Thursday, 9 February 2012

Thursday, 9 February 2012

Thursday, 9 February 2012

Mr Speaker took the Chair at 2 p.m.

Prayers.

Business Statement

Business Statement

Hon GERRY BROWNLEE (Leader of the House): When the House resumes on Tuesday, 14 February, the Government will look to progress the Address in Reply debate and conclude members’ maiden speeches. A number of bills on the Order Paper will receive their first reading. By agreement of the Business Committee of the House, the House will take extended sitting hours on Thursday, 16 February. This is to progress a number of Treaty settlement bills and Statutes Amendment bills Nos 2 and 3, which have the broad support of the House.

Questions for Oral Answer

Questions to Ministers

Fishing Industry—Set-net Ban

1. GARETH HUGHES (Green) to the Minister for Primary Industries: Will he extend the Taranaki set net ban after the recent death of a Maui’s dolphin in a fishing net?

Hon DAVID CARTER (Minister for Primary Industries): The Ministry of Agriculture and Forestry and the Department of Conservation are currently working on a Māui’s dolphin recovery plan. I will wait until that plan has been presented before making any decisions on set-net bans in Taranaki. I have certainly asked for that work to be done as quickly as possible.

Gareth Hughes: Can the Minister guarantee that no Māui’s dolphins will die while that recovery plan is being carried out?

Hon DAVID CARTER: No.

Gareth Hughes: Will the Minister take responsibility for the recent Māui’s dolphin death, given that research published by the Ministry of Fisheries in 2005 established that Māui’s dolphins swim in the area where the dolphin died?

Hon DAVID CARTER: No, I will not take responsibility for this death. It is my understanding that when the current set-net ban was established, it was covering the area where Māui’s dolphins were thought to swim. My information is that this is an area where they previously had not found Māui’s dolphins, and that is why we will await the recovery plan before we make further decisions on that ban.

Gareth Hughes: Will the Minister take responsibility for the recent Māui’s dolphin death, given his Government’s inaction following a submission in 2009 including video footage of a Māui’s dolphin swimming in the vicinity in unprotected Taranaki waters?

Hon DAVID CARTER: This Government and the former Government have taken action. The set-net ban was put in place in 2008 by the Hon Jim Anderton. It was subsequently challenged in court, requiring the then Minister, the Hon Phil Heatley, to further review the information and to stick with the extended set-net ban.

Gareth Hughes: Given a Ministry of Fisheries report, video footage submitted to the Government, and now a dead dolphin, what more evidence does the Government need that dolphins swim in these unprotected Taranaki waters for him to act with an extension of the set-net ban?

Hon DAVID CARTER: I have given the member the answer to that question. The information I now want is the completion of the Māui’s dolphin recovery plan. When I get that information, I will further consider that report.

Gareth Hughes: Given that Māui’s dolphins will become extinct if mortality exceeds just one individual over 5 to 7 years, and that we have had two Māui’s dolphin deaths in the last 5 months, why will the Minister not use his powers under the Fisheries Act and put a moratorium on set-net fishing while more research is being carried out?

Hon DAVID CARTER: I certainly accept that this is a species under extreme threat of extinction. Set-net banning—and the influence of human interaction—is but one factor in the death of these dolphins. I will work with the Ministry of Agriculture and Forestry, I will work with the Department of Conservation, and I will await the report of the recovery plan before making further decisions.

Gareth Hughes: Given the Minister’s inability to guarantee that more Māui’s dolphins will not die on his watch and his refusal to implement greater protection measures now, is he prepared to be an accessory to extinction?

Hon DAVID CARTER: This is a relatively small population. It is an endangered species, but there are a number of reasons why this extinction could be caused, of which human interaction is but one.

Gareth Hughes: I seek leave to table this DVD containing a 31-second video shot by Taranaki fisherman Ray O’Donnell of a Māui’s dolphin in the area where the Government alleges Māui’s dolphins do not travel in Taranaki.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. I remind members that points of order should be heard in silence.

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

Trade—China Strategy

2. DAVID BENNETT (National—Hamilton East) to the Minister for Economic Development: What actions is the Government taking to boost economic linkages with China?

Hon STEVEN JOYCE (Minister for Economic Development): Last Friday I attended the launch by the Prime Minister of the China Strategy, which provides a clear direction for Government action over the next 5 years and aims to double two-way trade with China, from $10 billion to $20 billion, by 2015. Our efforts will focus on sectors with scale and growth capacity: food and beverage, agribusiness, information and communications technology, and high-value manufacturing, together with growing services in tourism and international education. Some examples of how we will achieve this include working with exporters on how to do business in China, facilitating more direct links to China, and negotiation of a fisheries and aquaculture arrangement.

David Bennett: How does the Government’s actions in China fit into its broader economic development strategy?

Hon STEVEN JOYCE: In order to provide long-term, sustainable jobs and competitive industries, businesses must be able to access customers and markets, and this is where the Government can assist. In fact, it is one of the six key drivers of business growth we are focused on. China is the second strategy to be launched following the launch of the India Strategy last October. In addition to India and China, other strategies under development include the US, Australia, South-east Asia, the Middle East, and the European Union.

Rt Hon Winston Peters: Do the Government’s attempts to boost economic linkages with China include a representative of the Chinese Government making representations to the New Zealand Government on Chinese businesses buying productive New Zealand land?

Hon STEVEN JOYCE: I am not aware of any such representations.

David Bennett: How important is China to New Zealand’s economy?

Hon STEVEN JOYCE: It is very important. China is, in fact, our second-biggest trading partner now, and of course Australia is our largest trading partner. Coincidentally, Australia has China as its largest trading partner. The current global economic uncertainty has only reinforced the importance of China to this country. That is why the attitude of the Opposition parties is hard to understand. They claim they want more jobs and better wages—

Mr SPEAKER: Order! The question was from the member’s own colleague and I do not think we need to get into Opposition parties on those grounds.

Hon Shane Jones: Can the Minister confirm that the actions of the Government in relation to China include the dispatching of Christchurch Mayor Bob Parker there?

Hon STEVEN JOYCE: I think the Mayor of Christchurch went under his own steam.

Rt Hon Winston Peters: If a representative of the Chinese Government did make representations to the New Zealand Government on Chinese businesses buying productive New Zealand land, would he be expected to know about it?

Hon STEVEN JOYCE: No, not specifically, and I would remind the member that countries and members of countries make representations to Ministers all the time about all sorts of things.

Electoral Broadcasting—Prime Minister’s Radio Live Show

3. GRANT ROBERTSON (Deputy Leader—Labour) to the Prime Minister: Does he stand by his statement that his hour-long show on Radio Live on 30 September 2011 was an “election free zone”?

Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery) on behalf of the Prime Minister: Yes.

Grant Robertson: Did he or his office seek or receive advice from the Electoral Commission on whether the “hour with the PM” show could breach electoral broadcasting law; if so, what did that advice say?

Hon GERRY BROWNLEE: I am informed the Prime Minister’s office discussed the matter with the broadcaster. Radio Live, I understand, then sought advice from the Electoral Commission. After receiving that advice, Radio Live decided to go forward with the programme.

Grant Robertson: Will the Prime Minister be declaring the value of an hour of free radio time as a donation, as required under the Electoral Act?

Hon GERRY BROWNLEE: The Prime Minister has no obligations under the Electoral Act.

Grant Robertson: Has the Prime Minister received any advice as to the value of an hour’s air time on Radio Live, and was this reflected in the declaration of donations for that period?

Hon GERRY BROWNLEE: I am unable to answer that question at this point.

Grant Robertson: If the show was an election-free zone, as the Prime Minister has said, and he was not there for the purpose of getting electoral advantage for himself and the National Party, what reason did he actually have for hosting the show?

Hon GERRY BROWNLEE: Thousands, tens of thousands, hundreds of thousands, millions of New Zealanders find everything he says just fascinating.

Grant Robertson: Has he or his office sought advice as to whether he has abetted a crime under section 66 of the Crimes Act by hosting the “hour with the PM” on Radio Live?

Hon GERRY BROWNLEE: This matter is currently referred to the police. The police are investigating Radio Live in this matter.

Health Targets—Changes

4. Dr PAUL HUTCHISON (National—Hunua) to the Minister of Health: What improvements, if any, have been made to the Government’s national health targets?

Hon TONY RYALL (Minister of Health): Preventive health is very important to this Government, and that is why we are lifting health targets in this vital area. For example, in the area of immunisation, the target is moving from 2-year-olds to 8-month-olds, and this is important because we will ensure more infants are protected from infectious diseases like measles, whooping cough, and pneumoccocal disease. When we came to office, only over 70 percent of 2-year-olds were immunised—just over 70 percent. Now 92 percent of 2-year-olds are fully immunised, with virtually no difference between the rates for Māori, Pacific, and general New Zealanders. We have also announced the new target for more heart and diabetes checks, which will be very important for preventing, detecting, and managing heart disease and diabetes.

Dr Paul Hutchison: What other improvements are being made to deliver shorter waits for cancer treatment?

Hon TONY RYALL: The Government has announced that we are strengthening the cancer waiting times target by including chemotherapy in the shorter waits target, and on 1 July 2012 all cancer patients ready for radiation or chemotherapy treatment should begin that treatment within the world gold standard of 4 weeks. Just a few years ago, people had to travel to Australia for vital radiation treatment, and no one has had to do this since late 2008.

Hon Maryan Street: If the Minister considers prevention a useful part of improving New Zealanders’ health and achieving these health targets, how will the prevention of obesity and all its contingent diseases be achieved, given the fact that nutrition and physical exercise programmes such as Healthy Eating - Healthy Action and Mission-On have been axed?

Hon TONY RYALL: Well, actually, the Government is spending many, many millions of dollars promoting healthy eating and healthy action. We certainly have got a huge investment, particularly in the Kiwisport programme, championed by the Prime Minister, where $20 million is going in to help schools make young people more active. Our young people today are far less active than they were 20 years ago, and that is why the Kiwisport investment is so important for dealing with that.

Hon Maryan Street: So if the Minister does consider prevention a useful part of achieving health targets, what preventive measures is he promoting to address the health effects of increasing inequality, as described in the New Zealand Herald today?

Hon TONY RYALL: I think the Government is making huge progress in improving the standard of health care for all New Zealanders. New Zealand’s levels of rheumatic fever were at scandalous Third World levels under the previous Labour Government. Annette King made it a health priority in 2001, and then did absolutely nothing about it. This Government is investing $24 million over 3 years in a programme to stamp out rheumatic fever, a Third World disease that that party opposite talked about and did absolutely nothing about.

Dr Paul Hutchison: Why is the Government lifting performance in the health targets?

Hon TONY RYALL: That is a very good question. The national health targets drive improved public services right across the health system. You cannot speed up an emergency department without improving the way that a whole hospital runs, with quicker access to X-rays, to magnetic resonance imaging scans, to CT scans, to a bed, or to surgery. You cannot immunise more kids if you have not got primary care working well, and you cannot provide more heart and diabetes checks if hospitals and primary care are not working together. That is the success of the national health targets—it is driving whole-of-systems performance improvement.

Christchurch, Recovery—Potential for Rates Increase or Sale of Council Assets

5. Hon LIANNE DALZIEL (Labour—Christchurch East) to the Minister for Canterbury Earthquake Recovery: Did he discuss with the Christchurch City Mayor reported claims that there had been overtures from within The Treasury that there was scope for the city’s rates to be increased or for assets to be sold to pay for the quake recovery, and that this could be done under the Canterbury Earthquake Recovery Act before he called him a clown; if not, why not?

Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery): No.

Hon Lianne Dalziel: Has he been briefed about what Treasury officials said to the mayor; if not, why did he describe the mayor’s quoted statements as an outrageous abdication of his responsibilities and call him a clown, when he does not know what was said?

Hon GERRY BROWNLEE: In the days leading up to that particular injudicious comment from me there were numerous discussions going on with the council—between the senior executives, the mayor, me, and the senior executives of the Canterbury Earthquake Recovery Authority—over a number of issues that we want the council to take some responsibility, alongside us, for. Although Treasury officials will have talked to the council, I am unaware of exactly what that discussion would have been about. But let me tell you that when the Government is spending $5.5 billion anywhere we expect the recipients of that to have some plan for how they will participate in what will be a very, very expensive recovery, and that plan has to be a lot better than saying “We’re just going to put up the rates, and we’re going to borrow a lot more money.”

Hon Lianne Dalziel: When he told the media that section 48(3) of the Canterbury Earthquake Recovery Act said that the Minister “must not direct any council to (a) set a rate under section 23 of the Local Government (Rating) Act 2002;”, was he acknowledging that the Act could be used to force the council and its holding company to sell all or any of its assets, and explaining why the Government voted against our amendment to the legislation when it was going through the House?

Hon GERRY BROWNLEE: No, and any analysis that would suggest that that is possible is extremely bodgie.

Hon Lianne Dalziel: Can he give a guarantee that the Government will not require Christchurch City Council to sell any of its assets to help pay for the recovery?

Hon GERRY BROWNLEE: I cannot bind the Christchurch City Council to what it may decide to do.

Hon Lianne Dalziel: I raise a point of order, Mr Speaker. My question was very clear, which was “… that the Government will not require Christchurch City …”. It was a question of whether the Government would not require it, and he has not dealt with that question at all.

Mr SPEAKER: I accept that was exactly what the member’s question was.

Hon GERRY BROWNLEE: The member herself has pointed out that capacity for that does not exist under the Canterbury Earthquake Recovery Act, and therefore it would have to be a decision by the Christchurch City Council.

Hon Lianne Dalziel: I raise a point of order, Mr Speaker. The question was: “Can he give a guarantee that the Government will not require”—

Mr SPEAKER: On this occasion I think the Minister did answer, because in his answer he claimed that the legislation does not give the Government power to do that. So he is basically saying no.

Hon Lianne Dalziel: Can he give a guarantee, as Minister for Canterbury Earthquake Recovery, that neither he nor any member of the Cabinet committee on Canterbury earthquake recovery, which he chairs, has sought or is seeking any external advice on Christchurch’s assets to assess the potential for their sale to help pay for the recovery?

Hon GERRY BROWNLEE: Speaking to the very specifics of that question, we have asked Treasury, obviously, to give us advice about what the capacity is for Christchurch’s rating base to take on some of the extraordinary expense they have to face in the future. The list is long: a convention centre, a town hall, a new stadium, Centennial Pool in the centre of the city, the QEII complex, the central city library, parking buildings throughout the city, and many service centres, which are all destroyed. That is before you even start talking about some of the parks and other recreational facilities that the council has. It is a billion dollar - plus bill that it has to face, and we are very interested, given that we are putting up $5.5 billion, as to how it might meet that cost.

Local Authorities—Increase in Council Debt Since 2002

6. JACQUI DEAN (National—Waitaki) to the Minister of Local Government: What reports has he received on increases in local government council debt since the Local Government Act 2002 was enacted?

Hon Dr NICK SMITH (Minister of Local Government): The local authority financial reports show that council debt has quadrupled from $2 billion in 2002 to over $8 billion today. The increase in debt is significantly greater than any other sector, and is noted by local government analyst Larry Mitchell to be the No. 1 issue facing that sector.

Jacqui Dean: Has local government borrowing slowed in response to the global debt crisis, in the same way that households and businesses have become cautious of debt?

Hon Dr NICK SMITH: No, household debt grew sharply between 2000 and 2008, but stabilised in 2009 and has reduced in 2010 and 2011. Farm debt has also responded prudently to the global financial crisis and not increased since 2008. In contrast, council debt has been growing at a faster rate—$500 million of borrowing in 2007, $800 million in 2008, $1,100 million in 2009, and $1,800 million in 2010. This ongoing increase in local government debt is not sustainable.

Jacqui Dean: Why is this increase in debt a concern?

Hon Dr NICK SMITH: There are three concerns. The first is that council debt is actually just rates deferred. The greater the debt, the less opportunity there is in future for containing the cost of rates for households and businesses. Secondly, council debt contributes to New Zealand’s overall indebtedness. Households and businesses are doing their bit by pulling back their borrowing, and local government needs also to tighten its belt. My third concern is that for some councils their level of debt-servicing costs is becoming so great that it puts the financial viability of their council at risk.

Minimum Wage Review—Minister’s Statements on Increase

7. DARIEN FENTON (Labour) to the Minister of Labour: Does she stand by her statement that the new minimum wage announced yesterday “strikes the right balance between protecting low paid workers and ensuring that jobs are not lost.”?

Hon KATE WILKINSON (Minister of Labour): Yes.

Darien Fenton: How is the balance right when New Zealand’s top 48 chief executive officers received an average pay increase of $202,000 in 2010, while thousands of Kiwis on the minimum wage received a pay increase of just 19c an hour in real terms over the past 4 years under her watch?

Hon KATE WILKINSON: As the member knows, the annual task of setting the minimum wage is always a balancing act. It has been a dilemma for many Ministers of Labour. We set it at the rate that we thought was the most sustainable to protect employees’ purchasing power, whilst not jeopardising jobs and resulting in job losses. Had we increased it to $15 per hour, our advice was that this could have resulted in the loss of up to 5,500 jobs. We were not prepared to actually jeopardise those jobs, because our commitment is to job protection, not job destruction.

Darien Fenton: Why does she continue to insist that there will be job losses in increasing the minimum wage, when Treasury advice is to the contrary?

Hon KATE WILKINSON: The member makes a very interesting point, because the Treasury advice also recommended a nil increase. We did not accept that advice. In fact, the Department of Labour’s advice recommended a 30c increase. We actually did not accept that, because we thought a 50c per hour increase was actually fair and reasonable and sustainable in the circumstances.

Darien Fenton: How will she balance the increasing cost of living and low pay for young people on the minimum wage, when she moved this year to pass legislation to cut their minimum wage by 20 percent?

Hon KATE WILKINSON: Certainly, the question of youth unemployment is an issue that we are all grappling with. We want to give employers the incentive to take on young people, and we want a flexible market regime and a flexible employment regime that actually encourages businesses to get ahead and to take on those young people, so they get their first foot on that employment ladder.

Darien Fenton: Will the 50c minimum wage increase address income inequality and reduce poverty, or was the Minister of Māori Affairs correct when he said “Such a modest adjustment, from $13 to $13.50, does not reflect the political courage and strategic vision we need to eliminate poverty”, and is this another example of a growing rift with the Māori Party?

