Tuesday, 6 September 2011

Tuesday, 6 September 2011

Tuesday, 6 September 2011

Mr Speaker took the Chair at 2 p.m.

Prayers.

Motions

New Zealand Defence Force—Death of Corporal Doug Grant in Afghanistan

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: I seek leave to move a motion without notice on the recent death of SAS soldier Corporal Doug Grant in Afghanistan.

Mr SPEAKER: Is there any objection to that course being followed? There is no objection.

Hon BILL ENGLISH: On behalf of the Prime Minister I move, That this House pay tribute to Corporal Doug Grant, a courageous soldier who lost his life while serving in New Zealand’s SAS. Corporal Doug Grant died in action at the age of 41 on his second tour to Afghanistan with the SAS. We mourn the loss of Corporal Grant with a very heavy heart.

New Zealanders are rightly very proud of our SAS soldiers. They are among the bravest, most resourceful, and most resilient soldiers in the world. We all grieve when we lose one of them. Corporal Grant’s death is a reminder of the dangers the New Zealand Defence Force’s personnel face while serving in Afghanistan. They carry out an important role with great professionalism and courage. We mourn the death of Corporal Grant, and we remain committed to the work the Defence Force is carrying out in Afghanistan.

Corporal Grant was a man who exemplified the Defence Force’s values of courage, commitment, comradeship, and integrity. He recognised the dangerous and volatile conditions he was facing in his work, but he wanted to be there anyway. He had absolute faith in the work of the SAS, and he knew he could help the Afghan people. Above all else he loved his family: his wife, Tina, and his two young children. I acknowledge the support that the army has provided for the family of Corporal Grant.

I also pay tribute to those who were with Doug at the time in Afghanistan and those who brought him home. A fellow SAS trooper was first to his side and attempted to resuscitate him while under fire. He and other SAS members then extracted him in extremely difficult conditions and took him to a New Zealand Army medic outside the compound. Together they got him to a medevac helicopter, which was provided by the US team, to transport him to hospital in Bagram. Our Australian friends then provided a plane at very short notice so that we were able to bring Doug back home. I thank everyone who helped to rescue him and bring him home. I know that the SAS will continue his good work in his memory.

The members of this House honour Doug’s sacrifice. Our thoughts remain with his family and friends. Corporal Doug Grant paid the ultimate price for his service to his country. He is a hero and we will never forget him.

Hon PHIL GOFF (Leader of the Opposition): On behalf of the New Zealand Labour Party I support the motion and express our sadness and our sense of loss at the death of Corporal Doug Grant, who died in the service of his country on 19 August in Afghanistan. To his wife, Tina, we extend our deepest sympathy, and also I think we reflect with a sense of tragedy that their two young children—Jemma, aged 7, and Jaden, aged 5—will grow up without their father. But they will grow up proud of the man he was, and proud of his accomplishments. We extend our condolences also to Doug’s mum and dad and his four brothers, and also to the SAS and the wider New Zealand Defence Force, who were really part of his family as well.

Doug Grant had always wanted to be a member of the SAS. At his funeral service a story was read out that he had written in year 10 at school, in which he imagined he was a member of the SAS going out and rescuing his schoolmates from an attack made upon them. He joined up with the SAS and served in Afghanistan, but then decided to transfer back to the mainstream army at Linton to spend more time with his young family. But, as is so often the case with members of our SAS, the pull of the unit was too strong and he made the decision to go back, knowing full well that he would be serving in a combat capacity in Afghanistan.

Doug Grant was a very decent man. His family say he had a strong sense of social justice and a strong opposition to injustice. In fact, along with other members of the Patriots Defence Force Motorcycle Club, he campaigned actively against violence within the family. He had good taste—he rode a Triumph—and his commanding officer said that he approached life in the same way that he rode his motorbike: above the speed limit. He cared little for rank, believing that respect came from what one did, not what rank one held. He was also a great storyteller to his friends and his family, earning him the nickname “Doug TV”.

Doug Grant is the third soldier serving with the New Zealand Defence Force to die in Afghanistan, and the seventh New Zealand citizen to die there while serving as a soldier. Like the others, he understood the risks, and he died doing something he believed in. Today in this House we pay our respect to him, and acknowledge his service and his sacrifice on behalf of his country.

Dr RUSSEL NORMAN (Co-Leader—Green): With great sadness I express the Green Party’s heartfelt sympathies for the family of Doug Grant: his wife, Tina, and their young children, Jemma and Jaden. Regardless of one’s views about the war, Douglas Grant can be remembered as a man who died while on a mission to rescue others, and it was not his first time attempting to do so. In the New Zealand Herald last week a friend of his recalled serving alongside him in East Timor, where they helped rescue 600 villagers from a militia. Very few people can lay claim to such feats.

But serving his country was not something Doug Grant did just on foreign shores; it was something he did back home as well. Doug Grant was a champion to end violence against women and violence in the family. As a member of the Patriots Defence Force Motorcycle Club, he was the road captain in the 2010 White Ribbon Ride to end violence against women. During the ride Douglas Grant’s group visited more than 40 communities, and he is remembered for giving his bed away each night so that one of his team could get a good night’s sleep. Douglas Grant, whether it is as a corporal or as a captain, you will be remembered.

Hon JOHN BOSCAWEN (Leader—ACT): On behalf of the ACT Party I also wish to express my sorrow at the death of SAS soldier Corporal Doug Grant in Afghanistan last month. Corporal Grant died in the nation’s capital, Kabul, helping save the lives of three British civilians and two security guards at the British Council offices.

Corporal Grant had a distinguished career in the military. He served for more than 21 years in some of New Zealand’s most important and notable overseas missions. He was deployed twice to East Timor, he served in the former Yugoslavia, and this was his second mission in Afghanistan. When he died he was fulfilling a long-time dream of serving in the New Zealand military’s most elite unit. He wrote an essay as a school pupil about wanting to serve in the SAS, and went on to do just that, with great bravery and commitment. He is an inspiration to all young New Zealanders who aspire to go on to serve their nation in whatever way they can. Soldiers like Corporal Grant do a job that few have the courage to do. They deal with the darkest and most savage and dangerous elements of the modern world, and they do it with professionalism and pride. Corporal Grant believed deeply in the good work the SAS was doing in Afghanistan in helping protect the people of Afghanistan.

It was not just in his career in the military that he dedicated his life to helping others. As we have heard, he was a volunteer for the White Ribbon Ride, an event aimed at eliminating violence against women. He was a community man, and, most important, a family man. I particularly wish to express my heartfelt sympathies to Corporal Grant’s wife, Tina, and their two children. Although we all mourn the loss of a great New Zealander, our loss is nothing compared with their loss of a dedicated husband and father. I hope at this unbelievably difficult time in their lives they can take comfort in the fact that he served his nation with great honour and courage. Too often we ordinary citizens, living our lives in relative safety, forget the role that soldiers play in defending our borders and preserving our way of life. We can also too easily forget the role our military, in particular, plays in rebuilding and keeping the peace in nations that have been devastated by war. Corporal Grant and his family have made the ultimate sacrifice for our country. We all in this Chamber mourn his loss.

Hon Dr PITA SHARPLES (Co-Leader—Māori Party): Tēnā koe, Mr Speaker, mō te Pāti Māori. In te Ao Māori the pursuit of kotahitanga—to travel as one—is a quality much admired. Mā te kotahitanga e whai kaha ai tātou—in unity we have strength. In making the ultimate sacrifice for his people and his country, Corporal Doug Grant demonstrated the courage and the commitment he gave on behalf of us all. And so today we in the Māori Party, along with all other parties in this House, mourn his untimely death, a death so far away in Kabul, yet a death serving under the authority of the New Zealand SAS, representing our country with great honour and pride.

Corporal Grant had taken on the responsibility of training the Afghan National Security Forces and accompanying them on their mission, when he was fatally gunned down by a hail of bullets. He was killed while trying to rescue civilians—three British people and two Gurkha security guards—who just happened to be in the path of fire. It was an act of heroism, a brave and valiant act, which will for ever be associated with his life and, indeed, with his death.

There is no greater sacrifice than to give one’s life for another, and I place on record our complete sympathy and aroha for his wife, Tina, their 7-year-old daughter, and their 5-year-old son, who have to endure such a devastating sacrifice in losing a beloved husband and father. It is the scale of loss for the family that must occupy our thoughts in this final tribute—the parents, the grandparents, cousins, aunts, uncles, nieces, and nephews who no longer have Dougie in their lives. There will be other times when we must address our contribution in Afghanistan and the impact it takes upon our troops. Today it is appropriate to focus on the very human toll made on the family, on his SAS colleagues, and, indeed, on the entire Defence Force.

Doug packed a lot into his 41 years, and probably his five brothers will know only too well the extent of the loss his children must endure. One of those brothers, Stuart Grant, summed it up: “He truly was a deep thinker, sometimes instinctive but never impulsive. He was the whole package, Doug. And it’s important to remember this for those of us who let him go,”.

Nā reira, kai te rangatira, haere, hoki atu, okioki pai, haere ki te hunga nui e pōhiritia koutou ngā mate. Nā reira, koutou ki a koutou, haere, okioki pai mai.

[And so depart the chief, return, rest well, journey on to the myriad who welcome you, the dead. Remain there among the dead, rest well.]

Hon PETER DUNNE (Leader—United Future): For many of us, most of the time Afghanistan is another one of the seemingly interminable conflicts in a far-off place, punctuated by dust, heat, and hardship, and with complete cultural difference. It is only when an event as horrific as the death of Corporal Doug Grant occurs that we realise a couple of things. Firstly, we realise the level of sacrifice being made by all of our personnel in Afghanistan. We realise the risks that they face, the hardships that they endure, and the toll that they are personally prepared to take in defence of a greater ideal. The second thing we realise—and we have come to know this about Corporal Grant since his death—is what fantastic people we have in our armed services: people of high calibre, people who are highly qualified, highly committed, and professional in their tasks, but, as Corporal Grant’s short life shows, people with a huge talent for, and commitment to, the well-being of their fellow citizens. His work with the Patriots group, his work in the area of family violence prevention, and his broad commitment to his community and society demonstrate that.

For his family—for Tina and his children, and the wider family—this is a time of immense loss and huge sadness. The consolation of the support that there is all around the country for them, and the recognition of Corporal Grant’s contribution, will, I hope, be of some benefit, but at the end of the day it is going to be a very lonely and difficult time for them.

For those of us in this House, we salute a man who gave all he could for his country, a man who fell fighting to preserve the ideals for which he had joined the SAS, and a man whose contribution to New Zealand, in 41 short years, was immeasurably strong. Corporal Doug Grant may well have fallen in conflict; he joins the band of New Zealand heroes in that respect. But he will never be forgotten. May he rest in peace.

HONE HARAWIRA (Leader—Mana): Tēnā koe e te Kaiwhakawā, tēnā tātou katoa e te Whare, tātou e noho mai nei i roto i te pōuritanga mō tērā kua ngaro atu i a tātou i tēnei wā. Nō reira, e tika ana kia mihi atu ki a ia me te mea anō i taku rongo, wētahi e mea ana ko tōna mate he mate moumou engari, hara i te mate moumou, hara i te mate taurekareka, he mate rangatira tērā te tū o te hōia o tō tātou Ope o Tūmatauenga kia ora ai tētahi atu; kia ora ai tētahi atu iwi, kia ora ai tētahi atu w’ānau, tētahi atu hapori. Nō reira, e tika ana kia mihi atu ki a ia, kia tangi atu ki a ia me tōna w’ānau a nōki e noho pōuri tonu ana i te mea, hara i te mea ko te tangata nei kua mate, he tangata noa iho. Hara i te mea ko te hōia noa iho, ki wētahi he tamaiti, ki tōna wahine he hoa rangatira, ki ōna tamariki he matua. Nō reira, me mihi atu ki a ia i roto i wēnā āhuaranga katoa me ngā kōrero kua kōrerotia nei ki te tangata, e ū ana ki te kaupapa kia kaua te tangata e patu i tōna wāhine i roto i tō tātou ake whenua. He mahi rangatira tērā anō hoki. Nō reira, aroha ana au ki tōna w’ānau i tēnei wā e tangi ana i te pōuri nui, te pōuri roa.

Hoki mai taku mihi i tēnei wā ki a tātou o roto o Aotearoa, me te mihi a nōki ki tētahi atu hōia kua mate i ngā rā kua pahure ake nei; he hōia mō te reo Māori, he hōia mō ngā tikanga o te Ao Māori, he hōia nō Muriwhenua, a Saana Murray tērā kua takoto mai i roto i tōna marae i Te Hāpua i tēnei rā. Āpōpō rā ngaro atu ki roto o Kapu Wairua. E tika ana kia mihi atu ki a ia mō āna mahi rangatira kia ora ai tō tātou reo, kia ora ai tō tātou kaupapa Māori o roto o Aotearoa whānui. Rātou te hunga mate ki a rātou, tātou te kanohi ora ki a tātou, tēnā koutou, huri rauna kia ora tātou katoa.

[Greetings to you, Mr Speaker, and to all of us, the House, seated here despondent at the loss of that one, lost from us at this point in time. Therefore, it is appropriate that we acknowledge him, stating at the same time that, as I have heard it mentioned, his death was a waste but not in a true sense of being undignified, but rather a noble one as a soldier of our army in the act of saving the life of someone else, from some other family and some other community. So it is fitting that we pay a tribute to him and grieve for him, and also his family, left remorseful, because he was no ordinary man. He was not just a soldier; to some he was a boy, to his wife he was a husband, and to his children he was a dad. Hence I acknowledge him under all those circumstances, and the tributes accorded to him. He was a person committed to the cause of preventing spousal abuse in our country. That is also a noble act. So I sympathise with his family, who at this time mourn the great and long sadness.

At this point I focus my tribute upon us here in New Zealand, to another soldier, as well, who passed away recently—a soldier who fought for the Māori language and customs pertaining to Māoridom, a soldier of the far north, and that was Saana Murray, who lies in state upon her marae at Te Hāpua today. Tomorrow she will be lost to the Gathering Place of the Spirits. It is fitting that I acknowledge her sterling efforts to keep our language, and matters relating to Māori, alive throughout New Zealand. Let the dead rest there peacefully amongst themselves, and we, the living, celebrate life together, so salutations to us all, throughout the House.]

Hon Dr WAYNE MAPP (Minister of Defence): On behalf of the New Zealand Defence Force and the Ministry of Defence, I wish also to express my sympathy and condolences to the family of Corporal Doug Grant, especially to his wife, Tina, and their two young children, and also to his wider family. Corporal Grant’s loss is deeply felt throughout the Defence Force, but especially amongst his closest comrades in the New Zealand Special Air Service. Corporal Grant died serving his country. He was in the midst of the rescue of members of the British Council in Kabul. They were ultimately rescued, and his family have the thanks of the British Council and of Prime Minister Cameron for his heroic endeavours in this regard.

Corporal Grant served our country for 21 years in the New Zealand Army: firstly, in the Hauraki Regiment, then in the infantry, and then in the engineers. In fact, he actually built the family home. But his greatest commitment was to the Special Air Service, where he served from 1997 through to 2003, and then again most recently at the not such a young age of 41 this year. He knew full well the risks that he was undertaking. To join the Special Air Service requires the utmost dedication and perseverance. Only the best get through. They are the elite of the New Zealand Army, and they are assigned the most difficult of roles. As we have heard, he had wanted to join the SAS from his teenage years, and his personal characteristics of resilience and resolution meant that he succeeded in this most difficult trial of character. He was a man who lived life to the full, knowing full well the risks he was undertaking.

The New Zealand Special Air Service has been deployed to Afghanistan on three separate occasions, in 2001, in 2004, and most recently now from 2009. Corporal Grant had served twice in Afghanistan, as well as in Timor-Leste and in Bosnia. He believed in the mission: keeping New Zealand safe from terrorism and giving the Afghan people and their Government the ability to join the broader family of nations as a responsible nation. Clearly, this is a difficult challenge, but real progress is being made. Corporal Grant was in fact helping the Afghan Police Crisis Response Unit to play its part in an improved Afghan Government.

The loss of Corporal Grant is a reminder to everyone in this House of the cost of war. Governments make the decisions to deploy our young men and women on dangerous operations, but it is they and their families who actually pay the price. Each life is precious. Today, we mourn the loss of Corporal Doug Grant. Lest we forget.

Motion agreed to.

Business of the House

Business of the House

Hon SIMON POWER (Acting Leader of the House): I seek leave for the Hon Chris Carter to make a valedictory statement at 5.45 p.m. today, and for the House to suspend for the dinner break at the conclusion of his valedictory statement.

Mr SPEAKER: Is there any objection to that course of action being followed? There is none.

Points of Order

Social Networking Site—Fake Profile

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. It has just been drawn to my attention that there appears to be an impersonation of a member of Parliament reported by Stuff, by way of a false Facebook page entitled “Aaron Gilmore for PM”. My question to you is whether the matter of that sort of impersonation should be brought up as privilege or whether it is a private matter.

Mr SPEAKER: It is certainly not a matter to be dealt with in the House right now. [Interruption] It is not a matter to be dealt with in the House, because it is not a matter to do with the proceedings of the House. But if there is a concern because a member is being impersonated in such a way, inappropriately, I am sure he or she would raise the matter with the Speaker, and the matter could be dealt with.

Questions for Oral Answer

Questions to Ministers

Earthquakes, Canterbury—Cost to Crown and Impact on Earthquake Commission

1. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: What is the cost impact for the Earthquake Commission following Friday’s High Court decision, and what now is the total cost to the Crown of the Canterbury earthquakes?

Hon BILL ENGLISH (Minister of Finance): We do not yet know the impact of the High Court decision, but the judgment would be likely to shift some of the costs from private insurers towards the Earthquake Commission, so there are likely to be extra costs for the Government. The important thing is that the judgment does not affect Canterbury residents, as their claims will still be met. The total cost to the Crown of the earthquakes, including the increased Earthquake Commission liability estimate issued last week, is currently around $12.9 billion. That excludes any impact from the court decision.

Dr Russel Norman: Does he recall telling this House on 16 June this year that had the costs of the earthquake been larger, raising an earthquake levy was something he could have looked at, and, given that the costs are now in the order of $13 billion or possibly $14 billion, will he now look at it?

Hon BILL ENGLISH: I would distinguish between two sorts of costs to the Government. One is the general Government contribution, for instance to the purchase of homes in the red zone. Those costs are over and above any insurance claims, and they are being financed by borrowing, because that spreads the cost across all taxpayers. The insurance-related costs, which are the costs that are now looking significantly larger, have always been financed by the Earthquake Commission levy. It is, of course, possible that in the future those levies will increase, because any increase in insurance costs should fall on those who benefit from it, and that means the insured party.

Dr Russel Norman: Does he accept that his decision not to raise an earthquake levy will, overall, lead to greater levels of Government debt?

Hon BILL ENGLISH: Any Government at any time has the opportunity to put up taxes, which is what the earthquake levy would be. The Government made the decision, which it stands by, that an increase in taxes at the time of a significant earthquake and a recession would not have been helpful for the economy.

Dr Russel Norman: Does he agree with the AA Insurance head of corporate affairs, Suzanne Walton, who recently said that in light of the earthquake cost blowout, the Government might have to seriously look at the Green Party’s proposal to restock the emergency fund through a levy?

Hon BILL ENGLISH: I go back to distinguishing between different costs. The general contribution of the Government to the earthquake recovery is funded through debt. That cost is therefore spread across all New Zealanders. Costs related to insurance, in the Government’s view, should fall on those who are insured. Now that the Earthquake Commission fund is likely to be cleaned out, of course it is quite possible that Earthquake Commission levies will be considerably higher, and those would be borne by homeowners.

Dr Russel Norman: Is he aware that the Christchurch City Council is raising a 1.76 percent earthquake levy on ratepayers, and is it not a cruel paradox that the very people least able to pay a levy—the ratepayers of Christchurch—will have to pay one when the rest of us will not?

Hon BILL ENGLISH: The rest of us are contributing. There is a Government fund of $5.5 billion, and all of that $5.5 billion will ultimately be met by the taxpayer. The Government is working closely with the Christchurch City Council to look at how to achieve fair sharing of the costs between the council and the Government. We will continue those discussions, because decisions have not been made, but, certainly, part of our consideration is the ability of Christchurch ratepayers to pay.

Hon John Boscawen: Would the Government be more or less able to fund the earthquake recovery if Government spending as a proportion of GDP had been reduced to 29 percent—2005 levels—over the last three Budgets, as ACT proposed last month?

Hon BILL ENGLISH: We would be more able to pay.

Hon John Boscawen: How many more billion-dollar increases in the cost of rebuilding Christchurch will it take for this Government to realise the need to reduce Government spending as a proportion of GDP to avoid New Zealand becoming the next Greece, Ireland, or Portugal?

Hon BILL ENGLISH: We would hope there are not too many more multibillion-dollar additional costs of the earthquake. The Government has been working to strike a balance between getting New Zealand in shape to deal with external shocks on the one hand, which means controlling our debt and getting our deficits down, and on the other hand meeting the very real costs of the earthquake and the recession and, to the extent it is possible, protecting the most vulnerable through that period.

Economy—Government Policies

2. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Finance: What steps has the Government taken to build a more competitive, export-focused economy?

Hon BILL ENGLISH (Minister of Finance): The Government has taken a number of steps, including getting control of Government debt and laying out a track to return to surplus faster. We have undertaken the largest tax reform in 25 years, invested heavily in productive infrastructure, managed the economy responsibly, and made the public sector more efficient. If re-elected in November, the Government will also extend the mixed-ownership model to four energy State-owned enterprises, and reduce its shareholding in Air New Zealand.

Peseta Sam Lotu-Iiga: How will the mixed-ownership model be positive for both taxpayers and New Zealand savers?

Hon BILL ENGLISH: It will be a win-win. New Zealanders who are now starting to save for the first time in a decade will get the opportunity to invest in good New Zealand companies, and the Government will get access to $5 billion to $7 billion to buy new assets, such as rolling out ultra-fast broadband, and schools and hospitals, without having to borrow from overseas lenders and increase our debt. At the same time the Government will retain 51 percent control of these five State-owned enterprises, the same model as Air New Zealand and the Port of Tauranga.

Hon David Cunliffe: Given that New Zealand is currently enjoying a 37-year record in export prices, why is his Government still running a current account deficit, why is the unemployment rate 6.5 percent, and why is he racking up the biggest Government deficit in New Zealand’s entire history?

Hon BILL ENGLISH: Because we are still recovering from the severe damage inflicted on this economy by 9 years of a Labour Government.

Peseta Sam Lotu-Iiga: How will the companies in the mixed-ownership programme remain firmly in New Zealand control?

Hon BILL ENGLISH: In the first place, the Government will retain at least 51 percent control on behalf of all New Zealanders, and New Zealanders will be at the front of the queue for shares. We would expect that the combination of keen Kiwi mums and dads, KiwiSaver funds, Crown financial institutions, and other New Zealand investment managers will mean that New Zealanders will own at least 85 to 90 percent of these companies.

Hon John Boscawen: How can the Minister credibly argue that the Government is getting debt under control, when the deficit to the year ended June 2011 would have been over $10 billion excluding the effect of the Christchurch earthquake; and does he agree that if he really wanted to create a more competitive and export-orientated economy, he would take meaningful steps to reduce Government borrowing and Government expenditure to take the pressure off our overvalued exchange rate and to make our industries and our employers more competitive?

Hon BILL ENGLISH: The member’s analysis of the economy is correct. Under the previous Government the economy was dominated by construction and financial services in Government—all of which were far too much funded by debt. The Government took a number of decisions in Budget 2011 to achieve just what the member has said, although we are going about it in a more balanced and incremental way than perhaps that member’s party would like.

Peseta Sam Lotu-Iiga: What reports has the Minister seen that support the Government’s plans to offer New Zealanders a minority shareholding in these companies?

Hon BILL ENGLISH: I have seen a number of reports that support our policy. The Tower Investments chief executive, Sam Stubbs, who manages funds on behalf of thousands of New Zealanders, said last week that in fact Tower Investments will be selling overseas shares in order to invest in these State-owned enterprises. I notice also that iwi leaders spokesman Mr Tuku Morgan confirmed that iwi would be long-term investors in these companies, for the benefit of future generations.

Workforce—Skills

3. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that “New Zealand simply can’t afford a future where 20 percent of our workforce does not have the skills necessary for modern jobs”?

Hon STEVEN JOYCE (Minister of Transport) on behalf of the Prime Minister: Absolutely. That is why this Government has increased the output of industry training by 14 percent since 2008, that is why we have created 16,500 more full-time places across the tertiary sector since 2008, and that is why we have introduced the Youth Guarantee, which will provide 7,500 places next year. That is why we are establishing 21 trades academies—a number doubled, in an announcement made only today by the education Minister—and that is why we have more than trebled the number of people participating in level 1 and 2 courses with embedded literacy and numeracy in just the last 3 years.

Hon Phil Goff: Is it not actually true that the number of people in industry-based skills training has dropped by 31,000 under this Government’s watch and that the number of apprenticeships has declined, particularly in the area of building and construction, where those skills are desperately needed to rebuild Christchurch?

Hon STEVEN JOYCE: What has actually happened is that the Government is no longer funding imaginary trainees like the previous Government did. In 2008 more than 96,000 people—in fact, 96,831 people—were listed and were funded by the previous Government as being in industry training, where they did not achieve a single credit. In 2009, which was the last year before we changed the rules, more than 100,000 people were funded to do industry training and did not achieve a single credit. In fact, across those 2 years there were 44,000 people who were taxpayer funded in the settings made by Labour who were there for 2 years and did not achieve a single credit. That is not industry training. That is imaginary training.

Hon Phil Goff: Why has he not acted on the advice given to him by the Tertiary Education Commission in March of this year to double the amount of funding going into training building and construction workers to overcome a massive skills shortage, perhaps using some of the money—the $145 million—that he cut out of industry training in the Budget this year?

Hon STEVEN JOYCE: I point out to the member that in Budget 2011 we made available $48 million more for industry training and for trades-related training in polytechnics. Those numbers are growing and considerable places are still available. On top of that, we announced $55 million for job opportunities placements with the Ministry of Social Development and employers to subsidise people into industry training for trades-related training. They are all available now. If there is anybody interested in taking up trades training opportunities, there are hundreds and thousands of those available right now for trades training in Christchurch.

Hon Phil Goff: In view of the fact that we have a very high rate of young people unemployed in New Zealand, alongside a skills shortage, why does he not pay an incentive—such as the unemployment benefit, which goes to young people who are currently unemployed—that would go to the employer on the basis that it makes a hell of a lot more sense to pay the employer to train a young person in lifelong skills than to have that person rot on the dole?

Hon STEVEN JOYCE: Well, in fact, we do exactly that with the Skills for Growth programme, and the Job Ops with Training programme makes subsidies of $5,000 available for employers for exactly that thing. I have seen other suggestions from other parties about how we could improve industry training. I can tell the member opposite that we are already doing pretty much all of them.

Hon Phil Goff: Does he agree with the Canterbury Employment and Skills Board chairman, Carl Davidson, that rebuilding Christchurch would take as long as 15 years because of the shortage of skilled labour in that city?

Hon STEVEN JOYCE: I can tell the member that the Minister for Tertiary Education was meeting trades trainers in Christchurch yesterday, and he spoke with a number of them on the training that is going on at the moment. I can tell the member that trades-related training for institutes of technology and polytechnics is up 2,500 since 20 April this year; that the numbers in industry training are increasing steadily, as well; and that as businesses get more confidence in terms of the construction work coming through, I am reliably informed that they will take up trainees at an increasing rate.

Hon Phil Goff: When he launched the Kia Ora Mai training programme 2 years ago and said that that would raise the skills of 10,000 service industry workers in time for the Rugby World Cup, why, 3 days out from the Rugby World Cup, has he achieved only 10 percent of that number?

Hon STEVEN JOYCE: I think it is important to say that these are demand-based programmes making the places available. It is important that the demand has the opportunity to be met. But the point is that this Government has made thousands more places available in tertiary training and there is no shortage of places available right now.

Surgery, Elective—Average Annual Increase in Discharges

4. TIM MACINDOE (National—Hamilton West) to the Minister of Health: What was the average annual increase in elective discharges from 2000/2001 to 2007/2008, and how does this compare to the average annual increase in elective discharges over the last three financial years?

Hon TONY RYALL (Minister of Health): Official reports from the Ministry of Health advise that the average annual growth in elective discharges over the 7 years 2000-01 to 2007-08 was 1,432 a year. This was less than the population growth over the same period, meaning there was a cut in access—[Interruption]

Mr SPEAKER: I apologise to the Minister, and I apologise to the House. My hearing is terrible today—a bug has got into my ears. I can hear clearly when there is not a lot of noise, but when there was a high level of interjection I found I could not hear any of the numbers the Minister was giving. As the question was from a National backbencher, it is reasonable that he should be able to hear the answer too. I think the level of interjection was just unreasonable. I ask the Hon Tony Ryall whether he would not mind starting his answer again for me, please, and I want to hear it.

Hon TONY RYALL: Official reports from the Ministry of Health advise that the average annual growth in elective discharges over the years 2000-01 to 2007-08 was 1,432 a year. This was less than the population growth over the same period, meaning there was a cut in access to elective surgery. Over the last 3 years the average annual growth in patients benefiting from elective treatment has risen by an average of 9,000 a year. This is an annual increase of over six times that of the previous Government.

Tim Macindoe: What does this record increase in elective surgery mean for patients?

Hon TONY RYALL: Well, this outstanding performance by district health boards means that many more people are getting the care they need to have a better quality of life. It means an extra 500 patients a week—for example, an extra 23,000 people aged 65 and over have had operations for things like hip replacements and cataracts, and there have been an extra 4,900 operations to fix ear, nose, and throat conditions. This has been delivered as part of the Government’s $1.5 billion investment of new money into health over 3 years, and the Government would like to thank the many doctors, nurses, and other health professionals who have delivered this fantastic result for New Zealand patients.

