Tuesday, 18 September 2012

Tuesday, 18 September 2012

Tuesday, 18 September 2012

Mr Speaker took the Chair at 2 p.m.

Prayers.

Privilege

New Zealand Police—Agreement on Policing Functions within Parliamentary Precincts

New Zealand Police—Procedures for Execution of Search Warrants on Premises Occupied or Used by Members of Parliament

New Zealand Security Intelligence Service—Memorandum of Understanding on Collection and Retention of Information on Members of Parliament

Mr SPEAKER: In recent years Speakers have entered into a number of agreements that have implications for the House and its members. On 24 March 2004 the House noted a report of the Privileges Committee on its consideration of a draft agreement on policing functions within the parliamentary precincts. Following the Privileges Committee’s report, the Speaker and the Commissioner of Police signed a formal agreement, which was presented to the House on 24 June 2004. The agreement continues until termination, but is required to be reviewed every 3 years and may be amended by mutual agreement of the two parties. A revised agreement was signed on 12 December 2007. A further review is now due.

On 7 November 2006 the Speaker presented to the House a paper setting out interim procedures for the execution of search warrants on premises occupied or used by members of Parliament, and indicated to the House that she would seek to have the Privileges Committee consider it once the police investigation into the activities of Taito Phillip Field and any consequent action were completed. A final order for repayment was made on 3 September 2012, and the proceedings are now at an end.

On 21 December 2010 I entered into a draft memorandum of understanding with the New Zealand Security Intelligence Service on the collection and retention of information on members of Parliament, the need for which arose from a 2009 report from the Inspector-General of Intelligence and Security, following complaints from members.

All three of these agreements have the potential to raise issues affecting the privileges of the House. Consequently, I have determined that they involve a question of privilege, and therefore the question stands referred to the Privileges Committee.

Questions for Oral Answer

Questions to Ministers

Businesses—Government Initiatives to Support

1. MAGGIE BARRY (National—North Shore) to the Minister of Finance: What measures is the Government taking to encourage businesses to invest, grow and create jobs?

Hon BILL ENGLISH (Minister of Finance): A number of measures to support business confidence, because it is businesses that make the decisions to invest and employ. These include reforming the tax system to shift incentives towards working, saving, and investing, and away from borrowing, consumption, and over-investment in housing. We are also focusing on a faster path back to surplus to enable lower interest rates for longer, and to improve productivity, and, more important, quality of public services, and we are also continuing to review regulation and legislation where we have evidence that it is imposing unnecessary costs or inhibiting investment decisions.

Maggie Barry: As part of the Government building a more productive and competitive economy, which legislation is being reviewed?

Hon BILL ENGLISH: We have, for instance, reviewed and amended the Securities Act and the Employment Relations Act, and also, quite extensively, the building and construction legislation. We have removed 170 excessive regulations. We are undertaking phase two of reviewing the Resource Management Act to ensure that it reflects broader community expectations about job growth as well as the environment. Job growth is as important to the sustainability of our communities as the environment, and the two are certainly not mutually exclusive.

Maggie Barry: How does the Resource Management Act impact on investment?

Hon BILL ENGLISH: The Government has over the last few years made a number of changes to the Resource Management Act, since it is the principal regulator of environmental impacts. A consistent theme of discussions with homeowners, particularly those who want to get into their first home, and investors is that they can be frustrated by the costs of delay and also by the uncertainty created by that delay. Our experience is that investors are willing to trade off limits on development and economic opportunity in return for certainty around Resource Management Act decision-making, and that will be part of the Government’s consideration in the second phase of reviewing the Resource Management Act.

Maggie Barry: What effect have the changes the Government has already made to the Resource Management Act had on investment?

Hon BILL ENGLISH: Probably the change that has had the most impact is to set a 9-month limit for consenting projects of national significance through the Environmental Protection Authority. This has given the proponents of large-scale projects, including the Government with its transport projects, much more certainty about the time frame for getting agreement on those projects, and is reducing the costs of what would otherwise have been very long delays. This, of course, encourages those who do have larger-scale projects to look more favourably on those investments, because they will lead to more jobs.

Hon John Banks—Confidence and Electoral Returns

2. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Does he stand by his statement given in answer to Oral Question No 2 on 1 May 2012, “my chief of staff spoke with Hon John Banks and sought an assurance from him that he had fully complied with the requirements of the Local Electoral Act in respect of donations. Mr Banks gave his assurance during the phone call and stated that he was not aware that Mr Dotcom had made the donation to his mayoral campaign”?

Rt Hon JOHN KEY (Prime Minister): Yes.

David Shearer: Does he stand by his statement that for a Minister to enjoy his confidence, “The test is: has he misled me?”

Rt Hon JOHN KEY: Yes.

David Shearer: Is he aware of the sworn statement from Gregory Towers, a partner at Simpson Grierson, who said that Mr Banks told him in February this year, when Mr Banks was a Cabinet Minister, that he could not assist Mr Dotcom in getting medical attention in prison, because “that may backfire on Kim if it became known about the election support.”?

Rt Hon JOHN KEY: I have not read the report, but I have seen media reports. What I am aware of is that that is a statement from Mr Towers, not a statement from Mr Banks.

David Shearer: Is he aware of the dinner Mr Banks had with Kim Dotcom where Kim Dotcom offered him $50,000, to which he replied “No, not one cheque. Write two cheques out for $25,000 each.”, as cited in the sworn statement of Kim Dotcom’s security guard?

Rt Hon JOHN KEY: No, I am not aware of the specific dinner that the member is talking of, although I am aware that Mr Banks had dinner with Mr Dotcom. I am also aware that under the rules of the existing legislation it is quite within the rules to solicit cheques and donations on such a basis and comply with the law.

David Shearer: Can he assure the House that the changes to the Local Electoral Act that he is proposing will address the issues raised in the police files on John Banks?

Rt Hon JOHN KEY: Well, I have not read the report, but I can say that this Government will tidy up that legislation, where that Government failed. A couple of years ago the Labour Party was not worried about this issue—

Mr SPEAKER: Order!

David Shearer: I raise a point of order, Mr Speaker. That was a pretty straight question.

Mr SPEAKER: The—[Interruption] Order! I think the question was answered, but I think the territory the Prime Minister was about to go into then was probably beyond the question asked.

David Shearer: How can he be 100 percent sure that the new amendments will address those issues when he actually has not read the police files on John Banks?

Rt Hon JOHN KEY: I am certainly well and truly aware of the failings of electoral law. Funnily enough, so is the Labour Party, because if I was to quote from Prime Minister Helen Clark, she said through a spokeswoman that the electoral law was “confusing, contradictory and needed to be reviewed.” Guess what! Helen Clark and I worked it out. The shame is that Helen Clark did nothing about it.

David Shearer: Why does the Prime Minister refuse to read the police files on John Banks?

Rt Hon JOHN KEY: Because it is not my practice to go and read police files. This will come as a great shock to the member, but the police are independent in New Zealand. They do their own investigations, and guess what! This is the bit that the Labour Party is not quoting. Guess what! The police said that there was insufficient evidence to prosecute—by the way, no case.

David Shearer: How can he continue to claim that John Banks did not mislead him, given that Mr Banks claimed that he was not aware of the donations from Kim Dotcom, in spite of the fact that he solicited the donation at a dinner at Dotcom’s house; asked that the donation be split in half so he could claim it was anonymous; thanked Mr Dotcom for the donations during a phone call; and, as recently as on 8 February this year, declined to assist Mr Dotcom on the basis he had donated to Mr Banks’ campaign?

Rt Hon JOHN KEY: I am confident of two things: firstly, that my chief of staff spoke to Mr Banks’ office and sought an assurance that he had fully complied with the requirements of the Local Electoral Act, and, secondly, that he was not aware that Mr Dotcom had made donations. Many of the things that the member is now claiming are within the law. By the way, there are many older members of this Parliament—

Mr SPEAKER: Order! [Interruption] Order! I think there has been sufficient answer.

Hon Trevor Mallard: Can the Prime Minister remember saying “This is not a Prime Minister in control. It is a Prime Minister in damage control … She should now act over Mr Field. Why are we waiting, Prime Minister? … Helen Clark is only interested in protecting her slim majority in Parliament.”, and what has changed, other than the Prime Minister?

Rt Hon JOHN KEY: A couple of things. First, yes, I remember making that statement. Secondly, I am not surprised Trevor Mallard is on feet, because, quite frankly, David Shearer is going about as well—

Mr SPEAKER: Order! [Interruption] Order! Look—[Interruption] Order! I ask the House to settle down a moment. This is not going to be easy if it gets too testy.

Hon Trevor Mallard: Is the Prime Minister still satisfied and will he rely on the police conclusion when the evidence now shows that John Banks lied to his chief of staff and/or the media on this matter; if so, why?

Rt Hon JOHN KEY: The matter does not show that Mr Banks lied to my chief of staff—quite the contrary. Mr Banks complied with the law. You see, the Labour Party cares about the law today, but it did not care about it enough to change it. If you cared so much a while ago, change the law back then.

Hon John Banks—Police Investigation into Electoral Returns

3. METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he stand by his statement that Hon John Banks has “got a version of events, others have got a different version. It’s not for me to forensically go through that”; if so, whose job is it to hold his Ministers to account for the veracity of their statements?

Rt Hon JOHN KEY (Prime Minister): The member is referring to statements made to the police, whose job it is to assess the evidence before them. I have no responsibility for assessing evidence given to the New Zealand Police. However, I would note that the police decided there was “insufficient evidence to consider a prosecution under section 134(1) of the Local Electoral Act …”.

Metiria Turei: Why does the Prime Minister believe John Banks when John Banks says that he did not read his donations declaration even though he signed it, despite comments by John Banks’ ministerial press secretary that he did read the documents and that his campaign treasurer went over the declaration with him?

Rt Hon JOHN KEY: Because I accept the Minister at his word.

Metiria Turei: I seek leave to table an email exchange dated 13 September 2012 between John Banks’ press secretary and a New Zealand Herald journalist where the press secretary first claims that John Banks read the declaration and later clarifies that John Banks’ campaign treasurer went over the form with John Banks.

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

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

Metiria Turei: Is it a new policy of the Prime Minister that Ministers are not responsible for documents that they sign, and is this a new “don’t read, don’t care” defence on “Planet Key”?

Rt Hon JOHN KEY: No. I refer the member to the fact that the document was signed when he was not a Minister.

Metiria Turei: Will homeowners on “Planet Key” now be allowed to default on their mortgages and then claim it is OK because they did not read the documents; will business people on “Planet Key” now be allowed to sign illegal—[Interruption]

Mr SPEAKER: Order! I apologise to the member. I could not hear her question and it is important I can. I invite her to start again. Members must make it possible for the Speaker to hear the questions.

Metiria Turei: Will homeowners on “Planet Key” now be allowed to default on their mortgages and then claim it is OK because they did not read the documents; will business people on “Planet Key” now be allowed to sign illegal contracts under his new “don’t read, don’t care” defence?

Rt Hon JOHN KEY: I do not know so much about “Planet Key”, but my expectations are it would be a lovely place to live, it would be beautifully governed, golf courses would be plentiful, people would have plenty of holidays to enjoy their time, and what a wonderful place it would be. But I would expect people on such a place—referred to as nirvana—to comply with the law, and that is what Mr Banks did.

Mr SPEAKER: Metiria Turei. [Interruption] Order! I want to hear this question.

Metiria Turei: Thank you. [Interruption]

Mr SPEAKER: Order! I want to hear the question.

Metiria Turei: Is there one standard for ordinary New Zealanders, who are legally responsible for any statement or contract that they sign up to, and another for the Prime Minister’s Ministers, who can put their name to whatever falsehood they like as long as they live on “Planet Key”?

Rt Hon JOHN KEY: The question here is whether Mr Banks complied with the law, and it is our belief he did. As I was saying earlier, the law prior to the changes for central government would have seen many members of this Parliament do things that would be illegal today but were legal back then. There are also successful candidates who have funnelled money through trusts, for instance, which are legal when it comes to the law. I expect people to comply with the law. That is pretty simple.

Mr SPEAKER: Metiria Turei.

Metiria Turei: Thank you very much, Mr Speaker. [Interruption]

Mr SPEAKER: Order! I want to hear this question.

Metiria Turei: Will his Government now be changing the law so that enforcement agencies such as the Serious Fraud Office or the police can also apply his new “don’t read, don’t care” defence, or, again, is it only Ministers on “Planet Key” who are entitled to that privilege?

Rt Hon JOHN KEY: The member is missing the point. The point is whether the member complied with the law. The member may not like—[Interruption]

Mr SPEAKER: Order! I apologise to the right honourable Prime Minister, but I will not tolerate that kind of interjection. The member will not do that any further. He knows that it is contrary to the Standing Orders of this House to accuse another member of lying.

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

Mr SPEAKER: I will not entertain a point of order on the matter. I have ruled on that matter. There can be no interjections accusing any member of this House of lying. If the member wishes to raise a point of order, he may, but it will be on a different matter.

Hon Trevor Mallard: I would like to refer you to Hansard, Volume 633, at page 5055 and the comments that day of Dr the Hon Lockwood Smith.

Mr SPEAKER: I will look at them when I have time. Supplementary question, Metiria Turei.

Metiria Turei: I raise a point of order, Mr Speaker. The Prime Minister had not completed his answer.

Mr SPEAKER: I think the Prime Minister had long enough to answer it.

Rt Hon JOHN KEY: Oh, I was enjoying myself but.

Mr SPEAKER: Given the nature of the supplementary question, I think the Prime Minister had long enough to deal with it.

Rt Hon Winston Peters: Can I ask the Prime Minister why a police incapacity because something was statute-barred at the time is being interpreted by him as being a compliance with the law by Mr Banks?

Rt Hon JOHN KEY: First, it is my belief that the member complied with the law, because that is the assurance he gave me. Secondly, I refer to the press release from the police, who have said quite clearly that they had decided there was insufficient evidence to consider a prosecution. Thirdly, there are actually other examples in this House, which I will not bother going into, but there are some very esteemed members who have often said that looking at things, even when there was a prima facie case, would be trivial to pursue.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I asked the Prime Minister about a specific position in the law that the police have taken. They said that this matter was statute-barred and therefore they could not take it any further. I—

Hon Gerry Brownlee: Where is the point of order?

Rt Hon Winston Peters: Is he now the Speaker of the House?

Mr SPEAKER: Order! [Interruption] Order! I am now on my feet. I am not sure how—[Interruption] Order! The Leader of the House should know better than that. He does not need to lower himself to that level. It does not help the order of the House for the member to do that. The member asked a question, and it would appear from what he is trying to say in the point of order he is raising that he wants the Prime Minister to give a legal opinion. If I am wrong on that, I am happy to hear the member further, but it must relate to order and not the quality of the answer given by the Prime Minister.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I am not raising a question about the quality of the answer. I am asking a question about whether the Prime Minister even addressed the question I asked.

Mr SPEAKER: To save time, I am going to allow the member to repeat his question.

Rt Hon Winston Peters: Thank you very much, Mr Speaker. Can I ask the Prime Minister why he is taking the police incapacity that they expressed—because any action by them against Mr Banks would have been statute-barred—to mean that Mr Banks complied with the law?

Rt Hon JOHN KEY: I am not; I am taking the member at his word.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Frankly, I think that if the Prime Minister can get away with that, he might as well just get up and say “Rhubarb!”, because—

Mr SPEAKER: No, no. Order! [Interruption] Order! No, no, the House will settle down. Order! I am on my feet, and the House will settle down. The question asked why the Prime Minister was not taking what the member alleges in a report in respect of something being statute-barred and, instead, was choosing to interpret that the member has not broken the law. The Prime Minister’s answer to that was that he took the member’s word that he had not broken the law, and that is an answer to that question. I think when one analyses the question asked and the answer given, it may not have been exactly the answer being sought, but I have to accept that it is an answer to the question why the Prime Minister has done that.

Offenders, Serious—Proposed Public Protection Order

4. MARK MITCHELL (National—Rodney) to the Minister of Justice: What steps is the Government taking to better protect the public from imminent and serious sexual and violent offenders?

Hon JUDITH COLLINS (Minister of Justice): Today I have introduced the Public Safety (Public Protection Orders) Bill. It introduces a civil detention regime to protect the public from the most serious sexual and violent offenders. Public protection orders may be imposed by the High Court, at the request of the Chief Executive of the Department of Corrections, for offenders who have served a prison sentence for a serious sexual or violent offence and who still have a high risk of imminent and serious sexual and violent offending. This Government is committed to delivering on its election promise to keep the public safe from the worst sexual and violent offenders.

Mark Mitchell: How will the civil regime be managed?

Hon JUDITH COLLINS: It is anticipated that only between five and 12 offenders over a 10-year period would meet the legal test as posing a very high risk of serious sexual or violent offending. Offenders will undergo a comprehensive risk assessment to be put before the court. The High Court will determine whether the offender meets the test for imposing an order. Individuals subject to a public protection order will be housed in a residence located within the secure perimeter of a prison and monitored by staff. Conditions within the residence will be monitored by independent inspectors and the Ombudsman. Each resident will have a management plan that will set out any restrictions that they are subject to, as well as any identified needs. This detention regime is protective rather than punitive. Residents will have as many of the normal civil rights of ordinary citizens as possible without endangering the community. Public protection orders will be subject to annual review by a review panel comprising judges, parole board members, and psychiatrists or registered psychologists.

Mark Mitchell: How do public protection orders differ from other regimes for managing offenders on release from prison?

Hon JUDITH COLLINS: Extended supervision orders and preventive detention are not sufficient to protect the public from these very serious offenders. Extended supervision orders, which are set when an offender is released, can be made for up to 10 years for child sex offenders. They provide for an individual to be monitored and/or accompanied at all times. However, their conditions must eventually be removed. Public protection orders might be made for some offenders who are already subject to—

David Clendon: I raise a point of order, Mr Speaker. This is question time. What we are hearing is actually a first reading speech on a bill that was tabled today—[Interruption]

Mr SPEAKER: Order! This is a point of order and it has some merit. Question time is not a time to invite Ministers to give first reading speeches, as the member has just said. We will go on to Question No. 5.

Hon John Banks—Police Investigation into Electoral Returns

5. GRANT ROBERTSON (Deputy Leader—Labour) to the Prime Minister: Does he stand by his statement in answer to Supplementary Question No 3 in Oral Question No 2 on 1 May 2012, “The test is whether the Minister correctly applied and did everything in accordance with the law. I have received an assurance he did”?

Rt Hon JOHN KEY (Prime Minister): Yes, because such an assurance was given at the time.

Grant Robertson: Is he aware that section 134 of the Local Electoral Act, which is the law referred to in the primary question, covers two offences relating to the provision of a false return: the first, section 134(1), which is about knowingly furnishing a false return, and the second, section 134(2), where it is an offence to submit a false return unless there is proof that there was no intent to conceal facts, and where all reasonable steps had been taken to ensure the information in the return was accurate?

Rt Hon JOHN KEY: Yes.

Grant Robertson: Is he further aware that in paragraph 39 of the police criminal assessment report of the John Banks investigation police conclude that their analysis of Mr Banks’ return was that it was a false return, in respect of his return of expenses and donations for the 2012 mayoral election?

Rt Hon JOHN KEY: If the member says so, and I am aware also that there was insufficient evidence to consider a prosecution.

Grant Robertson: Is he aware that in paragraph 40 of the police criminal assessment report in the John Banks investigation police conclude that as a result of the return being false the law was breached and the elements for a prosecution were met under section 134(2)?

Rt Hon JOHN KEY: No, and I just point out to the member that there are no charges being laid against Mr Banks. He has complied with the law.

Grant Robertson: In light of the police finding that John Banks had breached the law and that the elements for a prosecution had been met under section 134(2), why is he arguing that John Banks has done everything in accordance with the law?

Rt Hon JOHN KEY: Because that fact is not proven.

Grant Robertson: If the test for John Banks retaining his confidence is that he has done everything in accordance with the law, why will he not read a report from the police that says that Mr Banks breached the law?

Rt Hon JOHN KEY: Because I do not need to. The test is whether I can rely on the member’s word, and he has given me an assurance that he met the law. The police have quite clearly said there was insufficient evidence. There is a statute of limitations, and he has complied with the law.

Grant Robertson: Is the Prime Minister telling the people of New Zealand that his test is not whether a Minister broke the law, but whether the Minister got away with it?

Rt Hon JOHN KEY: No, the test is whether the member complied with the law. The member did.

Conservation Land—Milford Dart Tunnel Proposal

6. EUGENIE SAGE (Green) to the Minister of Conservation: Has she considered making the decision herself on Milford Dart Ltd’s concession application for a private bus tunnel, rather than delegating it to a Department of Conservation manager; if not, why not?

Hon KATE WILKINSON (Minister of Conservation): I have considered it and have been advised that there is a long-held convention, under successive Governments, that concessions under the Conservation Act are normally decided at departmental level. In fact, there have been more than 10,000 concessions considered under the Conservation Act in the past 10 years, decided by a delegated decision maker, not the Minister. Although this does not mean that intervention would never be justified, I am comfortable letting the normal process run its course.

Eugenie Sage: Why will she not make the decision herself, when the proposed private road tunnel would affect two majestic national parks and the internationally important Te Wāhipounamu - South West New Zealand World Heritage Area?

Hon KATE WILKINSON: I am aware that there are many issues in relation to the application, and there is no doubt that this is a contentious issue. I have delegated this to the level of director-general to ensure a robust process is followed, free from interference, whether political or otherwise, as is the long-followed practice. I would consider the decision to grant the Kaituna dam proposal during the final term of the Labour-Green Government was contentious also, and I note that this was, like all the others, delegated from the former Minister to the department.

Eugenie Sage: In leaving the decision to a departmental official has she taken account of the high public interest in protecting Fiordland National Park and Mount Aspiring National Park, with 25,000 people, more than 2,000 of them from overseas, signing a petition calling for Fiordland National Park not to be dug up?

Hon KATE WILKINSON: That member is able to make unqualified statements of opinion, but as Minister I do not have that same luxury as it could be seen as interference in the decision-making process. It would not be in the public interest for me to comment further at this stage as it could compromise or jeopardise that statutory process, and it is important to remember that either or both parties, the applicant and/or the objector, can seek judicial review of a decision not made in accordance with proper process.

Eugenie Sage: If the Minister will not give an assurance that she will make the decision on such a large private commercial use of two national parks, what type of commercial concession application would she decide, or does she want to avoid approving a development that would severely compromise the parks and the World Heritage area?

Hon KATE WILKINSON: The member is asking a hypothetical question. I am dealing with applications that are on the table at the moment that are going through their proper statutory process, free from political interference or otherwise.

Eugenie Sage: Does the Minister believe that an appropriate way to celebrate the 60th anniversary of Fiordland National Park is to dig a tunnel in it and through Mount Aspiring National Park, and is she worried that instead of attracting tourists to visit a pristine Middle Earth, the journey will have to be rebranded as a visit to Mordor?

Hon KATE WILKINSON: I can only repeat what I have already answered. That member is able to make totally unqualified statements of opinion. I am concerned with making sure that the proper process goes through its course, to make sure that there is less chance of judicial review from either side, and to make sure that proper process is obeyed.

Eugenie Sage: I seek leave to table a plan map produced by URS for Milford Dart Ltd showing the location of the proposed tunnel adjacent to the start of the Routeburn track, walked by 11,000 people each year.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.

Denis O’Rourke: Is the Minister concerned that if the tunnel is built, it would irrevocably damage towns like Te Ānau, which are dependent on the slow tourism market, or does the Government just want to encourage large-scale, low-employment operations that profit only a few wealthy investors?

Hon KATE WILKINSON: That is yet another unqualified statement of opinion. In relation to that question, I am more concerned that proper process is complied with free from interference, political or otherwise.

Businesses, Small—Compliance Costs

7. Dr DAVID CLARK (Labour—Dunedin North) to the Minister for Small Business: What changes, if any, has he proposed to the Minister of Commerce to the Companies Act 1993 to reduce the burden of compliance on small businesses?

Hon JOHN BANKS (Minister for Small Business): I am always considering recommendations that will help small business. I have been a small-business owner myself for 50 years, but as the Minister for Small Business I have not proposed any such changes to the Companies Act to the Minister of Commerce.

Dr David Clark: Will he propose any changes to section 377 of the Companies Act, regarding the penalties for a director making a false statement, to cover those who cannot remember, or just did not bother to read the statement before signing it?

Hon JOHN BANKS: No, I have not made any such proposal to the Minister of Commerce. I am not proposing any changes to the Companies Act, and I certainly am not proposing to raise the minimum wage to $15, as it will turn big businesses into small businesses and put small businesses out of business, which is what that side of the House wants to do.

Dr David Clark: Will he be moving to amend the Companies Act so that those small-business owners who do not read statements that they sign and that are found to be false will be exempted from any prosecution; if not, why not?

Hon JOHN BANKS: I have not considered that, and I am also certainly not proposing to take GST off fruit and vegetables, because it would put a compliance nightmare—

Mr SPEAKER: Order!

Chris Hipkins: Can he answer the question now?

Mr SPEAKER: He has answered the question.

Jami-Lee Ross: If the Minister is not recommending any changes to the Companies Act, what other initiatives is the Government undertaking to help small business and reduce compliance costs?

Hon JOHN BANKS: That is a very good question from a fine member of this Parliament. I am always talking to my colleagues about how the Government can help small businesses and grow the economy. As Minister for Small Business—[Interruption]

Mr SPEAKER: Order! I apologise to the Minister. The member asking that question has just as much right to ask a question as any other member, and the House deserves to hear the answer. There will be some respect for this House.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. We were just checking to make sure that Mr Goldsmith was all right. He appears to have slunk down—

Mr SPEAKER: Order! That is not a point of order.

