say that the list of initiatives that the member opposite lists did not include two gangs in Timaru who received money through a pilot employment scheme, and used the money to upgrade their headquarters, when she was Minister of Employment in 1989.

Hon Annette King: When will she listen to the growing chorus of advice—

Mr SPEAKER: I apologise to the honourable member, but I am sure that the Minister will not be able to hear, again. I ask members on the National benches, please, to show some courtesy.

Hon Annette King: When will she listen to the growing chorus of advice, including from Treasury, telling her that the schemes are poor value for taxpayers’ money, are having no effect on youth unemployment, and are merely recycling people through expensive schemes that are abandoned after 6 months; is not quality just as important as quantity?

Hon SIMON POWER: In fact, those schemes are designed to give people life skills—to get them out of bed in the morning, and to give them a commitment to a purpose during the day. It is a $13,000 investment over a 6-month period, which is a lot cheaper than funding someone to go on and off an unemployment benefit for the following 10 years. That is why this Government will continue to back the Community Max scheme.

Hon Annette King: Why is she refusing to answer questions on her make-work scheme, hanging up on reporters, and then heading to Washington again to learn about the quality of that city’s programmes, when it is quality and value for money here at home that she needs to concentrate on?

Hon SIMON POWER: The member is right in the sense that the Minister for Social Development and Employment is currently at an international seminar that deals with intervention programmes, which, I am sure, will help inform the Government’s decision making in this area.

Jacinda Ardern: Does she agree with Work and Income’s description of Community Max that “It provides an opportunity for young people to build skills …”; if so, what skills did the job of sending text messages to defendants before court appearances, at a cost to the taxpayer of $18,000, provide young people in Hamilton?

Hon SIMON POWER: Yes, I do agree with that advice. And I also happen to agree with the advice that the member expressed on 2 August 2009 that “Any initiative that creates opportunities for young people is to be welcomed,”.

Katrina Shanks: What reports has he seen from members of Parliament on Community Max?

Hon SIMON POWER: Labour members of Parliament clearly see Community Max as having value, as I have just outlined. They have consistently argued for it to be expanded or continued. Nanaia Mahuta said: “the Community Max scheme that I visited in Thames demonstrated positive gain for the community and individuals involved,”. Chris Hipkins on 10 March 2010 said: “It would be good to find a way to keep similar programmes going. There’s a real gap there that needs to be filled.” And Maryan Street, who, I have to say, brings a slightly more intellectual approach to these things, said that it is “a step in the right direction”.

Jacinda Ardern: Why has she spent more than $300,000 on a garden that has left participants unemployed and produced just one pumpkin?

Hon SIMON POWER: Mr Speaker—[Interruption]

Hon Gerry Brownlee: Jacinda’s waiting for midnight.

Mr SPEAKER: Order! I say to Labour members on this occasion that one of their colleagues has asked a question, and I am sure that she wishes to hear the answer.

Hon SIMON POWER: In fact, the programme the member refers to has not left everybody unemployed; it has taken a number of those participants off the benefit. I also add that unlike hip-hop tours going around the world for $26,000, on this occasion three visits occurred to the Northland social development services project. Those visits were monitored, and a very close eye was kept on the project.

Marine and Coastal Area (Takutai Moana) Bill—Public Access

5. Hon JOHN BOSCAWEN (Deputy Leader—ACT) to the Attorney-General: Is he planning to amend the Marine and Coastal Area (Takutai Moana) Bill to provide an explicit guarantee of free public access, and provide that all negotiated agreements be passed by Parliament?

Hon CHRISTOPHER FINLAYSON (Attorney-General): The member should be aware that individual Ministers do not have the power to amend bills before the House. That is the prerogative of the legislature, not the executive. However, I can confirm—I am sorry if I sound like Sir Geoffrey—that it is my intention to recommend that Parliament amend clause 27 of the bill to make it explicit that charging for public access in the common marine and coastal area is not permitted, and that negotiated agreements for customary marine title will require legislation, thereby ensuring full parliamentary and public scrutiny of any such agreements.

Hon John Boscawen: Why is he proposing to recommend changes to the Marine and Coastal Area (Takutai Moana) Bill when his colleagues on the Māori Affairs Committee, chaired by the honourable Tau Henare, rejected those suggestions, and will he support a free vote on the bill to allow Mr Henare and the rest of the National backbench to vote against the bill?

Hon CHRISTOPHER FINLAYSON: I cannot comment on the proceedings of the Māori Affairs Committee, because I have no responsibility for it. The select committee is part of the legislature, and I am part of the executive. However, I can say that I have listened very carefully to the submissions. I have been out on the road, listening to people at hui and public meetings, and I believe that these approaches I have adopted will address the legitimate concerns of many good people in New Zealand.

Mr SPEAKER: Just before I call the honourable member, I tell Labour members on this occasion that a member of another party has asked a question, and that member has the right to hear the answer. It has been very difficult to hear answers.

Hon John Boscawen: Has he received agreement from the Māori Party to vote for his amendments, and to provide for an explicit guarantee of free public access and parliamentary scrutiny of negotiated agreements; if not, does he have the numbers to pass these amendments?

Hon CHRISTOPHER FINLAYSON: Those are matters of parliamentary procedure, and when the issue comes before Parliament in the next few days the member will have his answer.

Hon David Parker: What caused the change between 24 September 2010, when the Attorney-General promised there would be a full select committee process for the bill, and last week, when his Government members caused the bill to be reported back without the amendments that today he says he supports?

Hon CHRISTOPHER FINLAYSON: Again, because I am not responsible for the Māori Affairs Committee, I cannot talk about the parliamentary procedures undertaken by that select committee. I can say to the honourable member, however, that the Government has listened very carefully to the submissions, it recognises the legitimate concerns that have been raised by many good New Zealanders, and it is endeavouring to address them. I say to the member that I have also read very carefully Labour’s submission on the subject, which was written by Dr Michael Cullen, and which I thought was very good. That was the first submission; of course, Labour’s position has changed three or four times since then.

Economy—Recovery

6. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Has the economy improved in line with his prediction on Q+A in February 2010 that the economy would “get better” over the next 12 months?

Hon BILL ENGLISH (Minister of Finance): Yes, but my prediction that the member would get better has not.

Hon David Cunliffe: I raise a point of order, Mr Speaker. Do you feel that he may have addressed the question, or might he have another go?

Mr SPEAKER: I must say that the member has a legitimate grievance, in my view. The question was answered—and it was a perfectly fair question. It asked: “Has the economy improved in line with his prediction on Q+A in February 2010 that the economy would “get better” over the next 12 months?”. There was nothing political in the question, and the last part of the answer was gratuitous. The member has a legitimate grievance about that, and I ask Ministers, when answering straight questions like that, to avoid that kind of gratuitous comment.

Hon David Cunliffe: Has GDP growth in each of the last three quarters following his February 2010 prediction got stronger or weaker?

Hon BILL ENGLISH: As the member will know, GDP growth has fluctuated through the year. I think that the first quarter might have been about 0.6, and the September quarter was slightly less than zero. The economy did not grow in 2010 as quickly as most people anticipated, and I think the reasons for that are pretty well understood. New Zealanders are saving rather than spending, and the engine of growth that came from fast growth in credit and house prices simply has not kicked into action in the last 12 months.

Chris Tremain: What indications are there that New Zealanders are building a platform for stronger growth ahead?

Hon BILL ENGLISH: The distinct feature of the recession was that it was, to a large extent, a financial recession—that is, dominated by excessive debt. So New Zealanders have set about the business of clearing or reducing that debt, and increasing their savings. Although in the short term it means that there has been a bumpy road to recovery, in the longer term it is laying down a stronger foundation for future growth. New Zealanders will have got their debt to reasonable levels and will then be ready to spend and invest in a more measured way.

Hon David Cunliffe: Do recent official statistics that show that total retail sales for the December quarter went backwards by nearly half a percent make it more or less likely that New Zealand has now entered a double-dip recession?

Hon BILL ENGLISH: As the member will know, it was discussed at the select committee last week. There may or may not be a technical recession—the change is about 0.1 or 0.2 percent above or below zero. But I think the retail figures simply confirm the story we know, which is that New Zealanders are not spending. They are trying to get their debt back to reasonable levels, and they are not feeling as wealthy because their house prices have stopped going up.

Hon David Cunliffe: If the Minister considers that negative growth is a good thing because it shows New Zealanders are saving more, why does he not go all out and drive the economy into, say, minus 10 percent growth so they can save even more?

Hon BILL ENGLISH: What is happening is the result of hundreds of thousands of New Zealanders making their own choices. We believe that is quite a good way to run the economy. They have correctly figured out that if they are careful with their spending and if they support a Government that is pursuing plans for a stronger economy in the future, then they can expect to get the pay-off in higher incomes.

Youth Guarantee—Increase in Places

7. PAUL QUINN (National) to the Minister of Education: What recent developments have there been in implementing the Youth Guarantee for students aged 16 and 17?

Hon ANNE TOLLEY (Minister of Education): We are making huge progress, and I am pleased to announce that we are increasing the original number of Youth Guarantee places from 2,000 to 2,694. This exceeds the number that was in last year’s Budget. That means that under the wider Youth Guarantee umbrella up to 4,000 16 and 17-year-olds are staying in the system to gain an education and skills training, rather than dropping out. This Government is committed to addressing the chronic gap between those succeeding in, and those being failed by, our education system. We are working to ensure that all students have the best possible chance to develop, rather than just developing catchy slogans like the previous Government did.

Paul Quinn: How many trades academies have opened this year as part of the wider Youth Guarantee?

Hon ANNE TOLLEY: I was very pleased to have that member with me yesterday to open the WelTech trades academy, which is one of eight trades academies opening this year. These partnerships between schools, tertiary providers, and employers give free tertiary training—

Mr SPEAKER: I apologise to the Minister. I say to the Labour Party front-benchers that if I cannot hear the Minister, what chance does the questioner at the back of the House have? The questioner has a right to hear the answer. The Labour front bench is being a little unreasonable today in terms of the noise volume.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think the point might be in respect of the members around the questioner. The questioner, of course, is reading. He already has the question written down.

Mr SPEAKER: That was unhelpful, I must say.

Hon ANNE TOLLEY: They just cannot stand hearing good news. These partnerships between schools, tertiary providers, and employers will give free tertiary training to 16 and 17-year-olds, ensuring that they work towards completing the National Certificate of Educational Achievement and have a head start on trade skills. This comes on top of 19 service academies that are helping nearly 400 kids to stay in school.

Paul Quinn: What feedback have you had about the trades academies?

Hon Darren Hughes: I raise a point of order, Mr Speaker. Have you received reports on this matter?

Mr SPEAKER: I ask the member to repeat his question and make it within order. He should not address his question to the Speaker; he should address it to the Minister.

Paul Quinn: My apologies, Mr Speaker. What feedback has the Minister had about trades academies?

Hon ANNE TOLLEY: I have opened three of the academies so far and spoken to a number of teachers, students, and parents. Their overwhelming feedback was a feeling of excitement and hope. Finally, these kids are being given the chance to succeed and get a qualification that will actually help them in life, rather than their just dropping out of the system and waiting until they are 18 to go on the dole.

Te Ururoa Flavell: Tēnā koe, Mr Speaker. Kia ora tātou katoa. In what ways do the recent developments around the Youth Guarantee scheme benefit Māori; if they do not, what specific policy initiatives will be taken to ensure that the appalling underachievement and unemployment statistics for rangatahi Māori are addressed?

Hon ANNE TOLLEY: From the initial roll-out of the Youth Guarantee scheme we have targeted areas, in particular, that had high Māori unemployment. We have been very successful to date in attracting and retaining students. In addition, the trades academies are also targeting Māori students. There was a great example in my own electorate on Friday last week, when we opened the trades academy that is being led by Trident High School. We have six other local Eastern Bay of Plenty high schools participating, plus Waiariki Institute of Technology, Te Whare Wānanga o Awanuiārangi, and local businesses. So we are starting to see the Māori education communities come together to form these relationships, and I have no doubt that that will continue to grow.

Marine and Coastal Area (Takutai Moana) Bill—Constitutional Impacts

8. Hon DAVID PARKER (Labour) to the Attorney-General: Does he agree with Colin James’ assessment of his handling of the Marine and Coastal Area (Takutai Moana) Bill that “yet again the Government—pale shades of the dark days of Sir Robert Muldoon—has discarded constitutional niceties, this time for expedition. Not a good look for Mr Finlayson who, as Attorney-General, is the Cabinet’s guardian of constitutional propriety …”?

Hon CHRISTOPHER FINLAYSON (Attorney-General): No, I do not. Mr James was talking about the work of the Māori Affairs Committee. As a member of the executive I have no responsibility for the select committee—that committee reports to Parliament and determines its own processes—nor do I have any responsibility for its excellent chairperson, Mr Henare. On the point of constitutional propriety, I tell the member that I take my duties very seriously. For example, I have produced reports under section 7 of the New Zealand Bill of Rights Act—a constitutional requirement that the previous Government ignored in order to ram through its universally reviled electoral finance legislation.

Hon David Parker: Does the Attorney-General agree with the Nelson Mail editorial of 12 February 2011 that rushing the marine and coastal bill back to Parliament “invites nothing so much as despair. It provides even more ammunition to those who have argued that the new law will fail abjectly in healing the festering sore which has opened up since the seabed and foreshore issue was sparked into life the best part of a decade ago. It reinforces the sense that the bill has become a source of inconvenience for both National and the Maori Party.”?

Hon CHRISTOPHER FINLAYSON: No, I do not. I actually read that editorial when I was in Nelson on Saturday night and reflected on it. I think the author of the editorial has not read the legislation, because what the legislation endeavours to do is restore two things that were taken away by the previous Labour Government: access to justice and respect for property rights. It took one very brave person, Mrs Tariana Turia, to stand up to Helen Clark and the aim is to put it right.

Hon David Parker: When the Attorney-General said last week that the select committee chair was efficient in bringing the bill back to the House 2 weeks early, which decision does he consider most efficient: the decision to prevent members of the committee from seeking legal advice relating to the effect of the bill, the decision to prevent members from making amendments to the bill, or the decision to prevent members from being able to properly consider officials, advice, or the over 4,500 submissions received?

Hon CHRISTOPHER FINLAYSON: When the member turned up, which I understand was in occasional circumstances, the chair conducted himself with propriety. He was a tough and demanding chair. One needed someone like that to get through the huge number of submissions and to get the bill back to the House by 25 February.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. Could you advise me. I thought it was a longstanding tradition that members could not refer to the absence of members either from this Chamber or from a select committee, which is a part of this process. If I am correct, I invite you to explain to the House why you did not pull the Minister up.

Hon Gerry Brownlee: If that was of concern to you, Mr Speaker—and I am sure that if it had been inappropriate, it would have been—you would have pulled up Labour members previously for mentioning the absence of a Minister.

Mr SPEAKER: I think that we can get too pedantic about these matters. The reference was very much in passing. One has to accept that the nature of this question is highly political. The question is not particularly seeking a lot of information; it is making political points. The Minister is perfectly at liberty to make political points in response and there is no way I am going to stop him from doing that.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I accept your ruling. Is it therefore the case that the Minister can, in making political points, allege a member’s absence when that is absolutely not true?

Mr SPEAKER: In answering a highly political statement like that, the Minister can be political. I am not going to get too pedantic by preventing that. If members do not want Ministers to give political answers to questions, I note that there are some questions on today’s order paper that are good examples of questions where I have stopped Ministers from getting political. But if questions are asked that are highly political, then answers can be expected to be political.

Hon Shane Jones: Why has he refused to comment, explain, or identify the size of the political slush fund to fund takutai moana litigation as announced by Dr Pita Sharples?

Hon CHRISTOPHER FINLAYSON: Because there is no political slush fund. Under the 2004 Act, as Mr Jones should know, there was a fund set up to deal with certain types of application to the High Court. That fund after 6 years has about $215,000 left.

Hon Shane Jones: Fudging, fudging, dodging, hiding, concealing.

Hon CHRISTOPHER FINLAYSON: We are not concealing anything, I say to Mr Jones; we are trying to deal with the issue of what to do with that fund under the new legislation.

Hon Shane Jones: Political hush money for the Māori Party.

Hon CHRISTOPHER FINLAYSON: It is certainly not political hush money for the Māori Party. I wish the member would get himself under control.

Emissions Trading Scheme—Impact on Renewable Energy and Forestry Investment

9. CHRIS AUCHINVOLE (National—West Coast - Tasman) to the Minister for Climate Change Issues: Has implementation of the moderated emissions trading scheme last year had any impact on renewable energy and forestry investment?

Hon Dr NICK SMITH (Minister for Climate Change Issues): Yes, there have been marked changes in both sectors in response to our moderated emissions trading scheme. The year 2010 saw a record high amount of renewable electricity projects consented, with 800 megawatts approved—45 percent geothermal, 40 percent wind, and 15 percent hydroelectric. This contrasts with the pre - emissions trading scheme period under the previous Government when over two-thirds of new generation was fossil fuelled. There has also been a positive turn-round in forestry investment. Whereas we saw 37,000 hectares of deforestation in the 3 years preceding the emissions trading scheme, we have seen a shift to afforestation of an estimated 6,000 hectares since the scheme has been in place.

Chris Auchinvole: How have changes the Government made to the emissions trading scheme impacted on increases in fuel and power prices, and has the Minister seen reports of any policy changes that would increase costs for consumers and businesses?

Hon Dr NICK SMITH: The Government has been very mindful of costs for consumers and that is why our changes to the emissions trading scheme, supported by the Māori Party, halve the impact on the cost of living and particularly on energy prices. I have seen policy that states that the emissions trading scheme should be scaled up to the full obligation immediately. This would put up power prices by another 5 percent and fuel prices by a further 3.5c per litre. Members opposite need to be careful about cost of living issues, when their stated policy is to immediately increase power prices by 5 percent and fuel prices by 3.5 percent.

Brendon Burns: How can he claim that National’s moderated emissions trading scheme is responsible for the 800 megawatts of new renewable generation consented in the last year, when it takes several years to plan a consent for new generational capacity; are these new generation plants not really just the result of Labour’s emissions trading scheme?

Hon Dr NICK SMITH: National had a very clear policy at the last election that did not deal with just the emissions trading scheme but also the consenting process. There are examples of cases where it took up to 9 years to get consent for a renewable power station. Last year the changes that Chris Auchinvole and the Local Government and Environment Committee advanced resulted in a decision-making process of just 9 months. That is the biggest single contributor to the 800 megawatts of new capacity that was approved last year.

Chris Auchinvole: Has the Minister seen any incorrect claims about New Zealand’s climate change targets and record on forestry?

Hon Dr NICK SMITH: Yes, I have. The first was a press release on 4 February that claimed that New Zealand’s forest loss was the second worst in the world. But the author failed to read the actual report, which referred to New Caledonia, not New Zealand. The second was a press release on 10 February—again bagging New Zealand—that claimed that our minus 50 percent by 2050 target actually amounted to an increase. But it involved a miscalculation of 31 million tonnes, it overlooked the United Nations’ rules, and it was, embarrassingly, withdrawn from the Green Party’s website. I urge the Green Party to stop bad-mouthing their own country with false and inaccurate claims about our climate change policies.

Energy Companies, State-owned—Financial Returns

10. Hon CLAYTON COSGROVE (Labour—Waimakariri) to the Minister of Finance: Does he stand by his statement to the Finance and Expenditure Committee that the State-owned energy companies’ returns have been excessive?

Hon BILL ENGLISH (Minister of Finance): Yes. The member needs only look at trends in power prices during the 9 years that Labour was in office to see that retail electricity prices jumped by 72 percent and that State-owned energy companies benefited from this enormous lift in power prices under the previous Government, which pocketed large dividends from them.

Hon Clayton Cosgrove: How does he reconcile his comments to the Finance and Expenditure Committee on Wednesday, 9 February with the letter sent by Simon Power, Minister for State Owned Enterprises, in December 2008 where the Government demanded higher returns from all State-owned enterprises?

Hon Member: Don’t confuse price with performance.

Hon BILL ENGLISH: That is exactly the point—not to confuse price with performance. The Government in its role as a regulator, under the leadership of the Minister of Energy and Resources, decided that the electricity market was not sufficiently competitive. Over the last couple of years he has engineered a range of complex changes to make the electricity market more competitive.

Hon Clayton Cosgrove: Has the Minister seen reports from energy specialist Molly Melhuish that Contact Energy and TrustPower have both raised their retail charges consistently faster than the three State-owned power providers, and does he have any evidence to suggest that the State-owned energy companies will not also increase prices at a faster rate once he has partially privatised them?

Hon BILL ENGLISH: The fact is that complaints from the Labour Party about power prices lack credibility because at a time when Labour had total control of the State-owned energy companies, retail power prices went up by 72 percent. This Government is trying to undo that momentum through better regulation and clearer definition of the roles of ownership and performance.

Hon Clayton Cosgrove: Given the returns being made by State-owned power companies, why is he in favour of partially selling the State-owned energy companies, a policy that will transfer profits to the private sector—profits that could instead be used to fund essential public services for New Zealanders like schools, hospitals, and infrastructure?

Hon BILL ENGLISH: Use of the mixed-ownership model is just following the example set by the previous Labour Government, which through its mixed ownership of Air New Zealand was able to free up capital for other uses, which is what we want to do; make investment in good New Zealand companies available to New Zealanders, which is what we want to do; and get better performance out of the companies, which is what we want to do. We are just following the lead of Air New Zealand.

Census 2011—Preparations

11. NIKKI KAYE (National—Auckland Central) to the Minister of Statistics: What information has he received on preparations for this year’s census?

Hon MAURICE WILLIAMSON (Minister of Statistics): I can feel the electricity building; the tension is incredible! I am pleased to report that Statistics New Zealand is ready for the census.

Hon Simon Power: Good answer.

Hon MAURICE WILLIAMSON: There is actually more, I say to Mr Power. Statistics New Zealand is ready for the census on Tuesday, 8 March. Over 7,000 census collectors will be delivering to nearly 2 million households, and that delivery begins on Saturday, 19 February. The first television commercials went to air last week in a campaign to raise awareness. This is also the first year Statistics New Zealand has used YouTube, where the campaign ads can be viewed online when anybody wants to do so. It is an exciting time in Statistics New Zealand.

Nikki Kaye: How can the public complete their forms in this year’s census?

Hon David Carter: With a pen.

Hon MAURICE WILLIAMSON: My colleague David Carter has just intervened and said: “With a pen.”, but I have better news for people. This year people will get not only their forms but also an access code for the Internet site. I urge as many New Zealanders as can possibly do it to fill out their forms via the Internet. If everybody in an individual house uses the Internet, the census collector will not even need to collect from that house. It will be quick, it will be fun, and it has made statistics come alive.

National Certificate of Educational Achievement—Confidence

12. Hon DARREN HUGHES (Labour) to the Minister of Education: Does she believe NCEA is a world-class qualification system for young New Zealanders; if so, why?

Hon ANNE TOLLEY (Minister of Education): I take this opportunity to congratulate the member—this is my first opportunity—on his portfolio. I think he is Labour’s third spokesperson on education since I have been the Minister of Education, but it is a fantastic portfolio so I welcome him. In answer to the question, yes, I do. Despite quite a controversial start to life, it is proven to work for the vast majority of New Zealand secondary schools and their students.

Hon Darren Hughes: Why does she not think the National Certificate of Educational Achievement (NCEA) should be compulsory for secondary school students?

Hon ANNE TOLLEY: I am not quite sure that the member fully understands the concept of Tomorrow’s Schools, which gives schools the flexibility to reflect the needs of their communities. Auckland Grammar School has consulted its community, and the board is doing what it thinks is best for its current and future pupils.

Hon Darren Hughes: Why did she acquiesce to Auckland Grammar School, saying its move to relegate NCEA was way ahead, but threaten with dismissal parents on boards of trustees who had evidence-based opposition to her national standards policy?

Hon ANNE TOLLEY: The member fails to understand that it is not an option for children to learn to read and write and do maths at primary school. If they have not got that ability, they have no ability whatsoever to participate in any form of secondary qualifications. As I said, it is important under Tomorrow’s Schools that schools have the ability to reflect the needs of their community. Auckland Grammar School is offering NCEA, as well as some other forms of qualifications that its community thinks are appropriate. What is more, those students are achieving. So where is the harm?

Hon Darren Hughes: Why then does she not make national standards optional, as she is prepared to allow NCEA to be optional?

Hon ANNE TOLLEY: I thought I just answered that question. It is clear the member does not understand that it is not an option for young children at primary school to learn to read and write and do maths. When did that ability become an option, other than under a Labour Government? The National Government is determined to ensure that children have that ability so that we do not have one child in five leaving school unable to read and write and do maths at anywhere near the level they need to succeed.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. That answer was quite a long answer, but not to the question that was asked. The question was about options for boards to use assessment systems, not about whether kids are taught reading and writing at school.

Mr SPEAKER: I believe that the Minister did answer the question as I heard it. I think she did answer that question.

Hon Annette King: What was the answer?

Mr SPEAKER: The Minister simply argued that learning to read and write is not optional for students, and that was the Minister’s answer to why it was not an optional thing.

Hon ANNE TOLLEY: The question was not about an assessment system. That is not what national standards are.

Mr SPEAKER: We are not going to have an argument by way of a point of order.

Te Ururoa Flavell: How is the NCEA system working for young Māori, and what place do iwi have in shaping the qualifications for young Māori?

Hon ANNE TOLLEY: It is not working nearly well enough when nearly 50 percent—half—of all Māori students leave school without gaining NCEA level 2. We are working hard—with, I have to say, tremendous support from my Associate Minister the Hon Dr Pita Sharples—to make sure that we address that issue specifically rather than just hope that the students improve, as was the case under the previous Labour Government. We have introduced national standards and ngā whanaketanga rūmaki Māori in order to pick up struggling students and make sure they learn to read and write and do maths before it is too late. We are introducing the Youth Guarantee, as I have talked about before, to target areas with high numbers of young Māori students who are dropping out of school without a qualification. In the House last week I read out a long list of the initiatives we are putting in place to address Māori underachievement. I also say to the House that the Ministry of Education has 43 agreements with iwi, and we are working together constructively to make the changes that are needed, and have been needed for so long, for Māori students.

Debate on Prime Minister’s Statement

Debate on Prime Minister’s Statement

Debate resumed from 10 February.

Hon MARYAN STREET (Labour): When the House adjourned at the end of last week I was saying that the programme we heard in the Prime Minister’s speech for getting New Zealand out of what is now widely recognised as a double-dip recession has two strands to it. The first strand is selling off the family silver but disguising it as being available to ordinary ma and pa investors, despite the fact that they are the very mums and dads who are trying to manage the Government’s increase in GST in order to put food on the table for their families. The second strand is to give the rich tax cuts, because somehow they will trickle down to the less well-off.

It is the same tired old National Party recipe we have heard for years from its members. Since the Government took office, 52,000 more people are out of a job. A tax cut is not a priority for those people; getting a job is their priority. So where are the jobs? We know that before the election in 2008 the current Prime Minister, or as he then was, the Leader of the Opposition, used to say frequently that he was ambitious for New Zealand. But in a recent FM radio interview at the end of January he was asked to name his top three priorities for New Zealand for 2011—his top three priorities. His first goal was for New Zealand to win the Rugby World Cup. Every New Zealander wants the All Blacks to win the Rugby World Cup, but I suggest that it will have more to do with Richie McCaw’s foot than it will have to do with John Key.

John Key then went on to say, as his second important goal for 2011, that there was something later on in the year—we were aware he was obviously referring to the election—that he wanted to win. We know that if he does not win the election, he is gone. He has already told us that if he does not win, he is throwing his toys out of the cot and he is gone. This is the amateur Prime Minister. He said he is not going to hang around as runner-up. He has got the T-shirt now and he will be off if he does not win the election. Where is the ambition for New Zealand?

John Key was asked to talk about three things that were priorities for him for 2011, and his third priority was to go to the royal wedding. Let us hope he has a nice frock. This is absolutely poverty-stricken. It is a complete waste of space for a Prime Minister who said he was ambitious for New Zealand, but, when confronted with the fact that people’s power prices are going up, food prices are going up, ACC levies are going up—quite unnecessarily in the latter case—petrol prices are going up, rents are going up, rates are going up, early childhood education costs are going up, and tertiary fees are going up, said he wants to go to the royal wedding.

There is nothing about the Government’s priorities that would indicate to any New Zealanders out there who are finding life difficult and who are finding it hard to make ends meet that the Prime Minister has their future, their well-being, and their prospects and the prospects of their children at heart. Thank you.

Hon TONY RYALL (Minister of Health): I think members of the House will agree that the Prime Minister gave a speech that set out a great plan of action for the next 12 months to 3 years of what this Government intends to do in order to continue building a better economy, better public services, and a stronger community in New Zealand.