Hon KATE WILKINSON: In relation to the last portion of that question, no; but nobody is saying that this is a silver bullet to actually address the poverty issue. This is just one measure, and it is actually interesting when we use the same methodology—

Hon Trevor Mallard: More like a water pistol than a bullet—more like a water pistol!

Hon KATE WILKINSON: —that was used in 2002 by the then Minister, Margaret Wilson—and what I would like to ask of the member who interjected is, why is it that when Labour has an increase in line with wage growth, it is a fairer deal—[Interruption]

Mr SPEAKER: Ministers do not ask other members questions.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I seek leave to table the confidence and supply agreement of 2005 between the New Zealand First Party and Labour, which put the minimum wage up from $9 an hour to $12 an hour.

Mr SPEAKER: The member will now resume his seat. That agreement is public knowledge, and we do not need to waste time tabling such documents.

Hon Dr Pita Sharples: When will the Minister come to the realisation that an extra $16.50 a week, which is the after-tax increase for a person working 40 hours a week on a minimum wage, will not reverse the dark plight of children who are living in minimum wage households, and that if she raised the minimum wage to $16 per hour, which is the Māori Party’s policy, $99 per week would go to those whānau, who really need it?

Hon KATE WILKINSON: Can I say that I do share the honourable member’s concern about children in low-income households. It is an important issue, and one that we discussed during the minimum wage consultation. But, as I have said, increasing the minimum wage is no silver bullet. The Government is assisting low-income workers in a number of ways, including through schemes such as Working for Families. We are determined to create the right environment to encourage businesses to grow and create more jobs, rather than legislate an unsustainable and arbitrary minimum wage level and risk the loss of significant jobs.

Interest Rates and Lending Practices—Establishment of Helpline

8. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Consumer Affairs: What recent announcements has the Government made on protecting consumers from loan sharks?

Hon CHRIS TREMAIN (Minister of Consumer Affairs): This week the Government announced a new freephone number to help protect consumers from being preyed on by unscrupulous loan companies. The number, 0800 LOAN STRESS, will give consumers better access to services to help them understand their rights and resolve disputes from finance companies. This will empower people to seek protection when they believe they are getting a raw deal.

Peseta Sam Lotu-Iiga: What else is the Government doing to prevent loan sharks from preying on vulnerable people?

Hon CHRIS TREMAIN: The Government will reform consumer credit laws to better protect consumers. This will include preventing essential household items from being used as security for loans, and creating a code of responsible lending. Draft legislation will be released in March, and I will be holding a range of meetings across the country to discuss the issues involved.

Peseta Sam Lotu-Iiga: What is the Government doing to target unregistered loan providers?

Hon CHRIS TREMAIN: All financial service providers are currently required to be registered with a dispute resolution service. Unregistered lenders will be targeted through new provisions in the consumer credit law. One of the proposed changes is that if a lender is not registered, the consumer will not be required to pay any of the costs of borrowing. The 0800 LOAN STRESS service will also assist consumers in finding out whether their loan provider is registered, and which dispute resolution service they are registered with.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. This is the first time that I have ever seen this occur in all my time in Parliament, where a question has been put down in the name of a member, has been circulated in the name of a member—in this case Jonathan Young—but between the publication of the questions and the time of the House, it has been changed. I know of no precedent, and no ability to make that change. You are allowed to change the Minister who answers it, but in the past it has always been done “on behalf of”, after circulation.

Mr SPEAKER: I am not aware of circulation being any particular cut-off time for such matters. A number of changes happened to questions on the question sheet, and I do not think the House need take more time on it. It is an absolutely trivial matter. It is not something that, in my view, we should be concerned about at all.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think the ability of a member to lodge a question—to have a question in that member’s name—is not a trivial matter, and for it to change after a member has lodged it is unprecedented.

Mr SPEAKER: We do not need to take more time. Clearly the members agree on that. It is not as if it is a problem between parties. Both members are from the same party. There has obviously been agreement that the question should be asked by a different member, and that is the end of the matter, as far as the Speaker is concerned.

NZ On Air Board—Potential Conflicts of Interest

9. CLARE CURRAN (Labour—Dunedin South) to the Minister of Broadcasting: Is he aware that Stephen McElrea is part of a working group within NZ On Air, which includes a representative of MediaWorks, and which is determining details of a documentary about Whānau Ora?

Hon TONY RYALL (Minister of Health) on behalf of the Minister of Broadcasting: The Minister is now aware, because it was discussed in the House yesterday. He was not previously aware, because the Minister is not made aware of decisions made by New Zealand On Air before they are announced by New Zealand On Air or published on the New Zealand On Air website.

Clare Curran: Is he satisfied that it is appropriate that a board member with such a close relationship to the Prime Minister is involved in operational matters in relation to programmes with political implications?

Hon TONY RYALL: The Minister has confidence in the board of New Zealand On Air and the way that it manages its processes. Clearly, a number of New Zealand On Air board members previously have had an association with Prime Ministers, such as the former deputy chairperson Mrs Judy Callingham, who would have been involved in such decisions, I am sure.

Clare Curran: Does he think that Stephen McElrea met the test set by New Zealand On Air board chair Neil Walter of being “… ‘perfectly capable’ of keeping his political interests separated from his decision-making role.” when he made a complaint about a documentary on child poverty a week before the election?

Hon TONY RYALL: The Minister of Broadcasting has confidence in the chairman of the board of New Zealand On Air.

Clare Curran: Is he responsible to this House for ensuring that the processes of the boards he appoints are appropriate; if not, who is?

Hon TONY RYALL: Of course, as any Minister would, the Minister of Broadcasting ends up being responsible in one way or another for the behaviour of his Crown entities. However, in terms of the internal processes of New Zealand On Air for managing the way it approves funding, the Minister has confidence in the chairman of New Zealand On Air.

Clare Curran: Is he aware of the subject and title of the documentary, which was not released in the document that was released publicly yesterday, dated 10 November 2011, “Record of decisions made at working group meeting”; if so, what is it?

Hon TONY RYALL: As the Minister answering this question on the Minister of Broadcasting’s behalf, I am not in a position to give an answer to that question.

Clare Curran: Given that documents were released in this House yesterday on these issues, which are matters of importance to the public, why is he not aware of the names of those programmes, and why cannot he release that information to the House?

Hon TONY RYALL: I am sure the Minister is not normally informed of decisions until they are made public. That is the information that I have received. As the Minister who is answering on behalf of the Minister of Broadcasting, I do not know the title to that programme.

Community Development—2012 Winston Churchill Fellowships

10. TIM MACINDOE (National—Hamilton West) to the Minister for the Community and Voluntary Sector: What recent announcement has she made in her portfolio that will benefit communities?

Hon JO GOODHEW (Minister for the Community and Voluntary Sector): On 3 February I announced grants from the Winston Churchill Memorial Trust to 15 individuals, at an average of $5,000 each—a total of $75,000. This covers overseas travel, typically for between 3 weeks and 3 months, to learn more about other people and cultures. The trust places great importance on the benefits of this project to New Zealand.

Tim Macindoe: What will this year’s Winston Churchill Fellows study?

Hon JO GOODHEW: This year’s recipients will study across a wide range of very interesting topics, including community welfare and health, disaster preparedness, and issues relating to history, commerce, the arts, and the environment.

Tim Macindoe: Can she give the House an example of how these grants can benefit a community?

Hon JO GOODHEW: Fellows return with new insights and understandings that do enrich their communities in many ways. The range of topics I have already given the House is broad. I have seen an example of a fellow who after studying transportation and traffic issues is putting that to good use within his business sector, and I am sure that the Associate Minister for Primary Industries is putting the knowledge and experience he gained in the year 2000 of beef exports to the United States to very good use.

Child Poverty, Abuse, and Neglect—Role of Family Incomes

11. HOLLY WALKER (Green) to the Minister for Social Development: Does she consider low family incomes to be a major contributor to childhood vulnerability?

Hon JUDITH COLLINS (Minister of Justice) on behalf of the Minister for Social Development: The Minister agrees with the Child Poverty Action Group’s economist, Dave Grimmond, who wrote in the Children’s Commissioner’s latest newsletter: “A lack of income may actually be more a marker of potential problems for children rather than the root cause of their problems … it might be that the personal characteristics that make someone unsuccessful in the labour market also make them poor parents.” He gives an example: “Someone with a drug addiction problem may be unreliable both as a worker and as a parent.” However, the Minister certainly does not agree with the implication that being financially poor makes one a bad parent.

Holly Walker: Did she advise her colleague the Minister of Labour, in recent discussions, to raise the minimum wage by more than 50c an hour in order to meet the needs of vulnerable children whose parents are on low incomes; if not, why not?

Hon JUDITH COLLINS: I cannot actually give a definitive answer to that, but I can say that I know that the Minister is fully aware that raising the minimum wage too far could, in fact, lead to more poverty for some families, where they would lose jobs.

Holly Walker: When doctors in South Auckland report seeing children suffering from the diseases of poverty and deprivation every day, how does the Minister hope to reduce high rates of child abuse and neglect without also addressing the underlying causes of poverty and low incomes?

Hon JUDITH COLLINS: I know that the Minister is fully aware that one of the ways in which we can, in fact, reduce some of the issues of child abuse and neglect is to actually bring through this House the Privacy (Information Sharing) Bill. I note that the member asking the question does not support the bill, and I am surprised, given her concern for children and child abuse.

Holly Walker: If a large number of submissions on the Green Paper for Vulnerable Children call for the Government to raise incomes as part of the solution, will she include strategies to raise incomes in the eventual white paper?

Hon JUDITH COLLINS: Of course, one of the best ways to raise people’s income is to get them into work, and I know that the Minister is particularly concerned to get more people into work. She also, though, would want to have it noted that one does not have to be rich to be a—

Holly Walker: I raise a point of order, Mr Speaker. My question related to the submission process for the green paper. It was very straightforward and asked whether submissions covered a certain thing and whether that would be covered in the white paper. I do not believe that the Minister is addressing that question.

Mr SPEAKER: Well, the Minister has not quite finished yet. I ask the Minister to make sure she does cover that part of that question.

Hon JUDITH COLLINS: Can I start again? Well, I will finish it. The Minister is very concerned that the implication should not be that only rich people are good parents. In fact, being wealthy is no indicator of being a good parent. And she is also going to look at what the submissions actually say before she comes to a conclusion. This is the way we do things in this Government.

Jacinda Ardern: Of the two out of every five children the Ministry of Social Development has identified as poor and from households where at least one adult was in full-time employment, how many of those adults were on the minimum wage?

Hon JUDITH COLLINS: For a specific question like that, it would be best to pop that down as a primary question. I am sure that member could do so in the future.

Whānau Ora, Minister—Confidence

12. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: Does he still have confidence in all his Ministers?

Hon GERRY BROWNLEE (Leader of the House) on behalf of the Prime Minister: Yes.

Rt Hon Winston Peters: Has anything happened since yesterday to shake the Prime Minister’s confidence in the Minister for Whānau Ora in light of reports that Whānau Ora money has gone, for example, to Northland television stations in Whangarei and also to a performing arts programme?

Hon GERRY BROWNLEE: No, and if the member wants to know more details about those things he should set a question down to the Minister responsible.

Rt Hon Winston Peters: Can I ask the Prime Minister, who is meant to be responsible for all these things, why is money going to fund a Māori TV station in Northland when there is already huge public funding and there are quota systems in place for Māori Television and Television New Zealand?

Hon GERRY BROWNLEE: I do not have the details of those allegations. I suggest that the member puts questions down to the Minister for Whānau Ora to get factual answers.

Rt Hon Winston Peters: Again to the Prime Minister, who is in charge of these things, with respect to the 150 organisations that have received grants in the last financial year, can the public be confident that in each and every case public accountability requirements are being met?

Hon GERRY BROWNLEE: I am not aware of the full extent of the 150 grants the member claims have been given over that time. He should ask questions of the Minister for Whānau Ora to get details.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I have tolerated that ending to the question three times now. It is not for him to tell me whom the questions should go to; it is for you.

Mr SPEAKER: That is not the way to raise a point of order—to be critical of another member. A point of order relates to order in the House. The principle the member was pursuing was fair enough. He is concerned about the answer being given. But the response from the Minister is perfectly reasonable. If the member wants to ask questions about Whānau Ora, the best chance of getting detailed answers is to address questions to the Minister responsible. When the primary question asks whether the Prime Minister still has confidence in all his Ministers, it is just not reasonable to expect, even were the Prime Minister able to be here today, that the Prime Minister could have that kind of detailed information. The member is certainly entitled to ask questions about that—absolutely entitled to—and is absolutely entitled to get answers about it. I will do all I can to support the member getting answers in this area of his concern, but the primary question has to be consistent with achieving the obtaining of those answers. I have promised the member I will do all I can to assist him getting answers, but the primary question must facilitate that process.

Rt Hon Winston Peters: Point of clarification, then.

Mr SPEAKER: There is no such thing as a point of clarification. I will assume this is a point of order.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. What I want to request of you is whether or not it is for any member of this House to decide whom he would like to ask a question of, or is that a right that is to be circumvented as well?

Mr SPEAKER: We do not need to take this any further. It is the Government’s absolute right to decide who should answer questions. Now, the member knows that if he puts down a question asking: “Does the Prime Minister have confidence in all his Ministers?”, the Prime Minister must answer that question. We all know that. But the dilemma then is that if the member wants to ask questions that need detailed information from a particular portfolio to answer them, rather than matters relating to confidence in a Minister, then it is not going to work. That is the dilemma the House is in. I want to do all I can to assist if I think the issue the member is seeking to pursue is a perfectly valid issue. The member should be able to obtain the answers in this House to his questions, but he has to follow the Standing Orders to be able to access those answers, and I will do all I can to make sure that can happen.

Address in Reply

Address in Reply

Debate resumed from 8 February.

COLIN KING (National—Kaikōura): Mr Speaker, may I begin my contribution to the Address in Reply by congratulating you on your reappointment to the role of Speaker, and may I also take the opportunity to congratulate the other presiding officers.

Effectively, at the election there were two propositions that voters could vote on. National’s proposition was to return the Crown accounts to surplus by 2014; to ensure that the Government developed good quality public services and to cap the size of those public services; to do its utmost in rebuilding our second-largest city, Christchurch City, after those severe earthquakes; and to make available to the public a minority shareholding of four State-owned enterprises—Mighty River Power, Genesis, Meridian Energy, and Solid Energy—and also to reduce the Government’s shareholding in Air New Zealand.

Labour’s proposition was to introduce a capital gains tax of 15 percent, raise the top tax rate, and borrow more money from overseas banks, and—yes—pay the in-work tax credit to those not working. The Greens were very similar. They were going to introduce a capital gains tax at the marginal tax rate, which would have been in the 20-plus percent range, as we see it. As a result, it is plain to see that the voters of New Zealand supported National, giving it 47.3 percent of the party vote, and returning 59 members of Parliament. Together with a solid support from the ACT Party and United Future, National under the leadership of John Key has formed the Government—an outstanding result in anyone’s definition. In fact, it is the best percentage party vote ever in the environment of MMP.

One could ask the question: “Why was that?”. The answer is simple. It is because the policies National canvassed with the public during the election made sense to the public. The policies that National canvassed with the public during the election made sense with the public.

The ASSISTANT SPEAKER (H V Ross Robertson): I am sorry to interrupt the honourable member. Could I just say to members that it is a longstanding convention in this House that members should not conduct conversations unless it is necessary to do so, and then only so as not to disrupt proceedings. They should show some courtesy to the member who is trying to address the business of the House.

COLIN KING: At the conclusion of 2011 the Governor-General gave the Speech from the Throne, which articulated that work programme of the National-led Government for the next 3 years. As expected, it was based on those four aims: return the Crown accounts to surplus by 2014-15, deliver high-quality public services, rebuild Christchurch, and offer the public those minority shareholdings of the four State-owned enterprises, as well as reducing the Government’s shareholding in Air New Zealand. The largest-ever percentage of New Zealanders voted in favour of those policies.

In the electorate of Kaikōura we achieved also that best-ever share of the party vote, and I would like to make the point again of asking the question why. Well, it is very simple. It is because under a National-led Government in Marlborough one gets to keep more of what one earns. In Marlborough, Kaikōura, and North Canterbury, if we send more money to Wellington, we never see it again. This means less investment, less growth, and no jobs for our youth.

National is determined to address those difficult issues, and in Marlborough we are putting together a strategy that has the dual aims of removing the roadblocks to economic growth and creating enduring job prospects for our youth. At this moment we have King Salmon going through the Environmental Protection Authority process. It has done the science, it understands what needs to be done to have a successful operation in aquaculture, and we look forward to it coming through the Environmental Protection Authority process, whatever the outcome is. If it is successful, that represents 200 jobs in Marlborough.

In terms of infrastructure and energy, TrustPower has a project in Marlborough already consented but still not yet started. That again represents another 100 jobs in Marlborough. In aviation, we have Safe Air in Marlborough; we also have the C130 programme. That too potentially can contribute another 50 jobs into the future. From those three opportunities that present themselves, there is also the enlargement of the contribution of the manufacturing services—another 50 jobs. Forestry needs to double its ability to process forestry and timber; that represents another 50 jobs. And with the ongoing upskilling of our workforce in Marlborough, the NMIT—the Nelson Marlborough Institute of Technology—also can build another 20 jobs. So if we can progress the agenda of this Government, my electorate looks to gain 500 jobs, and that is what we need to really ensure that there is a place and a career in this country for our young folks.

To those who are objectors to economic growth, I would say: “Show me your alternatives.” Show me your alternatives for youth employment, your vision for Marlborough, and, for that matter, your vision for New Zealand. Too many people for too long in this country have limited the potential of the provinces and rural New Zealand, and that is why, since 2004, this country’s tradable sector has shrunk dramatically. Labour’s dislike of the rural sector is well known, and its regular attacks on the rural sector before and during the election were obvious for all to see. Is it any wonder that when one looks at a map today, after the 2011 election, it is entirely blue with regard to provincial rural New Zealand in the party vote situation? Why? Because National is committed to the economy. It is not a tax, borrow, and spend Government.

In this term the National-led Government will continue its agenda to address those issues that New Zealanders care about. I will make that point again. The National-led Government will continue its agenda to address those issues that New Zealanders care about—issues such as better education for our youth, starting with a goal of 98 percent of all children accessing early childhood education before they start primary school, and identifying and supporting those youth who need support around literacy and numeracy. Without that essential support, we are committing them to failure. May I take this opportunity to pay tribute to the Ministers Anne Tolley and Hekia Parata for the wonderful work that they are doing and have done.