Grant Robertson: I seek leave of the House to table the September 2008 case-weighted discharge monitoring report that shows that over the term of the last Labour Government there was a 38.6 percent increase in case-weighted surgery.

Mr SPEAKER: The source?

Grant Robertson: The Ministry of Health. [Interruption]

Mr SPEAKER: Not good enough. Senior members of the House know that when points of order are being heard they do not interject, and they should not. 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.

State-owned Assets, Sales—Ownership of Shares

5. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by his statement in relation to part-privatisation of State-owned assets that “there will be some wholesale investors from overseas who will want to buy a little bit of these shares”?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Yes. New Zealanders will be at the front of the queue and will have substantial capacity to invest, but we expect there will be some interest from wholesale investors overseas. That will help ensure that we get good value for taxpayers’ money, but the amount left for overseas investors is likely to be small.

Hon Phil Goff: Why did the attendees at the recent National Party conference totally disbelieve the Minister of Finance when he made that same claim?

Hon BILL ENGLISH: They did not.

Hon Phil Goff: The newspaper was wrong, was it?

Mr SPEAKER: Order!

Hon Phil Goff: What restriction, if any, will there be on those buying shares in State assets from onselling those shares to foreign investors?

Hon BILL ENGLISH: As I pointed out, on the occasion the member is referring to the Government does not intend to bring in on-selling restrictions, because if we are going to have a market, we may as well have a market. But I would point out to the member that in the last 4 or 5 years there has been a trend towards greater New Zealand ownership of the New Zealand Exchange and less foreign ownership. In the case of the Port of Tauranga, which is under mixed ownership, New Zealand’s ownership proportion of the Port of Tauranga is growing. We believe that with the success of the Government’s policies encouraging New Zealanders to save, New Zealanders will want to buy these shares, and they will hold on to them.

Hon Phil Goff: When there is no restriction at all on people onselling the whole 49 percent of those shares to foreign investors, how can he make the claim that 85 to 90 percent of those shares will be in Kiwi hands long term; or is that just wishful thinking?

Hon BILL ENGLISH: We believe that New Zealanders will retain the shares. That is the track record of the last substantial float directly to New Zealanders. As I pointed out, with New Zealanders now saving more, there is a trend towards New Zealanders buying back the foreign ownership of shares.

Amy Adams: What recent evidence has he seen of strong local demand for domestic assets?

Hon BILL ENGLISH: There was an example just last week. Air New Zealand, which was set up as a mixed-ownership company by the previous Labour Government and has operated in that way for—

Hon Trevor Mallard: No, no—rescued. Rescued when it was a private company that went broke.

Hon BILL ENGLISH: Well, I presume the Labour Government knew what it was doing. I presume the Labour Government knew it was setting up Air New Zealand as mixed ownership. It raised $150 million of 5-year bonds from the local market. There was obviously very strong demand. There was no need to sell through a public pool because there was such strong demand for Air New Zealand bonds. We believe there will be the same kind of strong demand for Air New Zealand shares.

Hon Phil Goff: Is he prepared to give an absolute guarantee that a future National Government would not sell 100 percent of the shares in any State-owned asset, and would that guarantee be as reliable as the Prime Minister’s promise that “We will not be increasing GST.”, and the other one, that the Government share going into KiwiSaver would remain intact?

Hon BILL ENGLISH: The Government is doing exactly what it said it would do. Before the last election the National Opposition said that it would retain all State assets and that it would not sell any until or unless it had a mandate from the New Zealand public to do so. In this election campaign we are campaigning on the mixed-ownership model, and New Zealanders will have the opportunity to vote on a very clear proposition. As part of that, we have guaranteed that the Government will retain 51 percent ownership.

Hon Phil Goff: Does he stand by his earlier statement that dividends from the State-owned assets that will be sold, or part-sold, helped pay for social services such as health care, and does it follow that if he is selling half of the shares in those companies, then half of the dividends—which would have been, the previous financial year, $800 million, or the last financial year, $900 million—will no longer be available for that purpose?

Hon BILL ENGLISH: Certainly, of the $800 million that the member refers to in the last year, about half of it will not be available again, because it consists of the proceeds of the asset swap that was done between Meridian Energy and Genesis Energy, which effectively released $500 million to the Government. Of course spending will be tight over the next 3 or 4 years, because we are still trying to get hold of the rapid upsurge in spending that occurred under the last Government.

Afghanistan, Bamian Provincial Reconstruction Team Base—United States Personnel

6. KEITH LOCKE (Green) to the Minister of Defence: Was he briefed as to the presence of United States personnel at the Provincial Reconstruction Team base in Bamiyan and their duties; if so, what are the duties of the United States personnel at Bamiyan?

Hon Dr WAYNE MAPP (Minister of Defence): I am well aware of the presence of the United States personnel at the provincial reconstruction team base in Bamian as, in fact, I have seen some of them at the base on the two occasions on which I have visited. As Mr Vernon Small noted in the Dominion Post last Friday, this is, in fact, no secret. A number of personnel from other countries also currently use the base, including Malaysia, which has the largest contingent, the United States, and the European police contingent. Singapore has been a partner in the past. In relation to the second part of his question, the United States personnel are involved in many different duties, ranging from supporting military operations through to Department of State personnel supporting aid and infrastructure projects and civilian contractors involved in local facilities maintenance.

Keith Locke: Prior to the recent articles of Vernon Small, did the New Zealand Defence Force ask media it facilitated going to Bamian not to report the presence of United States personnel and their role; if so, why?

Hon Dr WAYNE MAPP: The answer to that is no.

Keith Locke: Are any New Zealand Defence Force personnel at Bamian required to report to United States personnel?

Hon Dr WAYNE MAPP: New Zealand Defence Force personnel are accountable to the New Zealand Defence Force and our command system, and that is exactly what I would expect.

Keith Locke: I raise a point of order, Mr Speaker. The Minister said that the New Zealand Defence Force reports to New Zealand command, but the Minister did not answer my—

Mr SPEAKER: If the Minister’s answer was not no, then the Minister had better correct my understanding of his answer.

Hon Dr WAYNE MAPP: I would also add that there is obviously a certain sharing of information between New Zealand and the United States, but the accountability is, in fact, to the New Zealand Defence Force.

Keith Locke: Are the United States personnel based at Bamian collecting intelligence to help the United States fight the wider war in Afghanistan?

Hon Dr WAYNE MAPP: The NATO International Security Assistance Force mission is, in fact, a coalition operation, and clearly all the partners are engaged in sharing information relevant to the overall operation.

Keith Locke: Does the Minister not think that this conflicts with the Defence Force public relations statement back on 15 July 2003 that the provincial reconstruction team in Afghanistan is “not going to war”, and that its “focus … is on reconstruction”?

Hon Dr WAYNE MAPP: No, I do not think there is a conflict.

Keith Locke: I seek leave to table chapter 17, headed “Bamiyan”, of Nicky Hager’s Other People’s Wars, which is subtitled “Public relations vs reality at the Kiwi base”.

Mr SPEAKER: Leave is sought to table that chapter from Nicky Hager’s book. Is there any objection? There is objection.

Children, Welfare—Child Poverty

7. Hon ANNETTE KING (Deputy Leader—Labour) to the Prime Minister: Does he stand by all his answers to Oral Question No 1 on 16 August 2011?

Hon PAULA BENNETT (Minister for Social Development and Employment) on behalf of the Prime Minister: Of course.

Hon Annette King: Given his statement in Parliament on 16 August that the report from Every Child Counts—a report that estimated the cost of poor child outcomes at $6 billion per year—was rubbish, what is his estimation of the actual cost of child poverty in New Zealand?

Hon PAULA BENNETT: In the context of the Prime Minister’s statement that it was rubbish, it was quite clear that he was saying that six of the key indicators were not available. So the ranking becomes kind of relative. Two of the ratings used—the indicators—were wrong, so that is the context of his making that statement.

Mr SPEAKER: I invite the Hon Annette King to repeat her question. It was a very interesting answer, but I am not sure that it was actually an answer to the question asked.

Hon Annette King: Given his statement in Parliament on 16 August that the report from Every Child Counts was rubbish—a report that estimated the cost of poor child outcomes at $6 billion per year—what is his estimation of the actual cost of child poverty in New Zealand?

Hon PAULA BENNETT: It is entirely appropriate to put context around the Prime Minister’s statement that the report was rubbish. The member has gone on to make an assumption as to why he made that comment—that it was about the $6 billion—whereas his comment was made in the context of the fact that six of the key indicators were not available, two of the figures used for the indicators were wrong, and the report did not include Government spending, such as spending on health and other social investments.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think you got it right last time when the supplementary question was asked.

Mr SPEAKER: With respect, I think that the Minister did clear up misunderstanding with that answer, because she pointed out in more detail that the Prime Minister’s dismissal of the report, or his description of the report, was not related specifically to the cost. It was not the cost that he was arguing was rubbish; it was other aspects of the report that he was questioning, and that is a perfectly fair answer. It would seem that the Minister is not disputing the cost side of it.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Although you interpret the answer as the Minister not disputing the costs, it was a very specific question about the cost, which the Minister did not refer to. Normally in this House I think we have an arrangement where Ministers say if they do not dispute it.

Mr SPEAKER: I invite the member to look at the Hansard. I seem to recollect the member referring to the cost not being what the Prime Minister was disputing. I accept that my hearing is not great today at all, but I believe I heard that, and that is why I think the second answer was a better explanation and a reasonable answer.

Hon Annette King: In light of the report from Every Child Counts, which estimates the cost of poor child outcomes in New Zealand at $6 billion per year, what is his estimation of the actual cost of child poverty in New Zealand?

Hon PAULA BENNETT: In all fairness, there are a number of reports, a number of evaluations, and a number of estimates going on, which are discussing whether we have a problem, its magnitude, and what the actual cost of that might be. That is both commendable and actually predictable for this point in the election cycle. Members of this side of the House are not getting into an argument as to whether we have a problem. We think we do. Hence we are putting such a massive investment into children in this country.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Although, again, I respect your interpretation of the supplementary answer before this one, I think I might have just been proven right. You indicated that the Minister had not disputed the figure. She was asked on this particular occasion “if the figure was not right, what was it?”. I thought it was clear that she was now disputing it.

Mr SPEAKER: The member makes a perfectly reasonable point. If I recollect the question correctly, it was actually a pretty precise question. It contained no criticism of anything the Prime Minister had said; it just asked, if I recollect correctly, what the Government’s current estimate of that cost was. I invite the member to repeat her question in case I have it wrong.

Hon Annette King: In light of the report from Every Child Counts, which estimated the cost of poor child outcomes at $6 billion per year, what is his estimation on the actual cost of child poverty in New Zealand?

Hon PAULA BENNETT: The point I am making is that there has been a number of reports over the last 12 months in particular. That is both commendable and quite predictable at this point of an election cycle. There is merit in the statement that there is child poverty, and that is why this Government is actually putting in the investment, particularly investment in the early years, which matter most.

Hon Trevor Mallard: I raise a point of order, Mr Speaker.

Mr SPEAKER: I can anticipate the member’s point of order, but there does not seem much point in pursuing the matter, because it appears that the Prime Minister does not have an estimate—at least the Minister answering on behalf of the Prime Minister does not.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Again, going back two questions, it might appear that way, but when a direct question is asked, if the Prime Minister does not have an estimate, then I think he is obliged to say so, not just waffle around the edge of it.

Mr SPEAKER: It is—[Interruption] Does the member wish to speak to the point of order?

Hon PAULA BENNETT: If you would like further clarification, I am quite happy to give it.

Mr SPEAKER: The question asked what the Prime Minister estimated the cost of child poverty to be, given that the figure in the report being referred to was $6 billion, from memory. If the Minister can help clarify that, so that the House can make progress, it would be helpful.

Hon PAULA BENNETT: My point is that there have been a number of reports and they actually go from a low figure to a relatively high figure. I do not have those numbers in front of me, and I am not prepared to just pick one out.

Hon Annette King: Does he stand by the statement in the Government’s Green Paper for Vulnerable Children that the Government will ensure ongoing research and evaluation to identify vulnerable children and to ensure interventions are effective?

Hon PAULA BENNETT: Yes. Not a lot of that work has been done, particularly in the last 10 years, so we are having to pick up evaluations that have not been done as to which children are vulnerable, where they are, and what programmes are effective. We have put a number of initiatives in place. The Minister of Health and the Minister of Education in particular are focusing on those early years, as is my own department. There are positive behaviour programmes and Family Start, just to name a couple of examples. But there are a lot more as well.

Hon Annette King: In light of that answer, why is the Growing Up in New Zealand multidisciplinary study, which produced its first report last year—which the Minister for Social Development and Employment acknowledged showed that those on lower incomes are not accessing the services and help they need—having its funding cut by his Government; and does it not make a mockery out of his claim that policies should be evidence-based when he cuts the very ability to gather such evidence?

Hon PAULA BENNETT: I do not have the actual number in front of me, but I know that millions of dollars are going into the Growing Up campaign. When Labour left office it had not fully funded it through to subsequent years. It had set it up but not actually funded it going forward. This Government has put forward literally millions more into it, and that funding is going in.

Public Transport, Auckland—Commuter Rail Network

8. NIKKI KAYE (National—Auckland Central) to the Minister of Transport: What progress has the Government made on improving Auckland’s commuter rail network?

Hon STEVEN JOYCE (Minister of Transport): It has made good progress. Last Thursday the Government and Auckland Council agreed to a funding and ownership arrangement that will dramatically increase the number of electric trains able to be purchased. The deal, which includes an additional grant of up to $90 million from the Crown, means that 57 three-car trains will be able to be purchased, which is 50 percent more than the 38 trains planned for previously by the Auckland Regional Council. This means that the entire fleet of trains on the three lines in Auckland will be electric. Having an all-electric fleet will result in significant operational savings, helping to reduce the previously identified operational deficit. A contract for the purchase of the new trains will be signed at the end of this month, with the new trains arriving progressively from 2013.

Nikki Kaye: What are the advantages to Aucklanders from this deal?

Hon STEVEN JOYCE: There are many. Aucklanders will have a brand new electric train fleet on all three lines, thanks to the Government making an additional grant of up to $90 million to ensure Auckland transport can take advantage of the current favourable purchase conditions. Commuter rail is an increasingly important way for Aucklanders to get to work, and this package will complete a massive $1.6 billion Government-funded upgrade of Auckland’s network. It is very important to note that these rail upgrades are all being completed without recourse to the 10c-a-litre regional fuel tax planned for Auckland by the tax-hungry previous Labour Government. I would like to thank the mayor and his council for their constructive engagement on this issue.

Phil Twyford: Can he point to one major initiative for Auckland rail that was not planned for, and committed to, by the last Labour Government?

Hon STEVEN JOYCE: Well, actually, if the member had been paying attention, he would realise the half a billion dollars of electrification was to be paid for by the 10c-a-litre regional fuel tax, as was the $500 million investment in trains. This Government has done it much more cost-effectively, and done it without a 10c-a-litre regional fuel tax for Auckland.

Phil Twyford: Will he confirm that the following achievements were all planned for, and committed to, by the last Labour Government: the upgrade and extension of the existing metropolitan rail network, the electrification of the rail network, the purchase of the new passenger rolling stock, the investment in new and upgraded rail stations in Newmarket, New Lynn, and Grafton, the reopening of the Onehunga branch line, and the building of the Manukau rail line?

Hon STEVEN JOYCE: The answer to that question from the member is, on the first one, yes. The second, third, and fourth projects were all unfunded by the previous Government, unless one counts the regional fuel tax, and the answer in relation to the fifth and sixth projects is no on both occasions.

State-owned Assets, Sales—Ownership of Shares

9. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: If he expects at least 85 to 90 percent of the State-owned assets he intends to privatise would remain in New Zealand’s ownership, including the Crown’s holding, what percent of the shares he plans to sell would be bought by foreign buyers?

Hon BILL ENGLISH (Minister of Finance): It is hard to say, because the percentage acquired by overseas buyers will depend on demand from local investors. We expect that demand from local investors will be strong. Between households, KiwiSaver funds, Crown financial institutions, and other funds, they have the capacity to buy and hold most, or all, of the stock offered if they choose to do so. Moreover, many local investors are likely to take a buy-and-hold approach. For this reason, we expect that the portion eventually bought by overseas bidders is likely to be small, but, as I said, we cannot say for sure what it would be.

Hon David Cunliffe: If, by his own admission, it is 10 to 15 percent of the total and he is selling only half, is that not 20 to 30 percent of what is actually sold?

Hon BILL ENGLISH: Well, it is a bit like the member counting the number of people who are not voting for David Cunliffe in the Labour caucus, is it not? Of course, mathematically that is possible, but when the member puts it that way it makes me realise that the 85 to 90 percent may be too conservative.

Hon David Cunliffe: Has Minister “2 Percent” reassessed the business case for asset sales in light of the increased $900 million in dividends, excluding Genesis, which is yet to report; and can he confirm that this recent increase in the dividend stream would be lost to the New Zealand taxpayer if his sale programme goes ahead?

Hon BILL ENGLISH: No, I cannot. The Government would be the 51 percent owner, so the Government would receive 51 percent of the dividends. The $900 million figure that the member quotes includes a one-off payment associated with the asset swap in the South Island, as do a lot of the previous dividend figures that he quotes. In fact, the underlying dividend is only about $380 million.

David Bennett: What successful examples of firms operating mixed-ownership models has he seen?

Hon BILL ENGLISH: I have already mentioned Air New Zealand, which has operated as a mixed-ownership company for some years, because it was set up that way by the previous Labour Government. Another similar case is the Port of Tauranga, which is 55 percent owned by the Bay of Plenty Regional Council and which has experienced, in recent years, a growing proportion of New Zealand ownership because it is a well-run and profitable company. Its share price has almost doubled in value over the past 3 years, making it close to the best-performing stock on the New Zealand Exchange. The Government would expect that if these companies are floated, they will also be high-performing stocks on the New Zealand Exchange.

Hon David Cunliffe: Given that the carnage on international sharemarkets has seen New Zealand’s listed energy stocks fall by 20 percent already this year, and given that that is a number the Minister is well acquainted with, has he revised downwards the expected proceeds of selling Genesis, Meridian Energy, and Mighty River Power; if so, by how much?

Hon BILL ENGLISH: I think the volatility in those sharemarkets underlines the wisdom of the Government’s decision, which that member has opposed, to borrow billions of dollars and invest New Zealanders’ money on those foreign sharemarkets through the Superannuation Fund. With regard to guesses about the funds that might flow from a float, Treasury made a best estimate some time ago, and the Government would want to make the best of conditions at the time. But, no, we have not revised that estimate.

Hon David Cunliffe: How much lower would equity markets have to plummet before the Government suspended its asset sales programme, or would it sell at any price, because it is driven by ideology, not value for taxpayers?

Hon BILL ENGLISH: The Government is not driven by ideology in this case. In this case it wants to provide opportunities for New Zealand savers to invest and to source capital to invest in hospitals, schools, and broadband, so we do not have to borrow it from foreign lenders and pay them interest.

Hon David Cunliffe: I raise a point of order, Mr Speaker. The Minister has not addressed the question, which asked by how much lower would equity markets have to fall before—

Mr SPEAKER: Yes, if the member had stopped his question at that point, it would have been fine, but he went on to talk about whether it was driven by something or ideology and the Minister quite appropriately answered that part of the question, at least in his judgment.

Trades Academies—Increase in Places and New Academies

10. NICKY WAGNER (National) to the Minister of Education: What recent announcements has she made regarding trades academies?

Hon ANNE TOLLEY (Minister of Education): Great news. I am pleased to inform the House that this Government is doubling the number of new trades academies. In this year’s Budget, we promised another five new academies; we are now doubling that to 10. With the current eight and the three that are already scheduled to open next year, this will bring the total number of trades academies in New Zealand to 21. In addition to this, we announced yesterday that we are trebling the number of places at the Canterbury Tertiary College from 148 to 550. This is keeping even more 16 and 17 year-olds engaged in education and practical skills training who would otherwise be at risk of dropping out of the system.

Nicky Wagner: Where will the new trades academies be?

Hon ANNE TOLLEY: This is quite a long answer. They are spread around the country. The 10 new trades academies that will open during 2012 are based in Nelson-Tasman, west Auckland, Manurewa, Central Otago, and Taumarunui, as well as trades academies led by the Universal College of Learning covering Manawatū, Horowhenua, Wairarapa, and Whanganui, the National Trade Academy in Christchurch, Tāmaki College, Kelston Girls’ College, and the Correspondence School. This is on top of those new trades academies already announced for Hawke’s Bay and the East Coast, Taranaki, and the West Coast. By 2014, 12,500 places will be available—

Hon David Parker: I raise a point of order, Mr Speaker. You have previously ruled in this House that we are not allowed to table press releases. I suggest that the answer is tantamount to reading one out. It is just a listing of each of these—[Interruption]. It is a serious point of order. Can we get around rulings as to the filing of press releases just by reading them out in answers?

Mr SPEAKER: Members are entitled to ask questions they choose so long as they are in order. The question was in order and it did ask for that information. I would have stopped the Minister had she made any disparaging comments about any other parties at all, but she was actually delivering the information sought by the questioner. I think, though, we did hear probably sufficient in the answer, because it was going on for quite a while.

Carol Beaumont: Will increasing the number of young people in trades academies translate into greater numbers of apprenticeships without providing employers with greater financial certainty and confidence to commit to employing an apprentice; if so, how?

Hon ANNE TOLLEY: The answer to that is yes, and in talking to students and their tutors at the Christchurch Polytechnic Institute of Technology yesterday, the feedback they are getting from employers is that these students, having come through the trades academies, are much better prepared to go into the workforce, and employers they are working with are coming to the Christchurch Polytechnic Institute of Technology in order to get those apprentices first before going out to the broader community.

Brendon Burns: Given that the House heard again earlier today that 30,000 jobs are needed to rebuild Canterbury, and given that we have 10,000 18 to 24-year-olds alone not in work or training in Canterbury, why are only a few hundred net new skills training places being funded for our region this year?

Hon ANNE TOLLEY: I would have to check that member’s figures, but what I can say is that this Government is concerned that for too long too many young people have been dropping out of school, and that is why we are delivering on our promises and providing more places. We have announced a considerable package in Christchurch to focus on training young people in those necessary skills—part of that was the announcement yesterday. Labour promised to fix this problem back in 2003—

Mr SPEAKER: We do not need to go down that track. The member asked pretty specifically about a certain number of places in Canterbury but I think we heard quite a sufficient answer.

Hydro-electricity Dams, Waitaki River—Sale by Meridian Energy to Genesis Energy

11. Hon DAVID PARKER (Labour) to the Acting Minister of Energy and Resources: Does she stand by the Government’s decision to require Meridian Energy to sell some of its hydro-electricity dams on the Waitaki River to Genesis Energy, and how have the proceeds of the sale been used?

Hon HEKIA PARATA (Acting Minister of Energy and Resources): Tēnā koe, Mr Speaker. To the first part of the question, yes, and to the second part of the question, that is a matter of responsibility for the Minister for State Owned Enterprises. But the Minister of Finance has already referred to it in a couple of his answers this afternoon, and my understanding is that a special dividend of around $520 million was returned to the Crown.

Hon David Parker: Could steps like the requirement to sell those assets from Meridian Energy to Genesis Energy have been taken if Meridian Energy and Genesis Energy had been in partial private ownership; if so, how would the Government have achieved that?

Hon HEKIA PARATA: That is not the situation we have, and speculating on what might happen under what is proposed does not seem to me to be a reasonable question.

Hon David Parker: Is the Minister, then, now giving notice to anyone considering buying shares in these companies if they are sold that National might, for market reasons, intervene, with repercussions on the value of shares?

Hon Craig Foss: It’s a finance question.

Hon David Parker: It is an energy question.

Hon HEKIA PARATA: No.

Hon David Parker: Is the Minister, then, now admitting that following the privatisation of shares in Meridian Energy and Genesis Energy, the Government’s ability to intervene in the market in order to get better prices is to be constrained?

Hon HEKIA PARATA: No. [Interruption]

Mr SPEAKER: I want to hear the question.

Hon David Parker: Given that following the privatisation of the shares, the Crown would have fewer options for controlling excess electricity prices, why does the Minister dismiss the concerns of Grey Power that her Government’s privatisation plans would lead to higher power prices?

Hon HEKIA PARATA: First of all, those suppositions are incorrect. But, if I may, I will refer the member to the consumer switching statistics, which have doubled from the end of 2009 to July this year in terms of the number of consumers who have switched companies to find a more competitive power price for themselves. I think that Grey Power will find that is very helpful to its members.

Offenders—Rehabilitation and Reduction in Reoffending

12. JONATHAN YOUNG (National—New Plymouth) to the Minister of Corrections: What reports has she received about efforts to cut re-offending rates and rehabilitate offenders?

Hon JUDITH COLLINS (Minister of Corrections): I am pleased to report that the Department of Corrections is making significant progress in its efforts to reduce reoffending. Over the last 3 years there has been a 159 percent increase in the number of New Zealand Qualifications Authority qualifications achieved by prisoners. In the last financial year 711 national certificates were awarded to prisoners, compared with 495 in the previous year and just 275 in 2008-09. The qualifications include certificates in horticulture, building, construction, mechanical engineering, and crane operation. National certificates are real qualifications that will help prisoners to get real jobs when they are released from prison.

Jonathan Young: In what other areas are prisoners receiving training?

Hon JUDITH COLLINS: Over the last financial year prisoners engaged in employment training have achieved a further 2,000 qualifications. This includes trade certificates, vocational driving licences, and first aid certificates. The department is also teaching prisoners to read and write at the same time as they are in work training. Forty-six employment structures have been upskilled to provide this training, which has so far benefited 600 prisoners. In the next few months the department will also be opening new workshops at Christchurch Men’s Prison. This will see a further 130 prisoners undertake trade training in areas where there are likely to be major skills shortages as we move towards rebuilding Christchurch. All good news.

Questions to Members

Railway Workshops, Petition—Request for Submissions

1. CLARE CURRAN (Labour—Dunedin South) to the Chairperson of the Transport and Industrial Relations Committee: Has he requested any submissions of evidence about the petition to the Transport and Industrial Relations Committee signed by nearly 14,000 people calling on the Government to retain the Hillside and Woburn workshops?

DAVID BENNETT (Chairperson of the Transport and Industrial Relations Committee): I have not requested any submissions on this petition.

Clare Curran: Have no—

Mr SPEAKER: I must hear this supplementary question.

Clare Curran: Did the committee consider asking for submissions?

Mr SPEAKER: That is not the kind of question that can be asked of the chair, because were that to be the case, it would be a decision of the committee.

Bills

Local Government Borrowing Bill

Second Reading

Hon RODNEY HIDE (Minister of Local Government): I move, That the Local Government Borrowing Bill be now read a second time. This bill is to facilitate the establishment and operation of a new company, the New Zealand Local Government Funding Agency. The funding agency will issue local government bonds to investors, and on-lend the funds raised to participating local authorities to meet their funding needs. This pooled approach will assist local authorities to borrow funds at lower interest rates than they can now achieve. Local Government New Zealand has estimated that the funding agency will save local government in the order of $25 million a year. The operation of the agency will also strengthen New Zealand’s capital markets by providing a new, high-quality investment option.

Unsurprisingly, the bill has a high level of support across the local government sector. I have been advised that 35 local authorities have indicated that they intend to participate as shareholders in the funding agency, and a further 14 have indicated that they will participate in the scheme as guaranteeing borrowers. There is strong support for the proposal and very little opposition to it. The Local Government and Environment Committee received only six submissions on the bill, with five supporting it and one opposing it.

Part 1 of the bill removes a number of regulatory impediments to the operation of the funding agency. Many provisions are designed to ensure that the agency obtains a high credit rating, which will be crucial to the success of the agency. The bill specifically states that the Crown does not guarantee the obligations of the funding agency. However, it gives the Minister of Finance the authority to lend money to the agency in exceptional circumstances. This authority expires after 10 years.

Part 2 authorises the Auckland Council to borrow in foreign currencies. This overrides the provision in the Local Government Act 2002 that prohibits local authorities from borrowing in foreign currencies. To maintain a high credit rating, the funding agency will not be able to lend disproportionately to one council. Therefore, because of its significant borrowing requirements, the Auckland Council will need to continue some borrowing outside the agency. Part 2 will effectively give the Auckland Council the same access to foreign currency markets as other councils will have indirectly through the funding agency. In its submission on the bill the Auckland Council confirmed its intention to fully hedge its foreign currency exposure in order to avoid any additional risk to ratepayers. It is intended that Part 1 and Part 2 will be divided into separate bills at the Committee of the whole House stage.

The Local Government and Environment Committee has unanimously recommended that the bill be passed with technical amendments to two clauses. The first amendment is to clause 2, the commencement clause. The Regulations Review Committee raised an issue with the current open-ended commencement for Part 1. The select committee has proposed an alternative that would provide a specified commencement date for Part 1, while still allowing sufficient time for the funding agency to be incorporated before Part 1 comes into force.

The second amendment is to clause 9. This clause overrides sections 62 and 63 of the Local Government Act 2002 to provide that while the funding agency is a council-controlled trading organisation—a CCTO—local authorities can guarantee the obligations of the agency, or lend money to the agency on favourable terms. The recommended amendment clarifies that any transaction entered into under clause 9 would continue, even if the agency ceased to be a council-controlled trading organisation. This will make it clear to potential investors that key transactions, including guarantees, cannot be overturned if the funding agency ceases to be a council-controlled trading organisation.

I especially thank the Local Government and Environment Committee for its excellent work on this bill. I thank each of the members and the outstanding chair, Mr Chris Auchinvole, who has done an outstanding job in his chairmanship. I commend this bill to the House.

PHIL TWYFORD (Labour): Labour members are happy to stand today in the House and support the Local Government Borrowing Bill. We supported the bill at its first reading, and there was a lot of consensus at the Local Government and Environment Committee that this was a useful, positive bill that should be supported.