There is no doubt that the Government inherited an economy in free fall, with no new jobs having been created in the export part of our economy—the productive part of our economy—for 3 or 4 years. Not one new job was created from exporting in 3 or 4 years. In fact, we lost jobs in the productive part of the New Zealand economy. It was the non-productive part of the economy, or the non-tradables sector, as the economists call it, that grew substantially. We had a large increase in the Public Service and in the number of jobs in real estate and property, but when it came to the productive base of the economy, the number of jobs fell, fell, fell by tens of thousands under the previous Government. That is what this Government inherited—a country whose engine, the export economy, had dropped to having about a fifth of the job creation that was needed.

Hon Maryan Street: Lowest unemployment in the OECD.

Hon TONY RYALL: The member opposite said we had the lowest unemployment. Well, when the country had had 7 or 8 years of great economic indicators driven by the world economy, of course there were opportunities for New Zealand. But when things tightened up, we started to see the fact that the previous Government was just a paper man.

The Prime Minister has set out some very clear expectations of what the Government and the community will seek to achieve over the next year. He talked about how we will help New Zealanders to have the skills that they need in order to participate in the global economy, with our strong focus on education and on supporting our schools and our teachers to implement national standards. If there was ever a time when the Opposition was out of touch with mainstream New Zealanders, it is now, with its backing of the isolated teachers unions against parents, who are in favour of knowing how well their kids are doing and who strongly support having national standards in literacy and numeracy. We heard from the Minister of Education today about the expanded opportunities in the Youth Guarantee scheme, which deals with those kids who do not fit into the usual secondary school system that we have in New Zealand. The Minister of Education has been around the country in the last week or so, opening a number of these trades academies, and we have made huge achievements there.

The Prime Minister talked about what we are doing to build better social services in New Zealand. One of our flagship programmes is Whānau Ora, which integrates health, welfare, and justice funding in order to have a real focus on what really matters for families and communities. Our Prime Minister also outlined, together with our Minister for Social Development and Employment, Paula Bennett, the special focus that we want to have this year on vulnerable children. We want to give Kiwi kids every opportunity to succeed, and we are dealing with that across a whole range of Government departments and services in the most comprehensive way. It is not a little slogan that is written up as a new direction but something that is tangible and is being delivered.

First, we are delivering better support for children in State care. The outcomes and the problems of children in State care are not what you and I would want for these kids. Many of these kids have come from hard backgrounds and difficult lives, and the previous Government was happy for that to carry on. We do not want that to happen, and we are doing more to help the kids in State care. We also have a real focus on child abuse and on how we can fix that. Secondly, in the area of justice, we have a lot of work under way to protect kids from abuse. We will have tougher penalties for neglect, and we are helping those children who have to go to court as witnesses or victims.

In health we have the best immunisation rates that we have ever had. If we can give kids a healthy start in life, that really sets them up for their childhood and adult life. We have record levels of immunisation. You know, the previous Labour Government spent 9 years talking about closing the gaps between Māori and non-Māori; we have closed the gap on immunisation to the lowest level at which it has ever been. That is the fantastic work that has been going on in the health service. We are also improving maternity services and early parenthood services. We have a strong focus on trying to eradicate rheumatic fever from New Zealand, and we will be talking about that. There will be further announcements on that. A lot of investment is going into health. We are fixing the B4 School checks. That is all part of the special focus on vulnerable children. In education, of course, we are promoting participation in early childhood education and helping children to succeed at school.

But the times are tough. Everyone knows that the global financial crisis had a dramatic impact not only on our country’s tax base but also, internationally, on the demand from consumers overseas. The Government is seeking to protect and grow our public services with a strong investment in health and education, and it also has a strong commitment to improve the productive and export part of the economy. But here is what will put that at risk: extravagant spending promises from the party opposite, if it ever has the opportunity to be in Government again.

We know that over the last few short months, Labour has promised over $5 billion of extra spending—$5 billion of extra spending over the last few months. The tax-free threshold of $1.3 billion is just a huge and totally ill-thought-through pledge that will put up the taxes on middle-income New Zealanders. Taking GST off fresh fruit and vegetables will cost $250 million. Having no dividends from the State-owned power companies, which is one of Labour’s promises, will cost $700 million. Labour would restore all the changes we have made to early childhood education; that is another $400 million. Restoring the research and development tax credit would be another $330 million. Extending paid parental leave to 18 weeks is estimated to cost half a billion dollars, and Labour is promising that. Restoring capital contributions to the Superannuation Fund is another $2 billion cost that the party opposite has promised. It has promised to back-pay the disability support workers who did sleepovers. That is a $500 million promise, as well. Labour has promised to provide back-pay for 6 years in terms of the sleepovers case, plus to pay the workers in future for sleepovers. That is another $500 million promise.

That is a huge bill of over $5 billion that the Labour Opposition has promised to pay. The only good news is that Labour will never get the opportunity to have to keep any of those promises. But it is a very serious situation when the leading Opposition party in New Zealand does not accept that this is a time for financial discipline. This is not a time to start promising to spend huge amounts of money, when we know those promises simply cannot be delivered on.

The Prime Minister has set out an agenda. We will be working very hard to get the economy sorted, and to get it moving and providing benefits for New Zealanders. There are positive signs out there that the export economy is ramping up and providing more job opportunities, but after the last 9 or 10 years of the previous Government—and there was no job creation in the export sector in its last 3 or 4 years—the improvement is taking a lot longer than many people had expected.

This Government is also looking at how we can improve public services with the investment that we currently have. The New Zealand Government—under National, the Māori Party, ACT, and United Future—has put $1.2 billion extra into the public health service. We have sought to protect and grow the public health service. We are providing more than 400 extra operations a week in elective services for New Zealanders, which means that 400 extra Kiwis a week are receiving elective surgery. We are speeding up the emergency departments, so that people who turn up with their families when they feel vulnerable receive service much faster. We are also making a real commitment to make sure that we lift the performance in a whole lot of our preventive health areas, with more immunisations, more help for smokers, and a better focus on diabetes. All those services are important. We are also making a stronger investment in cardiac services, to make sure they work better for New Zealanders.

This is an exciting period in New Zealand: a time of challenge, given the difficult financial situation that we face. The Prime Minister has set out a clear agenda that focuses on what really matters to the New Zealand economy right now—that is, a focus on the export part of our economy, and on improved savings and investment so that we have the resources to back the productive part of the economy to enable it to create jobs and wealth for New Zealand. The responsibility of members on this side of the House is to make sure that we support that effort by the Prime Minister. We want to make sure that we can deliver the brighter future that New Zealanders are looking for.

The ASSISTANT SPEAKER (Hon Rick Barker): I call the Hon Trevor Mallard. There are fewer than 10 minutes remaining, and I will give the member a bell at 2 minutes.

Hon TREVOR MALLARD (Labour—Hutt South): Thank you, Mr Assistant Speaker. It is great to follow Tony Ryall. He has a reputation these days for being the choreographer to the Prime Minister. It was interesting to see that even he was bored during his own speech. He was not interested, and four Government members seemed to snooze off. It was not the Tony Ryall of old.

He is known around Wellington these days as the “Minister for Redundancy and Consultancy”. He is causing redundancies all over Wellington. Some very good payments are occurring. Wellington unemployment rates are up. In the last 3 months the rate of increase was twice that of any other area in the country—twice! But there is a group that is doing very well under that Minister, and that is the consultants. The consultants are doing really well. It is the National Party approach: fire the public servants, give them redundancy, hire about half of them back at about twice their previous wages, and end up with none of the corporate knowledge.

It is really interesting that Julia Gillard, as part of her preliminary comments as she was coming to New Zealand, indicated that she saw New Zealand as a source of skilled migrants. That is a sad situation for New Zealand to be in, to have our nearest neighbour seeing us not as a partner, not as an equal, but as a place where Australia can have its training needs met by our employers and by our institutions, which train staff who then go off overseas. The trouble is that, at the moment, she is right. All of us know of friends, family, constituents, and people who live in our area who are upping stakes and going to Australia because that is where they can get a job and that is where they can have a reasonable standard of living. Their standard of living there is 1½ times, in real terms, what they can get in New Zealand. And the situation is getting worse, because our wages in real terms are going down, while Australian wages in real terms are going up.

We have heard Bill English talk about his “mom”—his mixed-ownership model. I think a lot of members on this side of the House are trying to work out what the “dad” would be. Would it be “disastrous asset ditching”, or “dog’s addition to Dipton”? There are a number of ways to describe it. I thought the Leader of the Opposition hit the nail on the head today when he asked a question that Bill English, on behalf of the Prime Minister, could not answer. He asked why one would give up an asset that is returning 15 percent and costing only 6 percent. Why would one give it up?

Hon Bill English: Labour wants to buy the stock market.

Hon TREVOR MALLARD: The member says it is a risky investment. Well, I tell him that I do not think Kiwis who over the years have paid their taxes to build dams around the country, as occurred under the NZED—the New Zealand Electricity Department—would regard it as a risky investment. I agree that there are some questions about their valuation, and I noticed that, when he came to the Finance and Expenditure Committee, he thought they were overvalued. That is an interesting approach, because they are valued on the same basis as private sector companies are.

I would have thought that if a Minister was trying to hock off assets, saying that they would go cheaper would hardly be the responsible approach to take. But that is the approach that Mr English is taking. I am not suggesting that we go out and gamble on the stock market; I am suggesting that we do not sell the things that people have paid for, for years and years—they have paid for them in their power prices, and they have paid for them in their taxes. But he wants to sell them off, and he wants to pay off debt and end up with a minus 9 percent return on it. That is what he wants. The return is 9 percent less, which is the difference between 15 and 6, I tell Craig Foss. That is the difference. The 10-year bill rate is 5.5 or 6 percent. The average return for the last 5 years has been 15 percent, but Mr English wants to sell those assets. I think it is about the level of economics we had back in the period just after he was Leader of the Opposition, or maybe while he was still Leader of the Opposition, and when Don Brash was suggesting that we should all sell our houses and rent them. That is the sort of approach. Mr English wants New Zealand to divest itself of assets and send them offshore—to send the ownership of those assets offshore. He wants to sell our power companies to Australians, to Chinese, and to Americans, yet we have paid for those power companies for years and years.

Today in the House Simon Power, who is meant to be the Minister for State Owned Enterprises, indicated his ignorance in saying that no one could buy a cornerstone investment in a State-owned enterprise under his scheme, because they could not be able to get 51 percent of shares. Well, I tell him that he should go back up to his room and have a chat with the three or four people in his office who understand a little bit more than a country lawyer about the way stock markets work. They will tell him that although there are a range of definitions, there is not much doubt that a 2 to 15 percent investment is regarded as a cornerstone investment, and owners of those investments have rights that can block the majority shareholder from doing what it wants to do, even when it is in the interests of the country.

I will leave one comment from a discussion I had yesterday with a cleaner. She and her husband are both cleaners, and they were just absolutely rapt at the idea they would both get $10 a week—$1,000 a year for a poor family—because of the Labour policy that people will not pay tax on their first $5,000 of taxable income.

Hon Bill English: Tell them the truth—they wouldn’t.

Hon TREVOR MALLARD: But Mr English does not like paying cleaners very much. He does not like paying them, except if they live in his house—no, not his house, but the house he was leasing from a trust of which he was a beneficiary. It was not his house; it was a house he was leasing from the trust of which he was a beneficiary. Bill English is someone who has no credibility. He is making a fool of the Government, and the end of the year cannot come soon enough.

A party vote was called for on the question, That this House express its confidence in the National-led Government and commend its programme for 2011 as set out in the Prime Minister’s statement to Parliament.

Ayes 67

New Zealand National 57; ACT New Zealand 5; Māori Party 4; United Future 1.

Noes 52

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

Motion agreed to.

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. It is a matter of clarification about the rules on this vote. I think we are all aware that enough Māori Party members are in the House for a vote of five. Is this an indication that Mr Harawira’s vote should be given separately?

The ASSISTANT SPEAKER (Hon Rick Barker): No; the member cannot use a point of order for that. It is entirely up to a party how it casts its votes and how many votes it casts. The one thing it cannot do is cast more votes than it has as its number of allocated seats. But parties can, if they so choose, cast fewer, for reasons that remain reasons for that party.

Bills

Appropriation (2009/10 Financial Review) Bill

Second Reading

Hon BILL ENGLISH (Minister of Finance): I move, That the Appropriation (2009/10 Financial Review) Bill be now read a second time.

A party vote was called for on the question, That the Appropriation (2009/10 Financial Review) Bill be now read a second time.

Ayes 67

New Zealand National 57; ACT New Zealand 5; Māori Party 4; United Future 1.

Noes 52

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

Bill read a second time.

Bills

Regulatory Reform Bill

First Reading

Hon RODNEY HIDE (Minister for Regulatory Reform): I move, That the Regulatory Reform Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Commerce Committee. The Regulatory Reform Bill amends 13 Acts of Parliament and is designed to reduce compliance costs and the regulatory burden on business, which will be a good thing. It is intended that the bill be divided into separate bills in the Committee of the whole House.

The Acts put forward for amendment by Ministers from eight portfolios have been identified through a number of avenues, including through the regulatory scanning exercise undertaken by Government departments. Agencies have been asked to undertake scanning of their legislation as part of the commitment this Government has to the Government Statement on Regulation: Better Regulation, Less Regulation. The statement was announced in August 2009 and sets out the Government’s commitment to introduce new regulation only when satisfied that it is required, reasonable, and robust, and to review existing regulation in order to identify and remove requirements that are unnecessary, ineffective, or excessively costly.

This is the second bill of what I intend will become an annual bill in this House. It forms a key part of the Government’s commitment to an ongoing process for amending legislation to remove requirements that are unnecessary, ineffective, or excessively costly, and sometimes all three. Such an omnibus bill will ensure that the smaller regulatory fixes do not fall off the legislative agenda, and are able to be progressed in a timely fashion to deliver the flow-on benefits to business and to the economy. A key benefit of this bill is the efficient, cost-effective method of collectively amending the 13 Acts through a single omnibus bill, without having to proceed with 13 separate pieces of legislation.

The maintenance of a quality regulatory environment in New Zealand requires a body of legislation that is easy to use, up to date, and fit for purpose. The changes proposed in this bill cover a diverse range of policy areas and legislation, but they are all aimed at the same objective: reducing the compliance burden on business. This objective is a unifying theme of the clauses in the Regulatory Reform Bill I am introducing to the House today.

In October 2009 I wrote to all Ministers requesting suggestions for amendments to discrete pieces of legislation that would reduce the compliance burden upon business and that were suitable for inclusion in the omnibus bill. I would like to thank my colleagues who have responsibility for the Acts put forward for amendment in this bill: the Hon Simon Power, Minister of Commerce; the Hon Steven Joyce, Minister for Communications and Information Technology; the Hon Phil Heatley, Minister of Fisheries and Aquaculture; the Hon Kate Wilkinson, Minister for Food Safety and Minister of Conservation; the Hon Maurice Williamson, Minister for Building and Construction and Minister of Statistics; and the Hon Nathan Guy, Associate Minister of Justice and Minister of Internal Affairs. The prioritisation of these amendments will contribute to businesses being better able to reach their full potential and the greatest opportunity for growth.

Some of the changes are aimed at removing requirements and streamlining processes. These include amending the Companies Act 1993 to allow companies to choose whether to use electronic shareholder participation. It is estimated that this change could save New Zealand companies a total of $1.5 million each year. Amending the Agricultural Compounds and Veterinary Medicines Act 1997, the Animal Products Act 1999, and the Wine Act 2003 to align and streamline the procedures for recognition under three food safety related Acts will save businesses from potential compliance costs of approximately $100,000 a year. People or agencies wanting recognition for functions such as sampling, testing, analysing, evaluating, and verifying compliance under these Acts should find the process simplified, and should find being recognised under more than one Act significantly less complicated.

The bill will amend the Fisheries Act 1996 to allow for the consolidation of Gazette notices to make it easier for commercial fishermen to find out which restrictions apply to particular stocks. Consolidation of Gazette notices will mean there could be one notice, for example, to cover all quota management stocks, and set the total allowable catch and the total allowable commercial catch for all stocks. This will reduce the time and resources needed by businesses to determine compliance.

Several changes are aimed at increasing flexibility. These include changes to the Films, Videos, and Publications Classification Act 1993 to modernise labelling requirements by allowing rating and classification labels to be printed. At present, distributors must arrange for the imported DVD or computer game to be unwrapped, to have the printed slick—the leaflet or notice containing information about the DVD or computer game we see inserted in any sleeve or display case—removed from the case, a label placed over the printed foreign classification label on the front, and then the slick put back into the packaging. This bill will mean that labels can, in addition to being physically attached, be printed directly on to slicks. Giving businesses flexibility in whether they print on or affix an adhesive label allows choices to be made about the most cost-effective method for supplying the rating or classification label. This will reduce compliance costs by an estimated $2.4 million in the first year, and $3.1 million in year 5. Apparently, representatives from the industry have been coming to see Government each year for many, many years, asking: “Why is it that we have to put this particular sticker on when it could just be printed at the time of its manufacture?”.

The bill will amend the Unit Trusts Act 1960 so that financial statements and accounts can be distributed electronically. This will result in savings of printing and postage costs.

The Regulatory Reform Bill is just one of the essential measures needed to implement improvements to regulation in New Zealand. It forms part of the broader regulatory reform agenda that will improve the body of regulation in New Zealand. Last November I introduced the Regulatory Reform (Repeals) Bill proposing the repeal of 31 spent Acts. I am also preparing a Regulatory Reform (Revocations) Order, which proposes the revocation of spent and obsolete regulations. This set of legislative vehicles is designed to improve the stock of regulation in New Zealand, and will make sure New Zealand has an evolving regulatory environment that is relevant, up to date, and best placed to meet the dynamic economy that will help New Zealand grow. Thank you.

Hon LIANNE DALZIEL (Labour—Christchurch East): The genesis of an annual bill that improves the regulatory environment was, in fact, the Quality Regulation Review, which I led in my role as Minister of Commerce. Arising out of the Quality Regulation Review was a desire from business to see continuous quality improvement from the Government, with the ability to tidy up features of different aspects of the regulatory frameworks without having to wait for the individual department or, indeed, the Minister to give it the legislative priority it needed. This was the reason I called the annual bill we committed to in Government the Regulatory Improvement Bill, because I believe that the principles and guidance that are enshrined in the Code of Good Regulatory Practice should be embedded within every layer of Government. That is something I always believed in as a Minister, and that I believe in today. I believe that we must commit to that if we are going to make a difference in the long term.

The Minister is calling this bill a Regulatory Reform Bill; I assume that he has just simply changed the name to the Regulatory Reform Bill, as opposed to the Regulatory Improvement Bill. I deliberately chose “Improvement” because I wanted the focus to be on continuous quality improvement. That also suggests to me that the Minister was not prepared to highlight the fact that this bill is actually late. If it were called the Regulatory Improvement Bill it would have been the No. 2 bill, and that would have highlighted that despite the fact that we have the country’s very first Minister for Regulatory Reform, the Government has not met its very first target, because this year’s bill should have been bill No. 3. There should have been one in 2009, there should have been one in 2010, and we should be dealing with the third piece of tidy-up legislation at the beginning of 2011.

I will talk about the legislation this bill amends, and I particularly want to focus on the Takeovers Act 1993, which the Minister did not mention in any detail. I mention to anyone who might be vaguely interested in this debate and may, in fact, be interested in any Acts that will be amended by it that I am deeply disturbed, for example, that the Government made the decision to take the regulatory impact statements out of bills. It does mean that one has to go to the website of either Treasury or the Ministry of Economic Development to print them off. Of course, because so many Acts are being amended there are different regulatory impact statements for each of the bills being amended, but they make for fascinating reading. Some of these regulatory impact statements do not meet the standards of good practice around regulatory matters, which I find somewhat ironic. But there is more than one irony in the debate that we are having today.

I want to mention, for example, the changes to the Registered Architects Act 2005, which will hardly excite a lot of comment. The changes to the Act, as I read them, will reduce the cost of the complaints process from $33,300 per case to a mere $19,100 per case, and that is by removing the hearing processes from the investigating committee and disciplinary committee and replacing them with a hearing, if necessary, in front of the actual board itself on the report of the investigating committee. So a sensible proposal is being made. It seems like good sense to me, and what it will really do is knock the time off the investigation process and the hearing process, which sounds to me to be a good thing as well.

But there was this little bit that I thought was really interesting. I have had quite a lot to do with architects of late, given the circumstances down in Christchurch, and they might be interested in this. Architects will still pay the same fees, and the time taken to process a complaint will at least halve. This will give the architects in question more certainty about their future, but, I could say, less bang for their buck at the same time. So it will be interesting to know why they are not having their fees reduced, since there will be such a major cost saving to the Registered Architects Board. But I am sure that will come up at the Commerce Committee, which I chair.

I want to refer to the takeovers legislation, because that is the one that has excited the most public comment, and certainly in the New Zealand Herald this morning there was quite an article of substance on it. But before commenting on this specific issue, I wanted to use this as an opportunity to acknowledge the work of the Capital Market Development Taskforce, whose work is being recognised in the legislation that we have before us. It spent, I know, quite a considerable amount of time with the Takeovers Panel in order to establish what changes needed to be made to the panel’s arrangements in the code in order to facilitate the work that it was doing. It is good to see that some of its recommendations are finding their way into law through this particular process.

Of course the regulatory impact statement on this particular case has been helpful in identifying the magnitude of the change. Although I note that when referring to the cost of complying with the takeovers regime when the number of voting shareholders in the company is very small it says: “These costs are incurred on a transaction by transaction basis and do not occur frequently. These costs are not significant to the economy as a whole but are to the parties involved in the relevant transaction. Because of a lack of a mechanism to collect data it is unknown how many companies are affected by this problem.” So sometimes the Minister for Regulatory Reform has a habit of overstating the impact that a lot of these things will have.

I do not disagree with making some of the changes that are proposed to the law, but there is one that I really do want to deal with in detail, and that is the question of international comity between New Zealand and any other country being added to the objectives of the code. I have commented before on irony in the debate today, and this is really where the irony kicks in. A National Government passed the Takeovers Act in 1993. In fact, I have been around so long that I sat on the select committee that considered the Takeovers Bill, as it was at that time. I wonder whether anyone in the House today remembers how long it took the Government of the day, the National Government, to allow a code to be written to give the Takeovers Panel some work to do. I wonder whether there is anyone in the House today who can remember how long it took the National Government to do that. I do not think anyone in the House has been here quite as long as I have. John Carter is in the House; he may recall exactly how long the National Government took to implement the Takeovers Code after passing the legislation in 1993. It is, of course, a trick question, because it never did. It never gave the Takeovers Panel a code to enforce. It did not empower the Takeovers Panel to write a takeovers code that would come into force. So for a number of years the head of the Takeovers Panel used to sign off on an annual report to Parliament, which was nothing more than a blank sheet of paper. So that is why it is ironic.

This morning’s New Zealand Herald states that the panel administers the Takeovers Code and can issue exemptions for companies looking to take over another business where it believes they are warranted. “Amid concerns about the Government’s proposal to partially privatise state-owned power companies, the Takeovers Act and code are seen as a key protection for retail investors and New Zealand’s wider interests. In combination with ongoing majority state ownership, the act—which requires any would-be purchaser of more than a 20 percent stake in a company to make an offer to all shareholders and secure at least 50 percent of it—is seen as a safeguard against the companies falling into the hands of foreign investors. Ministry of Economic Development officials said the amendment had been added to allow the Commerce Minister to take into account comity between New Zealand and any other country as an objective when formulating any recommendations relating to the code.” It is unfortunate that that is not what the officials advised the Minister for Regulatory Reform when they prepared the regulatory impact statement that went to Cabinet. They made it absolutely clear that this was about making it easier for the panel to provide exemptions in cases such as these. So I think that there is a very genuine concern about this.

I will comment on section 20 itself—the objectives of the Takeovers Code. These are all listed in the regulatory impact statement encouraging the efficient allocation of resources, encouraging competition for the control of specified companies, and the list goes on. But the second paragraph from section 20 of the Takeovers Act is missing, and it is relevant: “In formulating recommendations … it is for the Minister to determine the weight that should be given to any particular objective …”. The Minister of Commerce is the Minister for State-Owned Enterprises, and we should be worried.

TIM MACINDOE (National—Hamilton West): The National-led Government is delighted to see this important measure introduced into the House this afternoon. I start by acknowledging the work that the Minister for Regulatory Reform and his officials have completed in the 2¼ years since the current Government came into office. It is a significant body of work—

Hon Lianne Dalziel: So slow!

TIM MACINDOE: So slow, calls Ms Dalziel, the member who over 9 years saw an absolute explosion in regulation and did nothing to fix the problem. In the 2¼ years since the current Government came into office, a very significant body of work has been completed. This will make an important contribution to this country’s recovery from one of the most severe economic downturns of the past century. That is one of the reasons why I was waiting with interest to hear the position that the Labour Opposition would take on the Regulatory Reform Bill during its first reading. I have to say it was a bit cute to hear the previous Minister of Commerce suggesting that the genesis of this bill lay in measures that she had taken under the previous Labour administration, because Labour’s record in this area is one of abject failure. Once again, we have a very clear example of Labour’s spin being totally contradicted by its record in Government.

Ms Dalziel also queried whether anyone might be vaguely interested in this bill—that too speaks volumes about Labour’s awareness of economic realities. I can assure this House that many, many New Zealanders, particularly business owners, are waiting with bated breath for the passage of this measure. They have been hanging out for it for years as they have been drowning in red tape, and that is why we are delighted to welcome this bill today.

Members on this side of the House never lose sight of our vision and our determination to secure a brighter future for all New Zealanders. As we focus on lifting long-term economic growth in order to create jobs, boost incomes, raise living standards, and provide world-class public services, it is clear that this bill we are debating this afternoon is a crucially significant part of the package. By improving and reducing regulation in our business framework we will encourage conditions that are essential if we are to boost New Zealand’s productivity growth, international competitiveness, and living standards.

There can be no doubt that New Zealand businesses welcome the Regulatory Reform Bill. There cannot be many electorate MPs in this House who have not been contacted by local business owners whose companies are drowning in red tape and who are crying out for relief. Much of that red tape was the product of the nanny State tendencies—some would say “obsession”—of the previous Labour-led administration. Labour’s philosophy that if it moves it needs to be regulated has cost New Zealand businesses millions of dollars in the past decade. Particularly in the current economic climate, New Zealand’s businesses face enough challenges without having to grapple with compliance costs caused by unnecessary regulation. Those costs are passed on to households and families, and they cost many vulnerable New Zealand workers their jobs.

Members opposite do not like being confronted with the consequences of their financial illiteracy, but those were the stark realities of Labour’s “we know best” mentality, which saw this country slide into recession during Labour’s final term in office. Regulations passed by the previous Labour Government would have prohibited the sale, from 1 January this year, of over 1,000 common household products that are sold in cardboard or refill packs, even though the toxicity of those containers is barely more than that found in table salt or lemon juice. Labour’s excessive regulations would have added over $20 million to family grocery bills, and sent more than $30 million plastic containers into our already bulging stream of waste products. Thank goodness the new Government has stepped in to prevent that economic burden and environmental strain.

Let me digress for a moment to congratulate our current Minister for the Environment, Dr Nick Smith, on the exciting initiative he announced last week that will see many, many plastic waste products recycled into road cones. It is a great thing for the economy and it is a great thing for the environment.

Incredibly, Labour’s regulations would have seen popular washing products such as Surf, Persil, Spray n Wipe, and even the iconic Toilet Duck, banned from our supermarket shelves. Those regulations would have put the Unilever factory in Pētone out of business. Hundreds of jobs in one of New Zealand’s leading companies—and in one of Labour’s supposed political heartlands—would have gone down the gurgler. That would have been just the tip of the iceberg. It is indisputable that New Zealand households and businesses have endured a tidal wave of regulations in the early years of the 21st century. The statistics paint a sorry picture: between 2000 and 2009 over 68,000 pages of regulations were passed. They came on top of existing regulations that were already considerable, but it is very clear that the previous two decades paled in comparison with the regulatory avalanche that the Clark-Cullen-Cunliffe-Dalziel administration unleashed on New Zealand’s households and businesses. The consequences of that rampant rush to regulate were dire for this country’s productivity. It had been less than dramatic, it has to be admitted, at an average 2.1 percent per annum during the 1980s and 1990s, but 2.1 percent per annum growth was positively spectacular in comparison with the paltry, pitiful 0.7 percent per annum productivity growth that New Zealand averaged from 2000 to 2006 under the Labour administration.

This is an important measure, but it is just one of a number of weapons in the Government’s arsenal to cut red tape and to improve productivity. National members welcome the introduction of the Regulatory Reform Bill, and we look forward to its smooth passage through this House, as do businesses and households from one end of the country to the other.