Hon JOHN BANKS: Small business is the backbone of the New Zealand economy, and I am very honoured as member for Epsom to hold this portfolio. As Minister for Small Business I have launched an updated version of Start, Manage and Grow—[Interruption]

Mr SPEAKER: Order! I apologise to the Minister again, and I say to the Labour middle benches that that is not good enough. The members are better than that, and they should display better than that.

Hon JOHN BANKS: As Minister for Small Business I have launched an updated version of Start, Manage and Grow your Business, which provides small businesses with up-to-date information about how the Government can help them grow their business. I have also released a report on the Small Business Advisory Group’s recommendations, and will be coordinating the Government’s response to those recommendations. Further, this John Key - led Government has reduced the company tax rate and launched the Better Public Services initiative and the Business Growth Agenda, which will substantially assist people in growing their small business, which is what it is all about.

Dr David Clark: Should a small-business owner read all statements that they are required to sign under the Companies Act; if they do not do so, how would he describe them: a, negligent; b, careless; or, c, John Banks?

Hon JOHN BANKS: That member asking the question has never owned a small business, and I am certainly not going to propose removing the financial difference between working and not working by tampering with Working for Families, as the Greens want to do. I am not going to change the Reserve Bank of New Zealand Act, as New Zealand First is proposing, because it will wreck the economy.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. With the greatest respect, I understand Mr Banks’ difficulty, but loud, obfuscatory answers are not what the House wants.

Mr SPEAKER: Order! [Interruption] Order! There will be no—[Interruption] Order! I think there is some merit in the member’s point, because New Zealand First did not even ask the question and there were no excuses for bringing New Zealand First into the answer.

Welfare Reforms—Social Security (Benefit Categories and Work Focus) Amendment Bill

8. Dr JIAN YANG (National) to the Minister for Social Development: What changes will the Social Security (Benefit Categories and Work Focus) Amendment Bill make to the welfare system?

Hon PAULA BENNETT (Minister for Social Development): We are making changes to New Zealand’s welfare system and turning it into one that has an active and work-focused investment approach. The bill has been introduced to the House and is expected to be read within the next couple of weeks.

Dr Jian Yang: What changes are being made to the current benefit categories?

Hon PAULA BENNETT: There will be three new main benefit types, which will replace the current seven. Jobseeker support will be for those actively seeking and available for work. Those numbers from the unemployment benefit will go up to about 135,000, as we include those on the sickness benefit and those on the DPB whose youngest children are 14 years or over. The new sole parent support, which will go down, because it has got those people who have their youngest children aged 14 or younger, will have around 88,000 people on it, on today’s numbers. The new supported living payment is for people significantly restricted by sickness, injury, or disability. However, it will go up, because it will also include those who are on the domestic purposes benefit caring for sick or infirm, which is for those looking after someone who would otherwise require hospital care.

Dr Jian Yang: How will the changes ensure a greater work focus?

Hon PAULA BENNETT: We are placing a greater focus on work. The new jobseeker support will include those capable of work and also those who are temporarily exempt but soon will be able to work. Those currently on the sickness benefit will be now included in the jobseeker support, and will be assessed through their work capacity. I think the main difference is that we are looking at what people can do, instead of what they cannot, and then wrapping the supports round them so that they can get back to work quickly.

Jacinda Ardern: Will she guarantee every child in the home of someone who is subject to her social obligations a place in early childhood education and access to free doctors’ visits if they are under 6?

Hon PAULA BENNETT: The member has asked questions around this before, and I have always been quite clear. The social obligations say that we want to have children in early childhood education, we want kids who are school aged to be at school, we want them to be enrolled with a general practitioner, and we want them to get those sorts of obligations there. If they cannot because there are barriers or there are not places, then we will make sure that they are acknowledged, and they will not be sanctioned or penalised for that. We also know that there are empty spaces in early childhood centres that are not being taken up by children who are around that area and who would hugely benefit from that. So we want to support them into it.

Exchange Rate—Discussions with Reserve Bank

9. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Finance: What discussions, if any, has he had with the Reserve Bank regarding the exchange rate in the past six months?

Hon Dr JONATHAN COLEMAN (Associate Minister of Finance) on behalf of the Minister of Finance: The Minister meets with the Reserve Bank on a regular basis, and the exchange rate is frequently discussed as part of these conversations.

Rt Hon Winston Peters: Were options for addressing the overvalued dollar included in these discussions, like the use of alternative monetary policy tools such as a soft cap on the New Zealand dollar or measures to limit the extent of short-term cyclical capital inflows; if not, why not?

Hon Dr JONATHAN COLEMAN: There are a range of issues that are discussed at those meetings, but in response to the member’s question, if you look at the policy targets agreement, in section 4(b), there is the capacity for the Governor of the Reserve Bank to take a range of issues into account as well as inflation.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! A point of order has been called.

Rt Hon Winston Peters: I asked the Minister—

Mr SPEAKER: I think I can save time. The member indeed asked whether those particular issues had been discussed—issues to do with a soft cap on the value of the dollar; there was a further issue as well. It was a pretty straight question.

Hon Dr JONATHAN COLEMAN: On behalf of the Minister of Finance, I, obviously, have not been present personally at a lot of those discussions, but a full range of responses is discussed between the Minister of Finance and the Governor of the Reserve Bank.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I invite you to have a look at that answer. The Minister got up and said: “On behalf of the Minister of Finance, I have not been at a lot of those meetings.” Well, clearly the Minister of Finance has been at all of those meetings.

Mr SPEAKER: Order! I do not think the Minister was trying to be unhelpful. I think he was acknowledging that he is answering on behalf of the Minister; he was pointing out, in doing that, that he had not actually attended the meetings. I accept the language was less than perfect, but I do not think there was any attempt to be unhelpful.

Rt Hon Winston Peters: When the Prime Minister said in April, as the dollar approached US82c, that “we’re considering what we can do to resist a rising exchange rate,” what did the Government have in mind?

Hon Dr JONATHAN COLEMAN: I think the Government has been pretty clear that the key here is actually increasing the competitiveness of New Zealand firms. It is not interfering directly in the exchange rate. So that is what our whole programme is focused on: increasing the competitiveness of the economy. Actually getting in and interfering with the exchange rate is not the recipe for economic success.

Rt Hon Winston Peters: Are we to take from that answer that he asserts that the New Zealand Government has absolutely no way of influencing the New Zealand dollar down and now?

Hon Dr JONATHAN COLEMAN: Yes.

Schools, Canterbury—Proposed Closures and Mergers

10. Hon LIANNE DALZIEL (Labour—Christchurch East) to the Minister of Education: On what date did she approve the proposal for changes to the schools network in Canterbury, announced last Thursday, and when were school principals and board of trustee chairs affected by the proposed closures first invited to a briefing on that proposal?

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. In answer to the first part, Cabinet approved the education renewal plan for Christchurch, Waimakariri, and Selwyn on 20 August 2012, including a $1 billion investment. In answer to the second part, on 5 September a newsletter went to all schools, inviting them to a meeting on 13 September. This was followed up on 6 September by an email invite, and on 7 September hard-copy invites were sent to all schools. Further, the principal and board chair of proposed closing, merging, and relocating schools were contacted by phone the day before the announcement, at 10 a.m. on Thursday, 13 September. I personally met with most of the affected schools and then with all schools, outlining the Government’s proposal and opening the Ministry of Education’s third phase of consultation.

Hon Lianne Dalziel: Why did she not brief the schools proposed to close before the day of the public announcement, to minimise the impact of unexpected news on the parents, who have relied on these schools for stability and normality in their children’s lives since the earthquakes?

Hon HEKIA PARATA: In weighing up all of the circumstances and factors, I chose to brief them first at 10 o’clock in the morning. The expectation was that the embargo until 2 o’clock would give them the opportunity to speak to their schools. In the event, the embargo was extended to 4 o’clock, and was broken.

Hon Lianne Dalziel: Is the consultation that boards are being asked to undertake, where closures or mergers are indicated, consultation as required under the Education Act to close or merge a school, or is it a genuine opportunity to influence a different outcome from the closure or merger proposals?

Hon HEKIA PARATA: We opened the third phase of consultation on 13 September. There will be specific processes unfolding, depending on the status of the particular school.

Hon Lianne Dalziel: I raise a point of order, Mr Speaker. I asked that question very carefully because there are consultation requirements under the Act, and I do not believe that the Minister addressed the question.

Mr SPEAKER: The substance of the question was whether the consultation process would simply follow the requirements as spelt out in the Act, or whether there was an opportunity to actually influence the outcome of the proposal. If the Minister could help in her answer with that, that would be most helpful.

Hon HEKIA PARATA: To be clear—[Interruption] To be clear, to be clear—[Interruption]

Mr SPEAKER: The member is not helping. I do not mean the Minister; I mean the member interjecting.

Hon HEKIA PARATA: To be clear, the third stage of consultation opened last Thursday, on 13 September. At the point that I formally begin the process under the Act, then that process will be followed and those particular schools will be notified.

Hon Lianne Dalziel: Can she confirm that any school earmarked for closure from January 2013 will not be required to close in 2013 unless they voluntarily select this option, and what steps can they take to remain open?

Hon HEKIA PARATA: As I have already said, the third stage of consultation opened on 13 September. Thirteen schools are proposed for closure, of which two have indicated that they wish to seek voluntary closure. The remaining will be on a time line that incorporates both this open consultation now and under the Act at a date that I am yet to define. It will be in the unfolding of that process that we will know what the subsequent steps and their time line will be.

Hon Lianne Dalziel: I seek leave to table a statement from nearly 130 of the people who attended the Ōuruhia Model School meeting last night, asking for support around the fact that there is no major earthquake damage at their school, their school roll is steady, and they have a dedicated community and staff behind them committed to supporting the school.

Mr SPEAKER: Leave is sought to—[Interruption] Members are inquiring about the source of the document.

Hon Lianne Dalziel: It is a signed—

Mr SPEAKER: It is just a signed statement from a meeting.

Hon Lianne Dalziel: It is a signed statement from 128 people—128 people have signed this.

Hon Hekia Parata: Isn’t it a petition?

Hon Lianne Dalziel: It is not a petition—

Mr SPEAKER: Order! It is a signed statement by 120 members of a community involved in this process. Leave is sought to table that document. Is there any objection? There is no objection.

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

Student Loans—Changes

11. SIMON O’CONNOR (National—Tāmaki) to the Minister of Revenue: How has the Government made the student loan scheme more affordable for taxpayers?

Hon PETER DUNNE (Minister of Revenue): The Government is committed not only to making the scheme more affordable but also to keeping student loans interest-free. Through a number of measures that we have taken since coming to office we have been able to reduce the cost to taxpayers of student loans—the write-off—from around 48c in the dollar by 19 percent to now just 39c in the dollar. These savings allow us not only to improve our overall fiscal position but also to reinvest in quality tertiary education for future students.

Simon O’Connor: What actions has this Government taken to make the student loan scheme more affordable?

Hon PETER DUNNE: A number of actions have been taken. The most dramatic would be the announcement in August 2010 of a pilot programme to recover debt from overseas-based borrowers. That programme to date has brought in repayments of over $32 million, with a further nearly $3 million under payment arrangement. We have also reduced lending to students who are less likely to repay, including the introduction of requirements for academic performance, set limits on total support to encourage students to complete their study on time, and limited lending to groups who are less likely to pay back. And we have stopped lending to students who are in default on previous student loans. All of these moves help us not only to recover debt that is due but also to make the scheme far more affordable.

Question No. 12 to Minister

Hon DAVID PARKER (Labour): I seek leave of the House to carry over my question to a day when the Minister of Finance is present.

Mr SPEAKER: Leave is sought for that course of action. Is there any objection? There is objection. I call the Hon David Parker—[Interruption] Does the member wish to withdraw his question?

Hon DAVID PARKER (Labour): Yes.

Mr SPEAKER: OK. The member has that right, and that brings to a close questions for oral answer today.

Urgent Debates

Schools, Canterbury—Proposed Closures and Mergers

Mr SPEAKER: I have received letters from Catherine Delahunty and from the Hon Lianne Dalziel seeking to debate under Standing Order 386 the Government’s proposed changes to education in Christchurch, Selwyn, and Waimakariri. This is a particular case of recent occurrence. The Government’s announcement was, in fact, not publicly released until after the House sat last Thursday, although there were earlier media reports. It involves ministerial responsibility. Although the announcement is a proposal for the future direction, and a detailed programme of engagement is being developed, the proposal is an important one and foreshadows developments of very considerable public interest. Given the significance of the matter, I consider it important enough to warrant the immediate attention of the House by way of an urgent debate. The two applications are not identical, but they relate to the same matter. As Catherine Delahunty lodged her application first, I call upon her to move that the House take note of a matter of urgent public importance.

CATHERINE DELAHUNTY (Green): Tēnā koe. I move, That the House take note of a matter of urgent public importance. The Christchurch educational renewal plan is a plan for cluster learning—or is it a cluster bomb? This education plan has a context that has to be acknowledged as a terrible natural disaster now made more complex by a very difficult response by the Government, and there is deep mistrust between Christchurch communities around democracy and around issues of education. So we are looking at a stressed community who are asking for a logical and fair response to a natural disaster. Instead there are going to be 13 school closures and 18 mergers, and people are very concerned about their ability to influence this—[Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): Order! Would members carrying on private conversations like to take them outside the House. I am trying to listen to the honourable member Catherine Delahunty.

CATHERINE DELAHUNTY: —and about what is the underlying agenda behind this. That is why we already have an online petition by people concerned about children, we have had public meetings already referred to in this House today, and we have a rally tomorrow and Saturday in Christchurch by a community who are very, very concerned about both democracy in education and Christchurch people, who have had it up to their necks with stress, with change, with instability, and with shock.

The Christchurch Press has made some interesting comments today, quoting other people from that city, quoting principals, parents, and teachers about what is actually going on for them right at this moment. As one principal said to their children, “You have been through enough.” We are not denying the need for change. It would be foolish to pretend that anything can go back to the way it was. We are not denying the importance of reassessing education, because it is an opportunity to do so, but, unfortunately, what has come out of the renewal plan in the context of the mistrust that we exist in has not been successful to date. It is very unfortunate what happened last week. It is very unfortunate that the way in which the plan was launched created, if you like, an earthquake of its own. It is not being made up by people in this House; it is being communicated to us strongly, to all of us who are open to hearing it, that there are real problems.

This is an issue of education as well as location, and that is why I am standing here in support of the members of this Parliament from Christchurch, from my party, who have told me that they are flooded with emails from local people, as I am myself as an education spokesperson. And all of this is occurring in a city that has been shattered and is seeking hope and regeneration, in a city where facilities such as schools have been the key support for the devastation of those communities, where local really matters more than anywhere else. I myself, having spent time in Aranui during the earliest days in February, saw the role of those schools. I walked those streets, and I know nothing compared with those communities who are saying: “We want change, but we want it on our own terms.”, and I think that is a fair call.

Many of these schools have been the single stable factor in the children’s lives. Their parents may have lost their jobs, their parents may have lost their home, and they may have been moving around their suburb. They may have been through all kinds of changes. And, for children who are young, they may have lost the certainty that the earth actually supports us. Now the school, which has been their key place of reference and source of resources, may be going to close. Maybe some of them need to. If you take the example of Le Bons Bay School on Banks Peninsula where the predicted roll growth is something like six, there is a logic to it, and they support it. But if you take Aranui and the Wainoni area and some of the intermediates, there are real problems with this renewal plan.

Many of the schools are asking us to raise issues about the real agenda. For many people the idea of super-sizing is not logical. It smacks more of what Naomi Klein calls shock doctrine post-disaster reorganising than of a plan based on the educational needs of some of our youngest citizens. A core issue for people is trust. How can they support and trust a Government that has already attacked Environment Canterbury and cancelled the local body election, and now is saying it is going close 13 schools and merge 18 when the criteria have not been made clear?

What happened last Thursday did nothing to reassure anybody that they are going to be heard. The possible option of merging Shirley Boys High School with Christchurch Boys’ High School—although some say it will never happen and it was never meant to happen—is a good example of how, if you put up an option that is clearly a worst-case scenario from those schools’ point of view, you will get that kind of reaction.

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

CATHERINE DELAHUNTY: So the renewal plan—sorry, Mr Speaker—is actually putting up options that have, perhaps, made the situation even more fraught, which is really unfortunate, so we have had a lot of principals speaking out and being very concerned. Because of the level of stress, people will take the worst-case scenario from their point of view. They will not just jump on the fact that it may be just an option. I think that is why there has been so much concern.

The other issue is educational reform. What the Government is asking us to do is trust it on education. Well, I am sorry, but we have been in this House for a number of years seeing national standards imposed on schools, whether they liked it or not. We have seen the whole issue of class size turning into a ludicrous debacle, then we have the bizarre spectre of experimental, ideological charter schools, and people in Christchurch—and I have been there and attended public meetings on those issues—do not trust that this renewal plan is not connected to that agenda. In fact, the renewal plan is explicit about taking opportunities, but for whom, and for whose benefit, is what the people of Christchurch who are affected by the potential closures would like to know.

So what are the criteria? We were told last week there are three—that there is demographics, earthquake damage, and also a quiet mention of educational achievement. We would like to know what that means. What is meant by judging a school on the third one? If those schools are being closed because they are failures, then that needs to be put up front so those schools can challenge that, because it is a very interesting criterion to use. So whatever, we need to examine those three things. Demographics—there is a huge debate about demographics in Christchurch right now. There is a huge debate as to whether the 4,500 or so students who have left will return during the rebuild. There is a big debate about what is happening in early childhood education. There is a considerable debate about what is happening in terms of the buildings.

Some of the schools—as the Hon Lianne Dalziel just pointed out in her question—do not have damage. So if they do not have a demographic collapse and they do not have damage, then it is very difficult for them to accept the rationale. If the rationale is they are failing students, then let us go there for a moment. If they are failing students such as Māori and Pacific students, then let us go there for a moment, because the plan is very strong on that. Of course, I myself am very interested in that discussion, but what I am hearing from the two kura is that they are going to be merged against their will if this goes ahead. The two kura are in the paper today saying they are actually going to the Waitangi Tribunal to lodge a complaint about what they describe as a new round of colonisation, which is hardly to the benefit of Māori students who are asking for the choice of having two kura. These two kura are very different from each other and have asserted that they do not want to be put together.

Te Whānau Tahi in Spreydon and Te Kura Whakapumau i te Reo Tūturu ki Waitaha are actually complaining that they are going to be merged, when they come from really different cultures. They compared themselves with Catholics and Jews and said it is like saying that they should all be in one school, which is an interesting comparison. But what I think they are really saying is: “Just because we’re Māori, don’t say we have to merge. If you’re serious about lifting the achievement issues, if you really want to talk to us, be really explicit about these educational criteria that you’re applying in the renewal plan. Don’t just say it is demographics, don’t just say it is geotechnical, unless you have finished the work.” We have got a situation where at Shirley Boys High School, for example, and at other sites, the work is not actually finished, yet the options are being put up that they have got to be moved. So it has created this huge level of confusion.

It was never going to be easy, and I am not saying the Government had an easy task, but what is interesting is what we are hearing back from communities—and parents, in particular—about how they see the consultation to date. So 544 people were involved in the consultation, and many of them emphasised points that I believe have been manipulated, such as the word “school” as “hub”. If you read the analysis of the summary of the submissions, what you are hearing is not that people want bigger schools, but what they want is that if their existing local school can be rebuilt, if there is sufficient logic, and if they agree with it, that they have more services available on those sites, which is actually a hub, but not necessarily to be merged with bigger schools, because bigger is not always better.

There are a huge number of issues that I would like to canvass: issues around early childhood and the concerns around waiting lists that already exist, and issues around school transport in a city that is already really difficult in terms of transport. The rural schools, such as Duvauchelle School and Okains Bay School are raising concerns because they do not necessarily want to be merged with Akaroa Area School. There are issues around unfinished reports and all kinds of community issues. I went to Banks Peninsula recently and I saw the size of some of those schools. For some of them there is logic to the mergers, but for others there is definitely not. The intermediate parents and teachers have raised a lot of issues, because they think there is actually an agenda around it. There are core issues around what is really going on with the plan.

Renewal is about the right of education, for professionals, parents, and teachers to talk about the kind of hope they want for their city—and they did that. They participated. But many of them are now reacting and saying that they are not actually happy with what is being proposed. I have many quotes in front of me from parents saying things like “This has added to our uncertainty.”, “Every person we have spoken to is furious with having something else ‘done to us’ by this Government.”, “The schools have been a real focus of our community. With this side of the city in a constant state of flux, they have been the rocks of our community. By offering the children something normal and stable and predictable, that’s what’s been important.”, and “The communication and transparency has been confused, contradictory, and amateurish.” “There has been a lack of”—this is quoting from parents—“compassion or empathy.” Other concerns are that consultation is a mere talking shop: “To be honest, there will be a further push to leave Christchurch.” And one of the last comments that parents sent to me was: “Don’t experiment with people in vulnerable situations. Don’t experiment with their children’s future.”

They are worried about charter schools. They are worried about super-sized environments. They know there has to be change, but they want the plan to reflect what they are saying about local resilience and local power. Because if there is one thing people care about—and it is obvious in the analysis of submissions—it is that they care about their local cultures, and their local, very specific traditions. The people on the west side are very concerned, but the people on the east side have been through far worse. So if there is a logic to making change, they have to have buy-in, they have to be negotiated with in a way that is respectful for them.

Unfortunately, the launch was a really bad beginning to a very difficult process, and it is really, really important that from here on there is a constructive engagement about the criteria. So the demographics, the issues around whether it is building damage or not, and the issue particularly around the education agenda—whether it is failure or whether it is underachievement or what that means—has to be made explicit to those communities, because they are asking to know “What have we done wrong? Why are children going to have to move?”. I think if you are going to talk about closing a school, even not in a disaster zone, it is always very emotional, it is always very sensitive. If you are going to do that, you have to say you take the community with you.

There is a lot of wonderful rhetoric and there is all this wording about dual shifts and recapitalisation, but it sounds more like de-capitalisation and decapitation. We have to be more careful than this, because I do not think that the people of Christchurch who are writing petitions and who are holding public meetings are being manipulated from Wellington. What they are saying is: “We live here. We want more dialogue. We want to be part of the decision making and we want educational change to be based on the robust and resilient issues that we actually live with.” And everybody like me who comes from a small community knows what a school can be. If it is down to six, close it, but if it is not, if it is an intermediate like Chisnallwood, which is actually seen as highly successful by its community, then we have to make a better argument than say a whole lot of rhetoric about consolidation, rejuvenation, with lots of lovely, shiny documents, and lots of beautiful words. But in the end, people who are traumatised and children who are traumatised need a great deal of care and there needs to be more care than was shown last week. I appreciate the difficulty of what is trying to be done, but hope is based on respect, and respect must be based on listening to the people on the ground. Kia ora.

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. Huri noa i tō tātou Whare, tēnā tātou katoa. New Zealand has one of the best and top-performing education systems in the world. That has not happened by accident but by design, nor can it be sustained without constant attention and innovation. Our challenge is always how we can do what we do well even better, while constantly looking for opportunities to improve where we must. New Zealand must continue to transform its most potent resource, our people, through the power of education, to grow our productivity and economy, and to strengthen the social and cultural fabric of our society.

The terrible tragedy of the earthquakes, and the ongoing costs of all its measures, has forced upon the people of the greater Christchurch, Waimakariri, and Selwyn areas both its consequences and its opportunities, and upon the people of New Zealand a willing obligation to support. Rebuilding Christchurch is one of four Government priorities. Rebuilding the greater Christchurch area restores the economic pivot of the South Island and the society and culture of its communities. Education not just for now but for a strong future is a critical part of the investment that our Government is making. So on 13 September, together with my honourable colleague the Hon Gerry Brownlee, we announced a $1 billion investment in the education provisions for the greater Christchurch, Waimakariri, and Selwyn areas. That $1 billion will, over 10 years, rejuvenate, restore, and consolidate the network for education options for our youngest learners to our oldest.

We cannot simply put back what was there before. We must also make system improvements. From the consultations we were told that people wanted a mix of both tradition and newer 21st century options, diversity of choice, and more equitable education outcomes. The operational realities of post-quake Christchurch, the experience of sharing and collaboration, and the innovation that has arisen have also provided insights for ongoing provision. As we embark on this third stage of consultation about educational renewal, I want to take the opportunity of once again thanking schools, their boards, and their principals for the leadership that they have shown, and to once again highlight the tremendous success that the senior secondary school students of the region showcase. Some schools have reported an increase of up to 15 percent in National Certificate of Educational Achievement achievements and a quarter of last year’s top scholars came from Christchurch schools.

So how do we both build on that success and invest in raising that success for five out of five learners? Well, in October last year we began the first round of consultation by using an online survey, forums, and interactive small and public meetings on the future shape of education provision. From the over 200 responses we received, we published Directions for Education Renewal in Greater Christchurch. In May this year we produced yet another document, which sets out further provision, but this time on the specifics. We published in July the analysis of over 550 submissions, and in September we published the opportunities for innovation. All of these together provide the context for the third phase of consultation, which we embarked on last week.

The announcements included the $1 billion investment we are making over a 10-year period in 41 learning community clusters, comprising all of the learning options in a geographic community. These clusters provide the opportunity for those communities to consider what they think is their best option, and to put forward their cluster plan. In addition, I announced three categories: restore, consolidate, and rejuvenate. They are based on the level of activity and the level of engagement that we anticipate will be necessary for all of those schools. I announced that of the 215 schools, 42 have firm proposals for a change of status, from closure, to merger, to shared governance, or to complete rebuild. Some secondary schools are awaiting geotechnical information and a range of options have been proffered to them, but no firm proposals or finite options have been put on the table. We are still waiting to have those discussions. Of the 173 schools not affected by these firm proposals—that is, 80 percent—I announced that 40 would now begin repairs, that 23 school swimming pools would be completed by the beginning of term 1, and that new provision would be made in Rolleston, Pegasus Town, and Halswell. I also announced that there would be three advisory groups: an education advisory board, a Waitaha advisory board, and a Pasifika advisory board. I announced a multidisciplined, fast-moving task force that would be set up and would include external expertise.