National will continue to unclog the health system from its managerialism, or its over-managerialism, ensuring that money reaches the doctors and nurses so that they can perform their miraculous procedures and add to the quality of people’s lives. Today our hospitals are performing 20,000 more elective procedures than they were under the last Labour administration, and what is more, National’s goal is to increase the number by at least 4,000 further elective procedures. Has the Minister of Health, Tony Ryall, not done a great job?

National will continue to take the lead and bring along the public in developing better ways of preventing child abuse. An outstanding example of this is the present Green Paper for Vulnerable Children, which is being conducted by the Minister for Social Development, Paula Bennett. What a great job Minister Paula Bennett is doing in this area.

National made significant progress in reducing crime during its first term in Government by increasing the number of uniformed police and equipping them with the tools to do their job better. We look forward with confidence as Minister Collins continues the outstanding work started by the previous Minister, Simon Power, in the law and order area.

That is but a flavour of the work streams that this hard-working Government has as its programme for the next 3 years. I am sure that my fellow colleagues will articulate the many other work streams that this Government has to address going forward in their presentations to the House. In conclusion, New Zealanders can have confidence and trust that this National-led Government will do its level best—it will do its level best—for all those who are prepared to help themselves. Thank you.

Hon CLAYTON COSGROVE (Labour): Firstly, could I congratulate, obviously, Lockwood Smith, the Speaker, on his reappointment. I also pay my respects to the Governor-General, as is the tradition in this debate.

We are some 2½ months from the last election and, oh, how the world has certainly changed in a number of ways, both globally and domestically. It is interesting how personalities change and how the cracks in Governments start to open. It is 2½ months after an election, and I congratulate the National Party on its substantial victory. You would have thought that unity would have broken out in this country, peace would have reigned, and we would now be inheriting the sort of brighter future that John Key promised us not just in one election but in two elections. But if you look at the analysis over the last months, weeks, and days, what do we have? We have division in New Zealand. We have protest. We have court action against the Government. We have Waitangi Tribunal claims being lodged. We have people being insulted—leaders in our community. We have public discontent. And we have no political leadership and no ideas from the Government, as evidenced by the Address in Reply debate.

You can tell, of course, when a Government gets arrogant. You can tell when, in the second term, the Government starts to get arrogant. Normally it takes a few years of the second term, but it has taken 2½ months. Yesterday we had the senior Minister, the politician of the year, Gerry Brownlee, blow a fuse, a sort of political version of a blunderbuss, at the Mayor of Christchurch, who I would have thought had got a fair bit on his plate—as Mr Brownlee does every day, of course; three times I think. He called Bob Parker a clown.

I have to say I sat there for a minute, knowing Mr Brownlee as I do, and tried to work out where he was at the time when he thought of this wonderful term “clown”. What sort of inspiration was he thinking of? Then it became clear; I looked up Wikipedia and it became clear. Mr Brownlee’s favourite restaurant, of course, being McDonald’s, I thought that must be his inspiration—the McDonald’s clown. Of course it was, because if you look at Wikipedia, you see that it says about Ronald McDonald, the clown that represents the fast-food chain, that he “inhabits a fantasy world called McDonaldland, and has adventures with his friend Mayor McCheese …”. I thought that must be Gerry; after the third double-meat burger and chips, he blows a fuse and attacks the Mayor of Christchurch. You know when a Government is cracking and you know a Government is starting to get arrogant when you have that sort of stuff going on.

We have protest in this country now, we have division in this country now, and I am waiting and New Zealand is waiting for the so-called economic brighter future that Mr Key promised us. If you look at the job figures, of course, you see that full-time jobs are down, the number of hours worked is down, 100,000 people want or need more hours to make ends meet, 83,000 people—mostly young people—are not in education, work, or training, quality jobs are going out the door, and families cannot make ends meet. This Government’s answer, its only idea—apart from abusing mayors of Christchurch and others—its only strategy, is, first, just manage and spin the economic decline, manage the decline, manage the drift south, and, secondly, the big idea, which of course is not original, sell State assets. Again, you can tell a Government is cracking when you see the arrogance come out again.

This Government won an election—I accept that. But I say this: those members know, and the polls show, that the State-owned enterprise sales, the fire sales that this Government is going to engage in, have been rejected by New Zealanders, and the discontent is growing. The thing that Mr Brownlee does not get, as he blows another powder keg and has another crack at people, is that people in the communities are not silly and they can work out basic economics. They know, of course, that when you sell revenue-generating assets, when you max the credit card out as this crowd has, borrowing hundreds of millions of bucks a week, when you spend all the cash, as this crowd has—just like a household spending all its income; all the cash is gone, and you keep borrowing—your only alternative is to sell something. So you sell the car, but you keep borrowing on the credit card. So you pay off maybe a month’s debt, but you keep borrowing, and on it goes. What do you do then? You sell the motorbike maybe. You sell the fridge. You keep selling and you erode your assets.

Well, the communities have worked it out. Mr Brownlee once said on radio that the communities do not understand budgets, people do not understand basic economics—

Hon Gerry Brownlee: I never said that!

Hon CLAYTON COSGROVE: Yes, you did, on Newstalk ZB. I say to Mr Brownlee that if you can balance your household budget in these recessionary times, you would have a PhD in economics, something Mr Brownlee will not even get close to. People have worked it out. So the Government strategy and the big idea is for this crowd to sell revenue-generating assets, and then try to—[Interruption] Old “Twinkletoes” at the back is getting fired up. Then they try to sell it to the people of New Zealand by saying “We are going to buy schools. We are going to build schools and the odd bridge. We are going to invest this money in other assets.” People think, hey, that is not a bad idea—because we are all in favour of schools and better roads and those things. But here is the difficulty economically: you sell revenue-generating assets, you forgo the dividends, you buy non - revenue-generating assets, and at some point in time—I know that this will be a bit difficult for Mr Brownlee; use all your fingers and toes, Gerry—you run out of cash.

Then the proposition is what you do then. You have continued to borrow, you have no cash, you have sold the asset, you have used up the cash, so what is the proposition then? The only option for this Government is to sell more—to sell more. Those members have this sort of ideological block. Labour members engaged in this in the 1980s—remember, colleagues? But we learnt. These guys engaged in it in the 1990s, got re-elected, and did not learn. I invite them to walk down their streets and ask people: “Are you in favour of selling State-owned enterprises? Are you in favour of selling your power companies?”. Because people have also worked out that these are commercial operations and they know there will be overseas interest in them. Tony Ryall confirmed in the House that he has no plans, no ideas, and cannot stop the passing on and onsale of shares from maybe the odd mum and dad Kiwi who might find some cash, after they have paid all their household bills—if they have got a job—to whip down to the stockbroker and buy some shares. Government members have no plans, no options, and cannot stop shares passing on to overseas interests.

Why would overseas interests—or anybody—buy a State-owned enterprise? They do not do it out of a charitable spirit. They buy it to make money. We know what will happen to power prices. Overseas interests are not going to sit there and say to the Government they are happy just to take a static dividend or they are happy just to take less. They are going to say “We want more money.”, and they are going to screw it out of the people of New Zealand. Peter Dunne will be here somewhere, I am sure; I am sure I can see him. If the Māori Party acquiesces and actually does the right thing and walks, he may go down in history as this country’s best auctioneer—going, going, gone. He may well hold the pivotal vote that can either stop this going forward or allow it to go forward. I invite Peter Dunne to reflect on that. He will make history, one way or the other. He will make history over this.

So the big idea, after you have maxed the card out and got rid of all the cash, is to flog off the family silver. At least Government members are honest enough to say that if they win another election, they will consider doing it again, but they will do it after the election. So we know that once they have sold these assets, there are others on the block. There is a campaign being engendered and generated around the country from grassroots Kiwis who have been down this road before, do not like it, know that it does not work, and know that this crowd are bereft of ideas. We can tell they are bereft of ideas because they start attacking good, community folk. When you attack in the press the Mayor of Christchurch, who has probably got the hardest job in New Zealand as a mayor, trying to rebuild his city, because you blew a fuse—maybe you did not have a decent kip the night before, or the tuck shop was closed before you got there—it is a sign of a Government under stress.

It is going to be interesting, as we go through this State-owned enterprises debate, to see the twisting and the turning that will occur over section 9. It is happening now. The Prime Minister knows the complications in respect of the creative remedies around that. But I invite the next speaker to get up and explain Mr Brownlee’s actions, and I invite the Government to think very carefully. Mr Brownlee’s actions are an example of where it is heading.

MIKE SABIN (National—Northland): One of this nation’s finest leaders said of leadership that “Having a vision is not enough. Change comes through … turning [a vision] into a reality. It is easy to espouse worthy goals, values and polices; the hard part is implementation.” Tragically, 10 years ago the architect of those words, Sir Peter Blake, lost his life in the pursuit of turning his vision into a reality. The essence of the Blake ethos centred around the notion that it is your actions that define you, not your words—something that can be easily forgotten by those well intentioned in their pursuit of public service. I raise this because in 2008, as a recipient of a Sir Peter Blake leadership award, I had cause to reflect on my journey, the importance of leadership, and the visions that I wanted to see become realities. That moment was a turning point and much of the reason I am here today, something I will expand on shortly.

But, firstly, Mr Speaker, I acknowledge you for your re-nomination, and for the dignity and decorum you bring to this role. Can I acknowledge the Prime Minister and Ministers of the Crown for the tremendous social and economic leadership that you have and will continue to show this nation, and express how humble and privileged I feel to become part of this National caucus team, working to serve the positive aspirations of all New Zealanders. Can I also acknowledge our party president, Peter Goodfellow, the National Party board he leads, and the team from the service centre. I want to sincerely thank you all for the assistance you have provided me, and acknowledge the outstanding leadership and support you provide our party. In particular can I thank Grant McCallum, who is also my campaign chair. I also pay tribute to the electorate team in Northland. Our success in the election is just that—our success. Nothing could have been achieved without you, and although I am the net result of those efforts in my election as MP, I want you to know that this has and always will be a team effort. I want to especially make mention of Sally Macauley, our electorate chair, the longest serving in the party; Neil Clements, my deputy chair, a very wise political gentleman; Ross Miller, a loyal and guiding hand; and a special thanks to the evergreen June Levet, the “Mrs National Party” of the north.

At this stage I would also like to pay tribute to my predecessor, the Hon John Carter, for the massive contribution he made to this party, to Northland, and to this nation. Of course, “massive contribution” could also describe the tab he now has at Trader Jacks, but I am sure the Cooks will be well served with him as their high commissioner, not only for the passion he brings to make a difference but also for the range of new jokes he will be unleashing on an unsuspecting population. I want to offer my thanks to all Northlanders who supported me through the campaign and have trusted in me to be their representative. I owe you all a debt of gratitude, and I hope to repay this in kind by being as effective as I can be as your MP in representing the hopes and positive aspirations of Northland and our region.

Lastly, I want to thank my family—my wonderful parents, siblings, and children. I am who I am because of you, and I could not be more proud to be part of the family that we are. Also I make a special thanks to my partner Sandra. I have not always been lucky in love, but my Powerball number certainly came up in that particular lottery, when Sandra came into my life. Thank you very much, Sandra, for sharing my life with me in the way you do.

I would now like to share with you three important themes: who I am, what I believe in, and why I am here. I am the eldest son of Lew and Merlene Sabin, and I have one brother and sister. I am the proud father of three amazing children—as you can see, these family things do get to me, Mr Speaker—Brook, Darryl, and Brenna. I am of mixed genealogy like most, and I am proudly of Tainui whakapapa on my mother’s side. It gives me a uniqueness in this world, and I celebrate that. But I celebrate more that I am a New Zealander and I call this place my home.

My early years were spent in Auckland before we as a family moved to Whangarei, and I am a product of Whangarei Boys High School. I left school and followed my father’s footsteps into the navy as a seaman officer, but before long I found myself back in Northland, dairy farming. However, as a young father I was keen to join the police, essentially to contribute to making the community I was bringing my children up in a better place. With that in mind my policing career was soon focused in the area of drug enforcement, primarily because I felt that the best way to make a difference was to get to the cause of the problem. One quickly comes to the conclusion in that particular vocation that alcohol and drug abuse is the cause more often than not.

My career in the police shadowed the introduction of pure methamphetamine, or P, into New Zealand—an area I have developed an expertise in—but while working on squads running undercover on electronic surveillance operations, I literally saw New Zealand explode from having no P problem to the worst in the world within 5 years. Our well-developed drug culture saw us primed for the only hard drug in the world that you can make on your kitchen bench from readily available retail chemicals. Those 5 years have changed New Zealand for ever, and led me to the conclusion that the fight needed to go back to the top of the cliff. Quite simply, I came to the conclusion that we would not win the war trying to heal the wounded.

This desire to find a better way gave rise to Methcon Group, a drug-education and policy company I founded in 2006 and operated from then. The mission was simple: empower employees, students, and the community with education, while working to find policy solutions to help provide the Government with better tools. It was a long, difficult, and often lonely journey and one that many told me was futile, and one that many told me was someone else’s problem to fix. Nevertheless I stuck to the task at hand, the primary reason being that I just believed that someone needed to do something. Could I at this time pay tribute to the Prime Minister and acknowledge the outstanding leadership on this particular issue. It has indeed been a gamebreaker.

That challenge was put into chilling context, however, when on Anzac Day 2009 my fight went from P to that of my son’s survival, when he suffered a catastrophic bleed on the brain during a game of rugby. This could get tough, Mr Speaker. Following his emergency surgery, I was confronted with the news that his death was imminent, something I refused to accept, as well as the contention that if he did survive, it would likely be in a vegetative state. Like his old man, my boy is a fighter. I knew that, even if they did not. I pledged to fight with him to help get his life back. It was a frightening journey, full of heartache, but one in which we never lost hope. Sometimes hope is the only thing you have to cling to. When that is the case you just have to develop an iron grip. Something I am very proud to say is that we have been rewarded today, as my son sits in the gallery larger than life, fit and healthy, to watch proceedings. That taught me that it is not what happens in life that defines you, it is what you do about it. It was a difficult couple of years, but by now my goal was to enter politics, and I sold my business to allow for a full-time campaign in an endeavour to try to win the selection and the election that followed.

While there are some who would say that I am a one-trick pony here to further the anti-drug cause, far from it: my journey into politics has come about as an evolution of many professional and life experiences, leading me to the simple conclusion that if one wants to support their community in achieving its real potential, there is a need for one to be around the table where the decisions that are most affecting your communities are being made. The reality is, my efforts on the P issue demonstrate more my willingness to try to make a difference than my focus on that one issue alone. Much like my son, I just wanted to try to find solutions, while many others were finding ways to tolerate the symptoms.

I would now like to share with you a little bit of what I believe in. I am a proud representative of the New Zealand National Party because its founding values resonate with who I am as an individual. Central to this is personal responsibility, reward for hard work and enterprise, limited government, and equality of opportunity and citizenship. It is a fast-paced world we live in and much has changed, even in my lifetime, with regard to the fabric that binds the society together and the balance required to maintain a healthy, socio-economic equilibrium. Too often, in my view, a sense of pride, self-reliance, and independence is usurped by cultural entitlement, despite the implicit irony that so many who contribute nothing to society have developed an almost self-righteous belief that society owes them something. Striving to succeed and success itself are so often frowned upon as threatening and somehow discriminating against those who seek refuge behind the ever-growing veil of mediocrity. Participation, it seems, is now the goal, and winning, as an equal part, unnecessary and intimidatory. Personal responsibility, the very source from which self-respect itself springs, is intrinsically related to the individual’s willingness to accept responsibility over one’s life. To do so is to give value, purpose, and freedom to the soul; to refuse it leaves a hole from which the spirit of the individual will slowly but surely drain.

Yet years of socialist ideology, welfarism, which has evolved to provide perverse incentives to opt out, and the insidious encroachment of Government into the minds and lives of citizens have seen the notion of personal responsibility pilloried like it was the ramblings of capitalist zealots. This country is God’s own, yet we condemn many children to child abuse, neglect, and homicide. For a generation we have vainly sought solutions, largely ignoring the fact that what we have created is a culture in which it is too easy for parents to become trapped in welfare, often through no fault of their own, who lack even the most basic of life skills, and for whom personal responsibility is an unnecessary and irrelevant commodity, surpassed by the sea of social agencies that will now seek to provide what they will never have to. Too often we have become consumed with addressing the symptoms of these very problems, while failing to challenge the cause of them, something that often requires courage and honesty in uncomfortable amounts, but none the less something, in my view, that New Zealand expects of its leaders. To that end I would like to commend the work being done by the Minister for Social Development in this particular area. The long and short of it is a little bit of personal responsibility will go a long way, but the lack thereof will go a lot further—just in the wrong direction.

And why am I here? I am a great believer that a marriage of quality education and equality of opportunity are the essential building blocks of social well-being and prosperity. I am here because I want to do all I can to ensure that this environment exists to help Northland and New Zealand reach the obvious potential that we hold. I also come here with a focus to see Northland develop a whole-of-region economic plan that clearly outlines a path to reaching that potential, the barriers that may stand in the way, and the opportunities we have to make our boat go faster. And there are many. Too often Northland is singled out for all the wrong reasons, but let me make it quite clear to you today, these less-than-flattering statistics are not the failure; our failure is that Northland is blessed with economic potential but we have no plan to achieve it—not yet, anyway. On that note can I suggest that if any members of the House are looking for some good beachside property in Northland, then it may pay to get in quick!

The last point I want to make relates to judgment. As elected representatives, one of our primary roles, in my view, is the exercise of judgment. Edmund Burke, viewed by many as a philosophical founder of modern conservatism, said of judgment: “Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.” In a world that is over-managed and under-led, leadership and judgment are what New Zealanders need and expect of us—something I will always keep top-of-mind.

So in conclusion, who am I? I am a proud father of a blended family of six, richer in spirit for the good and bad experiences of my personal life, poorer, financially, for the fact that I have managed to amass six children somehow in the process. I am a passionate Northlander. I am passionate about Northland and New Zealand, and the pursuit of the potential therein. What do I believe in? That personal responsibility is just that: the responsibility of the person, not the Government; that carrots work better than sticks, but that both are necessary; that the first question we should be asking New Zealanders is “What is your dream?”, and then set about creating a social and economic environment to help make those dreams possible. Why am I here? I am here for the implementation. Quite simply, I want to help turn visions into realities. Thank you.