Hon DAVID PARKER (Labour): As the Hon Lianne Dalziel has previously said, the Labour Party supports the Regulatory Reform Bill. I am not sure whether she mentioned it, because she was probably a little modest, but she was the Minister of Commerce when we, as the last Labour Government, decided that it was necessary to have an annual Regulatory Improvement Bill, which has now had its name changed to the Regulatory Reform Bill—but it is the same beast. Obviously, it is always necessary for Governments to look at what is over-regulated, what regulations have become outdated, or what regulations go too far. As the previous speaker, Tim Macindoe, pointed out, there was a regulation that went too far in respect of the packaging of some products. It was not going to ban all the soap powders or detergents, as the previous member suggested, but there was—

Tim Macindoe: It would have done, if you had put them out of business.

Hon DAVID PARKER: No, it would not have. That is just nonsense. No one has ever suggested that we should ban soap in New Zealand. Any member who stands in this House and suggests otherwise is lacking in credibility. What was proposed at the time related to some of those products that were accessible to children. Given that if those children drank them it could cause them great illness, there was a need for more child-proof packaging. That was the essence of those regulations: an improvement to child-proof packaging. The drafting of it did go too far, and too many things were put on that list. But there was never any suggestion that those products ought to be banned. So the previous speaker is just exaggerating when it comes to that.

What I would say in respect of the Regulatory Reform Bill is that I find it surprising that we are a country that is languishing in a double-dip recession—and National cannot deny responsibility for the second of these recessions; this recession we are going into is National’s recession—and here we are dallying with the Regulatory Reform Bill rather than actually doing things that are more substantial in terms of resetting the nature of our economy and investments in it. This bill does nothing to address the very poor imbalance in investment in the New Zealand economy.

Last year we had a Tax Working Group that was set up by the incoming Government. The Labour Party gave it plenty of room; in fact, the Secretary to the Treasury came to see the Leader of the Opposition, Phil Goff, and asked him not to be critical of measures that would affect the resetting of investment in New Zealand. Labour gave the National Government plenty of room to look at things like ring-fencing losses and other taxes. We did not criticise the report when it came from the committee of experts who were appointed by the Government, because it contained some good recommendations to try to reset the New Zealand economy towards the export economy.

New Zealand has a great problem in that we over-invest in areas relating to property. One of the reasons why we over-invest in those areas is that our tax settings encourage it; they effectively give tax advantages to people who invest in property. They can deduct their interest costs, their rates cost, and their maintenance costs so that their property investment overall makes a taxable loss. That taxable loss is used by many taxpayers to reduce their tax on their other income. By offsetting that loss against their other income, they reduce their overall tax. So they make a taxable loss and get tax deductibility for all of those interest charges, yet when they make a profit when they sell the property, because the property goes up in value, they pocket the profit and pay no tax on it. That compares with the rate of return one gets on non - property investments, where there is no tax deductibility for the losses. For example, if someone was investing in an export-based company, that person would not have the tax advantages he or she would get from investment in property. That is one of the reasons why New Zealand over-invests in residential property and under-invests in the export economy.

We know from figures that have been produced by the Tax Working Group, by Treasury, and by the Inland Revenue Department that New Zealand has $200 billion of investment in residential rental property. That makes a loss for the taxpayer, overall—no net tax is paid on any of that area of investment. Yet the export sector of our economy, which also wants investment money to expand its businesses, to spend money on expensive plant and equipment, and to spend money on export development, is competing for funds with the residential properties sector.

The Government, having had all of these recommendations from the Tax Working Group to say that this was one of the most important imbalances in our economy to be fixed for the growth of New Zealand jobs, for the growth of our exports, and to make New Zealand wealthier—so that we could afford the things we want in health, education, and our private lives—blinked. It had room to move from the Labour Party, and from other Opposition parties like the Greens. It had recommendations from the Tax Working Group, it had recommendations from Treasury, and it ignored them all. All it did was fiddle around with depreciation rates. It did not ring-fence losses, and it took Phil Goff in a speech earlier this year to say that regulatory reform is important and that we need to do these things, but that we should really get to the main game. The main game here is to reset New Zealand’s economy away from over-investment in property, away from over-consumption, towards investment in the productive sector, so that we grow more jobs and we have more exports.

We have had third-party thinktanks like the New Zealand Institute say that this is fundamentally important. Its recent report, A goal is not a strategy: Focusing efforts to improve New Zealand’s prosperity, was, I thought, an implicit criticism of the jingoistic nature of the National Party policy that pretends that we are going to catch up with Australia, that pretends we will have a step change in the economy, but then does nothing substantial to achieve that end. That report noted that New Zealand needs to expand the breadth of its exports. Again we heard Bill English in the House today say that we need to expand the volume of our exports. I took that to be a reference to our existing sources of exports: primary produce, forestry, and the like. They are very important but they alone are not going to grow our economy sufficiently. We need to grow the breadth of our exports so that we have more jobs for people—well-paying jobs, so that we can have the lifestyle that people have in Australia; and, of course, bridging the earnings gap between Australia and New Zealand, which is what the Government said it was elected to do.

This Regulatory Reform Bill falls under the heading of the little housekeeping things that we need to do to keep the country running efficiently, and we do not disagree with the things that are being done as a result of it, but the fact is that the Government has failed to take the initiative on the more important steps to reset New Zealand’s economy. The fact that it has failed to take any measurable step to improve New Zealand’s savings—in fact, the steps that it has taken to date have actually taken us backward on the savings route—stands in stark contrast to what it is doing with this bill, which, although important, compared with those more important things is trifling.

This Government is being increasingly exposed as being bereft of ideas to grow our economy. As a consequence we are dipping into a second recession—National’s recession. It cannot blame anyone else for this but its own management or mismanagement of the economy because it has not had the gumption to do what needs to be done to reset the signals in the economy. If we contrast that with the policy that Labour has already announced, Phil Goff in a speech earlier this year said that Labour would tackle the overinvestment in property by ring-fencing losses on residential property investment, which would in part go some way to pay for a tax-free exemption for every taxpayer so that the first so many dollars of their income would be free of income tax.

This Regulatory Reform Bill does so little to grow our economy. It will have an effect, but the effect in terms of the macroeconomic effect will be minuscule—it will be absolutely minuscule. We heard Government members say when they came to power that regulatory reform was one of their key causes of change in the New Zealand economy. They pretended that changes to the Resource Management Act and change to regulations like this would somehow drive the economy forward and achieve the step change in the economy that they promised. That was the language they were promising—a step change in the economy. Indeed, as late as last year they were saying in their publications that National sought a step change in economic performance. In February 2010 they were saying that.

If we go through all the National material now, we see that National members have completely dropped that language. They no longer talk about a step change in the economy; they have given up on that aspiration. They have stopped talking about bridging the wage gap with Australia and instead we are left dealing with the Regulatory Reform Bill here today, which is really tinkering with things at a time when more active management is needed by the Government to reset the economy towards exports in a way that would stop the droves of people who are increasingly going to Australia because they lack the employment opportunities and wages that they want here in New Zealand.

This bill is supported by Labour, but we lament the lack of a credible economic plan from the Government.

Dr RUSSEL NORMAN (Co-Leader—Green): I rise on behalf of the Green Party to speak briefly on the Regulatory Reform Bill. A bill like this raises the question of the role of regulation in our economy and also in our society, more broadly. I think it is hard, when having this debate, not to talk about the leaky houses disaster in New Zealand. The leaky houses disaster was a result of lack of regulation. It was driven by an ideological agenda, a so-called anti - red tape ideological agenda in the early 1990s, caused by the 1991 Building Act that was brought in by the incoming National Government.

I have had a chance to look at some length at some of the documents around the 1991 Building Act, in order to engage in the debate around the role of regulation. What people often forget when they talk about the inefficiencies of regulation is the astronomical cost of lack of regulation. The leaky buildings crisis will cost our country something like $20 billion—somewhere more than $20 billion—in order to repair the buildings that were leaky and damaged as a result of lack of regulation.

In terms of the debate around what kind of regulation we should or should not have, what sits behind this bill is an anti-regulation position coming particularly out of the 1980s and 1990s, which the ACT Party obviously goes back to. Coming out of that is the knowledge that in the past this kind of ideological position has caused massive damage to the New Zealand economy. When we say a cost of $20 billion, it is difficult to put that into a debate; it sounds like just another number. We can think of some of the examples given earlier in this debate. People said that such and such a regulation cost the country a few million dollars, or that something might have cost the country $10 million if so and so had not gone ahead with such a regulation. But lack of regulation of the building industry cost our country more than $20,000 million; $20,000 million worth of damage was caused by the ACT Party and National ideology as it was back then in the early 1990s, and which is trying to get a life of its own again here.

When National introduced the Building Act in 1991 during the last time it was in Government, Treasury papers that sat behind that Act were very clear. They said that we did not need regulation of the building industry and we specifically did not need regulation around trying to make sure that building standards remained high. They said that the market would sort it out, and that if there were any issues about shoddy building the courts would sort them out. This is exactly the wrong framework to have when it comes to dealing with the question of regulation. For this bill to come up again and for the National ideology from the 1990s to come back again and live again, like some monster from the deep, it seems to me extraordinary that there has not been a learning from the 1990s about what happened, given the cost, the phenomenal cost, to our country. This cost is something like five times the cost of the Canterbury earthquake.

People have talked a lot in this House about the cost of the Canterbury earthquake—maybe $4 billion to $5 billion. The decision by National in the early 1990s not to regulate the building industry, not to have proper regulation of the building industry, has cost our country four to five times the cost of the Canterbury earthquake. It is phenomenal, when we think about adopting the wrong ideological framework. Adopting an anti-regulation ideological framework seems like the world of ideas. People spruik on about this, that, and the other; it is just an idea.

Ideas can be immensely damaging, and in this particular case the ideas coming out of Treasury—at that time headed up by a man who has since become an ACT Party candidate—the anti-regulation ideas that ACT has promulgated and that find their home in parts of National these days, have cost our country more than four to five times the damage caused by the Canterbury earthquake. The Canterbury earthquake was a massive natural disaster, yet the ideas coming out of the far right and finding a home in ACT and, to some degree, in National are a calamity of a scale four to five times greater than the disaster that was the Canterbury earthquake.

Think of all the people in our country who have had to live inside leaky houses, and with all of the fungi that grow inside leaky houses. People have probably died as a result of living in leaky houses, whereas fortunately nobody died in the Canterbury earthquake. Those ideas that form part of the debate around this bill as to the role of regulation in our society have been immensely damaging to our country. So I say to the Government that when it plays footsie with the ACT Party, using these kinds of ideas, and when we are looking at a bill like this, do we really want to relive the leaky houses disaster all over again? Those anti-regulation ideas that sat behind the leaky housing disaster were incredibly expensive and damaging to our country.

That would be my contribution to the debate on the Regulatory Reform Bill. We need to have this debate in a mature way and an acknowledged way, rather than simply using ideological slogans like “too much red tape”, which is about as far as it gets with the ACT Party. Actually, red tape could have saved our country $20 billion in the cost of the leaky houses disaster, but we decided to let just anyone build a house. I mean, who needs rules to keep out the water? Why should we have a rule? This is what the National Government said: “Why should we have a rule that says that houses should keep out water?”. That was what it said in the early 1990s. National asked why we should have such a rule. It turned its back on having a rule that stated that houses should keep out water. Actually, that is quite a good rule to have. The leaky houses disaster proved why it is such a good rule, and $20,000 million later it is time to acknowledge that regulations play a positive role in our society. It means that houses keep out rain and do not rot from underneath people. In terms of framing the debate on this bill, I say: think about regulations. They can play an extremely positive role, and save us many tens of billions of dollars in costs and an immense amount of misery.

AMY ADAMS (National—Selwyn): It is good to take a call this afternoon on the Regulatory Reform Bill. It is good because I think it is part of a much bigger debate we have been having in this House over the last week about the future of the country, where we are going, the creation of jobs, and the things that this National-led Government is doing to make sure those jobs are created. In that context, I think it is worth taking a moment to look back over the last 5 years of the previous Government, where we saw the growth of a quarter of a million jobs in the non-productive sector. But, scarily, over the same period we saw a loss of 50,000 jobs in the export sector. So all the time that that non-productive sector was growing and creating ever more of a drain on the taxpayers’ purse, what should have been the engine room of our economy was shrinking and shrinking, to the point that that engine room is now really nothing more than an auxiliary motor.

Turning that round is an absolutely key part of getting this country back into the game. That is a multifaceted response. There is not one single thing that can be done that suddenly fires up the export economy, the problem is solved, and away we go—there are any number of things. I think all of those things can be broadly categorised as putting confidence back into the business sector that it can invest in New Zealand, grow its businesses, create jobs, and take people on. At the end of the day if there is not that sort of confidence that New Zealand is a good place to do business and invest money, the business sector will not be creating jobs for New Zealanders, in order to raise their incomes and their standard of living. So that has to be a big part of the plan. We have seen a lot of it already from this National-led Government. We have seen Minister Wilkinson give effect to the 90-day trial period, and the response from that has been fantastic. We know that it has already created 13,000 extra jobs. Businesses are saying that it is good, it has taken a bit of pressure off them, and they can now have the confidence to get in and use the trial period to create jobs for New Zealanders. That is what will give New Zealanders in this country some long-term security.

I think we can see a step in that same direction in the Regulatory Reform Bill. We are saying that this is a Government that will not burden people with costs for the sake of it. The Government will look at costs and if they are excessive and outweigh the benefit to society, then it will go back and ask whether we need this. I think that asking that question all the time, whether we actually need this, is fundamental to what any good Government should do. I will always support a Government looking very closely at the costs that it imposes on hard-working New Zealand families and businesses. Members should remember that most of those businesses are very small. Let us not get caught up in thinking that they are large, faceless corporations. Most New Zealand businesses—the vast majority—are small, family run enterprises. It is about the costs and the hoops they have to jump through time and time again, just to get through the day. Certainly the process of reviewing those costs and making sure they are appropriate is, I think, absolutely key to a sustainable recovery.

It is not surprising to me that the Green Party is not supporting the bill. It seems in their nirvana nothing at all would be allowed. The interesting thing is that one has to create business activity and wealth to pay for all the social spending that the Greens constantly call for. So I think frankly it is irresponsible to stand and say: “They shouldn’t be allowed to do this. We should crack down on this. We should stop that. We should regulate that out of existence.”, but at the same time continue to call for ever-increased spending on handouts.

One final comment I will make in this space—and it is perhaps a philosophical one—is that it always seems to me that excessive regulation and the drive for more and more regulation is the expected flow-on of a complete abdication of personal responsibility. We see this all the time, do we not? When something has gone wrong, the first thing we will often hear is someone saying: “There should be rules stopping that. It shouldn’t be allowed.” Often there is a valid question to be looked at, but often we have to say that hard cases make bad law. If we react to every single thing that goes wrong by making an excuse to wrap up an industry in even more red tape and regulation, then we are going to wrap ourselves into a completely catatonic state as an economy. I think that guarding against the overuse of the power we have, trying to remove any possibility of any harm to any one from any thing, which seems to be the endgame for the nanny State and its left-wing supporters, is something we have to guard against. The real endgame of that approach is a catatonic economy that will not create jobs and will not provide for its future. So, yes, regulation is essential and we do need to have it. But, equally as important as our power to create it is our power to constantly be vigilant about whether the regulations we have in place are necessary, productive, and to the ultimate benefit of New Zealanders. I am very happy to support this reading of the Regulatory Reform Bill.

CLARE CURRAN (Labour—Dunedin South): It is nice to hear the member opposite Amy Adams being a bit philosophical about things. It is just a pity that she was rewriting history throughout the few minutes when she stood up and spoke. As she well knows, and as the rest of the members of this House know, Labour supports the Regulatory Reform Bill because it is essentially a Labour bill. It is nice to hear that Amy Adams thinks regulation is important, albeit only sometimes, and that regulatory reform and improvement is also important.

As has been pointed out earlier, this omnibus bill is an outcome of the Quality Regulation Review, which was led by the Hon Lianne Dalziel when she was the Minister of Commerce. It is not an idea that came out of the brain of the Hon Rodney Hide. Lianne Dalziel introduced that first Regulatory Improvement Bill, which I spoke on in the House last year, which was an omnibus bill, as well. It was passed by the Government across the way, which then took credit for it. At that time Rodney Hide said that the Government would commit to an annual bill of this nature, and that is what we have here today. But instead of calling it the Regulatory Improvement Bill (No 2), he has called it the Regulatory Reform Bill and is taking credit for the concept as well as the content. I put on record that the concept was, and remains, a Labour initiative.

As I said before, the bill was the result of the Quality Regulation Review. That report was released in September 2008 after a 15-month review process. The Quality Regulation Review addressed the regulatory barriers to business growth, which Labour was absolutely committed to looking into and improving upon. It was a broad review. It looked at anomalies, inconsistencies, and duplication across the Government’s regulatory framework. As well as correcting some errors, the review aimed to develop ways of ensuring that new rules were efficient, from a business perspective.

Around that time Labour also launched a 2-year trial of a business cost calculator in order to quantify the compliance costs of regulation. That was a really important new initiative. It was a 2-year trial. The calculator was a software tool that allowed Government officials to calculate the true cost for businesses of any regulations that they were recommending to Government. The tool was designed to assist policy makers to create higher-quality regulation in a uniform and efficient manner, which are all the principles that underpinned the Quality Regulation Review. At the time it was launched under the previous Labour Government, Business New Zealand chief executive Phil O’Reilly said that it would help sharpen the focus on what it costs business to comply with new regulation. Those costs include fees for consents, payment for signs, manuals, and software, or professional fees and staff time to perform those functions—all good practice and all things the previous Labour Government was committed to doing.

Annual regulatory improvement bills are a sensible way of ensuring quality regulation, but although those changes may be helpful to some businesses, most of the changes in this bill are, as Chapman Tripp has said, small and technical in nature—hardly slashing red tape, as Rodney Hide announced in December. In an article on its website entitled “Red tape slashed by regulatory reform bill—or snipped?” of 22 December last year, Chapman Tripp wrote: “The Regulatory Reform Bill will ‘slash red tape’, according to its sponsor, Rodney Hide. And indeed the Bill will remove a lot of unnecessary bureaucratic clutter. But, almost by definition, most of the changes—while useful—are small and technical in nature. In our view more substantial amendment to the Companies Act 1993 is required to fix long-standing technical gaps and to catch up with the modernisation of company law in other countries.” Chapman Tripp thought that sounded more like a snip than a slash. Another argument is to question whether this bill will lead to quantifiable growth in the economy. Does the Government have nothing better to do? As my colleague the Hon Lianne Dalziel has said, why is there not more in it?

Let us look quickly at the summary of changes. The bill will amend the Companies Act to allow companies to choose whether to use electronic shareholder participation; it will amend the Unit Trusts Act 1960 so that financial statements and accounts can be distributed electronically, which will result in cost savings to unit trusts; it will amend the Films, Videos, and Publications Classification Act to modernise labelling, which has been estimated to reduce compliance costs by $2.4 million in the first year and $3 million in the fifth year; and it will align and make consistent all food-related legislation. We do not have any issues with any of these amendments, because we were the ones who initiated them.

I will talk briefly about the electronic documentation, voting, and meeting participation aspect of the legislation because those changes were sought by the Listed Companies Association in 2009 and have been more recently endorsed by the New Zealand Shareholders Association. Those changes will reduce compliance costs and bring New Zealand into line with other jurisdictions. The Listed Companies Association—not the Minister—estimated that aggregate cost savings of around $1.5 million a year could be generated among listed companies, assuming a 30 percent uptake of electronic voting facilities and use of those facilities for one voting process per shareholder per year. This, again, builds on the work of the previous Labour Government, which was done by a former Minister of Commerce Paul Swain in 2005. He noted that an information revolution was taking place and that the technological and innovative capability of New Zealand businesses and citizens would be the key to ensuring our ability to compete in world markets, and our enthusiasm and capacity to exploit the opportunities offered by the 24-hour-a-day, 7-day-a-week global economy. This measure is building on this capability. It sounded in the previous speech as though somehow this bill was all a new idea and a new initiative, and that somehow the National Government had come up with it all itself.

We support it, as we have said, but I note two concerns. Firstly, I echo what the Hon Lianne Dalziel said about the removal of the regulatory impact statements from bills. Requiring people who are looking at proposed legislation to go to another ministry or department website to find the regulatory impact statement is not open and transparent government; it is government that wants to obfuscate and remove any potential criticism of its legislation from public scrutiny. Yes, one can still get the regulatory impact statement, but if one does not understand how the process works or know where to look for it, then one will not find it. I put on record my concern about that matter.

Secondly, there are concerns about aspects of proposed amendments to the Takeovers Act, as my colleague has previously talked about. We will be looking closely at those changes when the bill gets to the select committee. I note the issues raised by the reporter Adam Bennett in this morning’s New Zealand Herald in a piece entitled “Planned ‘friendly’ amendment to Takeovers Act sparks worry”. Essentially, the concern was raised that “As the Government seeks to sell the public on state asset sales it is amending a key protection for small investors which is feared may allow company takeovers to go ahead in order to maintain friendly relations with other countries.” This is a serious concern. Essentially, it “would enable the Takeovers Panel to take into consideration ‘international comity’ or friendliness between nations. The panel administers the Takeovers Code and can issue exemptions for companies looking to take over another business where it believes they are warranted.” A company law expert and the Shareholders Association have expressed a lot of concern about this amendment. We think it is an important issue in relation to the ability of foreign investors to take controlling stakes in local assets, and we note that we will be looking closely at it in the select committee.

We support this bill, primarily because it builds on the work done by the previous Labour Government. It will remove duplicating and overlapping regulatory requirements, it will design safe harbours, and it will allow more rigorous risk analysis when developing and enforcing law and provide tailored information on regulatory requirements to meet the needs of business. I look forward to its coming to the select committee.

AARON GILMORE (National): It is a pleasure to speak on the Regulatory Reform Bill, which is yet another plank in the National Government’s economic reform package. I will first talk about one of the wonderful things about this bill. A whole lot of particular examples in this bill actually help small to medium businesses and large businesses address their costs, help employ more people, and get our country growing again. I will spend a fair bit of my time on one particular example that exists in this bill, which I am very happy to see in the bill. My local video shop has had problems with the labels that go on its DVDs. One wonders what sorts of problems there would be. Well, quite a large Deaf community surrounds that video store. One of the particular issues that people in that community have is the ability to read and access the labels that exist. The labels have had to go on the inside cover of the DVDs; they have had to be affixed to, rather than displayed upon, the DVDs.

One thing this bill does is allow some changes to the labelling that goes on videos and DVDs at the local video store, and I think that is a good thing. It is an example of the little extra costs that that video store owner and many others up and down the country will no longer have to incur due to double labelling, which takes time and effort, and is a right utter pain—in his own words—for customers. This little change in itself might not mean anything to the people listening tonight, unless they are particularly affected by that change, but a change of two or three small words in a bill can mean a massive reduction in cost for those people in that community. I am very pleased. I spoke to some of the people affected and told them about this change. They were ecstatic. In fact, I had to calm them down and tell them that I was not responsible for the change. But they promised me that they were very happy with the change and they thought it was a wonderful move. That change is made by a small clause in a bill that has a significant number of changes.

This is the second regulatory reform bill that has been brought before this House. Last year we spoke about some of the changes in the first bill that related to the requirements to audit the accounts of companies of a certain size. One of the benefits of that change was a saving of $10 million to $15 million a year in terms of audit fees that would no longer be required for certain types of statutory accounts. I am pleased to report that I have spoken to a number of leading audit firms up and down New Zealand, and, sure enough, that is what has happened. The auditors’ fees have dropped, the accountants are very grumpy, and the companies that pay the audit fees are very, very happy. I think that is a wonderful thing. That money can be better spent on employing people, innovating our businesses, and growing our economy overall.

Another example, which the previous speaker spoke about, is electronic filing and the receipt of documents. To most people, that seems an absolute given. If one wants a piece of paper or a bit of information these days, one goes to the Internet and asks for it. One literally puts it into one of the various search engines and one finds it. As a result of that, one is sent things via email. The stupidity of the historical nature of some of the details of the law meant that that could not happen. That is another example of some of the strangeness that exists due to bits of regulation not keeping up with the way the economy has been progressing. I think that is a classic example of why a regulatory reform bill needs to be undertaken on an annual basis. Technology moves very, very quickly. Mr Foss, who is sitting in front of me, has a new iPad, which is a wonderful piece of technology. I know he speaks very well of it and of some of the applications that exist. Three years ago such technology did not exist, and the ability to access certain documents as a shareholder would have been very difficult. I know that Mr Foss and other people around the country would very much welcome the ability to access shareholder voting and other documents electronically, rather than have to get weighty bits of paper in the post, which is estimated to cost in the order of millions of dollars. Those millions of dollars saved would be able to be reinvested in those things that matter, such as training, building people’s skills, helping innovation, and employing people in many other forms.

One of the other aspects that members from the Labour Opposition have touched on that I want to talk about is the issue of the removal of the regulatory impact statement from the bill. The regulatory impact statement is a classic example of regulatory reform in itself. Regulatory impact statements are publicly available to anyone who wants to find them. The issue is whether they have to be attached to every single bill every single time. If they were, then that would mean that every single bill would be longer and weightier. Not everybody wants to read the regulatory impact statements, but they are publicly available and they are easy to find for those people who are interested in them. Not every person is interested in reading those documents, but they are a useful document to read.

Those are examples of reduced costs and administration that occur from a need to have regulatory reform and an ongoing process that exists. I will talk a little bit more about some of the other detailed issues. We have heard previous speakers from my side of the House talking about some of the crazy regulations that have existed and that needed to be changed. Examples were given particularly around offensive products that in their mind might be seen as dangerous, such as Toilet Duck and Persil Surf. If they are the sorts of products that have the potential to be seen as dangerous and difficult, in reality all that was really needed was changes in terms of the rules and regulations around labelling. That made some sense. But to take it to the far extent that the previous Labour-led Government did seemed a little bit over the top and related to a whole lot of unnecessary costs being incurred, which did not make a lot of sense, at all.

The bill overall is about the impact of reducing red tape and costs to businesses, particularly those small to medium sized businesses out there. I look forward to these bills coming forward every year and to being able to stand up every year and say that last year we made a change to a regulation and that this is what happened to certain businesses. My family are involved in many small businesses, and every year they moan and groan about various bits of paper they have to fill in or bits of regulation they have to deal with. They are very unhappy about it and I get it in the ear every family birthday, wedding, Christmas, and every other occasion. Having 56 cousins, I get it quite a lot. The reality is that these sorts of changes every year will bring about additional positive changes to reduce the costs to Kiwi businesses so that there is more money to help employment and innovation in New Zealand. I commend the bill to the House.

TE URUROA FLAVELL (Māori Party—Waiariki): Tēnā koe, Mr Assistant Speaker. Kia ora tātou katoa e hoa mā kei roto i te Whare i tēnei ahiahi. The Māori Party entered into an arrangement with the governing party, as members are aware, basically to be at the decision-making table in order to do all we can to make a difference in the lives of tangata whenua of Aotearoa. As provided in the Treaty, tangata whenua should have an equitable say in the decisions that affect them. A key principle for us is the need to have in place robust and accountable work practices by local government and regional authorities when working with mana whenua. We want to ensure that local governments acknowledge the mana and authority of mana whenua, engage with Māori communities, build relationships, and advance Māori representation. In terms of the Regulatory Reform Bill, in the broadest sense we support the approach of redoing existing regulations to remove requirements that may be unnecessary, ineffective, or excessively costly for business.

The Regulatory Reform Bill in its most basic form is about amending 13 Acts, as other members of the House have spoken about this afternoon, basically to make small gains in order to improve the quality of the regulatory environment. As a principle, we welcome the context of reducing an overly heavy compliance burden upon businesses, though we want to ensure that the disaster of leaky homes is not repeated because of reduced regulations.

I say all of this from the particular perspective of Māori entrepreneurs. It is well known that if the Māori nation was assessed as a country, Aotearoa would rank as the seventh most entrepreneurial nation in the world. In fact, when looking at the group of Māori between 35 and 44 years of age, it could be said that one-third of an entire generation of Māori start their own business. For those in the senior stakes, apparently, Māori aged between 55 and 64 are some of the most entrepreneurial elders across the globe. The rate of early age entrepreneurship amongst this group is about double the average. But somehow between start-up and survival, something goes wrong. We call it the liability of newness, to describe the low chance of survival that so many Māori entrepreneurs experience. Businesses are said to have survived the liability of newness when they persist in owning and managing an established business for more than 3½ years. Although one in four Māori expects to launch a start-up venture in the next 3 years, only 6.5 percent of Māori entrepreneurs are in the category of owning and managing a company that has paid wages or salaries for more than 3½ years.