All of this was announced to all schools, in two consecutive groups, on Thursday. The first group comprised those schools most directly affected. Every school was given detailed information for their school and for the community cluster that they were a part of. They were also given a time line and a process for engagement. They were given contacts for the website, and the Ministry of Education has since followed up with a discussion about when, over the next few days, to schedule a cluster meeting for them. The time line for this third phase of consultation goes through to the middle of next year, with more specific processes for different schools, all of which will be advised to those schools. It is quite understandable that those communities most directly affected are upset. The challenge is providing certainty and clarity about the next steps. That is what I have done. It will require us to work together, and the Ministry of Education has been, or is in the process of being, in touch with every school to schedule that ongoing consultation.

I am proposing that of the 42 schools affected by closure or merger, 13 are proposed to close. Of those, two have sought voluntary closure, five have rolls of fewer than 50, and some have sustained earthquake damage and/or are in a cluster that has a range of other options. I am proposing that 18 schools merge, of which two are kura kaupapa Māori, both of which are in the south and are 5 kilometres apart, whilst there is no Māori-medium option in the north. I am proposing that five be replaced by one whole-of-life campus with shared facilities in Aranui, and three share governance in Banks Peninsula as an area school. Three are awaiting geotechnical information. All of these proposals are made in the context of a land and building assessment, movement of people—before, now, and projected—educational achievement, both pre-quake and post-quake, diversity of provision across the network, and a system-wide lift in achievement.

At the centre of this $1 billion investment is a focus on the learner, now and in the future, and on raising achievement for five out of five learners. I invite all the learning community clusters to take full advantage of the opportunities for engagement and discussion in this third stage of consultation. Thank you.

Hon LIANNE DALZIEL (Labour—Christchurch East): I actually do not accept that it is good enough for the Minister of Education to cancel a conference that she was due to attend tonight—

Hon Hekia Parata: I didn’t cancel.

Hon LIANNE DALZIEL: She was supposed to be at the conference tonight—

Hon Hekia Parata: I raise a point of order, Mr Speaker. It was not my conference and, therefore, it was not in my—

The ASSISTANT SPEAKER (H V Ross Robertson): No, that is not a point of order. That is a debating point.

Hon LIANNE DALZIEL: It is not good enough that this Minister cancelled out of a conference that she was due to speak at tonight, as part of the opening of that conference, and stand here in this House and not even complete the 15 minutes that has been allocated to her to defend the Government’s announcements last week. I want to tell her that the devastation that she has wrought on the people whom I have the privilege to represent—

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. You may well have ruled that the previous point raised by my colleague was a debating point, but I do think it worth noting that the Speaker signalled, as strongly as he could, last Thursday afternoon that this debate would take place. Anyone who thinks it is a snap debate clearly was not listening at the time. I think the Minister has shown the House appropriate courtesy by being here.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you for your explanation, Mr Brownlee. That too is debatable.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. The Minister was uninterrupted in her speech, for her 13½ minutes. This member has been interrupted twice—twice—with spurious points that are not points of order. I would invite you to rein them in.

The ASSISTANT SPEAKER (H V Ross Robertson): I have ruled on them. Thank you.

Hon LIANNE DALZIEL: I do not believe that it is good enough to stand in this House and not acknowledge the impact that this announcement—without warning, without preparation to communities—has heaped upon those people who are suffering down there as a result of the earthquake. In fact, what I really heard the Minister say was that this has given her an incredible opportunity—that is what the earthquake has given the Government—to do things that it would not otherwise be able to do. At the launch we were told by the Government that Christchurch could be the exemplar for the rest of New Zealand.

I want to put this on the record. The Government said that Christchurch would be the exemplar for the rest of New Zealand. I believe that the rest of New Zealand needs to hear what is going on in Christchurch. They have to see this not as a Christchurch issue but as a Government issue, where it is imposing its will on the people of Christchurch in order to pilot the work that it wants to do in the rest of the country. This is not about just Christchurch; this is coming to a school near you. Every single New Zealander needs to be aware of this.

I have to say that this is the message that is coming back from on the ground in Christchurch at the moment as people reel from the impact of that announcement. Nothing prepared these communities for what they heard last Thursday.

The pre-breakfast cross-party forum from the Minister did nothing to prepare MPs for what was to be announced that afternoon. Certainly, we were told about the clusters. We were certainly told about shared site provision. In some instances we were told that there would be some closures. But when we were told that no thought whatsoever had been given to preparing the community for the announcements—they talked about the work that had been done with the schools only, not with the communities; they had done no work with the communities to prepare them for the announcement on closures—that was admitted at that meeting, and I guess that left us thinking that the announcements were not going to be the way that they were. We believed that there were going to be some sensible closures, some sensible mergers, and that they would be the ones that have been sought. We have already heard that there are two schools that are voluntarily going to seek closure in the time frame indicated by the Minister. Everyone accepts there has to be change, but nothing prepared the people of Christchurch for the change that this Government has wrought upon them.

Did the Minister give any thought to the crushing blow that this announcement would have on the parents and the children who have seen these schools as the mainstay of their lives? I want to remind this House that children were at schools in Christchurch on the day of the earthquake, on 22 February, and those teachers and principals made sure that there was somebody with the children all day until the parents could come. But I know that there was a school where the parents never came, and that is because the father was waiting in Latimer Square for his wife, who would never be pulled from the CTV Building, and that is a school that is going to close under the proposals if they are adopted by this Government. I just want to remind this House that there are people in Christchurch who have absolutely depended on the schools to give their children normality and to give them the security of knowing that they are in safe hands while their parents get on as best they can in terms of getting their own lives back to normal. It has been a hard row to hoe, but I have to say that the way this announcement was announced was nothing less than cruel in terms of the impact it was going to have on people.

What of the announcement itself? The day before we heard that confessed to by the Minister in the House as she answered questions today, the principals of schools that were going to close or merge—and, actually, remember that if 18 schools merge, it means that nine schools close; so there are a hell of a lot more than 13 schools that are going to close in Christchurch—got a phone call to come go a pre-launch briefing. So they went to the pre-launch briefing, but before they went to the pre-launch briefing they rang around to find out who got the invitation to the pre-launch briefing, and it started to emerge that, actually, maybe this was not going to be quite what they expected it to be. Was that part of the plan? Did the Government want to create that level of uncertainty so that people whose schools were not being merged or closed would somehow defend the Government’s behaviour?

As people arrived at the meeting, they were given name badges, and then we found out that the colour of the name badge described what was going to happen to their school. This is how we treat principals and the chairs of boards of trustees. It is absolutely outrageous how they were treated.

The Minister then gave a briefing to this assembled group of principals and board chairs, and she told them about the $1 billion to be invested in Christchurch education. She did not say how much of that was going to be poured into the redundancies that will follow. She talked about the clusters and about how this was going to be a wonderful opportunity. While she was speaking, they were distributing the packs to the teachers, to the principals, and to the board trustees, and while they were sitting there hearing words like “restore”, “consolidate”, and “rejuvenate”, they were reading their packs and their packs were telling them that the words “restore”, “consolidate”, and “rejuvenate” actually were Government spin for “repair”, “merge”, and “close”—Government spin for “repair”, “merge”, and “close”.

I think that the Minister has been genuinely surprised at the overwhelming response of negativity from the people of Christchurch, and she had to cancel her attendance at this principals’ conference. She knew it was on. She knew it would be a clash with this announcement, and that confirms to me the view that she intended to release this at the end of August but changed the launch date as a result of the interference from the office of the Minister for Canterbury Earthquake Recovery, and I am sure that he also advised her how to run Government spin around a bad announcement. She knew that the community would be looking for leadership at this time from its school leaders. How dare she treat communities like this—allowing the principals to be away at the time when the community needs them the most? It is arrogance that beggars belief. And now they are being led to believe that their views will count.

Well, I just remind this House what happened when this House was asked to look at Aorangi School. People will remember what happened with Aorangi primary school and how many of those students went to Burnside Primary School, in the electorate of the Minister for Canterbury Earthquake Recovery. How is he going to go and face those parents and explain to them why he closed this school and is now closing the school where they have gone?

I find it unbelievable, really, that the Government has taken this approach. I do not believe that the Government is really going to listen to the people at all, because the Minister has made it clear that these are firm proposals. These schools are predetermined. I want to remind the Minister that when a board wants to merge or close, there are list of questions that the ministry asks the boards to consider. What educational benefits for students would we hope to achieve? Will there be educational and/or social advantages for the students in a larger school? How far away are neighbouring schools? What travel would be involved for the students? Would these schools provide the education the parents are seeking? What are the educational benefits?

These are the questions that we will be asking. I believe that Government members have failed to stand in this urgent debate, which they said they were perfectly well aware was going to happen today, and the Minister did not answer a single question that her own ministry would ask a board to answer before it would consider a merger or a closure.

Everyone expects change to happen in Christchurch; they do not expect a bombshell like this to be dumped on a very, very damaged community.

TRACEY MARTIN (NZ First): Kia ora, Mr Speaker. I would just like to open by acknowledging that this is a very, very difficult situation. It is difficult for Christchurch, it is difficult for Waimakariri, and it is difficult for all the areas of Selwyn that are involved in this. It is difficult for the Government. It is difficult for every single one of us in Parliament to try to do the best by the people, the children, and the families in Christchurch. But, unfortunately, I am going to have to say this was badly done, I say to the Minister of Education. I do not know who advises you, ma’am, but again somebody has advised you badly about how to actually communicate and consult with communities.

Hon Gerry Brownlee: Not the Chair.

TRACEY MARTIN: I beg your pardon, Mr Speaker. Somebody, Minister, has advised badly on how to go about this process.

I want to take a moment to talk about the third round of consultation that the Minister is talking about, and let us just talk about the first two rounds of consultation. The word “consultation” means to seek information and advice from, and to take into account feelings and interests. The first two are quite clearly outlined in the Directions for Education Renewal in Greater Christchurch. The first round of consultation involved focus groups with invited stakeholders. It is of interest—how wide did that stakeholder invitation go? How many of the parents in these communities were invited to those focus groups? Were they advertised in the paper? Were they just the businesses? Were the principals and the boards of trustees also on that invitation list? It would be nice to know, Minister, because it is not actually documented inside this rather large document. Obviously, you have very good staff to produce you a report, but not necessarily very good staff to provide you with information about how to consult.

Then there was an online survey. So an online survey—and we are just in the middle of a digital literacy inquiry, actually—suggests that everybody has access to or the ability to go online to complete a survey. So that makes an assumption that all demographics inside an incredibly damaged area of New Zealand have access to get online to complete this survey. It also begs the question: how was the fact that this online survey was available for this input advertised? Were all the parents of these schools given that information in the link to the survey through their school newsletters? What is interesting is, of all the hundreds and hundreds of people who are affected by this, the number of submissions received.

What is also interesting is the questions that were asked. Some of them have nothing to do with what it is that the Minister announced the other day—useful information perhaps, but they are included inside this report and have no relevance. But one question that is relevant, however, is question No. 8, which asks how important it is to plan for fewer but larger schools where learners may get a richer experience, even if it means children may have to travel a bit further. This was the least supported proposal by every submitter. It was the most answered question inside this survey from the ministry. It was the least supported proposal. Yet, when it is dumped on these parents and communities, this is actually probably one of the most strongly supported proposals by the Government and by the Minister.

I would suggest that this statement that sits on the front of the Greater Christchurch Information Pack: an opportunity plus innovation to enhance education across Greater Christchurch cannot be read in any other way than that the Government has decided to take a few ideas that some sort of elite educationalists or members high up in the ministry, sitting somewhere in the middle of Wellington, think would be a cool thing to do, and has decided to launch it into this city. They may be a very cool thing to do, Minister. They may be some great ideas, but you have to extend the way you consult.

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

TRACEY MARTIN: I beg your pardon—the Minister must extend the way they consult.

I think once again the Government has underestimated the connection that communities have with their schools. Once again, it has underestimated the people of Christchurch. They are realistic, the people of Christchurch. They have lived through some disastrous times—a natural disaster, never witnessed before in my lifetime and in the lifetime of most of the people in this Parliament. What held many of them together was that sense of community. What happens? We have seen it again and again and again, when a Government—not necessarily this Government, but any Government—has closed small schools, rural schools, has attacked class sizes, and has gone into schools and, without widening out the consultation beforehand and taking those parents with them, has run into a brick wall. I can only suggest that the Government needs to learn from the way that it does these things that there is a better way, and it is to not run a focus group and it is not to run an online survey. It is to actually participate on a one-on-one level and give the community some sense of real input that they might be able to trust.

I also want to note that the Minister, in a Māori Television interview last night, did make mention that one of the criteria for some of these schools that have been selected to close was based on academic performance. That is the first time, Minister, that we actually start moving into this area. It is well known among charter schools in America that when there is a standardised testing regime, if the school does not meet the standardised testing regime then the State comes in and closes you down. What happens, unfortunately, and why it is so prevalent around people who believe in charter schools, is because they believe that another private business will pop up and actually fill that space.

But I also recognise that in the same interview on Māori Television the Minister pooh-poohed the concerns by kura kaupapa that they would be merged into a single charter school. The Minister, quite rightly, pointed out that that legislation around charter schools has not come into this House yet; therefore, there is no mechanism by which a charter school can be formed. She is quite right. But why should the people of Christchurch take any comfort from that, Minister, considering that just last week we had the Advanced Technology Institute Bill that needed to come into this House for its first reading, but the establishment board had already been established? The Government continues to hold on to its one vote majority in this House to force things through. The fact that the legislation is not here yet is cold comfort. I think that the Minister, her staff, and the ministry’s staff need to go out there and be an awful lot clearer with regard to these communities and start building back up some trust.

Also, only in that last week, the ability to have an elected body in the same area was denied to them by another Minister in this House. So trust is pretty thin on the ground in Christchurch. It is pretty thin on the ground, actually, in a lot of places throughout New Zealand. I think that this could be improved. I am more than happy to sit down with the Minister and help her to understand how that works—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! I have been very tolerant with the member, but can I just advise her that every time she uses the word “you”, she brings the Chair into the debate. She may not do that.

TRACEY MARTIN: My apologies, Mr Speaker. I will try harder.

There is one other little thing, and that is the billion dollars that is mentioned at the beginning of the opportunity plus innovation pack, and that is great. That is wonderful. The Government is investing up to $1 billion over 10 years to develop Greater Christchurch. I have a question. Is this the same billion dollars that the rest of New Zealand has been told will be spent on them and their schools and their hospitals, or is this another billion dollars being taken out of the future fund? Again, it is not clear, Minister. So there is an awful lot of information that has not been clear. If it is not clear to members of the House, how can it be clear to the parents, the children, the principals, and the boards of trustees that this is going to affect?

I think, in closing, the only other comment I would like to make is that it is all very well and good to send out a letter on 5 September, an email on 6 September, and to follow up with a phone call on 13 September to the chairmen of the boards of trustees. These people, predominantly, are also in employment. They have jobs and real lives that they go on with, while giving their evenings and what time they can to fulfil this governance role to their communities. To say to them that, by the way, there is a meeting in 8 day’s time at 10 a.m. in the morning that you need to take time off work for—

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

TRACEY MARTIN: —sorry—and that it was required of them to take time off work to attend is, I think, outside the bounds of reality, Minister. I think it is very hard. This message has been badly delivered—incredibly badly delivered—and, really, whoever is advising the Minister needs to do better.

TE URUROA FLAVELL (Māori Party—Waiariki): Tēnā koe, Mr Speaker, ka nui te mihi ki a koe otirā, ki a tātou o te Whare i tēnei rā. Ko te nuinga o ngā kōrero kua korero kētia e wētāhi, ā, nō reira ka waiho ake ērā kōrero kia iri i te pakitara-ā-Whare. E hāngai tonu ana waku kōrero ki ngā mea, me kī, kua puta i roto i ngā kōrero o ngā mea o roto i ngā kura kaupapa Māori. Me taku mōhio anō hoki kei te ngākaunui tō tātou Minita ki te āhuatanga o te kura kaupapa Māori. Kua mōhio tonu ia ki ngā piki me ngā heke e pā ana ki ngā kura kaupapa Māori nō reira, ko āku kōrero he mea whakatūpato noa ake, ka mutu, ko ngā kōrero kua puta mai ki ngā taringa o te Pāti Māori inā tata nei.

Nō reira, me pēnei rawa te kōrero, wā poto i muri o te putanga o te kōrero i roto o Ōtautahi, kua āhua rerekē te noho o ngā kura i roto o tērā takiwā. I tae mai tētahi īmēra, i tētahi o ngā mātua o roto o te kura kaupapa Māori o Te Whānau Tahi. Ko Melanie Rīwai Couch te ingoa o te wahine nei, anā, i pātai a ia i ētahi pātai. Anei tana kōrero i te reo Pākehā: “The two kura each have a very distinct and unique history, and, while supportive of each other, any talk of merger spells a death knell to any Māori school. The earthquakes are just a cover and local Māori families committed to Te Reo Māori are likely to be the ones to pay for this experiment. Whatever happened to partnership, protection, and participation?”. Koi nei te ia o tana kōrero. Ka mutu, koi nā tana kōrero.

Kua oti i te mema a Catherine Delahunty te whakaara ake i ētahi o ngā take kua puta mai i roto i ngā kōrero ēngari, tērā pea e rua ngā take nui. Tuatahi, ko te wā kōrerorero mō te take nei, me kī i te reo Pākehā, ko te consultation, ā, kua rongo ngā taringa o te Minita i ia e kōrero ana mō te tekau mā marama pea, e kōrerohia ana. Hāunga tērā kōrero ka mutu, me kī , kua oti kē i a ia, otirā, Te Tāhuhu o te Mātauranga, te whakatau i te huarahi ka whaiwhai haeretia e ngā kura ā ngā tau kai mua i te aroaro. E ai ki te Melanie Couch nei he huarahi tēnei, me kī, e whāia ana hei whakakotahi nei, anō nei e ōrite ana ngā kura e rua ēngari, ko tā rātou he kī atu, me kī, ko ngā mea o roto i ngā kura e rua, ēhara. He rerekē anō ngā kura. Ā, tēnā kura me ōna kōrero, me tōna wairua. Tērā kura me ōna kōrero, me tōna wairua.

Nō reira, ko tā mātou te Pāti Māori ko te kī atu, āe, kāre ā mātou raruraru ki te whai atu i tētahi huarahi hai whakapakari ake i Te Reo Māori, te wairua Māori, te ngākau Māori, te tikanga Māori hei oranga mō te painga o ngā tamariki, otirā, ngā whānau i roto i ngā kura. Ko te mate kē i Ōtautahi e ai ki tā mātau e rongo nei, tuatahi, kāre te rū o roto o Ōtautahi i pā ki ngā kura, kātahi ka rua, kai te pai rātau. Kua kī, e ai ki tā rātau ēhara i te mea kua puta te nuinga ki wāhi kē. He aha te take kua pā mai Te Tāhuhu o te Mātauranga ki te kī atu, ā, me whakakotahi nei kōrua nā runga i te āhuatanga o te rū. Ko tā rātau ko te kī atu ē kāo, kāre i te tika. Ko tētahi i roto i Te Kura Whakapumau i te Reo Tūturu ki Waitaha, i kī mai ia, tino ohorere ia nā runga i te kore kōrero a tētahi ki a rātau. Māna tena e whakautu, māna tēnā e kōrero.

Ko tētahi o ngā take nui kua puta mai, ko te kī a ētahi o roto i ngā kura kaupapa Māori, he huarahi tēnei ki te kura hōu, arā, ko te kura hōu rua, arā, ko te charter school. Kāre au i te tino mōhio, āe rānei, kāre rānei ēngari, tērā kōrero, anā, kua tāpirihia atu ki ngā kōrero o te whakakotahitanga i ngā kura, kai reira tonu tētahi raruraru nui. Ēhara i te mea, kai te whakaae atu rānei, kei te whakahē rānei i tērā huarahi, mā tēnā iwi, mā tēnā hapū tērā e kōrero. Mēnā koi rā te huarahi e hiahiatia nei e Ngāi Tahu. Ka pai, whāia atu. Ēngari, ēhara i te mea e pēnei, e pērā. Me whai atu i ngā huarahi e rua, mēnā koi rā tā rātau e pīrangi nei, kura kaupapa Māori, āe, kura reorua, kai a rātau tērā.

Nā, hei whakamutu i taku kōrero, e rua noa iho ngā kura kaupapa Māori o roto o Ōtautahi. Arā nō ngā kura reorua kei St Albans, kei Richmond, kei Rowley, kei Woolston anō hoki. Ko te mate kē, e rua noa iho ngā kura kai tērā takiwā. Ahakoa, he tokomaha tonu ngā Māori kei tērā takiwā e noho ana. Ki te whakakotahi nei, ki te whakakao nei i ngā kura e rua nei, ka whakaaro ake, āe rānei, ka tipu ko tēnei mea te kura kaupapa Māori ā ngā tau. Ko wai ka mōhio?

Ka mutu, ko te kupu whakamutunga, ko tērā i puta i a Mark Solomon, ko tana kī mai, kai te noho āwangawanga ia mō te huarahi e whai haeretia ana e rātau. Ko tana kī mai: “[We] support the extension of Māori-medium education throughout Christchurch and any reduction in services would be inconsistent with this kaupapa,”. Nō reira, me kī ko Ngāi Tahu kai roto i ngā whiriwhiringa katoa, te tūmanako ia ka aro mai te Minita, ka mutu, te tāhuhu ki ēnei manawapā kua puta i roto o te hapori o Ōtautahi. Kia ora tātau.

[Thank you, Mr Speaker, and a huge acknowledgment to you, and, indeed, to all of us in the House today. Most of the issues have been addressed already by some, and so I will leave those sentiments hanging there on the walls of the House. My comments will focus on things that came out of what those involved in Māori-medium schools have stated, knowing full well that our Minister of Education is passionate about the situation relating to Māori-medium schools. She understands the ups and downs that Māori-medium schools experience, so my sentiments are merely of a cautionary nature and about what the Māori Party has heard just recently.

So let me put it this way: in a short space of time following the announcement of the Christchurch plan, the plight of kura in that area has changed somewhat. An email arrived from one of the parents involved with Te Kura Kaupapa Māori o te Whānau Tahi. Melanie Rīwai Couch is the name of this woman. Now she really asked some searching questions. Here is what she said in English: “The two kura each have a very distinct and unique history, and, while supportive of each other, any talk of merger spells a death knell to any Māori school. The earthquakes are just a cover and local Māori families committed to Te Reo Māori are likely to be the ones to pay for this experiment. Whatever happened to partnership, protection, and participation?”. That is the gist of her comments, and that is what she said.

The member Catherine Delahunty has already brought up some of the issues that have emerged from some of the talk, but there are two major issues, perhaps. Firstly, the kōrerorero about this issue—the consultation, perhaps, in English. The Minister has heard, as she was talking, that the consultations will be for 18 months. That aside, the second major issue is that she, and, indeed, the Ministry of Education, have already determined the future merging process that the two kura will follow. To Melanie Couch, this merging process to be followed by the two kura makes the assumption that the two schools are similar, but they are not. They are telling the Government that each kura is distinctly different to the other. The stories and spirituality about each one are quite different.

We the Māori Party are saying, yes, we do not have a problem pursuing a process that will strengthen Māori language, spirituality, feelings, and culture for the well-being and benefit of children, and, indeed, of families in both kura. The problem really in Christchurch, according to what we heard, is that the Christchurch earthquake did not affect either kura. That is the first thing. The second is that they are fine. To them, it is not as though the majority of students moved to some other place. Why has the Ministry of Education contacted and told them that your two kura must merge due to the earthquake? They have said, no, that is not right. A person from Te Kura Whakapumau i te Reo Tūturu ki Waitaha said to us that he was really shocked because no one spoke to them. No one said: “I will respond to that. I will speak to you about that.”

One of the big issues that emerged was the speculation by some in Māori-medium schools that this is an avenue towards a new school, a new merged school: the charter school. I do not know for sure whether it is yes or no, but that is the talk, and it adds to the statements for the two kura to merge into one, and that brings up another big problem. It is not as though one agrees or disagrees to that avenue. It is for that tribe and subtribe to determine. If that is the way that Ngāi Tahu want to go, well and good, go for it. But it is not saying this or that one in particular. They must pursue both avenues if this is what they want; Māori-medium schools or bilingual schools, that is up to them.

To end my address, there are only two Māori-medium schools in Christchurch, and a bilingual school at St Albans, Richmond, Rowley, and also Woolston. The problem is that there are only two kura in that area, despite the large number of Māori living there. To merge or gather these two kura together, the thinking might be, yes, this thing called a Māori-medium school might grow in years to come. Who is to know that?

In the end the final word might be that which Mark Solomon expressed when he alluded to the fact that he was somewhat concerned at the path that was being pursued. He said: “[We] support the extension of Māori-medium education throughout Christchurch and any reduction in services would be inconsistent with this kaupapa,”. So let us assume that Ngāi Tahu is participating in all negotiations. The hope is that the Minister and eventually the ministry take heed of the concerns that have come out of the Christchurch community. My appreciation to us all.]

CHRIS HIPKINS (Labour—Rimutaka): Thank you for the opportunity to make a brief contribution to this debate on the announcement of the rearrangement of schools in Christchurch. Can I say on behalf of the Labour education team that we want to acknowledge the stress that the schools, the teachers, the principals, the boards, and the kids have been under since the earthquake. Regardless of where we stand on this particular announcement, I am sure we can all agree that the schools have done an absolutely wonderful and commendable job—

Sue Moroney: And early childhood education services.