PESETA SAM LOTU-IIGA (National—Maungakiekie): I move, That the debate be now adjourned.

Motion agreed to.

Bills

Taxation (International Investment and Remedial Matters) Bill

Second Reading

Debate resumed from 8 February.

PAUL GOLDSMITH (National): I speak in support of this bill, the Taxation (International Investment and Remedial Matters) Bill, which represents a small but important part of the National-led Government’s efforts to lift New Zealand’s economic performance. I do welcome the widespread support in this House for the bill.

Tax law has a massive influence on the economy, often in a manner opposite to the effect anticipated or desired by legislators, so we keep refining in the hope of delivering a system that extracts the revenues required in a way that minimises not just the direct burden, but also the dead-weight cost of that taxation. That is the economic cost to the country caused by the effects tax laws have on behaviour.

International tax law is a good example of generating dead-weight costs. Because of the New Zealand international tax regime, many New Zealand companies over the years have simply decided not to expand abroad, and New Zealand is the poorer for it. These costs have seldom been taken into account by legislators, but they are considerable. The centrepiece of Budget 2010 was the delivery of a major tax package reforming the tax system to make it fairer, more sustainable, and a better support for economic growth.

The Taxation (International Investment and Remedial Matters) Bill builds on and extends earlier international tax reforms. As we have heard, the main proposal is to extend the active income exemption introduced in 2009 to offshore subsidiaries—controlled foreign companies, or CFCs as they are often referred to—so that it also applies to joint ventures and other significant shareholdings in foreign companies that are not controlled by New Zealanders’ non-portfolio foreign investment funds.

New Zealand went out on a limb on the tax regime for controlled foreign companies in the late 1980s and early 1990s in its desire to be comprehensive. This showed wonderful philosophical consistency in our arrangements, as in much of the tax reform of that era. Unfortunately, however, in this area the rest of the world did not follow. So the active income exemption brings New Zealand’s tax rules into line with practice in other countries. It will help New Zealand - based businesses to compete more effectively in foreign markets by freeing them from a tax cost that similar companies in other countries do not face. For example, a New Zealand - owned manufacturing plant in China will now generally face the same tax rate as other manufacturers operating in China.

These changes will improve the competitiveness of New Zealand’s tax system and encourage businesses with international operations to remain, establish, and expand. Why is that important? Because we want New Zealand businesses to grow into international businesses based in New Zealand. That is how we build the economy and earn the money that we need to maintain our living standards. Our tax laws frequently made that unreasonably difficult in the past, and in some instances added to the pressure for companies to leave New Zealand or, more frequently, just not to attempt international expansion. This bill will make it a lot easier to do that, for the better of New Zealand.

There are a number of worthy provisions in this bill, showing that the Government has listened to the advice of the Capital Market Development Taskforce. In one the bill removes a tax barrier to non-resident investment in New Zealand corporate bonds. In 2009, the House might recall, the Capital Market Development Taskforce recommended that the approved issuer levy be reduced from 2 percent to nil for some public issues of debt by New Zealand residents, and this bill provides a zero rate of approved insurer levy for bonds that are traded in New Zealand. This is all about making it easier for New Zealand companies to get access to the credit at best possible rates, and deepening New Zealand’s capital markets generally.

Finally, I am pleased that the Finance and Expenditure Committee adopted some of the suggestions that submitters made during the select committee hearings. These will simplify compliance for taxpayers using new rules. I particularly want to mention allowing taxpayers to apply the active business test, using accounts prepared in accordance with the United States’ generally accepted accounting principles. That certainly makes it easier for New Zealand companies to jump through the hoops that are required by legislation and tax rules, and I think that will be a great boost to New Zealand companies trying to expand internationally and grow this economy. Thank you very much.

ANDREW WILLIAMS (NZ First): Firstly, can I congratulate you, Mr Assistant Speaker Robertson, on your reappointment to the role as an officer of the Parliament. I have greatly enjoyed dealing with you in other capacities over the years. I have always enjoyed the relationship we have had in local government and working with you in your central government role, and I appreciate the support, wisdom, and great knowledge in many areas that you have been able to give to me over the years. So I do congratulate you and your fellow officers of the Parliament.

We are here today to further the Taxation (International Investment and Remedial Matters) Bill. New Zealand First will support this bill, but we do have some reservations and caveats in relation to it. The bill is intended, of course, to move to allow reciprocal arrangements between countries for investments and taxation, to ensure that companies and businesses are fairly treated in the various jurisdictions where they are operating. However, we would not wish to see departures from New Zealand as a result, or any encouragement for companies to see this as an opportunity to set up their businesses elsewhere for the benefit of a lower tax regime in some other jurisdiction.

Increasingly, of course, business these days is done over the internet, in the ether, via all sorts of other means rather than physical hard products and physical hard manufactured goods. Therefore, as a result, companies can, in effect, be based anywhere. They are almost cyber-companies in many respects, because you are only as far as the distance from your mobile phone or your laptop. As a result, companies can operate from anywhere. Therefore, we certainly would not want to see a situation occurring where this was used as a matter of convenience so that companies could operate in cyberspace in order to secure more advantageous tax regimes.

We do not have to remind you of New Zealand First’s longstanding commitment to this sort of situation, going back to the most famous wine-box saga in the 1990s. Many of you will recall, particularly those of you who were in this House at the time—and, Mr Assistant Speaker, you will recall—that that was a sad period of time in New Zealand because it was very clearly a situation where there was an attempt, perhaps, on the part of some to evade paying their due taxes to the Government and the Crown of New Zealand. In that situation, it was convenient for some companies to find alternative locations for the registration of their companies, and, in so doing, it was a significant situation in terms of the revenues to this country. For instance, Treasury officials estimated during that period of time that New Zealand was losing up to a billion dollars a year in the mid to late 1980s through the wine-box tax deals situation. Companies’ tax money was not being paid, meaning that the burden to meet the Government’s expenses here in New Zealand on welfare, health, and education fell on to the ordinary PAYE taxpayers. It meant that the Government kept running Budget deficits for a lot longer than it might have needed to, and those deficits had to be funded by borrowing. We certainly would not want that situation to be repeated again in this decade.

The Taxation (International Investment and Remedial Matters) Bill also raises the aspect of third-party situations, where again I would remind you—and looking back in the records from those wine-box days—that, apart from Australia, the other country that took a pounding from the wine-box deals was Japan. Tax credits funnelling something like $1.2 billion to generate tax certificates were subsequently presented for tax rebates in Japan. The tax losses to Japan from those deals alone may be in the region of almost $200 million.

As I said at the beginning of my address, we certainly would not want a situation where clever, creative accountants and clever, creative organisations try to use the Taxation (International Investment and Remedial Matters) Bill and the law that will come out of it as a means of avoiding or evading tax. I am not talking just about New Zealand companies; I am talking about international companies. We had a situation in recent weeks, which is before the courts, in relation to some activities occurring in this country that are perhaps less than desirable and that we would not wish to be occurring in this country, if they are proven through the courts to be so. So at the same time, we certainly do not want to have international operators operating in this country for the purpose of perhaps avoiding taxes in their own areas of jurisdiction.

New Zealand First has always supported reform of taxation. Our long-term objective is always that New Zealanders will pay less tax in the long run. We would like to see tax law simplified and enforced so that it is applied equally to all taxpayers. The burden of tax should fall equally to us all; it should not be imposed on some sections to the benefit of others. This includes incentives for increased research and development, and reduced tax on export industries is a main platform that New Zealand First, through this Parliament, would like to see moved on.

At the same time—and although this is slightly away from this particular bill—it does raise the issue of anomalies of instances of tax situations and pension situations for immigrants to this country, and, vice versa, for New Zealand citizens living in other countries who do not necessarily secure the appropriate pensions and superannuitant payments because of the location of where they choose to live in their retirement. In a sense, it is a penalty to them. Therefore, while we are looking into this situation of being fair to corporates and companies to put them on a level playing field in terms of taxation so they can compete in world markets and in terms of investments around the world, it does also raise the irony that we do have individuals—citizens of this country and citizens who have come to this country—who similarly, perhaps, are not on a level footing, simply because of relocating to another country.

So, in a wider sense, I think in the future we need to raise our expectations in terms of fairness. It should not just be fairness to the corporate world and the business world, but perhaps in the future we need to give consideration to the everyday Joe Bloggs in the street who moves to another country, another location.

In closing, can I just say that taxation is with us all. It is something you do not avoid in life; that and death are two things you are assured of through life. In terms of taxation, it is beholden to us all to ensure that taxes are fair. We do have an increasing burden in terms of health, education, and social security. We do have a responsibility to provide for the people of this country and of this nation in a fair and equitable manner, and we do have to ensure that our companies and our corporates are competitive at the same time, in order to compete in the world markets.

I hope that this bill will be supported in the House, but with those caveats that when it does go through and is confirmed by this Parliament, it is on the basis that it will ensure fair taxes both within New Zealand and in other markets where our corporates operate, to the benefit of the New Zealand economy and to the benefit of our corporates, and to ensure that New Zealand is a strong global player. Thank you.

DAVID BENNETT (National—Hamilton East): Thank you, Mr Assistant Speaker Robertson. I want to congratulate you as well on your appointment to your role, and to follow on in regard to the Taxation (International Investment and Remedial Matters) Bill.

I think there were some interesting points that were raised by the last speaker. One of the things in taxation law is that sometimes it can get too complex, and the more complexity you bring into taxation law, the more opportunity there is for people to try to avoid the law by getting around those rules. The essence of what we are doing here today is to take out some complexity to make it fair for New Zealand companies that are investing overseas in a manner in which they do not have control of those companies but have a significant investment in them, so that they are not under some set of rules and regulations that are, frankly, outdated and can lead to people having to structure their affairs in certain ways to avoid taxation, when it would be much better if we did it in a simpler and more effective form. That is the purpose of this reform that is before Parliament, and it is something that, in essence, does not lead to the problems that the previous speaker spoke of, which are encouraged by having too many rules and regulations.

Many people have spoken about the nature and aspects of this bill, including the active and passive taxation. For those who are not tax gurus, “active” is when you have a business that is actively producing something. If, for example, Fisher and Paykel Appliances was building washing machines in China, that would be “active”, whereas “passive” is something where you just receive an interest, royalty, or dividend. That is the difference between “active” and “passive”.

When you hear members of Parliament talking about that in regard to this bill it is very much to extend the active income exemption, to extend the exemption for those companies that are actively engaging in activities. These are basically controlled foreign companies, or CFCs, so it applies to joint ventures and other significant shareholdings. You may have less than 50 percent, but a significant shareholding, and in an active company you would be taxed in this manner. That is to give some fairness to New Zealand companies that are investing overseas, and to give them some simplicity in how we do business for them.

One of the things that was changed in the Finance and Expenditure Committee was in regard to the use of accounting principles. Generally accepted accounting practice is the American approach, and this legislation enables companies to fulfil generally accepted accounting practice in accordance with US rules. So that means that they do not have to prepare two sets of accounts, because the US typically does not recognise the international accounting standards that a lot of New Zealand companies will be following. If we did not have that, they would have to supply generally accepted accounting practice accounts for their activities in the US and also international accounting standards - supplied regulations and financial reporting for those operations. This is another attempt within the committee to reduce the compliance costs on companies so that they do not have to have two forms of accounting records produced when it comes to the US and companies in that jurisdiction.

So, in essence, this bill is there to make it easier for New Zealand businesses to make money overseas. That is good for New Zealand. If our businesses make more money overseas and can bring that back to New Zealanders, that is in the best interests of “New Zealand Incorporated”, and something that I know all members of this House will want to see happen, because that grows the pie here. That is what we are all about, so that we can actually deliver those better services for our people.

So this legislation is important. It is part of providing growth for our country. It delivers a taxation system that is much more up to date, recognises the current circumstances, and enables New Zealand companies to have a structure and system that are comparable with other countries, so that they can compete on a level playing field, and do not have excess regulation from the New Zealand side. Thank you.

Hon CLAYTON COSGROVE (Labour): Mr Assistant Speaker—

The ASSISTANT SPEAKER (H V Ross Robertson): I recognise the Hon Clayton Cosgrove.

Hon CLAYTON COSGROVE: And I recognise you too, sir.

The ASSISTANT SPEAKER (H V Ross Robertson): Well done.

Hon CLAYTON COSGROVE: Thank you. I am sure we all recognise you, actually, Mr Assistant Speaker, given the venerable status you have—building on Mr Bennett’s comments.

On a serious note, Labour will support the Taxation (International Investment and Remedial Matters) Bill. As we know, this bill builds on the recent changes to the tax treatment of international investments, and, like other members who have spoken have said, obviously we are in favour of simplification and making it easier for companies to grow their revenues and to increase their capacities. It also aligns the rules relating to the foreign investment fund—or, as it is known, FIF—income with the current method for calculating attributed controlled foreign company income.

But we do want to raise—and Labour members did raise in the commentary—a concern in respect of the approved issuer levy. Those concerns are regarding the removal of the approved issuer levy on payments of interest on securities meeting certain requirements as notified under the Income Tax Act. Now, one of the issues I want to raise in respect of this is that there is a concern that relates to a further erosion of the tax base associated with financial transactions at a time, as we know and as the Government has forecast, of falling Government revenue.

In a public session on the Finance and Expenditure Committee earlier this week we heard from the Inland Revenue Department and other submitters on a number of issues, but there seemed to be a theme running through some of the submissions that the Government is, of course, you know, in a sort of dash-for-cash mode. Whether it is cutting and slashing Government department capacity and services or trying to screw extra cash out of various other entities and agencies, it is in a sort of clawback mode. We know why: because it has to fund on the borrowings, and it is borrowing wide because it has given a small percentage of New Zealanders right at the top of the stack a large tax cut. Now all that means is that this Government is chasing revenue like billy-o. Everywhere there is revenue, it wants it. It wants to drag it in.

The concern that we raise—we support the bill—is that this move, in terms of the removal of the approved issuer levy, may indeed erode a falling and reducing Government revenue base. We were advised by a number of submitters that the proposals outlined in the bill would not help increase liquidity, reduce interest rates, or add depth to our capital markets.

I know that the Prime Minister has waxed eloquent about wanting to increase the depth of our capital markets. He spins that as part of the line or the alibi for promoting asset sales—that somehow the partial asset sales will add depth to our markets and will give opportunities for investment; you have heard it all, etc., etc., etc.—when we know exactly what will happen in respect of those assets. They will fall offshore, and the returns that are made, at least on the 49 percent of those assets, will not flow into the coffers of the Crown. That is important for New Zealanders, because those resources could be deployed to provide the social services we need, but they will flow offshore. So at a time when the tax base is reducing, at a time when the Government seeks to grab every bit of revenue it can, there is a concern that this move may simply add to that.

In addition, our side of the fence is concerned that in some cases the current tax system already effectively contains a lower tax burden on offshore sources of capital, relevant to the tax on domestic savings, thereby providing an undesirable incentive for funds to be sourced offshore, rather than being retained or saved domestically. I think that is a valid point to raise. Surely, one of the objectives is for companies to retain capital onshore, to save capital onshore, and utilise that here. Now, you know, we are in sort of unchartered waters with some of this stuff. There are a number of international obligations here, but again I think it is worth raising those concerns.

Our side of the fence believes that there is a need for further work on this issue in order to improve the neutrality of the tax treatment of capital across domestic and international sources. So we, of course, are for simplification. We are for providing an environment where companies can grow and prosper, and of course invest internationally, but we think this is one area where the Government should have done some more work, done some more in-depth analysis, at least to allay, I think, the fears of a number of us in this House. I come back to it again: if there is a further erosion of the tax base, do we have projections on that? I was not on the committee at the time, but at a time when the Government is sort of out there trying to rake up everything that looks like a dollar, then one wonders whether this is a potential risk.

We support this bill. We note that companies, both domestically and those that are showing a tonne of guts, actually, to expand their operations and pursue markets offshore in order to expand their domestic capacity—and we applaud that. We want to see those companies growing and prospering here, but also of course paying their fair share. I think it is worth, when we are dealing with these bills, to note with a degree of pride that we have some of the most innovative companies in the world. We have companies that are small in their number, in their capacity, but they are some of the most creative on the globe. So it is appropriate that we do what we can to assist—to align, to make it easier to do business, and to expand markets internationally—and we should pay tribute to those companies.

I was in business once, for a short period in my life. Probably the best lesson I learnt was that if you are in business, it is the one area where if you do not work, you do not eat. You are totally reliant on your own capabilities. We are lucky in that we get a pay cheque every second Thursday, or whenever it is, and whether we are any good at it—whether we sit on our chuffs or we do the work—the taxpayer is generous enough to pay us. When you are a small business, when you are a sole trader, you are a business and you are risking your own shirt. Again, we had the privilege in Government when we were there, and now these folk are there, risking everybody else’s money on their behalf and utilising everybody else’s money on their behalf. When you are in business, as we know, you are risking your own shirt.

I know that there are people across the country, innovative business people, who have shed a lot of sweat to get where they are or to maintain the number of employees they have, in exceptionally difficult times. As I say, the best lesson I learnt in life was if you do not work, if you do not get out of bed, and if you do not keep your eye on navigating the business through, you do not eat because you do not get paid. It is all up to the business person and they do risk a lot. They are the ones, of course, who put bread and butter on the table of their employees.

Governments can knock down roadblocks, Governments can assist, sometimes Governments create roadblocks, but at the end of the day businesses create jobs, companies create wealth, and what we must ensure is that, you know, everybody pays their fair share. I know companies, especially smaller businesses, are staring at this and saying: “Oh no, more compliance. More stuff we have got to keep our eye on or get up to speed on.”, and every time you are getting up to speed on more Government compliance, of course, you are not behind the counter growing the business; you are behind the desk almost doing the Government’s work. So it is appropriate, I think, as we deal with these taxation bills, that we do acknowledge the contribution of business. Labour will support the bill.

TODD McCLAY (National—Rotorua): It gives me pleasure to stand and speak on the Taxation (International Investment and Remedial Matters) Bill. Before I go into some of the substance of the bill I want to recognise the fine speech of my parliamentary colleague Mike Sabin, who made his maiden speech just a short time ago. Can I say to Mike Sabin that it is great to see a member who shows feeling and emotion. In fact, I think it shows the strength of so many people who come to this House to represent others and to work hard to make their lives better. I particularly enjoyed it, as I have enjoyed speeches yesterday from other members, and I look forward to the coming week or so when we will hear from those members who have not been able to make their maiden speeches yet.