The idea, I think, first raised its head from the Capital Market Development Taskforce, and Phil Goff spoke out strongly at the Local Government New Zealand conference last year, calling for progress on the concept of a local government bond bank. I am pleased to say that I think there is a high degree of consensus across political parties and across the local government sector that this bill, and its promise of coordination, efficiencies, and cost savings by local councils, is well worth supporting.

I note that the figure of $25 million has been cited throughout the debate on this bill. I think it came from the work that Local Government New Zealand has done. I note that in “BusinessDay” back in April, Hugo Ellis, a partner in Cameron Partners, was quoted as saying that the possible savings from the establishment of the agency were based on council borrowing rates from September, which had fallen by up to 35 basis points since then. So he casts doubt on whether the $25 million figure is credible, but in the same article he notes that one of the reasons that the cost of local government borrowing has fallen is in fact in anticipation of the bond bank being set up. So this is a remarkably efficient bill, which saves—who knows—possibly millions of dollars in local government borrowing costs before the legislation has even passed its second reading in the House.

I want to talk about the broader question of local government debt. We heard much in early 2010 from the Minister of Local Government about the ballooning levels of local government debt. There was talk of a crisis in local government, with local councils being unable to meet the costs of infrastructure, ballooning levels of local government funding, and debt getting out of control. This talk was bandied around as some kind of justification for the Minister’s agenda of rate capping, of trying to roll back the scope of local government through his core services agenda, and of opening up municipal water services to what we regard as an effective privatisation, through 35-year public-private partnerships. The last of those three items was, in fact, implemented in the Local Government Amendment Act that was passed at the end of last year.

Interestingly, the Auditor-General’s report on the trends and financial information in long-term council community plans offers some really interesting reading about the state of local government debt. This is the most rigorous, most authoritative data that we have at hand—coming from the Auditor-General’s office—on this issue. It came out in August 2010, and I will just quote one or two passages from the Auditor-General’s report. The long-term plans, which go from 2009 out to 2019, were analysed and clearly showed an increasing use of debt, a trend that was evident in local government from about 2004. The debt was forecast to reach its highest level over the 10-year period in 2015, peaking at $11.2 billion. Although the total debt is clearly significant in dollar terms, the Auditor-General notes that the amounts are “not so large”—those are the Auditor-General’s words—“when considered in the context of local authorities’ overall balance sheets, and annual revenues and expenses.” The debt as a percentage of total assets over the 10-year period was forecast to move from 7.4 percent in 2009-10, to peak at 9.5 percent as a percentage of total assets, then fall again to a little over 8 percent by 2018.

That is not the kind of picture that was painted by the Minister of Local Government and his followers in early 2010, when they sought to paint a picture of escalating debt getting out of control in some kind of financial apocalypse in local government. The cost of borrowing is significant, whichever way we slice it, for local government. According to the Auditor-General, $6.7 billion will be spent—that is the cost of capital for local government investment in capital items—in the decade 2009 to 2019. That reflects a more than 100 percent increase in the annual interest expense, compared with the financial year 2008.

The general picture is that debt is increasing. It is not increasing to levels that are unsustainable; it will peak, then fall away again towards the end of the decade. But whichever way we slice it, we are talking about large amounts of money that are a cost to ratepayers—$6.7 billion during the decade we are talking about, 2009 to 2019. The Auditor-General’s final verdict was: “We do not consider that this level of interest expense is high or poses a likely risk of compromising the prudence with which local authorities are managing community assets.” So debt is increasing, but it is well within the normal standards of financial prudence that are expected from local government.

Needless to say, it did not really matter that the Minister’s fantasy of ballooning, out-of-control debt and the need to rein in these irresponsible councils—that story—collapsed, because by then the Minister had been reined in by his own Cabinet colleagues, who had told him that they did not want to see any more of the extreme agenda he was promoting through 2010.

Labour supports this bill. We support the establishment of the Local Government Funding Agency, because it is consistent with the fundamental Labour principle of owning our own future. This bill will make it easier for councils to offer retail bonds to mum and dad investors, which will allow them a secure option for investing their money, and for investing in the vital infrastructure needed in communities throughout New Zealand, whether that is water supply, transport infrastructure, or new buildings—you name it. This is an opportunity for New Zealanders to make sound and secure investments in the future of their country.

But I contrast this with the approach that National is putting before the people of New Zealand in this election campaign. It is putting up on the auction block our most profitable and our most well-run State assets. National is putting up those organisations on the auction block, and will be selling off 49 percent of them in a way that, contrary to the blithe reassurances we have heard from the finance Minister, will inevitably end up with a substantial amount—if not all—of those shares in foreign hands. That is irresponsible, it is wrong, and I am sure the people of New Zealand will reject that policy resoundingly.

Privatisation is very much on the agenda of this National Government and its allies, and we have to wonder whether that will come back to bite New Zealanders if National is re-elected for another term. Will National force the city of Christchurch to sell its assets in order to fund the reconstruction of that city? That is a question that National MPs should answer in this debate. I call on Christchurch members in particular to stand and take a call in this debate. Will this Government force the city of Auckland to sell its shares in the Ports of Auckland in order to fund the rail infrastructure that is so desperately needed in Auckland?

LOUISE UPSTON (National—Taupō): I am pleased to be able to stand and speak in the second reading of the Local Government Borrowing Bill. It is great to see that the bill is being supported by the Labour Opposition, because, clearly, it is about reducing costs for local government. The member before me spoke about the fact that perhaps the level of debt owed by local government entities was not at the rate we had spoken about previously. But Treasury’s projections still are that local government borrowing will jump by two-thirds over a 5-year period, and will reach about $10 billion. There would not be a week that goes by without my having a constituent in one of my electorate offices concerned about increases in their rates, and, probably more important, their ability to constrain rates increases. That is really what the Minister of Local Government has had as one of the clear focuses in his work.

The Local Government Borrowing Bill has two parts. The first, of course, is the creation and operation of the New Zealand Local Government Funding Agency and its ability to issue local government bonds to New Zealand and also to overseas investors, who will then be able to re-lend to local authorities for capital and infrastructure projects. The second part of the bill concerns the ability for the Auckland Council to borrow in foreign currencies. As we heard from the Minister, there were not many submissions in the select committee process—only six, of which five were strongly in support, with just a few comments about how we could possibly tweak the bill in order to improve it.

This is a common-sense bill. It is solving a very real problem—a very real problem that affects district councils differently up and down the country. Some councils have incredibly high gearing; others have low. Some councils manage their capital investment requirements in different ways. In effect, this legislation will level out some of those differences up and down the country and will provide the ability for local councils to borrow at realistic rates and get some real economies of scale in relation to their interest costs.

We know that strong and good local government is vital for each of our communities, be they small or large. The success of local government is vital to our economy and also to the protection of our environment, but the reality is that we cannot be in a situation where rates continue to rise and debts taken on by local government are at unsustainable levels. The speaker before me talked about the fact that local governments are starting to change their behaviour. Some of the projects they have put forward in their long-term plans are different. I think part of that is that they are responding to a signal from this National Government and from the Minister of Local Government that there is an expectation that local governments should be more mindful of how they are spending ratepayers’ money. They are clearly more mindful of the economic conditions we are in right now. Just as every household is tightening its belt, and just as central government is tightening its belt, local government entities are doing so, as well. They are responding to the circumstances we live in, as well as to the signal from this particular legislation, and it is great to see that they have taken that on board.

This bill is very simple—it is about reducing costs. We could argue around the edges, but we are talking about anticipated savings of potentially $25 million in interest costs for local councils. That is a massive saving, and a reduction in the burden on our ratepayers. There is also a reduction in duplication. If we think of our different district councils, we know that some are very small in size; others, like the Auckland Council, are large. But this legislation will reduce the burden on them in terms of their having to deal with the sometimes very complex issue of borrowing for and financing their debts. This does not mean that local councils have to borrow through this funding agency. They still have other funding options available to them. But the bill will provide them with a choice. As the Minister said in his opening comments, there will be a strong move by many of the councils to get their funding through the Local Government Funding Agency.

The other side is that the legislation also provides an opportunity for mum and dad investors. If National is successful in being re-elected after 26 November, there will be other investment opportunities for people; there will be a whole suite they can choose from. If I look locally at the Taupō electorate, I know there is a significant list of projects that need to be completed within the three different district councils, all of which need funding. Some needs are significant, and I spoke about water and waste-water projects in the bill’s first reading. I know, having spoken to the councillors in the Taupō electorate, just how grateful they are that central government is extending a significant hand of assistance to them in a very real and practical way, which assists them in reducing their costs. That is why I am very pleased to support the Local Government Borrowing Bill in the second reading, and I will be pleased to see it through to fruition.

Hon RUTH DYSON (Labour—Port Hills): It gives me a lot of pleasure to speak in support of the Local Government Borrowing Bill. It is quite a rare opportunity to support something that has been introduced by the Minister of Local Government, the Hon Rodney Hide, as an ACT member of Parliament. That is not generally Labour’s position on such matters, but this bill is worthy of support. The bill certainly went through the Local Government and Environment Committee very smoothly, as well. I commend the select committee for the way it considered this bill, and I also acknowledge and thank the officials. There were not a lot of contentious issues under debate during the process, but the select committee nevertheless gave the bill a decent and rigorous amount of consideration. The officials—as usual, actually—paid a lot of attention to the issues as they were raised by both submitters and members of the committee.

This bill had its background under the previous Labour-led Government in 2007, when an inquiry was instigated into local government rates, and particularly the funding mechanisms that were available to local authorities. The recommendation that really triggered this bill was that “local government look favourably on making more use of debt to finance long-term assets. This should include the issuance of bonds (including infrastructure bonds) on the capital market, not just shorter-term borrowing from commercial banks.”

As the member who just resumed her seat, Louise Upston, noted, there are a variety of ways in which capital can be raised. The member was nearly salivating by the time she finished her speech, as she talked about the hocking-off of New Zealand’s strategic assets that National is planning, should it win the election at the end of November. National is proposing to sell off assets to, as it says, Kiwi mums and dads—except that Kiwi mums and dads already own those assets. We already own our lakes, our dams, and the power companies that National wants to sell back to us. It makes no sense at all. The Minister of Finance was obviously trapped not just at his own National Party conference by his own delegates but also in the House today. He has spun the story that Kiwi mums and dads will be at the front of the queue to buy those assets, which they already own, and that there will be some magical protection against all these assets being hocked off to foreign owners.

But that is not true. There is no mechanism at all, either intended or in existence, that will stop our dams, our lakes, and our power companies being sold to foreign owners. If National thinks that is OK then that is what it should be campaigning on, instead of this spin, which is rapidly becoming undone. If we had a choice between what this bill proposes and hocking off the family silver, as National wants to do, we would certainly go for this. Likewise, this is not only better than privatisation but also much better than the public-private partnerships that the National-ACT Government is so keen to promote.

I mentioned earlier the Local Government Rates Inquiry and that the concept of a local government bond bank was also proposed by the Capital Market Development Taskforce. Again, that was set up by the previous Labour-led Government in 2008 and reported back to the current Government towards the end of 2009. The Government then said it supported that recommendation, but all it has done is put in a minuscule amount of money, a mere $5 million, to establish that fund. That was in the Budget of last year, and there has been no other progression since then.

This is good legislation. It is nice occasionally to have such unanimity, but even better, I guess, is the fact that all of us in this Parliament know that through this process and by supporting this legislation there is the potential for the ratepayers of New Zealand to save about $25 million in interest. That has to be good. As a Cantabrian I know that we will have a lot of very good use for any additional funding we can save out of our council budget. On that note, I remind the Minister of Local Government that he has already abolished one of our councils in Canterbury. The Canterbury Regional Council was abolished in a disgraceful way by the current Government. I put on record the fact that we do not want the Christchurch City Council to be abolished as the next move, as part of the setting up of some super-city. We are keen on keeping all three of our councils: the Waimakariri District Council, the Selwyn District Council, and the Christchurch City Council.

Labour is very keen on full democracy being restored to Canterbury and our regional council being re-established as well. Everyone else in the country had a vote for their regional council, except us in Canterbury. We have done our penance for whatever sin the Minister thought had been committed by Environment Canterbury. We would like our full democracy restored. In the meantime, I will be pleased to watch the progress of this bill.

SUE KEDGLEY (Green): The Green Party too will be supporting the Local Government Borrowing Bill, but with a couple of misgivings. We agree with other speakers that it makes sense to set up the New Zealand Local Government Funding Agency, which would enable it to become a large-scale borrower on behalf of local councils, to borrow and to raise finance. Hopefully, through amalgamating the borrowing the agency would get good credit rating terms and thereby lower interest rates, and there would be savings. The projected savings do depend, as the Minister of Local Government said, on getting good credit ratings. The projected savings are from a Treasury regulatory impact statement, and they are just that: they are projected, in terms of reduced costs of capital. I wonder whether the Minister of Local Government could stop speaking right here; it is a little bit distracting.

Hon Tau Henare: No, you haven’t got much to say.

SUE KEDGLEY: Thank you so much, I say to Tau Henare. That is typical—

The ASSISTANT SPEAKER (H V Ross Robertson): I am on my feet. The member must be seated. I advise members to the right of the Speaker that it is a convention in this House that when you are sitting on the cross benches you do not interrupt, because of the effect it has on the microphones. It is a courtesy to another member.

SUE KEDGLEY: As I was saying, we support the idea of the Local Government Funding Agency borrowing on behalf of councils. We are pleased to hear the Minister say that quite a number of councils—I think he mentioned 35 councils—will be signing up to this agency. We are pleased that it is a voluntary agency. There is no obligation to sign up, so it is an opt-in. As previous speakers have said, from our point of view we would far rather that councils funded infrastructure through borrowing, long-term intergenerational borrowing, rather than through privatising assets, selling them off, and public-private partnerships, which this Government has supported over many years.

We have already been told that more and more councils are borrowing, particularly for large-scale infrastructure projects. It is unfortunate that councils are forced to fund public transport infrastructure projects. They have to contribute 50 percent to the funding of public transport infrastructure projects, whereas State roads, highways, and motorways are fully funded by the Government. So if we are to see a substantial investment in public transport in New Zealand, which we strongly support, then councils will have to raise funds. One of the ways of doing so is through the Local Government Funding Agency. It will enable councils to spread the intergenerational burden of funding those assets, such as public transport.

Others have not yet mentioned this, but there are some risks involved in this venture. The participating authorities will be required to guarantee each other’s debts, so they will be jointly liable for debt. If one of the councils were to default, all would have to pay. We could say that it is pretty unlikely that a local council would default, because it can always require ratepayers to fund its budget. However, in the event of calamities such as earthquakes this becomes a realistic possibility, especially when the Government—unfortunately, this Government—will not agree to a Christchurch levy, for example, to contribute to the rebuilding of Christchurch. Thereby a considerable amount of the burden of rebuilding Christchurch will fall on Christchurch ratepayers. We can imagine—if, God forbid, such a scenario were ever to happen in the future—that there could be the prospect of a council defaulting. That would mean that all other participating authorities would be required to guarantee each other’s debts. I guess they go into this with their eyes open.

All councils are supposed to fully consult if they join up to the Local Government Funding Agency. Through their financial statements, they are supposed to make absolutely clear the liabilities they will incur in so doing. But I rather suspect that for many councils it will be all in the small print of a financial statement and that many people—many ratepayers—will not realise that their council has entered into substantial new liabilities through joining up to the Local Government Funding Agency.

Another concern we have is that there will be a temptation, particularly with the current pressures on councils, once debt becomes more cost-effective—and it will do, through this agency—for a council to borrow instead of increasing rates. So we could see more and more debt being incurred by councils and that, we think, would be a real risk. Already the projections are that local government debt will increase by two-thirds over the next 5 years, to $10 billion, but I would say there is a risk that this will increase and that more and more council funding of infrastructure will be by debt rather than by rates. It will be much more acceptable to not put up rates. I think that too is a risk.

The other issue we are a bit concerned about is that the Auckland Council will now be able to borrow in foreign currency. It will get an exemption under the Local Government (Auckland Council) Act 2009 and it will be able to borrow in foreign currency. We need to remember that one of the main reasons for the Asian financial crisis of 1998 was that organisations and entities in Asia borrowed offshore to finance their domestic activities. When the exchange rates fell, they were left insolvent and that precipitated the crisis. If we see the Auckland Council being encouraged to borrow offshore while our currency is strong, we are a bit worried about what would happen if the currency falls. We think there are risks in encouraging the council to borrow in a foreign currency.

Hon Craig Foss: They have to be hedged.

SUE KEDGLEY: I know they have to be hedged, but, nevertheless, there has been comment in this House today about the volatility of the sharemarket and of currencies at the moment. There are risks attendant to that, and I think it is worth just pointing that out.

In general, we will support this bill because we see borrowing through this agency as a far preferable strategy than the privatisation of council assets or public-private partnerships. We note that certainly it was the intention of the Minister of Local Government, who has been sitting here talking rather noisily in my ear for the entire speech, to sell off as many local council assets as possible. It has been quite clear that he and the ACT Party wanted to privatise water assets. In fact, it has put most of the $28 billion of the Auckland Council’s assets into council-owned companies. Obviously its intention is to try to get as much of that into private hands as possible. So that is clearly ACT’s strategy, and that is why we believe that this provides some sort of alternative for local councils, which are having to invest heavily in infrastructure, particularly in things like public transport infrastructure. For this reason, and with some misgivings, we will support this bill.

RAHUI KATENE (Māori Party—Te Tai Tonga): Tēnā koe. The circumstances around irresponsible borrowing and lending have been at the heart of the financial crisis of the past 3 years. In many respects, therefore, we could look at the Local Government Borrowing Bill as an extension of the borrow, borrow, borrow mentality that has had disastrous consequences at the central and local government levels, at the community level, and at the family level. But we cannot ignore the very serious debt issues facing our local government, which this bill attempts to address.

I am really pleased to be able to speak to this bill as the Māori Party member of the Local Government and Environment Committee. As the Māori Party member on that committee, I am really keen to ensure that I do as much as I can to assist the committee to tackle an extremely significant issue for local government—that is, to dramatically improve representative democracy as provided for in the provisions of the Local Government Act 2002, in particular Māori representation.

The provisions are really specific in terms of providing opportunities for Māori to contribute to and participate in the local authority decision-making process. There is the opportunity for fostering the development of Māori capacity and the requirement to provide relevant information to Māori in order to best uphold the commitment to democratic representation, yet representation of Māori elected on to councils is at best between 5 and 7 percent, despite Māori being 17 percent of the population. Of course, as we all know, the Māori population is increasing, and at a faster rate than the European population. So there is no question that we have a long way to go in improving the effectiveness of local government for Māori. We must pull out all the stops to enhance Māori participation in local government, to implement and monitor accountability mechanisms to ensure effective Māori participation, and, of course, to be engaged in the true realisation of the power-sharing envisaged in Te Tiriti o Waitangi.

In order to meet these needs, we accept that local councils need to allocate priority to Māori representation. Yet as we already know, local authorities are facing many competing priorities. It is a situation that this bill attempts to address. The forecast borrowing needs of local authorities are large. Total borrowings could reach $10 billion within 5 years from a current level of around $6 billion. The purpose of the bill then, as others have said before me, is common sense. It is, very simply, to make borrowing cheaper for local councils. This simple aim would be achieved by establishing the New Zealand Local Government Funding Agency Ltd to act as a type of umbrella organisation for the purposes of borrowing money for local councils. The theory is that multiple councils issuing their debt collectively will lower the cost of borrowing, and we have to applaud that purpose. Economies of scale will mean that the agency is more creditworthy than individual councils and will therefore borrow money at a lower interest rate. We would hope, therefore, that the benefits of this approach will be realised by all and, more to the point, will enable a more comprehensive and enduring attempt to create representative democracy.

The Māori Party places huge priority on listening to the people, so we were particularly interested in the submission from the Society of Local Government Managers. We must pull out all the stops to enhance Māori participation in local government. In order to meet all of these needs, we accept that local government councils need to allocate priority to making sure that as well as Māori representation, there actually is the facility to make borrowing cheaper. That can only benefit ratepayers, that can only benefit local authorities, and that can only benefit taxpayers, as well. So we are supportive of this bill. Kia ora.

NICKY WAGNER (National): I rise to support the Local Government Borrowing Bill at its second reading. This bill is all about better, cheaper, more cost-effective borrowing for local councils. It is a way for local government to coordinate its borrowing to obtain economies of scale and cheaper interest rates. By collaborating and working together, councils will have a better chance of affording the capital they need in the coming years to fulfil the expectations of their ratepayers. At the moment the market for local authority debt is fragmented, with over 80 issuers and several hundred mainly small issues of debt. Coordination will improve the overall market for local authorities and make it more efficient for both issuers and investors, and generally improve the New Zealand capital market.

Council borrowing has a very low credit risk, and ratepayers should gain the benefits of supporting financially sound institutions. In the past, because councils have been unable to coordinate their borrowing effectively they have not taken advantage of these opportunities. The bill will facilitate the establishment of the New Zealand Local Government Funding Agency, which will issue debt on behalf of all participating local authorities and will have the same regulatory environment as the participating local authorities. That will allow local authorities to combine resources and purchasing power and to achieve economies of scale that will provide cheaper borrowing than ever before. The agency is expected to yield significant savings for the local authorities involved. In fact, the forecast stated that they would indicate a 50 to 70 basis point reduction, which would cut the interest bill of local authorities by up to $25 million a year. That is something ratepayers would be very pleased to see. In reality, the $25 million might be an overestimate now, because local government interest rates have already dropped significantly—partly in anticipation of this new authority—so this bill is already being effective.

Cheaper finance will mean that communities can spend more on essential infrastructure and other priorities and less on servicing debt. It could also mean there will be less pressure for rates increases. The Local Government Funding Agency will also provide a deeper and more liquid market in standardised local authority bonds, which will be good for both wholesale and retail investors. At least nine of the larger local authorities have already committed to working together to support the agency, and they represent about 54 percent of the rateable income of New Zealand local government. That statistic is from 2009. But a much bigger group—more than 35 councils—is also interested in being involved.

The costs to ratepayers have been escalating for years, but through this initiative, which I believe came out of the Prime Minister’s Job Summit, we have found a better, cheaper, and more effective way for local government to manage its borrowing. It is about time that councils took advantage of their low credit risk and that they do so for the benefits of their ratepayers. I commend this bill to the House.

BRENDON BURNS (Labour—Christchurch Central): As earlier speakers have indicated, Labour is supporting the Local Government Borrowing Bill because it makes absolute sense. It is a mechanism to allow the local government authorities of this nation to use their collective power and might to borrow at more sensible rates. That collective approach is something that Labour often endorses as a way to go. This bill predates the Prime Minister’s Job Summit. It goes back to the Capital Market Development Taskforce, which the last Labour Government set up in 2008. The task force reported to the new Government at the end of 2009 and proposed the idea of a local government bond bank. This bill has evolved from that. At the heart of the bill in its gestation was a view that Auckland would most especially need a borrowing mechanism such as this and, indeed, the bill includes a particular reference to Auckland being able to borrow offshore.

But since this bill began its journey through the officials and into the House, we have had the Christchurch earthquakes. My city of Christchurch is facing considerable extra ratings demand upon it as it works through the process of paying for its share of the costs of recovery. In question time in the House today we heard reference from, I think, Russel Norman about the fact that ratepayers in Christchurch this financial year are seeing an additional 1.75 percent on top of the earlier expected rate that they will pay this year as Christchurch residents pay their share towards the cost of recovery. Every dollar that the Christchurch City Council is able to borrow at a lower rate means another dollar paid off the debt bill that our city must meet as its share of contributions to the cost of the earthquakes and the recovery that is needed. Of course, we would much prefer that that was the approach taken, and that the council in Christchurch and councils across the country take the opportunity of what this legislation envisages and use it collectively to borrow, to press down the interest rates, and to save their ratepayers, cities, towns, and local authority entities considerable amounts of money.

We always have a concern around what the alternatives might be. Obviously, one of the things in our mind at this point is that this is a much better mechanism to allow councils to borrow and to use their collective might to borrow at lower rates—it is certainly a much more preferable option—than privatising assets or part-privatising assets. We know that that is certainly on the Government’s agenda. It is stated as being part of the Government’s agenda in respect of the assets that the Crown holds in Air New Zealand and Solid Energy. Of course, there are other assets in the wider public domain, and there are prospects for such alternatives to borrowing sensibly, repaying debts over a longer time period, and using this bill to hold down the interest rates that councils and, therefore, ratepayers would face.

In my city of Christchurch we have seen a very solid stream of revenue to the ratepayer base of Christchurch from a number of council-owned companies, particularly Orion, which will be known to many members of this House. Orion did a sterling job through the crises of September last year and February this year and through the 13 June earthquake as well. Orion has just released its annual report. Members will have been sent a copy fairly recently. I note that despite the hellish year that Orion has been through, the report says it has still managed to produce a net overall profit of $28.4 million and fully imputed dividends back to its shareholders—namely, Christchurch City Council as the most notable shareholder—of $37.5 million.

Again, with members opposite from Canterbury present, I raise the concerns that are emerging in Canterbury—and it was referred to in question time in the House today—about the option that the Government may be considering for Christchurch as an alternative to borrowing as provided for by this bill. Sensible borrowing at lower rates is a good mechanism that uses long-term strategies and uses dividend streams from assets such as Orion. The Government may be putting the option to the Christchurch City Council, in most forceful terms, of selling off assets like Orion. I think members opposite from Canterbury need to comment on that issue. I again raise that question in front of them, as I have at every opportunity in the House over the last few months.

It is an important issue for the ratepayers of Christchurch to know whether the Government is leaning on the Christchurch City Council and saying to the council that it should sell off those assets or part-sell off those assets like Orion, the port company, the airport company, the Enable broadband network, and the Red Bus company. Those assets are collectively worth around $2.2 billion. If this Government has a philosophy that it is appropriate to sell down assets to reduce debt, I ask whether the Government is leaning on the Christchurch City Council to effectively force it to sell down assets instead of taking up much more sensible options, as envisaged in this bill, to hold on to assets, to use them to leverage and raise capital by way of debt, and to use the good effects of this bill to hold down the interest rates that the councils and, therefore, the ratepayers would pay. That is a much sounder strategy—a much sounder strategy—than the short-term option of realising assets, selling them off, taking the payments, and reducing debt but carrying the long-term costs.

Going back to the Orion example, I note that the latest dividend of around $37.5 million takes Orion’s payments back to its shareholders—notably Christchurch City Council and the people of Christchurch—over the last 20 years to $1 billion of dividends and other payments. One has to ask what sort of madness would inspire any Government to consider selling off assets that return that kind of return to the ratepayers of Christchurch. Again, I say that we have members opposite from Canterbury in the House today and I ask them to comment on that issue.

The reason Labour is supportive of this bill is that it is absolutely just plain common sense, to borrow a phrase that a member opposite has been known to use. It provides a mechanism for local authorities to collectively raise capital at the best possible rate. I need to note that local authorities are facing some extra costs as a result of some Government policy changes. For instance, at Christmas last year—in fact, on 23 December; I had predicted that the Minister of Health would choose that date—the Minister announced the capping of the funding scheme that Labour had put in place to allow small communities within local authorities across New Zealand to access some assistance with improving drinking water. That fund has now been capped at $10 million a year. There is still about $80 million in the fund. It was actually fully funded by the Labour Government—$150 million was put into the pot. About $80 million is still in the pot, and the Minister has chosen to cap it. In a situation where one in five New Zealanders is still drinking water that is either not safe or not being tested to assure people that it is safe, that is exactly the sort of funding that assists small communities to make their water potable and able to be drunk safely.

One wonders if behind this bill, in some respects, the Government has chosen to squeeze back the funding that is available to small communities and their local authorities, then gear them up so they can take out loans to pay for some of this. There is nothing wrong with support from the taxpayer, especially where the funds are there, to assist those small communities. Many of them will continue—even under this bill, which provides those slightly lower interest costs—to not be able to afford to improve their drinking water unless they are given some assistance, as was provided and envisaged by the last Labour Government. Those funds are still there, but are now constrained to $10 million a year.

I also note that in just the last few weeks we have seen the last payment under the Sanitary Works Subsidy Scheme, which the last Labour Government also introduced. So we are seeing two funding schemes disappear. We are seeing this sensible mechanism about lower local government borrowing costs, which is commendable, but the background to it includes the loss of two schemes that I think have assisted many small communities to upgrade their very basic and most essential services, which are also worth supporting. In the meantime, this bill proceeds through the House. Labour supports this bill.

NIKKI KAYE (National—Auckland Central): I am very pleased to speak on the Local Government Borrowing Bill. It is good to speak on legislation that has so much support across the Parliament. I acknowledge the members of the Local Government and Environment Committee, and particularly the chair, Chris Auchinvole, who has done an outstanding job of chairing the committee’s consideration of this legislation.

The purpose of this bill is to improve financial management within local government. When we look around the world and at what is happening, we see that it is really important that this Parliament recognises that we are passing a bill that is designed to improve the management of ratepayers’ funds across New Zealand. Obviously the major purpose of this bill is to set up a new agency that will enable collective borrowing across local government in New Zealand. I think Ms Louise Upston raised the point that there are different borrowing needs right across the country, and the Minister of Local Government mentioned that 35 local authorities have signed up to this bill. So it is good to see that it has a lot of support.

We need also to acknowledge why at this time it is so important. We know that there are many people on fixed incomes, and rates rises really hurt some of those people. So I think it is really important that this Parliament, as I say, takes a moment to acknowledge that we are doing everything we can to ensure either that we are freeing up greater funds for services in local government, or that we are enabling local authorities to not have to spend so much on borrowing so that we actually reduce the chance of rates rises. I think it is significant that over $25 million is projected to be saved under this legislation. We also need to acknowledge that this idea came from the Job Summit and that it is voluntary. Local authorities can choose to borrow independently, or they can choose to use this legislation.