CHRIS HIPKINS: —I am going to come to the early childhood education services in a minute—of supporting kids through a really difficult couple of years that, you know, they have experienced down in Christchurch. As my colleague Sue Moroney has pointed out, the early childhood centres have also done an absolutely wonderful job. I guess for those of us living outside of Christchurch it is difficult to comprehend in some respects the difficulty that schools would have with not knowing where parents are and not being able to contact parents. It is the same with early childhood services. They have done an absolutely wonderful job, and I do want to acknowledge the contribution that they have made in that regard.

I am concerned that this announcement goes a little bit further, potentially, than what some would have been expecting. I do not think that anyone would have expected that there would not be change required in Christchurch following the earthquakes. They have had a significant impact on the whole community and on the educational community, as well. I think everybody expected that change was going to come and that it was going to be required. The extent of these changes, however, is larger than what people anticipated, and I think that it creates a lot more anxiety for people when they hear the changes proposed in Christchurch being referred to as exemplars for the rest of the country. I think it would be very unfair on the people of Christchurch that they be used as guinea pigs for experimenting with different models of education, at a time when they are already under significant strain. I am concerned that elements of what is being proposed by the Government certainly would suggest that that is the case. The Government appears to be using the cover of the earthquake to trial things that it cannot do elsewhere, and I actually think that is very, very unfair on the people of Christchurch—I think it is very unfair on the people of Christchurch.

Hon Gerry Brownlee: So rubbish.

CHRIS HIPKINS: If the Government—and Gerry Brownlee says it is rubbish—wants to do things in Christchurch that it is not willing to do elsewhere, it should be upfront and honest about it. It should actually say to the people of Christchurch “Hey, look. We’re going to experiment with the future of the kids in Christchurch to see whether this actually works.”, because that is effectively what the announcements it has made amount to. It is going to experiment on the children of Christchurch, and I do not think that is the right thing to do. You know, some change is required, and I have acknowledged that some change is required, but the Government could at least get the process around that right—it could at least make sure it gets the process around that right.

When principals are saying that teachers in their schools were getting text messages saying that their school is being closed while they were still in the meeting being briefed about it, and hearing about it, and they were not actually in the schools and able to talk to the teachers concerned, that suggests that the process was a complete botch-up—that suggests that the process was a complete botch-up. Giving people colour-coded name tags indicating whether their school was going to close or merge or be pushed out of existence is absolutely disgraceful. That is not the way people should be treated. The Government could have at least afforded some dignity to the process, which clearly it did not in that regard.

Giving people colour-coded name badges to indicate whether or not their school was going to be closed, like naughty primary school kids, is absolutely disgraceful. I am not surprised, though. I am not surprised, given the Minister who has been placed in charge of it. She cannot seem to manage to make any announcement without absolutely hashing it up, although she seems to be better at backtracking than making announcements. So when she comes back to backtrack on all of these proposals, I am sure she will probably get that a little bit better than her initial announcement, and she might have learnt something from the process. Then maybe when the backtrack comes—the flip-flop comes—maybe she will finally get the process right around that, because she certainly has not got the process right around this.

Finally, to conclude, this is not an opportunity for the Government to inflict charter schools with unregistered teachers on the students of Christchurch, who are already dealing with enough challenges without having the Government decide that it is going to trial its ideological charter schools experiment, which has been proven to fail everywhere else around the world it has been tried. This is not an opportunity for the Government to experiment on the kids of Christchurch. It needs to go back to the drawing board and get a process right that is fair, that is open, and that is honest about what it is trying to achieve, because it certainly has not been in this process.

Hon KATE WILKINSON (Minister of Conservation): As one of the speakers in this House who actually comes from Canterbury and comes from Christchurch, it is really interesting to see those who cannot even pronounce the names of the schools, let alone know what it is like to live through earthquakes, try to make some comment of any worth in this House. It would be a great thing if the education of our kids and our grandkids could be put above politics, but what happens now in Christchurch is it is not.

We get accused of some sort of breach of the embargo. It was not the Government that breached the embargo—it was not the Government that breached the embargo. We were not responsible for that breach of the embargo. Yes, it was unfortunate, but if we put it in perspective, we have lost 4,500 learners in Canterbury—in Waimakariri, Christchurch, and Selwyn. There are 4,500 learners who have gone somewhere else, and if the members on the other side believe that the loss of 4,500 learners means that it is just business as usual, then there is no wonder that they are still on those Opposition benches.

We also talk about consultation. How many times have we heard that this has been out for consultation? This is not the first round of consultation. This is not the second round of consultation. This is the third round of consultation, and it is still happening. Having said that, there is still, even after all these months in Christchurch, an underlying fragility about the people of Canterbury—about the people of Christchurch, Waimakariri, and Selwyn. These are still challenging times. Change is difficult and we acknowledge that. We also acknowledge that the schools have been fantastic in being a rock for some of those kids, for giving them some sense of stability and some sense of normality. Of course change is difficult, but when we lose 4,500 learners, something simply has to happen.

I would like to mention some welcome news from the announcement. In Waimakariri we have been waiting for a long time for the announcement that we would get a new school, and now we get a new school in Pegasus. We have a new subdivision there with an extra 1,800 homes and an increased population of 4,700 residents. Yes, it means the closure of Waikuku School, but for those who do not live in the area, Waikuku School has actually been wanting to close and shift to Pegasus for some time now. It has not only outgrown its premises, it has outgrown its parking, it has outgrown its drop-off and pick-up areas, and it has outgrown its septic tank requirements. So for them the announcement of a new primary school for Pegasus town will bring relief to the parents, the primary school’s children, and the community in that electorate. We have been waiting for that for some time and that is certainly some welcome news.

I just want to make one mention, and it might be a wee bit off topic, that private schools in our area have also been impacted, yet Labour hates private schools. The only thing I can think of as to why it hates private schools is that private schools gave it Michael Cullen. But private schools have been damaged and impacted by the earthquake. My own school has no chapel, no dining room, no science block, no arts block, and no swimming pool. The students have been in marquees since the earthquake. Do they complain? No. Do they get criticised by the Opposition? Yes. Private schools also provide fantastic education for our schools in Christchurch.

It would be wonderful if this could be seen as an opportunity to have a world-leading education system in Canterbury—not guinea pigs; actual improvement to have a world-leading education system in Canterbury, Waimakariri, Selwyn, and Christchurch, and not just as an opportunity for that side of the House to use its union mates to incite protests and rallies. Our kids are better than that and our kids deserve better than that. Education is above politics—it is above politics, and so it should be.

Hon AMY ADAMS (Minister for the Environment): I am pleased that we have had the chance to have this debate in the House today actually, because, for one, I am getting heartily tired of all the misinformation, scaremongering, and drivel coming from stirrers in the Opposition parties and certain other interest groups in this sector. Like my colleague who has just resumed her seat, Kate Wilkinson, it is pretty hard to sit in this House and hear speaker after speaker from the Opposition benches, who do not come from Canterbury and who are not living with the situation, stand up and, frankly, patronise the people of Canterbury and those of us who are working very hard to try not only to repair and rebuild what we have but also to take the opportunity that this horrible, horrible set of circumstances has given us, and promise the people of Canterbury not just to put back what we had but to build something far, far better.

The earthquakes changed our lives and they changed our landscape. There is no question about that. We all know that the difficulties did not end with the Portaloos, the liquefaction, and the demolition. These difficulties are real, we are living them every day, and they will continue while we go through this rebuild period. But the one thing that we hold on to—the one thing that makes this bearable for us in Canterbury—is that we have a vision of a city that we are going to get from this process. We are going to have the best small city in the world, as Minister Brownlee has told us. The people of Selwyn and Waimakariri, who share in the future of Christchurch City, know that and the people of Christchurch know that. The opportunity for us now is to take this terrible tragedy that has happened to us and build from it, and to offer our citizens the chance not just to go back to what we had but to build something far, far better. That is what my colleague Minister Parata has been working at ever since she took the portfolio, and, before her, Minister Tolley.

I have sat in numerous meetings where I have heard Opposition members and stakeholder groups complain that it was all taking too long and that what our community wants is answers. So what did Ms Parata and Minister Brownlee announce last week? Well, first and foremost, they announced a billion-dollar investment into education in Canterbury—a billion-dollar investment. They announced that 173 of the 215 schools could get on with some certainty. Let us not forget that. I have had a number of emails from principals in my electorate thanking us for that. One principal emailed me last week and said he wanted to pass on his thanks. He said it was a landmark day for his school and his community, and that finally getting word that the rebuild would be happening in the immediate future was truly amazing; it was unbelievable. Another has emailed me to say that the news that the school was going to be repaired was received with great relief and celebration.

I am not saying this to diminish the difficulties for the 20-odd schools that are in a period of uncertainty. I do not want to diminish that for a minute. I know those communities will find this very tough to work through, and we are going to be helping them every step of the way. But let us remember that these are proposals. They are proposals. At some point, you have to come up with a set of ideas, you have to talk to the community about them, and if the community thinks there is a better way of dealing with the challenges we face, then of course we will listen to that.

Let us reflect on a couple of things in this. As well as the 173 schools that have had their futures confirmed, 40 of them can get on with fast-track rebuilding projects, and 23 school pools will be repaired in time for the summer season. We have got two brand new schools immediately green-lighted—one in Pegasus and one in Rolleston—and we have a major expansion green-lighted straight away in Halswell. In my own community, I know the schools of Greenpark, of Burnham, of Yaldhurst, of Duvauchelle, of Okains Bay, and of Le Bons Bay do face change, although I acknowledge that Le Bons Bay School has actually requested that change, so we have to accept that. To hear—

Hon Clayton Cosgrove: Burnham?

Hon AMY ADAMS: —I said Burnham, Mr Cosgrove, if you were listening—speakers in this House suggest that it should be limited to only schools that have had massive earthquake damage is simply wrong. These schools face earthquake damage, they face population loss, they face earthquake strengthening, they face leaky building issues, and they face, some of them, other education challenges. We have to look at all of these matters before we spend a considerable investment of taxpayers’ money, and make sure that we are spending it for the best future for the children of New Zealand. That is not going back and repairing old schools in communities with populations that are dropping. It is saying: what is the best thing that we can do for our children? Here is a proposal. We want those communities to come and talk to us.

I congratulate Minister Parata. I note that not one speaker in this House who has criticised her has come up with any better way that something of this magnitude and this challenge could have been handled.

Hon CLAYTON COSGROVE (Labour): I, for one, accept, as do other colleagues—despite the hot air—as do some parents, and as do some teachers, that change had to occur in Christchurch in certain places where, as the last member who spoke said, there has been substantial damage to school property, where the roll has depleted, where the population has disappeared, and where there is not a likelihood of repopulation, if you like, in that catchment. I accept that. No one on this side has said that there should be no change. I accept that change is required in some areas.

Where, though, people have some difficulty—and I should say, in a positive way, in Waimakariri, for instance, I am not sure whether the member Ms Wilkinson talked about it, but Waikuku School is moving to Pegasus Bay. That is something that they welcome, and that is something that that community has wanted for a time. In fact, that was something that was not only signalled but agreed to by the last Government. The last Government set aside the money. When I was the member there, I recall looking at the Budget line items. It was set to be triggered—the money was put aside to be triggered—by roll growth. Then in 2008, when there was a change of Government, it stole the money and flicked it off, and it disappeared. For 4 years—for 4 years—they have waited. But it is good news—and I wanted something positive—that finally the Government has reinstated the money and the school is going to move to Pegasus Bay.

But let me say this. What the last member, Amy Adams, forgot, in a whole lot of sweeping statements about all these schools having damage, their populations being depleted, their rolls being shattered etc., etc., etc., was that there are some difficulties with that proposition. At Ōuruhia School, where I was last night with other colleagues—David Shearer, Megan Woods, and Lianne Dalziel—you have to say that looking around the place, as the principal said, there is a crack in a piece of asphalt and a few cracks in the gym, but even Nicky Wagner, I am told by my colleague, visited the school last week and said that there was no problem with the school. Its roll has remained stable. Yes, Brooklands has disappeared, but, hey presto, go and talk to Peter Simpson in Belfast, and he will tell you—and I think even your colleague, Minister, would tell you—that, given the land approvals and other things that are coming on stream, there is enough population growth signalled there, because Belfast is going to be the size of Levin in not too short a time, for both those schools to be catered for, and enough capacity there to cater for it. So the roll is stable, the school is basically untouched, and there is enough growth in the area, but it is history.

What people object to—and when we sat in the Minister’s office at 7 a.m. on the morning of the great announcement, I was hopeful, as I looked at the weighty tomes that we were given, as I saw the run sheet, that perhaps—

Hon Hekia Parata: What you have never done for us.

Hon CLAYTON COSGROVE: Oh, the member interjects. The member could not even spell Nola Kilpatrick’s name right, who was on the advisory board. Gerry Brownlee will know who Nola Kilpatrick is, because he was a teacher there when Nola Kilpatrick was an English teacher, before she became deputy rector. That was the level of oversight that this Minister has.

She can belittle that, but here is the problem. This is not just about schools as such, and communicating an announcement to rejuvenate, whatever that means. If you look at Avonside Girls’ High School it says the options are to continue, close, merge, operate as dual shift, or consolidate. This is about communicating to a community that has been under gross stress, and it has to be done in a way that is sensitive, not by having the principal of Ōuruhia School, who did not even know he was on the radar screen—his roll was stable, there is population growth, and his school is basically untouched—sort of smacked in the head by the political baseball bat as his name is read out, as if he is told he is terminally ill. His school is gone. There was no foreshadowing, no nothing.

So despite all the consultation, run sheets, internet surveys, and all this, it comes down to a number of schools and a number of communities that should be dealt with sensitively. But I have got to say that sensitivity is anathema to this Government. This announcement last week, off the back of the earthquake recovery Minister basically telling technical category 3 land people that they were whingers and moaners and he had had a gutsful of them, ironic that that may be—

Hon Gerry Brownlee: That’s not true.

Hon CLAYTON COSGROVE: Yes, it is true. It is absolutely true—

Hon Gerry Brownlee: No, you’re a liar.

Hon CLAYTON COSGROVE: —to the point where he had to apologise. I raise a point of order, Mr Speaker. I take offence at that comment. I do not know whether you were listening, but the Speaker has already ruled on that. I require him to withdraw and apologise.

Mr DEPUTY SPEAKER: You do not require anything. Look, I did not hear. Did the member say something unparliamentary?

Hon Gerry Brownlee: I did. I called him a liar, so I withdraw and apologise.

Hon CLAYTON COSGROVE: And that is the sort of foot in mouth—foot in mouth—swashbuckling, swing the lead around style that Gerry Brownlee has exhibited. That actually speaks volumes, and that is why, Minister of Education, people have had a gutsful of that Minister over there. People have a right to be treated with sensitivity.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I am sorry, because I thought you were going to wait till the member got to the end of his sentence before you got to your feet. There is a form for withdrawing and apologising in this House. Speakers have often ruled that repeating the comments again is disorderly, and it is your job to stop members doing that.

Mr DEPUTY SPEAKER: The member is technically right, but on this occasion I asked the member. I said—

Hon Trevor Mallard: You didn’t ask him to repeat the comment.

Mr DEPUTY SPEAKER: That is true, but I opened the door for him to say it. That was my fault. I think—

Hon Trevor Mallard: Everyone knows what the rules are.

Mr DEPUTY SPEAKER: And I accept that. On this occasion, I asked the member and he responded in a way that was inappropriate—I will accept. But he did withdraw and apologise.

Chris Hipkins: I raise a point of order, Mr Speaker. After a member withdraws and apologises, is it in order for them to loudly boast to everybody “I didn’t mean it.”?

Mr DEPUTY SPEAKER: Well, I did not hear that either.

Hon CLAYTON COSGROVE: Well, there we go again. I do not mind it, colleagues. Gerry Brownlee can keep doing it and keep saying it, because for every Cantabrian watching, they know what a buffoon he is. What he said in the Christchurch Press last week—I am happy to furnish him with a copy—kicked Cantabrians in the guts to the point where he had to come out 2 days later and apologise to them. I will just read the member something. In the Press on 16 September, here is what a Mr Les McNamara wrote on his Facebook page: “Such an appalling way”—he is talking about the education announcement—“to treat the people of Christchurch. It’s as though the Government went out of its way to cause as much distress as possible.” I accept that that might be a bit over the top. I accept that the Minister may be incompetent, but I think she did actually act in good faith. She may have a high degree of negligence and incompetence, but I think she actually did not go out of her way to cause distress to people. I will grant her that.

But I just say that 2 years down the track, how many announcements have we had about earthquake matters? You would think that this Government would learn how to do it—would actually learn how to do it. Within a couple of hours of Avonside Girls’ High School and Shirley Boys High School being told that they are history and they are merging with Christchurch Girls’ High School and Christchurch Boys’ High School, suddenly—it is sort of John Banks all over again—the Government has had memory loss and is going to reverse its decision. It might be OK, and the schools might be allowed to stay.

In a community that is under stress, the only constant, really, in a family’s life in Canterbury at the moment is the kids’ schooling—is the fact that the kids can go to school. As a woman said at Ōuruhia last night—she was a member, I think, of one of the emergency services—the one constant in her life was that she knew the kids would be looked after. There was another lady who got up and said that when there was an earthquake she did not worry about the kids at Ōuruhia, because she knew they would be taken care of. She knew that if it hit the fan, they would be moved and they would be looked after. Such is the faith they have in their school.

So what we are down to—and I hope this consultation is going to be high quality; I doubt it—is that parents want to know the justification for these decisions. In Ōuruhia’s case they want to know why it is when the roll is stable, when there is massive population growth just across the road, effectively, in Belfast—enough for both schools; in fact, more, I suspect, than both could cope with—and when they have basically no damage, they have not even seen an engineering report, I think, and an engineering assessment, I believe, has not been done, they are on the block and it was not even signalled to them. I would have thought that if you respect that community—a community that does not ask much, apart from justification from politicians for their decisions—and if you are really interested in consultation, the Government, the Minister of Education, and the Ministry of Education would do that groundwork well before this botched announcement took place.

If it was a high-quality announcement and that groundwork had been done, then I suspect it would have been a very different meeting at Ōuruhia last night. They are good parents. They are not extremist and they are not asking for something they feel is outlandish. They just cannot work out the logic behind this decision, and they cannot work out why there was not a full explanation. According to the Minister Gerry Brownlee, all the geotechnical information on these schools is available. According to the Minister, all the consultation had been done. Yet they are left in tears, many of them, because they cannot work out why this decision has been rendered on them. Shame on that Minister.

For all the weighty documents, for all the run sheets, does the Minister not realise that people are under extreme stress and strain in that province? I know that Gerry Brownlee will get up, and he will spray us all and say this is political opportunism. That is what he interjected on my colleague before.

Hon Hekia Parata: It is.

Hon CLAYTON COSGROVE: No, political opportunism, as defined by the Government, is anyone who stands up for the local communities and says “No.”, “We disagree.”, or “We are opposed.” That is labelled political opportunism by that mob over there. They tried in the first 6 months to say that we were just playing to the media. Then it was an election strategy. Well, I say to that member over there, the Minister of Education, that I challenge her to go down to Ōuruhia School, Burnham School, Duvauchelle School, Kendal School, or Burnside Primary School and say: “Well, the members, the people, and you—the community—who oppose us, you are being opportunistic.” I challenge the member to make that claim to the people of Christchurch, or to make that claim about those who represent Christchurch and are local members in Christchurch. I bet you 100 bucks she will not have the fortitude to go down and make that claim in the community. We will wait and we will see whether there is any high-quality consultation, and whether this Government continues to put its foot in its mouth.

Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery): I want to start by acknowledging the mover of this motion, Catherine Delahunty. I thought she really did do a good job of indicating, firstly, that this was a serious problem that had to be dealt with, that there were emotions that needed to be considered in all of this, and that there was no particular easy way of going about it, but also that there were, perhaps, some things that could be done better as we progress through the consultation period. I think that as a discussion topic for this House, a debate in this House is perfectly appropriate, and I thank her for the tone of her contribution.

There has been nothing particularly easy about the last 2 years of dealing with the fallout from the earthquake events in Canterbury. There is no particular decision that has come naturally and simply. Every one of them has required a great deal of consideration and a great deal of thought about the best interests of the people who are most affected. I want to say to some of the other speakers who have spoken this afternoon specifically about cases they are familiar with, such as the Māori immersion schools having to come together, that none of that is something that we want to do. It is something that has been put upon us by the circumstance and has to be considered. That is part of this process today.

Ms Martin, from the New Zealand First Party, made a number of interesting comments. Firstly, she said that there was too much information prepared but not enough consultation. Well, I do not know how you have consultation without significant amounts of information being given to people. Further to that, I do not know how the Government was supposed to talk to 500 individuals, so 250 principals and 250 chairs of boards, and then all of the people who support them, the staff of all those schools, and the people who, as the member said, give up their time to voluntarily be on boards, and get them all together—thousands of them, in fact—to give them a message, which she then said should have been delivered one on one.

This is a difficult, difficult process. No one is denying that, and I am grateful that all other members have acknowledged that. I do want to say, though, to people who are listening that there is no part of the city that is immune from the considerations that have had to be put forward in this process. In my own electorate in the north-west there are three schools that face the possibility of being closed. Those schools are in relatively close proximity to each other, and there are numerous schools around and about. It simply indicates that the demographic in Christchurch has shifted quite significantly. The growth patterns for the city have changed and have moved, and it would be plain irresponsible to go around saying to every school “Look, we’re going to come along and fix everything up, and then take a longer period of time to sort all this out.” The one thing that people in Canterbury appreciate most is decisions. They do not like indecision, and the only way that we could get to a decision point in this was to put it all on the table for that wide consideration.

I have to say that I am utterly disgusted at some of the cynical manipulation of what I think is genuine anxiety, for what our opponents, particularly in the Labour Party, perceive as being to their political advantage. There is no—no—winning in getting alongside people who are deeply distressed and telling them that they do not have to deal with the problem that is in front of them, that they should not have to deal with the problem, or that if only there was someone else running things the problem would not be there in the first place. That is not true, and I have got to say that we have been through land decisions where we have had the same rhetoric blown out from Mr Cosgrove, all about “I’m here for my local community. I’m an advocate. I won’t be deterred.” All that does is reinforce the angst, anguish, and hurt that people are having to suffer. It is disgraceful and it is time it stopped, because this country has never, ever dealt with a problem as big as this. It is very easy for the rest of New Zealand to think that it has been 2 years and it should have gone away, but, for goodness’ sake, this is a huge problem. We are tackling it in as smooth a way as is possible. Yes, there will be some people who do not like the way we are handling it. That is what it is all about.

But what I can say in this case is that 173 schools out of 215 got the green light the other day to go ahead, repair, and get on with things. That is overwhelmingly positive. It would not have been right to say to those other schools—schools that know they have lost roll, know they have got declining demographics in their area, and know they have children today in classrooms that are well below the code, should there be an earthquake in close proximity to those schools—that everything is OK, we are going to fix it, and there will be no change. Change was inevitable from the moment the earthquake struck—

Denis O’Rourke: Everybody knows that.

Hon GERRY BROWNLEE: —in September. What we are seeing is this crazy sort of acknowledgment: “Yes, we know there was going to be change, but on the other hand we don’t want it, we don’t like it, and it doesn’t have to happen.” That is plain irresponsible.

This is a billion-dollar investment by the Government in the revitalisation of schooling in Canterbury. You cannot—no one can—make the case that the Government is walking away or cutting corners when you have got such a huge upfront statement about the investment that is available for those schools.

I want to make a comment, too, about Ōuruhia Model School. I thought the chairman of the board there took a very, very sensible stance in saying: “Well, we’ve got a 12-week consultation programme. We are going to go into it, and we are going to fight our case.” I do not like that word “fight”, because I think it is a proper discussion that we need to have. Yes, there has been the loss of a whole population—900 houses in Brooklands, where the children who go to that school largely came from, are no longer going to be there. Yes, there will be shifts further west in the city, and that may have an effect on Ōuruhia Model School, but we do want to talk to them.

I think one of the things that is most annoying about this is that some of those who are politically opposed to what we are doing and how we are doing it are making a big noise about: “It could have been done better, and, if it was only us, it would have been better.” They are even going so far as to say “If it was only us, we probably would not have done this anyway.”, which is a total denial of reality. That denies the fact that this is a proper process, where there will be consultation and there will be discussion. I have to say that I am very, very convinced that the people who are affected here will engage in that process properly, because the experience in Christchurch proves just that.

We have had the dreadful news given to 7,795 households that they can no longer live on the properties that they built and called home. Of those, as the dates have come up for people to have to make a decision about one of the Government’s offers, the overwhelming numbers of people have made that decision, because they simply know that it is in their best interests. What I would say is that—

Denis O’Rourke: I raise a point of order, Mr Speaker. I fail to see how what the Minister is talking about now in terms of compensation for homeowners—

Mr DEPUTY SPEAKER: Order! That is not a point of order. The member cannot enter the debate by a point of order.

Hon GERRY BROWNLEE: The point of it is simply that of the first 3,000 households, which, I agree with the member over there, had no choice because of the condition of their land, there was only one who took until the last day to make that decision. It will be like that with the schooling issue. It will be like that with the schooling issue.

Hon Lianne Dalziel: Do you know why? Because they didn’t have an offer from their insurance company.

Hon GERRY BROWNLEE: What we are getting across the House right now is that denial once again that there really is a problem here. There is the idea that somehow there has been a misleading of people about all of this. This is not right.

Hon Lianne Dalziel: I thought you were better than this.

Hon GERRY BROWNLEE: The member says she thought I was better than this. I have to say to that member that she is letting her communities down by cynically manipulating their emotions. It is a disgrace. It is time it stopped.

Hon CLAYTON COSGROVE (Labour): I seek leave to table a report where Gerry Brownlee accuses earthquake victims of “carping and moaning”—

Mr DEPUTY SPEAKER: The source of the report?

Hon CLAYTON COSGROVE: —about the situation, in the Christchurch Press, 13 September.

Mr DEPUTY SPEAKER: No. We do not put leave for press—

Hon Trevor Mallard: But he said the exact opposite before.