I am glad to speak on this bill because the centrepiece of the National Government’s Budget in 2010 was the delivery of a major tax package and a reform of the tax system to make it fairer and more sustainable, and to offer better support for economic growth. The National Government is firmly focused on lifting New Zealand’s economic performance, and this bill is another step in that direction. In fact, it is one of a number of measures that were started in the last term of Government and will continue this time.

Can I say that actually I agree with Clayton Cosgrove’s sentiments around small businesses and the need to recognise that for many people in business it is their livelihood they put on the line, it is their hard work, and for many of them—at least the ones whom I have had an opportunity to work with or have met—they often pay others, pay their bills, and so on before they put payments to themselves at the forefront. So whenever it comes to the work we do in this House, particularly in our committees around taxation, and to the need to make sure there is not too much regulation placed upon them, I agree with Mr Cosgrove’s sentiments.

This bill builds on and extends earlier international tax reforms. We have seen a lot of reform around the tax system over a number of years. The main proposal or component of this bill extends the active income exemption introduced in 2009 to offshore subsidiaries—in short, this is controlled foreign companies—so that it also applies to joint ventures and other significant shareholders in foreign companies that are not controlled by New Zealanders.

It also deals with the active income exemption and it brings New Zealand tax rules into line with the practice of other countries. I think that very clearly it helps New Zealand - based businesses to compete more effectively in foreign markets by freeing them from a tax cost that similar companies in other countries do not face. An example of this would be New Zealand - owned manufacturing plants in parts of Asia, where the Government has worked very hard over a number of years to increase trade and to bring down tariff barriers and non-tariff barriers through trade agreements; China is an example. A New Zealand - owned company that might manufacture in China today or in the future will now generally face the same tax rate as other manufacturers operating in China.

In brief, international tax calculation methods will be rationalised by this bill, exemption for investment in Australia will be maintained, thin capitalisation rules for investors will be dealt with, and when we come to the Committee stage, I look forward to going into particularly that last one in much, much greater detail. Thank you.

Dr KENNEDY GRAHAM (Green): This bill, the Taxation (International Investment and Remedial Matters) Bill, seeks to change New Zealand tax law, specifically the Income Tax Act 2007, around gains from income in overseas companies and gains by foreign investment in New Zealand companies.

The main changes are threefold. First, it relaxes what is known as the thin capitalisation rules. These rules are designed to deny interest-related tax deductions to multinationals that use debt as a way of avoiding a tax liability here. The Inland Revenue Department claims that the new laws adopted as recently as 2009 have created some unfair consequences for resident companies investing abroad. Secondly, it extends the active income exemption to New Zealand businesses operating offshore and rationalises the international tax calculation methods. This brings New Zealand into line with overseas practice, freeing companies here from a tax cost they do not face elsewhere. Thirdly, it removes the 2 percent tax or levy on bond issues for non-resident investors. This follows one of the recommendations of the Capital Market Development Taskforce. It effectively lowers the cost of raising funds from offshore.

So what is the likely fiscal cost of these changes in terms of lost company revenue? They are estimated to be somewhere around $15 million in the first instance, $10 million in the second change, and $5 million in the third—that is to say $30 million all up. This package of company tax totalling $30 million, of course, pales in the light of the $1.5 billion of company tax cuts already announced by the John Key Government, which Todd McClay spoke of so effusively just a moment ago.

Todd McClay: Thank you. Thank you.

Dr KENNEDY GRAHAM: You are welcome.

And what are the political implications of this bill, as well? The provisions of the bill are complex in their detail—ironically, because, as Clayton Cosgrove said just a moment ago, we are all in favour of simplification in our tax laws. But most of them involve a similar kind—generally a broad trade-off, as the Green Party said in the first reading; that is, lower company tax revenue versus the risk of company emigration offshore. This creates a problematic tension between a race to the bottom with company tax breaks, in a race we cannot win in the long term, or the loss of tax revenue and jobs as companies move offshore, motivated by tax reasons. Each of these cases is slightly different, so we may support some measures while not supporting others.

We shall vote for this bill in the second reading, but, as a general principle, we should not support the slow erosion of our tax base for unquantifiable theoretical gains. Better to understand our natural advantages and play to them while simultaneously extending our efforts abroad in international forums to agree to satisfactory environmental labour and tax standards.

RAYMOND HUO (Labour): I rise to take a call on the second reading of the Taxation (International Investment and Remedial Matters) Bill. Inadvertently, I guess, the bill was made famous on its first reading in November 2010. The bill, although complex and a little bit dry in a technical sense, made headlines, and the National Business Review outlined it very well. I acknowledge the presence of Minister Jonathan Coleman. According to the National Business Review it is easy for MPs to become confused about tax legislation, and none more so than Minister Jonathan Coleman. The unfortunate Dr Coleman, the then Minister of Immigration and Minister of Broadcasting, was given the task of introducing the first reading debate on this particular bill in the absence of the Minister of Revenue, the Hon Peter Dunne, who was responsible for introducing this bill. Obviously someone gave him the wrong bill, and his speech focused primarily on another bill. If my memory serves me well, it was the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill. The famous bill got a nickname of the “Telephone Book Bill” because in its original form it contained more than 820 pages.

We should not give too much of a hard time to Minister Coleman, because the two bills are related. I feel sorry for him; I guess many of us would have been in a similar situation. The incident prompted me to thank the officials, the submitters, and the members of the then Finance and Expenditure Committee for the great work and efforts they made.

It is an important bill that introduces significant changes to the tax treatment of inbound and outbound cross-border investments. Most of the changes are intended to take effect from the beginning of the 2012-13 tax year, as I understand from reading various reports, so this bill has been reintroduced in a timely manner.

I certainly recall my contribution on the first reading debate; I borrowed part of the title of an article published by Deloitte to describe some of the aspects presented by the bill and the priorities taken by the Government, which was “The Good, the Bad, and the Ugly”. The good is that the bill introduces some significant changes to the tax treatment of international investments. It is bad because we have concerns with regard to the removal of the approved issuer levy, or AIL, as it is commonly known. It is ugly that some of the important issues that are worth a cross-party, bipartisan, robust consideration and debate, such as a capital gains tax, have not received such an approach.

The bill in the current form proposes changes to foreign investment fund, or FIF, rules. This bill means that New Zealanders holding stakes of 10 percent or more in offshore companies will now be subject to New Zealand tax on those interests unless the companies earn passive income such as interest, royalties, or rents. The bill replaces the exemption of non-portfolio foreign investment funds in the eight “grey list” countries—such as Australia, UK, US, Canada, France, Germany, and so on and so forth—with an exemption for non-portfolio foreign investment funds that are resident and subject to tax in Australia.

We do have concerns, as raised by David Parker last night and Clayton Cosgrove just now, on various grounds regarding the removal of the approved issuer levy. Firstly, our concerns relate to a further erosion of the tax base associated with financial transactions at a time of falling Government revenue. Secondly, we were advised by a number of submitters that the proposals outlined in the bill will not help increase the liquidity of the New Zealand corporate bond market. Thirdly and finally, as pointed out by David Parker, we have concerns that in some cases the current tax system—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member; his time has expired.

LOUISE UPSTON (National—Taupō): I am pleased to support in its second reading the Taxation (International Investment and Remedial Matters) Bill.

Bill read a second time.

Bills

Consumer Law Reform Bill

First Reading

Hon CHRIS TREMAIN (Minister of Consumer Affairs): I move, That the Consumer Law Reform Bill be now read a first time. I nominate that the Consumer Law Reform Bill be referred to the Commerce Committee. The National Government is committed to a brighter future for New Zealanders. This includes a strong commitment to strengthening and building our economy. A brighter future is a future where New Zealanders from all backgrounds and walks of life have the opportunity to better themselves and to achieve the living standards they aspire to through hard work, and it is a society where we have the resources and the laws to protect the most vulnerable. The Consumer Law Reform Bill before us today is one of the policy initiatives that will help to achieve this goal. It is a key element of National’s 120-point economic development plan. Strengthening and building our economy requires a series of good policy decisions and reforms, and this, indeed, is one of those.

For consumers, ineffective laws may mean a lack of information and choice, leading to poor purchasing decisions. Ineffective laws may also mean that consumers are not provided with the avenues to have their problems with goods and services resolved and their rights protected. In contrast, confident consumers who demand high-quality goods and services make good choices and seek satisfaction when their purchasing expectations are not met—an essential component of effective markets. Effective markets, in turn, drive competition, innovation, and economic growth.

Consumer law is part of the Government’s commitment to improve the quality of regulation. The Government’s regulatory reform agenda seeks to have in place laws that are sound and relevant. Laws that have become out of date and need to be worked around are an unnecessary compliance cost for businesses and consumers, and, in this case, the reforms drive change from over a 20-year period.

I would like to take this opportunity to thank the former Ministers of Commerce who were previously responsible for this bill: Heather Roy, John Boscawen, and Simon Power. Their hard work has resulted in a much-needed piece of legislation that will be welcomed by consumers. Can I also acknowledge the hard work of the officials from the Ministry of Consumer Affairs, whom I believe have worked very hard to see this in its first reading here today in the House.

The main objectives of the bill are to strengthen consumer rights, to simplify business compliance, to make consumer legislation more accessible and understandable for consumers and businesses, and to have effective and enforceable consumer laws. Another key objective of the bill is to update and modernise consumer legislation. The three main consumer laws—the Fair Trading Act, the Consumer Guarantees Act, and the Weights and Measures Act—are all sound but have not been amended in over 20 years, as I mentioned previously. Over the same time period there have been changes to the way consumers transact with businesses. As a result, our consumer laws are not adequately dealing with a number of modern transactions, such as online auctions, supermarket self-service systems, door-to-door and telephone sales using credit cards, and also the sale of extended warranties.

A further objective is to achieve harmonisation with the Australian consumer law, as appropriate, and, again, in accordance with the Government’s agenda of a single economic market with Australia. I would like to acknowledge the support that has been received from our Australian ministerial colleagues and their officials in the policy development of this Consumer Law Reform Bill. Australia and New Zealand have both undertaken significant reviews of consumer law at the same time, and this has allowed for some real-time harmonisation of our laws. The Australian consumer law came into effect fully on 1 January 2011. We have been able to take advantage of Australia’s legislative developments, and it has put in place provisions that are substantially the same as our consumer guarantees.

I will now outline some of the main features of the Consumer Law Reform Bill. Broadly, the bill amends the Fair Trading Act 1986, the Consumer Guarantees Act 1993, and the Weights and Measures Act 1987. The bill also provides for a new Auctioneers Act and repeals four other pieces of consumer legislation.

Firstly, the bill will add purpose clauses to the Fair Trading Act, the Consumer Guarantees Act, and the Weights and Measures Act. The first part of the purpose clause for each Act will be the same, saying that: “The purpose of the Act is to contribute to a trading environment in which—(a) trading is fair; and (b) there is effective competition; and (c) consumers and businesses participate confidently.” These words emphasise that consumer laws are strongly principles-based. They provide the framework for consumers and businesses to conduct trade. The purpose clauses reflect that these laws are about delivering positive outcomes for both consumers and businesses and delivering effective markets.

Secondly, the bill makes fundamental changes to the Fair Trading Act. These include provisions that a person must not make an unsubstantiated representation. Traders and retailers must have reasonable grounds for any claims that they make. New, modern provisions are added to the Fair Trading Act relating to lay-by sales, unsolicited goods and services, conduct at auctions, extended warranties, and uninvited direct sales. For example, rules surrounding direct sales such as door-to-door or telemarketing sales will now apply to all types of transactions over $100, including cash and credit.

The bill will also give the Commerce Commission a wider range of enforcement tools, to enable it to more effectively monitor and enforce the Fair Trading Act. As some members will know, I have a personal interest in the new auctions conduct provisions. These have the objective of making the rules and consumer protections that apply to auctioned goods much clearer.

The third area of reforms relates to the Consumer Guarantees Act. Until now, goods sold by auction and on sites like TradeMe have been exempted from the Act. Sales by professional traders using TradeMe-style auctions will now be covered, which I know much of the market is pleased to see. However, there is still an exemption for second-hand goods sold at auction by a registered auctioneer.

There are provisions in the bill concerning the acceptable quality of electricity and gas. The Consumer Guarantees Act is amended to provide that retailers may seek indemnity from distributors when consumers raise product quality issues.

There are also provisions in the bill to provide that the service guarantee in the Consumer Guarantees Act applies when using carrier services such as couriers, and there are associated amendments to the Carriage of Goods Act requiring that a carrier must offer contract for carriage at the limited carrier’s liability or declared value risk. I am sure the select committee will focus on that one. The bill also provides for an increase in the limited carrier’s liability from $1,500 to $2,000. I am aware that there is some concern about whether this increase has been set at the right level, and I will invite the Commerce Committee to give particular attention to this particular matter.

Fourthly, providing consumers with access to redress is just as important as providing consumers with rights. I have particular interest in ensuring that consumers who have problems with the goods and services they have purchased have accessible and free or low-cost dispute resolution available to them. I am pleased to say that the Consumer Law Reform Bill extends the scope of the disputes tribunal to consider section 9 of the Fair Trading Act. The disputes tribunal will play an important role in providing low-cost access to justice in cases of misleading and deceptive conduct by traders.

Fifthly, the Weights and Measures Act regulates accuracy of weighing and measuring instruments. The Act will be updated and extended to provide for new retailing approaches, such as supermarket self-checkouts, and to ensure that consumers can see weighing instruments and recorded weights in order to be satisfied there are no weighing anomalies.

Sixthly, and lastly, the bill also provides for a new Auctioneers Act, which will require auctioneers to meet a minimum number of standards, including accounting for the proceeds of an auction and displaying their licence.

Two matters that are not included in the bill but which were considered by officials and are covered in the regulatory impact statement are unfair contract terms and unconscionability. I would like to invite the Commerce Committee to also consider examining whether the Fair Trading Act should provide for these protections. These are included in the Australian consumer law, and many other jurisdictions provide for these protections. It is important that New Zealand also properly examines whether they should be included in our own consumer laws.

Strong and relevant consumer laws are important both for consumers and for businesses. Consumer laws are a part of the fundamental legal infrastructure that helps markets operate efficiently and effectively. Working alongside and supporting competition law, consumer laws underpin all business-to-consumer market transactions. As a consequence, it is critical to ensure consumer laws are working as intended and remain relevant in the face of changes to the way in which markets operate and consumers and businesses transact. Confident consumers help to create a competitive business environment and a productive and innovative economy. The reforms contained in the Consumer Law Reform Bill will be a significant step forward for consumer law and regulatory reform in New Zealand. I commend this bill to the House.

Hon LIANNE DALZIEL (Labour—Christchurch East): I am pleased to speak in the first reading of the Consumer Law Reform Bill as the Opposition spokesperson on consumer rights and standards. Because this bill traverses both the consumer rights aspects and some product standards issues, I am really pleased to be able to make this contribution.

I want to reflect a little bit on the journey that this bill has taken to get to here. I have in front of me a copy of a speech that the Hon Heather Roy gave in November 2009. In that speech she talked passionately, as she often did when speaking for the Association of Consumers and Taxpayers; I think we forget that the ACT Party is an acronym for the Association of Consumers and Taxpayers. She was delighted to be the Minister of Consumer Affairs and to see that portfolio sit with the ACT Party. So I certainly look forward to Minister John Banks’ contribution to this debate, because I am sure he will want to make a substantial contribution, recognising that both Heather Roy and John Boscawen after her took on this really important role.

When Heather Roy spoke, she spoke about One Law-One Door—I guess a variation on the “one law for all” that the ACT Party was normally referring to. The One Law-One Door concept was actually one that I think had some resonance in this field, because there are a myriad of pieces of legislation. There are, I think, seven consumer laws and two business laws that this piece of legislation relates to, and I think that the concept of bringing them together into one legal framework is a very positive one. So we are very pleased to be seeing the bill in front of the House and obviously we will be supporting it to the select committee.

The “one door”, though, does not necessarily find itself addressed in this particular legislation. I think it is interesting that the Minister concluded, I think, by referring to some of the things that were not in the legislation, particularly in relation to some of the Australian issues—unconscionability and making claims that cannot be substantiated, which are unfair practices. The Minister, I think, was indicating that the select committee could actually have a serious look at those issues and that he would be willing to—

Hon Chris Tremain: Unsubstantiated claims are in it.

Hon LIANNE DALZIEL: They are in it, but unconscionability is not, and that is certainly something that is reflected in the Australian legislation. I think with the general focus on the single economic market, it would be a good thing for the select committee to have some detailed look at that. I know that for myself, when I was a Minister of Commerce, it was something that I was quite keen to see us pursue in the legislative frameworks that we were considering at the time.

So I think it is helpful when a Minister does say that there are opportunities within the select committee to hear what submitters have to say and then potentially report back something with some significant changes. I think that is a positive thing, so I am very pleased. That certainly was the history of the relationship that we had with the previous Minister of Commerce and the previous Minister of Consumer Affairs as well, so I am pleased about that. But I should reflect on the fact that this bill was on the legislative timetable in 2010 and in 2011, so it is a little bit of a shame that we have waited until 2012 before it has actually been introduced. But it is here, and I want to speak positively about it because of what it is attempting to do.

But I want to do something even more important. I know that none of the people on that side of the House are going to be surprised at what I am going to refer to, and that is the two regulatory impact statements. I just want to say that these are the best regulatory impact statements I have seen in my time in Parliament. They are the best, and I would like every single Minister in this Government to have a good look at these regulatory impact statements and think to themselves about how they might want to ensure that all regulatory impact statements meet this standard. This has set the bar, in my view, and that is because the regulatory impact statement—the first one that was prepared for the legislative timetable in December 2010—started off with the preliminary work.

I really do want to congratulate those who have put it together. It is probably not surprising that the Ministry of Consumer Affairs sits with the Ministry of Economic Development, and the Ministry of Economic Development would certainly have been looking over its shoulder in terms of the detail of this. I am sure the deputy secretary would want this to be as good as it has been. But to set out what the status quo is, the status quo actually identifies what the regulatory frameworks are at the moment. So you have got a very simple snapshot of what all of those pieces of legislation do in a nutshell, and I think that is an incredibly useful starting point.