I really want to touch on the Auckland Council situation. As members know, in this House throughout this term we engaged in a major reform of local government within Auckland. I think it is very important to acknowledge that we now have a wonderful situation in Auckland where we have one mayor and one council. The council is proceeding to make some pretty big changes across our city, across public transport, and right within the spatial plan. It is very important that the legislation we are passing today will give it much more flexibility in terms of its borrowing needs, given that it now has $30 billion in assets and is dealing with billions of dollars in rates. It is also important to acknowledge that significant changes were made at the select committee, particularly around council-controlled trading organisations. We had to ensure that there was some financial certainty around council-controlled trading organisations that may be disestablished, to ensure that investors have certainty that transactions will be conducted.

As I have said before, I am very pleased to support a bill that has so much support across the Parliament, that is focused on ensuring that we save ratepayers money, that gives councils greater flexibility in terms of financial management, and, very important, that gives the Auckland Council the ability to better manage its finances, given that it is such a large organisation. It will enable Aucklanders to free up potentially $10 million—which is the figure I think I have seen—which could be spent on local government services or on ensuring that we keep rates down. I commend this bill to the House.

DAVID SHEARER (Labour—Mt Albert): It is my pleasure to speak on the Local Government Borrowing Bill. As we have indicated, we are supporting this bill. We believe that it is a good move and a good means by which capital can be raised for important infrastructure projects that are offered by local communities. It is very cost-effective. It is looking to save local authorities about $25 million a year, which is a big saving and one of the big reasons why we support it.

As one of my colleagues said, an additional reason we are supporting it is that it means that we do not have to flog off assets in order to buy other assets. We can actually do this through people investing in their own infrastructure within New Zealand at the local level in order to get the infrastructure that they require.

Just to give some background to this particular legislation, the idea of the local government bond bank was floated at the Job Summit about 2 years ago—2 quite long years ago—and it is only now coming back to Parliament. I believe that the Government has really dragged its feet on moving this bill through, despite the fact that, particularly in the Auckland region that I know best, we need it urgently.

The concept of a local government bond bank was also proposed by the Capital Market Development Taskforce back in 2008 under the Labour Government—again, we signalled that we were in favour of it way back then—and reported to the National Government in 2009. So on the one hand it came up through the Job Summit, and on the other hand it was actually a formal recommendation from the Capital Market Development Taskforce. Both of these ideas came to the same conclusion of a very cost-effective way of raising money for infrastructure, yet it has taken until now for it to go through. The Government set aside $5 million in an establishment fund in Budget 2010, but here we are nearly 18 months later in 2011 and we are only now going through the bill’s second reading.

The funding agency, as I said, is a win-win both for local government and for New Zealanders—Kiwis—looking for new and safer ways to invest. We have certainly had a calamity within the investment market, particularly with the finance companies falling over. People are still wary about the stock market. The property market at the moment is up and down. People are looking for more secure, safe ways to invest their money. I also believe that they feel quite strongly and, perhaps, patriotically that they would like to invest their money in their own communities through this sort of mechanism.

We hear so much from the other side about mum and dad investors when National members are talking about flogging off our key electricity assets, Air New Zealand, and things like that. But we know that their shares will end up going offshore, as they have done in every single case where this has happened before. But in this sort of case, mum and dad investors know that their investment is good for the community and will help Kiwis retain ownership, not lose it to an Australian or a US corporation that will simply send the proceeds offshore. They will control those assets—

Hon Tau Henare: Those dirty Americans, eh. Those dirty Americans. I’m glad you like Americans.

DAVID SHEARER: I can see that this is a sensitive point. I know that at the National Party conference there was a lot of discussion from the floor about who was going to own those assets. The rank and file of the National Party know for sure that the assets are all going to go offshore.

Hon Members: Were you there?

DAVID SHEARER: I absolutely know that for a fact. It was reported in the media that the National Party rank and file were asking why National was doing this, and they were saying that it could lose National the election.

The ASSISTANT SPEAKER (Eric Roy): Just come back to the borrowing bill.

DAVID SHEARER: I am sorry, Mr Assistant Speaker; I was responding to some—I was going to say “intelligent comment”, but I will not go as far as that—comment from the other side. The point about this legislation is that rather than assets being flogged off, mum and dad investors—and they are mum and dad investors in this case—know that their investment is not only secure but good for the community and helps them to retain ownership and control of the assets that will build up for decades. So they know that their children, and their children’s children, will be able to enjoy the infrastructure that that money goes towards.

I think this is a very good bill that we are supporting here. It supports the very things that Labour stands for, which is ensuring that money goes into building assets for our community, that those assets are enjoyed by the community now and in the future, and that the savings that these people put their money towards are secure and safe and provide a good return.

When we look at the demand for these sorts of funds we see that it is pretty apparent, certainly in the Auckland City area with the type of spatial plan that was put in front of us just a few weeks ago regarding the Auckland City rail loop and the $2.4 billion that Minister Joyce is hugely reluctant to commit to, despite the fact that Aucklanders are overwhelmingly in support of it, that this is the sort of thing that perhaps a fund like this could actually put money towards. This is the Minister who, in question time today, stood up and crowed about the development and progress being made on Auckland’s rail, yet all of the areas he was talking about were actually put in place by the Labour Government. In fact, a lot of the funding for the project, which was supposed to be met by central government when the National Government took away the regional fuel tax, is now actually being pushed back on to Auckland City ratepayers. What a con. The Government takes away the regional fuel tax, it says that central government is going to fund those projects that the tax was going to fund, and now yet again it is putting it back on to the Auckland ratepayers to pick up the cost. It is a complete con. Steven Joyce has the audacity to stand up in this House and crow about the various projects on rail that this Government has proceeded with, when they were actually put in place by a far-thinking and visionary Labour Government back in the mid-2000s.

Coming back to the purpose of this bill, which is to raise funding for local government, I say again that we support the bill. We support the bill because it is a cost-effective way of raising the money for the infrastructure projects that are so needed by local bodies throughout the country. In addition to that, it provides the mum and dad investors who will put their money into this sort of scheme with the security of knowing that their investment is safe, and with the knowledge that the things they are funding are going to be good for the community, that they will not lose ownership, that they will get the benefit of them, and that their children will get the benefit of them as well. So rather than funding something that we know will be flogged off, we support this legislation. We are sad that it has taken so long to get here, but we are happy to see it proceed with haste now.

CHRIS AUCHINVOLE (National—West Coast - Tasman): It is a pleasure and a privilege to be the last speaker during this second reading of the Local Government Borrowing Bill. The bill is to facilitate the establishment and operation of a new company: the New Zealand Local Government Funding Agency. It has been a pleasure to see this bill come through our Local Government and Environment Committee. It was one of those occasions when, basically, we were all in agreement that it was a good idea—not only a good idea but also that it had true purpose, true meaning, and was significant legislation.

I remember during the early stages, because as has been evidenced by the way people have spoken we were pretty much in accord on this issue, there was very much a bipartisan discussion about the whole thing. I did, none the less, feel obliged to ask the officials why, if it was such a good idea now, we had not done it before. The answer to that question really was given by Local Government New Zealand, which is a very, very strong supporter of this particular bill. It said that in the past, without the pressures of the difficult economic times we have been having, money was reasonably easy to facilitate for local councils and the interest rates were always competitive, because they were such blue-chip financial institutions. But without that, with the difficult times we have had, with banks being more careful whom they lend to, with councils being more cautious about borrowing, this has certainly become a timely operation and it is a good thing to be doing.

Local Government New Zealand has estimated that the funding agency will save local government in the order of $25 million each year. At the Local Government and Environment Committee we are quite familiar with the level of debt that various councils are engaged in and we are kept up to date with that. So if we can make savings and easier facilitation of money, the operation of the agency will also strengthen New Zealand’s capital markets by providing a new high-quality investment option, and that will be a good thing too. Unsurprisingly, the bill has a very high level of support throughout the local government sector. We are advised that 35 local authorities have indicated they intend to participate as shareholders in the funding agency, and a further 14 have indicated they will participate in this scheme as guaranteeing borrowers. There is strong support for the proposal and there is very little opposition to it.

If I may, I will take just a moment to reflect on the response to local government requirements that the current Minister of Local Government has shown throughout his tenure of that portfolio. The Hon Mr Hide has repeatedly come out with legislation that is tailor-made to suit the requirements of local government. It goes from the very large effort in Auckland down to this sort of consideration, which is really for smaller councils’ maximum advantage.

This bill is most worthwhile legislation. It gives the Minister of Finance authority to lend money to the agency in exceptional circumstance, but it specifically states that the Crown does not guarantee the obligations of the funding agency. As I say, I am pleased to be the last person speaking on this particular reading of the bill. The recommended amendments we brought through the select committee will be most worthwhile if they are incorporated into it. I think that of the six submissions we had, five were in support and there were very few recommendations for change. It has been very tidy legislation. I am deeply grateful to the committee members who assisted in the passage of the bill, and to the officials who provided us with the assistance we required. Thank you.

Hon STEVE CHADWICK (Labour): I will take only a short call, mainly because the ACT members sat here, in humility, and did not take their call. Mr Hide will be surprised to hear me say that Labour is fully behind the Local Government Borrowing Bill. This is a much better bill than National’s position of a borrow-and-hope bill, because this bill will have concrete and tangible benefits for the local government sector. I congratulate Minister Hide. When I think about his rate-capping legislation, I realise he always had concerns about expenditure at the local authority level.

But I want to put it on the record that the establishment of the Local Government Funding Agency is not actually a new idea. I remember that when the previous Prime Minister met with mayors of the country and chairs of regional councils, this sort of mechanism was discussed by Labour—

Hon Nathan Guy: Had 9 long years.

Hon STEVE CHADWICK: Hang on a minute, though. In response to that meeting, Labour set up the Capital Market Development Taskforce, and it reported back to the Government at the end of 2009. We set that task force up in 2008 in response to a call from mayors and chairs of regional councils to look at the sort of funding mechanism that we could put into the local government sector. So it was on the back-burner and moving along. I agree with Mr Auchinvole that at the time it was not as imperative as it has become since the recession. So I would not really say that the funding agency was a new idea; it was one that was moved a little bit forward by the Job Summit, led by John Key, but it was an idea that Labour instigated. I just want to own a bit of that back, at the same time as congratulating Rodney Hide on getting it moving.

When we think of local authority legislation, we think of the Auckland super-city legislation. Those of us who have not worked at Auckland governance level have often thought about what would come out for local authorities around the country. I think that this mechanism is a fantastic idea. It will get Kiwi investors excited about investing back into something; perhaps they will be able to say they played a part in an investment and a part in a development. We much prefer it to other proposals that were floated a little earlier. It is a win-win for everybody. The community will love it. I like the $25 million of savings. Of course, we can borrow more cheaply for infrastructure from a bank like this to help to meet the needs of local authorities.

I also put it on record that in Rotorua we have had all but one of our lakes brought into a sewerage subsidy scheme, and that helps with reticulation and the treatment of lakes water in Rotorua. Unfortunately, the subsidised scheme that was provided by the Ministry of Health has finished, and there is no more funding. That one lake is Lake Tarawera. When this bill is passed, I will encourage our local authority to put its hand up to this new agency to say that Rotorua knows exactly what it costs to get a good reticulated sewerage scheme in order to protect the lake’s water, and we will put our dibs in. Then we will really test the effectiveness of this funding agency to make sure that every local authority around New Zealand can get access to the funding, and that it will not all go to the higher needs of the Canterbury region at the moment, or all be eaten up by the Auckland super-city. There are infrastructure needs all around the country. I think the canning of the wonderful little drinking-water subsidy schemes and sewerage subsidy schemes run by the Ministry of Health is shameful. It is a public health issue, and I think it will have a long-term detrimental effect on public health and well-being.

I also acknowledge today the death of Colin Hammond, a former mayor of the Whakatāne District Council. I remember Mayor Hammond taking me out to a very deprived community—Te Whāiti—who were looking at managing a mountain of waste leachate that was going into a stream where trout fishers, just a kilometre away, were catching prize trout. He was concerned about the health impacts on people from this waste leachate. If only there had been a scheme like this—because Te Whāiti was a community that in no way could afford to raise the rates paid by its people; there were something like 40 residents. In acknowledgment of Colin Hammond’s contribution to Whakatāne and that wider region, it is very fitting that today we are debating this bill. I think he would have been really thrilled to see that, at last, something that he put before the Prime Minister of the country in about 2004 has now led to a mechanism for those small, deprived communities to access.

There is one little element of cynicism, and it is that when this Government came in, it talked about a brighter future.

Hon Tau Henare: You said this was going to be only a short speech.

Hon STEVE CHADWICK: Well, no, I have a bit to say. This is a short speech. When we came into Government, Rodney Hide was harping on about spending by local authorities and their debt being out of control. In Rodney Hide’s last act before the House, I want to get it on the record that the Auditor-General looked at local government and showed that although debt was increasing, it was not increasing nearly as fast as Rodney Hide had pumped it up to be, as he tried to introduce rate-capping legislation. That was a bit like this Government’s approach to ACC, when it said costs were out of control and therefore the Government would privatise it. In fact, in June 2010 the councils had borrowings of $1.9 billion, as did city councils, and that was less than the $347 million for district councils and $136 million for city councils. The point is that the Government rarked up the exercise in order to look at the privatisation of community assets. Labour would never have supported that, so it is lovely to be in the House today to say Labour fulsomely supports this bill. It is fitting for Rodney Hide; he will go out on a high.

Bill read a second time.

Bills

National Animal Identification and Tracing Bill

Second Reading

Hon DAVID CARTER (Minister of Agriculture): I move, That the National Animal Identification and Tracing Bill be now read a second time. The bill was referred to the Primary Production Committee in December 2010. The committee received 16 submissions on the bill and heard 10 oral submissions. The committee has done a thorough job in examining the bill, and called for some additional information from expert witnesses before recommending that the bill be passed with some amendments. I thank the committee for its work and the notable cooperation from both sides of the House in reviewing this bill. I also take this opportunity of acknowledging the previous Government’s work in approving the early development of the National Animal Identification and Tracing (NAIT) initiative.

Before I outline those amendments, I reiterate the need for this important bill. Agriculture is a key driver of our economic growth, and it is critical that we maintain our reputation as a world leader in the production of top-quality animal products. To do this we must improve the information we hold on livestock, including their life history and location, so that we can give assurance to our trade partners that New Zealand product is healthy and disease-free. Such information will also enable us to better manage biosecurity responses.

The NAIT scheme will support electronic recording of the locations of those animals—that is, cattle and deer—of people in charge of animals, and of the movement of animals between properties. The scheme will reduce our reliance on paper-based systems when decisions are needed quickly. Together with other non-regulatory information, the scheme can support improved productivity and on-farm management.

The committee has recommended a change to the commencement date of the bill, as the scheme is now unable to meet the original time frame of November 2011. The new commencement date will give greater certainty to those who need to be ready for the NAIT scheme, including farmers, saleyards, and processors. Some flexibility needs to be built into the bill to support different start dates for various obligations for farmers and for other participants in the scheme. The amendment sets 1 July 2012 as the mandatory date for the tagging of cattle with NAIT identification devices. Other obligations such as registering specific location and movement details in the system will become mandatory by no later than 1 November 2012. All obligations will apply to deer on 1 March 2013. Flexibility has been built into the legislation to bring these dates and provisions forward through an Order in Council.

A number of submitters were concerned that the process for designating the new NAIT organisation—which will be responsible for running the NAIT system—was overly complex. They were also concerned that the process did not align with any merger of the functions of NAIT Ltd and the Animal Health Board into a single organisation by around 2013. The committee has recommended that the relevant clauses are redrafted so that NAIT Ltd will continue to run the scheme until any new entity can be put in place.

The bill has been amended to provide more detail on matters the Minister must be satisfied about before approving the appointment of the NAIT organisation. These include the capacity of the organisation and its agreement to operate on a not-for-profit basis. A further amendment has been made to give the Minister flexibility to act where necessary to preserve the integrity of the NAIT scheme.

Sections of the bill have also been amended so that consultation carried out before the bill’s enactment will be valid for the purposes of the Act, recognising that much work around developing NAIT has taken place prior to the bill being passed. The committee has also recommended that we reduce unnecessary compliance costs by removing clause 32. That clause would require people moving a NAIT animal to make a statutory declaration as well as providing relevant information to the NAIT database. The committee felt that this additional compliance burden was unnecessary.

Several submitters commented on clause 46, which sets out who may apply for access to information in the NAIT database. The committee felt that it should be made clearer what groups of applicants may have access to which categories of data. Most submitters felt that if a person gave their consent to access their information, then the restrictions set out in the earlier draft could then be relaxed. It was also pointed out that levy-funded bodies need not be bound by separate rules from other bodies corporate. These changes will make the criteria clearer without compromising the very firm control on information sharing stipulated by the bill.

The compliance and enforcement provisions of the bill have been rearranged at the committee’s recommendation. Clause 10 has been rewritten to clarify that compliance and enforcement will be undertaken by the NAIT organisation in conjunction with the Crown.

Another issue that raised comment was the inclusion of clauses cross-referenced from the Search and Surveillance Bill. These provisions were included in the National Animal Identification and Tracing Bill because the wider-ranging provisions of the Search and Surveillance Bill, when passed, will affect the NAIT organisation’s operations. The later clauses have been included as a schedule to the bill to remove their dominating effect. A consequential amendment may be made later to align the two statutes.

One further amendment relates to the power to require a person to answer questions about their compliance with the National Animal Identification and Tracing Act or regulations. While the regulations will provide exemptions from some of the general requirements set out in the bill, the people involved may still have valuable information to provide, should there be a need to trace animal movements. This clause has been redrafted to ensure that people who are exempted under the regulation are still required to provide the information if requested. A further amendment to clause 55 clarifies that a search warrant would be necessary to exercise the power to detain and search conferred by that clause.

The final point I will make is to take this opportunity of acknowledging in the House today the dedicated work of Mr Ted Coats as chairman of NAIT Ltd. His full commitment to this role has been very much appreciated. I commend the National Animal Identification and Tracing Bill to the House.

Dr ASHRAF CHOUDHARY (Labour): Thank you very much for this opportunity. I rise to support the National Animal Identification and Tracing Bill. The Primary Production Committee had a very good discussion on this bill. As the Minister said, we heard 10 submissions, but they were very thorough submissions, very good submissions from a range of submitters. I say at the outset that this is a bill that the Labour Government started in 2004, and then we formally committed to implementing it and allocating resources in 2008. I think it is very important to say at the outset that this is an issue about animal tracing that all the key exporting countries around the world have already. We are the one that has actually been slack. I have a list of the countries that have already got some kind of national animal identification and tracing scheme in their systems: Australia, the United Kingdom, Canada, the United States—in that case it is voluntary—South Korea, Japan, the European Union, Argentina, and Brazil. Those countries have it just for export purposes.

I think it is very important that as we move forward from a number of other animal issues like animal welfare—we have now passed a number of Acts for animal welfare—and also for the image that we have as a clean and green country, that we go into animal identification, because there will be more and more demand as countries and consumers want the ability to trace where their protein is coming from and which country the animals are coming from. I think we have done well in terms of getting this bill in place so we can assure consumers and countries that the meat they are consuming is coming from reliable sources. In particular, as a major exporting country, New Zealand has, over the years, taken leadership in many areas. Whether it is technology on the farm or whether it is meat processing or freezing meat, for over 100 years we have done very well. In that vein it is important that we pass this bill, because it will give consumers better choice and better understanding of where their protein comes from. It is also important, as a country that is very serious about biosecurity and any issues to do with animal diseases, that we have a way to identify animals so consumers and buyers know which source the animal protein is coming from. Going forward, I think consumers will want proof of where their meat has come from. This identification will start with cattle and deer because as we get into the system we have to ensure we start with animals that are easily traceable. Of course the next step will be to go to sheep in future years, but because of the numbers—30 million sheep—it will not be easy or cheap.

I must highlight a couple of points that have been raised by a number of submitters on this bill. One issue is about the lifestyle block people—the people who have small lifestyle blocks. There will be a cost factor for them, and how will we identify those small lifestyle blockholders who have a few animals? There will be a cost issue and, as I understand it, it could cost $2 to $3 per animal to microchip those animals. That cost issue has been raised by some of the submitters, and I think it is important that we need to keep in mind that to fulfil the animal tracing requirement, the holders of small lifestyle blocks can be contacted. Obviously, we have what we call the FarmsOnLine database. That could be useful for this purpose.

The other issue that has been raised by submitters is the accountability for recovery. What principles will be used to recover the cost of microchipping animals? The levy recovery will be a major issue. Another issue will be at what time and what stage these animals will be microchipped. Will they be microchipped at the time of birth? What happens when animals are moved from one farm to another farm, or even moved from south to north or north to south? Those issues need to be sorted out, because this could be a potential problem in terms of animals being moved from farm to farm but farmers not being sure at which stage animals should be microchipped.

The other issue is whether it will be helpful, given that a lot of diseases are spread by wild animals, such as possums. We know that in New Zealand we have millions of these terrible animals, which spread disease. The question is whether just microchipping export animals will be good enough to stop the spread of disease. That is another issue we will need to look at.

The other issue that could potentially be a problem is dispute resolution in terms of levy payment. That is another issue that the ministry will have to resolve—whether these disputes will be resolved through regulations or whether that should be in the bill. In other areas these disputes are often dealt with through regulations rather than through legislation, and that is another concern that some submitters had.

The other issue will be to ask what process will be used to include other animals like, as I said, sheep. What processes will be used to include them in the whole National Animal Identification and Tracing process?

I say finally that although I support this bill, it is something that has been ongoing for a number of years. I am glad that at last this Government is taking this matter seriously enough to get this bill approved, hopefully before the end of this Parliament. I personally am delighted, because this is an area that I, as a scientist, have had a lot of interest in over the years. I foresee that in the future, along with animal welfare issues and our clean, green image, the tracing of animals will be very important for consumers. They are looking for safe food, they are looking for the ability to trace the animal and trace where the meat has come from, and I think that is an edge that we should have had years ago, along with other countries. But I suppose one could say that it is never too late, and even now we are passing this bill. I think it is good for the industry, it is good for the consumer, and it is good for the name that New Zealand has overseas in terms of providing a good source of protein. With those words, I am delighted to commend this bill to the House.

SHANE ARDERN (National—Taranaki - King Country): It is a pleasure to follow the previous speaker, Dr Ashraf Choudhary. His services to the Primary Production Committee will be sadly missed. He is one of the very few agricultural scientists who have come into Parliament in the time that I have been here. He has made a substantial contribution not only to this bill but also to the Primary Production Committee in the whole time that I have chaired it and, prior to that, on occasions when I have served on it. I thank him for his contribution.

I do not intend to relitigate all of the comments that the Minister of Agriculture went through, because I think he pretty much summed up the history of the National Animal Identification and Tracing Bill and where we are with it, but I would like to make some points. Before I do that, I thank the officials and the Minister for the way that they have worked with us in this process. I particularly thank the officials, because we certainly grilled them on a number of issues and made life fairly challenging for them while we went through the formation of the amendments that the Minister spoke of in his comments.

Can I say New Zealand has never been better placed than it is right now to exploit the opportunity to export high-quality, traceable, sustainably farmed—and I emphasise the last bit, “sustainably farmed”—protein foods to the world, and the world has never been more receptive to the idea of buying at a reasonable price. That does not make us a low-cost producer, but a niche producer and marketer of high-quality food to the world. We have never had a greater opportunity. Hand in hand with that goes the responsibility of having a traceability mechanism that is based in modern technology and has integrity. That goes to the hub, I guess, of some of the major concerns that were raised through the submission process in the select committee.

Federated Farmers raised with us substantial concerns about the choice of technology—low-frequency versus high-frequency technology—that may be employed. As a committee we were not going to try to second-guess which technology may be the best in the future, but we tried to make sure that the bill was enabling, so that the market could determine, through technological development, which technology would be better suited and most cost-effective. The Federated Farmers submission was well received, despite the fact that they indicated at the end of it that they were not entirely happy with the direction that we were heading in. I think to some extent that concern has now started to fade away a little, because high-frequency technology will be able to be used if, in the end, that is proven to be the best technology. We called in an expert to appear before the select committee to give us advice on this matter, and I have to say he did not in any way at all allay our fears that potentially we were going down the wrong path. In fact, it was quite the opposite of that: he might have suggested to us that high-frequency technology, as Federated Farmers were submitting, potentially may be the way of the future. We have yet to find that out, I guess, as time goes on.

The other major issue that needs to be mentioned now is the Crown’s commitment to this project. The Crown has made available to this project $7 million in upfront capital costs and 35 percent of the ongoing costs, at $2.5 million per annum. That is the kind of importance the Government believes this issue needs, and I support that entirely. We cannot be a First World trading nation if we do not back up our comments about traceable, First World products with technology and with action. The State is doing that, and that needs to be acknowledged. National Animal Identification and Tracing is effectively an insurance policy to support New Zealand in a uniquely livestock-based economy. Nowhere else in the world that I am aware of is as dependent on exports from livestock—proteins and fibres—as New Zealand is. We are unique in the world in that regard, so making sure that that integrity is in place is absolutely the genesis of this notion. Those who would have been critical of it, as the previous speaker said, because of cost probably need to bear that in mind when they consider their position on that issue.

The ability, in the future, to implant a silicon chip—not a tag that can be lost or have retention issues—into farmed livestock for traceability, and to do so in such a way that it will not affect meat processing or cause other ongoing problems is something that I am confident will develop over time. The developments that will come from that, of course, in terms of livestock handling, genetic certainty about the integrity of records kept, and traceability back to the farm of origin, etc., are substantial. They spin over not only into international market certainty but also into buyer security certainty. We had the example of the Waiheke Island foot-and-mouth hoax, when we in New Zealand were absolutely found to be wanting. The lessons learnt from that hoax have, I guess, focused the minds of people. If we are to be involved in rearing or keeping livestock, even if it is as a hobby rather than a commercial enterprise, we need to be responsible for the record-keeping on how many of those particular animals we have, where they are, and when they are being transported.

I look forward to the passage of this bill. I am confident that it will make good progress through the House. It is good to see the support we have. I am not sure whether anybody will oppose it at this stage, but maybe someone will do so. I look forward to the passage of the bill.

IAIN LEES-GALLOWAY (Labour—Palmerston North): It gives me a lot of pleasure to speak on behalf of the Labour Party on the National Animal Identification and Tracing Bill, and to express our wholehearted support for the bill, because it assists in underpinning the future and security of our agricultural, primary produce, and food-exporting industries. As the previous speaker, Shane Ardern, pointed out, New Zealand is uniquely placed to take advantage of 21st century global economies in our ability to put a high-value, high-quality product on the international market. I suppose this bill, and the concept of setting up a National Animal Identification and Tracing (NAIT) system, is very much a response to both the opportunities and the threats that global trade presents for us. We have the opportunity to put our products into a much larger market and to send them overseas into lucrative markets, where conscious consumers are looking for a product that they can place a premium on. We can take advantage of those markets.

At the same time we have food products coming into the country, as well, which poses a potential threat if products come into New Zealand harbouring diseases that can then find their way across the country. Having an animal identification system and a tracing system allows us to be much more responsive should the unfortunate event occur that our biosecurity systems lapse in some way and there is a threat of an outbreak. Shane Ardern referred to what turned out to be a hoax on Waiheke Island, and to the fact that it became clear that our ability to respond to that sort of threat was not really up to scratch. That could potentially undermine what is still very much referred to as the backbone of the New Zealand economy, and we need to be able to respond to that.

In 2004 Labour originally proposed an NAIT system, and in 2008 committed to an implementation plan, as well as a funding mechanism to cover all the capital set costs. That work has been continued by the current Government by its introduction of this bill, and all sides of the House, to my knowledge, support the continuation of that work.

A NAIT system will help maintain the confidence of our export markets in the safety and disease-free status of New Zealand’s livestock products, both by showing consumers that we are able to trace the source of the products they are consuming and by helping to protect our borders. It will also boost our ability to prepare and respond to animal disease outbreaks. I think it is important to note the pork industry’s concerns at the moment that by, I suppose, showing a little bit more favour towards our trade obligations and reducing some of our border standards on pork products we are at risk of introducing pork-borne diseases, particularly porcine reproductive and respiratory syndrome. I think that is a genuine concern held by pork producers. It is not simply a mechanism for putting up trade barriers; this is an important concern that we have to take into account. As an exporting nation we need to show the world that we take our trade obligations seriously, but also as an exporting nation we need to make sure that we have good biosecurity and border security when it comes to these sorts of diseases. I think it is really important that we take the pork industry’s concerns into account. Of course, pigs are not currently included in the NAIT system—perhaps that is something that will happen in the future—but having a tracing system like this helps to, hopefully, alleviate some of the fears that we have within our producer industries that in the event that something does come across the border, we will be able to trace it and clamp down on it quickly so that any biosecurity threat does not move too quickly through the country.

This is really important for helping our producers to enhance their product and to be able to demand a premium price for their product. In the same way that Fonterra is able to use milk and milk products to create a whole range of premium products by deconstructing milk down into its component parts, our other primary industries are able to demand a premium for their products because they are able to display to that growing market of conscious consumers that we have good animal welfare and environmental standards in New Zealand, and that our products are safe, secure, and disease-free.

Consumers these days want to know where their products come from—not just their food products but also clothing, furniture, and all kinds of products. People are concerned about labour standards and about whether people are getting good wages and have good employment standards. They are interested in knowing where their T-shirts, for instance, are made, where their furniture comes from, whether the products used in building that furniture, especially timber products, come from sustainable sources, and whether the world’s resources are being used sustainably, fairly, and with a view to looking after the people who live in the areas where those products come from.

Equally, people are very interested in the farm practices a country engages in, the welfare systems for farm animals, and where those animals come from. The environmental impact and the labour conditions under which farm workers are employed are issues, as well, that our international markets are interested in. I think it is really important that we are able to clearly demonstrate, particularly to people in Europe, Asia, and the United States—who will place a premium on this knowledge—where their products have come from and in what conditions their products have been raised and created. This really does present a considerable opportunity to New Zealand, which has a good clean, green image internationally and a good reputation for good employment and environmental practices.