Mr DEPUTY SPEAKER: We do not put leave for press statements.

Hon CLAYTON COSGROVE: I raise a point of order, Mr Speaker. Although I accept your ruling, I then ask you what course of action a member has when they are accused of telling an untruth and the evidence is presented to the contrary, and leave is denied. What is the course of action one has then?

Mr DEPUTY SPEAKER: There are several courses of action that members can take, and question time tomorrow may be one of them. His own—I am not here to give him a lecture on how he pursues that, but we do not seek leave for press statements or press cuttings to be presented in this House.

The debate having concluded, the motion lapsed.

Bills

Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill

First Reading

Hon DAVID CARTER (Minister of Local Government): I move, That the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill be now read a first time. I nominate the Local Government and Environment Committee to consider the bill. At the appropriate time I intend to move that the committee present its final report to the House on or before 30 January 2013.

The Canterbury region is of national significance. It has over 60 percent of New Zealand’s freshwater resource. It has around 34 percent of New Zealand’s hydro generation capacity and 70 percent of its generation storage, and accounts for in the order of 18 percent of the country’s overall hydroelectric generation. The region has huge economic growth potential and is a key driver in making New Zealand a more productive and competitive economy. It is vital that a clear vision is developed for economic growth and sustainable management of the natural resources in the Canterbury region. To do this, the Canterbury region needs leadership that is effective in its planning and decision making, leadership that works in a constructive and collaborative manner with councils, iwi, and other key stakeholders, and leadership that inspires confidence throughout our Canterbury community. This bill provides for the continuation—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I understand that it is normal where there is an interest declared in a matter—and I understand that the Minister in charge of the bill is a major landowner and is affected by this legislation—for that declaration to happen at the beginning of the speech rather than later in it. I have been listening carefully and I have not yet heard him declare his interest in this particular legislation.

Mr DEPUTY SPEAKER: The Speaker has no knowledge of what anybody may have in terms of a pecuniary interest in any particular section. It is normally left to members to make those declarations if they do apply. It is not up to the Speaker to judge whether a member has that kind of connection.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. With due respect, the interests of members are tabled in this House, and one of the reasons for that is for the Speaker, when asked, to be in a position to make a ruling on these matters. I know that there is a slight problem when there is a Deputy Speaker in the Chair, but I would have thought that this is a matter that should be the subject of an early, not later, declaration.

Mr DEPUTY SPEAKER: I stand by my comment earlier that it is for any member to make that declaration. Speakers do not have the pecuniary interests listed here at their desk.

Hon DAVID CARTER: As I was saying, this bill provides for the continuation of commissioners in Environment Canterbury, or ECan, over the next local body electoral cycle. It continues the limitation to points of law only on the rights of appeal to the High Court on Resource Management Act plans and policy statements, and provides for a ministerial review of governance arrangements in the Canterbury region commencing in March 2014.

No Government wants to roll over local democracy. My preference is always for local democracy to work effectively and efficiently. That is why we have set such a high benchmark for any such interventions. But when a council is ineffective, when a council loses the confidence of its community, including every one of its 10 mayors, and when a council puts at risk the region’s prospects for economic growth, something has to be done.

In 2009 the Government commissioned an independent report into the performance of Environment Canterbury. This report was commissioned after an extended period of serious poor performance, including an inability to deliver a clear strategic vision for the region, an inability to effectively manage and deliver a number of its core regulatory functions, and an inability to manage relationships with stakeholders in the region. This report found that the extent of the gap between the capability of Environment Canterbury and what was required of it to adequately manage freshwater issues was enormous and unprecedented. It said that the failures of Environment Canterbury required “comprehensive and rapid intervention on the part of central government to protect and enhance both regional and national well-being.” So in 2010 the Government intervened.

I want to take this opportunity to congratulate the seven commissioners, led by Dame Margaret Bazley, on the outstanding job that they have done in the last 2½ years. They have addressed Environment Canterbury’s systemic problems and reformed its decision making and conduct. In particular, I want to note their success in managing the Canterbury Natural Resources Regional Plan to an operative stage and starting work on a second-generation land and water plan. I want to note that they have made significant progress on the implementation of the Canterbury Water Management Strategy, they have significantly improved relationships with territorial authorities, iwi, and other stakeholders, and they have dramatically improved compliance with statutory consent time lines under the Resource Management Act from 29 percent in 2007-08 to 92 percent in 2010-11.

When the original Environment Canterbury (Temporary Commissioners and Improved Water Management) Act was introduced in 2010 the responsible Minister noted: “The explicit intent is for the commissioners to withdraw and be replaced by elected representatives as soon as their task is achieved and the present systemic issues are resolved.” Although I did acknowledge the success of the commissioners, the fact is that the job is not yet complete. Subsequent to the original legislation the Canterbury region has been hit by four devastating earthquake events. Those earthquakes have placed a nationwide focus on the importance of rebuilding Christchurch and on the wider Canterbury economy. They have brought into sharper focus the need for a competent and consistent approach to planning for vital infrastructure. Getting the infrastructure planning right is crucial for both the earthquake recovery and continued regional economic growth. To give Cantabrians the best chance of a successful recovery the region needs strong and effective leadership. As Canterbury recovers from the earthquake it is vital that the relationships between agencies such as the Canterbury Earthquake Recovery Authority, the Christchurch City Council, and the Stronger Christchurch Infrastructure Rebuild Team are kept strong. Currently, those relationships are working effectively. To displace or interrupt these linkages would significantly affect Canterbury’s recovery.

Finally, the bill provides for a ministerial review of Environment Canterbury governance arrangements to take place in March 2014. It is important to transition the regional governance of Canterbury back to democracy. The inclusion of this review in the bill shows that this Government is serious about providing the best long-term governance solution for the Canterbury region. This bill is about providing the Canterbury region with the stable and effective governance arrangements that are desperately needed to assist the earthquake recovery, and providing a platform for future economic growth. I commend this bill to the House.

Hon ANNETTE KING (Labour—Rongotai): This bill should be called the “National Party Deception Bill”, or perhaps the “Broken Promises Bill”, or maybe the “Destruction of Democracy Bill”. Instead it is called the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. It sounds reasonable, does it not? But it is part of a National Party plan, a pattern, and an agenda against local government in New Zealand. It is yet another attack on local democracy, and it follows a pattern that has emerged from the Local Government Act 2002 Amendment Bill currently before the Local Government and Environment Committee. I realise that bill is not the current Minister of Local Government’s bill, but he must have been worried to inherit a bill that was based on myths, false figures, and a handful of egregious examples.

Now we have this bill with its fancy title. But what is the reason for it? Well, why will the Minister not release the report that this bill is based on? We have got a regulatory impact statement. That is going to be the evidence we are going to use for this bill. But the Minister has refused to release the report. Why, Minister? What has the Minister got to hide? What has the Government got to hide that it cannot release a report that is making such a significant difference in an area that has already been struck with so many decisions that lack democracy? Where is the evidence for the need for this bill?

Even his own Government department’s regulatory impact statement states in paragraph 97 “given the progress made by the Commissioners, there is no apparent reason for continuing this level of intervention, which was used in response to ECan’s previous serious and systemic dysfunction.” So his own regulatory impact statement says the extension of the commissioners’ term would continue to deny Canterbury residents the opportunity to vote for representation on Environment Canterbury, and it says there is no apparent reason for continuing with the current arrangements. Even the commissioners themselves, the very people appointed to run this organisation, said that they would prefer an option that was a transitional option, one that transitions back to democracy.

But let us step back a little and look at the promises the Government made to the people of Christchurch. On 30 March 2010 the then Minister, Nick Smith, decided to get rid of the 14 elected members and replace them with seven appointed members. This bill, he said, would empower commissioners “to rapidly bring the region’s resource management framework into line” and solve the problems. That was said 2½ years ago. We accept there have been earthquakes in Canterbury, but what this Minister has done is to add another 4 years to the rapid change that was meant to happen in Christchurch. So we end up with around 6½ years in the transition back to full democracy in the Canterbury region. But let us just remind the House what the then Minister said. He said this: “but, whatever the circumstances, the next regional council elections in Canterbury will take place no later than those scheduled for late 2013.” No ifs, no buts, Mr Carter, from your previous Minister. He said that, whatever the circumstances, the election would take place no later than 2013. I read the Minister’s response to questions from my parliamentary colleague Grant Robertson last week, where we saw the reinterpretation of what Minister Smith had said. A broken promise is a broken promise.

It was a promise that we now know was based on a lie. You see, the Government has a plan to reduce local democracy in local government. You need only to look at this bill to see ministerial muddling in just about everything. This bill is anti-democratic. There will be no election in 2013 as promised. The people of Canterbury went out and they believed the Government, which said there would be an election. They accepted what was happening, because there was going to be an election. There will continue to be no appeal of the commissioners’ decisions to the Environment Court—having it look at the decisions that have been made by those commissioners. There has been no consultation with the Canterbury community. The regulatory impact statement was very strong on this point to the Minister. It said to the Minister that it restricts the ability to present a community view, because there was not community consultation. In fact, even Treasury was upset at the lack of consultation. Treasury said that it did not believe there had been enough consultation with other stakeholders, particularly with Government departments.

So there has been no Crown-led consultation process with Canterbury stakeholders and the communities. Well, did we not just have a debate around the lack of consultation and the roughshod way the people of Canterbury are being treated? Surely, Minister, if you live in the area and have any idea of what is happening in your community, you would know that one thing you would have to do was to go out and consult over this bill to remove democracy until 2016. So there was no consultation.

This bill, the Minister said, is going to provide effective, efficient, stable governance, and will support the earthquake recovery and provide leadership. Well, Minister, let me tell you what your message is to Cantabrians: none of them—none of them—are capable of providing effective, efficient, stable governance. That is the message to Cantabs—none of them are able to provide that. The next message is that they are all incompetent, conflicted, mentally unstable, or dumb, because none of them are capable of being elected to a body to continue the work that has been done by the commissioners. That is the message to Cantabrians. It also tells Cantabrians that none of them have leadership qualities. You see, everything I am telling this House is the reason why the Minister said we needed this bill, but no Cantabrian has those skills. They are not capable. It is not possible for them to do this job. It has to stay in the hands of a few commissioners. What an insult. I say to Cantabrians they ought to rise up and tell Carter he is wrong. He is wrong. Why does he not consult? Why does he not release the information? Why does he not give the people of Canterbury an opportunity to have management over their own affairs?

The bill enables the commissioners to adopt a second-generation land and water plan and fully implement it. Why not let the local people adopt the second-generation plan? This work should be completed by October 2013, and the work that is carried on should be done by the local people themselves. In fact, Minister, read your own regulatory impact statement, because the regulatory impact statement said the commission had addressed the systemic problems within Environment Canterbury. It said it had addressed the problems, and now we hear from the Minister that we must continue on with the arrangement we have.

This bill does require the Minister to review it in March 2014. Why not start reviewing it in October 2012 and ready this organisation for election in October 2013? If the real agenda is amalgamation of the Canterbury councils, put it on the table now, because I suspect that is the real agenda—amalgamation of the councils across Christchurch. It has been reported to us that this is the Government’s agenda, and delaying it until 2016 enables the Government to put in place a structure for amalgamation.

Well, Labour members say that this bill is unnecessary. The Minister could have come back with an arrangement as proposed by his own department, a transitional option, one that would have some elected and some appointed—something that Nick Smith, the former Minister, said on 2 July this year that he supported; that Federated Farmers supported; and that the Fish and Game Council supported. It would have been a short-term fix. It could not have been permanent, because unlike the district health boards, which get Government money, the money for the regional councils comes from local people, and local people should be making local decisions. We will not support this bill.

NICKY WAGNER (National—Christchurch Central): I rise to take a call on the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. During the years that I was a councillor on the Environment Canterbury council, there was a gentleman called Murray Lane who used to sit in the back of every council meeting. He came to the meetings because he was a member of the Water Rights Trust and he was deeply concerned about the deterioration of water quality and water quantity in the lowland rivers of Canterbury. He actually became a real part of our council’s proceedings, and he would often hold up a yellow or a red card when he thought we were making the wrong decisions. But he was totally committed to seeing the council’s water plan completed, and he spent hours sitting in that council chamber as we worked our way through the process. In particular, he was a keen supporter of the Canterbury Water Management Strategy, and he contributed to the progress of that strategy up until the time of his death in 2009.

We have heard today that there were many reasons why the Canterbury Regional Council was disbanded and commissioners were put in its place. But it was managing the demand for water, the hundreds of consents, and trying to finalise the water plan that were the most challenging aspects of Environment Canterbury’s work. They sucked up huge time and resources affecting the whole organisation, so little progress was made. Since taking over Environment Canterbury, the commissioners have made real progress with water issues. They have notified the Canterbury Natural Resources Regional Plan and it is now in an operative stage, which is a fantastic achievement, and they have started working on a second-generation land and water plan.

But, most important, and closest to Murray Lane’s heart, they have made real progress in developing the Canterbury Water Management Strategy. The vision of that strategy is something that all Cantabrians have bought into. The vision is to enable present and future generations to gain the greatest social, economic, recreational, and cultural benefits from our water resources within an environmentally sustainable framework. That is something that we all understand and that we all want to see in our province of Canterbury. The strategy is based on a community, collaborative process, with each catchment designated as a zone. The 10 zones have been established, stakeholders are engaged, and now, after a couple of years of really solid work, implementation plans have been agreed by seven of the 10 zone committees, and the others are very close. The next step is to bring all that work together and to create the land and water plan, and to give the decisions made by these stakeholders, by these communities, some statutory teeth.

This is why I support this bill. There has been so much time, so much energy, and so much work invested in this process from all stakeholders and communities across the length and breadth of Canterbury just to get to this stage, and I do not believe that we want to change the model now. If we had not had the earthquakes, this work could have been completed, so I do not want this work to become a casualty of that disaster. The bill allows for a ministerial review in 2014, and I am hopeful that, by that time, the work around the Canterbury Water Management Strategy will be complete, the community’s vision for sustainable water management will be ensured, and, in particular, the changes that Murray Lane was so committed to will finally be in place.

GRANT ROBERTSON (Deputy Leader—Labour): I have said a lot of things in this House about what I think of the National Party’s policies and the direction that it is taking this country in—

Hon Maurice Williamson: None of it’s been very nice.

GRANT ROBERTSON: It has been highly critical, Mr Williamson, and I believe those things strongly. But I never thought I would have to stand up in this Parliament and say to the National Party “Why are you denying a group of New Zealanders the right to have a say in how they are governed in their region?”. I never thought I would have to stand up in this House and say to the National Party “What is it about democracy that you do not like?”. That is what is here today. That is what is on the table today: the National Party denying a group of New Zealanders their democratic right to vote for the people who govern them. The people of the Canterbury region have been through enough. They deserve the right to elect the people who will make important decisions on their behalf, instead of this National Government deciding that democracy does not matter in their region. It is an unbelievable situation that the National Party thinks it is OK to take away the democratic rights of hundreds of thousands of New Zealanders.

When we look at the reasoning that we have heard today from David Carter for why this should happen—

Hon Member: Facile!

GRANT ROBERTSON: It is facile, and the reasoning that Mr Carter actually gave us today was about what was happening before 2010. We can argue, and we will argue, about that. But the question Mr Carter has to answer is this: when there was a problem, in his mind, with the way the council was operating previously, he put in place commissioners, but he cannot continue to mount that same argument. Different people will put their names forward. All sorts of people could end up being elected to the Canterbury Regional Council. It is not the same set of circumstances as it was, but Mr Carter continues to justify taking away democratic rights on the basis of what a previous council did. It is time for the people of Canterbury to be given back their democratic rights, and no case has been made in this House by the National Party for why they should not be given back their rights.

The regulatory impact statement makes absolutely clear what the problem is here. That problem is that this approach that the National Government is now taking is denying democratic rights. But, more than that, it actually defers the resolution of the problems that the Government thinks exist. Paragraph 87 of the regulatory impact statement says “It defers resolution of the current problems as it provides no clear exit mechanism from the intervention.” This Government does not know where it is going on this. It has got appointed commissioners in place, extended out to 2016, and no exit mechanism.

The Government even had on the table the option from officials to go to a halfway house—not quite democracy but at least on the way to democracy—by having a mixed body of appointed people and elected people. That was not ideal, in our view, but at least it was a step towards some kind of democratic process. Nick Smith liked this. He went and said to Federated Farmers that this was a good option. The officials said it was a good option, but Mr Carter said no. A Cabinet paper has gone up that goes against those officials’ recommendations. We would like to see it, Mr Carter. It would be good to release that some time, so we can actually see what the justification is. But instead, no. Mr Carter wants to deny us all the right to know what the justification was for going against the advice of officials. As my colleague Annette King has already said today, and as David Carter actually said during question time last week, it is clear that it is because it is part of a wider agenda. It is part of a wider agenda of getting rid of regional councils, of taking away representation at a regional council level from New Zealanders all across this country. But, no, Mr Carter will not release that paper to us.

There was another Labour politician who once said that if you ever wanted to find out where things were at, you should follow the money. Well, in the case of Environment Canterbury and the Canterbury Regional Council that should be follow the water, because that is what you should actually do, if you want to see what is happening here.

Hon Annette King: That’s where the money is.

GRANT ROBERTSON: Indeed, because that is where the money is.

Let us be absolutely clear what this Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill does. This bill continues the process whereby the appointed commissioners control all the decisions about water. They control all the decisions about water, and individuals’ rights to appeal those decisions to the Environment Court are gone, under this legislation. The Government has extended the fact that the only things that are allowed are appeals on points of law to the High Court. So the decisions around water conservation orders are gone from the public process into the hands of commissioners. That is what this is about. It is about controlling that very valuable resource in Canterbury in the interests of certain people and not in the interests of the wider Canterbury region. That is disgraceful. Decisions about water are vital for the future of the Canterbury region. This Minister, with this piece of legislation, is continuing to exclude the people of Canterbury from their right to question those decisions in the Environment Court, and putting those rights in the hands of the commissioners. It is disgraceful.

But this is a pattern from this Government, going right back to my very first days in this House with the legislation around the Auckland Council. This Government is denying the democratic rights of New Zealanders right across the country when it comes to local government, but also in the way it is running other things. Take Work and Income. I would not be surprised—in fact, I would lay some money that at some point Paula Rebstock will become a commissioner for Environment Canterbury. That is when the people of Canterbury will know they are in trouble. Paula Rebstock is in running a board for Work and Income, and she is in running ACC now. At some point she will become a commissioner for Environment Canterbury, because she is the person who brings governance to these organisations—not democracy but governance. This is a disgrace.

Nobody underestimates the impact of the earthquakes on the Canterbury region, and every member of this House understands the importance of working alongside the people of Canterbury. That is why Gerry Brownlee’s comment in the House today directed at Lianne Dalziel was so disgraceful. Canterbury MPs of all parties have worked very hard on behalf of their constituents. But the fact is that once again this Government is using the earthquakes as a smokescreen for another issue. I challenge Government members to get up and tell me exactly what impact the earthquakes have had on whether or not the commissioners’ mandate should be extended. What exact things have not been done and not achieved by the commissioners because of the earthquakes? The threshold for denying democratic rights should be so high as to be almost impossible, not just because they have not quite completed the things that the Government wanted, or not just because the Government prefers to deal with commissioners than to deal with councillors.

When this first happened, Nick Smith said that one of the reasons that the Government went ahead with this proposal was that it was worried about the outcome of the election. I have said it before in this House: I was quite worried about the outcome of the 2008 election, but I did not advocate cancelling it. I did not decide it should be cancelled. There are countries all around the world where people cancel elections, and members on that side of the House have given dozens of speeches and comments about Fiji and other countries where elections have been cancelled or elections have been delayed. Well, I will lay another bet with you. I reckon there will be an election in Fiji before there is an election for Environment Canterbury. What does that say about those members on the other side of the House? They sit there and they judge other countries where elections do not happen, but this Government sits here and says “We’ll cancel an election for Environment Canterbury, because we didn’t like what was going to happen in that election.” What is more, it will carry on with this process of having commissioners denying the democratic rights of Cantabrians, against the advice of its officials, and against the advice of most New Zealanders, who would want to see their fellow countrymen and countrywomen given the opportunity of electing the people who govern them.

This bill is an outrageous attack on democracy. There are no two ways about it. The Labour Party will oppose this bill throughout. I join my colleague Annette King in urging the people of Canterbury—maybe there were some problems with Environment Canterbury before the commissioners were put in, but that is no excuse to deny Cantabrians the right now to be able to elect the people who represent them. That is a fundamental principle of this House. It is a fundamental principle of New Zealand that people get to elect their representatives. It is called democracy. National is denying it to the people of Canterbury.

EUGENIE SAGE (Green): Tēnā koe, Mr Speaker. This euphemistically titled Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill is about stealing democracy, broken promises, mistruths, misrepresentation, denying access to justice, and more water pollution. The Press described the Government’s decision to suspend regional council elections for another 4 years as “the most radical denial of voting rights that this nation has experienced in recent times—a fact that disadvantages Cantabrians and besmirches the Government.”

Tomorrow is women’s suffrage day. New Zealand’s leadership in strengthening democracy and giving women the vote in 1893 is part of our national identity and national psyche. The National Government is trampling on that identity and our previously robust democratic tradition. As constitutional law expert Philip Joseph has noted, New Zealanders have unreservedly voted down proposals to extend Parliament’s life beyond 3 years. The principal Act in 2010 suspended regional council elections in Canterbury for a period longer than the term of any one Parliament. Now the Government is compounding that in this bill, which steals democracy for 6 long years. The Green Party opposed the principal Act and will be opposing this bill.

By 2016 Cantabrians will have paid more than $450 million in rates to the regional council, with no elected voice at the council table on how that rate money is spent. Cancelling elections until 2016 is occurring in this bill because the Government wants its hand-picked commissioners to promote irrigation ahead of healthy rivers and healthy aquifers. It cannot trust Cantabrians to elect a new regional council that would promote National’s agenda of capital-intensive dairying and irrigation development.

National members keep harking back to 2010. They keep giving the same tired excuses and recycling the same arguments that they gave in 2010 for the principal Act to justify this bill. It would seem as if the commissioners have been doing nothing for the last 2½ years.

This bill is about broken promises. In 2010 when National axed regional councillors, suspended elections, and rammed through legislation in this House under urgency, with no opportunity for public submissions and select committee scrutiny, it promised that democracy would be returned in October 2013. The principal Act explicitly provides for this in the sections that this bill is now amending.

This bill is about misrepresentation. Both Dr Nick Smith and now the Hon David Carter keep on claiming that Environment Canterbury councillors were not processing resource consents quickly enough. Yet information in Environment Canterbury’s 2009-10 annual report, which the Parliamentary Library has provided, shows that by the end of the 2009-10 financial year over 80 percent of all new resource consent applications were being processed in accordance with statutory time frames. Because commissioners took over 2 months before the end of that year, the bulk of that improvement in processing times happened under councillors who were elected, not under commissioners, as the Minister repeatedly claims.

Cantabrians should be very worried about Part 2 of this bill and its review of Environment Canterbury’s governance structure, membership, powers, and functions. The Auckland super-city model is not appropriate in Christchurch. A large unitary council would be remote from, and less accessible to, citizens, and much more bureaucratic than local councils representing their local communities. A super-city Christchurch unitary model would not reflect the distinct identities of Christchurch, of Selwyn, and of Waimakariri.

National just does not understand or respect local government. It regards local councils as branch offices of central government and subject to ministerial direction and interference, rather than as a separate and competent arm of government with its own constitutional mandate and its own relationship with electors. We have certainly seen that in the Local Government Act 2002 Amendment Bill. Submitter after submitter to the Local Government and Environment Committee has strongly opposed National’s proposed changes to the purpose of local government and the removal of the well-beings from its purpose.

This bill interferes with the rule of law. As Professor Philip Joseph has noted, “The right of access to the courts is one of the fundamentals of a civilised society under the rule of law”. This bill, like the principal Act, undermines the rule of law not only by stealing democracy but also by restricting Cantabrians’ access to justice. It denies Cantabrians access to that specialist court, the Environment Court, by restricting appeals on regional plans and the regional policy statement to appeals on points of law, and only to the High Court. This compromises the quality of decision making under the Resource Management Act in Canterbury, because it is the Environment Court that has developed a sizable body of case law on how the Resource Management Act should be interpreted, and its scrutiny of councils’ decisions can substantially improve those decisions, just as the Environment Court did recently with Manawatū’s One Plan. The court upheld the strong rules in that plan to control erosion and control nutrient leaching from intensive agriculture.

In Canterbury the second-generation land and water plan is critical in both its policies and its rules around water allocation and nutrient management. This bill means that Cantabrians are denied the ability to appeal the commissioners’ decision on that plan to the Environment Court, and the checks and the balances that the Environment Court provides through its de novo hearings are outlawed.

Water conservation orders are the closest equivalent we have to national park status for rivers. This bill is about water pollution, because it perpetuates the gutting of water conservation orders that occurred in the principal Act. The Act did this by replacing the preservation purpose of water conservation orders with a sustainable management purpose. It removed them from the jurisdiction of the Environment Court and made the recommendation of the commissioners to the Minister the final sign-off, rather than the courts being the final sign-off. That change benefited dam proponents in the Hurunui catchment and it benefited TrustPower. Without this new bill the water conservation order provisions and processes in the substantive Act would have terminated in 2013, and we would have gone back to the situation that applies in the rest of New Zealand.

Continuing the gutting of water conservation orders is contrary to officials’ advice. It flies in the face of the statements in the regulatory impact statement by the Ministry for the Environment, the Department of Internal Affairs, and the Ministry for Primary Industries, which considered that there was “insufficient justification for continuing special provisions for WCOs”—water conservation orders—“in the Canterbury region.” The Government has rejected this advice and continued with these weakened water conservation order provisions.