But then the most important part of the process—because you cannot get to the end point until you do this—is problem definition. And I have to say it warmed my heart to see a document that actually said “problem definition”. The problem definition talked about a number of factors that had been brought to the Government’s attention by way of some analysis around consumers’ knowledge of their own rights and where they could go to have them addressed. So I just cannot really applaud loudly enough the extent of the work that has gone into these statements.

The next is the regulatory impact analysis, and what it has done is look at consumer and business detriment as a result of consumer laws not meeting the objectives that are set out using the OECD Consumer Policy Toolkit framework. That analysis looked at unfair contract terms and standard form contracts, unconscionability, making claims that cannot be substantiated, lay-by sales, unsolicited direct sales, unsolicited goods and services, Consumer Guarantees Act statutory guarantees, and auction conduct and licensing. Then the document goes through each and every one of them, and it does it in a very simple form that people can follow. It says: “What is the problem?”. It talks about the measure of consumer detriment and the magnitude of that problem. It then talks about the nature of the detriment, the scale of consumer detriment, and the measure of business detriment, and then the likely consequences of taking no policy action—namely, the cost of the status quo. That identifies the cost to consumers, the cost to businesses, and the cost to the Government. I mean, I honestly have not seen a document more significant than this in considering a regulatory impact analysis.

The policy options are then set out: no change, or to add provisions to the Fair Trading Act—the same as in the Australian consumer law—and then to add provisions to the Fair Trading Act on unfair contract terms, or to add provisions to the Fair Trading Act on “unfair contract terms similar to …”, etc. The ministry favours a particular option and sets out both the benefits and the costs. It goes through each one of those headings on the same basis. Again, I think it is absolutely extraordinary that it has gone into this extent of detail, and I am very pleased to see it.

The second regulatory impact statement relates to the changes, the additional options, that were identified to address problems that have been identified with consumer laws not adequately meeting the objectives of consumers who are able to transact with confidence and businesses that are able to compete on a level playing field. Again, this identified areas where the public did not know what their rights were, and in fact businesses found it difficult to work their way through a myriad of issues. One of the classic ones is the extended warranty. I do not know how many members in this House have had the experience of buying an appliance and being offered an extended warranty—which is completely and utterly meaningless if you do not comply with the obligations under the legislation.

So I think that the Ministry of Consumer Affairs can take great credit for the background work, which I think will facilitate the work of the select committee. Labour will be supporting this legislation’s referral to the select committee, and we look forward to its progress.

TODD McCLAY (National—Rotorua): Confident consumers who are able to make informed decisions are a necessary and important part of an effective market. This drives competition, innovation, and economic growth. I thank the Minister of Consumer Affairs for bringing the Consumer Law Reform Bill to Parliament. I believe it is a very important part of much of what this Government is about. Consumer law reform is an element of the Government’s 120-point economic development agenda. Therefore, stable markets based on sound consumer law are essential for economic growth.

I start by recognising the last speaker, Lianne Dalziel, and say to her that I am glad that Labour will be supporting this bill to the Commerce Committee, and I look forward to working closely with them on the Consumer Law Reform Bill in the committee. It is good to hear such a positive speech at the beginning of what I believe is a very important piece of legislation for all New Zealanders, those who manufacture and trade and those who consume. It contributes to a trading environment in which trading is fair. There is effective competition, and consumers and businesses participate confidently. Consumer laws are some of the most fundamental laws that we have in this country. All transactions between consumers and businesses must be dealt with, and are the cornerstone of an effective market.

Our consumer laws in this country have not been updated for almost two decades, and therefore they must be well out of date by now. Just think how much trading has changed over the last little while. Can I say to you that dealing with modern transactions such as online auctions, supermarket self-service systems, and telephone sales using credit cards are not adequately dealt with under current laws. Industry and consumer groups have been seeking improvements to consumer law for some time and to make legislation more modern and more workable. Well, as Minister Maurice Williamson says, it is more good news. This bill will deal with that. Can I also say to you that clear consumer laws enable people to shop with confidence, protect suppliers and consumers from inadequate market conduct, and enable businesses to compete fairly.

Now, this bill does a number of things. The bill adds purpose clauses to the Fair Trading Act, the Consumer Guarantees Act, and the Weights and Measures Act. The first part of the purpose clause for each Act will now be the same, stating that the purpose of the Act is to contribute to a trading environment in which trading is fair, there is effective competition, and consumers and businesses can participate confidently. It will deliver positive outcomes for both consumers and businesses in an effective market place, I believe.

I want to touch, just very briefly, on each of those Acts in the way that they will be changed and the effect that that will have. For the Fair Trading Act it will state that a person must not make an unsubstantiated representation, and traders and retailers must have reasonable grounds for any claims that they make. The Fair Trading Act will be modernised with new provisions covering lay-by sales, unsolicited goods and services, conduct at auctions, extended warranties, and uninvited direct sales. Actually, these are issues that I think many members of the House are contacted about by their constituents when they have concerns, when they wonder what provisions of coverage and support they have, or when they believe that retailers and others may not have been acting appropriately towards them. I think consumers will be happy with the changes that are being proposed.

The scope of the unsafe goods notices and product recalls will also be extended. The bill will provide for mandatory notification for recalls of unsafe products. The Consumer Guarantees Act will be amended. The Act currently has an exemption for goods sold by auctions. This will be removed so that sales by professional traders using the likes of TradeMe-style auctions will now be covered by the Act. But, importantly, there will still be an exemption for sales of second-hand goods by a registered auctioneer. Those who are not professionals and who just sell goods will not be covered by the Act.

Finally, consumers will have access to redress, and this is very important, when something goes wrong. We have heard others previously say that we need to be looking at reducing bureaucracy on businesses but also when it comes to consumers seeking redress. So the Consumer Law Reform Bill extends the scope of the disputes tribunal to consider section 9 of the Fair Trading Act, which covers misleading and deceptive conduct. This enables the Government to provide better low-cost access to justice for all consumers. I look forward to this bill coming before our committee, and the work we will undertake seriously. Thank you.

Hon CLAYTON COSGROVE (Labour): I follow colleagues Mr McClay and my parliamentary colleague Lianne Dalziel in supporting the Consumer Law Reform Bill. I think it is probably one of those pieces of legislation where there is not a lot of argument. I agree with Mr McClay that our respective offices and most of the colleagues would be inundated by people who went into transactions—whether it was to buy a washing machine or whatever, second-hand or new—in good faith, because there was a time, of course, in New Zealand when deals were done on handshakes, consumers paid the debt on time, and if the goods sold to the consumer broke down the seller would go and repair them and sort it out. You did not need vast amounts of legislation.

Sadly, those times have changed. I think what both parties to a transaction seek ultimately, both the consumer and the seller, if you will, is openness, transparency, and accountability, in essence, so the good or service does what it says it is going to do—it performs—and if it does not, it is remedied and people can get redress.

I recall—and I know it is slightly off the edge, Mr Deputy Speaker, but I am sure you will indulge me briefly—my time in Government when we dealt with, reasonably controversially, the real estate agents sector. Before I start getting phone calls, emails, and death threats, let me say that in all sectors, including politics—you know, one bad politician and we are all a pack of so-and-sos—you are judged by the lowest common denominator.

Many good people in the real estate industry were judged by those in the industry who, bluntly, ripped consumers off. It is an interesting example, actually, which I think is germane to this, whereby an industry—and I believe that industries can self-regulate, when they do it right, better than Governments can, actually; that is my own personal view from a commercial background—was given a number of opportunities to reform itself and provide accountability, transparency, and openness whereby consumers were dealt with fairly and consumers could get redress and accountability when people behaved inappropriately in the industry.

That industry had railed against that for years, rejected it, then at that point public pressure built to a point where the Government—the Government I was a part of—had to step in. I do not think we want to get to that point. The place is littered with the metaphorical bodies of people who were done over by sharks in that industry, and there was very little, in the end, that we could do retrospectively about that. So I think this legislation is good, in that we move forward. It is sad that we have to put in regulation what was the old Kiwi handshake. Times have changed, sadly; technology has changed; and people act—some, very few—in nefarious ways.

The other point I want to make in respect of this legislation is that it is also necessary, I think, because—and I mean no disrespect to the communities when I say this—we do have a difficulty with basic financial literacy. Many folk do not have the confidence to be able to weave their way through the provisions—certainly, with legislation like this, some of us who are not lawyers struggle each day with it—knowing their rights, knowing that they can execute those rights, and knowing what their responsibilities are, and also business folk knowing what their responsibilities are.

Financial literacy is passion of mine, and I think we have to do something serious about that so that people do have better financial literacy and do have more confidence when they are dealing with that—you know, whether it be a flash transaction, or sorting out your credit card arrangements. People need to know what it means if they are going to get into debt, and know what the implications of a hire purchase are. As a country we do like spending money, and knowing the ramifications of debt, hire purchase, and those sorts of things, and knowing what you can do to protect yourself so you are not ripped off is, I think, ambulance at the top of the cliff stuff. It gives people confidence when they are entering into even basic transactions like, as I say, putting the fridge on hire purchase, because they know what the ramifications of that are and they know they have some redress.

This bill brings us into line, of course, substantially, with Australia. Given that Australia is one of our biggest markets and also our closest neighbour in terms of the commerciality let alone the culture, this is a good and sound piece of legislation. I would note in passing Lianne Dalziel’s point that this has sat around for a while; it has got a couple of inches of dust on it over the years. One of my colleagues over there said that National has a 120-point action plan. Well, I think this bill should have been in the upper part of the 120 points. I would love to see them, if a member wants to send me the whole 120 points. It would be a cracker to read over the cocoa tonight, and go through, but this is important legislation.

There are some people who yawn at this sort of stuff. They are generally those people who have, as I say, a high degree of financial experience, or those who have a certain amount of resource behind them and can get independent advice and can get the confidence to engage in these transactions. But for the vast majority of our community, you know, it is a serious deal when you are spending money, and consumer protection has to be paramount in this.

We need to look further, I think, perhaps at our banking industry, and perhaps at those who provide finance to consumers, given that there are two sides to it. We need to increase our financial literacy, but people also have a responsibility, if they get into debt, to meet their obligations in terms of payments. However, there is also, I think, a counter-obligation—that the provider of that debt finance has actually got to be very open and transparent about the interest rates and the penalties and all those sorts of things.

There are a number of issues dealt with here in terms of the consumer. But I think we actually have to have a look at maybe the banks, at some of the bigger issues, especially around credit cards and a few things like that, where it is not an issue of saying that somebody is bad for non-disclosure, or for disclosing in a certain way called fine print, but is more about saying: “OK, we will educate people.” But we have also got to ensure that those providing, for instance, finance, are very, very open about the ramifications of providing that finance and the responsibility you take on when you go into debt.

So we support this piece of legislation. We think it is good. There will need to be, I think, a fair bit of work, once it is implemented, around marketing it to people, and assisting, for instance, business folk. We have just done a tax bill; now this thing. These are good measures, but, of course, for small businesses especially it is another thing they have to read, another hour in the day when they have got to come to grips with the requirements on this, and for every hour they are spending doing the work of the Crown, if you will, it is, as I said in the last bill, another hour that they are not spending behind the counter, growing the business and selling the product, so they can employ more people, etc., etc.

So I think the Government needs to commit to providing a fair bit of resource around assisting consumers to come to grips with their new protections and rights, but also around assisting those business people, to make it easier for them to implement and comply—because most, if not nearly all, will—with the requirements and responsibilities within this legislation.

It is nice in the first week of Parliament that we deal with some bipartisan, if you will, legislation—I am sure that we will get to the gritty stuff in the next few weeks. But this is an important bill. It is not something that a certain commentator should yawn at. I am sure that it will not get the high media profile that other, more colourful times in this Parliament had, but it should, as it is very important legislation. I was not part of the select committee when this was dealt with, but I commend the committee for its work and we look forward to the bill’s passage and scrutiny through the parliamentary process.

KEVIN HAGUE (Green): I begin by congratulating you, Mr Assistant Speaker Tisch, on your reappointment. I also congratulate Minister Tremain on his first piece of legislation before this House in his ministerial capacity. I rise to speak in support of the Consumer Law Reform Bill today for the Green Party in place of my colleague Mojo Mathers, who will lead the Green Party’s further work on this bill. But, sadly, the technology is not yet in place to allow her to participate fully in this debate. That is a matter for regret and, hopefully, rapid remedy. We support the general intent, clearly, of a bill like this to modernise and rationalise legislation, and introduce things like standard definitions covering sales processes that were not even conceived of at the time that some of this legislation was put in place—credit cards, internet sales, and various of those things. I think Lianne Dalziel mentioned the fact that some of the legislation this replaces is almost a century old. The Auctioneers Act 1928 probably is overdue for a bit of an overhaul.

We support the new provisions being included related to unsubstantiated representations. We think it is very important that consumers should get the full facts, and we draw attention to a particular use of the new provisions in relation to “greenwash”, and we hope that this bill, when enacted, will see a reduction of that pernicious practice. There are far too many examples of people seeking to benefit from association with the qualities of environmental friendliness or ethical value without the expense involved in making their claims real. I am not sure whether this legislation will extend to political parties in that regard, but certainly that might be a matter the select committee could consider.

We also support, in particular, the aims of the legislation regarding product safety. The Ministry of Consumer Affairs warned the Minister of Consumer Affairs back in 2009 that these product safety risks were on the increase, and that there was an international consensus requiring some more effective action. In 2007 the United States Consumer Product Safety Commission oversaw the largest annual number of voluntary product recalls in the last decade. At the same time, the European Commission saw a 47 percent increase in notifications of products posing serious risks to consumers, with half of those products originating in China, a country with which we now have a free-trade agreement and a burgeoning import trade.

The Ministry’s report said New Zealand’s current model was “skewed toward rapid reaction to incidents, rather than taking a more proactive approach to emerging risks.” Well, with this legislation, I do not think we could accuse it of being a rapid response or rapid reaction, but at least it is finally in the House. Consumers have a right to know that the goods that they are purchasing are safe, and that they and their families will not be injured through dodgy appliances or products.

We also support the strengthening of rules around direct sales. We are pleased that legislation is finally tackling the scourge of the uninvited salesperson. The legislation sets out rules for uninvited direct sales, and repeals the Door to Door Sales Act 1967.

We also believe that consumers deserve protection from unfair contract terms, and I was very interested in the Minister’s comments about that. I am very pleased to see that he is intending and directing the select committee to take a look at re-inclusion of those provisions in the bill. It is a great shame that the Government did not do that in the bill that we are considering today, because protection from unfair contract terms buried in small print is one of the principal problems that, in fact, consumers face. New Zealand’s biggest consumer advocate group, Consumer New Zealand, has been particularly critical of the decision to omit that provision from this bill. The Government’s reasons for omitting that are far from clear, and certainly the Minister and Mr McClay, when speaking to the bill today, did not make it clear why those provisions had been dropped. We believe there is certainly a strong case for following Australia’s lead and making it easier for consumers to challenge those unfair contract terms in standard agreements for things like car rentals and gym memberships, which are some of the examples that have recently been in the news media. We do not suggest that New Zealand should slavishly follow Australia’s lead, but this does seem to be an area where harmonisation would benefit New Zealanders.

The terms in contracts are typically contained in pre-written, standard-form contracts, often in dense fine print, which the previous Minister of Consumer Affairs accepted was sometimes one-sided, and usually signed by consumers without reading. Sometimes those contracts are signed by some of the most vulnerable in our community, perhaps like those with poor English language skills, the elderly, or the disabled. It is a great shame that provisions protecting those groups have not been included in the bill at this time, but, as I say, it is good that the Minister is intending that they will be considered by the select committee.

I note with interest that the Direct Selling Association of New Zealand vigorously opposed including an unfair contracts provision in its submission to the Ministry of Consumer Affairs on the discussion paper, and I do hope that that was not the submission that swayed the Government to exclude those terms. The reasons the Direct Selling Association gave were that such provisions would add to compliance laws, and that existing laws were already adequate, and I think that is probably something we have heard on a number of occasions. I think most New Zealanders would disagree with that statement, and certainly the ongoing popularity of the Fair Go television show would indicate otherwise.

We also share TradeMe’s concerns that professional traders are not forced by this bill to disclose themselves as such, and I would hope that the select committee will also look at that matter. It seems a missed opportunity that the Ministry of Consumer Affairs considered including a requirement for professional traders to disclose that fact but it has been excluded. Traders who identify themselves as professionals could then more easily be held to legal obligations, including the requirement to offer refunds on shonky goods and to pay tax on their profits. The Arthur Daleys of this world are no longer selling second-hand motors in brown leather jackets from lock-ups; they are now online, and TradeMe’s recommendation, I think, should be taken very seriously.

The previous Minister of Consumer Affairs, John Boscawen, said the issue of identifying professional traders could be looked at again at the select committee, and I urge the current Minister, Mr Tremain, to do so.

The fact is that most businesses are fundamentally concerned with profit maximisation; indeed, probably all should be. One maximises profit by maximising sales and minimising costs. At the same time that profit motivation is probably universal amongst businesses, the ethical standards that go with that are not necessarily universal. Although some businesses may have a business model that relies on long-term relationships with customers and repeat sales, others have a business model that relies on one-off sales. The temptation to take shortcuts and to mislead consumers if they believe they will get away with it is one that many businesses are shown to often take. I think it is very important that this bill does protect consumers from that. I was very heartened to hear the Minister’s comment about the Government’s commitment to improve the quality of regulation in this field, and in others I hope.

KANWALJIT SINGH BAKSHI (National): First of all, I would like to congratulate the Hon Chris Tremain on the introduction of this bill, which is the first major reform in two decades. I support this Consumer Law Reform Bill. This bill represents an example of modernising and maintaining the relevance of legislation in line with regulatory responsibilities. The Consumer Law Reform Bill seeks to ensure that the laws which protect our citizens are up to date, so that consumers can undertake the sale and purchase of goods and services with confidence. By introducing this bill, once again we ensure that the National Government is committed to the protection of buyers and sellers in New Zealand. We want to create an atmosphere where both buyers and sellers who obey the law of the land are protected against unlawful conduct by those who do not obey the law. This bill will strengthen consumers’ rights, and it also acknowledges the interests of businesses. It will also simplify and clarify business compliance and create a more even playing field, where reputable businesses are rewarded.