It is also true that in the 21st century animal production using genetic modification and cloning techniques is on the increase. I will put to one side the arguments that different members in this House and different people will have about the use of genetic modification. In cases where it is being used it is really important that we are able to trace modified genes and animals that carry modified genes, and the movement of those animals and genes through different herds. Again, people will place a premium on knowing whether there is genetically modified material in their food products. Some people will not be very concerned that there is genetically modified material in their food products; some people will be concerned that there is genetically modified material in their food products. The NAIT system gives us an ability to prove it, one way or the other, which is of significant value to our markets, as well.

I know that the issue has been debated vigorously within the livestock industry for some years. Federated Farmers made a considerable submission to the Primary Production Committee, and in the end came down not very much in favour of the NAIT system. The cost involved—at about $2 or $3 per head of stock—is a significant upfront cost for farmers, particularly for farmers on a smaller scale like lifestyle blockholders, but, overall, the benefits that are to be gained for individuals, for our industries as a whole, and for our nation as a whole from implementing this system far outweigh the upfront costs. Labour is very, very happy to support the progress of this bill.

GARETH HUGHES (Green): Kia ora. Ngā mihi ki a koutou. Kia ora. It is a real privilege to take a call in this debate in Parliament today. I do not know whether I am the right person to be taking a call on the National Animal Identification and Tracing Bill given that I am a vegetarian and have been for the last 11 years. So my interest is in the animals, not necessarily in eating the animals. But the Green Party welcomes this legislation and will be joining with other parties in Parliament to vote in support of it.

We do support greater information going to consumers. We believe that that will assist our export markets—that vital New Zealand brand—and we support the transition in New Zealand towards a sustainable agricultural sector. I will be taking only a brief call, because I am speaking on behalf of Kevin Hague, my colleague who heard the submissions and who was involved in the Primary Production Committee.

I will talk briefly about what the bill will do and what it can do, and I will look at the new quasi public-private organisation that will be enforcing the bill. Then, lastly, I will look a little at the opportunities of this bill—how we can really build that “clean, green” brand, that valuable brand to New Zealand’s economy.

To begin with, the bill establishes a national animal identification and tracking (NAIT) system for cattle and deer. We have heard that it is too expensive, initially, for sheep. I am not sure of the status of pork products in the new body that is being established, but I think we would question why we are not doing it all at once—why we are not bringing those 30 million sheep in at once—because there will be greater costs down the line when we do that.

The bill will be setting up a system to follow the rapid and changing trends, be they in diseases or new methods, that affect animals from birth to death. It is sort of taking on that cradle-to-grave idea, or a farm-to-shop tracking system. We support the intent of the bill and the way it is being rolled out. We note, though, that what is essentially being established is a quasi public-private enforcement agency that will have significant powers in relation to compliance, searching for documents, and searching and questioning people. It will even have powers of detention. I note that the agency will not be subject to Official Information Act requests.

We know that the establishment of this body will be expensive. In earlier documentation, I understand, the cost was in the order of $1 per animal, but now I hear from the debate that we may be facing a $2 or $3 cost per animal, which will be a significant cost especially to livestock farmers or even to people with only a few livestock animals. But I think that the greater burden will be in the hassle of registering and engaging with this new administrative body. No doubt there will be a great number of questions, and I think we may see a number of problems in that area.

But the issue, of course, is an important one. We are dealing with human health issues, and we have seen some very large cases globally that have dealt with animal health and human health issues. In the UK about 10 years ago we saw an outbreak of mad cow disease—or bovine spongiform encephalopathy—which caused millions of animals there to be slaughtered. A £4 billion bill was faced by the UK Government at that time. Recently we saw a food poisoning outbreak in Germany—I think they understand it was from salad products—with 48 deaths. There were literally weeks when European authorities could not track what the cause of the illness was or where it was coming from.

I hope that a law like this, which will increase identification and tracking of New Zealand livestock animals, will assist if we ever see an outbreak in which New Zealand livestock face something like that. On the other hand, we have seen the economic costs associated with Turkey’s export ban. So it is important that this Parliament is turning its hand to this legislation.

The Greens have some concerns about the new body that will be enforcing this law, but ultimately we support greater enforcement. That brand is vitally important to the New Zealand economy. We have a story to tell, and we should be telling it. I recommend that members go and look at Icebreaker’s product-tracking guide for its website. The company calls it a baacode, and it allows its woollen products to be tracked anywhere in the world, from the farm to the shop. That is a good example of innovation by a vibrant Kiwi company, and it is the type of opportunity we should be taking from this bill in order to tell our story, because we do have a story that, on the whole, we can be proud of.

The important thing, though, of course, is making sure we have substance to back up our story, and to make sure we have good animal welfare standards. The Green Party is disappointed that this bill will not be dealing with the critical animal welfare issues we face in New Zealand. It is important that the substance of the bill focuses on the environmental impacts of our agricultural sector in New Zealand, in regard to water, to dirty dairying, and to climate change, and it is important also that worker standards on our farms are of the highest scratch, so that the story we tell is compelling. That means that we can charge a premium.

We do not want to be a low-cost provider. We are on a hiding to nothing if we are going to chase China or Uruguay to see who can degrade their environment faster in order to boost productivity. Our gain for New Zealand must be focusing on a niche, on premiums, on high-value and high-knowledge products, not on trying to race other countries to destroy our environment and to go for the lowest value products.

The ultimate irony of this bill, though, is that now, as a result of this bill, foreign consumers will have far greater information on New Zealand products than Kiwis do with our imported products. It has been a source of great disappointment to the Green Party that Sue Kedgley unsuccessfully championed country-of-origin labelling, as it is a simple right meaning that Kiwi consumers should be able to know where their food has come from. I think that most Kiwis support that. It is a simple right to know where our food is coming from, but both Governments—blue and red—have not acted on that.

It was disappointing that Labour through its 9 years in Government did not act on it despite constant campaigning by Sue Kedgley, although I understand that Damien O’Connor is drafting a member’s bill, and I welcome that. It is great that Labour is coming to see the light on the need for Kiwi consumers to have proper country-of-origin labelling of their food. But the irony of this bill is that international consumers will have greater information than Kiwi consumers. I hope this will act as an incentive for us in our Parliament to work on country-of-origin labelling in New Zealand.

In summary, I say that the Green Party supports this bill, and we will be voting for it. We support the intent of greater tracking, but what we really want to do is make sure that the story we tell has a substance behind it. I note that Russel Norman, the Green Party co-leader, recently released one of our water priority election issues—that half of our rivers and streams are not safe to swim in. That is why, when we talk about our brand overseas, using this new technology and using Government support to establish it, we need to have a good, compelling story to tell. Kia ora.

RAHUI KATENE (Māori Party—Te Tai Tonga): The Māori Party has had mixed views about this National Animal Identification and Tracing Bill and the initiative to establish a national identification and tracing system. We are not at all inclined to support legislation just for the sake of legislation to bring about new compliance requirements. I have to say that one wonders where the line will be drawn when it comes to the microchipping of cattle and sheep.

So it was with some interest that we looked at the advice from the Privacy Commissioner to the Primary Production Committee. At first we were under some confusion as to whether it was the privacy of sheep, beef, and deer that was being talked about when the Privacy Commissioner emphasised the need to “properly balance privacy impacts against the public interest in identifying and tracing animals.” But in reading further, it seems that the concerns posed by the commissioner were about search and detention powers and whether a warrant should be issued. We certainly have to agree with the commissioner that this power should be exercised only under warrant.

We also concur with the advice that the reporting requirements should be amended to make it less onerous. In essence the issue of unnecessary and disproportionate compliance is the one that our caucus found most objectionable about this bill. I will quote from the Privacy Commissioner again. The submission noted that annual information would be required from the National Animal Identification and Tracing (NAIT) agency. To quote directly: “This provision imposes a high level of compliance costs on my Office and the NAIT organisation, which I do not think is necessary.” We will be interested in the response of the Minister to this concern, as it is one that has raised issues for our caucus. All going according to plan, the National Animal Identification and Tracing system will allow the rapid and accurate tracing of animals from birth to death or live export. It will provide information on the location and movement history of animals, and it should do much to improve biosecurity management.

We expect also that the bill will help to manage risks to human health associated with animals. It will help to improve animal productivity, provide market assurances, and support compliance with trading requirements. These are all worthwhile goals.

I will refer to another submission that helped us to form our position at the second reading, and it was from the Federation of Māori Authorities. The federation represents members comprising ahu whenua land trusts, Māori incorporations, rūnanga, and Māori trust boards from throughout 11 different rohe across the nation. Collectively, there are some 150 members administering over 800,000 hectares of land on behalf of an estimated 100,000 Māori beneficial owners, so when the Federation of Māori Authorities speaks, it speaks with considerable authority, and, accordingly, we listen.

The Federation of Māori Authorities said that the NAIT system will add value to New Zealand’s exported agricultural products in that it will allow our produce to be entered into high-value markets that require identification and tracing of agricultural products. This is a very important issue in terms of fostering and supporting Māori economic development while at the same time bolstering the reputation of New Zealand products in international markets. To put it simply, the federation thought that having the ability to track potentially economically damaging diseases such as foot-and-mouth disease or mad cow disease would be of great value to the Māori economy. It was their opinion that this legislation provides us with an opportunity to be proactive, as opposed to reactive, to an event of disease outbreak.

They also thought that although there will be significant costs for relevant industries to come into line with the NAIT system, these costs are small in comparison with the huge costs to our economy and international reputation should we have the misfortune to suffer a large-scale disease outbreak.

I do not want to take up much more time before the House, but I do think that the NAIT system will also be helpful for the environment. If we can track free-range cattle and sheep through this system, we can find out what farms are not carrying out their responsibilities to keep cattle out of streams and rivers and from too close a proximity to streams and rivers. They are damaging to the water and to the environment close to the water.

The Māori Party supports agricultural trade and employment of workers. We also support an effective and accountable Government entity to carry out the purpose of the bill. We are persuaded by the logic and the experience of a key Māori business to provide support to this bill. Kia ora.

SANDRA GOUDIE (National—Coromandel): I, in turn, will speak to the National Animal Identification and Tracing Bill. I applaud the Māori Party and Rahui Katene for their support for the rural sector. I think we need more voices speaking out in support of the rural sector. The National Animal Identification and Tracing Bill does a number of things. I will reiterate some of those things.

The bill will enable rapid and accurate tracking of animals from birth to death or live export. I think that is vitally important, because we do need traceability, and markets are demanding more traceability. We do not want to put any of our markets at risk, so the bill is very important in regard to that. The National Animal Identification and Tracing (NAIT) system will provide information on the location and movement history of animals. I think that is also important. It will also improve biosecurity management, help manage risks to human health, improve animal productivity, allow market assurances, as I have already mentioned, and support compliance with trading requirements. All of those things are very, very important.

We cannot in any way risk our overseas markets. Our overseas markets are vital to our exports, and thus to our national economy. We must not forget that the agricultural sector is one of the stalwarts of the New Zealand economy. I hate to think where our economy would be without the agricultural sector. I wonder how many New Zealanders fully appreciate and understand that, and understand the importance of agriculture to New Zealand’s economy. Probably not enough, in my view.

I would love to see the education system change in such a way that our children understood the importance of the agricultural sector right from primary school. If we can do it for conservation, I think we should be able to do it for agriculture. I think the agricultural sector sometimes becomes the whipping boy for a lot of situations and causes where it is blatantly unfair to do so.

The Primary Production Committee is chaired by Shane Ardern, an excellent chair. His knowledge of agriculture is among the best in this Parliament. Some recommendations were made through the select committee. There was an amendment to clause 2.

Mr DEPUTY SPEAKER: I am sorry; I am having difficulty hearing the speaker.

SANDRA GOUDIE: There was an amendment to clause 2. This is a bill of great importance, so everybody should be listening attentively and hanging on every word, of course.

Amy Adams: We are, Sandra.

SANDRA GOUDIE: Ha, ha! The commencement date for mandatory identification of cattle with a NAIT device will be in July 2012. There are dates for other obligations as well.

There were Government amendments to reflect practical arrangements, such as allowing the dissolution of NAIT Ltd before the new, permanent NAIT organisation is appointed, and requiring consultation with people who are likely to be substantially affected. We all know that those people who will be substantially affected need some considerable consultation. There is quite an exercise in making people aware of their responsibilities, because communications for the rural sector are not as robust as they might be for the urban sector.

The Minister was given more flexibility to remove some or all functions and powers from the NAIT organisation where this was needed to address a wider range of circumstances, subject to consultation, yet again, with affected parties. That goes without saying. We also deleted the clause requiring a person in charge of animals who consigns a NAIT animal to another location to provide a NAIT declaration. There was an amendment to clause 46 to make data access criteria and application processes fairer. A large portion of Part 5, relating to search and surveillance provisions, is moved to a schedule, retaining the appointment processes for a NAIT officer and a NAIT authorised person, who can then exercise powers and perform functions under the bill.

The select committee identified the concern expressed by some submitters on the use of low-frequency identification devices rather than high-frequency devices. This concern was motivated by the fact that we understand that there are rapid advances in technological change. It is certainly an exercise. If the technological requirements for NAIT change at a rapid pace, there is a difficulty with the uptake of those changes by the users of the NAIT system, the farmers themselves.

So there needs to be some care and concern to make sure the technology is robust and substantial in the first instance, so there is no need for too much further change in technology as time goes on. All of those changes come at a cost, and we do not want to add any further cost to those in the agricultural sector. They are certainly burdened enough by local government and other regulations currently. Those off-farm costs are a big imposition on the incomes of our agricultural sector.

I fully support our agricultural sector. Let us do what we can to make sure that things run pretty smoothly for it. I applaud this bill and the maintenance of the agricultural sector’s markets.

PHIL TWYFORD (Labour): The National Animal Identification and Tracing Bill is such a sensible bill that is has united all the parties in the House. It has even united the carnivores and the vegetarians, so it was interesting to hear Gareth Hughes, one of the few vegetarians in the House, speaking on a bill about tracking animal livestock. I was on a podium the other day with Gareth Hughes. When one is on a podium with a member of the Green Party, one always worries, because one always knows that those members will “out - moral high ground” one. Gareth Hughes and I were speaking before an audience of rabid vegans, and it was very reassuring to see that even he could not please the demands of the rabid vegans.

Labour supports this bill. It makes complete sense. It is a valuable contribution to the infrastructure that supports our livestock industry and it gives confidence to export markets that the animals that are raised in New Zealand are raised according to the strictest standards of health and animal welfare.

This bill is the first step in a system that will deliver traceability for our livestock industries, and that is a standard that we need to meet for the sake of keeping confidence in our agricultural exports. As Iain Lees-Galloway was saying before, it really raises the prospect of traceability from the farm gate to the plate. Increasingly, socially and environmentally conscious consumers around the world are demanding that traceability. They want to know not only what country their piece of beef, lamb, or venison came from but also what part of the country it came from, what farm it came from, what conditions it was raised under, and what its pedigree or genetic background is. That is something we will have to seriously consider.

The National Animal Identification and Tracing (NAIT) system this bill establishes—a system that was devised and planned under the last Labour Government and is being continued under this National-led Government—really provides the platform for that traceability to be put in place. Labour supports the bill. It will ensure that a quick and efficient response is possible when we face a situation—and let us hope we do not face another one—like the hoax foot-and-mouth outbreak that occurred on Waiheke Island a few years ago.

Gareth Hughes talked about the mad cow disease outbreak in Britain and the enormous cost to Britain’s agricultural industries. The traceability that the NAIT system allows for tracing individual livestock back to the farms they have come from will allow a quick and efficient response in that kind of crisis situation. It will help maintain the confidence of the export markets in the safety and disease-free status of New Zealand’s livestock industry.

We support this bill. It will commit an implementation plan, as well as the funding to cover all the capital set-up costs. The implementation itself is necessary to demonstrate that New Zealand continues to be one of the leading producers of high-quality, high-value, safe food. Consumers want to know where their food is coming from—not only what country but also what farm and even what part of that farm the animal comes from.

Some meat companies in New Zealand already have their own traceability systems set up and are quite far down the track of delivering traceability, but this system will lay the platform for the whole industry. As previous speakers have noted, venison and cattle will be the first to be included, but it is expected that pork and sheep will follow.

We appreciate the concerns that farmers raised at the Primary Production Committee. Those concerns have been incorporated, and Labour is very happy to support this bill. I will not say any more, because I want to hear the valedictory statement of my colleague Chris Carter.

Debate interrupted.

Valedictory Statement

Valedictory Statement

Hon CHRIS CARTER (Independent—Te Atatū): All satisfying stories should have a clear beginning and a conclusive end. This is the conclusive end of my parliamentary story, but, I hope, not the end of any opportunities I might have to do some public good in the world. I would like to use this opportunity to reflect on some of the highlights of the 15 years I have served as the member of Parliament for Te Atatū. But before I do that, I need to acknowledge some rather special people who are here today.

This year my partner Peter Kaiser and I celebrate 38 years as a couple. We met in 1973 when we were both very young students and have been together ever since. Nothing I have achieved in my life would have been possible without Peter’s support and energy. In politics he has canvassed as many houses as me, delivered as many leaflets as me, attended as many conferences and regional meetings as me, raised money for our party levies, and hosted numerous Labour Party functions in our home, including Helen Clark’s 60th birthday party. Peter organised the lot, and, as many of my former Labour colleagues can attest, without his contribution Auckland regional Labour politics would have struggled, particularly during the difficult political period between 1993 and 1998.

Peter has served at all levels in the Labour Party, up to and including the executive of the New Zealand council, the ruling body of the party. He has served as an area representative and was chair of the Auckland regional council of the Labour Party for many years. Together we founded Rainbow Labour, the gay and lesbian sector of the Labour Party.

In the good times and the bad, he was always there for me and for the Labour Party. Many people, including me, urged him last year to take my place as the Labour MP for Te Atatū. He would easily have won the selection and the election, but he would not have a bar of it. Successful relationships are often difficult for MPs to sustain, as many in this House have found. The stresses of the job, living part of the week away from home for non-Wellington members, and the intrusion of the media into our personal lives all have a high personal and relationship cost.

Peter has put up with all the costs of being a reluctant public figure for me. He is a successful and popular school principal, and the last few years in politics have been enormously difficult and stressful for him as the media have unfairly dragged him into the public spotlight. It is an acknowledgment of the respect he has earned that no matter how nasty or unfair media stories have been about us, he remains a much loved, respected, and valued member of his school community.

To be honest, for 15 years Te Atatū and the Labour Party actually had two MPs for the price of one. I know he is very happy that I am leaving politics, but I will always be indebted to his support and contribution during the time that I have been a politician. The children of MPs also have a heavy burden to bear. Our three children, Alice, Willem, and Oliver, have not had an easy time with me as a public figure, and I have often worried about how they have coped, particularly during the last year.

I want to acknowledge today for the record my appreciation of the friendship and support of a large group of people in my electorate. Without their help and encouragement, I could not have achieved the support I won from my constituents. I acknowledge Jenny Atkins, the long-time secretary of our Labour electorate committee and her daughter Adele, Margaret Sutton and her family, Neville Tilsey, Bill Guy, John Edgar, Claudia Elliot, Sherilee Swanepoel, and Verity Davidson, Mary Bragg, George O’Donel, Maurice and Barbara Caryllie, Orsa and Haraald Hansen, Rex and Marilynn Hurley, Brian Henaghan, John Wakenshaw, Anne Pala, Mahendra Tailor, Camille Nakhid and her husband George, Shane Misselbrooke, Lincoln Dam, Pon Lok, Roy Clements, George Bach, Emad Khan, Haseeb Metla, Zhang Shibo, and many, many more.

Without the support of these friends and supporters we could never have kept the Labour flag flying out west so successfully and won five elections so comfortably. I cannot thank them enough for their personal support and friendship. The unanimous support and repeated endorsement I received from my electorate committee last year meant a great deal to me. I probably appreciated even more their commitment over many years to knock on doors, dodge dogs, deliver thousands and thousands of leaflets and target letters, fund-raise, and provide me with their collective wisdom on everything from major policy issues to the content of my numerous electorate newsletters.

Staff have always been very important to me and to my success as a politician. I can truthfully say that it was my staff more than anything else whom I missed the most when I ceased to be a Cabinet Minister. I would like to acknowledge my two electorate secretaries, Margaret Sutton and Dianne Montieth. Margaret has been with me since the beginning in 1993, and her Irish background and sense of humour have seen us all through so much. Wendy Hogg, Shibo Zhang, and Tao Ren were also long-term local staff and made a huge and valued contribution. Joy Bridge, Brian Henaghan, Lautofa Tanielu, and David Taylor were among the many volunteers who have helped out on a regular basis in my Henderson office.

In 2000 Serge Sabylak, a recent immigrant from the former Yugoslavia, came as a Victoria University intern to my office. We discovered we had so much in common, even the same birthday. He came for 7 months and stayed for 7 years. Over time he became more like a son to me than a staff member. As a Minister I had two skilled, wise, and valued political advisers: Kevin Smith and Michael Gibbs. Both became friends as well as staff and did amazing work for me and for our country. For 5 years Nick Maling was my long-suffering but much valued press secretary, adviser, and friend.

Others who made a huge difference to my success as a Government Minister included Richard Marshall, Gavin Rodley, Steve Boyd, Elizabeth Brown, Becky Chin, Elizabeth McMillen, Stephen Cross, Leroy Taylor, Jay Eden, Daniel King, Peter Graczer, Simon Gilmore, Helen Lahtinen, and Brett Demalmanche. After the 2008 election I had two parliamentary staff, David Hawkins and then Tim Kano. Both have served me and my constituents well. I owe them and my other staff a huge thankyou for their loyalty and hard work.

I would also like to acknowledge the fine chief executives whom I had the privilege of working with as a Government Minister: Hugh Logan and Al Morrison at DOC—the Department of Conservation—Sonya Rathgin and Mervin Singham at the Office of Ethnic Affairs, Chris Blake and Brendon Boyle at the Department of Internal Affairs, Katrina Bach at the Department of Building and Housing, Leslie McTurk and Pat Snedden at the Housing New Zealand Corporation, and Karen Sewell at the Ministry of Education.

The American politician and former Speaker of the House of Representatives Tip O’Neill gave the famous quote “All politics is local.” The local was always the part of the job I loved the best. I have tried to work hard on behalf of my constituents. My majority at the last election was the highest of any Labour MP in west Auckland, even though Labour narrowly lost the party vote in my electorate. That personal support was earned by never taking support for granted and consistently providing a service. I can truthfully say that there is not a house, a letterbox, or probably even a dog in my electorate that I do not know personally.

Local achievements that I feel particularly satisfied about include saving at least half the Harbourview land in Te Atatū peninsula as a public park, helping to expand public services at Waitakere Hospital, numerous local school projects, support for the Ark in the Park project in the Waitakere Ranges, and, with my two Labour colleagues in west Auckland, support for the Waitakere Ranges protection legislation.

On a more personal level, the innumerable immigration, housing, ACC, IRD—Inland Revenue Department—and other constituency cases that came through my local office often had a life-changing impact on individuals’ lives. Nothing can be more satisfying than helping people in such a practical and direct way.

At the end of any politician’s time in Parliament I imagine that all of us will reflect on our legacy in Parliament. Did the time spent in this place make a difference to our country and its people? I would like to think that the 15 years I spent here, particularly the 6 years I spent as a Cabinet Minister, did make a positive difference. I have always been a very goal-focused individual who wanted to get things done yesterday. Every ministerial job I had—and I was entrusted with quite a few—saw lots happening. I would like to touch on just a few of the highlights.

Conservation was the job I enjoyed the most. During the 5 years I spent as the Minister of Conservation—the longest anyone has held that position to date—over 360,000 hectares of land was added to the conservation estate. That is an area almost twice the size of Stewart Island. Of all my actions as a Government Minister, this land acquisition programme on behalf of the public is the achievement I am most proud of. Long after I am forgotten I know that that land will be protected, accessible, and an asset for every New Zealander. Cabinet approved the money, but my energy and determination drove the process forward.

Another highlight for me was the gazetting of 17 new marine reserves. Creating each one felt, at times, like fighting World War III, but marine reserves work. This is a controversial process, and I am not surprised that very few have been created since I left the job in 2007. Worried about the sale of private coastal camping grounds to property developers, I managed to gazette 100 new camping grounds in the Department of Conservation estate while I was the Minister. I also extended protection to a number of marine species, including the endangered great white shark. I particularly enjoyed the media announcement made in the Chathams in a wetsuit and underwater in a shark cage. No wonder my Cabinet colleagues often teased me about those photo opportunities I had as the Minister of Conservation.

I signed staff agreements between the Department of Conservation and the State conservation agencies in Italy, the Philippines, South Africa, and Canada, giving my department’s expertise a chance to be shared with others globally. I negotiated and implemented regional assistance and training for environmental and park service staff in Papua New Guinea, New Caledonia, the Solomons, Tonga, Samoa, Niue, and Fiji, a move that complemented New Zealand’s regional assistance work in the Pacific. I battled Japanese, Norwegian, and Icelandic whalers at five IWC—International Whaling Commission—meetings, putting New Zealand in the world’s spotlight as the most staunch anti-whaling nation.

I initiated and actively pursued a huge number of individual biodiversity and recreational projects, the most exciting of which was Project Hauraki, the establishment of Rangitoto and Motutapu islands in the Hauraki Gulf as pest-free, with the potential to become another Tiritiri Mātangi Island on the doorstep of Auckland. None of these projects could have happened without my Cabinet colleagues’ support and Cabinet approval, but I was the man entrusted to get the job done, and I relished doing it.

For 6 years I served as New Zealand’s Minister for Ethnic Affairs—again, to date, the longest any individual has held that particular portfolio. Being the Minister for Ethnic Affairs was not a job Cabinet colleagues were queuing up to take. Why was that? Well, quite simply, it was because of the workload. If you value any free time on weekends, being the Minister for Ethnic Affairs is not the job for you.

Over 6 years I visited almost every mosque, gudwara—Sikh temple—Buddhist temple, Hindu temple, and synagogue in New Zealand, and there are an awful lot of them. I celebrated Buddha’s birthday on numerous occasions at temples in Auckland, Wellington, and Christchurch. I watched karbadi competitions, which is a sort of Punjabi bull rush, at Sikh temples, was splattered with paint powder at Hindu Holi festivals, attended religious services for Indian Christians, Greek Catholics, Iraqi Christians, Lebanese Christians, and Russian Orthodox.

I was splashed with water at Songkran, the Thai water festival, danced the night away at Nowruz the Iranian New Year, celebrated Eid each year, launched the annual Islamic Awareness Week, and enjoyed Rosh Hashanah, the Jewish New Year. Over the last 10 years I must have attended at least 60 Diwali events, countless Chinese New Year events, as well as the annual Hindu Navrati festival.

In addition to these religious services, most of the over 184 different national and ethnic groups who make up modern New Zealand also like to celebrate their national days as a focus for their community members who are resident in New Zealand. The drums of Ghana’s, Burundi’s, Rwanda’s, the Congo’s, and Nigeria’s national days became as familiar to me as the traditional dances of Croatia, Bulgaria, Russia, the Ukraine, Korea, and Romania. On one notable occasion in 2005 I attended eight ethnic festivals in Auckland on one Saturday, followed by five more the next day.

Significant achievements that I am proud of completing during those years as ethnic Minister included the establishment of Language Line, a professional telephone interpreting service using 39 languages that allowed people with little or no English to access Government services; the Connecting Diverse Communities work programme, a whole-of-Government approach containing more than 70 initiatives across Government agencies to improve policies aimed at strengthening positive relations between diverse ethnic, cultural, and religious groups; the Building Bridges initiative, launched in 2006 in conjunction with the New Zealand Federation of Islamic Associations to help dispel Muslim stereotypes in the post 9/11 environment; the intercultural awareness and communication programme, which saw the Office of Ethnic Affairs staff provide specialist services, advice, and training to other Government agencies to help facilitate better cultural and religious understanding in New Zealand; and the initiation of the annual UK / New Zealand dialogue on multicultural communities, an exchange of policies and best practice between the Office of Ethnic Affairs and the UK Department for Communities and Local Government.

Helen Clark’s decision for Parliament to celebrate annually the Chinese New Year, the Hindu festival of Diwali, and the Muslim festival of Eid—which, of course, is happening tonight—was a message to all of New Zealand that our country was now home to many cultures and religions and all of them have value and are part of our evolving national identity. I also initiated at Parliament during my time as Minister the celebration of Jewish New Year—Rosh Hashanah—and a significant celebration in 2008 of 150 years of Croatian settlement in our country.

Other ministerial jobs included that of Minister of Local Government, which saw me responsible for the passage of the new Local Government Act in 2002 and a major overhaul of dog legislation—always a very controversial subject. As the Minister for Building Issues I was responsible for the passage of the new Building Act in 2004, a review of the Residential Tenancies Act in the same year, and the passage of the Retirement Villages Act during my time in that portfolio. I had a brief spell as Acting Minister of Pacific Island Affairs and was appointed housing Minister in 2005.

I am proud that under my watch Housing New Zealand increased the quantity of social housing by another 1,923 housing units, increased the provision of community group housing units, and introduced a shared equity scheme to allow better opportunities to boast first home ownership. We also significantly expanded the community renewal programme, which saw big concentrations of social housing undergo major renovation and community development.

My last major job in Government was that of education Minister. As a former teacher I was immensely proud to be promoted to the seventh-ranked Cabinet position, responsible for New Zealand’s education system. When Helen Clark informed me I was going to be appointed education Minister she said I had done such a good job selling the Labour-led Government’s successes in conservation and that we had an equally great story to tell in education. Indeed, Labour had.

Over 8 years Labour had doubled the education budget from $5 billion to $10 billion. The capital works programme for schools alone was an astonishing $3.3 billion, 42 new schools were built, and expenditure on early childhood education increased by 281 percent. Two personal education initiatives I was very proud of were a major package to try to address the scourge of bullying in schools and a ban on the sale of junk food in school tuck shops. Both at the time were condemned by the Opposition as PC and the nanny State gone mad. Yet surely keeping students safe and trying to address the rising rate of childhood obesity was just plain good sense.