“Representative democracy and independent courts are the twin pillars of the legal system.”, Philip Joseph has said in a seminal article in the New Zealand Law Journal. “The abrogation or suspension of the former … has menacing implications.”, Dr Joseph said. That is what this Government is doing. It is stealing democracy. It is restricting access to justice so that its hand-picked commissioners can make sure that they shape the plans that will determine how water is managed now and in the future. Certainly, the Canterbury Water Management Strategy has been rolled out, but that strategy was developed by elected councillors, not commissioners. But it is the statutory plans that set in place the rules. They are absolutely critical. By denying the appeal rights to the Environment Court, the check that that specialist court can provide on the commissioners’ decisions is removed. By gutting water conservation orders we are putting Canterbury in a very different situation from the rest of New Zealand. And by trampling all over democracy the Government is saying it does not trust Cantabrians to elect a new regional council. It does not trust Cantabrians to elect councillors to make decisions about how their environment should be managed. The Green Party opposes this bill.

JACQUI DEAN (National—Waitaki): One of the features of my work in 2005 and up until 2010 in my electorate office was dealing with complaints from water users about the performance of Environment Canterbury. I am sure my other South Canterbury colleague, Jo Goodhew, would have the same view. In fact, we used to talk about the fact that one of the frustrations of our work as representatives in South Canterbury, North Otago, and Canterbury was the frustrations that our constituents had with the performance of Environment Canterbury. It was a systemic problem that our constituents faced, and it was beyond me as the local member of Parliament to be of assistance to those constituents in their dealings with Environment Canterbury, because the problems were so great within Environment Canterbury. The problems were systemic, and they were having an adverse impact on the local economy of South Canterbury.

With respect, I say to the previous speaker, Eugenie Sage, that I utterly reject the contention she made that the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill is about promoting irrigation ahead of healthy rivers. I invite that member to visit the Ōpuha dam and have a look at the subsequent water-quality improvements that have been made in that catchment. I also invite the member to travel a little further south to the North Otago irrigation scheme and the North Otago Irrigation Company, and have a look at the innovative farm management plans, which put a very strong focus on water quality. So it is that, with respect—because I know that member is very genuine in her desire for water quality—I reject the assertion she makes.

Canterbury, which does include, for me, South Canterbury and North Otago, is of national economic significance, and has huge economic growth potential based on the use of water. Crucial to this economic growth is the efficient management of Canterbury’s water. Of course, we all know, or we should do, that the Canterbury region has 70 percent of New Zealand’s freshwater resource and 34 percent of New Zealand’s hydro generation capacity, and most of it is within the Waitaki electorate, which is why I care so much about it. So in 2010, following an extended period of poor performance by Environment Canterbury, which I have already talked about, the Government replaced the Environment Canterbury councillors with commissioners.

Divisions within Environment Canterbury had impaired the effectiveness of planning and had impaired the effectiveness of decision making, and, most crucially, the local communities, including the local authorities, had lost confidence in their elected representatives, which I would have to say is an understatement. An independent review found that Environment Canterbury granted consents without any proper framework, and it granted consents to take water from catchments that were overallocated, compounding the problems for water users within that catchment. The report came on top of the 2007 Resource Management Act survey, which said that Environment Canterbury had failed to process more than two-thirds of resource consent application within the statutory time frame. That level of poor performance has a very significant impact on the farming communities, on local authorities wishing to renew water consents, and also on large water users. Environment Canterbury’s performance was ranked the worst out of 84 councils in New Zealand. The review group also stated that the institutional failure in Environment Canterbury required comprehensive and rapid intervention on the part of central government to enhance both regional and national well-being. That view was supported by all 10 of the region’s mayors.

The disruptions caused by four separate earthquake events have made the Canterbury situation truly unique. The level of disruption was not envisaged when the original legislation was passed. The rebuilding of Christchurch and the wider Canterbury economy, including South Canterbury and North Otago, of course, after the earthquakes has brought a much sharper focus on the need for a competent and a consistent approach to planning for vital infrastructure for the future.

The commissioners have been highly successful. The complaints into my office and into my colleague’s office have all but dried up. What the commissioners have achieved has been significant. They have managed the Natural Resources Regional Plan into an operative stage and started work on a second-generation land and water plan. Am I allowed to say hallelujah? I think I will, anyway, because that plan is hugely significant to all water users in the region. The commissioners have made significant progress on the implementation of the Canterbury Water Management Strategy, and that has been through innovative, collaborative processes, and the development of zone implementation plans. I have attended the launch of several of the 10 zone committees. They are effective, they are working well, and they are making good progress in the use of water in the catchment. There has been dramatically improved compliance with statutory time frames under the Resource Management Act. There have been significantly improved relationships with the territorial local authorities, with iwi, and with other stakeholders, through collaboration and a joint work programme with Ngāi Tahu. There has been the establishment of a strong partnership, and this is crucial, with the Canterbury Earthquake Recovery Authority to facilitate earthquake recovery. I think also critical to the residents of South Canterbury, Canterbury, and North Otago is that it has made a commitment to improve air quality through Environment Canterbury’s Clean Heat project, which provides assistance for clean heating and insulation, and, critically to my constituents, an education campaign on the proper use of woodburners.

I want to finish by noting the comments of Irrigation New Zealand: “Rural communities now have more opportunities to be involved in water management through the collaborative approach of the Canterbury Water Management Strategy. We are starting to see real gains through the zone committee and we don’t want to go back to the nightmare situation that ratepayers suffered under previously.” I commend the bill to the House.

DENIS O’ROURKE (NZ First): New Zealand First opposes the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. First of all, looking at the title, it is not very temporary as far as these commissioners are concerned, and I do not think it is really very much about improved water management either. The bill does two things. Firstly, it extends the commissioners’ special water-management powers for a further 4 years, and, secondly, it delays the date for an elected Environment Canterbury to 2016, therefore making the period without an elected council over 6 years.

I want to say straight away that I supported the original move in 2010 to remove the elected council and to replace it with commissioners. I did so with very great sadness, but there were longstanding political and management problems. I cannot do any better to sum it up than the statement in the supporting documentation, which says: “ECan was clearly unable to perform and exercise its duties and powers, most critically those under the Resource Management Act 1991... There were longstanding problems due to entrenched political divisions, competing and adversarial approaches within ECan, institutional and technical deficits and ingrained organisational culture issues.” I for one can testify to the fundamental truth of that. It is no help to Canterbury or to anyone else to deny—and Canterbury people knew at the time—that that was the truth of the situation.

But we do need to move on. I was at that time, and still am, the chair of the Central Plains Water Trust, so I was well aware of the water issues that took such an important position in the thinking of Cantabrians in 2010, and actually still do. But in 2010 there was great concern about some of the irrational behaviour of Environment Canterbury on irrigation issues, and I personally believe they were mainly management deficits, as stated in the regulatory impact statement. The council itself, however, was very hostile indeed to all irrigation development, and that was driven by wound-up public and political perceptions about dairying, rather than by a robust policy and planning process.

The Central Plains Water Trust was, and is, about sustainable farming, not just about dairying, and that is the way that New Zealand agriculture must move in the future. The development of a sustainable farming protocol, with contractual arrangements to back it up, was what that particular project was about, and still is. It established a trust to ensure a community scheme so that the water rights could never be alienated, and so that it would always be a community scheme. Environment Canterbury I found, and we on the trust found, virtually impossible to deal with—firstly, because of unreasonable political hostility. You simply could not talk to the people. Then there was the them-and-us mentality. We were treated as enemies when we wanted to collaborate, and that was not good enough, I think. This also extended to council management, which sought to change plans for the Waimakariri River, even while the Central Plains Water Trust Resource Management Act process was being finalised. Talk about pulling the rug out from under one’s feet.

The best hope, however, was, and is, for a consensus under the Canterbury Water Management Strategy, and that especially concerned, and still concerns, storage. Environment Canterbury wasted time on impossibly impractical proposals like in-ground storage, and there was a need for a balanced approach by Environment Canterbury, not a dictatorial one. The commissioners, I think, have done that and they need to be commended for the approach that they have taken, which I think is a balanced one, which achieves environmental protection while facilitating sustainable use of water for irrigation.

However, although I did support the original decision to insert the commissioners, that never meant that it was right to delay the elected council’s reinstatement beyond 2013. The decision to add another 3 years to elect a new regional council is, firstly, unnecessary. Everything that the commissioners needed to do has already been sufficiently done. Secondly, it is unhelpful. The strategy of which I spoke now needs community buy-in and active support. It is unlikely, I think, that appointed commissioners can do that, and I think that is best done by local people, especially elected people. Thirdly, it is, of course, as others have said, an affront to democracy. In Canterbury, along with the Canterbury Earthquake Recovery Authority, the Christchurch Central Development Unit, and the Stronger Christchurch Infrastructure Rebuild Team and so on, there is altogether too much central government and not enough community governance. Community representation may be inconvenient for a National Government, but it should understand that there is now a real sense of loss and grievance by Canterbury people concerning their lack of elected representation and lack of a say in how the city and the province should be governed.

The perception now is of Government manipulation for its own ends. There is justified concern about commissioners with powers about the Rākaia River water conservation order. Although that order probably does need amendment in a way that balances the protection of the natural character of the river with sustainable use of water, it does need public input as well, because the decision has to be made about where that balance should be. The commissioners are perceived as tools of central government, not of the community, and the Government, in particular, is perceived as having commercial imperatives through shareholding in TrustPower, with its Rākaia River and Lake Coleridge interests in power generation.

So what should the Government now do? I would have to disagree with the statement in the regulatory impact statement that says: “there is a risk ECan will revert to its irreconcilable and long-standing political divisions that emerge from the representational split of urban and rural populations and Christchurch interests and those of the wider region. Political divisions could return and prevent ECan from acting as an effective decision-making body,”. Well, if that was true, we would never get another Environment Canterbury elected in Canterbury, and that is really just not good enough. So the Government should, right now, go ahead and carry out comprehensive consultation with the people of Canterbury about the future of regional governance there.

There are many options that should be put before them. Should it be fully elected, or part elected and part appointed? Should Environment Canterbury be reinstated as it once was? Or should we establish one or more unitary councils? We do not know what Cantabrians think about that. The National Government should find that out before it starts making decisions about this. That consultation should be carried out now, and the new council, whatever it may be, should be elected normally in 2013. Those are the ways that the wishes of the people of Canterbury and the people of Christchurch City can be carried out. At the same time, there needs to be a review of the Christchurch City Council itself. People in Christchurch City believe that to be necessary too, and the same process should be applied to them.

What form of local government there should be, both at regional and city council levels in Canterbury, is not really a choice for a particular party that happens to have power in a particular Parliament. It is for the people themselves to decide. We have got to stop using this issue as a political football. If we want Environment Canterbury, as it will be in the future, to have the confidence of the local people, then there is only one option, and that is to carry out that consultation and then to do the election as planned in 2013. That is what the Government promised. That is now what it should do—

The ASSISTANT SPEAKER (Lindsay Tisch): Sorry to interrupt the honourable member. I call Colin King.

COLIN KING (National—Kaikōura): It is a pleasure to speak on the first reading of the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. I have to address the previous speaker, Denis O’Rourke, and thank him very much for his definition of why the Government needed to step in and do what it did. I am the MP for the Kaikōura electorate. In the southern end we have three district councils and one environmental council, and I can tell you that the Government’s decisions in the first place to remove duly elected councillors and replace them with commissioners, and then to progress the extension of those commissioners for 3 years, have been unanimously received in a positive way.

The Opposition cries foul and a breach of democracy, but the duly elected mayors and councillors of those three district councils are in favour of what the Government is doing. They say “What a lot of rubbish!” to the Opposition. They have enjoyed more democracy since they have had the commissioners in place than they ever enjoyed under Environment Canterbury, which totally ignored them and never spoke to those councils. I had to ask: “Well, what do you mean?”. They say that the commissioners have changed the culture. The councils now sit down with Environment Canterbury officials and they work these things through. Those three district councils are happy with the decision of the Government.

So now we find that things are beginning to head in the right direction. There have been some outstanding achievements during the installation of those commissioners. We have seen the superb work of the water zone committees. In the Hurunui we now have an agreed water storage project, which is 20 years overdue. It is now being notified. So that is a very positive step. We have now got a draft version of the Kaikōura regional water plan out for consultation and receiving submissions. This has all been done in a very democratic way. We are looking forward to taking on board those submissions. There is total, wide community support and it will be enduring.

I would like to read an excerpt from an email that I received from somebody in Christchurch. It says that they believed that the reason why the commissioners were put in place was purely to grab water. I have to say that when you read that email you can fully understand why there was paralysis within Environment Canterbury. Those who were considered to be the duly elected representatives used Environment Canterbury as a tool to prevent economic development. So we are very happy on this side of the House to support this bill. We see it as a way forward, as very positive, and we are very thankful that the Government has had the wisdom to take this step. Thank you.

Hon CLAYTON COSGROVE (Labour): That was a very interesting speech by Colin King on the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. It was a very interesting speech in its so-called definition of “democracy”. In Mr King’s small world, in the last 2 or 3 years since the commissioners have been in place—unelected, accountable to no one in Canterbury, accountable to their paymasters in Wellington, unelected but appointed—apparently the province of Canterbury has enjoyed uninterrupted democratic activity—

Andrew Little: That’s what George Speight said.

Hon CLAYTON COSGROVE: Yeah, that is what George Speight said. Well, I do not know; I think George Speight might have been a bit brighter than that. Apparently, democracy goes something like this in Mr King’s little world: if local authority - elected folk—those who are left in the outer reaches of the province, those who have not had their democratic rights cut asunder from them—are happy interacting with the commissioners, then this is nirvana in respect of democratic practice.

I invite Mr King to do a couple of things: maybe talk to Peter Dunne, because—I mean this in all seriousness—Peter Dunne, I think, graduated from the political science department with a Bachelor’s degree in political science—

Hon Peter Dunne: Master’s.

Hon CLAYTON COSGROVE: Forgive me, a Master’s in political science. I am sure—and I mean this in all seriousness—that the Hon Peter Dunne, of what A grade university—

Hon Peter Dunne: A good university.

Hon CLAYTON COSGROVE: Sorry?

Hon Peter Dunne: A good university.

Hon CLAYTON COSGROVE: —a great university; the one I went to too—could give Mr King a lesson on the definitions of “democracy”. Because I have to say to the member over there, Mr King, that “democracy” means that you get a say, you get a vote—hopefully every 3 years—and you have representation with taxation, as it were. That is the sort of tried and true definition of “democratic discourse” in a democratic nation. I invite him to maybe grab hold of the Encyclopaedia Britannica. I am sure he can dust a couple off there. He may not have progressed to the internet and some of that sort of amazing technology we have got now. I invite him to dust off the Encyclopaedia Britannica and have a go: look up “democracy” under “d” and learn about it—learn about it.

Andrew Little: Apparently you can google it.

Hon CLAYTON COSGROVE: Apparently you can google it. But I say that this is all about a simple thing. This is about a Government that came to power, took action, stripped out the right for Cantabrians to have a regional council that is voted in, and then made a promise. I refer back to the great quote of that great genius Nick Smith, who said “Under any circumstances the next regional council elections in Canterbury will take place no later than the election scheduled for late 2013.”

Denis O’Rourke: Broken promise.

Hon CLAYTON COSGROVE: Broken promise. There is another word for it. It has been used a bit liberally this afternoon. I think we know what it means, and every Cantabrian knows what it means.

What we are faced with in Canterbury is a rather extraordinary situation. We gave the Government wartime powers in respect of the earthquake. Gerry Brownlee got wartime powers. There was some controversy about that. We on this side voted for that because we believed that it would be appropriate to get things done. Sadly, we now wonder whether Mr Brownlee will ever dust off the warrant and actually use those powers in an appropriate way.

We have a city council that is in great difficulty, apart from—and I will mention a few names here, hoping not to destroy their political careers—Tim Carter, Yani Johanson, Glenn Livingstone, and others. They are elected people on that council who are trying to get some cohesion there but are left wanting, sadly, by the mayor and the chief executive of a dysfunctional council. Then we have a regional council, of course, that exists, in effect, in name only, in terms of its lack of democratic principles. I mean no disrespect to the commissioners, because the commissioners are doing a job, but the question is whom they are responsible to. You see, in the old days, Mr King—through you, Mr Speaker—you could ring up a regional councillor like Jo Kane, the former deputy chair and a good person, and say “Hey, we’ve got a constituent who’s got some problems. Can you sort them out for us?”. The councillors may not have been able to kick a goal, but they were accountable to the constituency that elected them.

The problem with the commissioners—not a personal problem with them—is that they are not accountable to people like us who live in Canterbury. They are not accountable to the local communities. They are accountable to this Government, and because of that the Minister of Local Government and this Government will bear the responsibility for this situation. They made a commitment. They made an absolute commitment that in 2013 democracy would be restored to Canterbury.

It is interesting, as Annette King said, when you have a look at the regulatory impact statement to see who was against this. Well, there was very little opposition to the proposition of restoring, through a transitional phase, democracy to Canterbury. The commissioners proposed option one. Option one—to inform Mr King—was where you elected and appointed a combination of the two, which would be a transition to full democracy. The commissioners were in favour of that. The Department of Internal Affairs was in favour of that. Treasury said in the regulatory impact statement that there had been virtually no Crown-led consultation with stakeholders, Government departments, or the communities; therefore, it was hard to provide proper advice on this. Very few people or agencies were opposed at the very least to option one, which was a transitional combination of appointed and elected folk to transition to democracy. But, oh no, the Minister and the Government know best.

So what do we have in Canterbury in terms of participatory instruments to allow the community to have a say? Very little. Sadly, as I have said, we have a dysfunctional city council. Secondly, we have an appointed and soon to be reappointed, if this legislation goes through, regional authority. And we have the Canterbury Earthquake Recovery Authority, which, of course, with wartime powers and a Minister with wartime powers can, effectively, do what it wants. It has done some good things—I accept that. It has made some blunders.

We have already debated this afternoon—and I will not go there again—the sad state of affairs in respect of the Draconian decision to cut across everybody, in terms of our schools and the communities that sit alongside those schools. So the question I have got is why the broken promise? We have heard a lot about water and a number of esoteric things, but it comes down to this: it comes down to a Government—every one of those members sitting there, goggle-eyed, from Canterbury and other places—that stared the constituencies in Canterbury in the face and said “You’re gonna get your democracy back in 2013.” Now, without the support even of the Environment Canterbury commissioners, whom that Government and that Minister appointed, they roll over the top and say “No, no, no. It’s gonna be a total of 6½ years from the time we put in the original legislation. Basically it’s another 3 years—2016—before you get a go.” I say that that is wrong. I say that not only is it wrong that the promise was broken but it is wrong that this Government has not even fronted up to the constituencies and the community, consulted with them, and provided a justification as to why this legislation should be before us today. It is the usual slipshod stuff—that is, punch a piece of legislation out, make an arbitrary decision, consult with nobody, do not take the advice of your officials, your appointed commissioners, the Department of Internal Affairs, or anybody else, and just make it happen.

I have got to say to Minister Carter—a longstanding member of this House, who has a member of his family, Tim Carter, on the Christchurch City Council, who, along with others, I say is doing an outstanding job—and others that Cantabrians are getting to the point where they have had a gutsful of being driven over by the proverbial political steamroller, either in the form of the Minister for Canterbury Earthquake Recovery or in the form of the Minister of Education, and now in the form of the Minister of Local Government, with no consultation, not even the meekest reference to engaging with the community. They are getting a bit tired. They are getting a bit stressed. They have got enough to cope with, and they would not mind if occasionally somebody in the Wellington offices of the Beehive actually said “You can have a say—you can have a say. You can be the masters, perhaps, of your own destiny. And, by the way, they in Wellington in Government feel that there is leadership capability in Canterbury, there are smart people and innovators in Canterbury, and there are entrepreneurial and socially entrepreneurial people who could take control of an organisation like Environment Canterbury, show some acumen, show a high degree in world-class management, and actually run the show.” Because last time I checked, I do not think that all roads of intellect and a monopoly on all knowledge and all good ideas emanated from the Minister of Local Government’s office or the ninth floor or the seventh floor of the Beehive.

Andrew Little: Have you got any evidence for that?

Hon CLAYTON COSGROVE: Well, Gerry Brownlee will be around here somewhere I am sure. He provides enough evidence of that. I just say in all seriousness that people are actually entitled to have a say, or, at the very least, if this crew is going to march forward and punch this legislation through, then the Government has a duty, Mr King, under our little democracy, to make the case and justify the position to the people of Canterbury. It has not made the case, it has not justified the position, and this bill is a disgrace. Yet again, the Government thinks it knows best, and the boot goes in to Cantabrians.

TIM MACINDOE (National—Hamilton West): Like most who have ever lived in Christchurch, I have fond memories of the beauty of the city’s landscape and heritage, and feel deeply for all Cantabrians over all they have suffered and lost since the first earthquake struck that region. But it is a regrettable fact that the former Environment Canterbury’s performance was ranked worst of 84 councils in New Zealand just over 4 years ago, while it is widely acknowledged that the current commissioners have been highly successful and effective in tackling the systemic problems they have been tasked with correcting. I commend them for that progress and wish them further success in their vital work, as set out in this temporary extension of their role in the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. Seldom in our history has there been a time or place where sound and effective regional governance has been more critically needed.

The ASSISTANT SPEAKER (Lindsay Tisch): I understand this is a 5-minute call. I call Sue Moroney. I will ring the bell at 4 minutes.

SUE MORONEY (Labour): I would like to say that it is a pleasure, because it normally is, to rise to speak to a bill, but in this case it is the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill at its first reading, and Labour is deeply opposed to this bill. Never has there been a more important time for the good people of Canterbury to take control of their own futures. Never have they needed that so much. And what are they getting from this Government? They are getting this bully Government marching in and telling them that it does not trust Cantabrians enough to actually let them have their own elected representation in Environment Canterbury. That is what this Government is doing.

I actually visited Christchurch yesterday. I know that the people of Christchurch have had enough of things happening to them, being done to them, and not having control over their lives. This is the very time that Cantabrians want to take control back over their lives. They have had enough meted out to them. This is the time when they want to have more control. That was actually expressed to me yesterday in a meeting that I was having with early childhood education providers in Christchurch, where they were telling me the impact on them of being pretty much sidelined and kept out of the grand Christchurch education plan that the Government landed on them last Thursday. What they were saying to me, and it is relevant to this bill, was that they had had enough of being treated like second-class citizens.

The early childhood education sector, in education, is being treated like a second-class citizen by this Government. It happened again to the sector in Christchurch last Thursday, where all the discussion was going on around schools, and early childhood education was just an afterthought. They said to me: “We want to have involvement, we want proper consultation, because we have some great ideas.” And they did. They have got some great visions for what they want in their city, but this Government keeps coming along and pulling the carpet out from underneath them. This bill is yet another example.

This bill tells Cantabrians that they cannot take control back over their lives—that this Government will specifically prevent them from taking control back over their lives by not allowing them to have a vote on who controls decision making over Environment Canterbury. I cannot stress enough just how important it is for this Government to start listening to the people of Canterbury. It needs to actually hear what the people of Canterbury are saying, rather than being on its high horse down here—up here, from Canterbury’s perspective—in Parliament, telling Cantabrians what is best for them. Here we go again, with this bill. I will not even call it a nanny State; it is a “manny State” Government—a “manny State” Government—that now has a consistent track record in telling Cantabrians and other New Zealanders what is in their best interests, because this Government just knows best. It knows so much better than the people of New Zealand and, in this case, the people of Canterbury, that it will take democracy away to prove that it knows better. That is exactly what is happening with this bill.

Tomorrow we celebrate Suffrage Day in New Zealand. It is 119 years since Kate Sheppard, who I think was a Cantabrian, actually got out on her bike, went around with a whole heap of other women and good men, and got the voice of Cantabrians to actually fight for the right of women to have the right to vote in this country. That is happening tomorrow. What would Kate Sheppard think of this Government? What would Kate Sheppard think of it putting a bill through Parliament today—the day before Suffrage Day—to take away the right of Cantabrians to vote for their local council?

MOJO MATHERS (Green): I rise to speak to the Government’s bill to extend the suspension of democracy in Canterbury, the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. When the principal Act, the Environment Canterbury (Temporary Commissioners and Improved Water Management) Act, was first introduced in 2010, many of us in Christchurch were cynical that democracy would be restored in 2013. The joke in Christchurch was that Fiji would see democracy restored before we would in Canterbury. We were cynical despite Nick Smith’s heartfelt reassurances that we would, in fact, have our votes back in 2013.

Why were we so cynical? It is because those of us who have been involved in water issues in Canterbury saw this Act’s real goal as being all about removing roadblocks to the extension of irrigation in Canterbury and the extension of large-scale water storage schemes. That is what this second-generation plan will help provide for, and that is not in place yet.

Democracy has been a barrier to these plans being developed. Why? It is because the people in Canterbury are apprehensive about more proposals for intensive farming, for irrigation, and for water storage. They are rightly so, because we in Canterbury love our rivers and our waterways. We value our drinking water. Christchurch is the only large city left in the world that can drink pure, uncontaminated water straight from the tap, untreated. This water shapes our identity in Christchurch.

We are concerned right now, and have been for many years, by the existing irrigation and intensive farming that are polluting our rivers. We are directly impacted by these. Just 3 weeks ago in the township of Darfield there was a really serious outbreak of gastroenteritis, with more than 150 cases of serious vomiting and diarrhoea. This was directly related to intensive farming. The Canterbury District Health Board’s medical officer of health Alistair Humphrey, has said in a statement: “Intensified farming now means that a lot of water is contaminated with animal faeces, especially the Waimakariri after heavy rains.” The intensive farming that we have now in Canterbury is already not being well managed or regulated, and it is already polluting our water, and it is already making people very sick.