The bill makes a number of significant changes that I would like to acknowledge and commend. The Fair Trading Act prohibits both misleading and deceptive conduct, and false or misleading representation. However, this is difficult and expensive for the Commerce Commission to enforce. This bill prohibits unsubstantiated representations from being made about a product or service, unless the person has reasonable grounds for the claim. The bill provides that the person may later be asked by the Commerce Commission to substantiate any claims that have been made about a product. A defence built into the bill is that the person can rely on the information they obtained to support the claim. The unsubstantiated representation protection will help to prevent fictitious claims being made by businesses for commercial gain, thereby improving consumers’ confidence and creating a level playing field for all businesses.

New Zealand’s consumer laws are either self-enforcing or enforced by the Government when carrying out its investigation and prosecution functions. Good consumer law needs to be both enforceable and enforced. It is therefore important that for the enforcement, appropriate provisions are in place. The bill identifies two areas of enforcement that could be improved; hence the inclusion of court-enforceable undertakings and management banning orders in the new Fair Trading Act provisions. The Commerce Commission may currently enter into an agreement with a person to amend their behaviour as a result of an apparent breach of the Fair Trading Act. At the moment, however, such an agreement is not easily enforced if it is breached. The Commerce Commission enforces the Commerce Act, and the Financial Markets Authority has court enforcement undertaking powers. The provisions in the bill will give similar powers under the Fair Trading Act.

At the moment, there is an unintended incentive for the Commerce Commission to prosecute a person to ensure a result. The bill proposes to make an agreement entered into legally enforceable. This will allow the Commerce Commission to take the person to court if an agreement is breached, creating more transparent and enforceable law. The bill also proposes the introduction of management banning orders: penalty provisions for use in the situation when an individual has been convicted for repeat offences under the Fair Trading Act. A management banning order is something I consider to be significant, because a personal consequence is that it can seriously affect a person’s future earnings. However, in some cases the fines imposed are not a significant enough deterrent to prevent future undesirable trading activities.

It is because of these two, and many other, welcome changes, that I lend my support to the Consumer Law Reform Bill.

TRACEY MARTIN (NZ First): Firstly, I acknowledge the comments made by the Hon Clayton Cosgrove around financial literacy. As a previous credit controller, which is in reality a fancy name for a debt collector, I say there is certainly room for some improvement around the way that we educate and protect particularly our young people as they enter into debt in this country. If there is any room or some latitude inside this bill to address that, it would be welcome.

I stand here on behalf of New Zealand First to speak in support of this bill, the Consumer Law Reform Bill. New Zealand First notes that the specific objectives of this bill are to create an environment where consumers are able to transact with confidence, businesses can compete on a level playing field, and consumer laws assist in facilitating mutually beneficial trade. We acknowledge that with the large leaps in information transfer and modern technology improvements, especially in the ability of consumers these days to transact business online, with the creation of internet auction houses and e-stores as just two examples, there is a need to overhaul and retool much of the seven consumer laws and two business laws currently affected by this bill.

A clear example of the need for this reform would be the Sale of Goods Act 1908. There was no way, of course, that the authors of that legislation could have foreseen the online auction houses of TradeMe or eBay and craft content to give consumer confidence to those transactions. New Zealand First agrees that consumer law should facilitate mutually beneficial trade on equitable terms, and that trade partners should have trust that our laws deliver safe products and products that are consistent with any measure, quality, or other claim made.

There are certain suggestions in the bill that New Zealand First will be looking forward to discussing further as the bill moves through the House. For example, as we legislate to implement a certain standard for our own businesses and transactions, what is our commitment to ensuring that the level playing field we are aspiring to achieve will apply to other nations with whom we trade that are outside the promoted trans-Tasman economy? We heard earlier today in this House a comment from a Minister on the India plan and the China plan, and New Zealand First would like to be assured that the intent of this bill will be given consideration to in those plans. But let us be clear that this bill, as the impact statement points out, is one of the platforms for the Government’s single economic market agenda with Australia, and New Zealand First will be looking forward to seeing that the single economic market provides a level playing field for New Zealanders.

I can give an example of why we want to have the people of the Commerce Committee make sure that that is at the forefront of their minds as we go forward. In Rodney we have one of the world’s leading glass manufacturers of strengthened and toughened glass, and recently this company purchased a glass-bending machine from China at the cost of $1 million. The machine was subsequently delivered, complete with technicians to put it together and to make it go. Now, the machine itself is around about the length of this Chamber and probably reaches up to the gallery, so it is a sizable piece of equipment. It heats different thicknesses of glass sheets to the required temperature, to allow the product to be curved and bent to the required specifications—predominantly for superyachts. Unfortunately, when the accompanying technicians had completed assembling the machine, it did not go. The imported technicians had another go, took it apart, and put it back together again—still nothing.

Now, as we all know in this House, time is money in business, so as the dollars ticked by through lack of production, the New Zealanders asked the Chinese technicians to step back and let them have a go. It took close to another half a million dollars to bring that machine online—a loss of time, money, and production that in these current times is even more keenly felt by our business community. So as I say, it will be with interest that New Zealand First looks to see that the sorts of protections we might be able to provide in circumstances such as this and that this bill will provide currently in the trans-Tasman market can be extended across these other markets.

We also note that it is suggested that a benefit of this reform will be that carrier services such as couriers will be subject to the Consumer Guarantees Act, and I can say that I know many a small winemaker in New Zealand who will greet that news with some delight. We do caution, however, that as pointed out by the previous Minister of Consumer Affairs in March 2011, this bill “represents the most significant changes to consumer laws in more than two decades”, and, as such, requires robust discussion and debate to make sure that any review meets the needs of New Zealand’s consumers and business communities. But, as I say, New Zealand First supports this bill and looks forward to the wider debate.

PESETA SAM LOTU-IIGA (National—Maungakiekie): It is a joy to stand up here and speak on the Consumer Law Reform Bill and to hear from around the House that there is universal support for what is an important piece of legislation, not just for our consumers but also our businesses.

Mr Deputy Speaker, may I take the opportunity in my first speech in the House of this the 50th Parliament to congratulate you on your appointment, and also to congratulate our Minister Chris Tremain, who is bringing this important piece of legislation to the House. I also want to take just a quick opportunity to thank all those people in Maungakiekie—certainly, those who supported me, but all the people back home. Thank you for putting your support, confidence, and trust in me as your local member of Parliament.

This legislation supports the Government’s clear agenda, which was set out in the Speech from the Throne, about managing the Government’s finances, about producing a more competitive and productive economy, and about delivering jobs, opportunities, economic growth, and prosperity for our country. It does that by allowing in our consumer transactions confident consumers who may be able to make informed decisions around effective markets. The balance that must be found in this legislation is to balance, as my colleague from the Green Party said, the rights and desires of our businesses to maximise profits and drive economic growth with the needs of consumers—some of whom are vulnerable consumers—in our communities, and to protect their interests in some of these commercial transactions.

It really is about principle-based legislation so that trading is fair and so that transactions are fair. But fair trading does not regulate for risk, it cannot regulate for price, and it cannot regulate for outcomes in competitive markets. As I campaigned and travelled throughout my electorate of Maungakiekie, on the one hand, you know, I heard from my local businesses that the Government cannot over-regulate, it cannot put too much compliance in our laws and our regulations, and it cannot overburden businesses with tax and compliance. On the other hand, numbers of people come through my electorate office seeking fair transactions having been the target of particularly unscrupulous moneylenders and the like. That is why this piece of legislation—as well as a piece of legislation that will be released later this year—is part of our programme to protect consumers, particularly vulnerable consumers in areas like Maungakiekie.

I am glad that financial literacy was mentioned today, and I would add to that budgeting services, which are critical for consumers to better protect themselves and to get better information around goods and services that they consume and purchase. But I think we have got to be careful that the overall bent of our legislation does not take away from the personal responsibility that consumers and individuals and their families must undertake when they go into such commercial transactions. I might just want to add that laws in themselves do not produce good outcomes. If we are going to regulate, we need enforcement agencies that uphold the law, enforce the law, and bring about prosecutions when such laws are put in place. I certainly commend this bill to the House. I look forward to discussing the various parts of the bill within our select committee, the Commerce Committee, which is a very busy select committee. I commend this particular bill to the House. Thank you.

CLARE CURRAN (Labour—Dunedin South): Thank you, Mr Deputy Speaker, and I would like to add my congratulations on your re-election to the august position of Deputy Speaker. This is my first speech in the House this term, and I would like to welcome all the new members here as well.

I note the views expressed previously by my colleagues and by colleagues across the House about the importance of the Consumer Law Reform Bill and its status as a kind of bipartisan measure. There seems to be a lot of agreement around it, which I think is a really good thing because, ultimately, it is about consumers, about providing more protections for consumers, and about bringing the protections up to date. So I would like to make a few comments about that and about what some of the implications of that are, particularly with regard to the new technology—or not-so-new technology—about the encroachment of the online environment in our lives generally, and about the importance of bringing legislation up to date, across the spectrum, which is essentially what this piece of legislation is doing.

Before I do that, though, I would like to make special mention of where this bill came from, along the lines of my colleague Lianne Dalziel. This bill has been a long time coming to the House, and it probably should have been brought before the House well before now. I would like to make special mention of the previous Minister of Consumer Affairs, John Boscawen, in this area, and of the work that he did on that. I know that my colleague Lianne Dalziel talked about Heather Roy’s contribution, but I would like to acknowledge Mr Boscawen’s contribution and his commitment to these issues and also to the quality of the work around what underpins this bill, I suppose, around the importance of the wider spectrum of consumer law reform, and also the seriousness with which I know the Commerce Committee will take it. We will be looking at it from a range of different perspectives, and I am really looking forward to doing that, particularly with regard to the impact of the consumer issues on the online environment and the special challenges that that raises.

I would also like to make mention, given that the previous speakers talked about it, of the importance of balance and fairness in the legislation. Although I absolutely agree with them on that, it did sound as if there was somehow a potential conflict between the importance of protecting consumers and the enabling of innovation to occur and business to get done. In regard to this particular bill, I do not agree. I actually think that it is pretty clear that consumers and good law protecting consumers are what drive good business. Having strong and relevant consumer legislation is important for both consumers and business, but it is good consumer legislation that is ultimately good for business, and I think that is the important point to make here. If you have got good consumer legislation, then you are going to have consumers who are able to make purchases in an environment that they know and trust, and you are going to have good laws around them that are going to deal with the issues that should not be arising, particularly the issues that should not be arising in this day and age, around how people are purchasing more and more online and how people are purchasing more and more products in environments where they should not be being ripped off. So financial literacy is obviously an issue around that, but to my mind we should be coming at this from the perspective of providing those things and putting things such as financial literacy and protections for consumers in place, in order to ensure that consumer confidence will drive more consumer purchasing. Ultimately, that is what I believe lies behind this.

So with that frame in mind, that is how I believe that the select committee should be looking at this piece of legislation. And when you are talking about principles, I think the committee should be asking itself, in the decisions that it is making, whether if it is going to be good for consumers, then it will be good for business. I think that is a good starting point to take.

With that in mind I would like to mention a couple of pieces in the bill around the changes that are proposed. I would just like to refer back to what I think was Todd McClay’s point around the fact that consumer law reform was one of the 120 points of the Government’s economic plan. I have to say, that is the first time I have heard that phrase, and I was wondering to myself what the other 119 were and whether there was a list of them somewhere, because that would be—

Michael Woodhouse: Yes, there are; they’re on the website. Go and have a look.

CLARE CURRAN: There is? Good. On the website? 120 points? Good. I heartily agree that consumer law reform is a very important part of a wider economic plan, and it was good to know that such an economic plan exists. Perhaps the fact that is has got 120 points in it is a reason why people have not really got their heads around what it actually all means. However, one of those things is around, as I have said, closing those loopholes around allowing unscrupulous traders to get away with avoiding their obligations, and having a responsible approach to the online environment. And I would just like to say that I would expect that the important and emerging new businesses that we have in New Zealand in that online environment—it would be good if we had more, and perhaps consumer law reform might help drive confidence in that area around more businesses being developed—for example, TradeMe, which has been used today in the House as an example, and other reputable organisations already take a responsible view on these things. But the traders that operate through TradeMe do not always, and having those laws to prevent that kind of behaviour happening is good.

I would just like to refer to Consumer New Zealand and the work it has done on this, and its signalling this as a significant issue at least 2 years ago—more than 2 years ago—where it said that it believed that unscrupulous traders were exploiting a legal loophole in online auctions. And I would just like to make reference to that, because I actually think that that is, hopefully, one of the things that this legislation will address. Just to explain exactly what that means for people—because no doubt there have been many of us who have gone on to TradeMe and made purchases—you may not know that if you are clicking on the “buy me” button, then you are protected under consumer law, but if you are pressing on the button that is called “starting bid”, then you are not. That is an issue. I mean, it is a simple issue, and hopefully things like that will be addressed through this legislation and a lot more protection for consumers will be provided. So I think that is really important.

And while we are talking about the importance of consumer confidence, I would like to just quickly make mention of another issue, which is not directly related to this legislation but hopefully will be addressed as part of the 120-point economic plan—that is, the protection for consumers who are buying and likely to be buying a lot more of the products and services associated with ultra-fast broadband. I see that there is a new survey that has just been done about how people are more likely to take up products if they have got high video content attached to them. The questions I have are: how can they be reassured that they are paying a competitive price for those products and services, and how can they be reassured that they are not going to be ripped off by monopoly pricing? Those are issues that really do need to be addressed, and I hope the Government will be looking at them as well.

JONATHAN YOUNG (National—New Plymouth): I am pleased to stand and support the Consumer Law Reform Bill, which is now before the House for its first reading. The previous speaker, Clare Curran, made mention of the different Ministers who have had input, and I think what that shows to us is that the creation of law is quite a process when you consider the different Ministers, the different officials, the fact that we are debating it, that it will go to a select committee, that the general public will have a say, and that different people in the sectors will be able to come in and make their own submissions. It shows what a robust process we actually have here in New Zealand. Of course, today, Mr Deputy Speaker, you are presiding, so congratulations on your reappointment as well.

The Consumer Law Reform Bill is a bill called an omnibus bill, which amends a number of Acts, as we know: the Fair Trading Act, the Consumer Guarantees Act, the Weights and Measures Act, the Carriage of Goods Act, the Sale of Goods Act, and the Secondhand Dealers and Pawnbrokers Act. It also repeals the Auctioneers Act 1928—that is going a long way back—and the Door to Door Sales Act 1967, the Layby Sales Act, and the Unsolicited Goods and Services Act 1975. So there are a lot of Acts of Parliament that are being amended, improved or updated, and some repealed in this piece of legislation. In fact, it has been 20 long years since this amount of work has been done and I think that is a considerable length of time.

I watch quite frequently—and, no doubt, many others do—the programme on TV called Fair Go. I think for every New Zealander, when it comes to transacting business, parting with their hard-earned money, or when they want to receive a good or a service, the thing that they want to see is value for that money. They want a fair go. They want to know that what they have paid for and what they thought they were going to get they do get. And at times, of course, that is not the case, which is why we have programmes like Fair Go, why we have legislation, and why we have enforcement.

It is important for this to bill to proceed and make good progress. So I look forward, as a member of the Commerce Committee, to being able to really get into the nitty-gritty of this. It is touching so many areas. I think this is a bill that is coming to the House in good time, and we look forward to the progress that it shall make. Thank you.

Dr RAJEN PRASAD (Labour): May I also, seeing as it is my first time in taking a call this Parliament, congratulate you, Mr Deputy Speaker, and your three colleagues—the Speaker and Assistant Speakers—on your re-appointment. May I also acknowledge those who have given their maiden speeches and say how much I enjoyed those; it always reminds you of when your turn came 3 years ago to give a maiden speech. So there is a lot of feeling on our part—those of us who are not that old, meaning not too old to this Parliament—of knowing where you were. I really wish those who are yet to speak the best for their speeches, which we will hear in the next week or so.

I also wanted to congratulate the Minister of Consumer Affairs, Mr Tremain, on his first bill. We were in the gym together over lunch and I noticed he was looking forward to introducing his first bill, and—

Hon Gerry Brownlee: For how long?

Dr RAJEN PRASAD: I beg your pardon?

Hon Gerry Brownlee: For how long?

Dr RAJEN PRASAD: For the full hour. I did not see you there, Mr Brownlee. You know, it is great—it makes the afternoon go a lot better in the House, with a lot more energy. But Minister Tremain did enjoy himself. He was leaving as I was starting, for the full hour, indeed.

I do want to acknowledge that I am new to consumer law, so it was fascinating being asked to speak to this particular bill, the Consumer Law Reform Bill, and then reading all of the documents. But of course it does remind you that although one might be new to consumer law, one is not a new consumer. So I am sure that many, many times I have been ripped off, as well, but not known what one could have done about that. This bill brought those things to mind.

But perhaps the one thing that it did make me realise was that the relationship between a consumer and a supplier of goods and services is a complex one. It is almost by definition an unequal relationship, where often the supplier holds a stronger hand—often that is so; it might not be the case all the time—and, consequently, it is important to realise that it is a symbiotic relationship, where progress can only be made by one with the participation of the other. Unless that happens, progress is not made. So it is in the interests of suppliers of goods and services to maintain their competitive edge and to constantly redesign their modus operandi to maximise their return. It becomes, then, as I was saying, a symbiotic relationship, and both actors in the relationship are important. It has not often been the case, but it is so here.

Of course, once we realise that, we see that in advantaging one partner a number of allied professions have also developed to provide an edge for the suppliers of goods and services. Whether that is marketing or other marketing-related activities, it is designed to give an edge to one side. Sometimes suppliers engage in practices that entrap innocent consumers, while others give legitimate transactions. When people do this, they give legitimate suppliers and honest suppliers a bad name.

We were talking earlier in question time about loan sharks. Indeed, when one follows the experiences of some who have gone through that process, loan sharks come to mind as an example of where the relationship is totally unbalanced, and I hope that this Parliament will do something about that. Sometimes those who are caught through these practices are vulnerable people, and those are the ones whom many of us probably see in our out-of-Parliament offices. Clearly, they have been taken advantage of by unscrupulous suppliers. Consequently, as the system has got complex—and other speakers have talked about electronic purchase and what have you—it is important to modernise our laws to protect vulnerable people and, at the same time, enable legitimate transactions between parties to be conducted fairly and predictably. So this is what this bill sets about doing.

Perhaps the most satisfying part of it is to realise that it is principles-based. It is a complex bill to get your head around, because there are four Acts, plus a new one, that are being addressed through this particular omnibus bill. But certainly it should enable consumers to transact with good confidence, protect suppliers and consumers from inappropriate market conduct, and make it easier for those affected to access the provisions of the bill to get some redress—and the final one is to realign ourselves with Australia.