We come back to the Regulatory Reform Bill whilst thinking about the major issue for Māori businesses, which is the sink or swim survival strategy that comes with starting up a new business. The bill seeks to amend a range of small regulatory fixes, which will make life easier. It clarifies the Unit Trusts Act, for example, so that financial statements and accounts can be distributed electronically, it amends the Agricultural Compounds and Veterinary Medicines Act to remove the requirement for the details of product manufacturers to be included on the public register, and it will impact on the Companies Act 1993 to allow companies to choose whether to use electronic shareholder participation. A whole lot of other amendments are in a similar vein, but I will not touch on them too much, because some of them have been spoken about already. All of these things are hardly breaking news, but we hope the changes are not merely cosmetic but actually help to increase productivity for Māori businesses and allow them to focus on their business rather than on fussing over compliance costs. We will be supporting the bill at the first reading. Kia ora tātou.

STUART NASH (Labour): I stand in support of the Regulatory Reform Bill, as does everyone in the Labour team. As has been noted, this reform process was started by Lianne Dalziel. The process was well implemented and was taken over by Rodney Hide. The least that he or the Nats could do is to give credit where credit is due, as we always do.

The bill changes 13 Acts and makes doing business a little bit easier. It is one of the standard processes that go on. A lot of legislation goes through the House every year, and as the nature of things changes, so does the legislation need to change. It becomes slightly outdated. There is no point in repealing Acts and rewriting them a lot of the time, so the Regulatory Reform Bill is the sort of bill that comes in to amend them.

I will pick up on a couple of points made by a couple of the National speakers. Aaron Gilmore, who is a man who knows a lot about business, stood up here and said the bill is part of a package of Government economic reforms. I ask Mr Gilmore where National’s plan is for economic reform. I also ask whether the National Government is really working for all New Zealanders. Mr Gilmore stood up here, said this bill is about National’s economic reforms, and talked about how important it is. He then talked about the owner of a local video store. I pay no disrespect to the owner of Mr Gilmore’s local video store, but in fact many businesses of New Zealand are struggling at the moment. One has just to walk down the main street of Napier to see how many retailers are struggling, let alone manufacturers, etc. To put things into perspective, the Government and the country are facing much bigger, much graver, and much more serious issues than Mr Gilmore’s video store faces.

Mr Gilmore then went on to talk about Mr Foss’ iPod.

Hon Steve Chadwick: iPad.

STUART NASH: Sorry; it was an iPad. It is good that the chair of the Finance and Expenditure Committee has embraced technology and has an iPad, but I ask Mr Gilmore whether that is really part of the economic growth and reform that all New Zealanders are looking to the Government to deliver. It has been in office for 2 years now. In the first 12 months a Government can get away with saying it is just getting its policies in place and it needs to develop the right sorts of criteria, inform people, and consult them. A Government can get away with saying that for 12 months. But it has now been 2 years and we have not seen a plan from National. New Zealanders have not seen a plan.

I will tell members a story, and this is without a word of a lie. A chap came into my office yesterday and told me he is a sort of swinging voter. There are a lot of swinging voters out there. He is involved in business: he is a marine engineer. He lives in Napier, but he travels over to Perth to work. He earns very good money. He said Australian companies love him, because he pays Australian tax, and he brings his money back and spends it here. He is on a contract. He said he had been listening for 2 years and he had not heard National articulate a plan. I tell members that I sat there with a huge smile on my face, and I said he would not believe how many times I had heard that. We sit in this House as Labour MPs. There are people who watch the House on television. They comb the newspapers and look for policy statements. They are asking where Mr Key’s plan is for getting this country out of the economic doldrums and driving growth forward.

Unfortunately, Mr Key leaves that plan to Mr Power to develop, and Mr Power comes up and says the Government will sell State assets. I think those members call it the mixed-ownership model, which is a nice bit of spin. It is a good bit of messaging, but it cannot hide the fact that the only plan for economic growth that this Government has put forward in 2011 is to sell New Zealand’s public assets—to sell power companies. Then Government members stand up and say power prices for New Zealanders will not increase. Well, come on! I say they should stop being disingenuous. We know that under the free-market model, power prices will increase. We were told that the Bradford reforms would break up the power sector. We were told they would make it a lot more competitive, and power prices for New Zealanders would drop. That did not happen. We are a country of 4.5 million people. We have a huge, wide, long country, where the cost of infrastructure is so high that that did not happen.

Hon Dr Wayne Mapp: And what did you do about it for the last 10 years? Absolutely nothing.

STUART NASH: I know why Dr Mapp has decided to leave the National Government. He must have been getting a hell of a lot of gyp from his mates around the barbecue over summer, asking him what he was still doing there. That member is off to pursue other options, and I do not blame him. I do not blame him for doing that. He has a doctorate in law; he knows what is going on. That member does not want to sit on the backbenches—because that is where he would be—and say: “Oh goodness me! I have better things to do with my time than to go out to constituents and sell a policy of asset sales.”

But I am wrong: there was another policy, and that was to mine national parks. That was the policy of 2010. Let us forget about the tax cuts that gave people $1,000 a week if they were earning over $1 million a year. The mining of national parks—that was the economic development argument, and what happened? There were no fliers, no posters, and no radio announcements. Just through the power of the Internet, the march organisers got—what was it—about 40,000 people. Whatever the number was, Queen Street was filled from top to bottom with New Zealanders who were saying National could not mine national parks. They said that was not a plan for economic growth and economic development. I suspect what will happen this year is that New Zealanders will line Queen Street from the top to the bottom and say National cannot sell our State assets.

The Government can call it a mixed-ownership model or whatever it will, but it is selling public assets. That is not a plan, and that is not a Government that is working for all New Zealanders. It just simply is not. I look at what is happening in the Napier electorate. I am now seeing more and more people come through my electorate office who normally would not go near an MP’s office because they have no need to canvass an MP, but they are doing so at the moment because they are at their wit’s end. They cannot see the plan for economic growth. There are 7,000 people who are unemployed along the east coast of the North Island—7,000 people. There are 158,000 New Zealanders who are unemployed. Do members know what they are asking? They are asking where Mr Key’s plan is. Selling State assets is not a plan.

Amy Adams stood up and said this Government will create jobs and drive economic growth. Well, we all want to create jobs. Everyone wants there to be economic growth, but there is no plan for it. There is no plan for creating jobs and driving economic growth. I ask Ms Adams, the next time she stands up, to please tell us what the plan is for doing this. We can take Wairoa, for example. Wairoa is at the top of the Napier electorate. I was talking to a local principal. The school is 60 students down this year—60 students down—because people are leaving the region. This is the provinces. This is heartland New Zealand, and there is no plan in heartland New Zealand.

Do members know what the Government did? It took $71 million out of infrastructure in Hawke’s Bay and took it up to Auckland. On Sunday I went to look at the Matahōrua Gorge open day. The Matahōrua Gorge is an example of driving economic growth, because it is an investment in infrastructure. The Government should be doing that up and down the length of New Zealand. It is classis Keynesian economic theory, which is the sort of economic theory that most Governments around the world are following at the moment. We should invest in infrastructure; we should not spend $14 billion on tax cuts and then wait for economic growth.

We had the Minister of Finance come to the Finance and Expenditure Committee and say the tax cuts would not promote economic growth and stimulate the economy, because they were not supposed to do that. Well, my question to the Minister of Finance is, where is the plan? If the Government is to spend $14 billion, then at least it can ensure that some of that money will go towards creating economic growth—towards growing jobs and growing this economy—and driving our economy towards export-led recovery. That is not happening.

Mr Power is a very intelligent guy. I have a lot of respect for Simon Power. He is a hard-working Minister. That is why he was voted the top Minister on that side of the House. Mr Power must sit there sometimes, wring his hands, and think: “Goodness me, there is more to this.” Mr Power is the only one who has come up with a plan so far, but unfortunately it is to sell State assets.

I support this Regulatory Reform Bill, because it is important in the regulatory framework, but there needs to be a plan for economic growth.

A party vote was called for on the question, That the Regulatory Reform Bill be now read a first time.

Ayes 110

New Zealand National 57; New Zealand Labour 42; ACT New Zealand 5; Māori Party 4; Progressive 1; United Future 1.

Noes 9

Green Party 9.

Bill read a first time.

Bill referred to the Commerce Committee.

Bills

Legal Services Bill

Second Reading

Hon SIMON POWER (Minister of Justice): I move, That the Legal Services Bill be now read a second time. I thank the Justice and Electoral Committee for its careful consideration of this bill. Legal aid was first provided in New Zealand in 1912. It was based on the principles that legal assistance be provided to persons of insufficient means where that was desirable in the interests of justice. These principles remain features of this legislation, but the bill fundamentally reforms the legal aid system to ensure its viability for a second century of service. The reforms respond to Dame Margaret Bazley’s review of the legal aid system in 2009. This review found that the legal aid system is facing significant challenges, which, if not addressed, could result in service delivery failure and threaten the future viability of the system. These risks include the variable quality of legal aid services, inefficiencies created by overly prescriptive legislation, and service delivery issues.

The bill includes a number of measures to improve the efficiency and the effectiveness of the legal aid system. In particular, the bill transfers the administration of the system to the Ministry of Justice and establishes an independent statutory officer to administer those functions that require independence. Importantly, the bill also introduces a new quality-assurance framework to ensure that legal aid lawyers meet appropriate standards. I am pleased that the committee has agreed with the overall policy direction and intent of the bill.

The committee received 24 submissions from lawyers, community law centres, and the general public. The majority of submitters considered that there is a need for reform, and provided suggestions as to how that could best be achieved. A provision that received a number of submissions was the disestablishment of the Legal Services Agency and the transfer of its functions to the Ministry of Justice. This proposal will ensure that the legal aid system supports the effective operation of the courts and that legal services align with other Government initiatives that enhance access to justice.

The committee carefully examined this provision and considered that the Legal Services Commissioner provides the necessary level of independence for those functions that require separation from the Government. The commissioner will be responsible for making decisions on individual applications for grants, determining the level of repayments, assigning providers to clients, and managing cases assigned to salaried lawyers such as those in the public defence service. Other functions will be administered by the Secretary for Justice, who will assume overall responsibility for establishing legal services to assist those in need. The secretary may delegate other functions to the commissioner but will retain responsibility for them.

A key change in the bill is that prescription around some of the legal services has been removed. This will allow the Secretary for Justice the flexibility to modify schemes over time to ensure that the needs of legal aid clients are met in an efficient and effective manner without being restricted by outdated criteria. The committee recommended making it clear that the secretary may undertake or fund law-related education and research. Actually, this is an important aspect of any legal aid regime. I thank the community law centres for their helpful submissions, which drew attention to that matter. Community law centres provide a valuable service for New Zealanders and will continue to play a very important role in the new regime.

A key focus in the bill is on enhancing quality in the legal aid system. Frankly, this responds to concerns about the variable quality of legal aid services and the inability of the current system to address problems with lawyers who exhibit poor practices and are failing to perform. The bill introduces a robust approval process to ensure that all legal aid providers have the skills to do the job assigned to them, with appropriate sanctions where approved providers do not meet the required standards. The committee made a number of useful recommendations to enhance the operation of the new quality assurance regime, including the processes for approving, or declining, approval to provide legal aid services. The committee also provided helpful recommendations relating to clarifying the roles of the performance review committee and review authority. In addition, the committee recommended removing the time limits on applications for judicial review of a decision by the review authority, which will allow the court to consider applications for review on the basis of merit, without having regard to a time frame. These proposals will ensure that the review process is fair as well as being cost-effective.

A key proposal in the bill is that the Legal Aid Review Panel will be replaced by a new tribunal, supported by the tribunals unit in the Ministry of Justice. The committee also made suggestions that improve the processes for reconsidering and reviewing decisions of the Legal Services Commissioner. In particular, the committee considered that it was important for the chair of the new Legal Aid Tribunal to be able to accept a late application for a review of a decision by the new Legal Services Commissioner.

The Legal Services Bill demonstrates the Government’s commitment to improving the operation of the legal aid system and the quality of services provided. Ultimately, the bill, along with many operational changes under way, will establish a system that will deliver high-quality legal services to those who need them, and, importantly, to the taxpayers who pay for them. The bill will help restore confidence in the legal aid system.

In conclusion, I thank again the Justice and Electoral Committee for its careful consideration of the bill, and the public for their submissions. I thank the people and organisations who took time to submit on this important bill. The proposed amendments represent important improvements, which will enhance public, and provider, confidence in the new legal aid regime. They will ensure that access to justice is maintained. I am confident that the changes recommended by the committee will improve the operation of this legislation. I commend this bill to the House.

Hon DAVID PARKER (Labour): I agree with much of what the Minister said in his address on the Legal Services Bill. The Labour Opposition supports this bill. It is a timely overhaul of the way in which legal aid is provided, and it will have a particular impact in respect of criminal legal aid. The inquiry by Dame Margaret Bazley did find that there was some poor practice.

In the Justice and Electoral Committee we heard from retired High Court Justice Hansen, who used to be the executive judge for the South Island. He is very experienced and has been brought in by the Government to try to oversee improvements to some of the legal aid procedures in New Zealand. One of the things that he told us related to the preferred lawyer regime that we currently have. That means that it is the right of defendants to choose who should represent them, even if that representation is being paid for by the Crown. This bill changes that practice so that for lower-level offences—those in categories 1 and 2—defendants will be, effectively, allocated a lawyer in most cases. From memory, there is discretion for the judge on occasions to override that. Mr Quinn might be able to correct me on that point if I am wrong. But I think that was to be retained, because there are some occasions where an accused has a history. He or she might have mental illness problems. There can be problems known to a previous lawyer, and that knowledge can facilitate the conduct of the person’s defence and also facilitate the administration of justice generally. So there needs to be some flexibility around that issue.

None the less, we were convinced by what we heard from officials, submitters, and Justice Hansen that, by and large, the principle that one should allocate these cases to lawyers who are on the legal aid roster—rather than letting people choose their own lawyers—is a good thing. We heard about cases where the existing rules are, effectively, being abused by a small minority of lawyers who manage to line up for most of the cases, despite, according to Justice Hansen and some of the other people, actually sometimes being the least competent of counsel. Just because those lawyers are good at running the relationship with the accused person, that does not necessarily make them good lawyers, even though they are good at convincing their accused clients that they are the person for them. We were convinced at the select committee that making that change to the existing rules was necessary.

I must admit I was quite shocked to find out how much some people were being paid by the State for the provision of legal aid services in relatively minor cases. I think the amounts that were being earned were sometimes more than a quarter of a million dollars per practitioner. That is a lot of taxpayer money being spent on a relatively small number of people for the provision of legal aid services. It did seem that some of the practices that had been identified by Dame Margaret Bazley, and that had been referred to by the officials and by Justice Hansen, needed to have some response made. This bill seems to be an appropriate response to those practices.

One of the other areas that we heard was a problem was that if someone is alleged to be incompetent, then effectively a complaint can be made by, or to, the Legal Services Agency, but then it gets sent to the district law society. The society does not really have control of the funding functions at the legal aid end of the equation, so there has been a disconnection between the disciplinary processes and what should be funded through legal aid. Quite often there could be poor practice of the sort whereby the Crown, in paying the bill, would say that person should not be engaged again. But under the existing rules it was very, very difficult for the Crown to actually stop paying incompetent counsel.

The remedies that were left were effectively a sledgehammer, because the Crown would just about have to go to the Law Society and say the person ought to be struck off. That could have been too great a penalty for the behaviour that was being complained about, whereas it would have been perfectly appropriate for the legal aid people to say they did not want to engage that particular counsel again. Despite the common-sense nature of that proposition, which I think I have just put, the system did not allow that to happen. The new system will now allow for a better monitoring of complaints about quality. It will allow complaints to go to the controllers of funding through the legal aid system, rather than being treated as a disciplinary matter for the Law Society to attend to through its route.

I am sorry, but I should have mentioned earlier something else in terms of the preferred lawyer scheme. We heard from Family Court lawyers that it was important that continuity be maintained, particularly in respect of issues like counsel for the child. Where there are disputes that relate to children, it is desirable that the same counsel be appointed to represent their interests. At least at the moment it is provided for in the family law area that there is still choice on the part of the person who needs a lawyer as to whom that person appoints as the lawyer, even if the lawyer is being paid through legal aid. Legal aid is, at least theoretically, a loan rather than a grant, and it is meant to be repaid over time, although obviously people who are on the lowest income generally do not end up paying much back.

I also agree with the comments made by the Minister in respect of the clarification provided in the bill that legal education is something that can be funded through the new authority. Community law centres were concerned that that was not the case. I think that at the committee too, although we agreed with that, we also had a general view that it is important that legal aid services do not cross the line from education into political polemic. I have on occasions seen legal aid centres that were set up primarily to provide legal advice primarily to people who would not be able to access a lawyer for small legal problems. Sometimes centres tend to involve themselves in political causes rather than legal causes, and that is, I think, a line that should not be crossed. Hopefully, through this legislation we will enable the funders of community law centres to appropriately fund education as well as legal advice services, whilst not crossing the line into funding political campaigns. And by that I do not mean political party campaigns; I mean campaigns for change, which I do not think are generally within the centres’ primary purpose.

In relation to another minor change that was made, the Law Society was concerned that some of the language of the bill implied that some of the work now conducted by lawyers might be carried out by non-lawyers. That was ambiguous in the legislation, so we tidied that up. Because court administration and the rights of the accused and defendants are best protected by lawyers, we wanted to make it clear that we were not trying to remove the requirement that lawyers appear for the accused.

The Regulations Review Committee had concerns about some of the exemptions to the regulations that were able to be brought about by those who would be administering the scheme. We looked at those carefully, and on reflection we thought that the powers that were being conferred were appropriate.

We heard from Justice Hansen in respect of the preferred lawyer scheme. He actually thinks that we should have a roster for even more serious cases. He thinks that the case for defendants to have a choice of lawyer in respect of category 3 and 4 criminal offences is not strong, and I think we may have to revisit that issue in the future.

Another area that I think has yet to be tidied up concerns legal aid in criminal appeals. It used to be the case in New Zealand that the gatekeeper for criminal appeals was, effectively, the Court of Appeal. But a Privy Council case decided that that was inappropriate, and that the same judges who would be considering the merits of an appeal ought not to have a hand in the decision about whether the accused is granted legal aid for the appeal. I can understand the logic behind that, but in my view someone should be a gatekeeper, and at the moment we effectively have a position where the State takes an obligation upon itself to fund virtually every appeal on a criminal matter where someone wants to appeal, without regard to the merits of the appeal. Although I think it is very important for an accused person to have access to justice and have the ability to appoint a lawyer, I am not convinced that that means the Crown should always have to fund every criminal appeal, even if it is not meritorious. I think that if there is not some sort of scrutiny of the merits of appeals, more appeals can end up being funded through a criminal aid system than would happen if people did not have legal aid.

PAUL QUINN (National): I will take only a brief call in this second reading of the Legal Services Bill, given the fact that I think members on all sides of the House agree with this bill. As the Minister said in his address to the House, this bill really is about reframing the legal aid system—a system that this Government absolutely believes is essential to the exercise of a fair justice system within New Zealand society, but that is in need of reframing for the 21st century we are now in. So it is appropriate at the beginning of the century, as the Minister said, that we take stock and ensure that the issues that have arisen are addressed.

A number of amendments were proposed to the bill itself, coming back from the Justice and Electoral Committee, and I will not cover those now, as no doubt we will have plenty of time in the Committee stage to go through them. I just say that one of the issues that came up, and that I was pleased to hear about when we heard from Justice Hansen, concerned the practice that has let down the current system. It is the fact that—dare I say it—the lawyers who rely on the legal aid system currently for the basis, if you like, of their income, have got lazy, and there has been no process that has required them to undertake continual upskilling and education. As a consequence, that has led in some cases to a rorting of the system, and of course at the time that the report came out there was a lot of focus on the Manukau District Court.

There are a number of issues that this bill addresses, and that the new system will address, and I have alluded to just one. I also acknowledge the work of the Justice and Electoral Committee. It was undertaken in a very harmonious and cordial way—as of course it always is in that select committee—under the excellent chairmanship of its chairman, Mr Chester Borrows. There were equally excellent contributions from members on all sides of the committee. We were able, I guess, to be guided by the experience of Mr Parker, who in a very humble way informed us that he was one of the architects of the very first community law centre, which I think he established in Dunedin. So we had his expertise in that area, and exposure to that, as part of the process. With those few words, I tell the House that it gives me great pleasure to support this second reading.

JACINDA ARDERN (Labour): It is my pleasure to speak on the second reading of the Legal Services Bill. I begin by agreeing with the comment made by my colleague Paul Quinn about the way that the members of the Justice and Electoral Committee really worked together on this bill, as it does on most bills that come before it. I also express my sadness that I am no longer a member of that select committee. I really enjoyed the opportunity to be on a committee chaired by Chester Borrows, who always conducted himself with integrity, and I will miss his good grace. But I was a member of the committee when it considered the Legal Services Bill.

As has been pointed out, this bill probably would not exist in this form had Dame Margaret Bazley not completed a scathing report on the way that legal services were provided in New Zealand. I think it is important that as a Parliament we responded to that report with speed, because one of the important pillars of our justice system is that people continue to have confidence in it. In particular, when it comes to people accessing the justice system, which so often is eased by the availability of legal aid, it is important that people have confidence that they are getting a high-quality service, and that, at the same time, we are getting value for money for the taxpayer dollar.

I will touch on one particular point, first off. The committee heard very early on from the Legal Services Agency board that there were concerns amongst the legal fraternity in Manukau that the report had cast a dark shadow across all of the legal profession in that area. We need to keep in perspective that, of course, not every lawyer working in that area was rorting the system. However, Dame Margaret Bazley made the statement, and I am not sure it was backed up by evidence, that 80 percent of lawyers working in legal aid were gaming the system, and that approximately another 200, she believed, were rorting it—“gaming” being using procedural points within the court system to delay proceedings and therefore draw down further legal aid payments. Labour members called on the Minister of Justice to meet with the Bar in South Auckland in order to smooth the way forward, and, in particular, to ensure that when these changes are implemented it is done smoothly, and we do not allow a perception that all lawyers working in the legal aid system are rorting it, because that certainly is not the case.

I will touch on a couple of things that my colleague David Parker has already talked about. We are pleased to see the extension of the Public Defence Service; that was something Labour raised in 1999. Via a pilot scheme, we found we could save up to a million dollars by having salaried lawyers available as public defenders, and we could also have standardisation of high-quality defence. I am pleased that that will be rolled out in other centres. I would not mind, though, if the Government could explain something. Dame Margaret Bazley made suggestions about where the scheme should be rolled out. The Government has responded by rolling it out in only Hamilton, Wellington, and Christchurch. I believe Palmerston North has been left off the list, and I would be interested to know why that is the case.

I am also pleased that the Government and the select committee were able to work through some of the very important issues raised by the community law centres; I will come back to that. Also, I will very quickly make the point that it was frequently raised with us that when we bring in an agency that previously sat independently of the Ministry of Justice, we should ensure that the lines of reporting are transparent and have enough separation from the Secretary for Justice and the Government to allow the public to have confidence that there is good separation of powers. I think we managed to ensure that, in the end.

There is one area where I continue to have a couple of concerns. The Legal Aid Review Panel is disbanded under this bill, and the legal aid review function will be carried out by the Legal Aid Tribunal. The board that existed specifically to give the community law centres access to the Minister of Justice has also been disbanded. There was concern amongst the community law centres about their lines of communication with the Minister of Justice. We reached a middle ground, I guess. We assumed that the requirements in this bill of the Minister of Justice essentially capture a requirement to continue to liaise and communicate frequently with the community law centres. But that is not explicit in the legislation. Although we might be confident that the current Minister, Simon Power, would conduct himself in that way, because he has continually expressed his support for the centres and has demonstrated it in times of funding shortages, that conduct cannot be guaranteed when we move through Ministers of Justice. I am still of two minds about whether we have written in enough protections for the community law centres, but at this stage I am willing to proceed. There are protections in this bill; whether they go far enough will be tested. That is something I would encourage the community law centres to continue to monitor, and I encourage them to come back to Parliament if they find that that relationship is inadequate.

We have heard David Parker talk about the select committee’s discussion of the preferred lawyer issue, and I would like to put it on record again. On the face of it, removing the ability for defendants to choose who should represent them in low-level criminal cases—and I want to make that distinction; it is only in low-level criminal cases—may seem a backwards step. But it was very interesting for the select committee to hear evidence that demonstrated to us that a person having a preferred lawyer does not necessarily mean that he or she has the best lawyer available. In fact, Dame Margaret Bazley’s report demonstrated that backhanded payments were going out for referrals to particular legal aid lawyers. Often there was a cycle of those who were most frequently used becoming the preferred lawyer by default, when, in fact, they may not have been any more competent than another lawyer who was used far less often.

Also, we were satisfied that there was discretion built into the legislation, as David Parker said, to allow for continuity of lawyers in cases that involve domestic violence or children, where continuity is important, and also in cases where it may be important to make sure that defendants who have a language barrier, for instance, are appropriately paired with lawyers who can communicate with them. We felt there was enough discretion in the bill to make sure that that could still occur, and we were satisfied by that. That, coupled with the fact that there was a threshold, which meant we were talking about not serious criminal cases but lower-level cases, meant we were satisfied that removing the preferred lawyer at that level was an appropriate measure.

I will spend my final few moments reflecting on the concern brought before us by the community law centres in relation to legal education. It struck me by the end of our hearings that perhaps there was a misconception about the level of change between the current Legal Services Act and this bill. The definition of “legal services” in the Legal Services Act includes provision of legal education. This bill does that, as well, but it is slightly separated out. So I will point out, for the record, that the definition of “community legal services” in clause 4 of Part 1 states: “ ‘community legal services’ means any 1 or more of the following services that a community law centre provides … : (a) legal services: (b) law reform and advocacy work”. The clause further on defines what legal services can include. The definition of “legal services” states that “in relation to legal aid, [it] means legal advice and representation”, etc., then states in paragraph (b): “legal advice and … the provision of legal information and law-related education”. So although it is perhaps not as succinct as the current Act, there is still a connection in the definitions.

To make it even clearer, the select committee, which did hear the concerns of the community law centres, added under the functions of the Secretary for Justice in clause 68 a specific measure, paragraph (fa), which states that one of the secretary’s functions is to “undertake or fund law-related research and education;”, as well. So not only does it sit under the definition of services provided by the community law centres but we have made it a specific task of the secretary, as well.

Dr KENNEDY GRAHAM (Green): Let me begin by reiterating, not for the first time, an appreciation of the manner in which the Justice and Electoral Committee operates under the benign and competent chairmanship of Chester Borrows. We tend to repeat this every time, and I just wonder whether Mr Borrows is starting to feel certain ennui in terms of the accolades that are being given to him every time; perhaps we can relieve him of this in the future and regard it as read each time. But I do not intend in any way to diminish the sincerity with which I say that. It is a good committee; it cooperates very well indeed. That said, I would not wish the House to wax under the misapprehension that Mr Quinn offered—that all was total harmony and sweetness and light on the Legal Services Bill. The Green Party does remain opposed to it. Although, for reasons that I will explain later, I do take personal responsibility for part of that misapprehension arising.

Let us recall, for the moment, the basic aim of the bill is to reform the legal aid system by replacing the Legal Services Act 2000, and that aim and method is based on the Bazley report, which, of course, was delivered not just by one person but by a group of people. The report recommended a variety of reforms, which can be boiled down to four principal reforms. The first is to disestablish the Legal Services Agency, transfer the administration thereof into the Ministry of Justice, and create a separate independent statutory officer. Secondly, it recommended replacing the Legal Aid Review Panel with the Legal Aid Tribunal. Thirdly, it recommended increasing the quality assurance, performance management, and application processes for the greater efficiency of justice. Its fourth and final recommendation was to clarify that legal aid can be obtained for Waitangi Tribunal proceedings.

The Greens certainly have no difficulty with the fourth point; we are in favour of that. But we did have difficulty with the other three reforms, such as the transformation of the Legal Services Agency, to be folded into the Ministry of Justice. We prefer that it remain at arm’s length from the Government to avoid any potential conflict of interest. Jacinda Ardern spoke about a certain confidence level from the public being required for that, without really offering views as to how that could be obtained. For our part, we are a little less convinced that that would be obtained automatically. So we are not convinced on the merits of that. The second reform of replacing the panel with a tribunal that would be chaired by a non-lawyer is one that we remain opposed to, notwithstanding the committee’s deliberations. We think that casts an aspersion on the legal profession that is unwarranted. The third reform deals with the zeal for administrative savings, and greater efficiency and value for public funds is a principle. But if it tarnishes the equal or greater principle of natural justice, then we have to pause. We are fearful that natural justice is being tarnished. So with due regard to the constructive discussions within the committee itself, we are not persuaded that our basic concerns have been met, and we are not alone.