It is impacts like this that make people want to have a say in how water is managed, because they will have to live with the impacts of it. That is why it is so concerning that the bill does not allow appeals to the Environment Court on the merits of the commissioners’ decisions. This last bit is probably of greatest concern to me, because we have no recourse to a vote, and we have no recourse to the Environment Court. So what can we do if the commissioners make a decision that will allow more pollution of Canterbury’s water?

LOUISE UPSTON (National—Taupō): I am proud to take a call in this first reading of the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. The issues of the bill have been well canvassed, but I just want to say that we need to look back at one of the issues that was raised by the review panel. It said that the institutional failure required comprehensive and rapid intervention, because Canterbury is so important to both the regional and national well-being. That national well-being is even more important given that the issues relating to the earthquake, and the economic recovery required, both for the region and the country overall, are vital. That is all I am going to say on this bill. I commend it to the House.

A party vote was called for on the question, That the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill be now read a first time.

Ayes 64

New Zealand National 59; Māori Party 3; ACT New Zealand 1; United Future 1.

Noes 53

New Zealand Labour 30; Green Party 14; New Zealand First 8; Mana 1.

Bill read a first time.

Bill referred to the Local Government and Environment Committee.

Hon DAVID CARTER (Minister of Local Government): I move, That the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill be reported to the House on or before 30 January 2013.

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

Ayes 64

New Zealand National 59; Māori Party 3; ACT New Zealand 1; United Future 1.

Noes 53

New Zealand Labour 30; Green Party 14; New Zealand First 8; Mana 1.

Motion agreed to.

Bills

Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill

In Committee

Debate resumed from 28 August.

Part 2 Amendments to Income Tax Act 2007 (continued)

Dr DAVID CLARK (Labour—Dunedin North): I rise to support the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. We are debating Part 3 of the bill now, in my understanding.

Louise Upston: No. 2. We’re on Part 2.

Dr DAVID CLARK: Part 2. Well, that is very, very good, because I have some things I still wanted to say about Part 2 but did not have the opportunity to say. I thought I had missed my opportunity.

The loyalty bonuses issue was one that came up in Part 2. I wanted to raise some concerns, but did not have the opportunity, in relation to where that issue had broader relevance. We saw that coming up, likewise, at a similar time in our Parliament, around the asset sales legislation. In some places there appears to be an inconsistency. In the asset sales legislation that this Government is trying to ram through the House as quickly as it can, we are encouraging people by giving them bonus shares. In Part 2 of this legislation, on the other hand, we are taxing bonus shares. The submitters to the Finance and Expenditure Committee who spoke about this suggested that this was really the wrong way round, and asked how we could encourage investment in capital markets and local markets when we are taxing these shares, rather than encouraging more shareholding.

In Part 2, clause 17 talks about software development write-offs. The way in which this de-risks business is something that the Labour Party supports. We believe that there are some sensible things in this bill. Overall, the bill does contain some sensible measures, but, by and large, it is restricted to tinkering around the big issues of the day. The pro-growth tax policy that would take our country ahead is left grasping and excluded from this legislation, whereas taxing bonus shares is included. We have no plan for KiwiSaver beyond the unimaginative plan, which we will discuss in further parts of this bill, to increase it mildly after the Government had previously cut it. The Government is all over the place on KiwiSaver. And then we have nothing in the bill about monetary policy. Of course, this would not be the place, but it all adds up to no real vision for this sector.

What we have in the bill, part by part, is this little piece of tinkering and that little piece of tinkering. Many of the provisions are good, many of them valuable, particularly in the area of write-offs for software development, but we do not have the big picture in here. We do not have a real vision for saving in a beefed up KiwiSaver scheme. We do not have any pro-growth tax policy, and that means that as a country we have seen our tax take drop. We have seen it drop 4 percent during the time of this Government, in policies that were described as broadly fiscally neutral. We have nothing in this bill that seeks to correct for that or that seeks to make sure there are the right conditions for growth in our economy in order to secure the revenue base that we need as a country to secure future public services that we rely on—the hospitals, the schools, which look after our children, and the police, who look after our society. All of those services that we as taxpayers value are at risk when the tax base has been eroded and when there is no plan through the tax system or otherwise to grow our economy, other than things like taxing bonus shares, which is actually going to make our capital market more shallow than it already is.

If we compare our capital market with that of our neighbours in Australia, we can see part of the picture of why Australia has got so far ahead of us in recent years. It has $1.3 trillion in its retirement savings scheme. In New Zealand our KiwiSaver is a johnny-come-lately. The Labour Government in the 1970s put in a scheme that would have seen us actually better off than the Australians with our savings, but Mr Muldoon pulled that back, and we are all rueing that part of the story.

But there are opportunities now in the KiwiSaver space. There are opportunities here in terms of the decisions we could make. The plan to have write-offs around software development that has not been successful, which de-risks some of that development work, is a good step forward. The replacement of the—[Bell rung]—KiwiSaver 3 percent—

The CHAIRPERSON (Lindsay Tisch): No. The member must sit down when I have rung the bell. That is it. You do not continue. Otherwise, I will give you another call.

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

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 98 in the name of the Hon Peter Dunne to Part 2 be agreed to.

Amendments agreed to.

Part 2 as amended agreed to.

Part 3

Amendments to Tax Administration Act 1994

Hon CLAYTON COSGROVE (Labour): Given that we are proceeding with a reasonable amount of haste through this—

The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come, at a reasonable pace, for me to leave the Chair.

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

The CHAIRPERSON (Eric Roy): Members, the Committee resumes its consideration of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. Before the dinner break we were debating Part 3, and the Hon Clayton Cosgrove has the call. He has used 8 seconds of his 5 minutes, so he has 4 minutes and 52 seconds remaining.

Hon CLAYTON COSGROVE: Thank you, Mr Chair. Indeed it was—

Chris Hipkins: I move an extension of time!

Hon CLAYTON COSGROVE: Indeed, it was a short call before dinner—even shorter, I think, than your colleague, the other Chairperson who was in the Chair at the time, in metaphorical terms, in good humour.

I want to address a number of clauses in Part 3. I know that the Minister in the chair, the Minister for the Environment, will be ably prepared to answer some questions. Specifically, in clauses 104 to 106 there are a number of provisions that deal with the electronic and otherwise filing of forms, and the aim, I am advised, is that, as is the case with many tax bills that flow through the Finance and Expenditure Committee, it is an attempt to reduce compliance costs for taxpayers and to make the Inland Revenue Department more efficient by moving from paper to electronic services.

I would note, though—and it would be interesting if the Minister could provide some background to this—that there is still a gap in the Inland Revenue Department system, in that when you get a personal tax statement it will allude to salary and wages, but it does not take account of interest paid on bank accounts. Some years ago I inquired of officials why that was, and it was because of the archaic computer system that we still have at the Inland Revenue Department.

So we have this bizarre situation, as this bill tries to gain some efficiencies within the department, where if you request your personal tax statement and you align that with your resident withholding tax certificate, you will find that the two do not match up, even though the bank has transferred—if you are on the right tax code, which most people are—your resident withholding tax from your account to the Inland Revenue Department, and for some reason relating to the archaic computer system, the department cannot then reproduce that as part of your personal tax statement.

So what you are required to do, I am advised, is either assume the Inland Revenue Department has got it right and that there has not been a mistake, which is probably in about 90 percent of cases, if you have the right tax code, or, if you want to be safe, ring up your bank, get your tax certificate, and advise the Inland Revenue Department in writing. The Inland Revenue Department then both reconciles on paper and produces another tax statement with the correct amount on it, even though the Inland Revenue Department has got the money.

I said to an Inland Revenue Department official that given that the banks are compelled to transfer the funds, the resident withholding tax, from a person’s account to the Inland Revenue Department, surely, there is a more efficient way, given that the Inland Revenue Department has got the money, for the department then to produce a piece of paper that says: “Here is your wages and salary, and anything else. Here is your personal tax statement. And it will include the money that we, the Inland Revenue Department, have already received from the bank.” But, apparently, this is a sheer impossibility. It cannot happen because there needs to be some reform or some change to the Inland Revenue Department computer system.

So I ask the Minister, given the wonderful things that are contained in clauses 104, 105, 105B, 105C, 105D, and 106, whether there are any moves afoot to deal with the basic, basic anomaly whereby the Inland Revenue Department receives the money but cannot actually reconcile the amount it receives from an individual’s bank account and have it reflected in the individual’s personal tax summary without that person, or business, having to go back with their certificate from the bank and go through the motions again.

Can I also ask the Minister a question in respect of clause 104, which one could, nominally perhaps, refer to as the “John Banks clause”. Clause 104(1) states the following: “Where information contained in a taxpayer’s return has been transmitted by electronic means in the prescribed electronic format in accordance with”—I am sure the Minister is familiar with this—“section 36, the taxpayer shall retain or cause to be retained—(a) the return in the form of—(i) a signed hard-copy transcript of the information transmitted:”. Given that there has been some controversy in recent days—and I can see the National Party members have sort of perked up and are taking this very seriously—over whether people who sign forms read them, retain the notion in their brain that they have signed them, and have a memory of signing them, and given that that is a normal, human, biological, and mental practice for 99.9 percent of the populace, apart from one person from Epsom, what would be the penalty regime if somebody acted in a fraudulent way?

What would be the penalty regime—I see Mr Goldsmith, the chief biographer of Mr Banks, is drafting his obituary as we speak; volume 2—if somebody acted in a fraudulent way? What, I ask the Minister, if a person did not retain the correct documentation, or did sign that documentation, and could not remember the name they used in signing that documentation—which is very The Day of the Jackal, is it not—or could not remember or did not read the documentation they signed? Would that absolve them? I am sure the officials will be poring over the statute book as we speak—

Hon David Parker: What about David Garrett?

Hon CLAYTON COSGROVE: I will come to him in a minute. What would be the penalty regime? I am not a lawyer, but Mr Parker and others around the place are eminent lawyers. I would have thought that that was fraud in its simplest definition. I would have thought—

Michael Woodhouse: Careful.

Hon CLAYTON COSGROVE: No, I am talking about if a taxpayer—

Michael Woodhouse: Is this a hypothetical situation?

Hon CLAYTON COSGROVE: Absolutely. It is very hypothetical, very hypothetical. I would have thought that that is fraud. If one signs a document or signs it negligently, or falsifies documentation, or maybe has a bout of amnesia and cannot remember their own name, or perhaps signs somebody else’s—who knows—but cannot remember doing it, would that absolve them of their tax obligations under new section 23(1)(a)(i) of the Tax Administration Act, set out in clause 104? Then we come to new subparagraph (ii) whereby the taxpayer must retain “an electronic form meeting the requirements of section 25 of the Electronic Transactions Act 2002; and”—it goes on—“(b) for a period of—(i) 7 years after the end of the income year to which the return relates;”.

Then we turn to clause 105B, clause 105C, and clause 106. Clause 106 inserts new section 33AA, which relates to “Exceptions to requirement for return of income”, and it says: “(1) A natural person is not required to furnish a return of income for the tax year if, for the corresponding income year, the person—(a) derives no assessable income other than—(i) income of a type referred to in subsection (2), including a total of $200 …”, blah-blah-blah.

So there is a whole series of requirements here that require a high requirement from the individual taxpayer: first, that they do not have amnesia; second, that they are being honest and not fraudulent; third, that they actually read the documentation unless they have entrusted it to a trusted adviser; fourth, that they sign their name to it; and, fifth, that they retain it. Presumably, the Minister can advise us that the law would state that assuming you have signed it yourself, you are aware of its contents, and therefore you are responsible for the veracity and accuracy of those contents. I know that the Chairman is taking great interest in this; I can see the look on his face. I think he is an alumni of the Finance and Expenditure Committee, possibly.

We could call this the “John Banks series of clauses”, and I think it is important, given the environment in which we find ourselves floating around in this Chamber, that we get squarely on the record whether this would be considered fraud, whether a person in that situation would be seen to have lied to the Inland Revenue Department, to have falsified documents, or to have falsified the position, and, that being the case, I ask what penalties or remedies the Inland Revenue Department would have through our judicial system. It is a worry.

The other point is that I presume that under the mental health legislation some power of attorney would be required if somebody did not have the mental capacity to sign—I am being very serious—their own name because they had, for instance, amnesia.

Michael Woodhouse: There is a scope issue here, surely.

Hon CLAYTON COSGROVE: No, no. It is in scope, because in order to comply with clause 104, presumably you would have to delegate power of attorney to somebody of sound mind who could sign on your behalf. But, presumably, a court would hold that the court would have to determine whether you indeed did perhaps have amnesia, were incapable of remembering your own name, or were acting as a responsible citizen and therefore requiring power of attorney to be delegated to a third party. That might happen, and if that was the case, presumably you would comply with the law.

But if you falsified the documentation, there is a question of penalties—and I know that the Minister in the chair is a lawyer, a very senior lawyer, I am told, so she will be able to snap her fingers and gain the answer for us. What are the penalties? What are the remedies that Inland Revenue Department would have under that theoretical case if the documents were not retained under clause 104 and they were not signed appropriately?

I know that Mr Bridges is a former chair of the Finance and Expenditure Committee and this is an issue that is very close to his heart—that and wheel clamping, as he is the Associate Minister of Transport. He asked me whether I would mention him in the speech tonight. We call him Jed Clampett for obvious reasons. He is famous for his role as Associate Minister of Transport.

Dr RAJEN PRASAD (Labour): Thank you. It is a privilege to rise and take a call on this Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill, and to talk about clause 103 in Part 3. I know that the Hon Simon Bridges is particularly interested in this part and so he will be following my comments particularly closely. This particular clause is permissive in the sense that it now enables—

Hon Simon Bridges: That’s like half the Labour caucus, Rajen.

Dr RAJEN PRASAD: I beg your pardon, Mr Bridges?

Hon Simon Bridges: That’s like half the Labour caucus—permissive.

Dr RAJEN PRASAD: I do not know what that member knows about the Labour caucus, but what he knows about the Labour caucus will not fit on the back of a small stamp.

Chris Hipkins: I don’t know whether to be offended or flattered.

Dr RAJEN PRASAD: Yes, yes, yes. But we know much more about that member’s caucus. I am happy to elucidate on that if the member is particularly interested, but I am sure he is not and it will be outside of scope.

The CHAIRPERSON (Eric Roy): Part 3. Part 3.

Dr RAJEN PRASAD: Thank you, Part 3. Thank you, Mr Chairman, for bringing Mr Bridges back to the point that I am trying to make. So here is a permissive provision for the keeping of records when tax returns are submitted.

Maggie Barry: Take your time.

Dr RAJEN PRASAD: What clause 103 does is it actually enables records to be kept in a particular way. I notice Maggie Barry is particularly interested in keeping it narrow, because that fits within the ambit—

Maggie Barry: Get to the point. Get to the point.

Dr RAJEN PRASAD: —of that member’s understanding of this. If the member will allow me, it is about where the records are going to be kept, and what kinds of records. Ms Barry, as a member in an electorate with a whole lot of Korean members, would be interested in how the system is going to work when the language now is permissive. Records do not have to be in English. Also, what this clause does is enable these records to be kept anywhere. So the Minister in the chair, Amy Adams, might want to tell us what kinds of provisions the Inland Revenue Department will make to make sure that there is an ability to access those records and translate them in a way that would make sense within the New Zealand tax system. I have some experience with this, I would want to tell both Maggie Barry and Simon Bridges, because when I was a member who heard immigration appeals on the Residence Review Board I had to deal with a lot of records in banks about what banking records—

Hon Clayton Cosgrove: Banks? John Banks?

Dr RAJEN PRASAD: —in business—Banks again. No, no, different kind of banks. This is a good bank; that is a bad bank. This is a good bank, a straight-up bank. Banks that can be trusted. Banks that do not forget what they are telling you about. Banks with good records, Mr Bridges—those kinds of banks. Here, Mr Bridges, one had to really do a lot of work to understand the investment records of those who were applying to come to New Zealand on business migration visas. That required all of the skill I have, and I know, Mr Bridges, it is not that great, but it is enough. It is enough. It has got me this far, and I am sure it will see me through my time.

What are the provisions by which the Inland Revenue Department is going to access these records? They could be in Swahili. A record could be in Ethiopia. It could be in the Middle East. It could be in Korea, in India, or wherever. So here we have a set of permissive provisions. That—

Todd McClay: If it was in Swahili, it would make more sense.

Dr RAJEN PRASAD: The member does not know Swahili? We will send him to East Africa—we will send him there. The member might want to know that it is a language. Mr Todd, it is a language and it is used for trade in that particular region as well. Here are provisions in this bill that say records can be kept in any language and in a number of different places. So where are the checks and balances, I ask the Minister in the chair? The Minister might want to take a call to explain to us where those particular records will be kept and how might they come to be utilised by our tax authorities here.

Of course, clause 104 also enables this information to be transferred electronically, so it makes it even more important that we have those checks and balances. I just assumed that the Finance and Expenditure Committee and the Minister of Revenue have thought about these provisions, and I am sure they have. I would just like to know what they are, because there are so many languages of trade internationally now, yet this is permissive.

Todd McClay: No, they’re in favour.

Dr RAJEN PRASAD: It is permissive. Well, Mr Todd, this says it does not have to be in the English language.

TODD McCLAY (National—Rotorua): Thank you very much. I just want to clarify an issue for the last speaker, Mr Rajen Prasad. It was not that I did not know what Swahili was—of course it is a language. I had suggested to the Committee by way of interjection that if the member was speaking in Swahili his speech would be much more enjoyable, because the poor people at home would not understand the rubbish he was talking about. If ever there was a reason for the taxpayer to deserve a refund on an MP’s salary it was that last speech from Mr Prasad.

So what I would like to say very clearly is that in the Finance and Expenditure Committee, when we focused on Part 3, we gave a large amount of time to consider these issues. There were very few submissions on them, but we did question our advisers at great length about language, what it meant, how we needed to use it, how the Inland Revenue Department would deal with it, and so on and so forth. Actually, our advisers showed so much more common sense than has been apparent in the part of the debate that I have been listening to since I got here that I am thankful that we now get to move on. I do note that I think the parties in Parliament are supporting this legislation. It is good that we get to talk this Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill out, I suppose, but let us make some progress. Thank you.

Hon DAVID PARKER (Labour): I want to ask the Minister of Revenue about clause 106 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill, which, as I understand it, is part of the provisions of the Budget that picked the pockets of paper boys. Remember that line that we had? This is the provision that, rather than exempting a certain level of income that could be derived by paper boys and paper girls, by babysitters, and the like, the Government came along and said: “We are so broke as a country we are going to disincentivise young people getting part-time work by taxing them more.” My understanding, if I am correct, is that clause 106 of the bill is the clause that gives effect to that by saying that, instead of the previous exemption, there is a limited exemption of up to $200 of income per annum.

Hon Clayton Cosgrove: The Uncle Scrooge clause.

Hon DAVID PARKER: The Uncle Scrooge clause, as Mr Cosgrove describes it.

I would be interested if the Minister could take a call and explain the justification for this, and explain why we have become so miserable in New Zealand that the only level of exempt income is limited to $200 per annum. This is in stark contrast to Australia, where the first so many thousand dollars of income is not taxable, whoever earns it, rather than the miserable $200 per annum limit that we have under this bill. We had this Government come into power on the slogan: “Wave goodbye to higher taxes. Not your loved ones.” It was going to close the wage gap with Australia and decrease the number of people moving from New Zealand to Australia. In part, that was because it said it was going to reduce the tax burden in New Zealand, whereas this bill, and this provision in this bill, does exactly the opposite. It increases the tax burden on people who are already earning very small amounts of money. I would be pleased if the Minister took the next call and, indeed, told the Committee that the Government is not going to proceed with that change to the income tax law that effectively increases the taxation of young people who have got their small amounts of earnings, often irregular amounts of earnings, and who often do not have security of income from week to week, because their hours can change, and the—

Hon Clayton Cosgrove: The big tax reform.

Hon DAVID PARKER: —big tax reform is going to take more money off them.

I would also ask another question following up from what the Hon Clayton Cosgrove asked in respect of when you file returns. My understanding of the provisions in this part of the bill is that you are obliged to disclose if you have received income. If you have not received income, then you are not doing anything wrong to say that you have not received income. But if you file a tax return that says that you have not received income when you have, that would be an offence against the tax legislation. [Interruption]

One of my colleagues interrupts me and says: “What if you cannot remember?”. Well, that would be a matter for the court, as to whether it believed you. It would not be for the Minister or for the Prime Minister to pretend to judge a claim by someone as to not being able to remember whether they had received income or not. That would not be a decision for the Inland Revenue Department. It would not accept my word if I pretended that I had not received income even though I had received cheques in an envelope. I do not think I would be believed, particularly if I had asked for them, or if I had asked for the income to be split into more than one payment. I would think that it would be very unlikely for the Inland Revenue Department to believe me when I said that I had not received income. If I filed a declaration to that effect, I think I would be held to account for my declaration.

Hon Clayton Cosgrove: And signed it.

Hon DAVID PARKER: If I had signed a declaration to that effect, I would be held to account for it. If I later denied that I was liable for the truthfulness in my declaration because I could not remember, I would be doubted. I think that if that were any normal person, the Inland Revenue Department would not give them the benefit of the doubt, and it would say that that is a question that should be put to a jury rather than the Inland Revenue Department, the police, or whoever it is that prosecutes these things—rather than them taking the decision as to whether it believes the unbelievable story.

Dr David Clark: What if there were sworn affidavits?

Hon DAVID PARKER: Well, if there were sworn affidavits from people who were involved in the payment of those amounts to me, and they said I knew I received them, then I would expect that that would make it even less likely that I would be believed if I denied that I had received that income. That seems to me to be so obvious that I am surprised to be asked the question. But I can understand why there is a level of doubt about that, because that, of course, is exactly the standard that John Banks and the Prime Minister are expecting us to believe in respect of other aspects of the conduct of affairs in this country. That level of double standard is—

Hon Clayton Cosgrove: Despicable.

Hon DAVID PARKER: —despicable. It is despicable that someone can stand up in this House in respect of other legislation and say that they have no responsibility for a lapse of memory. They do not have to account to Parliament or to others for the lack of credibility. They do not have to respond to the statements by other people that cast into doubt the unbelievable statements that they are making anyway.

I would ask the Minister to take a call and explain the point of principle that is different in respect of taxation legislation, and explain why, if I received income and failed to properly declare it for income tax purposes, there should be a different standard in respect of income tax from that which is applied to political donations in other parts of the law. We know that different standards are being applied in respect of different areas of the law, because we have seen it in respect of the investigations into the Hon John Banks in respect of campaign donations that he received, and that the evidence shows pretty clearly he knew he received, yet he claimed they were anonymous. If that is permissible in respect of donations for political parties that are meant to be subject to a limit, or even when they are not within the limit they are meant to be publicly disclosed, why is it that we have a different standard in taxation legislation, where people are held to account for the honesty or otherwise of the statements they make as to the receipt of income?

This is relevant to Part 3, because it is Part 3 that imposes obligations on people to return their levels of income, and, as Clayton Cosgrove said earlier, to keep copies of these documents. If they are submitting them electronically, they still have to keep an original copy that bears their signature. Why is that? Because they are held to account for what goes in under their signature. If that is good enough for taxation, and if that is good enough for the tax system, why is it not good enough for rules that are meant to keep New Zealand free of corruption, to keep political operators from being unduly influenced by donations, and to keep a level playing field between candidates, so that one person cannot cheat on the system by spending more in their election campaign than the nominal limit, while someone else complies with the rules?

One of the ways you do that, of course, is by having proper disclosure as to the amount of donations. In terms of avoiding corruption and avoiding the allegation that people are effectively selling policy for money, they are meant to disclose whether they know who the money is coming from. In respect of the tax system, it is clear that you have to make those disclosures. The sorts of excuses that are being used by the Prime Minister, John Key, and by John Banks in respect of political party donations would not stand the tests in respect of this tax legislation. I ask the Minister to take a call and to explain what is the point of principle that says we should be stricter in respect of our tax rules in the enforcement of electoral declarations. In fact, in some ways the declarations are not quite as clear, because all you are doing is saying “This is my income.”

The other declaration that Mr Banks swore—

Dr DAVID CLARK (Labour—Dunedin North): I am very pleased to take a call at this point, as I had the opportunity in the previous debate, but I think it is important to come back to the context, for starters, because we are talking here about a Government that is failing. It is failing in respect of having the worst economic growth record of any Government in 50 years. There are 50,000 New Zealanders leaving annually for Australia, there has been a 50 percent increase in unemployment, and there are now nearly 50,000 more people on benefits. That is because this Government will not tackle the big issues, and Part 3 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill is another illustration of that. This part of the bill has more tinkering.

We have here some positive streamlining. That is the best thing we can find in this bill. We can find no pro-growth tax policy, we can find no research and development policy, we can find no savings policy in this part of the bill, and there are no changes to monetary policy, of course. This is a Government that is failing.

I want to question whether the Government can actually implement the changes. I would be interested if the Minister in the chair, the Minister for the Environment, would like to take a call on this and say whether the Government can actually implement the changes that it is proposing here in respect of electronic transactions. I raise the question because it was not so long ago—well, it is actually over 6 months ago now—that John Key made his Valentine’s promise. John Key’s Valentine’s promise on 14 February of this year was to address the problems with the Inland Revenue Department’s computing system. The Inland Revenue Department’s computing system is not up to scratch. We know that. The Inland Revenue Department has been saying it for a very long time. And we know that tax policy is being held up because the computer systems—and I am quoting the Prime Minister here—cannot actually support radical changes from the Government. The Prime Minister, on Valentine’s Day, said: “You don’t want to be in a position where Parliament is held hostage to a lack of technology.” That is what the Prime Minister said. He told reporters that he did not want to be held hostage to a lack of technology.

Well, he is held hostage at this stage because this Government has not addressed the Inland Revenue Department computer system—a computer system that was designed in 1992 and apparently would cost somewhere between $1 billion and $1.5 billion to replace. I find that number implausible in and of itself. It is hard to believe that our computer system would cost that much to replace. We are not the only country in the Western World that has a tax system.