I was very proud of these and the many other investments Labour made in the educational sector during our time in office. I had only 14 months in the job, but I worked hard to justify Helen Clark’s faith in me. During that time I personally visited 327 schools and early childhood centres to see education in practice. I hope my presence and interest encouraged the excellent teaching and learning I witnessed happening in our classrooms.

I was the first MP to openly acknowledge being gay, although I am sure I was not the first gay MP to enter this Parliament. Why did I choose to be the first to be open about my different sexuality? As a former teacher I knew that gay and lesbian teenagers faced huge amounts of prejudice and had few affirming messages or positive role models. By being open and honest about my sexuality, and joined soon after by my industrious gay colleague Tim Barnett and my remarkable transsexual Labour colleague Georgina Beyer, we broke a glass ceiling. Today having gay and lesbian MPs is no big deal, and thank goodness for that.

In 2007 I met a beautiful young Māori woman in Melbourne who told me that as a 15-year-old she had been seriously contemplating suicide because of her sexuality. I had come to her school prize-giving, and my presence, she said, convinced her that being gay was not a barrier to personal success. She told me tearfully that I had saved her life. That story alone made it all worthwhile.

The people who have inspired me in this place have included Helen Clark, a remarkable and inspirational leader who made me proud to be a New Zealander; Michael Cullen, a man who knew how to build and maintain a strong economy; Margaret Wilson, Steve Maharey, and David Lange, individuals of great intellectual ability; and my friends Jonathan Hunt, Charles Chauvel, Lianne Dalziel, Jill Pettis, Martin Gallagher, Judith Tizard, Mark Burton, David Benson-Pope, Rick Barker, Ashraf Choudhary, Raymond Huo, Rajen Prasad, and George Hawkins. Thanks for your support and friendship, often rare commodities in this place.

The last year has not been easy, but now is the time to look forward and not back. I am and will always be a Labour person. I still consider myself a Labour MP and I still believe passionately in social democracy and that the Labour Party has the best philosophy for ensuring social justice and providing effective pathways to realising individual potential. The State should and must play a positive role in providing services and creating opportunity for all.

I remind those who seek leadership here in Parliament that strong leadership is about strong policies, rooted not in opportunism or pandering to the press gallery but in values that reflect your own political philosophy and your own personal ethics. Loyalty is a two-way process. It is earned and is not an automatic right. I want to take this opportunity to thank the Greens, who have been so kind to me. You truly have the nicest political culture here at Parliament. I want to thank Green MPs for all the support they have given me this year.

Where to from here for me? I have been appointed to a senior UN position and I look forward to making, over the next few years, a contribution to the UN’s global mission. It is time for a change for me, but I will always consider that it was an honour and a privilege to have served as a west Auckland representative in this Parliament for 15 years. Thank you very much.

Sitting suspended from 6.07 p.m. to 7.30 p.m.

Bills

National Animal Identification and Tracing Bill

Second Reading

Debate resumed.

Hon RICK BARKER (Labour): The bill before the House in its second reading is the National Animal Identification and Tracing Bill.

Hon David Carter: That’s right.

Hon RICK BARKER: It is in the name of the Hon David Carter, the Minister of Agriculture, who interjects across the House. He is the member responsible for the bill, but the work for this bill precedes that good member’s work and goes back some time. The bill is very important because the New Zealand economy is based on agriculture—of that there is no doubt—and very important to our agriculture is, of course, our animals. We have to take the most up-to-date, modern, and scientific approach that we can to managing agriculture. The old ways are no longer any good; we have to have new ways of doing things.

This bill will see the introduction of animal tracing and identification systems that are vital to controlling and preventing the spread of animal diseases. New Zealand’s animal tracing systems need to be updated, because an increasingly high standard is expected by our trading partners. Our trading partners are increasingly concerned about biosecurity issues, about traceability, about health, and about hygiene. We will be starting in this area with deer and cattle; electronic tags will be compulsory for all stock. Other species may be added in the future. No doubt we will be looking to spread this system to sheep, but at this point it is for cattle and deer. I presume—not that I am an expert on this—that it is because of the high incidence of tuberculosis.

Tuberculosis is a very important problem. It is spread more widely by the wide range of possums in New Zealand. Not everybody realises the link between possums and tuberculosis. People think possums sit up in trees and eat just pōhutukawa or rātā, but in actual fact possums prefer tussock and grass. They like the very lush grass that New Zealand farmers put out, so they come down to eat. When possums eat they leave saliva, and sometimes cattle come along later and eat the same grass. The grass can be infected with TB from the possums.

This brings into play another part of our important system, which is possum control. The country has had quite a lot of controversy about possum control, because a good deal of that control has been undertaken by aerial 1080 poison drops. These are not always popular, let me tell members. There are people who have severe doubts about the long-term effects of 1080. They believe that it has an effect on birdlife and other animal life. But people are agreed that we need to reduce the number of possums. I happen to have some interest in this because I have been involved with people who have been involved with possum control before, and I prefer to see live bait stations, where control is done on the ground. I think we can do a great deal more for controlling possums by ground control rather than simply by aerial drops. I know that ground control takes a bit more time to organise. I know that ground control is a bit more difficult. But it is no more expensive and, in fact, it is much more effective. So we want to concentrate on reducing TB. Not only do we want to concentrate on the contagion but we also want to do it in terms of managing our animal stock.

Labour is aware that this bill is very important. We initiated the development of the National Animal Identification and Tracing system in 2004, which is a quick and effective response to outbreaks of animal disease, and which could be used if that terrible thing, foot-and-mouth disease, came into New Zealand. That could be incredibly costly to New Zealand’s agriculture, and incredibly costly to New Zealand as a whole. We are very fortunate in that we are an island. We do not have any natural predators crossing the sea to us; we are not abutting up to other countries that have diseases. We are naturally isolated, and this gives us an advantage with regard to keeping diseases out. New Zealand is very fortunate in this, and we need to maintain that natural advantage by having proper systems to ensure that our stock diseases are reduced. The fact that we are disease-free is one of those things by which we can sell our products with advantage.

Maintaining this disease-free status is very important. The one area we are very at risk in is the area of TB. We have had some terrible outbreaks of TB in the past. It has been very expensive. We have put in no-transfer zones, and we have forbidden the shifting of stock from TB-infected areas into other areas to minimise infection. We have undertaken extensive tests of animals in the areas where there have been outbreaks of TB, and over the years, with significant control, we have reduced it. This bill helps to reinforce the control systems necessary to manage disease, and to make sure that we manage any future potential outbreaks to ensure that they do not damage New Zealand’s disease-free status. The bill is to make sure that we are able, in fact, to manage things much better.

This is good legislation. The whole of the House should support it, and Labour supports it. I say in conclusion that this is very good legislation. The Hon David Carter is grinning from ear to ear. This bill is probably one of the most effective that he has put forward in the House. He is very proud of it, and rightly so. It has the tick-off, but—

Darien Fenton: Who started the work?

Hon RICK BARKER: The member to my left interjects and asks who started it. Well, it is a bit of a bun fight, is it not? Of course, we all know that all the good ideas sprang from the previous Labour Government. We are very pleased to see that the Hon David Carter has seen the wisdom of this work, and has not tried to trash or modify it particularly. He has simply seen the wisdom of it. It has been compelling wisdom, and he has accepted it and continued with it. The only thing I can ask is why the Hon David Carter did not get this bill higher up on the Order Paper and get it passed sooner—sooner. I would have thought that this legislation, given the wide support it has across the House, could have been dealt with in the first year, and could even have made the 100 days of action. But, no—

Hon David Carter: You’ve got to get the industry with you. That was the difference.

Hon RICK BARKER: Oh, the member said he had to get the industry on board. Well, I understood that the industry was very supportive of this legislation.

Hon David Carter: Some were, but that’s not entirely.

Hon RICK BARKER: The Minister says that they were not all entirely supportive of this legislation. But it seems to me that this is a place where the Minister should have shown leadership—shown leadership. He should have taken the lead, taken a stand, and said: “Here it is.” But obviously he decided to become the negotiator and the peacemaker, and I say good luck to him.

It is a very good bill. I congratulate the Minister, and I congratulate particularly those Labour members who had a hand in forming this bill, and in crafting it before it came back to the House.

JONATHAN YOUNG (National—New Plymouth): Thank you for the opportunity to speak and support the National Animal Identification and Tracing Bill. I come from a rural province that has a large dependency on, and also great expertise in, the agricultural sector. Despite our great success in oil and gas exploration, and despite our great success in engineering and all the service industries around those areas of the economy, Taranaki continues to be one of the premier agricultural areas in the country. So this bill is very important to us and our economy. It works very well to protect our markets and ensure they always remain desiring of the products and commodities that come out of our region.

NAIT Ltd is the industry-owned company responsible for implementing the National Animal Identification and Tracing scheme for cattle and deer, which is designed to link people, property, and livestock. That is from its press release that came out yesterday. It said that the scheme will assure New Zealand’s overseas markets that a livestock disease can be quickly contained in the event of any biosecurity incident.

Sixty percent of our exports come from the agricultural sector, so we are incredibly dependent upon the sector. It bodes very well and it is very important that we have this technology integrated into the tracing of any biosecurity threat in order to not only protect our livestock and our farms from the incursion of TB but also assure our overseas and international markets that we are putting in place best practice to ensure the quality of our goods as we market them offshore. Thank you.

Darien Fenton: Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): No, I am calling the honourable member Dr Paul Hutchison.

Dr PAUL HUTCHISON (National—Hunua): Thank you for the opportunity to talk on the National Animal Identification and Tracing Bill. It certainly is a most timely bill, and the Minister of Agriculture, David Carter, needs to be congratulated on ushering it in in such a timely fashion. I understand there is support amongst the parties, and that is a great thing. They realise that this bill is important for the country’s biosecurity, its animal health, and also for the marketability of our high-value export products—and this is becoming more and more so.

It is salutary that a variety of other export industries in New Zealand have gone ahead in the traceability stakes. In Pukekohe, the onion industry has been required to do this by major importers in Europe, Tesco and Sainsbury’s, so that they can identify the box of onions that goes there from the field they are grown in. This is the sort of standard that is being required more and more throughout the world. So, as I say, it is timely that the National Government has responded to this and it is supported by the other parties of the House. I understand that 5 or 6 years ago a Mr Ted Coats was chair of National Animal Identification and Tracing, and he continues to be so.

Just before I finish, I want to mention one thing. The company that invented the tags was actually a New Zealand company. It started off in Palmerston North about 30 to 35 years ago, by virtue of one of the local farmers calling his jeweller mate to see whether he could manufacture an appropriate tag for him. From there the company grew. It is now a multinational, billion-dollar turnover company. The tag contains an electronic device that makes the traceability possible. There is another all New Zealand-owned company.

But just to finish off, as I said, this bill is highly appropriate and timely. It is being brought in flexibly and gradually, and it will serve New Zealand well.

JO GOODHEW (National—Rangitata): This will be a short call on the National Animal Identification and Tracing Bill. The bill will enable the establishment of a national animal identification and tracing system to control and prevent animal diseases and product contamination. My largely rural electorate of Rangitata will welcome that, and it will be better all round for New Zealand and New Zealand agriculture. I commend this bill.

The ASSISTANT SPEAKER (H V Ross Robertson): That is the end of the calls.

Darien Fenton: Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): There are no other calls. That is the end of the debate. The question is—

Hon Rick Barker: I raise a point of order, Mr Speaker. I accept that it is entirely your decision as to how calls are taken, but we have now had three National calls in a row, and I clearly saw my colleague Darien Fenton stand to take a call. Instead of taking a call from the National side of the House and swapping to this side, you decided to keep the call on that side. We are just a bit puzzled about this, because it is normal for calls to swap backwards and forwards. There is a pre-arranged order, but I would suspect that National has had more calls on this than we would normally expect, and Labour fewer.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you. I understand the honourable member’s concern. I say to the member that the Labour Opposition is entitled to four calls; the National Government is entitled to five. The call of ACT, which is part of the Government, was traded to the National side. That is how the speeches have been done, and we have now concluded.

A party vote was called for on the question, That the National Animal Identification and Tracing Bill be now read a second time.

Ayes 110

New Zealand National 57; New Zealand Labour 42; Green Party 6; Māori Party 3; Progressive 1; United Future 1.

Noes 5

ACT New Zealand 5.

Bill read a second time.

Bills

Trade Marks (International Treaties and Enforcement) Amendment Bill

In Committee

Part 1 Trade Marks Act 2002

Hon SIMON POWER (Minister of Commerce): Part 1 contains amendments to the Trade Marks Act to give effect to the Government’s decision to ratify the Singapore Treaty on the Law of Trademarks and to accede to the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks. Look, effectively, the aim of these international treaties is to reduce the business compliance burden for businesses registering trademarks, especially where businesses are seeking to register their trademarks overseas.

Part 1 also amends the Trade Marks Act to augment police enforcement of the criminal offence provisions relating to, and dealing with, counterfeit trademarks and counterfeit goods—something members will, no doubt, be turning their minds to for the Rugby World Cup, as part of that particular incentive. It does this by empowering the Ministry of Economic Development and the Customs Service to enforce those offences. Enforcement officers of the Ministry of Economic Development are being provided with a warrantless ability to enter places that are open to the public and to search and seize counterfeit goods where they have reasonable grounds to believe that those goods are evidence of a criminal offence under the Trade Marks Act. Customs officers are being provided with a warrantless ability to seize counterfeit goods under their control at the border as evidence of an offence. These investigative powers for customs officers will augment their existing powers available under the Customs and Excise Act 1996.

My memory is that all parties in the House supported this legislation through its first and second readings, so I imagine that we will be dealing with a swift and well-clipped Committee stage on this bill.

Finally, Part 1 introduces a number of minor amendments to the Trade Marks Act to clarify the intent or effectiveness of particular provisions, to include a small change to border protection measures for preventing the importation of trademark-infringing goods, and to increase the efficiency and effectiveness of administration by customs. Included is an amendment to allow customs to temporarily suspend enforcement of a border protection notice from a trademark owner under certain conditions.

Hon PETE HODGSON (Labour—Dunedin North): I would like to acknowledge the accuracy of the remarks of the Minister of Commerce but regret they were not delivered with more passion. The main challenge facing the Committee this evening is to not fall asleep.

The Trade Marks (International Treaties and Enforcement) Amendment bill is important. It is important legislation, but it is, in the eyes of many, not as interesting as watching paint dry, as the saying goes. The reason it is important—well, all of the legislation is important—is that we are talking to Part 1, which is about trademarks. The legislation, by the way, was introduced under the previous Government, and I do not know whether I introduced it; it might have been Lianne Dalziel. I cannot remember. Is she here? She is not. One of us introduced it, it went off to a select committee, and it took 3 years to come back. But there you go!

The short of it is that we need to update our trademarks legislation simply because it is a bit of a moving feast. We need to keep up with changes in international treaties, etc. In the case of trademarks, I am just trying to remember the names of the treaties. I think it is the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). Is it not the Singapore Treaty on the Law of Trademarks, as well?

Dr Paul Hutchison: Yep, that’s right.

Hon PETE HODGSON: It is? Oh well, good on me. So the Madrid Protocol and the Singapore treaty make up the international trademark registration system. If I am correct, the role of the Singapore treaty is to reduce some of the compliance costs and make things a little simpler for trademark registration offshore. It is for the defence of trademarks offshore, for indeed there is no point in having one’s trademark well known if it is going to be dicked over by some counterfeiter in an offshore market. But we will get to the idea of the importance of strengthened enforcement in due course.

For the moment we say to the Government, straightforwardly, that we will be voting in favour of this legislation, and that we will be seeing its passage through this House in a timely, but not necessarily speedy, manner. My instructions are yet to arrive in that regard—

Clare Curran: Keep going.

Hon PETE HODGSON: Keep going? But we do know that unless trademarks legislation is maintained to be roughly consistent with the legislation where international conventions, treaties, and agreements get to, then sooner or later law falls behind practice. We are, of course, following these treaties already; it is in the nature of the beast that they are agreed to by parties, that they are put into place, and that the law follows, rather than the other way round, as I understand it. None the less, failure to keep up with the changes by laws means that a certain amount of dissonance arises between what is practice and what is New Zealand law.

I will now get to some detail. We have changed the powers of the police. I think that what we have done with the cops is that we have said in new section 134X, inserted by clause 17—this is a very large piece of legislation; it runs to about 80 pages—that the police have all of the powers that are currently accorded people like customs officers. I see that the officials are looking at me in a bemused sort of a way, which is what officials do when they disagree. But I think the police have been given the powers to exercise all of the rights that customs officers have. In other words, we have a standing army that is made bigger by this legislation when it comes to the point of enforcing trademark miscreant behaviour.

Dr Paul Hutchison: How long has he got to go?

Jonathan Young: Too long.

Dr Paul Hutchison: 3½ weeks.

Hon PETE HODGSON: Three and a half weeks to go—no problems! So that is helpful, because it means that we will have more people able to do the enforcing.

It is a matter of fact that the Ministry of Economic Development, which is responsible for this legislation, is also responsible for a thing called the regulatory impact statement. There is a little rule in this little country, which is that when we have a piece of legislation we have to add to the back of it the regulatory impact statement. The Ministry of Economic Development folk go around and they beat up on other departments for having insufficient or inadequate regulatory impact statements. And they do it rather well in a jocular and pleasant way, and they offer to assist other agencies to make sure their regulatory impact statements are up to scratch. The reason for having regulatory impact statements is that we—ordinary members of the public here representing the people of New Zealand—are able to work out whether this legislation is, in a regulatory sense, a bit of an impost. That is very, very important to the ACT Party, because that party does not like heavy-handed regulation and it is committed to getting rid of heavy-handed regulation, but so far it has made precisely no progress. It does not matter, however, because the regulatory impact statements are part and parcel of our legislation these days.

So when we have a regulatory impact statement that has been written by the authors of the standards of regulatory impact statements, the question is how good they are at meeting their own standards. Answer—pretty damn good! I had a good old look at that regulatory impact statement, and looked at the options about doing it this way or doing it that way. There is a certain formulaic way in which they have put it together, because that is what officials do, but I would just like to note in passing that the Ministry of Economic Development has managed to put together a reasonable regulatory impact statement; I have seen a lot worse. So I say good on the ministry and I wish it well.

There are, apparently, some Supplementary Order Papers in respect of Part 1. I do not quite know what they do, but when I sit down I shall read them and see whether I can work it out. I see they are about commencement clauses, and so forth. One is completely nonsensical to me, but I will try to work it out. I therefore intend to resume my seat presently, and I hope that we will be able to hear further from members on the Government benches, especially from Dr Paul Hutchison, known affectionately as “Dr Paul”, which is why I said that in a low voice. We hope that he might be able to get to his feet and tell us a little more about trademarks, so that we can all be engrossed by the matter.

DAVID SHEARER (Labour—Mt Albert): I am pleased to take a call on this important bill, the Trade Marks (International Treaties and Enforcement) Amendment Bill. As my colleague Pete Hodgson quite eloquently put it, this is actually very important legislation. We support it, as we support important pieces of legislation, primarily because, as he pointed out, this bill was brought into the House while Labour was still in Government. Here we are 3 years later and it is back in the House.

I do not think there have been massive problems in not having this legislation in place, but the importance of this bill is that it protects much of New Zealand’s intellectual property. When we look at New Zealand today and where it is going, we see that much of New Zealand’s wealth is derived from intellectual property. That is both in the agricultural sector and, more important in some ways, in the way the high-tech and telecommunications sector is going. New Zealand companies in this sector add about $6.5 billion worth of revenue to the country, and nearly 80 percent of that is exported in the form of ideas and pieces of property. It creates enormous wealth per the individual who is involved in constructing this intellectual property, whether a product, a piece of software, or an idea. The figure is nearly $300,000 per person in the high-tech sector. It is of great value to New Zealand. Therefore, protecting our intellectual property and ensuring that is reflected in our legislation is extremely important.

I will move on to the purposes of this bill. The purposes are obviously in relation to the three treaties the bill brings into effect. The Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol), first of all, is a protocol that provides a system that simplifies the procedures required for a trademark owner to protect their trademarks overseas. Obviously that is important. Joining that protocol will provide New Zealand trademark owners with the possibility of having their trademark protected overseas by filing one application for registration of a trademark with the Intellectual Property Office of New Zealand, and designating one or more overseas countries that are also members of the Madrid Protocol where protection is sought. So it is a reciprocal arrangement between New Zealand and other important countries where we would like protection as well.

The second of the agreements is the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, which provides a classification system for goods and services for the purposes of registering trademarks. The Nice classification is widely known and widely acknowledged. Those countries that are party to the Nice agreement must apply the Nice classification to registered trademarks, although those countries not party to it may still apply the Nice classification. New Zealand has applied the Nice classification to registered trademarks for many, many years, so we have acknowledged it. It is updated on a five-yearly cycle, and parties to the Nice agreement meet on a semi-regular basis to consider whether there need to be or should be amendments to that classification. By becoming part of the Nice agreement, New Zealand would be permitted to participate in those meetings where amendments are considered and influence the future development of the Nice classification so that it best meets the needs of New Zealand businesses. In this context the bill will clarify the latest edition of the Nice classification that must be used with all new applications for the registration of a trademark.

Once again, it is New Zealand coming into the context of a series of treaties—the last one I will talk about is the Singapore Treaty on the Law of Trademarks—so that New Zealand is covered under international law. Lastly, as I said, there is the Singapore treaty, which aims to make national trademark registration systems more user-friendly and to reduce business compliance costs for trademark owners.

IAIN LEES-GALLOWAY (Labour—Palmerston North): Part 1 of the Trade Marks (International Treaties and Enforcement) Amendment Bill refers to amendments to the Trade Marks Act 2002, and specifically allows New Zealand to become a party to a number of treaties, as has been outlined by previous speakers.

Clause 5 deals with the classification of trademarks by repealing section 31(1) and substituting the following subsection (1): “Goods and services must be classified, for the purpose of registration of a trade mark, according to the edition of the Nice Classification in effect at the time of application for registration of the trade mark.” The Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks resulted from the Nice Diplomatic Conference of 1957. As my colleague David Shearer said, the Nice classification is updated every 5 years. Given that it has been around for quite some time, New Zealand has been applying the principles of the Nice classification, and this bill will codify and formalise it in the legislation.

The Nice classification is an authoritative classification of goods and services for use in registering trademarks and service marks. It is a list of 45 classes of goods and services, thousands of specific types in each class—which I will not be tempted to list—and has detailed descriptions of most of those. [Interruption] It is good to hear that Rahui Katene is listening; somebody is. The Nice classification is currently in use in 148 countries. The advantages of using the classification system are that national trademark offices have the ability to apply trademark applications in a coordinated manner with reference to that single classification system. Filing of trademarks is thereby greatly simplified, as the goods and services to which a given mark applies will be classified in the same way in all countries that have adopted the system. That the Nice classification system exists in several languages also saves applicants a considerable amount of time in filing their work internationally.

In January 2009 there were 83 signatories to the Nice agreement. These countries have officially adopted the classification system and apply it in the registration of trademarks. In addition, 65 non-member countries, four organisations, and the international bureau of the World Intellectual Property Organization also use the Nice classification. I am guessing, not having been a member of the Foreign Affairs, Defence and Trade Committee, that we fall into one of those 65 non-member countries and this bill will allow us to become one of the member countries. Therefore, when the classification system is next reviewed, we will have a much greater opportunity to have a say in the way that the classification system takes place.

One of the other protocols that has been codified in Part 1 of the bill is the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). It provides a system that simplifies the procedures required for trademark owners to protect their trademarks overseas. Joining the Madrid Protocol will provide New Zealand trademark owners with the possibility of having their trademarks protected overseas by filing one single application for registration of a trademark with the Intellectual Property Office of New Zealand, and designating one or more overseas countries who are also members of the Madrid Protocol where protection is sought. Overseas trademark owners would also be able to use the Madrid Protocol to protect their trademarks here in New Zealand, so it is a two-way process. Joining the Madrid Protocol would also simplify the subsequent management of overseas-registered trademarks. It is possible to renew or record subsequent changes to the trademarks registration in each country using the Madrid Protocol through a single procedural step, rather than making a request directly in each country.

The bill introduces amendments to the Trade Marks Act to facilitate the implementation of the international registration regime for trademarks under the Madrid Protocol, including providing for regulations to be made for the purposes of giving effect to New Zealand’s obligations under the Madrid Protocol.

The third treaty that is being ratified is the Singapore Treaty on the Law of Trade Marks, which other members have referred to. It aims to make national trademarks registration systems more user-friendly and to reduce business compliance costs for trademark owners. It does this through the simplification and international harmonisation of national registration procedures.

CLARE CURRAN (Labour—Dunedin South): Thank you for the opportunity to speak on Part 1 of the Trade Marks (International Treaties and Enforcement) Amendment Bill. As we have heard, Labour supports this bill, and, as my colleague the very esteemed Hon Pete Hodgson has said, it is a moving feast and it is important. It is important for a range of reasons.

I would like to make a couple of points about this bill. The first is that it is interesting that the bill was first introduced into the House in, I think, September 2008, and had its first reading at the beginning of 2009. I was just flicking through some information about it and noted that an article in an esteemed publication, I think it was the Independent, talked about how the bill was going to be passed in 2009, and I note that it has taken a while to come back and finish its hearing in the House.

The bill has not had a lot of public discussion. There has been a bit of public discussion on it, but when we actually contrast it with another piece of legislation that dealt with copyright issues that has been before this House and was recently passed, earlier this year, which certainly did have a lot of public discussion on it, it is quite interesting to make that contrast. The contrast I make is essentially a positive one in the sense that this bill is about harmonising our laws with international standards, which makes a lot of good sense. It is about New Zealand playing its part and leading some areas of standards development in this area. It is about enabling innovative New Zealand companies to more easily protect their trademarks in multiple jurisdictions. Those are really important things.

The key to that—and the thing that I am trying to point out here—is that it is what we should have been doing with the other controversial legislation that came before the House in this term and, admittedly, in the previous term, particularly around harmonising and playing a part in leading the way, enabling innovation to occur, and encouraging our own business community. That legislation is still surrounded by controversy, because it has not been dealt with or acknowledged as being part of a much bigger issue, which is about how to deal with a very fast-changing environment, how to deal with private sector involvement in it, and how to deal with the role that the Government should play. Those are really important points, because, essentially, we are still confronted with that issue in this country. We have passed legislation that is essentially propping up failed business models.

I am making that point in relation to Part 1 of this bill, because there is a growing problem around the world relating to the manufacture, distribution, and sale of counterfeited goods and pirated works for the purpose of selling them—not for the purpose of downloading them and then sharing them with our mates or watching them ourselves, but accessing them and then selling them. The World Customs Organization estimates that counterfeiting and piracy accounts for 5 percent to 7 percent of global merchandise trade, which I think was estimated as being up to US$500 billion. This comes from the Ministry of Economic Development regulatory impact statement on this bill. The World Health Organization estimates that up to 10 percent of medicines sold worldwide are counterfeit, which is extraordinary when we think about it. Goods typically targeted by counterfeiters are those items sold at premium prices and well in excess of the cost to manufacture.

JO GOODHEW (Junior Whip—National): I move, That the question be now put.

Hon PETE HODGSON (Labour—Dunedin North): That was an outrageous contribution! I think it is time for the Committee to become more aware of the import of this legislation and of the issue of counterfeiting as it affects New Zealand.

Dr Paul Hutchison: What’s the name of the bill?

Hon PETE HODGSON: How does it relate to the Trade Marks (International Treaties and Enforcement) Amendment Bill? The whole idea of copyright and trademarks is to deter counterfeiting and to enable people to enforce action against those who would counterfeit. How many infringing items were detained by customs officers in 2004-05, I ask the member opposite. Answer: 185,000—185,000. How many a day is that? It is 500 counterfeit items seized at the border in any one day by our enforcement agencies. And the member thinks that this legislation should be passed through without due comment on their efforts to sustain the truth and honesty of our merchandising system by ensuring that we have good enforcement of copyright and trademark laws!

However, the problem is not getting any easier. By the following year—2005-06—that figure of 185,000 had risen to 260,000. Members get the idea that this is a serious issue. What did the Retailers Association have to say? These are the people who hock off this stuff, you know. They do not make it; they are at the other end of it. They are the people hocking it off, and so that they can lie straight in bed at night, they want to hock off only the real McCoy. No counterfeits for them. They want a tough approach to counterfeiting, do the retailers. That is a little surprising. I would have thought that the manufacturers and owners and so on were the people who want it to be really tough. I would have thought that the retailers really could not care as long as they get cash for goods, if members see what I mean. But, no, they care all right.

The association said to the Foreign Affairs, Defence and Trade Committee that it had “increasing concerns about the growth in counterfeit merchandise …”. It went on to say, a little surprisingly, I thought: “We are … continually concerned at the personal health and safety risks [that] New Zealanders are subjected to by a vast range of poor quality counterfeit goods …”—this is exploding pyjamas and stuff like that. In fact, it went on to say that “these can range from car parts to pharmaceuticals and perfumes”. It did not mention exploding pyjamas, but it might have. It did say that it thought that the national enforcement unit, the people who are our counterfeit cops and our trademark cops, should be given a greater role—indeed, this legislation does that—to enable the enforcement of criminal offences, and on it goes.