I will quote simply one submission from a well-recognised legal authority in New Zealand, Tony Ellis: “The Bazley report upon which the Bill is premised is not the silver bullet many believe it to be. The report contained many unsubstantiated and unnecessary attacks on lawyers particularly on those from Manukau and Palmerston North, which were unsupported by any meaningful evidence. This exposes the legislation to what in reality is happening. There is no real effort to attack the problems within the system, just a smoke screen brought about by a desire to save money triggered by a public denunciation of lawyers’ incompetence by the Bazley report.” I know these matters are complicated, and I know there are problems within the legal aid system. But let us not engage in the misapprehension that this bill, which will no doubt become law, is the silver bullet to all of that, or that opposition to it is misguided, because it is shared by learned, legal authorities. It is not for the first time, I think, that legislation being pushed through the House by the Government, with great respect to the Minister and the chairman, is not necessarily perfect. So for our part, we feel constrained to continue to oppose it.

That said, I will say a word on the procedure with a note of personal apology. We in the Green Party had offered opposition, as I have described, and I did my best in the committee to explore those issues. It so happened that at the end of last year, at the beginning of December, on personal family reasons I was called away from the House and from Wellington. I missed to the day the draft report coming out on 2 December and the committee discussion on 9 December—the 10-day period I was away covered those dates. As a small party we were unable to have someone present at the time. I take the responsibility upon myself that I should have got word through that we continued to oppose it, which would have meant that the select committee report would have read “by majority”. But I was so preoccupied that I did not do that. I apologise to the House. I would just like it understood that the Greens continue to oppose this bill in the second reading. We look forward to further discussion, perhaps in the Committee of the whole House and in the third reading, but it would take something for us to alter our minds at this stage.

TE URUROA FLAVELL (Māori Party—Waiariki): Kia ora anō tātou katoa. In talking to the Legal Services Bill, I say that the Māori Party is pretty proud of our stand in placing the constitution firmly in front of our coalition arrangement with the National Party, and hopefully standing strong in our determination to support human rights of all people by ensuring their access to justice. The call for justice, after all, was what motivated our work to reverse the previous Government’s decision not to sign up to the United Nations Declaration on the Rights of Indigenous Peoples. Access to justice, specifically through restoring access to the courts, has been pretty pivotal in our role with the Marine and Coastal Area (Takutai Moana) Bill that will be heading to the House in the next week or so.

We come to the Legal Services Bill with a view to understanding how this bill, in replacing the current Legal Services Act 2000, will improve the situation for all New Zealanders. There is no denying that reform needed to happen. Dame Margaret Bazley, as others have mentioned tonight, left no room for doubt when her review highlighted a range of deficiencies within the legal aid system. These included the variable quality of legal aid services, as well as some serious service delivery issues.

A key recommendation from the Bazley report was that “stronger coordination between community law centres and central government” is needed to ensure community law centres are able to help the greatest number of people for the funding that is available. We have taken a particular interest in the potential of this bill to ensure much-needed services for Māori can continue to be delivered. As Dame Margaret said, “if the legal aid system fails Māori, it fails altogether.”

As electorate MPs each of us will have had experiences of clients who have alleged that their lawyers are incompetent or corrupt. We have heard too many stories of legal aid lawyers dragging the legal process on for long periods of time, indefinitely, to get repeated chances at fees. It is what Dame Margaret reported as milking the system. There are plenty of other stories of legal aid lawyers who have recommended guilty pleas rather than actively taking up the interests and rights of many of their Māori clients.

Of course, the stories of delays and deferrals are fairly legendary. We all remember the situation of 18 defendants caught in the spotlight of 15 October raids on Ruātoki. Their applications for legal aid were lodged more than 4 months before they began to be processed by the Legal Services Agency. I remember that at the time, the day that Dame Margaret Bazley’s recommendations were released, Annette Sykes shared her view on Te Karere that she approved of the changes to invest in the competency of legal aid lawyers. It was her view that too many Māori were frustrated by the poor quality of the work undertaken by those lawyers.

Dame Margaret Bazley’s report revealed that there was a small but significant group of lawyers who were abusing the system. We welcome the move in the Legal Services Bill, to the effect that lawyers will now have to sit competency tests before going on the legal aid roster. But we also hope that the brush is applied more widely, not just targeted at a particular court or a particular region, as was discussed by the member for the Green Party.

Our key focus in looking at this bill is to assess exactly how it will support the specific needs of Māori. These are all-important steps, and we hope that along the way the Minister will see fit to reinstate funding for the Māori Legal Service. We have a particular interest in the Māori Legal Service and believe that it would be an improvement to have Māori legal services under the scrutiny of Parliament. We want to see that legal aid will address the needs of peoples with insufficient means in Aotearoa.

I want to raise a particular matter around the intention of the bill, which is to clarify that legal aid is available for Waitangi Tribunal proceedings, but not negotiations with the Crown to achieve the settlement of a claim. I recall that at the end of 2009 the late Sir Atawhai Taiaroa, Sir Taihākūrei Eddie Durie, Matānuku Māhuika, and other representatives met with the Minister of Justice, Simon Power, to express concerns about the number of lawyers appearing before the Waitangi Tribunal, and the consequential loss of tribal control over their claims. It was proposed that a small group should meet with the Legal Services Agency and the Waitangi Tribunal to search for alternative proposals that would retain the benefit of legal aid but place controls on the number of lawyers, and the consequential expenditure for that.

The Ngāi Tahu Māori Law Centre brought a particular insight to the issue. It is a community law centre based in Dunedin that specialises in Māori land law. It was its view that “Moving the funding of negotiations between claimants and the Crown from the Legal Aid system to be funded solely by the Office of Treaty Settlements leaves open the potential for the funding of negotiations to be unduly influenced by those who negotiate with claimants on behalf of the Crown.” I will be interested to hear from the Minister about how the views of Māori leaders and the submission from Ngāi Tahu have been taken into account in the bill as it emerges from the select committee process. We will be interested to know what the nature of the tests will be that are put in place for Māori to apply for such funding.

I am aware that the challenge was issued by Dame Margaret Bazley that there be incentives in place to support the specific needs of Māori. Some of the comments from Annette Sykes give me reason to believe that the changes around the competency of lawyers will be positive. But there are some real concerns also around the removal of the public advisory committee, which is something that both the Ngāi Tahu Māori Law Centre and the Coalition of Community Law Centres of Aotearoa both spoke against. We want to see community input and consultation retained in the administration of legal aid, and we want to know how the Legal Services Commissioner and the new quality assurance framework will take this into account.

Let us be clear: our preference would have been to retain the Public Advisory Committee to ensure the involvement of the community. We do support disestablishing the Legal Services Agency and shifting responsibility to the Secretary for Justice, and we also support the approach of all legal aid lawyers having to demonstrate competency. But we remain concerned about the removal of a specific community input, and our vote at the final reading will be determined by discussions that we have over the successive stages to assess whether Dame Margaret’s warning has been addressed. As I said, the warning was that if the legal aid system fails Māori, the system will fail altogether. I will leave that for the consideration of the House. The Māori Party will be supporting this bill at its second reading.

SIMON BRIDGES (National—Tauranga): The Legal Services Bill reforms the legal aid system. I say from the outset that I certainly believe that because the State is bringing charges in criminal cases, there absolutely should be legal aid for those people who cannot afford representation. A slightly different situation pertains to family law cases, where the State may not be bringing charges. There may be some slightly different considerations in those cases, but, basically, and certainly in respect of the criminal courts, I feel very strongly that legal aid is a fundamental part of our system, because without it people who do not have the means to pay for representation do not get fair trials.

It is worth saying that there are caveats around that statement. It should not be legal aid at any cost and without any reference to the kind of quality and perhaps the assurances that should be in place with regard to the counsel providing the legal aid. I say that legal aid should not be at any cost, because some lawyers will say that, actually, legal aid or court cases should be at any cost and that cost is an irrelevant factor. I do not think that as politicians in this Parliament we should say that.

The fact of the matter is that we absolutely need justice in this country and we need fair trials. Justice, and the justice system, lines up against hip ops—and I do not mean the kinds of hip hops Carmel Sepuloni would necessarily talk about; I mean hip operations—education, and our schools. Trials and trial rights are lined up with those things in the system, because there is not a bottomless pit of money. Carmel Sepuloni may think there is, but we do not think so. We have to be careful with our money.

We in the Justice and Electoral Committee heard about lawyers and counsel at category 1 and 2 level—that is low-level criminal law and criminal cases—earning several hundreds of thousands of dollars by churning through cases. Those lawyers were not doing the hard stuff. Most reasonable New Zealanders would say—and Dame Margaret Bazley essentially said so in her report—that that is not on. We accept that anyone who works hard on a per hour basis can get to a position where they earn good money, but when the rate is $400,000, $500,000, or even $600,000 to do low-level criminal cases, something seems strange. Indeed, some of the calculations we talked about in our select committee made it quite clear that the lawyers were putting through what seemed like strangely large numbers of people.

We are changing things in that regard. We are not allowing costs to spiral out of control, because, as I say, we also have to make sure we have good hospitals, strong schools, and other social goods in our society.

When looking at this issue, the other thing I will say is that it is very, very important that if the State is paying for counsel—and as I have said right from the start, it must pay when people cannot afford good counsel in court—then the counsel should actually be good. The quality of legal advice and the quality of counsel someone is getting matter, because counsel are getting very good money. Off the top of my head, I think legal aid rates are around $160 per hour.

Chester Borrows: For who?

SIMON BRIDGES: Those are the rates for senior counsel, are they not—about $160 or $165 an hour?

Chester Borrows: Yes, $160 for junior counsel.

SIMON BRIDGES: Well, I would have been senior counsel when I was doing it, but that is by the by. We want to get away from that car-boot lawyer situation. Some ethics issues are involved, so we are putting in some assurances that there will be more competency tests for counsel, which has to be a very good thing indeed.

Finally, I will say a word or two about preferred counsel. We had some discussions about this issue—and I had some concerns at the start—but I think in the end we in the select committee came up with a very good solution whereby there is not preferred counsel for the low-level cases, yet there will be for the higher-level cases. I could say a lot more about that issue, but I think we have struck a good balance—one that meets all the requirements I have already talked about.

Ultimately, we will have a system that hopefully will be less about, and less for, the lawyers, and more about the accused who are up on charges and about the victims in the community. The system is not about people earning money from the system but about those who do not want to be in the system but are. We are reforming legal aid, which is a crucial part of the justice system, in a number of good ways in the bill.

LYNNE PILLAY (Labour): I stand, along with my colleagues, to speak in support of the Legal Services Bill. As I heard Jacinda Ardern say before me, I too am very sad to not be a member of the Justice and Electoral Committee, which is chaired by the amazing Chester Borrows over there, who is smiling proudly. It has been a hard-working committee and although we did not agree on everything—certainly in the case of the Legal Services Bill—we worked very constructively and the work of the committee has seen an improved bill come to the House today. It goes without saying that we should also acknowledge the fantastic select committee staff, who really gave, as always, very, very good support to us during the process, and we should also acknowledge the submitters, because a number of really relevant points were made during the select committee process. I will talk a little bit later about some of the changes made. But, all in all, it was a good process and I feel, along with my colleagues and, indeed, National members, that this bill is improved, that it is necessary, and that it is a very good thing when we talk about access to justice.

The purpose of the bill is to promote that access through a system that provides legal services to people of insufficient means and delivers those services in the most effective and efficient manner. I certainly hope that no one in this House would dispute that, irrespective of people’s means or circumstances, it is their fundamental right to have a fair hearing and to feel confident that justice is seen to be served.

Hon Steve Chadwick: Hear, hear!

LYNNE PILLAY: Thank you very much, I say to the junior whip. This bill overhauls the legal services system and is the result of a review that was carried out and found some failings. A number of Government members have spoken quite staunchly about some of the rorts that were going on in the system, and, indeed, that is not something that anyone in the House wants to see in any system.

But I will not talk about the rorts. Government members, who like to focus on the negative, have done that quite well. I would like to focus on all the good work that lawyers working within the legal aid system do. Although for some the reason for the choice may have been the ability to earn a tremendous amount of money, many others could be working in other areas of law and making, frankly, a lot more money, but choose to do this from a very principled position. So I want to stand in this House to acknowledge the contribution and commitment of those lawyers.

We do believe that the reforms are positive, especially the emphasis on the public defender system and community law centres. We are very pleased that there will be a focus on delivering good quality. I will give a little background on the public defence system. It was launched by our leader, Phil Goff, who was the Minister of Justice at the time, in the Manukau courts in 2004. It was part of the Labour manifesto in 1999, so it was something that Labour members saw as very dear, and we are very proud that that service was launched in 2004. Since then there have been two independent valuations of that service, and both found that it offered tremendous savings in lawyers’ costs when compared with the equivalent service from private providers—in fact, the saving was almost a million dollars over the period of the pilot. Those savings were achieved with no change of outcome for the client as measured by the conviction rate; they are, rather, delivering consistency. Most people in this House would acknowledge that employing lawyers as public defenders delivers consistency, accountability, and a high level of skill. So, as I said before, we are very pleased.

I will also take this time to acknowledge all the work that community law centres do. That is why, when people bang on about the greed associated with legal aid, I find it a little offensive, when one looks at the complete opposite.

Hon Steve Chadwick: Hard work.

LYNNE PILLAY: It is hard work. Community law centres are funded by the system, and the lawyers working in them are working for a very, very low salary, but their commitment is second to none. I know that my colleague Carmel Sepuloni, who, along with me, has had quite a bit to do with our community law centre in Waitakere, and I are really impressed—through referring clients, of course, not at first hand—with the standard, and many colleagues have said the same about community law centres in their areas. Let us just acknowledge the work that community law centres do.

One point, when we look at some of the changes canvassed, was that community law centres were concerned that there were no statutory consultation requirements within the bill. As a committee we spent quite some time discussing this, but were advised that there was no provision for the equivalent of the public advisory committee, so we did not propose an inclusion of such a committee. Although we know that consultation is very important, we noted that it has always been a very good administrative practice and we did not see that changing. But it was something that we drew attention to in our report.

There was also considerable debate around the preferred lawyer issue. A few submissions—not a great number—argued that for low levels of crime, in order to have access to justice the accused should always have the right to pick their preferred lawyer. We gave that careful consideration but did not recommend changes. For people accused of more serious crimes, of course that should be the case, but for people accused of crimes at a lower level, the committee unanimously felt confident that a good level of service would be delivered. But it certainly was considered.

As I said before, these are improvements to the provision of legal services in this country and it is very good to have a meeting of minds on those issues. It is certainly very good to have a report that comes back to the House on which all members agree. We can compare it—which is what I think is so strange—with that ridiculous “three strikes” legislation, which does nothing for justice in this country but is actually a justice cost. It is really quite ridiculous that Parliament’s time has been wasted and that taxpayers’ money has been wasted on ridiculous legislation like that, which does nothing to address crime in New Zealand. Rather, it is a deal with the ACT Party to make its members feel in some way relevant to this Parliament. I think it is a pretty sad day when legislation is passed for that reason.

Having said that, this bill is good. It will improve legal services and that is a good thing. We certainly see the public sector being decimated by cuts, but at least this is something positive that is happening for the delivery of justice. Thank you very much.

KANWALJIT SINGH BAKSHI (National): It is my privilege to speak in the second reading of the Legal Services Bill. The National Government intends to make sure that all New Zealanders have access to a high-quality legal system. The Government also wants to ensure that taxpayers’ money is well spent. The review undertaken by Dame Margaret Bazley in 2009 identified many challenges faced by our legal aid system, and also inadequate processes to ensure quality. Dame Margaret’s report identified failings that posed a serious risk to the future of our legal aid system, including the variable quality of legal aid services, inefficiencies created by prospective legislation, and serious service delivery issues.

The clear message was that it was time for fundamental changes. The trouble these days is that offenders know their rights better than their mistakes. The Justice and Electoral Committee recommended many changes to be considered, after considering submissions. One of the changes recommended by the committee that I think is very important is that the secretary is required to cancel the approval of a provider who has been convicted of an offence punishable by imprisonment. This would not only align the provision with provisions in the Lawyers and Conveyancers Act 2006, but would also ensure that providers are held to appropriate professional standards and would protect the reputation of the profession.

Another important change was the recommendation to amend clause 77 by inserting new subclause 3A, which would require the Secretary for Justice to provide a reason for declining or giving approval for a provider to provide legal aid or specified legal service. That will make the secretary accountable for his or her decisions. The legislation also creates a system in which taxpayers can have confidence, and will also provide high-quality legal service by capable professionals.

The legal aid service is vital to our most vulnerable citizens. The changes made will make the users as well as the providers proud. To date, the legal aid system is facing real challenges, both in terms of increasing expenditure, and the quality of legal services funded through legal aid. Last year there were 85,156 legal aid grants, costing taxpayers $131 million. The legal services bill shows that the Hon Simon Power, the Minister of Justice, has acted speedily to address the issues identified in Dame Margaret’s report.

I also acknowledge the hard work of the Justice and Electoral Committee under the chairmanship of Chester Borrows, which made those recommendations to be considered, as well as the staff. We are confident that this package of changes will help build more public confidence that the legal aid system will provide quality services for those who need it, while giving taxpayers value for money. I support this bill at its second reading.

CARMEL SEPULONI (Labour): It is always nice to stand and speak on a bill that we agree on in the House. It is my preference to speak on bills that we agree on. I thank Mr Bakshi for his contribution and also my colleagues who have contributed to this bill. I am new to the Justice and Electoral Committee, so I have taken advice from my colleagues who have been members of it. I will speak on some of the issues they have raised. I listened intently to Simon Bridges’ contribution earlier, as I always listen intently to whatever Simon Bridges has to say. I noticed that he mentioned the hip-hop tour that happened under the previous Labour Government. I really do not know what that has to do with anything. I point out the fact that, yes, the hip-hop tour occurred under a Labour Government and, yes, we support every form of performing arts and every form of the arts.

I also point out that the Prime Minister took a hip-hop group on a tour of the Pacific. So I thought that I would coin a new term—because there is a certain word starting with “h” that we cannot use—called “hiphopcrisy”. Perhaps that was what Simon Bridges was demonstrating earlier with his comments. I still do not understand how he was relating that to the bill, but that is OK—I will continue on.

This bill overhauls the legal services system. It is the legislative result of Dame Margaret Bazley’s review of legal aid, which was completed last year. The report found serious failings in the delivery of publicly funded legal services. This bill will replace the Legal Services Act 2000. As I said, Labour supports this bill. Labour believes the reforms are positive, especially the emphasis on the public defender system and the community law centres. We are very pleased that there will be a focus on quality assurance. However, we are concerned that the “three strikes” policy will place further pressure on publicly funded legal services and will negate some of the good work that has been done.

Dame Margaret Bazley’s report uncovered some serious problems with how New Zealand’s legal aid system operates. We agree on all sides of the House that that is the case. As a result, this bill is necessary to restore taxpayer confidence in legal aid, which is an indispensible part of our justice system. We are very pleased that the Public Defence Service will be expanded—a system launched by a former Minister of Justice, Phil Goff, in 2004. The Public Defence Service is a good way to meet the rising costs of fees charged by barristers and solicitors in private practice. It creates a system of salaried public defenders and it will standardise a high quality of defence. It is a good alternative to legal aid.

We are pleased that the Government is placing greater emphasis on community law centres, as my colleague Lynne Pillay spoke about earlier, and that the Secretary for Justice will have the flexibility to utilise different means of delivering legal services. Unfortunately, though, we fear that those vital reforms will be undermined by the Government’s ridiculous “three strikes” policy. As I mentioned earlier, the reforms in this bill aim to curb the out-of-control costs of legal aid—criminal legal aid, in particular—yet the “three strikes” policy will incentivise not-guilty pleas. That will prolong the length of trials and place extra cost pressure on the justice system.

Hon Dr Wayne Mapp: Stop reading your research notes.

CARMEL SEPULONI: That is what we are concerned about, I say to Mr Mapp. I do not know what he is mumbling about, but I am sure that it is not important, at all.

Lianne Dalziel has previously expressed concern that many allegations in Dame Margaret’s report were unsubstantiated, and she called on Simon Power to meet with members of the Manukau Bar who claim their reputations have been unfairly hurt by the report. We have some concerns about legal aid and employment disputes. The current system disadvantages union members, because they pay $300 to $500 per year for their membership, which includes an insurance fee to cover the cost of representation for personal grievance claims. However, non-union members have to contribute only $50, placing them at an advantage. Some of the changes that I think are important to mention are that the administration of legal services is overhauled, as suggested by Dame Margaret’s report; the bill transfers the administration of publicly funded legal services from the Legal Services Agency to the Ministry of Justice; the position of Legal Services Commissioner is created; the Legal Aid Review Panel will be disbanded, and the legal aid review function will now be carried out by—

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

CHESTER BORROWS (National—Whanganui): One of the saddest things when debating any legal aid legislation is an automatic assumption that when we are dealing with legal aid we are talking about those who defend the despicable, the guilty, and the least worthy of our society. The problem is that we tend to try to fix the symptoms of the situation, which has led us down this path. What bothers me about the Bazley report is that it does not address the underlying cause of problems within the legal aid system, which is the inequality of arms.

Earlier we heard a speaker from the Māori Party talk about how this bill may affect Māori, who are vastly overrepresented within the criminal justice system. Of course, that speaker is correct. Māori who appear before the court are largely unable to afford their own representation.

The criminal justice system—quite wrongly, in my view—appears to apply legal representation completely back to front. The more serious the category of crime before the court, the more money the Crown is prepared to throw at it. On one side, that approach appears to be just, because the penalties are more severe, so the consequences of injustice are greater. However, the low-level offending that appears within our summary jurisdiction is the gateway offending that leads on to further offending. The more a young person, for instance, appears in summary matters before the court for low-level offending, the greater the risk is that they will come back. Whom do we see applied to defend low-level offenders appearing before the criminal justice system? Invariably they are staff solicitors from big firms with little practice, little supervision, and the least ability to apply themselves in the defence of those people appearing before the court. That is wrong.

We never seem to apply our minds, either, to comparative legislation, or to legislation that deals with Crown solicitors. For instance, a Crown solicitor appearing before the District Court on a summary matter that is going on to a depositions hearing is allowed to have 15 hours’ work to prepare for that depositions hearing. A legal aid lawyer appearing on the same matter would get 3 hours. One has to ask why that is. A Crown solicitor can apply 8,500 sworn police staff to do the inquiry legwork in the investigation of a case, or to cover up the holes that he or she has found during the course of the examination of a case that he or she is about to put before a court. If defence counsel on legal aid want to make similar inquiries because of the holes that they have found, they are not allowed to go and do them themselves, because it creates a conflict when they want to lead that evidence in court. So they have to apply to the Legal Services Agency, as it is now—under this legislation, through the legal aid system, through the Ministry of Justice—for a private investigator to go out, ask those questions, and take those statements. That huge inequality of arms has never been addressed.

Examining the Bazley report and this legislation leads us to the reason legal aid lawyers have, in the words of Margaret Bazley, rorted the system, or milked the system. They are trying to apply themselves to a case using the funding that they are able to get for it. They have to in some way balance the books or their budgeted time allocation, which they have to make to keep their job, and they cannot do it by charging legal aid. So we end up in a situation, as Mr Bridges indicated earlier on, where a Crown solicitor is appearing at an immediate rate of pay of maybe $150 an hour, while in the same case a legal aid lawyer is getting somewhere between $95 and $110—at least, they were a few years ago when I was in exactly that situation. I think that situation should be a real concern for all of us.

At the moment all this bill addresses is the expediency with which a matter can travel through the court system, and the cost to the taxpayer. They are due considerations that must be given, but at the same time I am mindful of the inequities that they can lead to. I think we need to at some stage in the future address those inequities.

The issue about preferred providers has been raised. That is, the ability of someone appearing in a court case to choose their legal aid - appointed lawyer. It was interesting to note that the Law Society and the Criminal Bar Association did not come out with a position either way on the issue. That is because their own Bar is divided. There are people in receipt of legal aid cases who are making a lot of money and getting a lot of referrals, and it appears on the face of it that there is no justification for that. Currently a matter is traversing through the court system where someone is seeking a judicial review, but we will not comment on that particular case. Yet it is not unheard of for some people to get 500 cases assigned to them by a preferred provider in the court in South Auckland. It is very difficult to understand, then, how someone in the Public Defence Service who is also able under the same situation to be nominated as a preferred provider gets only about 50—that is quite a popular lawyer. So there is a real inequity.

The criminal Bar in South Auckland was, I think, quite justifiably aghast at the way the Bazley report talked as though the majority of lawyers appearing as defence counsel and in receipt of legal aid assignments were rorting the system or milking the system. The Bar was very disappointed that there was no appreciation, at all, of the situation that its members find themselves in, in respect of their inequality of arms, as I have covered.

I finish by saying that this legislation, which principally folds the Legal Services Agency into the Ministry of Justice in order to gain efficiencies, is good. The thrust of moving cases more quickly through the court system is also good. Maintaining a rotation service for category 1 and 2 cases before the court will work well for both sides. It will encourage more experienced and more senior counsel to be assigned lower-level cases and thus appear before the courts with their very new and still wet behind the ears colleagues. That will give the new colleagues the ability to learn from the more experienced practitioners appearing before the court, and it will give the more experienced members of the Bar an ability to gauge just where the inadequacies are within the current system. I hope that over time we will see an enhanced Legal Services Agency, enhanced legal aid providers, and a more equitable system that serves all people appearing before the court justly and humanely, and in a way that they would expect to be treated in a modern and democratic society. Thank you.

Bill read a second time.

CATHERINE DELAHUNTY (Green): I raise a point of order, Mr Speaker. Can I change my vote on the previous bill, please?

The ASSISTANT SPEAKER (Hon Rick Barker): There was no vote. We had a vote, but no division was called for.

CATHERINE DELAHUNTY: Can I call for a division?

The ASSISTANT SPEAKER (Hon Rick Barker): You are seeking leave for there to be a party vote?

CATHERINE DELAHUNTY: Yes.

The ASSISTANT SPEAKER (Hon Rick Barker): Leave is sought for there to be a party vote on the Legal Services Bill. Is there any objection? There is objection.

Bills

Road User Charges Bill

First Reading

Hon STEVEN JOYCE (Minister of Transport): I move, That the Road User Charges Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Transport and Industrial Relations Committee, that the committee present its final report on or before 25 May 2011, and that the committee have authority to meet at any time while the House is sitting except during oral questions, and during any evening on a day on which there has been a sitting of the House, on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 187, 189(a), and 190(1)(b) and (c).

The bill will reduce compliance costs for transport operators and will ultimately reduce transport costs for our businesses and exporters. The changes before us to the road-user charge system are the most significant since the scheme was introduced in 1978. They form another part of the Government’s regulatory reform agenda to boost business confidence by cutting red tape.

In March 2009 I was presented with the results of the Independent Review of the New Zealand Road User Charging System. The review found many positive aspects to the current system, but it also identified a range of shortcomings. Over the past 18 months, excellent progress has been made in implementing the recommendations of the review. Changes already put in place include the requirement to give 6 weeks’ notice of road-user charge increases and the passing of legislation that enables the use of electronic technology as an alternative to mechanical hubodometers and to pay for licences. That technology will remove much of the compliance costs for operators.

One of the most significant changes proposed in the bill will see the removal of the system whereby heavy-vehicle operators nominate a licensed weight for road-user charge purposes. That will be replaced by a system whereby each vehicle will have its own permanent road-user charge weight. That change will greatly simplify administration for industry and for Government agencies and will virtually eliminate weight-based evasion from the road-user charge system.

The road-user charge review also identified limitations of the current time licence system. Under the new legislation, the time licence system will be discontinued. Instead, selected vehicle types will pay a flat annual charge, resulting in a much simpler system.

A major criticism of the current road-user charge system is that it allows too many opportunities for evasion—conservatively estimated by officials at around $30 million a year. Our transport network represents a significant investment for both taxpayers and the government, and I believe that everybody who benefits from this vital asset should pay their fair share towards its upkeep. At present we have a situation whereby honest road users subsidise some who choose to ignore their obligations.

The bill looks to improve compliance with a number of proposals. The proposals are designed to strengthen the integrity of the system by requiring vehicle inspectors to report odometer readings to the New Zealand Transport Agency, introduce more stringent record-keeping requirements for transport operators, and give authorities more effective assessment powers in order to investigate and recover outstanding revenue. In addition to those changes, an updated offences and penalties regime will also make the system fairer for all.

Although the amended road-user charge regulations that allowed for the use of electronic technology were a necessary first step in modernising the road-user charge system, road-user charge legislation needs to be further updated to allow for the ongoing successful integration of the new technology. Under the new system, third-party electronic service providers will manage road-user charge obligations and information on behalf of operators. The providers will also act as representatives of the New Zealand Transport Agency for the purposes of issuing road-user charge licences. As a result, it is important that the providers be monitored and audited under a consistent statutory framework.