But, as I was saying, the intentions are given effect in the purpose clause of the Fair Trading Act, which is in clause 5 of this particular bill. The omnibus bill makes changes to, as I said, a significant number of provisions in the Fair Trading Act, and clarifies the respective rights and obligations of those providing goods and services and those receiving goods and services.

There are some provisions that were attractive to me, because I could relate to them. This bill makes new provisions for sending and receiving unsolicited goods and services. I think the solution that is in this particular part of this bill is actually quite clever, I believe, and it might even be “elegant”. That word could be used in this sense.

If somebody sends unsolicited goods to someone else, then the receiver’s liabilities are reduced from 3 months to 10 working days. So if a person in trade sends goods that are unsolicited, provided the receiver indicates the good is not accepted, the receiver has no liability beyond those 10 days, and has to indicate that. Of course that could be open for abuse; I do not know. What if you call on the ninth day to say it is not accepted, and then the other party has 1 day to remove the good? But I am sure the select committee will follow this up.

Additionally, if the goods are not collected—and this is the elegant part—within 10 working days, the good becomes an unconditional gift to the receiver. Well, I wish people would send me rather expensive things, unsolicited, and after 10 days they become an unconditional gift to the receiver. So here the onus is shifting to the sender of goods and services. This is a good provision, especially for vulnerable people who could be taken advantage of.

The bill also adds some new provisions for particular goods being declared unsafe, and other speakers have talked about that. That clause becomes important, particularly today, when so much of what we import is made somewhere else and often under different regulatory systems. When it comes to New Zealand, that is another part that becomes important. Perhaps the advantage here is that a whole series of provisions are being addressed, and I agree with Lianne Dalziel, who said that the regulatory impact statement was very detailed, and it does provide a very good way for the select committee to look at all of those things.

There are some provisions here around contracts. The only bit that worried me a little bit, and perhaps the select committee can look at that, is that I noticed that the bill’s provisions require those things to be in plain English and easily understandable. But in a diversifying New Zealand, where in Auckland there are now large numbers of people for whom English is not a first language, will the provisions still be understood by those people? Some attention could be paid to see how those who are not familiar with even plain English can still be enabled to understand what the provisions are—so the select committee could be looking at that.

Much has been said. We support this, and we look forward to the discussions at select committee and further discussions when the bill is reported back. Thank you.

Bill read a first time.

Bill referred to the Commerce Committee.

Bills

Road User Charges Bill

Third Reading

Hon GERRY BROWNLEE (Minister of Transport): I move, That the Road User Charges Bill be now read a third time. This bill has undergone a rigorous examination, both in the Transport and Industrial Relations Committee and here on the floor of the House. The amendments to the bill have resulted in a good bill becoming, I think, even better. I thank members, in particular those on the Transport and Industrial Relations Committee of the last Parliament who did all of the work to prepare this bill, and I would also like to acknowledge the work of the Road User Charges Review Group in conducting the initial review of the system.

The background to this bill sees the Road User Charges Act 1977 replaced. The review of the road-user charges system identified a range of shortcomings within the system, which can be summed up in two words: outdated and complicated. This bill is designed to modernise and simplify the road-user charges system, reduce compliance costs for both industry and Government, and reduce road-user charge evasion.

In the contents of the bill there are a number of changes. The 1977 Act was passed when paper records were the practice—there was no other opportunity to record the information required. Mechanical hubodometers were used to measure distance travelled by vehicles. Electronic registries and electronic technologies are now the norm, and the legislation has to reflect this reality. The Government supports the adoption of new technology, and the bill enables this to occur. The bill will allow for further integration of new and emerging technology, while ensuring that those providing these services are subject to a consistent statutory framework. In addition, the bill contains provisions to safeguard electronic information.

Industry has expressed concern that the road-user charges system is subject to evasion as it currently exists. The Government naturally shares this concern. Loss of revenue and the subsidising of the reluctant payer by the honest person brings the system into disrepute and deprives the National Land Transport Fund of revenue. When the bill comes into force we will see a new era in the management of road-user charges. Replacing the existing system of operator nominated weights with a system where all road-user charged vehicles will have a permanent road-user charge weight will help reduce the administrative burden on both operators and Government. It was interesting, when we were in the Committee stage of the bill, to see how that new charge will in fact advantage many users. The change will see the weight-based evasion of road-user charges virtually disappear.

The bill will also look to further improve road-user charge compliance by introducing more stringent record-keeping requirements for transport operators. It will give the New Zealand Transport Agency more effective assessment powers to recover outstanding road-user charges. One of the consequences of having electronic registries is that it is no longer necessary to impose heavy penalties for forgetful behaviour—the occasions when people do not meet a date because they have simply forgotten to do so. However, the new road-user charges system will have infringement fees for forgetfulness that are considerably less than the current system. That said, for situations where there are deliberate attempts to defraud the system, penalties have been increased.

This bill lays the groundwork for developing a forward-thinking system that will continue to serve New Zealanders well for years to come. Although the bill contains the general framework for how the new system will function, much of the practical detail will be covered off in the regulations. I am confident that the Government and industry will continue to work closely together on the regulations in order to make the most of the opportunities that this piece of legislation presents. I am confident that the bill will help to improve, modernise, and simplify a system that has been in place for almost 35 years. I commend this bill to the House.

PHIL TWYFORD (Labour—Te Atatū): I rise on behalf of Labour in this third reading to express our support for the Road User Charges Bill. We have found the select committee process in the Transport and Industrial Relations Committee to be constructive, and we are supporting this bill because we share the Government’s view that this is a long-overdue modernisation of the legislative framework for road-user charges. They are a critically important part of our transport system and a source of revenue for our roading and other transport infrastructures. We support this bill, but I want to use my time in this debate to just really reiterate some of the concerns that Labour still has about aspects of the bill that we do not believe have been adequately addressed—concerns that were raised by many submitters during the select committee process.

The purpose of this bill, as the Minister of Transport has said, is to modernise and simplify the road-user charges system; to improve compliance with, and the recovery of, road-user charges; and to establish a framework for electronic management of road-user charges. There has been, throughout this process, the assertion that there is a significant amount of evasion that goes on with road-user charges. I am not aware of any hard evidence that has been presented by the Government to substantiate the claim that there is evasion, so we are being asked to take that as read. The bill gives effect to the Government’s decisions arising from the recommendations of the Independent Review of the New Zealand Road User Charging System. Students of politics listening to this debate will remember that that independent review was a result of the trucking strike, if you like, that was sparked by an attempt by the previous Labour Government, under Annette King’s stewardship as the Minister of Transport at the time, to update the system for road-user charges. So it has an interesting provenance.

I do not think there is any difference or dissent over the need to modernise and to bring the system of road-user charges up to date with new electronic technologies. Nor is there any dissent from our side about the need for a consistent statutory framework. That is all well and good. But I want to comment briefly about two objections that remain on the table from our point of view.

The first—I think it is in Part 2 of the bill, and it is probably our most fundamental concern—is the shift from nominated weights to gross weights. As I said before, we do not believe that the case has been made, that that hard evidence has been put on the table by the Government to show problems with the current system of nominated weights, where a truck driver or a firm will fill out the forms for their road-user charges based on the actual weights—an estimation of the actual weights—that a vehicle will be carrying. We do not believe that the case has been proved that that system is performing badly or that there is significant evasion.

Many sectors in the industry are disgruntled. They do not feel they have been consulted properly about this change. They feel they have been kept in the dark over these changes and the impacts they will have, and, as we heard during the Committee stage, quite a number of submitters gave testimony that the impact of the shift to gross weights, to the maximum potential laden weight of the vehicle, will result in substantial increases in road-user charges. As we know, in our transport sector there are many, many small businesses and small firms that believe that under these changes they will be adversely affected. So we think there should have been much more analysis and consultation, and it is a shame that that did not happen. There were a few bodies within the industry that supported the change, but by no means was that view representative of the transport fleet as a whole. The impression we were left with was that the existing system overall, in terms of the use of nominated weights, was felt to be working quite well.

Another factor that was raised, and that we think is worth noting, is that there will be a considerable need to refit many trucks in the existing fleet, and certification costs will be faced by operators in order to comply with the new system. Make no mistake about it—this change will impose very significant costs on small businesses, which will be particularly vulnerable to it, in our transport fleet. There will be, we believe, less flexibility within truck fleets than is currently provided for with the nominated weights system, with smaller trucks on the road as operators seek to reduce the gross weights. And arguably that could increase roading congestion and carbon emissions. Having flexibility within the current system of nominated weights could mean that the national fleet is actually more efficient and better able to deal with changing loads. I know that one of the intents behind the change is to incentivise more efficiency, so we will have vehicles carrying loads that are closer to their capacity the whole time, but there are also some negative and possibly unintended consequences of that, as well.

We heard at the select committee about a case study presented by one operator that revealed an additional average cost of $18,000 per vehicle per annum and a total projected cost to the firm of $137,000 per year. This is obviously a very large firm, but, still, that is a substantial cost to be borne. One of the groups that feels they will be particularly badly hit is the New Zealand Motor Caravan Association. It has about 22,000 paid-up members and some 40,000-odd individuals who are associated with that organisation. These are people who travel the country in motor caravans. They reported—and I know the Minister challenged some of these figures in the Committee stage—increases of up to 270 percent as a result. I have subsequently spoken to the Motor Caravan Association. It stands by its figures and feels that the very nature of motor caravans is that they are often large vehicles that are almost never loaded up to their carrying capacity.

We have another concern that we want to just note at this stage, acknowledging that we are in support of and voting for this bill for the broad reasons outlined. The second point we think is worth noting is that one of the features of this bill, as the Minister said, is that much of the practical detail will be covered off by regulations. We think the balance is not quite right to be passing legislation when so much of its force and intent is actually going to be delivered by regulations. A number of submitters made the point that they felt that it broke the basic democratic principle that there should not be taxation without representation. No final numbers were available for proper scrutiny before the bill proceeded this far. The actual charges are going to be dealt with by officials through the process of making regulations. One of the risks is that this will be a complicated process and open to legal challenge.

I look forward to hearing the rest of the contributions. Thank you.

DAVID BENNETT (National—Hamilton East): I would just like to thank the new Minister of Transport and congratulate him on taking up the responsibility of the Road User Charges Bill. I look forward to it progressing and look forward to the many transport initiatives that he will bring to this House. They will be good for the New Zealand economy and the New Zealand transport sector. I would like to thank the Labour Party, as well, for its support during the Transport and Industrial Relations Committee consideration. I thank the Green Party and all the other parties that were part of that process.

Michael Woodhouse: They’re not here; you’ll have to write to them.

DAVID BENNETT: Yes. The committee approached this issue in a very constructive manner. It looked at the issues from the perspective not only of the Government needing to reform but also of the industry and the wider transport sector. I think we came to a pretty good solution in the sense that, as has been said, there was need for some decent change in this area. If that change had not been accommodated through this process, then we would get to the results that Labour found when it tried to make some changes without full consultation. There were a lot of protests, and I do not think the trucking industry or anyone else necessarily wants to go through that again.

Labour members have made a few comments about supporting the bill but having some reservations. I would just like to cover off some of those reservations. With the movements to the gross weights, the Labour members indicated they did not feel they had sufficient evidence. Well, I think they need to go out into the real world and see how it works out there. If you are in the trucking industry and you have to, first, identify those weights every time, then that makes it particularly difficult. Second, if you have got a lot of staff involved in that process, then that puts a lot of responsibility on to them and can make it very difficult when you have got high fines that are the result of making mistakes there. A third issue is that in an industry or any business you want to get the most productivity out of your vehicle, and you will want to do the best you can. So sometimes you will push the boundaries, and that is human nature, I guess. We see that through all our laws in regard to the roads. The laws are pretty strict. So in essence, there are a lot of reasons why it can happen and it does happen out there. To put your head in the sand and say there was no problem—really, that is not the case. People need some certainty. This bill gives that certainty and gives it in a manner that is in the best interests of the industry.

Another issue that Labour raised was the environmental aspect. Well, this will actually encourage people to make sure, because they are paying to the gross weight of that vehicle, that they utilise the full vehicle weight. So it should actually be more environmentally friendly, contrary to Labour contentions, because people will try to utilize that full weight because they are paying for it. There are ways of getting that back, but essentially they are going to pay, so they will use the full weight. That will not mean that we will have a lot more smaller trucks on the road; it will actually mean that the trucks on the road are as efficient and as well utilised as possible.

The other area that Labour brought to our attention just before is in regard to regulations covering the detail. Well, simply, we cannot as this Parliament do all that detail here. I know that Labour likes to have a situation where the Government controls everything in this country out of this room, but we actually need to give the industry—[Interruption] Labour’s caucus room would not be able to control much at the moment! The thing is that it cannot necessarily be set here. We need regulation, and that is the fit and proper process to do that, so that we have got that flexibility within it, and it also gives the ability for change if it is necessary, rather than having to come through this Parliament every 5 minutes to do a new road-user charges bill. I think that the Minister and the officials have come to the right decision and the right balance in how they are using regulation to achieve the purpose of giving that flexibility in the system. So it is good to hear that members of the major Opposition party are supporting it, but their contentions of why they have problems with it are not valid. This is a good bill, and it will achieve its purposes and deliver the results we need for the transport sector. Thank you.

DARIEN FENTON (Labour): I am pleased to take the opportunity to make a contribution on the third reading of the Road User Charges Bill. I have been through the process of the Transport and Industrial Relations Committee with the chair, David Bennett, and he is back—he is back! Actually, I did note a very conciliatory approach to the committee this morning, which I thought was very welcome. We look forward to a much more inclusive approach to concerns from the major party of the Opposition. So I am looking forward to this year, actually; I think, you know, that we have got work to do—there is no doubt about that.

But on the Road User Charges Bill, Labour has repeatedly raised our concerns about this bill. We raised them in the select committee. We voted against two parts of the bill in the select committee. We have raised them in all of the readings of the bill, including the Committee stage, and it is fair to say that we still continue with those concerns, even though we are intending to vote in favour of this bill because we believe that the good things in the bill outweigh the concerns that we have.

Now, my colleague Phil Twyford talked quite a lot about our first concern, which is about the shift from nominated weights to gross weights as the basis for charging road-user charges, so I will not go into that too much. But I wanted to address our second concern, which is the one about regulations being signed off without public debate or consultation. The concern from the industry was, first of all, that there had been very little consultation about this bill itself when it came in. That was reflected in all of the submissions that we heard. The second concern was that it is going into this whole new regime in the dark. The industry has no idea—very poor indications—of what it might mean. That is why we have seen concerns from some of the major players like the—what are they called?

Phil Twyford: Motor Caravan Association.

DARIEN FENTON: —the Motor Caravan Association. But also, I do not think that David Bennett can tell the Labour Party to get into the real world, when we have similar concerns from companies like Fonterra. Fonterra, one of our most successful companies in New Zealand, and Toll New Zealand have expressed similar concerns, and a range of small to medium trucking firms. Also in the submissions, concerns were expressed by some of those who are trying to work in the industry to modernise it through using new technology. I think it is a bit poor to write them off as not being important and saying that Labour is not in the real world. In fact, Labour did go and speak to many of these organisations. We took the trouble—and I am not sure that the Government did—to go and visit Toll New Zealand, Fonterra, A One Movers, and a whole range of organisations, and I must say that my education about road-user charges—

Michael Woodhouse: That’s fantastic.

DARIEN FENTON: Yes, it is fantastic, is it not? It is really good, but, you know, their concerns have continued, Michael Woodhouse. They continue, and I do not think that we have reached resolution in this bill in its third reading that allays those concerns.

I also found it really interesting that the member David Bennett—I nearly said “David Benefit”, I am sorry—[Interruption] I know, I know, that is right, it is the wrong committee, but I also found it a bit rich that the member David Bennett was talking about, you know, how the Parliament cannot set the rates and so on. When we think back to what happened in 2008, which was the big truckie strike, which was really political, actually—it was driven by the Road Transport Forum, and it was obviously designed to destabilise Labour in the period coming up to the election—the then Minister of Transport, the formidable Annette King, had made a decision that she would not advertise and consult on the changes to the road-user charges, because if she did there would be upfront buying, and the Crown would lose, I think it was, around $17 million. [Interruption] Yes, it is interesting. She made that decision, and she made it in the interests of New Zealand taxpayers, so there could not be that sort of thing happening.

Now, what we have got is a Government that is justifying increasing road-user charges and changing road-user charges through regulation without—oh, there may well be consultation but it is not clear in the bill how that public consultation will take place. Certainly the submissions that we had from the industry, what we have heard from the industry, and the discussions that we have had with it, is that it is very concerned about the breaking of the basic democratic principle that there should be no taxation without representation. So it is ironic that we went through all of this in 2008, and the National Party took the moral high ground, and here we are in 2012 passing a bill that actually does away with the right to consultation for changes in road-user charges. I hope that the Hon Annette King will have a chance, and I am sure she will, to make a contribution on this bill, because I think she will have some things to say about that, because she was actually in the forefront of that. She was in the firing line at the time. We know these things are complicated. Labour is a much more understanding party, of the Government, than the National Party was when we were in Government, so we tend to try to be cooperative about it. But I think the fear is still there in the industry, which is about what these charges actually mean. It does not know. So then you get the various examples that we have been given in this debate from various organisations: real concern about the increased cost to small business, but medium-sized businesses as well—real concerns about that—and leaving the industry in the dark.

Here we are, passing a bill in its third reading, where the industry still has no idea what the change in these charges is going to mean. I think it is, as I said, pretty rich of the Government to now say “We can’t possibly do any of this stuff, because it is too difficult; we can’t pass it in Parliament.”, when National was right there, boots and all, encouraging the industry in 2008 because it saw a political advantage. In fact, now it is justifying it, so it will be interesting, I think, to see exactly how the industry responds. I think there will be winners and losers. I fear that the winners are those who are in the big trucks, and the losers will be in the small parts of the industry who are just trying to get on with business and make a living. I think that there will be concerns that start to be raised.

I think the other thing that underlies this whole thing is that we are very supportive of road-user charges. It is a very unique system in the world. It is a system that we should be proud of, and in fact it is being adopted by other countries now, as they realise that tax on diesel and petrol is not actually going to deliver the income needed—

Debate interrupted.

The House adjourned at 6 p.m.