Interestingly, a press statement from 2009 that was mentioned by my colleague Clare Curran has an alternative point of view. Let me tell members what patent attorney Elspeth Buchanan has to say about these matters. “Patent attorney Elspeth Buchanan”—the newspaper tells us breathlessly—“knows how hard it is to tell knock-offs from the real thing.” It then quotes her as saying this: “ ‘I’ve been judging trademark infringements for 40 years professionally,’ ”—so Elspeth Buchanan is in her later years—“ ‘and I often can’t tell between the genuine and the fake,’ she said.” That is a pity, because that is what she is paid for. It is a bit of a shame, but anyway, there we are. She said that she has devoted her entire life to telling one from the other and she cannot, so I just wish her a really happy retirement, I do. It is just a shame that she has spent her life not being able to do what she is being paid to do. She said, however, that sometimes the right-holders cannot achieve that either, like the people who own the stuff. The people who made the Rolex could not tell the real Rolex from the other Rolex—

Hon Steve Chadwick: Just drop it on the concrete and you’d know.

Hon PETE HODGSON: “Just drop it on the concrete”, said Steve Chadwick, who obviously knows a thing or two about this. Elspeth Buchanan’s point of view is the opposite of that of the retailers, even though she is involved in enforcement, as well. She said she is worried that “the proposed new enforcers”—this is the national enforcement unit, I think—“of trademark and copyright laws”, customs officers and Ministry of Economic Development officials, “won’t be able to judge the real from the rip-off …”. After all, she cannot, after 40 years of trying, so probably officials will not be able to either—they being mere officials—“but they’ll be thwarting legitimate business while they try.”

In other words, the retailers cannot get on with hocking off the counterfeits, because the counterfeits have been seized. They will be some of those 260,000 items that are seized every year, or at least that was the 2005-06 figure. The article states: “These Government agencies under the new legislation will be able to search for, seize and investigate suspected trademark offences. Buchanan”—this is patent attorney Elspeth Buchanan, who has been doing this for 40 years—“says that the proposed changes are ‘spectacular’.” I do not know whether she means spectacularly good or spectacularly bad. I think she means spectacularly bad, because she goes on to say: “The hit squad”—this is Elspeth Buchanan, patent attorney—“from the Ministry of Economy Development will be raiding warehouses for hot copyright infringers, leading to criminal prosecution for infringing T-shirts,”. She is clearly pretty unhappy.

She said she had a client who imported exercise gear and missed last year’s Christmas market because a customs officer was unable to make a formal determination on whether the products were counterfeit. It turned out that they were not, she said, although she said earlier that she had not been able to tell one from the other. The customs officer was unable to make a formal determination because of staffing issues.

The point is that this patent attorney, Elspeth Buchanan, is of the view that we might be making too much of a meal about this copyright and trademark stuff, and that maybe it is better to let it go through. After all, she says, we cannot tell one from the other, so who gives a damn. She has been trying to do so for 40 years and still she cannot, so I say good on her for her frankness. She holds the view that this legislation will hold up business, and that there will be too much of an impost on the honest trader who wants to flog off a few counterfeit goods because no one can tell one from another. Well, not on this side of the Chamber—we do not agree with that. We think Elspeth Buchanan is wrong, with a capital “R”. We think that Elspeth Buchanan should stand in favour of action against counterfeiters and people who are cheats and liars and stuff like that. She is a lawyer! She went to a law school, and she is letting these cheats and liars off. It is a disgrace.

We stand with the Government on this bill. We think it is excellent legislation.

Clare Curran: Because we introduced it.

Hon PETE HODGSON: Because we introduced it—which leads me to make another point. I said that I was unsure whether I or Lianne Dalziel had introduced it. Well, guess what? Silly old me; neither of us did.

Hon Tau Henare: But nobody cares.

Hon PETE HODGSON: Tau Henare says nobody cares. I care.

Hon Tau Henare: Yeah, but you’re nobody.

Hon PETE HODGSON: Tau Henare has said that I am nobody. I have been called a nobody by Tau Henare—that is wonderful.

Hon Simon Power: Judith Tizard.

Hon PETE HODGSON: The legislation was introduced by the Hon Judith Tizard.

David Shearer: I wasn’t going to bring that up.

Hon PETE HODGSON: My colleague was not going to correct me; he should have. That is why I was unsure whether it was me or Lianne, because it was neither of us. My honourable colleague Judith Tizard, who I believe is within the precincts of the building tonight—I am not sure—

Hon Rodney Hide: Call security.

Hon PETE HODGSON: I cannot hear what Rodney Hide says, but it does not matter, because he will not be here much longer. I think Judith Tizard is within the precincts of the building. In any case, she introduced this legislation, which is now, I think, in the name of the Hon Simon Power, who is going the same way as me, and not before too long. I now think that, in very short order, I will resume my seat.

Dr PAUL HUTCHISON (National—Hunua): I move, That the question be now put.

Hon STEVE CHADWICK (Labour): I felt compelled to take a call after hearing Tau Henare interjecting across the Chamber. This was his moment to rise and take a call on what is an important bill. It is an important bill, and I would have thought that the member would stand up and talk about the Toi Iho brand, and about the counterfeiting of Māori products that we are seeing infiltrating into the market.

This bill gives the powers of enforcement to the Ministry of Economic Development, the Customs Service, and the Police, and strengthens their powers. The member opposite should be fighting to say that these powers are absolutely significant for us. This bill is incredibly important, but of course Mr Henare belongs to a Government that, as one of its first moves when it came into Government, said that the Toi Iho brand was no longer significant—and that is the brand that marks genuine Māori product.

The Government cut funding in its first Budget for maintaining and spreading the marketing of the value of the brand of Toi Iho. We in Labour stood up and said that the Ministry of Economic Development must have strengthened capacity to sell that brand, so that we could pick up counterfeit models. We shamed the Government into bringing back the Toi Iho brand and saving it in time for our incredibly important cultural products in New Zealand.

There is another aspect to this bill that will give protection to the departments, and I am pleased they have these reinforced powers, and that we have some alignment across the ministries. In Rotorua we have been particularly concerned that products are being brought into the country from offshore, and sold as pounamu. We would like to see stronger enforcement on that, because we in New Zealand are very proud of our greenstone, our pounamu, and we are not happy when we see cheaper products coming into the market—having copied our taonga—and being sold in our souvenir shops as genuine New Zealand souvenirs and artefacts. That is a very important aspect of this Trade Marks (International Treaties and Enforcement) Amendment Bill. Tau Henare has gone very quiet now, because he realises that he could have been constructive in this debate.

Part 1 is a very significant part, and it is about strengthening those powers. Goodness me, we need more of them. Our officers will not be rushing through retail outlets and saying that they will ping this or that person. It is about the public eyes and ears bringing to the attention of customs officers, police, and Ministry of Economic Development officials that there is an influx of product that is causing us concern. As a small island country we should be supporting our own manufacturers and our own products for export to international markets.

This is a very good bill. I congratulate Judith Tizard on bringing in the bill. She understands the value of New Zealand’s products and that is one reason why she brought in this bill. The problem that we have—

Hon David Carter: Who is she?

Hon STEVE CHADWICK: We should not take lightly the issue of counterfeit goods. I have travelled overseas with the member who is laughing opposite, and we all rather enjoyed seeing the “Gucci” sunglasses that were not Gucci sunglasses. I think the member knows what I am talking about. Those are the sorts of cheap products that we do not want to come into our country and clutter the market when we are trying to encourage our own producers of exports to produce products that are second to none, to sell on the world stage.

Unfortunately it has taken too long for this bill to get to the Committee stage. It is one that is very significant and important for New Zealand as we are trying to strengthen our role as a trading partner on the world stage. I congratulate the members of the Foreign Affairs, Defence and Trade Committee on getting the bill back to the House, and we are able to have the Committee stage today.

JACQUI DEAN (National—Waitaki): I move, That the question be now put.

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 268 in the name of the Hon Simon Power to Part 1 be agreed to.

Amendments agreed to.

Part 1 as amended agreed to.

Part 2 Copyright Act 1994

Hon SIMON POWER (Minister of Commerce): I am not sure how I would feel if I was Elspeth Buchanan, after the debate on Part 1, but we are on to Part 2 now. Of course, Part 2 is a much smaller, more focused part than Part 1, which I am very pleased about. It means that debate will be constrained to the very specific clauses contained in Part 2, and I guess the Committee is the poorer for not having the Hon Judith Tizard to guide this particular part through the Committee, given her somewhat chequered association with copyright legislation, because of course Part 2 amends the Copyright Act 1994.

Part 2 has three broad purposes. The first is to amend sections 87 and 188 of the Copyright Act to restore an exception to copyright infringement that was unintentionally removed by way of a drafting error in the Copyright (New Technologies) Amendment Act 2008. It also contains amendments to that Act to strengthen the enforcement of criminal offences for copyright piracy, in the same manner that Part 1 introduces amendments to the Trade Marks Act to do the same. Finally, Part 2 includes amendments to the Copyright Act to make a small change to the border protection measures against the importation of pirated copyright works. To increase the efficiency and effectiveness of the Customs Service in administering these measures, an amendment is being made to allow the service to temporarily suspend enforcement of a border protection notice under certain conditions.

That is really all I have to say about Part 2, because, as I say, if members look at the structure of this bill they will see that Part 2 is a much smaller part than Part 1, with a far more specific focus.

Hon PETE HODGSON (Labour—Dunedin North): Part 2 is to copyright what Part 1 was to trademark. In any case, it is intellectual property regulation—it is IPR—it is how we ensure that innovations that derive from our fair shores can make it across, and that we can export those innovations and protect them. It also means that we are protecting the New Zealand consumer from counterfeit goods arriving on our shores from somewhere else.

Let me give the Committee a couple of examples, so that we can now begin to understand the strident import of this sort of legislation. The first example I offer up will be the golden kiwifruit, which has a trademark called Zespri. It has a bunch of intellectual property around it that one can buy and sell—in fact, that has been bought and sold in the last 10 years—and that needs to be protected. If one goes to Italy, one will see Zespri Gold being grown there. If one goes to an island off the mainland of South Korea, one will see quite a lot of Zespri Gold being grown there. Some Zespri Gold is also being grown in South America, but all of it has to be branded—whether that is by a copyright, trademark, or whatever other type of intellectual property protection it enjoys—in a way that consumers can believe they are buying the real thing.

What is more, Zespri set aside a certain proportion of its budget to defend a certain proportion of the counterfeits that come along. In this case, the counterfeit is in the form of plant material that is derived from sources other than New Zealand. The end result is that the kiwifruit industry is able to extract a premium, because it controls not only those who grow the stuff but also the science of it and, really importantly, its quality. That is why the industry wants to protect its trademark or copyright to the extent that it does.

A more serious example concerns pharmaceuticals. The reason it is more serious is that a pharmaceutical will be counterfeit not only in the sense that Johnson and Johnson might be getting done in the eye—you know, being put out of pocket by someone who is selling one of that company’s products in a counterfeit manner—but also in the sense that its bioactivity might be different. At that point, human health and safety come into play, and that is why the management of counterfeit pharmaceuticals—we are not talking here of generic pharmaceuticals; that is not what I am talking about, at all—is really important. The World Health Organization estimates that 10 percent of pharmaceuticals are counterfeit, and they are largely sold and traded in Third World nations but not entirely so.

In New Zealand we have to maintain a level of vigilance, which we do through Medsafe and other organisations, including the Pharmacovigilance Centre that happens to operate out of the very fine electorate of Dunedin North, which I have the privilege of representing. We maintain an eye on that stuff—a very, very close eye. It is actually very close to a closed system, notwithstanding the internet and people being able to buy and sell as they will, in small quantities. So the idea of getting on top of any counterfeit pharmaceuticals becomes terribly important, because that deals much more with human health and safety as well as the loss of cash. Those are a couple of examples, then, when it becomes immediately apparent that intellectual property rights are of consequence.

I will make one other comment before I resume my seat. The use of intellectual property rights in New Zealand is growing, reliably and quite encouragingly, off a really, really low base. This goes back to an old saw about how New Zealand science is good but how the New Zealand commercialisation ability of science is not good. That has gone on as an argument or debate for yonks, so I shall not go on about that. But I will make the point that more and more New Zealand innovators—he said broadly—are realising the importance of getting good intellectual property rights.

STUART NASH (Labour): Some quite interesting dilemmas are raised in clause 30, in which new sections 87 to 87B are substituted in the Copyright Act. We are talking here about what infringes copyright and what does not infringe copyright, and there are some interesting precedents around that. New section 87 is headed “Free public playing or showing of communication work”. For example, if someone plays something that is free—that is, if people have not come to see a movie or hear a soundtrack—then it states in this provision that that “does not infringe any copyright in—(a) the communication work;”. For example, one could have a fire truck with a stereo on the top of that fire truck. If one drove around the streets and played music, then that is not an infringement of copyright in any way, shape, or form, because no one has paid to come out specifically to hear a concert or has been led to believe that they are paying to hear any song for that matter.

But there are some interesting precedents in relation to that, and one I remember—and Mr Chair himself might remember—is that there was a National Party conference where a Muttonbirds song was played. I think it might have been Nature—

Hon Tau Henare: Were you there?

STUART NASH: “Mr 40”! I think a good nickname for “Mr 40” might be “Rip Van Winkle”, because he slept for 40 years, came back, and found that things had changed. Nothing has changed about “Mr 40” over there.

Anyway, I go back to my example. At a National Party conference, the song Nature by the Muttonbirds was played. The lead singer, Don McGlashan, of the Muttonbirds came out and said—and I quote—that he would rather have sex with an ugly crayfish than have one of his songs played at a National Party conference. There was a big debate about that—about what constituted copyright. Had the National Party infringed a copyright by playing someone’s song without his permission at a gathering where people had actually paid to attend that gathering?

I must admit that that same case came to mind when I was watching the news and saw a 3-second snippet about the last National Party conference, when I think all the members were quizzing the Minister of Finance about asset sales, and were disagreeing with him. A Feelers song was played, and I happen to know that the Feelers were huge supporters of Helen Clark when she was Minister for Arts, Culture and Heritage. I said to myself “Goodness me, I wonder if the National Party stole that song or actually paid money or got permission to play it in an area where people had gathered for a specific purpose. Does that infringe copyright?”.

I am looking through this bill but I am not too sure whether that does infringe copyright, because it states in new section 87(2), inserted by clause 30: “For the purposes of this section, the public playing or showing of a communication work is not free if—(a) the audience has paid for admission to—(i) the place where the communication work is played or shown … or (b) goods or services are supplied at the venue or a place of which it forms part at prices … or (c) the venue is a hotel, motel, camping ground, … that admits persons for a fee for purposes of temporary accommodation, and the audience is made up of persons residing at that hotel, motel, camping ground, or other place.” So I was reading this and I was very unsure—perhaps the Minister of Commerce could answer—whether, for example, at a National Party conference the broadcasting of a song infringed copyright if the National Party had not got specific authorisation to play such a song.

The other thing this brings up is, for example, if I went to a hotel to see a concert by a certain band and I paid money to get in, and on a jukebox they were playing Rolling Stones songs but I had paid money to go in to hear a song played, would that infringe copyright? Maybe it would not for a jukebox. I am sure there are rules around that, because one puts money into it. If they had put in a CD, for example, and that is counted as broadcasting the Rolling Stones in a public place where people have paid to hear music, does that infringe copyright? This bill is a little unclear in that area. Maybe I am not reading it correctly. That is probably the case. The Minister, no doubt, will be able to stand up and clarify that. The implications for this are that pubs, bars, hotels, camping grounds, etc. will need to be very, very careful.

Let me give members one example. A school in Napier does not have a bell that rings to denote the end of interval or the beginning of lunchtime; it has music. It plays music.

JACQUI DEAN (National—Waitaki): I move, That the question be now put.

CLARE CURRAN (Labour—Dunedin South): Mr Chair—

Stuart Nash: I thought I was being very relevant.

CLARE CURRAN: I would like to say that the speech from the previous member, Stuart Nash, was very relevant to the discussion, generally, about copyright and about the problematic nature of infringement and alleged infringement. I will return to the seriousness of counterfeiting and copyright infringements that happen with large-scale copyright and counterfeiting breaches and breaches of trademarks, which my colleague Pete Hodgson referred to. With reference to Part 2 of the Trade Marks (International Treaties and Enforcement) Amendment Bill I will return to what was considered to be the public policy objective of this bill. The public policy objective of this bill was about reducing the trade in New Zealand of counterfeits and about deterring people from becoming involved in that trade, through increased prosecution by a Government agency for the criminal offences that are provided under the Trade Marks Act and the Copyright Act. This bill is providing for more provision for enforcement.

I think the ministry talked about prosecution by Government agencies for those criminal offences as being infrequent and ad hoc, which was contributing to the growth of counterfeits being offered for sale in New Zealand. Greater volumes of counterfeits being offered for sale could lead to reduced profits by the trademark owners and the copyright holders. They are otherwise known as the rights-holders. This bill is about being on the side of the rights-holders and trying to ensure that there can be updated and harmonised legislation—which has taken several years to come back before the House to be passed—that can provide more protection and entrenchment in society, so that there is not an acceptance of counterfeits and so that people cannot get away with doing that and making a lot of money out of it while ignoring the law. There are also health risks, which have been alluded to, and the wider impacts on the economy as a whole.

All those things are very important. I think that across the House we all agree on those fundamental principles, but, unfortunately, we have taken nearly 3 years, or whatever it is, for the legislation to get back to the House to be passed. There has been virtually no debate on the importance of the scope of the issue, yet there has been an enormous amount of discussion and legislation passed in the House on putting a penalty on people who are doing it for their own benefit because, generally, they cannot get access to the material elsewhere.

I think one of the most important things about this bill is that it is about the importance of brands. Virtually all my colleagues have alluded to that. In the spirit of the importance of brands I will make reference to some breaking news that is sort of relevant. I hope that the Chair, Lindsay Tisch, and the Committee would consider it to be relevant. There has been a lot of discussion in New Zealand in the last few weeks about brands, particularly about rugby jerseys and controversies about them. The Highlanders have made a decision tonight—

Hon Tau Henare: Who?

CLARE CURRAN: —the Highlanders—to keep the original colours of their brand in the home games. If Eric Roy was in the Chair, he might be interested in that piece of news, and a few other people in the House might be, too. The Highlanders may keep that new green strip for the away games, but the original colours will be kept in Otago and Southland for the home games. That is a piece of good news. I thank the Chair for his indulgence in allowing me to announce that. I wish I had the aforesaid Highlanders jersey here tonight—which I certainly would not be wearing in the Chamber—as a significant symbol of the importance of a brand and what it means.

DAVID SHEARER (Labour—Mt Albert): Mr Chair—

Hon Tau Henare: Ooh, ooh! Why don’t you just let her finish?

The CHAIRPERSON (Lindsay Tisch): Order!

DAVID SHEARER: Thank you, Mr Chair. With anticipation of those noises Tau Henare—

Hon Tau Henare: Why didn’t you just let her finish?

DAVID SHEARER: She did, she was. She wanted to announce the news about the Otago strip and then she wanted to sit down. That was the climax. Her piece was coming to that climax. I will talk about—

Hon Rodney Hide: The Labour Party knows nothing about climax.

DAVID SHEARER: Let us not go there. I will talk about enforcement. A lot of Part 2 of the Trade Marks (International Treaties and Enforcement) Amendment Bill is about the powers of enforcement in the bill—in particular, the powers of enforcement of customs officials in being able to ensure that the trademark and copyright parts of this bill are upheld. Obviously, with the growing problem of the manufacture, distribution, and sale of counterfeits we are seeing a steady stream of these goods coming into New Zealand. Pete Hodgson mentioned the number—more than 500,000, I think—of goods in 2007. Clearly, the flood of these fakes, effectively, undermines the profitability of businesses dealing in the genuine article—that is, as Steve Chadwick talked about, our own goods themselves. Our Māori artefacts, for example, are sometimes manufactured overseas and are sold as the real thing when in fact they are not, at all.

New Zealand’s international obligations require us to include a criminal offence for cases of wilful counterfeiting, piracy, or commercial sale. The penalty for a person convicted of that is a fine of $150,000 or imprisonment of up to 5 years, so it is quite a serious thing to be caught for. The bill will empower the Ministry of Economic Development and the Customs Service to play an active role in enforcing those criminal offences under the Trade Marks Act and the Copyright Act alongside the cooperation with other enforcement agencies and rights-holders.

If we look at clause 31 of Part 2—we are looking at the enforcement officer’s power of entry—we see that the powers are quite widespread. When I look at new section 134E, I see it is entitled: “What enforcement officer and person assisting may do when exercising power of entry”—in this case, an examination—“and examination without warrant”. So these are the powers they can apply without a warrant. Enforcement officers can examine the place and all things, including any document; seize anything that he or she has reasonable grounds to believe is evidence; bring and use in or on the place equipment for the purposes of carrying out the examination; take photographs, sound, or video recordings; or take any person to the place to assist him or her with the examination. In other words, they are quite wide-ranging powers that these officials have in trying to combat the infringements of both trademarks and copyright.

I wanted to highlight that because the places where enforcement officers can carry this out without a warrant include mainly public places. New section 134D(1) is about an enforcement officer’s power of entry and examination without warrant for the purpose of carrying out his or her functions, and it says that an enforcement officer may enter and examine any place where goods are being offered for sale, exposed for sale, or publicly displayed in a public place. An enforcement officer can do that and go into that under this new legislation without the need for a warrant. So it certainly extends the powers of these enforcements officers, the people able to do this, quite considerably.

This is extremely important, because when I was glancing through some of the past work on this I saw that there were no prosecutions, as I understand, in 2002 under the Trade Marks Act. Customs officials say they are determined to make a public example of importers of patented goods.

JONATHAN YOUNG (National—New Plymouth): I move, That the question be now put.

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 268 in the name of the Hon Simon Power to Part 2 be agreed to.

Amendments agreed to.

Part 2 as amended agreed to.

Clauses 1 and 2

Hon PETE HODGSON (Labour—Dunedin North): I wish to advise that in the course of this debate, I have been offered some counterfeit goods. I will just find them here. It is pretty serious, but it is what happens with modern technology. It is very straightforward. It says “Buy cheap, pirated software here”.

Hon Rodney Hide: Where?

Hon PETE HODGSON: Well, I will tell the member: “http://”—is the member taking this down?

Hon Rodney Hide: Yep.

Hon PETE HODGSON: —“cheapestsoftinc.com/”. Shall I do that again or did the member get it the first time? OK. The Hon Rodney Hide, sharp as a knife, got the website stuff down the first time. The point is that even as we have been debating the ubiquitous nature of counterfeiting and its omnipresence, it came up on my phone. Unbelievable! Who would have thought? I do not know whether anyone else has checked their phone to see whether they have been tempted with counterfeit goods, but I have in the course of this debate. If necessary—and the officials could indicate this to me—I would be happy to forward this email on to them for further investigation, should they wish. The point is that with modern technology, any form of counterfeiting is pretty straightforward, and all of us know all the spam we have to clear off our little phones, laptops, or whatever they may be. Every morning from the night before, there will be some counterfeit goods on the market. That is why legislation like this matters.

It matters for another reason—that is, that this country will not get there on cows and tourism alone. We will have to look to the innovative components of our economy and the innovative nature of our people and our ability to protect the intellectual property that New Zealanders devise if we are to have an economic future that will have a broader base than exists at the moment. That is why we need to be reasonably staunch on intellectual property matters.

Last year I was in Geneva. I went up to the World International Property Organization—I dropped in; I rang first. I dropped into the World International Property Organization for an afternoon and I asked a few questions. The World International Property Organization is one of the bodies of the United Nations. It is headed up by an Aussie guy, quite a smart guy. Pretty much, my question was that now that the world economy is changing from the dominance of so-called developed nations to the greater hegemony of China and India, in particular, but also in due course Brazil, Russia, Indonesia, and so on, are we seeing a change in the average approach around the world to intellectual property, or is the white man’s approach to intellectual property, which is to defend it staunchly, still in the ascendancy? Answer: we are seeing a change. It is not a big change, said this guy, but it is there. As there are now more and more developing countries joining the world economy, and some of them with spectacular pace, their attitudes to intellectual property, which is not as defensive or protective as ours, are starting to infuse the debate globally a little.

He made the second point that as those countries make more money from their intellectual property, so the value that they place on intellectual property will rise. Let us take India as an example. It is a massive producer of generic pharmaceuticals. It is a huge producer. Dr Reddy’s Laboratories recently sold out—one of the world’s largest pharmaceutical companies. A massive export for India had been these generics. Well, not any more. More and more, India’s pharmaceutical effort is going into original molecules. More and more, India is not the one waiting for the patent to drop away or for the time-limited patent to come to an end. More and more, India is the one that is trying to get the product to market in a timely way, because that country is moving from being, if you will, a copycat to an originator.

So too, to an extent, is China. It may be to a lesser extent, and it may also be that in China it is a lot more variable. But China now has an extraordinary effort going into its scientific endeavours that did not exist even 10 years ago. In parts of Beijing, the north-east quadrant of Beijing, there are more universities than Australia and New Zealand put together in that one city. The intellectual capacity of some of those centres is now bewildering, at least to a New Zealander. China is famously good at counterfeiting and ripping people off. The Lord of the Rings was launched in Wellington one day and could be seen in Beijing the following day. Those days are still with us, but they are in retreat a little. I suppose that as things move on and as the next and last continent—which is, of course, Africa—goes through that process of development, we will see the whole thing play out again, perhaps not in my lifetime but certainly in my children’s lifetime.

I think that our approach to intellectual property will probably remain in the ascendancy foreseeably, but it is true that it does change as new, big, bulky countries join the international trading arena, as China and India have done so spectacularly in recent times.

CLARE CURRAN (Labour—Dunedin South): I would like to take another call on the Trade Marks (International Treaties and Enforcement) Amendment Bill. One of the most important things about the impact of this bill, apart from stamping down on the illegal trafficking of materials and counterfeit merchandise into New Zealand, is that it is about encouraging innovation. It is about taking legislation and trying to update and modernise it. That is a really important thing to do. I commend the Government on doing that and hope that all other legislation is treated in that vein.

It is important that all Governments take the view that they do not know everything and that they can move with the times and learn a few things along the way. I note that the Minister in the chair, the Minister of Commerce, is shaking his head, so I guess that means he disagrees with me and that he thinks he does know everything, which is a pity because he does not and it would be a good thing to acknowledge that.

The important thing about this bill is the extent of the problem. I think Pete Hodgson talked about the 260,000 items that are being detained each year. I do not know when that figure was last updated, but that is a lot of items. It could be that there are many, many more items out there that could be detained. Prosecutions could be brought, and the national enforcement unit could exercise its powers and become much more efficient. There would be the effect of stamping down on the illegal counterfeiting of goods and pirated works, which is ultimately the intent of this bill.

I would just like to say, I guess from the industry’s point of view, just exactly how industry is likely to benefit from the enforcement that will occur across the nation, hopefully, as a result of the bill. I think it is difficult to quantify the benefits, which was acknowledged during the development of the bill. It was said that enforcement action by the national enforcement unit is expected to lead to a significant reduction in the manufacture, importation, and sale of counterfeits in New Zealand through that deterrent effect. We are talking about large numbers of items and the significant ability for people to make money out of them. That deterrent effect is really important.

The reduction in the sale of counterfeits is likely to result in increased sales for rights-holders, an increase in their profits from the New Zealand market, and an increase in the reputation of the quality of the rights-holders’ goods. That is that important brand I was talking about. As Pete Hodgson has rightly said, there can be a difficulty in determining the difference between the real bona fide brand and the counterfeit brand. It is extremely important that the manufacturers of those bona fide brands have the ability to reap the rewards and the profits from them, rather than having to compete against those knock-off items, as they have been described.

Although the knock-off items might not look a lot different, generally they are different and are of much poorer quality. We have also heard that in some cases there are personal health and safety risks associated with them. One of the memorable phrases from tonight is “exploding pyjamas”. I am not quite sure whether that was what was meant, but it has certainly left an enduring visual memory, in terms of the impact of those exploding pyjamas.

JO GOODHEW (Junior Whip—National): I move, That the question be now put.

IAIN LEES-GALLOWAY (Labour—Palmerston North): Like a bill we were debating earlier on in the evening that dealt with the tracing of animals, the Trade Marks (International Treaties and Enforcement) Amendment Bill assists New Zealand in developing our position in the 21st century global economy. It assists with dealing with both the opportunities and the threats that our existence as part of a global economy presents to us. The opportunities of developing our own intellectual property and our own particular niche goods and services and being able to export them to markets around the world is a very important opportunity for New Zealand. Trademarks and copyrights of that intellectual property and of those goods are important for New Zealand’s ability to express our high-value brands around the world—the likes of Zespri, Fonterra, and Beef and Lamb New Zealand, for instance. These are known as high-quality products around the world, and we need to be able to protect them.

We also need to be able to protect our own consumers here in New Zealand to ensure that they know when they are purchasing a product that has been imported into New Zealand whether they are purchasing the genuine article or something that is a knock-off of the genuine brand. As has been discussed, it is sometimes quite difficult to determine whether a product is the real thing. As our economy develops and grows, it will be about not just protecting our well-known agricultural brands but also being able to develop new technologies and new ideas, and being able to send those into niche markets around the world as well.

For those reasons, although the material in this bill is reasonably dry—and there has been some amusement about the debate this evening—it is hugely important and it does warrant discussion in the House. Although these things do tend to get a little bit overlooked, and it is not the sort of thing we expect to read on the front page of the Dominion Post, the functionality of a bill like this and of New Zealand signing up to the treaties that are ratified in this bill is actually hugely important for our ability as a nation to deal with some of the trade deficits that we are dealing with in this country—the fact that we are still importing more than we export—and our ability to go out there on the world stage and make some money. That is all embedded deeply in this legislation and, indeed, in the animal tracing legislation that we dealt with earlier on in the night.

Labour is very much in favour of this bill. It is our pleasure to continue to support it. We hope that its commencement occurs in as timely a fashion as possible and that its progress through the House is able to continue. I do not have too much more to add to the debate at this point, so I shall take my seat.

TIM MACINDOE (National—Hamilton West): I move, That the question be now put.

The CHAIRPERSON (Lindsay Tisch): I remind members that we are on clauses 1 and 2, which are the title and commencement clauses. You must bring those into the debate.