Finally, the bill will enable the administration of road-user charge collection to be granted to a designated road-user charge collector. I propose to seek Cabinet approval to make regulations designating the New Zealand Transport Agency as the road-user charge collector. This change will enable the New Zealand Transport Agency to improve its processes and service delivery, including making the design of its systems more streamlined.

The bill is about updating and modernising a system that has been in place now for more than 30 years. The hypothecated revenue system means that all road taxes contribute to the upkeep of our transport system. The road-user charge changes will ensure that all those who use the network pay their fair share towards its upkeep. The changes will also help to meet the Government’s objectives of increasing economic productivity and reducing compliance costs for New Zealand businesses. In closing, I say that the proposed changes will ensure that we have a road-user charge system that will continue to be relevant to New Zealand road users in the years to come. I commend the bill to the House.

Hon SHANE JONES (Labour): Kia ora anō tātou. Tēnā tātou katoa, i tēnei pō. We support the Road User Charges Bill being referred to a select committee.

As a brief outline of the history, I say that we were very aware of how incendiary the criticisms were when the then Labour Government, under the leadership of Helen Clark and Dr Michael Cullen, sought to introduce a road-user charge. I have difficulty saying the word “RUC” in case I say the wrong consonant. Now we are giving a description of what might be done to Steven Joyce’s head by members of his own committee, should they continue using a rugby analogy. We will hear from the member Michael Woodhouse as he tries to get answers from the Minister of Transport as to why a dodgy tender process went down for the trains—but that is another matter.

We are aware that the road-user charge is a very controversial area of the transport industry. An independent study was undertaken, and it is actually quite pleasing to see that the Minister has taken up some of the suggestions. For those reasons, we support the bill being referred to a select committee.

We have a number of concerns. Feedback to date suggests that people in smaller firms, people who perhaps are not at the heavy freight side of the industry, may end up shouldering a disproportionately larger proportion of the burden spread across the whole transport industry.

Although we support the bill being referred to a select committee, one area has caused the new spokesman to have a small measure of concern. We knew the bill was floating around somewhere and we thought we would test it. I must confess, I have not rung my occasional confidante and buddy of days gone by, Mr Ken Shirley. However, more consultation could have been mandated by the Minister. There is a suggestion that a document was floating around that simplified the road-user charge system. A host of firms have said they have never seen that document. It was given to a narrow range of economic investors and commercial interests in the transportation—

Michael Woodhouse: Rubbish!

Hon SHANE JONES: OK, maybe they were National Party mates. They would be only in the trucking industry, because National does not like rail, it certainly hates coastal shipping, and it is disinterested in improving the operations of ports. In fact, the Minister who introduced the bill made a point of telling representatives from the ports industry last week that they were on their own and that the global market would determine their future. A greater level of jettisoning of responsibility is quite difficult to imagine.

If the Minister wants to introduce a new revenue-gathering system to the transportation industry, if key firms are complaining that they were not adequately consulted, if the document I have referred to was distributed to a narrow range of people and on the pages of the documents was the subheading “For discussion: not Government policy”, and if it is going to be that broad, then the Minister should provide an opportunity for all the stakeholders to have a say. Some of the stakeholders are those who were particularly excited—or should I say enraged—a few years ago and who organised those very successful, I have to say, truck protests. In fact, a number of my cousins were driving those trucks. Give them an opportunity—

Hon Nathan Guy: You were in the cab, too.

Hon SHANE JONES: Yes, unfortunately they were. I recall them threatening to run over a car I inherited from Steve Maharey for that short and eventful time I was a Minister. But they have seen the light. They have realised that they have now been marginalised by the quality of stewardship shown by the Minister, who is interested in only one thing: building more superfluous motorways and not actually focusing on the cost structure confronting the people who move our goods and services around the country.

I think that the watermark entered into each sheet that said “For discussion: not Government policy” shows that there has been a bit of circuitousness in the development of those ideas. But I am not surprised, because any Government would not want to repeat what we went through.

We look forward to a range of submissions coming to our select committee from the various interests in the transportation industry. I would point out, though, the hypothecation—what a delightful word—that was introduced under the high-quality leadership of Annette King. It enabled the scarce resources collected from the toilers in the transportation industry to be dedicated back to our transportation system.

Although this debate is about charging those who move freight around—in particular, about introducing some equity—I would particularly like to know whether this bill will reduce the need for the commercial vehicle investigation unit, which creates for John Carter and me all sorts of dramas with our local trucking firms up north. However, he is unlikely to have to carry that on, as there are probably not a lot of trucks in Mauke, Rarotonga, Pukapuka, and those other highly important islands that lie at the centre of our geopolitical relevance to the future of the Pacific. I could not think of a better person to take over in Rarotonga, and I look forward to taking many rugby trips with the golden oldies team up there in the future.

But let me come back to the Road User Charges Bill, or RUC, which has only a passing relevance—

Hon Nathan Guy: You’re just talking about another ruck.

Hon SHANE JONES: Well, when that Minister can resume his guard and put on his boots again, we will have a great deal more fondness for him. He has turned his back on the hallowed tradition of parliamentary rugby.

But I will say that the Minister of Transport has made a particularly important point in terms of clamping down on evasion. There will be debate as to whether this bill has a remedy for operators who clock up miles but spend quite a lot of time off the roads—they spend time on forestry roads and private roads—and we will need to hear whether the remedy will work in practice.

Modernising and improving the electronic system will worry the rogues in the industry, because at the point when a warrant of fitness is issued and when the weights and distance travelled are measured, we will no longer rely on the office staff or on the operator. Those matters will be dealt with through new technology, which is hardly likely to be advanced by Minister Joyce, given the debacle he is presiding over in relation to technology improvements in our rohe in provincial New Zealand. But having said that, the boffins in the transportation part of the bureaucracy are convinced that they have a system that will lead to sweet execution and improve the manner within which information is collected and stored. Hopefully, in the future that will lead to an improvement in the kinds of policies we have.

During the select committee process, we will also look forward to hearing about the way in which money is dedicated. There is a bias in terms of the dedication of money towards trophy projects.

Mr Assistant Speaker, I do not want that Minister moving too far away, because the House will collapse again. We have 2 more minutes, and I ask whether he could remain. I am sorry; I did not see the “battery hen”, the Minister of Agriculture, sitting on the frontbench. I am very sorry about that. [Interruption] OK, he is not a hen; I accept that. He is a “Peking duck”—a duck that is peeking out because he never ever makes any ballsy decisions in his portfolio and he hides behind his bureaucracy every single hour of the day.

Hon Tau Henare: You watch out when you get a hiding from Pita Sharples.

Hon SHANE JONES: It is not my fault that Hekia Parata proved to be a more reasonable, better-looking, and higher-qualified Māori than Tau Henare to come into Cabinet. I do not know why the rest of us should suffer his sense of rejection, his sense of marginalisation. Hekia Parata has a greater—

Hon Tau Henare: I’ll have you know I’m the top twitterer.

Hon SHANE JONES: It is John Key’s problem as to why he chose Hekia Parata, and why Michael Jones or Va’aiga Tuigamala will be the candidate against Phil Twyford and not my whanaunga Tau Henare. That actually has nothing to do with transport, just as Tau Henare’s future has nothing to do with the long-term prospects of Parliament—nothing whatsoever.

Now I will come back to this important bill. We support the bill being referred to a select committee. We look forward to hearing a range of submissions. We will hold our position in relation to whether or not we will support the bill through the entirety of the legislative process. We join with the Minister of Transport and encourage all and sundry to make as many submissions as possible, but let them be of a better quality and of more relevance to the future of the industry than Mr Friedlander’s outgoing outburst was, of all his frequent outbursts. That is why Ken Shirley is providing a great deal of information to members on this side of the House, and he knows that balance is absent on the other side of the House. Kia ora tātou.

DAVID BENNETT (National—Hamilton East): We can see that Labour’s transport portfolio is in very safe hands now, is it not? Mr Jones has it. He has a great personality, he is a good guy to get on with, and he will make our job on the Transport and Industrial Relations Committee a lot easier. It is good to have Shane Jones on the committee, and we are looking forward to his valuable contribution on this bill and on other bills as we go through the year ahead.

The Road User Charges Bill is a reflection on what happened when Labour was last in Government. Labour rammed through some changes that led to mass protests. The truck protests that the previous speaker, Shane Jones, talked about were a direct result of our having a Government that was not listening and did not engage with the industry. This bill is a reflection of the way in which this Government has engaged and talked with the industry. Those in the industry understand the changes that are coming.

We look forward to hearing the submissions on this bill. No doubt they will be positive and will reflect the positive mood of the industry towards the Government’s programme. Our programme involves road construction like the Waikato Expressway, which is central and integral to the growth of New Zealand, especially the great city of Hamilton.

Minister Joyce needs to be congratulated once again in this House on the way in which he has approached the issues. He has worked with the industry to make things successful, and to make this bill something that everybody feels they can proceed with.

One of the key things in this bill is a change to the definition of vehicle weight. Previously road-user charges have been based on the distance travelled and the weight carried, which could provide some difficulties for operators as to predicting the actual weight of the vehicle. The bill changes the definition of vehicle weight to a fixed road-user charge weight, so that operators do not have to guess in advance how much the weight is. That change will make it a lot simpler and easier for both parties involved.

Chris Hipkins: Run through that again.

DAVID BENNETT: For the benefit of the young member over there, who has also joined the Transport and Industrial Relations Committee but is the spokesperson on ACC for the Labour Party, I say that it is effectively a move from having to have the—

Hon Tau Henare: When was his last accident?

DAVID BENNETT: Yes, when was his last accident? When did he get his driver’s licence? He might have to sit that test before March. He probably does not have a driver’s licence. There was a change to the definition of vehicle weight to make it easier for the parties involved.

The bill also removes the time licence system and modernises the list of vehicles exempted from road-user charges. That is another important change this bill will focus on. The bill improves the regulatory framework for electronic management systems. Once again, this is an example of a Government moving with the times and with the industry. If any members have been in the more modern trucks that we see out on the roads these days, they will have seen that electronic time management is very much involved. This bill fits in well with the industry norms with regard to the technology that is involved in trucks these days.

There will also be a fairer, simpler, and less costly structure in relation to offences and penalties. This is particularly so for light vehicles, because people in that area of the industry have felt that they have been hard-done-by. This change is an attempt to provide a better system for those with light vehicles—who may argue that they have issues with compliance because they are not in a heavy vehicle fleet—in relation to offences and penalties.

Those four changes are the big parts of the Road User Charges Bill. We look forward to the bill’s referral to the select committee and we appreciate having the support of all the parties in this House in referring it to the select committee. We look forward to hearing submissions on it and to working constructively to bring this legislation through this House in the near future. Thank you.

DARIEN FENTON (Labour): As my colleague Shane Jones has said, Labour will support the referral of the Road User Charges Bill to the Transport and Industrial Relations Committee. I record my appreciation of the addition of Shane Jones and Chris Hipkins to the select committee.

Hon Tau Henare: That’s not what you said last week.

DARIEN FENTON: It is what I said last week, actually. I think it will be very challenging for the chair of our committee, David Bennett, who thinks the Government is not here to make peoples’ lives better. Having listened to his speech, he is apparently here to make better the lives of—

Chris Hipkins: Truckies.

DARIEN FENTON: Well, some truckies, but not all. As my colleague Shane Jones has said, Labour will support the referral of the bill to the select committee. We have reservations about some parts of the bill, but we strongly support other parts. I look forward to hearing from submitters, and I hope the concerns that I am about to outline will be addressed in that process.

Hon Tau Henare: I thought you had finished.

DARIEN FENTON: I am sure that Mr Henare will listen carefully to the submitters who appear before the select committee.

It is very disappointing, once again, to see the same rushed process put on to the select committee. We could be called to meet at any time. What is the hurry? What is the panic? Why is the Government doing this? It is an abuse of the process. Once again this has happened to the Transport and Industrial Relations Committee. This sort of resolution is put forward by the Minister of Transport and sometimes the Minister of Labour. Why is it always the Transport and Industrial Relations Committee that is required to meet at any time while the House is sitting, blah-blah-blah? Why is it so important to do that? Quite a number of things in the bill need to be carefully looked at.

I make it clear that Labour supports reform that will improve compliance with, and recovery of, road-user charges. I will talk about that reform a little more later on. We support the establishment of the framework for the electronic management of road-user charges. We know that that is the way of the future. I have seen what is possible with electronic management of the road-user charges, and that is a good thing.

We agree that road-user charges should be simplified and modified but we have some concerns about the changes to the vehicle weight definitions. First of all, there was only limited consultation over those very significant changes, which will have an impact on people in the road freight industry. The consultation on those changes was limited to larger organisations and larger operators. At no point have those changes been fully explained to smaller trucking operators. Exactly what those changes will mean, in the end, is still a mystery to many people in the industry. The changes are being widely discussed throughout the industry—there is no doubt about that—but very few of the operators that we have been speaking to are clear about what it will mean for them. What is the difference between the old system and the new system? Nobody knows exactly how those changes will impact on their business. None of that is clear in the regulatory impact statement, either. There are no comparisons between the old and the new.

This bill changes the system where road-user charges are based on the distance travelled and the weight carried. Currently, operators have to estimate, in advance, the actual gross weight to be carried. Under the proposed changes the usual maximum allowable weight of the vehicle will be decided in advance, and the road-user charges will be charged on that figure. That is supposedly to simplify the charges, and it sounds simple when one hears about it. I think there have been problems around the road-user charges system. The existing truck fleet has been purchased to work within the existing system, so reclassifying the national fleet will have unknown impacts.

Under the present system the first tonne of weight is charged at a much lower rate than the last tonne. The last tonne is charged at a higher rate because the weight at the top end of the scale does the most damage to the roads. Under the new system those charges will have to be set for an average weight in each class. We presume that the Government wants to collect the same amount of road-user charges in each class, but that means that the operators with trucks within that average weight band will have to pay more to cover the lost revenue from heavier trucks at the top end of the scale. Those with heavier trucks will pay less. So the winners will be a minority of operators who carry the heaviest loads and, therefore, pay the largest amount of road-user charges. They will enjoy large windfalls with reduced rates.

Our estimate is that up to 70 percent of all trucks are not loaded to the maximum carrying capacity. They commonly run at about half or two-thirds their potential capacity, simply because the goods being carried are not as heavy as that. For example, how much does a truckload of Pink Batts weigh? All these operators who run trucks at less than capacity will have to cross-subsidise operators who run trucks at maximum weight.

Hon Tau Henare: Who wrote this?

DARIEN FENTON: Why do those members, who are on the select committee, not listen and take this seriously?

Just how much extra will those operators have to pay? We do not know. The truth is that nowhere in the Road User Charges Bill, or anywhere that I could find, is there a chart that shows the difference in the charges that operators in each band will be expected to pay. Presumably they will be introduced retrospectively under the rules process, but Labour wants to know why this process has not been more transparent.

I move on to talk about the things that we support. We are supportive of the measures to reduce road-user charges evasion. In 2008, just before the election, there were mass protests in the transport industry after the previous Labour Government instituted increases to road-user charges. I say shame on the National Party. It was a completely politically driven protest. Since I have been involved as Opposition spokesperson on transport, I have spoken to many truck operators who have admitted that they put their truck drivers on the road that day. They paid their truck drivers to get out on the road in protest against the Labour Government. What are employees to do? What are owner-drivers to do? If their company says that they want them on the road, will they say no? They might lose their job. They were out protesting because their employers or their contractees told them that would happen.

The interesting thing about that protest is that during the process—from the protest to the implementation—more than $17.5 million of road-user charge licences were pre-purchased at the old rate. That money was lost to the Crown. If the Government was to spend the same amount on our roading network, then that lost revenue had to come from somewhere. The truth is that it comes from ordinary Kiwi motorists. Amid the outrage, the truck convoys, and the media going along for the ride, no one asked Kiwi motorists how they felt about picking up the tab. Labour just wanted the trucking firms to pay their fair share, and we still want to see that.

It would also be nice if they paid the estimated $30 million that has been lost in the collection of road-user charges. Last year I submitted a parliamentary written question to the Minister of Transport, and he replied that 6,478 operators were prosecuted between December 2008 and April 2010 for not paying their road-user charges. The total fines associated with convictions totalled more than $12 million. That figure does not include the fines that were not paid and were outstanding. Labour is really, really pleased that we have a bill that will improve the collection of road-user charges and the enforcement of those charges, and will stop the evasion that has been going on.

However, I say in closing that I am worried, and Labour is concerned, about the trucking companies that do not know about this legislation. We estimate that about 70 percent of trucking firms will end up paying more under this bill. The large companies—the ones with the big trucks—will do well, but the little companies will not do so well. Is it not a bad time to introduce a change like this? Diesel charges have gone up, and all of those operators are being affected by the cost of living. We do not think that this particular bill has been properly researched, so we are looking forward to the select committee process, where we can find out what people are saying. Thank you.

GARETH HUGHES (Green): Kia ora, Mr Assistant Speaker. Ngā mihi nui ki a koutou, kia ora. I acknowledge the new transport spokesperson for Labour, Shane Jones, and also the excellent work that Darien Fenton has done on truck safety in this Parliament.

Members might not know this about me, but growing up in Gisborne I was a boy racer. I am not the typical Greenie who is opposed to every single road, and who hugs trees. I am not sure whether I am the only member in this House who can change a car engine, but I can. So I am a Green who loves roads, and this speech is about why it is important we focus on our roads but do so with a balanced approach. It is great—[Interruption]. The House is so enraptured I cannot hear a word a single person has said, so I will keep on going with my speech.

It is good to be in front of this House discussing the Road User Charges Bill. I will talk a bit about the bill, but more importantly about the agenda. It is not just about the small, mostly common-sense changes that are happening; the big picture is the stuff the Minister is deciding behind closed doors, the stuff that the New Zealand Transport Agency is implementing. That is what I want to talk about.

We have heard a few mentions already tonight about the Road Transport Forum New Zealand; we have heard, in hushed tones, about Ken Shirley. We know they are powerful interests, but I am proud to be standing here as the member from the party that does not accept a cent from the Road Transport Forum. I never have, and I never will. We know how powerful that group is. It mobilised 4,400 cars to shut down some of our biggest cities to get what it wanted. Although I am a supporter of non-violent direct action, I know how powerful and influential a group it is.

I will provide a bit of a context. Although I was a boy racer and I loved burning around in my Mark I red Ford Escort with mag wheels, some of the context of what I am providing to this House is the idea that this House is wasting billions of dollars on uneconomic motorways. That is locking us into a car and truck-dependent future. I mean, where is the balance? For every dollar we are spending in this House on walking, cycling, buses, and trains, we are pouring six bucks into new, unaffordable motorways. For the 85 percent of Kiwis who cycle, we are spending only 10 percent. We are lacking that joined-up thinking. We are talking about roads of national significance; why are we not talking about “corridors of national significance”, which, we believe, are smart transport investments? But that is just not what we are seeing from this Government.

We will support this bill being referred to a select committee because there are some important questions we want to ask. Let us be honest: this bill is pretty non-controversial. However, it is important because what we do with our freight industry in New Zealand will have a huge bearing on our kids’ future. The amount of freight carried by truck in New Zealand is estimated to grow by 75 percent into the mid-2030s, and road-user charges, the main way in which we get revenue, is spent by us. Even older than I am, the road-user charge regulations came in in 1978 when Muldoon was still tramping around this Chamber. We are one of the few countries in the world that still has road-user charges. Many other countries have just moved on. As the Road Transport Forum has pointed out, we are spending $120 million in administration, which the forum says is just wasted.

This bill takes a user-pays approach to our road trucks, which the Greens support when it comes to commercial vehicles. There are a lot of them. There are 580,000 heavy trucks under this road-user charge, which are all diesel vehicles. This bill will not increase or decrease the amount that people are paying, but it will make evasion more difficult. That is a good thing, considering that the charge cost us about $30 million last year.

We have heard an interesting debate on the charging of the maximum weight, and I am still open to the arguments about that. On one side we heard from Darien Fenton that it will penalise some truckies, but on the other side it could act as an incentive for trucks to be fully loaded. That would mean more efficient trucks on our roads, and hopefully fewer trucks and more safety, so I am still open to that argument. The legislation will introduce a framework for electronic payment, which could facilitate more accurate charging. That is good, and could reduce compliance costs.

Where the bill drops the ball, I think, is in going in favour of rewarding fuel efficiency. The Minister of Transport says that he does not want that included in the road-user charge, but we have seen this Government exempt road-user charges from electric vehicles. We need to make sure of—and this is one thing I will be keeping an eagle eye out for in the select committee—the impact that that will have on efficient, compact cars. MINI talked about the current system, which it calls the small car advantage minimalism, or SCAM, approach to small compact cars. We need to have more small, compact, efficient diesel cars. It would be interesting to ask about biofuels. I have a mate who drives around town in a chip-fat fuelled biodiesel car. We need to ask questions about how we will be impacting on that. We do not want to penalise those who are doing a good job in being more efficient on our roads.

The key thing I want to approach in this speech is the question of what we will do with the income from road-user charges. Where will we spend those tens or hundreds of millions of dollars? That is what I will look at, because three big things are making the trucking industry in New Zealand very, very happy. The first is the potential closure of four regional rail lines. The second is the heavy truck—what I call the juggernaut truck—vehicle mass rule change earlier last year. Lastly, there is the hugest investment in our country’s transport history: the roads of national significance.

First of all, I will look at regional rail closures. My home town of Gisborne is facing the closure of the Napier to Gisborne rail line, and three other regional rail routes are facing closure. Closure would be a boon to trucks. In Gisborne and up on the East Coast we are facing a wall of wood from maturing pine plantations. The wood needs to get to port to be exported somehow, but if we close that rail route in the next couple of years, the only option will be to transport it on trucks on the roads. But that would make our roads less safe, make us more oil-dependent, and be worse for the climate. These rail lines are community assets, long-standing assets. In our history, people have actually died building those rail lines. They are also considerable community economic assets for regions like my home region, Gisborne, in going forward into the future.

This Government last year introduced the heavy truck rule for up to 53-tonne, 22-metre trucks. Those trucks do have an impact, and they will have an increasingly huge impact, on our roads, on the road toll, and also on the viability of rail and coastal shipping. Already, heavy trucks are involved in 16 percent of our crashes even though they account for only 4 percent of our fleet, and it is Kiwi motorists and cyclists who will be facing those heavy juggernaut trucks and the risks they entail. Ratepayers are the big losers from this legislation, as they will subsidise the heavy truck industry in terms of bridge maintenance and road maintenance at the same time that this Government has raided the road maintenance budget to fund its grandiose roads of national significance.

Looking at the seven roads of national significance projects, I see an $11 billion gamble from the Minister. It is uneconomic. Many of them have negative benefit-cost ratios, and as we saw from independent earlier estimates, some of them had benefit-cost ratios as low as 0.4. I would get laughed out of a council meeting if I went to a council to propose something with a benefit-cost ratio of 0.4. I do not believe that the Minister is getting away with it. For the amount of money, we are not getting a good return on our investment. I have tabled reports in this House from the OECD that show there are more jobs, more macroeconomic benefits, and twice as many jobs per dollar spent when we invest in public transport, road maintenance, or local roads. We should not be pouring all our money into motorways. I think the key point is that even Don Brash is opposed to some of those roads. As part of the 2025 Taskforce, he said that there was no evidence that projects like Transmission Gully would provide a net benefit to the economy.

The fact is that the way we are going about transport planning in New Zealand is not joined up, it does not look at the climate, it does not value our dependence on oil, and it just promotes a huge growth in the amount of freight carried on our roads. The irony is that the Government could do smarter things like have a joined-up approach and invest in things like our regional rail lines to break those set decades of negative feedback—death cycles, as they are called. If we invested in things like a central business district rail link to get cars off Auckland’s streets, that would benefit motorists and trucking companies more than the uneconomic, unwanted, terrible for the climate roads of national significance, and all the really dumb decisions this Government is making when it comes to transport. Kia ora.

TE URUROA FLAVELL (Māori Party—Waiariki): Kia ora anō tātou katoa. I have just a brief contribution to the discussions tonight. Many of the points have already been raised by other members.

In terms of clarification, as we know, the purpose of the Road User Charges Bill is to modernise and simplify the road-user charges system, which is a system that collects money from the users of diesel vehicles. At the moment road-user charges are based on the distance travelled and the weight carried. In order to find out what the impact of the changes might be, I got in contact with a couple of Māori contractors for their opinion, to see how they might be affected by the charges. The group of New Zealanders who it appears will be hit the hardest by this legislation will be truck drivers, loggers, transport service workers, and those involved in the forestry sector. Within that group Māori comprise about 22 percent—a massive 22 percent, if you like—of the total truckie workforce, which is some 6,240 people.

One of the people we got in contact with was named John. He said he drove a 23-tonner, which had a 27-tonne maximum. He said he would be paying for 27 tonnes when he was using only 23 tonnes, and that that was not good. In fact, he was very clear, saying that he did not support the changes, at all. With the cost of fuel going up, he could not afford to be paying more for road-user charges as well. On the other hand I talked to Don, who said that the devil was always in the detail. Because most logging trucks had on-board scales and were loading to the legal limit with every load, a charging in bands rather than a specific tonnage should not have had any effect.

So what is the judgment call—John or Don? Well, at this stage we know that we need to hang out a little bit more for some conclusion to that debate. At this stage we know that this bill is about cleaning up the administration of the antiquated road-user charges system. In some senses the bill is purely an administrative tidy-up. That in itself serves to be pretty consistent with our Māori Party policy—namely, that we will review compliance requirements so that there is no increase in compliance costs.

The Government members’ point of view is that they believe that changes in the bill will result in less road-user charge evasion—that is, less non-payment of charges because evaders will no longer be able to deliberately underestimate the weight they are likely to carry. If members do not know about this, I can tell them that evasion in relation to road-user charges is conservatively estimated to cost about $30 million a year for heavy vehicles alone. The Minister has talked about the need to remove a form of evasion; the removal will give the system greater integrity and reduce revenue leakage, while at the same time it will provide for a fairer and simpler structure in relation to offences and penalties.

From the point of view of those who believe in the genuine progress index, which includes the Māori Party, at least, another issue of the evasion of offences and penalties should be brought into this debate. That is the fact that in the 81 pages of the bill there is not one single mention of the environment, despite this legislation being in effect a tax bill for diesel.

The Māori Party will be supporting this bill at the first reading in the House, because we want to hear the views of more than two submitters, notwithstanding the importance of the views put forward by John and Don that I referred to earlier. We are certainly keen to hear more in relation to the issue of environmental impacts, and, to this end, we look forward to the debate in front of the select committee. The Māori Party is willing to support this bill at its first reading.

Dr JACKIE BLUE (National): I am pleased to be speaking to the first reading of the Road User Charges Bill. The purpose of this bill is to update the road-user charges, or RUC, system. The road-user charges system is well over 30 years old, and it is quite timely that it has undergone review. The current situation is that all users of New Zealand roads contribute towards the upkeep of the roads. Most road users pay levies in the price of their fuel, but others, such as the users of diesel-powered vehicles, pay through road-user charges. All the revenue that is collected from road-user charges goes into the National Land Transport Fund. The road-user charges are administered by the New Zealand Transport Agency, or NZTA, and enforced by the New Zealand Police.

This bill is the outcome of the recommendations of the Independent Review of the New Zealand Road User Charging System. This independent review group was appointed in August 2008 to review New Zealand’s road-user charges system, in response to concerns that had been raised by the road transport industry following road-user charge increases in July 2008. The review considered the Ministry of Transport’s cost-allocation model between road users, and whether the road-user charges system should be replaced by alternative revenue collection methods. It was quite a comprehensive review.

In total, 33 recommendations were made, covering all aspects of the road-user charges system. After due consideration, the Government has accepted the recommendation that the road-user charges system be retained, simplified, and modernised, rather than replaced with a diesel tax, which would impose costs on non-transport users. When the recommendations were released, the Minister announced that it was intended there be an Internet-based road-user charges purchase system, which would reduce compliance costs and the risk of evasion. That has certainly happened in this bill; there are provisions for that, and in this day and age that is quite a timely move. It is long overdue, but we must face it that over 30 years ago, when the original bill became law, the Internet did not exist. So here and now we can make the appropriate changes.

In keeping with the Government’s focus on promoting a road-user charges system that is fair, balanced, and well-managed, just a week prior to the release of the recommendation a law was passed requiring that 6 weeks’ notice of road-user charges increases should be given, so transport operators could plan and budget accordingly. That has happened, and that move has been well received.

The main provisions of this bill include a change in the definition of vehicle weight, removal of the time licence system, modernisation of the list of vehicles exempt from road-user charges, an improved regulatory framework for electronic management systems, and a fairer, simpler, and less costly structure in relation to offences and penalties, particularly for light vehicles. This bill is all about bringing the road-user charges system into modern-day practices. It is about reducing compliance costs for transport operators, and ultimately reducing transport costs for our businesses and exporters, which, in turn, will make it easier for this sector to go about its business. That can only be a good thing for the economy. The changes will make the system easier to understand, and fairer for those who pay road-user charges. I certainly commend this bill to the House. Thank you.