DAVID SHEARER (Labour—Mt Albert): I want to start on the commencement clause because, as has been pointed out by a number of the speakers tonight, the Trade Marks (International Treaties and Enforcement) Amendment Bill was first brought to the House in 2008. Now, in 2011—3 years later—it is certainly our wish that the bill passes as quickly as possible and gets through to its third reading—

Hon Rodney Hide: Great!

DAVID SHEARER: —and is able to move into law before Parliament goes into recess. The interjection of Mr Hide makes me reflect on the fact that in this Chamber tonight there are a number of people whom we will not be seeing after that time: Mr Locke, Mr Hide, Mr Hodgson, Mr Power, and Mr Henare, who is at No. 40. The House will be a sadder place for their not being here.

Hon Rodney Hide: I’d swap 40 on National to Mt Albert for Labour.

DAVID SHEARER: Mr Hide does not have to worry about that wherever he goes.

Let us get on to the bill. This is the Trade Marks (International Treaties and Enforcement) Amendment Bill. As has been said, this bill is more of an omnibus bill. It will amend both the Trade Marks Act 2002 and the Copyright Act 1994. These two Acts—again, as has been said during the course of the debate—are extremely important for New Zealand. The idea of us protecting our intellectual property is something that perhaps we do not take as seriously as we possibly could. I am thinking about trademarks. Somebody mentioned Adidas, but we could easily also mention Canterbury Apparel and the Kathmandu clothing range, for example. These are all New Zealand products that could be copied or changed in some way. They are certainly identifiable as New Zealand products. Making the cheaper rip-offs, or rip-offs that do not involve the research and the marketing behind the products but just use the symbol or the actual product itself without all of that investment, is unfair. It certainly disadvantages those designers and manufacturers who have put that effort in.

This bill also gives effect to the Government’s decision to accede to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks. It enables us to accede to the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, which is known as the Nice agreement. As we said before, it will give us the ability to sit at the Nice classification, which is updated on a 5-yearly cycle. Parties to the Nice agreement consider amendments to it, and we will be able to consider amendments that will be advantageous to our manufacturers and our businesses here in New Zealand. Finally, it ratifies the Singapore Treaty on the Law of Trademarks, which, as was mentioned earlier in the debate, aims to make national trademark registration systems much more user-friendly and reduce business compliance costs for trademark owners. That is obviously not only important for our businesses but also important for those out there who may be tempted to flout the law of both copyright and trademarks and try to produce goods that infringe that law. That treaty enables them to at least understand exactly their position under law.

It would also, as I mentioned before in the debate on Part 2, empower the three agencies that relate to this bill: the Ministry of Economic Development, the Customs Service, and the police.

JO GOODHEW (Junior Whip—National): I move, That the question be now put.

Hon PETE HODGSON (Labour—Dunedin North): I raise a point of order, Mr Chairperson. I just point out that debate on clauses 1 and 2, which is the conclusion of the Committee stage of the debate, is often wide ranging, and it is a surprise to me—

The CHAIRPERSON (Lindsay Tisch): I know what the member is saying. I have listened intently. There have been more calls on clauses 1 and 2 than on Part 2. I brought to the Committee’s attention that although this is a peroration, a tying-in, the title and commencement must be mentioned because in previous speeches they have not been mentioned. I feel that at this stage we have run the course of time and there is no new material. I have accepted the closure motion.

Hon PETE HODGSON (Labour—Dunedin North): I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Lindsay Tisch): If the member is trifling with my decision—

Hon PETE HODGSON: I am certainly not. I seek leave to give a contribution of no longer than 5 minutes, strictly around matters to do with commencement.

The CHAIRPERSON (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection.

Hon PETE HODGSON: Very good, Mr Chairman.

Jo Goodhew: Yes.

The CHAIRPERSON (Lindsay Tisch): Sorry, I have ruled no objection.

Hon PETE HODGSON (Labour—Dunedin North): I thank the Committee; I thank the Committee indeed—

Hon Member: There was objection.

Hon PETE HODGSON: Oh, there is objection.

The CHAIRPERSON (Lindsay Tisch): I will put the leave again; my apologies. Leave is sought for the Hon Pete Hodgson to speak briefly on the commencement. Leave is sought for that purpose. Is there any objection? There is objection.

Motion agreed to.

Clause 1 agreed to.

The question was put that the amendments set out on Supplementary Order Paper 83 in the name of the Hon Simon Power to clause 2 be agreed to.

Amendments agreed to.

Clause 2 as amended agreed to.

The Committee divided the bill into the Trade Marks Amendment Bill and the Copyright Amendment Bill (No 2), pursuant to Supplementary Order Paper 85.

Bill reported with amendment.

Report adopted.

Bills

Road User Charges Bill

Second Reading

Hon NATHAN GUY (Associate Minister of Transport) on behalf of the Minister of Transport: I move, That the Road User Charges Bill be now read a second time. I thank members of the Transport and Industrial Relations Committee for their hard work on this bill. I acknowledge the chair, David Bennett, and his team.

Road-user charges are paid by users of diesel vehicles as their contribution to the development and maintenance of New Zealand’s road network. This bill brings about the most significant reform of the road-user charges system since it was introduced in 1978. The bill aims to simplify and modernise the system, provide the opportunity for lower compliance costs, and reduce the level of road-user charge evasion.

The bill was referred to the Transport and Industrial Relations Committee in February. The committee considered 41 submissions and heard 20 submitters, and has recommended a number of technical changes to the bill. I believe that the bill is better for these changes. A focus for submitters was the provisions of the bill that move the road-user charges system from one based on a vehicle’s actual gross weight, as nominated by a vehicle’s operator, to one based on a vehicle’s maximum permissible on-road weight. Operators will now be charged according to the capacity of their vehicle rather than an estimate of its total weight. The costs being recovered will effectively be averaged across similarly sized vehicles. I do appreciate that some submitters are concerned about what this means for the road-user charge that they pay. Overall the change will be revenue-neutral, but invariably there will be some winners and losers.

Road-user charge rates will be set in regulations issued under the new legislation, and the Ministry of Transport will consult with those affected on the content of these regulations.

Assigning each vehicle a fixed road-user charge weight will make purchasing road-user charge licences easier and reduce operating compliance costs. It will also eliminate weight-based error and fraud in the purchase of road-user charge licences. The committee has recommended a change to clause 12 of the bill, to provide greater flexibility for individuals operating vehicles at weights above their normal maximum limit to pay their additional road-user charge. A redrafted clause 12 provides two options for purchasing a road-user charge for vehicles operating overweight. This flexibility reflects the variation in circumstances under which vehicles may operate with overweight or high-productivity permits.

The committee also recommended changes to the record-keeping requirements in the bill, to ensure a balance is struck between retaining records that are needed to make an assessment of a person’s road-user charge obligations and the cost of holding those records. The committee has limited the scope of records to be kept and the duration for which they must be retained, ensuring that the bill creates no unreasonable compliance costs.

A number of submitters interpreted provisions in the bill as making electronic distance recorders mandatory for heavy vehicles. This is not the case. The bill provides an improved regulatory framework that will enable—not mandate—the use of technology. Operators will continue to have the choice of using an electronic system or continuing with the paper road-user charge licences and hubodometers.

The reformed road-user charge system will be supported by new regulations made under the bill. As I mentioned previously, the Ministry of Transport intends to consult with those affected on the content of the regulations.

Finally, I would like to ask the House to consider at the appropriate time a Supplementary Order Paper that will make minor improvements and correct a number of minor errors and omissions.

In conclusion, I say this bill will simplify and modernise the road-user charge system. It will reduce compliance costs for operators, eliminate the scope for error and fraud in the purchase of road-user charge licences, and simplify enforcement and administration requirements. I commend this bill to the House.

DARIEN FENTON (Labour): It is a privilege to take a call in the second reading of the Road User Charges Bill. I was on the Transport and Industrial Relations Committee with others. I say in opening that Labour supports this bill, but we still have some major concerns over the shift from nominated weights to gross weights as the basis for charging road-user charges, and over the determination of rates set by regulation. At select committee, we actually voted against those particular clauses.

However, we do support lots of things about this bill. We think the purpose is sound. We want to make sure we continue the road-user charges system by imposing charges on heavy vehicles and certain other vehicles for the use of the roads in proportion to the cost that those vehicles generate. We think it is good that we modernise and simplify the road-user charges system, and that we improve compliance with, and recovery of, road-user charges.

The bill also establishes a framework for the electronic management of road-user charges, which is welcome and is welcomed by Labour, and it gives effect to the Government’s decisions arising from the recommendations of the independent review of the New Zealand road-user charging system. Just going back to where that review came from, it came about prior to the last election, when there was a lot of concern—and, in fact, action—from truckies about a change that was being proposed. In actual fact, Annette King set up the independent review and this is the outcome of that review.

As I said, in the select committee we had two major concerns about the bill. They are still not really resolved and I think we will find that they are not resolved in the industry either. Although some parts of the industry may have settled down, I think we will find in the next little while that there are others who are concerned about a couple of proposals in the bill. Most in the industry welcome the upgrading of the road-user charges regime—you know, it is very sensible and we need to do it—and also a move to an electronic road-user charges system. After all, we are in the 21st century and we should be using whatever technology is available to us. But the move from nominated weights to gross weights for the setting of road-user charges is still causing quite a lot of concern. In fact, the Associate Minister of Transport said in his second reading speech just a moment ago that there were winners and losers.

I will give an example from one submitter who talked about the difference this move would pose for his firm. This is not a large firm. It is a firm in Avondale that is, I think, known to the Hon Tau Henare. Submitters from the firm made a submission. They felt they had a fair hearing, so they are feeling quite disappointed that they are still in the situation where they will face quite substantial increases in charges. There is an additional cost for this firm of $137,000 a year. That is significant for a firm of that size, in particular when we are still in a recession and this firm is trying to keep on its feet and keep doing business. So there is a lot of concern around that. As I say, I think that concern will be highlighted.

I do not think this has settled down in the industry by any means, although it is fair to acknowledge that there are differences in the industry. The Road Transport Forum is still harking back to the good old days, thinking we should have road-user charges based on diesel—that it should be a diesel charge. Anybody who was on the select committee and listened to where the industry is going and what is happening overseas will know that any sort of road-user charges based on a charge through diesel is not where the world is going. New Zealand actually leads the world. We have had road-user charges for some time, based on the system we have at the moment. When we look at what is happening overseas, we see that people are now starting to realise that funding road-user charges based on diesel is not viable. As trucks get more and more efficient, as they move to different systems—maybe electric systems and others—obviously the income from road-user charges is declining.

One of the things that was really interesting about the select committee process and meeting with some of the groups that are doing very, very innovative and leading-edge work in this industry was understanding that we have a great product in New Zealand with our road-user charges system, and with the move to electronic hubodometers and charging through electronic systems. We have a product that is now starting to be sold throughout the world. We had a couple of examples from companies that came to see us. EROAD was one. I have been to see some others, and there is another one called International Telematics.

They are moving out well beyond New Zealand—well beyond Australia, for that matter—and into Europe. Europe is now saying that New Zealand actually has a good system, and it has had it since 1974. It thinks it is a viable system and wants to look at it. It wants to look at how New Zealand is moving in this direction and how it is using new technology to charge for road use. That was pretty interesting for the select committee, and I think we need to be encouraging that. It was a bit disappointing to see some of our more leading companies treated, I thought, fairly abysmally by the National members on the select committee, who are very suspicious of their motives. I think we need to be encouraging that sort of innovation and possible export revenue that is developing in the industry.

The other part of the bill we are not happy about—that is, the industry is not happy about—is the process by which the regulations that will set up the rates for the road-user charges will be written by the Ministry of Transport and then signed off by the Minister, thereby breaking the very important democratic principle that there should be no taxation without representation. We heard again and again that there has been a lack of consultation with the industry. One of the things the industry was asking for was that we write into the bill a requirement that there be consultation before the regulations are set for the new rates for road-user charges. That request was rejected by the Government, which is very unfortunate.

It is a very interesting turn of events, which we see if we look back at our history. I started my contribution by referring to 2008, when we saw the truckies out on the roads protesting against the then Labour Government.

Hon Tau Henare: That’s right.

DARIEN FENTON: They were protesting against the Labour Government, and I am happy to own up to that, but the Hon Tau Henare should go around and see his mate from A One Movers and see where he is coming from and how happy he is with this Government. In fact, we may well see the truckies on the roads before the next election, because they are not happy with this bill. Labour is on the side of the truckies and is sticking up for them.

As I said, there are good things about this bill, but on those two things the Government has failed to listen to the industry. I think their concerns are fair enough. Why should there be increases to charges without proper representation? Why should there be taxation without representation? Setting increases through regulation—

David Bennett: That’s the Labour Party.

DARIEN FENTON: Mr Bennett can scoff, but I hope that the truckies come visiting him before the election; I am sure they will. In fact, an awful lot more action is coming your way. You may think—

Mr DEPUTY SPEAKER: Order!

DARIEN FENTON: Sorry, Mr Deputy Speaker. He may think that the Road Transport Forum is the be-all and end-all, but it is not, and it does not speak for the new industry—the modern part of the industry. The progressive part wants to see this industry move forward, use new electronic systems, and be responsible. They do not want to hark back to the 1970s and claim that they want a system based on diesel tax.

As we move towards the next election, members opposite may well see quite a lot of opposition coming their way. When companies like Fonterra, which is New Zealand’s largest company, and Toll New Zealand are opposing this bill, I have to say we have to be very, very worried that this Government is not listening.

DAVID BENNETT (National—Hamilton East): The Road User Charges Bill is very important legislation and reflects the work of the Minister of Transport and the Ministry of Transport in providing the best process and opportunity for making decisions in this area. We do not accept at all the Labour Party’s comment that the Government is not listening to, and engaging with, businesses in order to make this measure worthwhile and successful for them. This is a good bill. It will achieve its purposes, and it is in the best interests of the transport sector. Thank you.

DAVID SHEARER (Labour—Mt Albert): It is a pleasure to take a call on the Road User Charges Bill. The purpose of the bill is to continue the road-user charges system by imposing charges on heavy vehicles and certain other vehicles for their use of the roads that are in proportion to the cost that those vehicles generate. We know that obviously trucks cause disproportionately more damage to our roads than ordinary cars. Several thousand car trips equal one or two truck trips in terms of creating damage to our roads, so it is only right that we look at where the costs of the repair and maintenance of our roads come from, and that those users pay their fair share.

As my colleague Darien Fenton was just saying, Labour is supporting this bill, but there are a number of aspects we are not happy with. One of them, as Ms Fenton pointed out, is the degree of consultation that has taken place. A number of major users are opposed to this bill. Toll New Zealand, which is a large company and actually a very responsible company—it uses both road and rail, and is moving goods right across New Zealand on a variety of modes of transport—is unhappy with the bill. Toll NZ is prepared to embrace electronic monitoring of its transport fleet and its road-user charges. It has adopted an electronic system called EROAD, which is from a company based on the North Shore. That company, although we do not herald it as much as we could, has sold its product into the European markets, particularly into the Scandinavian markets.

The system works simply on the basis of having an electronic sensor on the windscreen rather than a hubodometer on the hub of the vehicle. It uses a Global Positioning System (GPS) to measure where the truck is moving to and from. The ingenious part of this piece of technology is that even if the GPS is not working, the revs of the engine and the vibration of the vehicle are monitored and measured. Even if the GPS is not functioning, the computer can still measure approximately how far the vehicle has moved along the road. It transmits that information back both to the company and to the billing authority for the road-user charge, and the charge is able to be calculated and a bill sent to the company concerned. No longer does one have to go and check hubodometers; one can do that from the windscreen of the truck itself. The other ingenious part of this technology is that if anyone tries to take it off the windscreen, it immediately sends a signal to say the device has been tampered with, and the appropriate intervention can be made.

Interestingly, many companies in New Zealand are opposed to this device. Toll NZ is one of the few companies that has adopted it. It is using the device, as are a number of the Scandinavian countries where EROAD has been able to market this product. It is now a fantastic piece of New Zealand intellectual property being marketed and sold offshore. It is a shame that we cannot bring the device into New Zealand in a more widespread fashion, because if we did, we would be able to demonstrate to other potential markets across the world that we have confidence in this device for electronic tracking of vehicles to calculate their road-user charges. By demonstrating that confidence, we would help to promote that product further overseas. That has not yet happened.

I mention that product because it is related to this legislation. If we are to have legislation like this, and to make some changes as Darien Fenton outlined, then we should also have the most up-to-date electronic capacity in order to use this legislation much more effectively. As I said, EROAD is one of a couple of companies able to do that.

Coming back more specifically to the bill—and I stress again that many of the people who will be affected by this bill were upset because they did not think they were being consulted sufficiently—it basically moves from nominated weights to gross weights for the setting of road-user charges. At the moment road-user charges are based on the distance travelled and the weight carried. An operator currently has to estimate the actual gross weight to be carried; he nominates it in advance. Under the changes proposed in this bill, the usual maximum allowable weight of the vehicle will be decided in advance, and the road-user charge will be charged on that gross figure, supposedly to simplify the process a bit. That is what Nathan Guy said will happen.

The problems, and there are a number of problems, stem from the fact the existing truck fleet has been purchased to work within an existing system. We have a real problem in relation to the impact of reclassifying and changing the trucking fleet. The costs and the difficulties of changing midstream are largely unknown. There definitely will be some unseen costs that have not yet been recognised.

Under the present system, the first tonne of weight is charged at a rate much lower than that of the last tonne. The last tonne is charged at a higher rate because it is the weight at the top end of the scale—the reverse of the marginal cost—that is doing the most damage to the road. If a tonne is added to a 39-tonne truck, that makes it a 40-tonne truck, and that extra tonne does a lot more damage than the first tonne carried by the truck.

Under the new system, charges will have to be set for an average weight in each class. If the Government still wants to collect the same amount of road-user charges in each class—and I am sure it does—then operators with trucks within that average weight band will have to pay more to cover lost revenue than operators of heavier trucks at the top end of the scale. Effectively, it looks like the operators of heavier trucks, the trucks doing more damage, will actually pay less, and the operators of lighter and medium-sized trucks will actually be paying more.

There is a lot more to this bill than just that issue, and that is the reason Labour is supporting it. But I highlight these points because it seems, certainly from what we have heard from some of the submitters, that submitters did not feel they were consulted sufficiently. I believe them when they say that, and they can take the matter into their own hands as they did in 2008.

It seems to me that when looking at who should pay what, and the fairness of the system, the operators of heavier trucks, which are in fact doing more damage, may actually end up paying less. That does not seem quite right to me. Personally, I have some reservations around that part of the bill. However, as we have said before, we will be supporting this bill for other reasons, although we have spoken about our opposition to some of those parts I mentioned. Thank you.

Hon TAU HENARE (National): Established in 1978, the road-user charges system has done us proud. But this is the 21st century, and so what our Minister of Transport and our Government want to do is reduce compliance costs, make the system easier to understand, and change the definition of licence weights. It is estimated that $30 million a year goes towards road-user charges evasion. What we want to make happen is that the system is easier to understand for the worker, for the driver, and also for the Government. I commend the Road User Charges Bill to the House.

KRIS FAAFOI (Labour—Mana): I take a call on the second reading of the Road User Charges Bill. I would first of all like to do something a bit strange and agree with a few of the things that Tau Henare said, and say we support a lot of the substance of this bill. But, as is our job in Opposition, we would like to highlight a number of things that we do not agree with. One of these has already been pointed out by my colleagues David Shearer and Darien Fenton: the changes around the calculation of road-user charges. The change from nominated weights to gross weights is one thing within this bill that we do have serious concerns about.

For the benefit of those who may be listening at home at quarter to 10, sitting up to listen to the debate on the bill, and who are not quite aware of the current regime for road-user charges, I think it might be useful to set out, as David Shearer did during his contribution, how the current system works, in order to put into context the inequity of some of the changes within this bill. Currently, road-user charges are based on the distance that is travelled by a vehicle and also on the weight that is carried by it. An operator currently has to estimate the actual gross weight to be carried—and that is what the Minister referred to earlier as the nominated weight—in advance. Under that system, as David Shearer pointed out, the first tonne is not as expensive as the last tonne. So if someone has two trucks of similar configuration, and one truck has 10 tonnes and the other truck has 30 tonnes, the one that carries 30 tonnes will proportionately pay much more than the one that carries 10 tonnes.

But under this legislation that situation will be no more. Under the changes in this legislation the calculation of road-user charges will be based on the usual maximum allowable weight of a vehicle. Regardless of what the vehicle is carrying, it will be given an average, or nominated, weight, and that is how the road-user charge will be ascertained for that vehicle. According to the Government, this has supposedly been done to simplify the process, but in essence it will make life tougher for many operators. Unfortunately, in this case, in terms of the winners and the losers, the winners will be the large firms that carry the heaviest loads and do the most damage to our roads by carrying the heavier loads, and the losers will be those operators that run trucks at under their capacity. They will also have to subsidise the heavier crawlers that are carrying the maximum weight. Again, this is another case of the many and not the few carrying the burden for those that are doing the most damage to our roads.

There are significant concerns about these changes within the transport industry. As Darien Fenton and David Shearer pointed out, these concerns were well traversed when the Transport and Industrial Relations Committee was adjudicating on this bill. We agree with the tenor of a lot of the submissions. The first concern is roughly around the fact that, you know, if the system ain’t broke, why change it? There is no evidence that the current system of nominated weights is performing badly, so why do we need to make these changes? Again, rebutting a point that David Bennett made about his difference of opinion as to a lack of consultation, I say there has been a serious lack of consultation with the industry. Many sectors in the industry have been kept in the dark about the processes and the changes, and about the impacts that the changes in this bill will have. I guess it starts to get dangerous when the process is not as transparent as it should be, and that will have huge impacts on those people who really do not know what is going to happen.

If these changes are justified, then there needs to be proper analysis and consultation, which has not happened. Again, this bill is not evidence-based, but the Government seems hell-bent on introducing these changes to the way that road-user charges are calculated. A small number of submissions to the select committee were in support of these changes. But again, they were from a few bodies, and unfortunately they were not representative of the broader transport fleet. As one could imagine, they were from those in the sector who carry much larger weights on their vehicles.

A number of submitters also argued that a very high percentage of operators will end up paying more under the changes to the road-user charge calculations, while a very small percentage will be paying less. Not only would there be an increase in road-user charges for them but also there would be a considerable charge for them to ensure that there was a refit, and certification costs to make sure that their fleets met the requirements of the new system. In essence, those operators say that although these changes are apparently being brought in to be fiscally neutral and to streamline the system—supposedly to make things much more streamlined—things will actually become much more difficult for them.

In the opening address by the Hon Nathan Guy, he mentioned the fact that this measure was meant to be fiscally neutral. But there was a submission to the select committee from one person who revealed that there would be an additional cost for his firm of $18,000 per vehicle, and that the total projected increase in costs for him would be somewhere in the region of $137,000 a year. I think that is hardly in line with the Government’s plan to make these changes fiscally neutral.

On drilling down into some of the detail in the select committee submissions, we find that Jonathan Thomson, chief executive of the New Zealand Heavy Haulage Association, stated in his submission that the bill was a real opportunity to make compliance easier and less onerous, but that the current proposals would make things more costly and more time-consuming. In terms of the lack of consultation, he said the new road-user charges framework provided in the bill relies on the detail in the regulations that are to follow it being acceptable, but it would be very difficult to provide support for those provisions in the bill without knowing the detail. I guess that harks back to the flaw in the process, and the lack of consultation with the industry.

As David Shearer pointed out in his contribution, Toll New Zealand also made a submission on the lack of consultation. In point 2.4 of its submission Toll stated: “The Bill introduces very significant changes to the manner in which Road User Charges are calculated and administered, but its real impact will only become clear in the process of subsequent regulation.” On this side of the Chamber we do not think that sort of uncertainty for the industry is good enough. We know what will happen: it will mean that a lot of smaller operators will be paying more. But the uncertainty within this legislation is not good enough, and that harks back to the lack of consultation.

Toll also talked about the impact that these changes would have on courier truck operators. In section 4 of its submission on the bill, it said “Another area of concern is the manner in which Road User Charge regulations introduced under the provisions of the Bill could address the operations of small courier trucks. These trucks are typically of a maximum permitted weight of 5-6 tonnes and are currently categorized in the Vehicle Type 2 Band which has a maximum permitted weight limit of 14 tonnes.” Toll went on to say that if the road-user charge was based on 14 tonnes as a maximum, it could ultimately render the 5 to 6 tonne courier-type truck uneconomic to operate. Basically, it said this legislation may force some operators to go from one truck to two vans, forcing more traffic on to the roads, and eventually creating a situation where more road-user charges have to be paid.

There was one good example of this, and that was North Canterbury Distributors, and a chap called Paul Johnstone. He said he runs five trucks for the purpose of distributing chilled and frozen food. He has a gross weight of 4 to 7 tonnes, but under the maximum weight regime, he would be somewhere in the range of 8 to 15 tonnes, and that would mean a significant increase in costs for his business under the new calculation of the road-user charges. I guess this means that the bigger operators and the larger firms win.

When we cast around for other examples of situations where this Minister has pandered to big business and shown a lack of consultation, we do not need to look much further than my own electorate and the Kapiti Expressway. On the road-user charges and the expressway there has been a lack of consultation. In both the road-user charges and the expressway the interests of big business have won out over the community or the industry. In the case of the road-user charges and the expressway the pleas of the industry and the communities have been ignored. In both cases not enough thought has been going into what the impact of these changes will be, other than to ignore the ability of those who cannot shout the loudest.

Hon Nathan Guy: Rubbish!

KRIS FAAFOI: It is not rubbish; it is the complete truth. Just drive down State Highway 1 at the moment, and see how the community feels about the expressway. These changes to the road-user charges are skewed towards the interests of big business, just as they have been in the case of the expressway.

Dr JACKIE BLUE (National): I am pleased to speak in the second reading of the Road User Charges Bill, which basically is very straightforward. It modernises a very old Act, which was first devised in 1978. Certainly the submissions supported the need for modernisation and updating it. I commend this bill to the House.

Hon RICK BARKER (Labour): I have been quite intrigued by this debate on the Road User Charges Bill. I am probably one of the few people in this House who has driven a heavy truck. I am licensed to drive one, and over the years I have grappled with the complexities of the law. Looking at this piece of legislation, I have—

Hon Christopher Finlayson: I thought the member was a bikie.

Hon RICK BARKER: I will come back to that in a moment. One thing truckers do not like, like a lot of other groups, is paying tax. That is reasonable. Everybody would like to pay less tax rather than more. Truckers know they pay quite a lot of tax. But when I reflect upon that fact as a person who rides a motorbike, I know I pay quite a lot of tax, as well, for riding my bike.

The point I feel is important here is that the rates charged on trucks reflect the amount of damage they do to the road. The rates should be proportionate. If I reflect on the amount of tax I pay for riding my bike in relation to the excise duty on trucks, then I think as a motorcyclist I am worse off. A large 18-wheeler truck carrying a full load, I am advised by research I saw from the United States, is equivalent to 160,000 cars. Well, as one riding a motorbike, I would say that a car would cause the equivalent of four times the amount of damage done by a motorbike. But I cannot see that truck operators are paying something close to 700,000 times the amount of tax I pay for riding my bike. So on one side the argument is that truck operators are not paying enough.

Having put that aside, we then look at the change in the system here. My colleagues have picked up a very good point—that we are changing the system from nominated weights to maximum weights. I drove a truck at one time that had quite a large maximum weight, but it had a much lighter nominated weight because I was carrying full loads of polystyrene. The truck was capable of carrying many tonnes because it had a very long tray, but it was fully laden with polystyrene. Well, there is not much that is lighter than polystyrene. If that truck is going to be taxed at its maximum weight, then the operator will be paying substantially more under the new system than under the old system—

Kris Faafoi: Hmm!

Hon RICK BARKER: —and my colleague agrees. We can see that a truck driver who has a load of polystyrene will feel very much aggrieved, because the tax is on volume, not weight, whereas the same truck could be carrying steel of much less volume. Steel is very heavy, as is concrete.

The point made by previous speakers was that we have a trucking fleet that has been bought and paid for around the road-user charges system. People have bought trucks that are able to carry much heavier loads, but they have never intended that they carry much heavier loads. They have intended to carry light loads, and they have wanted to carry volume. That is efficient and economic, because they can therefore buy road-user charges equal to the weight they have nominated.

Every trucker knows they have to be careful about the weight they nominate, because the weight of the load can vary. A truck can be carrying pallets, and pallets of goods will have a certain weight, but truckers know they have to be careful to take into account the weight of the pallets when they are wet. The pallets are not always dry, and the weight of the loaded truck is lighter when the pallets are dry. So truckers are always careful to measure their trucks according to the weight they are likely to carry. Someone might have six tonnes on a truck that is capable of carrying 20 tonnes, but under the current regime the truck driver will be charged for 20 tonnes rather than—

Kris Faafoi: It doesn’t matter, does it?

Hon RICK BARKER: Well, it is going to be much more expensive.

The issue I have heard my colleagues raise here is the lack of consultation about this legislation. The industry has raised the issue that these charges will not be set by statute; they will be set by officials making recommendations to the Minister, who will then simply promulgate them. The question here is what is the fairness or the democracy in that. The trucking industry is deeply suspicious about that process, and I think its members have a right to be deeply suspicious.

Of course, the Cabinet rules require that there is consultation, but consultation can be done poorly and it can be done well. The Government of the day—National—will most probably say that if it makes regulations, the regulations will then have to go to the Regulations Review Committee. But that referral could be quite some considerable time after the regulations have been put into force and people have had to pay. If the Regulations Review Committee decides that the regulations are unfair, the committee can then nominate that the regulations be struck down. But that decision has to come back to the House, and there will be a vote on it. The vote will be of the parties in this House. Who can imagine that the National Government and its support parties would vote down regulations that their own Ministers had put forward? That is being one’s own judge and jury of one’s own case, and I can well understand why the trucking industry is very concerned about this process. I have similar concerns.

Debate interrupted.

The House adjourned at 10 p.m.