STUART NASH (Labour): I support the Road User Charges Bill, but I have a number of concerns, which I will outline. My main concern is that this Government actually has no real plan, whatsoever, for the transport sector. It has no plan for the transport sector, and I will give members a real live Hawke’s Bay example of exactly what I mean. But before I start, I say to the previous Green speaker, Gareth Hughes, that I also have never accepted any money from the transport sector. However, if it ever wants to offer me money, I am based in Napier. I am only kidding. We will have to declare any donation over $1,500.

There is no plan; there is no strategy for a New Zealand roading sector, or for the New Zealand transport sector. Let me give members an example. In Hawke’s Bay the Labour Government allocated $71 million—

Hon Shane Jones: How much?

STUART NASH: —$71 million—for infrastructure development in Hawke’s Bay. That was money collected from Hawke’s Bay residents filling up their tanks at Hawke’s Bay petrol stations and driving on Hawke’s Bay roads. There was $71 million put aside by Labour for Hawke’s Bay, which was to be administered by the Hawke’s Bay Regional Council. The Hawke’s Bay Regional Council thought that it was such an important step forward that it put the chair of the Hawke’s Bay Regional Council in charge of its transport strategy. The chair was a man called Alan Dick, a much esteemed gentleman. He had been the Mayor of Napier for three terms, he knew the region like the back of his hand, and he always did what was best for the people of Hawke’s Bay. The strategy that this transport committee came up with was superb. It was really going to improve the infrastructure of Hawke’s Bay.

One of the main reasons that that strategy was so important was that Treasury said in a document that the highest level of economic payback for any dollar spent is that spent in infrastructure. If the Government invested $71 million in Hawke’s Bay infrastructure, the payback would be enormous. We were looking forward to the investment for a number of reasons. First of all, it would have taken trucks off Marine Parade. Secondly, it would have made our port, which is one of the most efficient ports in New Zealand, probably the most efficient port in the country. Thirdly, it would have meant that businesses around the country would have relocated to Hawke’s Bay, because the infrastructure was in place and ready. Fourthly, it would have created jobs in Napier. Hawke’s Bay and Gisborne have 7,000 unemployed people—7,000. This investment would have been brilliant for Hawke’s Bay. It would have created jobs. In fact, if we look at economic theory around what should be done in times of recession, we see that money needs to be spent on infrastructure. We should not give away $14 billion in tax cuts, which will not stimulate the economy at all. Money should be spent on infrastructure. Those men working on the roads are earning money. When they are earning money, they are paying taxes. When they are earning money, they are spending it in the shops in Napier.

I tell members a sad thing. When I wander down the main streets of Napier, I am hugely concerned about the amount of retailers who are suffering. I am worried about the amount of retailers who are suffering in Napier for two reasons. The first is that the wealthy got massive tax cuts and they are saving them—they are retiring debt. The second is that those on the median wage in Napier got an extra $5. That is taken up by inflation in petrol and food costs, running at 10 percent, and the standard costs of living. People are not spending in Napier. But spending $71 million on infrastructure in Napier would have created jobs and economic development—it was what we needed.

The esteemed gentleman Alan Dick, the ex-Mayor of Napier, got a phone call from one Steven Joyce. Alan Dick is a gentleman who has been involved in local body politics at the highest level, and he got a call from the new Minister who said that he wanted him down in his office in 12 hours. Where is the respect? So Alan Dick jumped on a plane, got down there, and Steven Joyce said to him that he had had $71 million raised by the residents of Hawke’s Bay, but now it was gone. Alan Dick asked where it had gone. It had gone to some big pot. And where is the money being spent? Where is this money being spent in Hawke’s Bay? According to the expenditure from the National Land Transport Programme for 2009-12, 22 percent was spent on local roads. These are not State highways; these are local roads. There are criteria for Government spending on local roads: they have to be roads where people die and ones that are really dangerous. But when it comes to infrastructure and creating jobs they do not count, so these roads will not be built in the Hawke’s Bay. I withdraw that; they will be built in the Hawke’s Bay when Labour comes into Government, because we will restore that funding to the people of Hawke’s Bay. The money raised in Hawke’s Bay will go back to the people of Hawke’s Bay, and Hawke’s Bay infrastructure will be where it should be.

We all know that when the provinces do well, New Zealand does well. I would like to ask that Government what it is doing for the provinces. What has that Government done for the people of Napier? What has it done? Nothing. It has taken our $71 million up to Auckland and it is spending it on I do not know what. Nobody in Napier knows where it has gone. The Government should read Keynesian economic theory and look at what Roosevelt did to get America out of depression. It should do what every economy is doing round the world, except ours, to lift people out of depression—create jobs. There are 158,000 unemployed people in this country. Where are the policies to create jobs? I tell members one policy to create jobs: build infrastructure in Napier with the $71 million. But the money has gone. There is no plan for the provinces. And where has that money gone? [Interruption] Are the roads being built in Mr Jones’ area? No; not at all. Where has the money from the provinces gone? What is that Government doing for the people of Hawke’s Bay? What is that Government doing for the people of the provinces of New Zealand? Nothing. No, it is not doing nothing; it increased GST. It has increased the cost of living. It is hard work in the provinces and this Government is doing nothing about it.

As for road-user charges, I know all about road-user charges. When I drive my fire engine around the streets of Napier, I have to pay road-user charges. People say to me that I need a fire engine in Napier to put out the fires lit by the Napier National member of Parliament. They are all over the place. There is no plan, no roading strategy, and no roading plan that anyone can put their hands on and say that that is the way forward—we are not able to do that. However, Labour is supporting this bill to select committee for two reasons. The first is that there has been insufficient consultation across the whole industry, and at least in select committee every person whom this bill affects or who wants to have a say will have the opportunity to do that. This was not done under Mr Joyce’s reign.

Hon Shane Jones: And it wasn’t done by Tau Henare in the takutai moana either.

STUART NASH: Not at all. The second reason is if, in fact, it does streamline and make the road-user charge regime easier to follow, then we are all for that. A Labour Government is a Government that supports hard-working New Zealanders. If we can make it easier for hard-working New Zealanders, then we will support it. We always have. Nine years—goodness me! We made this country hum. There was a 3 percent unemployment rate and now it is up to 7 percent. There used to be a joke that the Mayor of Napier under the previous Labour Government knew the name of every unemployed person, because there were only about five of them. Now there are 7,000, but this Government has no plan for the people of the provinces, and the people of Napier are suffering. Mr Assistant Speaker Barker, you know well that the people are suffering under that Government, and it is a disgrace—it is an absolute disgrace. But on that note, I commend this bill to the House and I look forward to everyone who is interested having their say—it is about time.

Hon TAU HENARE (National): Sometimes we look forward to people speaking in this House, and I sat here throughout the debate on the Road User Charges Bill, and I looked at Stuart Nash and thought: “I am getting excited. He excites me. He really does. He excites me with his command of the English language and his command of the issues and the problems facing this nation.” Well, what an anticlimax! I paid all that money to watch, and all I got was a repeat, a rehash, of everything that Mr Jones said. I say to Mr Jones that I welcome him to one of the hardest-working select committees in Parliament, other than the Māori Affairs Committee.

The Road User Charges Bill is purely and simply about two things—nothing else. There is no politics in this bill. It is about only two things: simplification and bringing us into the 21st century. That is all it is. If we put those two things together, we do not get a truckload full of pornographic material; we get economic growth. That is what it all about. It is about getting this country moving.

The previous Labour Government was in office for 9 years, and what did it do about the trucking industry? Well, let me tell members what it did. It caused a riot. It caused the trucking industry to march in the cities en masse. In fact, that Government created havoc on our roads. Not one new road was built under that regime. [Interruption] But as a resident of Te Atatū Peninsula—does Mr Twyford know where that is—I want to thank the Minister of Transport for a number of roads that are popping up in my area. That leads to economic growth in Auckland, and if it leads to economic growth in Auckland, then it will lead to economic growth in places like Napier.

I will answer Darien Fenton, who asked what the rush is and what the hurry is. I will tell members what the hurry is, and I will tell them what the rush is. The Labour Party may not have seen it yet, but we are in a bit of a bind economically—we are in a bit of a bind. So that is the rush and that is the hurry. There are no politics in this bill—absolutely none. All it is about is simplification and modernation—modernising the industry. Modernation—that is my word.

Chris Hipkins: What’s modernation?

Hon TAU HENARE: It is not “moderation”; it is “modernation”.

Hon Shane Jones: Where’s the Minister of Education?

Hon TAU HENARE: There is nothing wrong with that word. I will just add that word to the lexicon of the English language. I have a new word every day.

I turn now to the Green member Gareth Hughes. I have to say that with all respect to him, do members not get the feeling that they are being told off by a 2-year-old? I know he can pull out the engine of a car, and good on him—well done. My diesel truck is in Bowen House. Maybe he could help me to fix it up. I have to say that all the speeches in the House tonight from the Opposition have been nothing but waffle—they have not said anything new.

Jacinda Ardern: As opposed to this one—in direct contrast to this one.

Hon TAU HENARE: Sorry? I did not think there would be a reply. This bill is all about the modernisation of this industry. It is all about the simplification of this industry. I tell members this as a person who loves to drive his diesel truck all over the nation—a 2.8 Turbo Mitsubishi Challenger, one of the first in New Zealand—1996. It has done 300,000 kilometres. Something that I despise is having to go to the post office and buy road-user charges. I love the idea of going online and picking up the required road-user charge. It makes it a hell of a lot easier. It simplifies it, and here is that word again—modernation.

I am amazed that the Greens and the Labour Party can have their cake, eat it, and then have the gall to get up in this House and moan about the taste. They can cook it, they can have it, they can eat it, and then they moan about the taste. That is the Green Party, and that is the Labour Party—they know that there are no politics in this bill. This bill is about getting the economy moving. It is about moving forward, getting the engine of the New Zealand economy—Auckland—on the move. I cannot wait to hear from the many truckers and business people who will come before the select committee.

Hon Shane Jones: What about Māori on the statutory board? They’ve been told to ruck off!

Hon TAU HENARE: I tell members in closing that I cannot wait to work with the Hon Shane Jones. I know that he will turn up to every Transport and Industrial Relations Committee meeting we have on this bill. I promise the House that if he does not turn up to even one meeting, then I will come back and tell the House about that member’s commitment to the select committee and about the job that he now has as spokesperson on transport and other matters.

Te Ururoa Flavell: Moderation!

Hon TAU HENARE: Modernation and simplification.

CHRIS HIPKINS (Labour—Rimutaka): I will move that all the words in the referral motion after “May 2011” be deleted. The reason I will do that is that we have just heard a very eloquent contribution from Tau Henare on the National side, talking about the importance of all the members on the Transport and Industrial Relations Committee being present for the very important deliberations on the Road User Charges Bill. I would hate to think that any member of that committee missed out because of the outrageous referral motion that this Government will move on this bill.

That motion gives the committee the power to meet even when the House is sitting, and even when it goes into urgency in order to rush through the foreshore and seabed legislation, which we know is coming up very shortly—even while the House is sitting under urgency to rush through the outrageous Marine and Coastal Areas (Takutai Moana) Bill, which the Government wants to do before the Maori Party completely implodes.

Te Ururoa Flavell: I raise a point of order, Mr Speaker. The member seems to be diverging way off this particular bill, in terms of references to other bills. I just ask that you bring him back to the focus of the bill.

Mr DEPUTY SPEAKER: I thank the member. This is a first reading speech, so there is a little flexibility here. But I hear what the member says, and I am listening to what is being said.

CHRIS HIPKINS: Thank you very much, Mr Deputy Speaker. I am happy to speak for a little longer on the reasons why I do not think this bill deserves to have a truncated select committee process that prevents the members of the committee from fully participating in the deliberations on it because they may have to come into the House to talk about the foreshore and seabed legislation, which is no doubt coming up under urgency. I am not surprised that the Māori Party is a little sensitive about that particular matter.

I will pick up on some of the contributions that have been made by other members of the House on this bill, and I will raise some of the issues that I will be asking about in the select committee process, because, having read through the bill, I have a number of questions. I am particularly interested in the usual maximum allowable weight issue, and what that means for vehicles that are regularly loaded to less than their maximum capacity. For example—and this is something that the Minister of Agriculture will take an active interest in—milk tankers are regularly loaded at well below their maximum allowable weight. Does this mean that milk tankers will be charged at their maximum allowable weight, even if they are half empty? That, potentially, will create some issues. I imagine that the people who drive milk tankers will not be particularly happy with the Minister of Agriculture about that, and I would like to see the select committee explore that issue a little further. I think the select committee should explore it further.

One of the other issues with regard to the maximum allowable weight issue is that vehicles are often empty when they are returning to the depot, so what will happen with regard to those vehicles?

The Labour Party supports the measures in this bill that tighten up on road-user charge avoidance. I think we can all be pleased that the Government is taking some action on that. However, I think we could go a bit further in terms of the electronic monitoring of road-user charges. I am not sure whether this bill fully provides for the new technology that could be available to monitor those issues. For example, the feedback that I have received from the trucking companies in my own electorate is that they find that the hub meters can be quite unreliable. Actually, there is global positioning system (GPS) technology now that is pinpoint accurate—down to the very metre—which can record all of a vehicle’s movements. An electronic system may be much harder to fool in order to avoid paying the road-user charges, so it could be much fairer and provide the trucking companies and the operators of trucks with a much more flexible, reasonable, and easy to manage system. An electronic system can operate on a cellphone SIM card or GPS-type system. That can be instant, much, much more accurate than hub meters, and potentially much fairer. That is another issue that I would like to see the select committee explore a little further, and I will be asking some further questions about that.

I am also concerned about the lack of differentiation in this bill and in the existing regime between different types of small diesel vehicles. For example, under this bill a small Volkswagen Golf will be charged at roughly the same rate as Tau Henare’s Mitsubishi Challenger. He is paying attention now; I have woken him up again. His Mitsubishi Challenger will attract roughly the same road-user charges as a Volkswagen Golf. A Volkswagen Golf is much smaller and much lighter on the road, so the rationale for charging the same road-user charges for a Mitsubishi Pajero or Challenger as for a Volkswagen Golf is, I think, pretty weak. If we are moving towards more fuel-efficient vehicles, smaller vehicles, and potentially the greater use of diesel vehicles, then we need to think quite seriously about whether there should be a greater differentiation in the charging regime for smaller diesel vehicles. That is something that should be considered.

I read through some comments from New Zealand Bus on this particular proposal. It argued that public transport should be subject to a different charging regime, and I think that should possibly be considered, or at least we should canvass the arguments in favour or against having a differentiated charging regime for buses and other forms of public transport that operate on the roads and use diesel. Unfortunately this Government seems to have a natural predisposition against encouraging the use of public transport and against supporting public transport. We have seen that through Steven Joyce’s absolute obsession with building more and more motorways, while at the same time trying to choke off various public transport options around the country.

Hon Maurice Williamson: I bet the Green candidate for Botany wished there had been a motorway out east.

CHRIS HIPKINS: What was that?

Hon Maurice Williamson: I bet the Green candidate wished there had been a motorway out east. He missed his nomination.

CHRIS HIPKINS: If we are talking about motorways in Auckland, I would defer to Melissa Lee’s superior knowledge of the motorways in Auckland. After all, when they built that extra motorway through—what was it, Harbourview—whatever it was—

Jacinda Ardern: Waterview.

CHRIS HIPKINS: When they built that extra motorway through Waterview, she said all the criminals would travel from South Auckland to west Auckland without having to pass through Mt Albert and that would be absolutely fantastic. The voters of Mt Albert embraced that so much that they delivered to her an even lower result than the previous National candidate managed to obtain at the last general election. But that comment, coming as it did from Maurice Williamson, highlights National’s absolute obsession with having more and more motorways rather than considering alternative forms of transport. That is absolutely relevant to this discussion, because when we are talking about the charging rate for diesel road-user charges, one of the issues that could be considered is a differentiated charging rate for public transport.

But the big question I have here is whether this is the step change that we have been waiting for from the Government. The Government members are just back from the Christmas holiday. They have had a nice long holiday. John Key has been off to Hawaii a couple of times to lie on the beach. Is this what he managed to come up with in that period of time? Will changing the road-user charges regime be the step change that will catch us up with Australia? Is this the step change that will give jobs to the thousands of people who have lost their jobs since National came into Government? Will this will give them jobs? I do not think this will do very much for them at all. This is not a step change. This is routine administrative legislation, which is one of the reasons why we support its referral to the select committee, although we would like to give the select committee the opportunity to consider it properly. We are supporting its referral through to the select committee, but where is the step change? It is still not here. It is certainly not in this legislation.

Finally I will comment briefly again on the select committee process. Given the lack of consultation around the bill that we have in front of us, it is very important that the select committee is given adequate opportunity to do its job thoroughly, and that the members of the select committee can focus on this bill and give it the attention it deserves. I do not think that will happen. I do not think that the referral motion that the Government is to move—completely unnecessarily—to rush this bill through the select committee by giving it the ability to meet even when Parliament is sitting will result in this bill getting the scrutiny that it deserves. It will force members to step out of the select committee to participate in other parliamentary processes such as debates in this House, or it will force members not to participate in debates in the House in order to participate in the select committee process. A good chairperson of a select committee should not need the type of referral motion that the Government is to move. It should be possible for the select committee to meet the deadline that is to be set of May 2011 without having to rush through the process and without having to meet while Parliament is sitting.

To conclude, there are some meaty issues here for the select committee to get into. Maybe they are not as much meaty as they are technical, but they are interesting. But overall the bill is not the step change that we are waiting for from the National Government. I would like to see a really concrete plan to get the economy moving. I do not think that this is anywhere near to being close to that plan. Thank you.

MICHAEL WOODHOUSE (National): I am very happy to take a quick call at the end of the first reading of the Road User Charges Bill, but before I do, I would very much like to address the rantings of the member Mr Nash about the quality of roading in Napier. It seemed odd to me that he would bag his own town to quite that degree. I spent a few days in Napier very recently and I can assure the House and those listening that the roads in Napier are in very good condition. The only thing that people in that place wanted to talk about was how good the hard-working MP for Napier was for them, although I must say that the member should take up with the regional land transport committee the small issue of the intersection of State Highway 2 and the turn-off to the airport, which seemed to take for ever to get through. Otherwise, I think that Napier is in very fine fettle and a picture of moderation—“modernation”, perhaps.

Chris Hipkins: Modernation—it’s a new word.

MICHAEL WOODHOUSE: It is. It is a further evolution of the nomenclature. One of the abiding memories of the 2008 election for me, particularly as I am not driven to protest publicly, was standing in the Octagon on that very cold July morning with several hundred trucks circling it. The people there were not normally very empathetic with the values of National, but I think that we picked up a great deal of support through that. Members will know that the independent review was actually the result of that protest and that it was put in place by the previous Minister of Transport, Mrs King. I welcome our new member of the Transport and Industrial Relations Committee, Mr Jones, who is a funny guy. He is intelligent and articulate, and certainly funny in relation to his criticism that the present Minister of Transport has somehow lacked consultation in this process. That is ironic in the extreme.

I want to pick up on Darien Fenton’s comments about using the averages, which potentially favour larger operators. She then conflicted her own position by pointing out that many of those trucks are travelling around only half full, and therefore the larger the truck, the bigger the penalty it will receive for travelling around half full. So I think that the averaging process will remove any of the anomalies that presently exist in the charging regime.

I also want to add my voice to the support for those strategies that will eliminate the evasion of up to $32 million worth of road user charges. I am sure we will hear more about that in the select committee. I support the bill.

Bill read a first time.

Hon DAVID CARTER (Minister of Agriculture) on behalf of the Minister of Transport: I move, That the Transport and Industrial Relations Committee consider the Road User Charges Bill, that the committee report finally to the House on or before 25 May 2011, and that the committee have authority to meet at any time while the House is sitting (except during oral questions), and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 187, 189(a), and 190(1)(b) and (c).

Mr DEPUTY SPEAKER: We have an amendment in the name of Chris Hipkins to omit the words after “May 2011”.

A party vote was called for on the question, to omit all the words after “May 2011”.

Ayes 52

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

Noes 67

New Zealand National 57; ACT New Zealand 5; Māori Party 4; United Future 1.

Amendment not agreed to.

Motion agreed to.

Bills

Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill

First Reading

Hon MAURICE WILLIAMSON (Minister for Land Information): I move, That the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Primary Production Committee, that the committee present its final report on or before 5 July 2011, and that the committee have the authority to meet at any time while the House is sitting except during oral questions, and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 187, 189(a), and 190(1)(b) and (c).

I am really pleased to speak in the first reading of this bill tonight. It amends the Crown Pastoral Land Act 1998 to set in place what I think is a robust and fair new system for charging rent for South Island high country pastoral leases. In July 2009 the Government agreed that lessees would be charged rent on the basis of the earning capacity of a property. We did that because the present rent system, which is based on the land value, is both unworkable and a source of dispute between the Crown and lessees. It is quite clear that those properties do not earn a lot of money just because the sheep can get a lovely view of a lake or a mountain. Therefore, it is wrong to charge just—

Hon Clayton Cosgrove: Careful.

Hon MAURICE WILLIAMSON: Well, Mr Cosgrove may have a different view of sheep, but all I can tell him is that that is not our view.

I am happy to report a high degree of support from high country farmers for the approach that we have adopted in this scheme. Notably, environmental groups who have views on pastoral lease management have not raised any concerns about what we are proposing in this legislation.

It has been a lot of work. We went right back to the drawing board to achieve our goal of implementing earning capacity rents for Crown pastoral leases. This bill proposes replacing what I think is an unworkable land value system with a system based on the productive capacity of the land. Rents will be set by capturing the carrying capacity of a lease in standard stock units and applying a dollar value to those stock units, using objective information about the current economics of high country farming.

Under this bill, scientific information about the characteristics of the land in a lease, such as aspect and temperature, along with a detailed assessment of the land itself will be used as an easily calculated proxy to determine the carrying capacity of the land in its original state. That is a very important element—in its original state. We do not want to penalise people who actively work to increase that capacity. The base carrying capacity will be set once for each lease and will not change. That alone will remove a major source of contention between the Crown and lessees when setting rents.

The process will then assess how much stock the land can plausibly carry at the time a rent is reviewed, so we can measure how far production has increased. The Crown will collect rent on the base production, plus 15 percent of the increase. In other words, somebody who is farming the land really well and gets a substantial increase across the base carrying capacity can extract 85 percent of that gain for themselves, with the Crown taking 15 percent. Ministers gave careful thought to the setting of this percentage. We agreed that rent must be paid on the base production and 15 percent of the increased production; that is what was finally determined. We felt it fairly represents the land and the development opportunity the Crown has provided to the lessees. Implicitly, as I said, the other 85 percent of the increase is attributed to the work lessees have done on the land and paid for over the years. Their own work and investment will not increase the rent they pay.

Crucially, this 15 percent figure conforms to the property rights inherent in a pastoral lease. We sought assurances on those property rights issues and other elements of the proposed system from an independent peer review panel, comprising a former senior civil servant, a retired Supreme Court judge, and a highly experienced valuer. The peer review panel endorsed the overall package of recommendations as a significant improvement over the current system.

Finally, the system takes the productive capacity of the lease—that is, the base plus 15 percent of the increase—and calculates any rents that are up for review by using an up-to-date rate that is calculated each year. This rate captures the current value of the production already assessed.

I will mention two further features of the new system. First, the bill sets out a cooperative approach to assessing the productive capacity of a pastoral lease, including a modern disputes resolution process for those cases where the Crown and the lessee cannot agree.

The final part of the new system that needs mentioning is that the bill contains an opt-in provision to allow lessees currently disputing rental valuations to have their rent set by the new system. As I mentioned before, the existing system encourages disputes. As I speak, 113 leases are currently before the Land Valuation Tribunal. At this rate, over half of all pastoral leases will be in dispute by the time this bill comes into force. This opt-in provision is a vital part of the bill. It allows for the equitable resolution of those disputes and a return to normality for the affected lessees. Those lessees and other lessees in the future will be able to get back to the business that they know best: productive pastoral farming that contributes to the New Zealand economy.

Finally, I along with my colleagues the Minister of Agriculture and the Minister of Conservation extend the Government’s gratitude and thanks to all those who have been instrumental in developing this bill. A lot of work and consultation was required to get here. I particularly mention the peer review panel, as I did before, which did a sterling job; Jonathan Wallis and his colleagues from the High Country Accord, who obviously had an interest they wanted to pursue—

Hon David Parker: They won.

Hon MAURICE WILLIAMSON: I do not believe that. I actually believe this balance gets—

Hon Clayton Cosgrove: You got rolled, Maurice.

Hon MAURICE WILLIAMSON: What?

Hon David Carter: It will be interesting to see how they vote in a minute.

Hon MAURICE WILLIAMSON: It will be. I will be very pleased to tell South Island farmers that Labour members think they rolled us, because I do not think that is how they see it.

As I said, I thank the High Country Accord. I pay a real tribute to the officials from Land Information New Zealand, the Department of Conservation, the Ministry of Agriculture and Forestry, and the Ministry of Justice. This is a particular example of legislation done in consultation with the interested parties, in what I think was a fairly iterative process of getting to a place and a space where we all felt there was balance.

Hon Christopher Finlayson: And Crown Law.

Hon MAURICE WILLIAMSON: How could I have not mentioned Crown Law, I ask “Sir Geoffrey”—I mean Mr Finlayson? How could I have not mentioned Crown Law? I commend this bill to the House.

Hon DAVID PARKER (Labour): The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill is yet another example of the way that this Government rules for a very, very narrow subset of New Zealand. This Government has in the last year given tax cuts of which over 40 percent went to the top 10 percent of earners. It has announced the abolition of gift duty, so that rich people can split their incomes by giving assets to the people in their family with the lowest rate of tax. Now it is giving absolutely unjustified rent reductions to millionaires.

Just about every one of these farmers is a millionaire. These farms are not worth just $1 million; they are sometimes worth $10 million—$10 million. They are more often worth about $4 million, yet the Government of New Zealand is saying that in all cases, whether or not lessees can afford to pay the rent, they will get a discount. Some of these properties have been purchased by the likes of Shania Twain’s family. I do not have a problem with Shania Twain or her family; they are, no doubt, very good people.

Hon Maurice Williamson: She’s not even here any more.

Hon DAVID PARKER: Well, “Mutt” Lange, her partner, still is. In fact, at the moment he is applying to buy a third high country station, I say to Mr Williamson. They paid $10 million for those stations. They are multimillionaires, yet the Government is giving them a rent discount because they do not want to pay the rent that is set out in the lease.

These leases are contractual documents. They are statutory leases—statutory leases. There has been absolutely no doubt in the minds of any of these purchasers that they are obliged to pay rent at a derisory 2 percent of the land value excluding improvements. The lessee’s improvements will be at least half the total value, so let us say the land value of a property worth $4 million is $1 million or $2 million. That means the lessee of a property that is worth $4 million is paying only $20,000 or $40,000 rent to the Crown at the moment under the existing formula. Yet the Government has said that if the lessees say they cannot afford it—actually, it is not even interested whether they can afford it; it will give them a discount anyway.

The previous Labour Government looked at these issues in great detail. We found that some farmers cannot, on the basis of pastoral farming, afford to pay rents that fully reflect the terms of their lease—that is, 2 percent of the land value excluding improvements. We said in respect of those farmers that we would not force them off the land; we would give them a discount. We might try to get them to fix up the wilding pines; we might try to perfect access through to rivers and lakes where there is no access for the New Zealand public. But if we did not need to do those things and they could not afford to pay the rent, then we would give them a discount anyway. That seemed to me to be a pretty fair and reasonable basis for the Crown to approach this issue.

The lessees came back and said that their properties might be worth $10 million when they sold them—and they wanted that $10 million in their pocket; they would not give that back to the lessor—but they would not pay 2 percent rent. They said they would go to the incoming Government, their National mates, and ask for a discount. Those millionaires on occasions can afford to pay it, but they are not willing to, and they want to change the terms of the lease.

Well, I say to the lessees and to National that property rights run both ways. There are private property rights to be respected and there are public property rights to be respected. A precedent is being set that the lessees ought not to forget. What goes around comes around, and I will never put up with an argument now from the lessees coming to me and asking me to please respect their property rights under this lease. What goes around comes around, and this is a licence for a future Government to go in, fix up these things, and change the terms of the lease.

The previous Labour Government never overrode the terms of the lease. The lessees came to me when I was the Minister for Land Information and asked me to respect their legal rights. I am a lawyer; I respect legal rights. My response was to say that I would absolutely respect their legal rights. They could enforce their legal rights, and it was my duty as Minister to enforce the Crown’s rights. The shame, I say to Mr Williamson, is that he is not enforcing his right as lessor in respect of the lease. He is giving away millions of dollars in value to the lessee. He is giving that money away for no consideration; it is a transfer of value from the Crown to the lessees.

This issue was considered in the 1980s by a group of experts, who produced what was called the Clayton report. The Clayton report found that if one gives a discount to lessees of below the market rent, they capitalise an increase in value to the lessee’s side of the ledger, so that the relative division of value between lessor and lessee becomes even more weighted towards the lessee.

Jacqui Dean and Nick Smith pretend that they are trying to get a good landscape outcome in the Mackenzie Country. They are setting up what they call a consultative approach. The outcome of that will be that in tenure review even more of the land will go to the lessee, and even less of it will come to the Crown.

I am told that there is a proposal now for the freeholding of a property around the shores of Lake Tekapō. Of that land, 90 percent will go to the lessee and 10 percent will go to the Crown, and the 90 percent that goes to the lessee will be extensively developed into dairy farms with centre pivots and the like, with extensive changes being made to the landscape. None of that development is permitted under a pastoral lease, but this Government is both encouraging that sort of outcome through tenure review and making the arrangements in tenure review outcomes even more weighted towards the lessee because it is devaluing the Crown’s interest in the lease by reducing the rent. Therefore, the relative share of the property owned by the lessee will increase, and the Crown’s interest will diminish.

This is another example of governing in the interests of a narrow few. No one in Labour was saying that we should drive lessees off the land. Everyone in Labour was saying that if the rent is unaffordable for lessees who are pursuing pastoralism, then we would give them a discount.

But what about the people who have a fractionalised ownership structure? I will give members an example. A property up the Shotover River—I forget what it is called; it is the former Borrell station—is now owned by a large number of people who all own a fractional interest. It is actually a great big crib now. It is effectively a time-shared holiday resort for the people who own it. We are giving them a discount. Some of the wealthiest people in New Zealand have interests in this station. That is without exaggeration. Some of the wealthiest people have an interest in this station, and we are giving them a discount, despite the fact that they paid large amounts of money—

Hon Maurice Williamson: We’re not giving anyone a discount. We’re asking them to pay based on the productive value of their land.

Hon DAVID PARKER: No, the Government is actually giving them a discount below 2 percent of the land value excluding improvements. Two percent of the land value excluding improvements is the statutory value of the lease. It has been for many decades and it is fair. The land values have increased because people pay a lot of money for these wonderful properties, and they are beautiful properties. Most of us would love to own one of them. But we would not expect the Crown, which is the lessor, to give it to us for nothing. It is getting very close to that—it is getting very close to that now.

These properties trade for millions of dollars, yet the Government is now charging less for these properties than the rent on a lot of residential properties in Auckland, despite the fact that these properties are thousands of hectares in area, they sometimes abut lakes—Lake Wānaka, Lake Wakatipu, Lake Tekapō, or Lake Pūkaki—and they are some of New Zealand’s most valuable and most beautiful properties. The National Government is giving those 200 lessees a discount, despite the fact that the lessees are pocketing the money when they sell. Labour said that we should give them a discount if they need it, but if they do not need a discount, then we should charge them the full rent. They bought the property on the basis of that rent. I ask what is wrong with that and what is unjust about that. Again, this measure is an example of this Government governing in the interests of a very small number of people, who are getting millions of dollars in value at the expense of taxpayers.

Mr Williamson said that all of the environmental non-governmental organisations think this is a good idea. That is not correct, I say to Mr Williamson.

Hon Maurice Williamson: I didn’t say that. I didn’t say those words.

Hon DAVID PARKER: The member did not say that? OK, I am happy to say that the environmental non-governmental organisations actually do not think that this is a good idea, because they know it will result in poor tenure review outcomes. We will not have the leverage to sort out things like wilding pines, and we will not have the access to our rivers and lakes that all New Zealanders should have.

Hon DAVID CARTER (Minister of Agriculture): Of all the contributions I have heard in the House, the previous speech from David Parker was the most full of jealousy and spite. It summed up Labour members’ attitude to the farmers of New Zealand. The Government wants to protect property rights, but Mr Parker calls the farmers filthy rich millionaires and says he will deal to them.

Labour has rolled Damien O’Connor. Here is what Damien O’Connor said on 4 August: “High country rentals based on earning capacity is a good principle to base lease payments to the Crown.” He went on to say: “I am sure farmers will welcome the decision and get on with farming and protecting their leasehold properties.” I agree with Damien O’Connor, but David Parker and Mr Hodgson have obviously rolled Damien, because they have changed tack. It sounds to me—though Mr Parker was not prepared to say so—that Labour is now going to oppose the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill.

I am proud to be part of this debate, because it gives some finality and surety to a small group of people who were treated in a despicable manner by Mr Parker and Helen Clark and the previous Labour Government. Mr Parker does not realise that the high country farmers of New Zealand are a very special breed of people. They live in the harshest environment in New Zealand. They live and farm there over a long period of time in order to bring up their families. On the whole, they do a superb job for the environment. They certainly do a substantially better job than any Wellington-based Government department could ever do with the area, but Helen Clark never believed so. For some reason, she had a real snitcher against the high country farmers. I thought it was just Helen Clark who had that attitude, but we have seen tonight that so does David Parker. Every National member in the caucus should send David Parker’s speech to every farmer they know. We now know the respect that David Parker has for property rights.

Over the 9 long years of the previous Labour Government, Helen Clark’s Government ran a concerted campaign to run high country farmers off the land. The first tactic was effectively to stop tenure review by demanding that the Department of Conservation become totally obstructive, grabbing more and more good pastoral land for the Department of Conservation estate. When that failed, Helen Clark and David Parker then announced they would automatically exclude a good number of the properties from tenure review because they might have a water view. That is what David Parker did, and that approach did not kick the farmers off the land, so the previous Labour Government came up with the final strike and raised the rent by hundreds, sometimes thousands, of percent. I tell Mr Parker that I know of farms where the rent he proposed for the high country station was actually higher than the gross income of the farm property. How was that ever going to work? It was not.

We are finally giving some security back to the farming families. We are going to leave them with a rent that is based on income-earning capacity. It is a rent that is affordable. It is a rent that will leave those farmers with some money to spend on things to address weeds and pests, so that they can maintain the environment. I ask Mr Parker to think how unsettling his and Helen Clark’s vendetta on these people was for the 9 years that Labour was in Government. Mr Parker laughs, but he should have got to know these people. He came from the area. It is no wonder they kicked him out as the member of Parliament for Otago. If he had any empathy with these people at all, he would know what his and the previous Labour Government’s policy did for them.

I am very proud to support this legislation. It finally brings resolution to what has been a very difficult issue for our high country community. It gives a clear demonstration that the National Government actually respects the property rights of the high country farmers. They had a lease in perpetuity, which Mr Parker was inclined to completely ignore and then come up with all these other very devious ways of trying to drive them off the land. The bill provides an equitable settlement for all parties. It will be simpler to administrate. It will be more transparent. It provides a fair rent. It allows the guys who live in that environment to get on with the job of farming and to look after the high country. I will guarantee to Mr Parker that those guys will do a substantially better job than any Government bureaucracy could ever do.

Hon DAMIEN O’CONNOR (Labour): The member David Carter and the previous speaker from National, Maurice Williamson, ought to take a lesson in history and read some of their own speeches. A lot has happened in the high country. Back in the 1990s the then National Government did two things. It tried to resolve a couple of anomalies in the leasehold area—one with Māori reserve lands and the other with Crown pastoral lands. Two Acts were passed, one in 1997 and one in 1998. The then National Government drove tenure review because a couple of reports had stated that “Successive Governments have agreed in principle with the commission’s findings that the pastoral leases should be freeholded to release their potential and to offer the opportunity for better stewardship.” That is effectively what tenure review did. It was set in train by the then National Government, with the idea being that some areas of the high country were better in private ownership and some areas would be better put back with the Department of Conservation. The then National Government drove that situation.

The previous Labour Government came in, and did not disagree with it in principle. But some of the easy transitions had occurred and it was getting more difficult, so we ended up with the situation where some properties that had been freeholded had been onsold. The valuation set in the tenure review process for the high country land was proving to be way below that of its market valuation. The Crown, as the owner of the land, was left in a difficult situation. Should it just ignore the market valuation of high country land that people like Shania Twain, Tom Sturgess, and a number of New Zealanders were paying big money for?

Sandra Goudie: Yes.

Hon DAMIEN O’CONNOR: National members say yes. In fact, the law states that a valuation must be taken on an equivalent area of land and that gives a fair indication of the value of the property being looked at. “Equivalent” is a simple term for it. Mr Carter has run off because he does not like hearing this. The fact is that the Crown had a legal obligation to charge a lease based on the valuation of the land. Now, we run into the technical and difficult issue of unimproved land value. In fact, the high country lessees have taken the issue to arbitration and have won their case, which is why we have the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill.

I do not disagree, as I said in my press release, with the general principle of the affordability of rents based on the productive capacity of the land, but it is hard to establish. In a bad year, if a farmer is running just dry stock and beef, they might not get very much income, at all. If a farmer is running fine merino, they might get a slightly better income. If a farmer is running a very profitable tourism operation, they might have a very worthwhile operation. How then do we identify the productive capacity of the land? I put it to the House that the answer is something that we will establish through the select committee process. The changes to land use in the high country have been well known and well publicised. In fact, they are not limited by what we are doing today.

The issue of the productive capacity of the land will be difficult to establish. Labour, when in Government, offered some compensation and some right to negotiate with high country lessees. I went to the Treble Cone ski field, spoke to the high country lessee, and laid out that offer on behalf of the previous Labour Government. Labour is still committed to that approach, but the issue of principle is then about passing on, through tenure review or another process, the right to have control of that land. If that right is onsold, the question is who should then retain the extra value, the unrealised value, when the rents have been set. Some might call it a super-profit. If we have paid on a productive capacity of, say, $300,000 gross income, we will work out our rent accordingly—at 2 percent or whatever the Government will do. But then if that block of land is sold for $10 million or $20 million, some would question whether it was of a very low productive capacity, and that may be the case. The high country lessees have argued that the valuation should not take on board other values beyond that of productive capacity.

If we accept that in principle, then I would go to the Maori Reserved Land Act, which is another piece of legislation passed by a National Government. They then had three kinds of land. There was agricultural, commercial, and residential land. I have had constituents walk from their homes because they have not been able to afford the increased lease on their leasehold property. Briefly, the argument goes like this. The Māori people who own the land have leased it on a 21-year rent review process with perpetual right of renewal, just like the high country people, but in 1997 the then National Government said that it would change the rules. It said this had been unfair to Māori landowners and it needed to straighten it up. I agreed with that in principle, but the lease was based on unimproved land value for the people who had their homes on those properties. When it came to calculating that lease, could the valuers identify unimproved land value? No, they could not. They were obliged by the Rating Valuations Act to say that the value of that property was equivalent to a freehold property of the same size in the same block, and that was what the rent would be charged on. So people in their homes had their leases go up—to quote the Minister—not by hundreds of percent but by thousands of percent, and some of them had to walk from their homes.

Where is the National Government when it comes to affordable leases for those people? Nowhere. If the National Government is to be consistent and if it is to stand on principle and talk about affordability, which I believe in, then it should do something for Māori reserve lessees. There will be a number of farmers amongst members opposite who know full well what I mean when it comes to some of the Taranaki leases. There are 1,000 of the 2,000 leases in the electorate that I am now campaigning in, so I know a little bit about it.

The issue of affordability is rejected by the National Government when it comes to State housing rentals. Do those members ask what the tenants in State houses can afford to pay? Well, they are doing it for high country lessees, and—[Interruption]—stop your squawking—I in principle agree with that. But if we are to have—[Interruption]

Mr DEPUTY SPEAKER: I ask the member to withdraw that comment.

Hon Clayton Cosgrove: Which one?

Mr DEPUTY SPEAKER: The comment that the member just made to the Government member. The member will withdraw that comment, please.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I would like to know which comment you are talking about.

Mr DEPUTY SPEAKER: The member said a very unparliamentary term, and I would like him to withdraw it.

Hon Clayton Cosgrove: Was it “you’re gone”?

Mr DEPUTY SPEAKER: No, it was not that one. It was the one following it.

Hon Clayton Cosgrove: Oh, “Shut up! You’re gone.” I withdraw.

Mr DEPUTY SPEAKER: I want the member to withdraw and apologise.

Hon Clayton Cosgrove: I withdraw and apologise.

Hon DAMIEN O’CONNOR: I have a passion for the high country, too. I have skied there. I have been out in those areas. I have enjoyed time at Molesworth. I have been to Minaret Station. These are iconic, spectacular locations. I admire the strength, the determination, of the people who farm those areas. But times have changed. It is easier now to farm those properties than it was 10, 20, or 30 years ago.

Sandra Goudie: Oh, rubbish!

Hon DAMIEN O’CONNOR: Oh, I wish that member would get off her butt and get out and find out. Now, thankfully, those farmers use helicopters for mustering. Now we have the aid of mechanical means to get around, and that is great. It is a different way of life in the high country now from what it was 20, 30, or 50 years ago, and that is something we welcome. But there is also a new appreciation of the value of that iconic land. It is appreciated by a lot of foreign investors. They are willing to come and buy, and they pay huge amounts of money for land that bears no resemblance to its productive capacity. As long as people are in those areas and farming them, looking after them, and protecting them as they have done in the past, and appreciating and loving that land, then we should give them affordable leases. I do not have any problems with that. The question is, when that comes to transfer on, who gets the right to the excessive valuation above and beyond that of productive capacity? That is the value at which many of those lands are transferred on. The reason that Labour is opposing the bill is that this Government is not consistent when it comes to affordability.

Hon CLAYTON COSGROVE (Labour—Waimakariri): I raise a point of order, Mr Speaker. I ask you to rule on the following matter. The issue—without relitigating it—that you asked me to withdraw on I do not challenge, but I would like to know this, in terms of what is considered to be unparliamentary language, because I did put it to Speaker Smith. I just want to know whether you are ruling that the term “Shut up!”, which is neither foul language nor anything else, is now deemed to be unparliamentary.

Mr DEPUTY SPEAKER: I made a ruling that in the context of what the member said against a Government member, the term was out of order, and it was unparliamentary. I have ruled on that matter, and that is the end of it.

Hon Clayton Cosgrove: Point of order—

Mr DEPUTY SPEAKER: There is to be no further discussion; I have ruled. There is no further discussion.

Hon Clayton Cosgrove: Point of order—

Mr DEPUTY SPEAKER: I have just said to the member that I have ruled and that that is the end of the matter.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I am taking a point of order. Bearing in mind that I am not challenging your ruling but just want to clarify your ruling, I ask whether it is clear that when a member constantly barracks another member, we cannot retaliate in kind with English language out of the dictionary.

Mr DEPUTY SPEAKER: The member has the right to retaliate, and this has been a robust debate. The words that the member used I deemed to be out of order—unparliamentary—and I ruled in that fashion. There is nothing to stop the member rebuking a member over what has been said; this has been a robust debate. I have not interrupted during the course of this debate, but what the member said I found offensive, and I ruled on that matter.

SHANE ARDERN (National—Taranaki - King Country): It has been interesting to listen to members opposite debate the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. Certainly, we have seen the true colours of Labour in this debate. Labour members do not like the words “farming profits”. They are opposed to any kind of agricultural profit. The word “agriculture” annoys them, and the word “profit” sends them into a complete tailspin. They cannot stand it. That is all that the difference is.

Under the 9 years of the previous Labour Government we saw what happened to a group of unique people in this part of the world. They are unique because of where they live and how they derive their income. They were trying to eke out a living in a very inhospitable area—sometimes not achieving that very well—and we had a Government that wanted to run them off the land. Let us look at the previous Government’s track record as custodian of those high country areas. Labour sees them as iconic and worth millions of dollars, and says they should not be managed in the way that this bill proposes. Let us look at what Labour has been like as a custodian. The Clark Government went out and spent hundreds of millions of dollars on buying up high country leases and other freehold high country land to include in the conservation estate. Most people do not realise that the conservation estate in the South Island currently occupies more than 50 percent of the total land area in the South Island. People need to look at it. Although that land is some of the most beautiful and iconic, the condition of it is a disgrace. Under the 9 years of a Labour Government that land deteriorated; it eroded, and it became covered in weeds and pests. The State has become the neighbour from hell in some cases because of the way the Labour Government valued that ownership.

What we have here is a group of individuals scattered across the South Island who, over a long period of time, have established a property right—a lease with the Crown—and have managed that land in a way that is sustainable. Labour members used to use the words “sustainable” and “sustainability” in every speech they gave. That land is being managed in a sustainable way. The weeds are being controlled. The pests are being controlled. The landscape is enhanced. There is a productive outcome for the nation. Those people pay taxes. There is an export earning capacity at the end of it. But, no, Labour members cannot stand that. They say it is Crown land and therefore the Crown should have total control. Presumably, Labour would want to send some bureaucrat from Wellington to manage it. That is exactly what a Labour Government would do with the conservation estate.

Let us look at what is happening in that regard. The example of public access is one that always sets me alight. When the Crown bought some of these iconic high country stations—and paid four times the value that a sheep farmer would have paid—it got control and put it into the conservation estate, then locked the gate. The Crown would not allow public access. In one case public access had been allowed by the private owners for over 100 years, yet the State got control and locked it up. No one was allowed to have public access.

I come back to the bill at hand. The bill proposes a substantial step forward in bringing some certainty to those high country farmers with regard to their commitment to the State. We will go back and honour the intent of the original legislation, which was passed by a previous National Government. That legislation was endorsed by the Labour Government, because it did not step in and change that legislation. This bill will bring some certainty in terms of what the costs are. A couple of members opposite asked what would happen if one of those high country stations came on to the market and was sold to a foreign investor—one who was a multimillionaire, a billionaire, or whatever the case may be—and the lessee captured a higher amount of the value than the State deemed should be the amount that the lessee should capture.

Hon David Parker: No, what their lease says.

SHANE ARDERN: Well, if that is the case, then under this bill the lessee would have to pay a percentage to the State. That is what the bill says. Mr Parker, who says he is a lawyer, should be able to understand that. The lessee will have to pay a predetermined percentage to the State. So the only debate is about whether that percentage is high enough. Of course, in Labour’s eyes, unless it is 100 percent it is never enough. Because those guys were billionaires or whatever, then even if it were 100 percent Labour would say it was not enough. Labour would say we should find another way to get at them.

I tell Mr Parker that the State cannot run the whole of New Zealand. Countries that have tried to do that have failed. Welcome to the real world! We want people to farm this land. We want people to maintain the condition of it, to prevent erosion, to control weeds, and to control pests. The State is not doing a good job of that in the substantial estate that it already has control over. What is the compromise? Members opposite offer no compromise. They want State ownership or nothing, and no profits. They think that if people want to live in those areas, then that is their choice but the State should not ever allow them to make a profit.

Hon David Parker: That is not what we said at all, and you know that.

SHANE ARDERN: That is exactly the position that some of those people have found themselves in.

Hon Damien O’Connor: Listen carefully.

SHANE ARDERN: The Hon Damien O’Connor will have his moment in the select committee. The Minister has said that the bill will be referred to the Primary Production Committee. I will value the member’s input, and generally it is sound.

It will be interesting to listen to the submissions. It will be interesting to hear the State side of the argument. It will be interesting to see what happened under the 9 years of Labour and how this whole thing became an absolute mess and was going backwards. There was no forward progress. No doubt those submissions will come forward. I welcome them and look forward to them. We have no choice but to look at an alternative to what the status quo delivers, because that has been a failure. I look forward to the passage of this bill through the select committee and the report back to the House.

Hon PETE HODGSON (Labour—Dunedin North): The previous speech was a confused contribution, a somewhat bigoted contribution, and certainly a bewildered contribution from the member of Parliament for Taranaki - King Country. It was a strange contribution, because Shane Ardern, of all members, was part of a Government that voted to rapidly and significantly increase the rentals of farms in his electorate because it was deemed to be the right thing to do in terms of sorting out the balance of property ownership and property rights. Yet that same member is now speaking in favour of legislation, the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, that reduces the property rights of the owner and increases the property rights of the lessee. The legislation is a law change that has no basis in economics and that is being done entirely on the basis of lobbying.

If the story is to be told, we need to be reminded that when the previous Labour Government came to power 11 years ago, some lessees of high country stations were paying less than State house tenants were paying for State houses in Dunedin.

Hon David Parker: One was $1,200 a year plus GST.

Hon PETE HODGSON: One was $1,200 a year plus GST. Do we hear any stories about that situation from National members? No, we do not. Instead, we get from the Minister of Agriculture a vein-popping, shrill, and strident contribution that Labour is driven by jealousy and spite. That is not the case. The member to my right, David Parker, against whom the allegation was made, does not have a jealous or spiteful bone in his body, but he does believe in people having a fair suck of the sav.

It is reasonable, is it not, for the Opposition to ask National members—themselves great defendants and guardians of property rights—to please defend and guard property rights where the property right is owned by the taxpayer, not by the individual? All we want is a fair return, which was the case during the time of the previous Labour Government. A fair return was secured, except that an opportunity was given to leaseholders if they thought for whatever reason that the rental was not payable or not affordable. The leaseholders then had the opportunity to go to the Government and say, as they might to any other landlord, “Look, this is too tough. It is too rough. We do not want to walk off the land. Give us a reduction.” And do members know what?

Shane Ardern: They did, time and time again.

Hon PETE HODGSON: I ask the member for Taranaki - King Country whether he would like to tell me how many leaseholders came forward to get a reduction in their rental when the opportunity was presented to them in a statutory framework.

Shane Ardern: They came forward on many occasions, and many of them.

Hon PETE HODGSON: Many occasions, he said. The member for Taranaki - King Country says “They came forward on many occasions”. That is what the member for Taranaki - King Country says, but here is the truth: the answer is none—diddly squat, not a single one, zero. Leaseholders were written to individually. They were written to individually three times, so we cannot have an argument from National members that leaseholders did not know that the landlord was prepared to negotiate.

The leaseholders decided to play the longer game. They decided to socialise their losses, wait until they could get a change of Government, lobby the Government for a change in legislation—which is what is in front of us now with this bill—and say to themselves that it was just as well they did not go cap in hand to that dirty, rotten, stinking Labour Government for a reduction in rentals, because they have got a substantial reduction in rentals and a substantial increase in their property rights as a result, whether or not they need it.

You see, some rich people from the US and Indonesia have bought up bits of the South Island high country as personal bolt-holes. That is the case, and those people sit alongside real, live, ordinary, iconic sheep and beef farmers. I know a few of those farmers; I used to be a veterinarian in the high country. I still wander into the high country in Otago from time to time. In fact, when I was Minister for Land Information, I met many, many runholders in that capacity. I have probably met more runholders in my time than the member who has just resumed his seat, who considers himself to be a cocky.

Sandra Goudie: Oh, rubbish!

Hon PETE HODGSON: “The Orange Roughy” said that is rubbish. Well, she would not know the high country. A good question would be to ask the low country farmer who just resumed his seat why he feels good about high country farmers getting a deal that would never be contemplated for the lowlands—never.

You see, there has been a cave-in by a Government that likes to think it can get away with giving a bunch of money to 231 people, some of whom do not need it—in fact, nearly all of whom do not need it. When we wrote to them three times to ask whether any of them needed the money, none of them said yes. That is the size of the problem. We are accused of running the farmers off the land. We wrote to them three times, asking whether they would like a reduction.

Hon David Parker: Not one of them left.

Hon PETE HODGSON: Not one of them left. What they will do, of course, from now on, when the legislation is passed, is capitalise their gains. When the next lease changes hands, it will be at a higher price than before. Should tenure review persist, then the amount paid by the State to get back its own land will go up—

Hon David Parker: Or the amount the State gets will go down.

Hon PETE HODGSON: Or the amount the State gets will go down, but usually it is the former of those two options. The process will be expensive in any respect.

What do we want for the high country? I think what New Zealanders want for the high country is this—[Interruption] The member who just resumed his seat has had his chance to have a say, and I did not interrupt him. I cannot hear him, and he did not make any sense when I could. The people of New Zealand all enjoy the idea of there being some productive use of the high country. Whether we take a romantic, iconic, sort of Shrek, Driza-Bone approach or a more informed, understanding view of the value of fine wools depends on a person’s point of view. But all of us like the idea of a bit of high country production, especially after tenure review when we have been able to see more of the productive land being used, including for horticulture. It is great; it is wonderful. That is one thing we want the high country for.

Another thing I think we would all agree on is that it would be very good for New Zealanders to have, in perpetuity, reasonable access to the high country. “Reasonable” means all that stuff about whether the sheep are lambing, and on it goes—reasonable access to the high country.

A third thing on which I think we could agree is that we would like the high country to be managed in such a way that there is not a whole bunch of unplanned activity, especially in relation to waterways, or a whole lot of buildings going up along Lake Tekapō, let us say, or whatever the next lake is that will come into the sights of developers, as is happening in the Twizel area at the moment.

Although we did not get this balanced view from the member who resumed his seat, the member for Taranaki - King Country, another thing we could agree on is that managing the exigencies of the high country, whatever they may be—wilding pines, or rabbits, or anything in between—is hard work. It is hard work. We can say, as the member who just resumed his seat—what is his name?

Hon David Parker: Shane Ardern.

Hon PETE HODGSON: —Shane Ardern, says, that the Crown is the landlord from hell. In some cases, that will be true—undoubtedly. But I spent a bit of time in the area when I was the Minister for Land Information, and I can say that some leaseholders are neighbours from hell. Some shocking mistakes have been made, including mistakes made by people who really were trying hard not to make mistakes. They were really trying hard not to. Pinus contorta might be an example of that situation.

We can agree that there have been abuses of the land, including abuses that people really, really tried hard to avoid. But there is no point in getting into a blame game about it, as Shane Ardern did. It will have to be managed by all folk. In the future, the effective managers of the high country land will be a mixture of Crown leaseholders. That is probably what New Zealanders want, and, frankly, if we do not charge leaseholders what the land is worth, and if we give away property rights, then we will see all of those aims reduced and we will go backwards in our management of the high country of this country.

COLIN KING (National—Kaikōura): It is quite clear that debate on the Crown leases is very emotional. It is interesting that there are 230 leases. I have learnt a lot tonight from listening to various debaters.

It is quite clear that we were in a situation, in my view, where there was a mess to be tidied up. The mess that was left was not addressed adequately by the Labour Government of the time. It is interesting to look at a comment in the Otago Daily Times dated 10 October 2008 that states: “News this week of the historic property’s purchase came on the eve of Monday’s start of a two-week hearing by the Land Valuation Tribunal in Dunedin to consider an appeal over the way Land Information New Zealand sets rent on pastoral lease land.” That epitomises what happened to Minaret Station when it was taken to a hearing, a tribunal, as to the formula that was then in existence.

As somebody who would not be so bold as to say he has been to as many stations as all the other learned speakers said, but as somebody who enjoyed the hospitality and the convivial treatment of having shorn on some those stations, mixed with some those people, and picked up the vibes before I even came into Parliament, I have to say how fragile the communities were.

I want to speak about a community that I am reasonably familiar with up in the Awatere Valley, where there are not what one would call any iconic views of Mount Cook or lakes or things like that, but it does have quite a nice view of Mount Tapuaenuku, which is the highest mountain in the inland Kaikōura Ranges at just under 10,000 feet. It has a major problem with rabbits. It has a major problem with Hieracium, and it has a major problem with being able to pay rents that could potentially rise by 600 percent.

I have heard the arguments put forward from the other side as to the inadequacy of farmers to address the Government in a man-to-man fashion—to use a term—but a lot of them were head down, tail up trying to make ends meet. I appreciate that there will be exceptions to the rule, but that is mainly brought about because, as the point was made, these are very, very different times from those when the leases in perpetuity were struck back in the 1860s. Resources are scarcer today and there is much more claim held to those areas of land than there was in those earlier days. In actual fact, if one lived in the Mackenzie country, even when I began shearing back in the 1970s it was a bit of a joke—

Hon Pete Hodgson: In the Mackenzie?

COLIN KING: Absolutely. If one was a merino farmer, it was a bit of a joke.

However, times change, and I take great courage and encouragement out of what the Parliamentary Commissioner for the Environment said about how we manage those very fragile properties, notwithstanding the argument that people will privatise the gains and—

Hon Pete Hodgson: Socialise the losses.

COLIN KING: —socialise the losses. That is externalising the problems and there will be difficulties around it.

However, in saying all that, I say that the Primary Production Committee will handle this diligently under the chairmanship of Shane Ardern. We will make sure that submissions are heard clearly and we will listen to the arguments of the Opposition.

However, it is very important to address the issue because under the Labour administration we ended up with 80 lessees having appealed the new rent levels. That in itself is not a reason to totally dismiss it.

Debate interrupted.

The House adjourned at 10 p.m.