We have not seen a plan yet from this Government as to how it is going to address these problems, so how on earth can it convincingly say that it is going to implement even something like electronic filing? The electronic filing provision here listed retains, I notice, paper copies as well. I think that is probably because the Government is a bit nervous about whether these electronic transactions will really work. So I would be interested if the Minister in the chair could express some confidence in the ability of the Inland Revenue Department to deliver these changes.

The other thing that is happening, of course, as this computer system struggles through, is that the Inland Revenue Department is preparing for this new world, but customer satisfaction levels are dropping. It is laying off staff around the country—42 people in the last 4 years down my way. It continues to have dropping customer satisfaction, because everything is going on the phone. If you have a tax issue, it is actually hard to find somebody these days who will service your needs. We all as taxpayers pay for the system but our need for service is not being met.

There are advantages in having electronic returns, so I congratulate the Government on recognising this at last. I guess one of the advantages of being able to put in electronic returns is that you can put them in more immediately. You can write them up straight away. If you are carrying around an iPhone or an iPad, I assume you can write up your electronic returns straight away, or that will be a provision, I hope. The Minister might like to explain that as well, and how immediate that is. I assume those forms will be online. You will be able to start filling them out. If you are somebody who perhaps suffers from memory loss, if that is an issue that somebody struggles with, you could—

Dr Rajen Prasad: You can’t bank on it.

Dr DAVID CLARK: You could not bank on it, my colleague says, but I hope that it is true that this will facilitate an easier filing of returns for people who struggle with a variety of issues, not just memory loss. I was thinking about this as I flew up from Dunedin North, the fine electorate that I represent—[Interruption] In an aeroplane. Yes, that is right. It was not a helicopter, and I do remember that very, very well. I was thinking about the advantages of electronic returns.

The other thing that we are seeing, as these computer systems struggle, is that a range of other problems are starting to impact on the department. We had 70,000 calls not answered in the lead-up to the last filing date. We have hundreds—

Dr Rajen Prasad: How many?

Dr DAVID CLARK: Seventy thousand calls unanswered—70,000 calls.

Kris Faafoi: Are you sure it wasn’t 50,000?

Dr DAVID CLARK: I am sure it was not 50,000, Mr Faafoi. It was 70,000 calls, and I do remember. I do remember. We have hundreds of thousands of unprocessed returns—hundreds of thousands of unprocessed returns—in that department. I am sure we will hear more from my colleagues about returns. We have a system that falls over at crucial times, and was declared by the Inland Revenue Department in many of its past briefings to incoming Ministers to be on its last legs. We have no plan but only talk of a $1 billion rebuild. We are not, as I say, the only country in the Western World with a tax system.

The other point that I would like the Minister to perhaps address is the rumours that are swirling around about the rebuild of this computer system—presumably, the computer system that files these electronic returns. There is a rumour floating around that there is a 1,700-page draft report—a 1,700-page draft report—on repairing this computer system. We have seen no action from the Government. There has certainly been no public announcement of a plan.

Hon Clayton Cosgrove: It’s called a manual.

Dr DAVID CLARK: It is called a manual—yes, it is. But we have seen no public announcement. We have seen no commitment, and I wonder whether even this 1,700-page draft report—if it exists—will suggest what the next steps might be. Perhaps there will be another draft report. There are some consultants doing very well out of this. My colleague Mr Chris Hipkins pointed out, not so long ago, just how well the consultants there are doing. After pointing out that a million clients hung up before their calls were answered last year, Mr Hipkins drew attention to the more than $125 million that has been spent in the Inland Revenue Department on consultants and contractors. That is unbelievable for a falling level of service, which the public of New Zealand are getting sick of, and which is simply not able to make the big tax changes that we would like to see: the capital gains tax, the research and development tax credits—the things that would actually make our economy work, rather than these smoothing gestures—

Dr Rajen Prasad: Rats and mice.

Dr DAVID CLARK: —the rats and mice that we find in Part 3 of this bill. I notice also that clause 131 notes that a taxpayer may apply for financial relief. That financial relief, in the face of hardship in paying tax, is another sensible clause in this bill.

So the kind of tinkering that is in here, most of it we do not object to. We just think that the really big changes could be addressed. Who knows, the financial relief might be useful for somebody who has filed a false tax return, who is then forced to repay some money and then whilst paying their debt to society is scratching around for some extra dough. So the clauses that are in this bill do seem sensible. Unfortunately, they are only tinkering and they do not get to the heart of the issue. They do not address the real problems in our economy—the big problems—which the National Government will not address, because it does not seem to have the wherewithal to address those things that would make our economy function properly. Thank you.

SUE MORONEY (Labour): I think in order to understand the importance of Part 3 of this bill, the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill, I actually want to get members of the public to just rewind a bit, back to Budget 2012. I think that will help them to understand the importance of Part 3 of this bill.

Remember Budget time 2012—unemployment soaring, economy flat-lining, trouble everywhere in New Zealand, families under huge pressure and stress, and what was the big idea that this Government rolled out? It was taxing paper boys and paper girls up and down the country. That was the big fix and the big idea the Government had, back in Budget 2012. That was going to deliver the brighter future, according to John Key. People—I am sure when the parents of these paper boys and paper girls saw the Government promise them a brighter future—they never imagined in their wildest dreams that what this Government was up to was to tax their children who were doing jobs after school, trying to get just a little bit of pocket money for themselves.

I do not think that any parent in this country believed that that was what John Key meant when he promised them a brighter future. But here it is in clause 106 of this bill that we are debating here this evening. This is the part of the bill that actually brings in the big idea from this Government. It actually taxes paper boys and paper girls and all of our adolescent children who do a bit of work here and there to get a bit of pocket money. Apparently, clause 106 is the provision that brings this in. It is the big idea from National that was going to change the direction and deliver this brighter future that it promised at the last election.

Of course, what we know is that it is a complete and utter joke, and that even though this will be passed into law, this clause 106 in Part 3 is not going to deliver a brighter future. That is just tinkering around the edges. That is what the Budget was known for. It was known for clause 106 of this bill tinkering around the edges, trying to imagine that we would somehow get ourselves a brighter future by taxing adolescents who are doing a bit of work for a bit of extra pocket money going into their families. That is what clause 106 is about.

But I cannot let the irony of tonight’s debate go by without understanding the irony of debating part by part what the obligations are of ordinary New Zealanders to make sure that when they sign documents they are actually making honest declarations and spelling out, as in this part of this bill, what they are doing and what they are required to do in order to make sure that they are putting forward information on taxation issues in the appropriate manner.

How ironic that we are debating the detail of what ordinary New Zealanders are required to do and the implications of when they put their signature to documents what that actually means, because that is what is covered in Part 3, and how ironic on the same day that the Prime Minister seems to have a completely different standard for his Ministers. He seems to believe that a signature from someone who is now a Minister in his Government can be put on a document and that that person cannot be held to account for it. Yet here we are, in Part 3 of this bill, spelling out all the measures by which ordinary New Zealanders are going to be held to account for signatures that they put to documents with regard to their taxation income.

I thought that, actually, clause 130 was going to be the one that would ensure that the John Banks fiasco would be uncovered and discovered. It is called “Knowledge offences”. I thought that was going to be the part of this bill that was going to make the Prime Minister see sense over his ducking and diving today over John Banks’ affairs. But, no, it seems that it is not about actual knowledge offences over the type of return that John Banks signed his name to. It is actually about employers’ superannuation contributions. What it does is it just makes it a bit more explicit that the knowledge offences under the taxation bill—

CHRIS HIPKINS (Labour—Rimutaka): I am very happy to take a call on Part 3 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. This is the part of the bill that is about the electronic filing of tax returns or the electronic filing of information. I think that that is a great thing. I file my tax return electronically each year. My accountant prepares it for me, but I have to sign it. Before he files it electronically for me, I have to sign it, and I can tell every member in this House that I actually read it before I sign it. So the accountant may prepare it for me, and put all the information together about my income and expenditure and so on, but before I sign it, and before it is submitted by him electronically, I read it and I make sure that all the information in it is absolutely correct.

I think that it is no unreasonable thing for the Inland Revenue Department to ask New Zealanders to read their tax returns before they are filed electronically. I think that is very reasonable. New Zealanders know that if they provide wrong information deliberately to the Inland Revenue Department, the department will come and find them. I tell you that if there is one agency of Government that somebody does not want to be investigated by, it is the Inland Revenue Department. Anybody who has been investigated by the Inland Revenue Department—I have the pleasure of saying I have not been one of them—will say that it is a most unpleasant experience to have the department investigating—

Maggie Barry: That’s the whole idea.

CHRIS HIPKINS: “That’s the whole idea.”, says Maggie Barry. I agree, because people, when they are filling out forms and signing them, should make sure they are correct, except this Government thinks that that rule applies to everyone else but not to it. The Prime Minister this week has said that it is OK for a Minister to sign a return without reading it and knowing that the information in it is false. If somebody did that with their tax return, and knowingly filed it electronically and according to the provisions of this piece of legislation, the Inland Revenue Department would be all over them. The Inland Revenue Department would not let go. The Inland Revenue Department quite rightly would be all over them. It would go through all of their financial affairs, because it can do that. But the Government’s message to New Zealanders is that “That is the standard we expect you to adhere to, but we have got a different one for ourselves.” That is the rule according to this National Government. It is absolutely and fundamentally wrong.

Let us talk through what that means. If somebody is earning, for example, money in cash, and somebody gives them an envelope, a brown envelope, at a meeting over lunch, with a cheque in it for, let us say, 15,000 bucks—so somebody gets 15,000 bucks—are they obliged to declare that as their income when they file their tax return? Actually, yes, I suspect they would be required to declare that when they file their tax return. If they knowingly filed a return that contained false information about the $15,000 they received in an envelope while they were having their lunch, they would be done for. The Inland Revenue Department would be all over them. But, actually, the Government—John Key—says that is OK, providing nobody prosecutes anybody. Well, actually, if New Zealanders took $15,000 in income and knowingly filed incorrectly with the Inland Revenue Department about that income, the Government would be all over them. The Inland Revenue Department, the Government’s agent, would be all over them. What this Government is saying is that that is the rule for everybody else, but not for it.

The point that my colleague David Clark raised earlier on about the electronic filing system is a very legitimate one. If the Government is going to implement an electronic filing system, we need to make sure that it is going to work and that it is going to be robust, but also that people who are using it will get the support they need to get. Electronic filing systems do not always work. There can be difficulties with an internet-based system, and somebody, when they are doing these electronic returns, needs to be able to pick up the phone now and then and talk to somebody, particularly given that the penalties for getting it wrong are quite high. For somebody filing information with the Inland Revenue Department that is wrong, the penalties are quite high. They need to be able to pick up the phone, talk to somebody, and make sure that they can get it right. If there are a million calls a year where people give up before they even get through to somebody at the Inland Revenue Department, that would suggest that the system is not working well.

Transferring a whole lot of the administrative burden from a call centre to an internet-based system does not necessarily resolve the problem. You still have to have the backup of the call centre if somebody needs to get hold of someone and talk to them and ask them questions. If we think about the massive amount of productive time that is being lost every year by people who are trying to get hold of the Inland Revenue Department and are not able to get through, the cost is quite significant. So I think that is something that the department really does need to give some thought to.

I know that the Inland Revenue Department is going through an upgrade of its computing systems. I am interested—and I am sure we will deal with it when we get to Part 5—in the fact that one of the things this bill does is allow the capital costs of unsuccessful software development to be tax deductible. I am sure that that will not apply to the Inland Revenue Department’s development of its own software if that turns out to be unsuccessful! Given the huge amount of cost that seems to be involved and some of the stories associated with this development of new software for the Inland Revenue Department, perhaps it should make it tax deductible, although—

Hon Clayton Cosgrove: Would Dotcom software be tax deductible?

CHRIS HIPKINS: Would Kim Dotcom software be tax deductible? Well, that is something that I am sure we will talk about when we get to Part 5. I can feel another speech coming on when we get that to part of the legislation.

To summarise the contribution I want to make to this bill, I think electronic filing is a great thing. I think that New Zealanders will welcome the opportunity to file more information with the Inland Revenue Department—

Hon Clayton Cosgrove: If the computer works.

CHRIS HIPKINS: —if the computer works—electronically. I think that is good. It potentially is a great productivity-enhancing measure, but the message to all New Zealanders—and we live in the electronic age where New Zealanders do so many things online—is that this is one of the more serious things they will do online, so they need to make sure they get it right. This is not just updating your Facebook status or sending a tweet. Filing something electronically with the Inland Revenue Department has quite severe consequences if it is wrong. One or two colleagues have discovered that filing an unwise Facebook status update can get them into hot water as well, but it is nothing compared with the hot water they would be in if they filed something incorrectly with the Inland Revenue Department. The department would be all over them.

Just as the heavy hand of the law should deal with people who knowingly file incorrect returns in other areas, so too should that be the case with the Inland Revenue Department. I think it is very concerning that according to this Government, according to our own Prime Minister, it is OK for people to knowingly file information that is incorrect, and to state things in a return that they sign that they know are not true, and to then try to claim ignorance when challenged on that. A person filing an incorrect tax return could not claim ignorance. They could not claim that they simply did not know about it. They could not claim that they had not read the return that they signed. That simply would not be an acceptable defence to the Inland Revenue Department, and nor should it be. Nor should it be an acceptable defence for elected officials to high public office to try to claim that about the forms they fill in, either. The New Zealand public should not be held to a separate standard from that to which we hold the people in the highest office in the land. They should be held to the same standard as every other New Zealander, and filing a false return while knowing it is incorrect is unacceptable for anybody in New Zealand to do.

Hon CLAYTON COSGROVE (Labour): I want to return to clause 106 of this bill, the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. I do not want to reiterate what other colleagues have said in respect of this clause—the “Uncle Scrooge” clause. It is the big tax reform this Government has come up with, apart from giving the top 10 percent the vast majority of the tax cuts and the lowest on the rung virtually nothing, at a cost of 300 million bucks a week in net borrowings, which, of course, it then blames on the global financial crisis but does not admit that it is in direct relation to the tax cut. In the Budget this clause was effectively signalled and is now replicated to be actioned in legislation. The big reform that the Government came up with in tax policy was to flog a few hundred bucks off paper boys and paper girls. Those young people are in jobs that we probably all had. Gerry Brownlee may have been a pizza delivery boy when he was a young fella; I do not know. Simon Bridges, I am told, had a milk round. But this is the big reform. New Zealanders, in the middle of a global economic meltdown, placed their confidence in this Government at the last election on the slogan of a brighter future, encouraging entrepreneurship, and people getting ahead. Then we get to the Budget and we come up with this clause, which we are now actioning tonight.

We had the cycleway. That was going to be a silver bullet. It was a fizzer. There were two jobs, according to Chris Tremain—a fish and chip shop and a bike shop in Napier. He could not tell us how many permanent jobs came out of that. That was a fizzer. Then we had the great international financial hub that New Zealand was going to be. That lasted 5 minutes. Then we had mining in national parks, and Gerry, of course, like the earthquake, blew apart on that. That lasted 5 minutes. And now we are down to this.

We have got 120-point plans, and more task forces than we have had hot dinners, coming out of this Government. But when you drill down with tax legislation, what is the big reform in terms of cutting compliance costs or reforming the tax system? What is the big reform, the big revenue generator, other than flogging off assets to Kiwis, who already own them, and those overseas interests? They tried that in the 1990s but it did not work. That is the history, but they are trying it again. The big reform is to take a couple of hundred bucks off paper boys and paper girls and those in small jobs.

I have got to say that this is groundbreaking financial and taxation reform from the National Government—groundbreaking thinking! I would like to know—

Michael Woodhouse: I raise a point of order, Mr Chairperson. I would just like to point out that the policy that is being described by the member has already been passed into law and is not within the scope of this bill.

The CHAIRPERSON (Eric Roy): I will take the member’s word for that.

Hon CLAYTON COSGROVE: No, you will not, because he is a whip. What does he know?

The CHAIRPERSON (Eric Roy): Order! I am on my feet. The member should not be engaging in some kind of interjection with me. If the member is speaking about clause 106, he should address himself to that, or to some part of Part 3, and while he is doing that I shall have a look at the clause that he is talking about.

Hon CLAYTON COSGROVE: With respect, I advise you that it is not appropriate to take the word of any member. I could make something up on clause—

The CHAIRPERSON (Eric Roy): Order! I have ruled. The member should speak about Part 3.

Hon CLAYTON COSGROVE: And I am speaking about Part 3, clause 106.

Hon Member: He makes something up all the time.

Hon CLAYTON COSGROVE: Well, you would know.

Michael Woodhouse: I raise a point of order, Mr Chairperson. It may assist the Committee if the member could point out which part of clause 106 refers to the taxation of paper boys.

Hon CLAYTON COSGROVE: Speaking to the point of order, Mr Chairperson, is that a debating point? If it is, you should rule on it. I am waiting for you to rule on it.

The CHAIRPERSON (Eric Roy): Yes, I guess that is a debating point. That really was not a point of order, so thank you.

Hon CLAYTON COSGROVE: We will carry on where we left off. I appreciate the lack of assistance from the senior whip.

Michael Woodhouse: I raise a point of order, Mr Chairperson. Perhaps if you could just assist me. Does this mean that any item that is arguably outside the scope of the bill becomes a debating point; if so, what does the Standing Order mean when it talks about speaking to the bill?

Hon CLAYTON COSGROVE: Speaking to the point of order, what the member is doing is expressing an opinion about my speech and the content of the bill. He is not the Minister. In fact, the Minister of Revenue will be here somewhere, but he is not in the chair.

The CHAIRPERSON (Eric Roy): Order!

Hon CLAYTON COSGROVE: It is for the Minister to make statements on that. Unless the member is taking advice from officials and is going to table some advice, it is a debating set of issues that he has raised. We should get on with the debate.

The CHAIRPERSON (Eric Roy): Look, the member justifiably raised a point of order and said the member was outside the scope of the bill. I invited the member to continue while I read the particular point that he was at, and that is what I have done. I have actually now read clause 106 and I think the member might be referring to new section 33AA(1)(c), inserted by clause 106, which states: “has total income of $200 or less or derives no schedular payment other than an amount or proportion of an amount for which the Commissioner …”. Is that the section the member was referring to?

Hon CLAYTON COSGROVE: I am reading from a number of them, including that one.

The CHAIRPERSON (Eric Roy): OK, so I think he is drawing a wide bow, but in the context of the debate thus far he is probably no further away than some other members were.

Hon CLAYTON COSGROVE: I raise a point of order, Mr Chairperson. [Interruption] This is a point of order. This issue was raised, I think, prior to the dinner break and post the dinner break for about an hour and a half. No Chair has ruled that it is out of scope. The Minister in the chair has not challenged any speaker, except a member decides to have an interpretation of legislation and has interrupted the debate a number of times. That is trifling with the Chair and interrupting speeches, and you should deal with it. It is a debating point.

The CHAIRPERSON (Eric Roy): I will choose whom I deal with. I have told the member that he is inside the scope with regard to everybody else, and it is out of order for him to raise the matter in the way he has just done. I ask him to continue with his speech.

Hon CLAYTON COSGROVE: Thank you, and can I thank the senior whip for exposing his lack of skill and knowledge about this bill and also thank Maggie Barry. If anybody can talk about grace, of course, Maggie Barry can. But we will not talk about putting the old tumbleweed back at the back of the garden.

So where, colleagues, did we leave off? Where did we leave off? We were talking about the great reform within this bill as reflected in the Budget. What we have seen over the last couple of minutes is that it is the old sort of Captain Mainwaring. Remember the Home Guard, the old cold steel? They do not like it up ’em over there. They do not like it highlighted, because they are embarrassed about it. But the facts are that that is what they did. That was the sort of big-hit reform that they tried to cover up.

Where is the reduction in compliance costs plan in this legislation? We have heard about the computer system, and all sorts of reforms that are dependent on electronic media within the Inland Revenue Department, but there is no money to actually action it, is there? No. Oh, they are all very silent now. Even the tumbleweed is quite silent. They are all very silent now.

Hon David Carter: They’re bored.

Hon CLAYTON COSGROVE: Well, people are not bored with Mr Carter—not down my way. We are looking forward to doing him slowly. This is what the big reform was in this legislation. It is mean-spirited and it actually does not contribute to New Zealand’s economic growth one iota, but simply highlights the lack of ideas. They have got lots of plans and no implementation, lots of task forces but no implementation, and they are out of ideas. The only idea they have got for generating a bit of money in the economy is to flog off the family silver—and once it has gone it has gone—and take a few dollars, under clause 106, from the odd paper boy. So the economic integrity is in tatters. When we talk about Mr Banks and signatures, if we refer to clause 104, as we have done, their political and moral integrity is in tatters. They have no ideas and they have no plan, apart from the little 200 bucks paper boy tax.

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

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 98 in the name of the Hon Peter Dunne to Part 3 be agreed to.

Amendments agreed to.

Part 3 as amended agreed to.

Part 4 Amendments to Goods and Services Tax Act 1985

Dr DAVID CLARK (Labour—Dunedin North): Part 4 concerns the amendments to the Goods and Services Tax Act 1985. Fresh in our minds, of course, for those of us on this side of the Chamber who have constituents struggling at this stage in their lives with the rising costs of living, are the changes that this Government made in 2010 in the so-called tax switch, where 44 percent of the value of the tax cuts went to the top 10 percent of earners, and the bottom 20 percent of earners got just 2 percent of the value of the tax cuts. That was some switch. Any benefit that those who were on low and middle incomes got was very quickly swallowed up in GST and then in subsequent rises in the cost of living.

This change in GST has really affected us as a society. Recently, there was a report that made it clear that we are becoming more and more unequal. In fact, New Zealand is now more unequal than it has ever been in its history, and that is not something to be proud of. When we have an unequal society, we have wasted potential. We have people right now in poverty, falling between the cracks. We have got to ask: was that tax reform the sensible tax reform that should have happened? Is there any better tax reform proposed in this bill, the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill, that would sort out that problem of widening disparities and the poverty that is eventuating? There is wasted talent amongst our poor people who are not able to put nutritious food on their table in some cases, and who are not able to afford the school books, school shoes, and raincoats that they need for their kids. They have kids getting preventable illnesses because they are living in cold, damp, and overcrowded homes. Those preventable costs are borne by all taxpayers. They are borne by high-earning taxpayers and by low-earning taxpayers.

Really, there is a huge social shame associated with being poor—unnecessarily, and because of this Government—and also with those health effects that go with being poor. Those people who are missing out as a consequence of not having the resources they should have will also not become the taxpayers of the future in the way that they could. I put it that if those people were given the full resources to develop as young children—and we know that early intervention has high rewards—then those children would grow up to be high-contributing taxpayers. That is why we need a tax system that is fair, where everyone pays their fair share, and where those at the top pay their fair share. We know that only 50 percent of the highest earners in New Zealand are on the top tax rate. We know that there is something not fair there, and that is part of the reason we need tax reform. We also know that sometimes people do not meet their tax requirements for a variety of reasons, and we deplore on this side of the Chamber those who do not fill out correct returns. That has been the topic of much debate this evening.

I want to address a couple of specific clauses in Part 4. One clause is clause 151B, the keeping of records, and if we take the first section there, in section 75(3D) the words “name, address, and registration number” are replaced by “name, and address, and registration number or tax file number, as applicable.” This is the kind of change we see in this bill. We see—

Hon Clayton Cosgrove: Radical!

Dr DAVID CLARK: —radical reform—adding the words “and” and “or tax file number, as applicable”. This kind of tax reform is, you know, hard to oppose—it is hard to oppose. I see that. Politically that might be a strategy from the Government of the day, to put up tax reform where the words “and” and the words “or tax file number, as applicable” are added in to the legislation, because Oppositions cannot get up much steam against that stuff. But what it also reveals is a Government that is bereft of ideas, and a Government that is not able to implement the real change that is needed to get New Zealand’s economy back on a track that would grow the pie for all New Zealanders. That is what we on this side of the House believe should be happening. We know that our trading partners over recent years, China and Australia, have been going gangbusters, and we know that during that time real wages in New Zealand have dropped. That is almost unbelievable. What is going to happen when those economies falter? New Zealand is going backwards already. Will we go back further? So we see this tinkering in the legislation where we should see more adventurous change.

Another clause that leapt out at me when I was reading through was the retrospective GST exemption in clause 135 of the bill for “the Auckland Council Independent Maori Statutory [written Statu-tory] Board established by section 81 of the Local Government (Auckland Council) Act 2009”. It was with some relief that I saw that hyphen in there. If it had been an “E” there, the clause may have been restricted—perhaps some might jest—to members of the Māori Party, to the “Māori Statue Tories”, as we have, perhaps, seen them acting in the recent debates on assets sales. I am sure my colleague Rino Tirikatene might have something further to say on that as the debate proceeds.

This kind of change—again, a small change—is something that is difficult to oppose because in and of itself it is worthy, but it really is tinkering, and we are tinkering here with little bits of GST here and there. We are not expecting to see a step change in the economy as a result of these changes to the GST treatment. It would be great if we had a Government that did have a vision, and that did really want to make change that would benefit our economy and that would really get our economy moving, with pro-growth tax reform and policy that promoted savings, perhaps through a universal KiwiSaver. We know that this Government has had more positions on KiwiSaver than the Kama Sutra. We wish that this Government would adopt a position that actually was beneficial for all New Zealanders, not just a position that was all over the place—all over the place. It would be a pleasure, I am sure, if we saw a positive position adopted. Variety is not always the spice of life, as we know in the area of savings policy.

This Government is bereft of these changes and of direction, in terms of GST and in terms of what kinds of changes could be made more broadly, and that is why it is the Government that has the worst growth record of any Government in the last 50 years in New Zealand. That is why 50,000 Australians are leaving annually to make their permanent home in Australia.

Hon Clayton Cosgrove: New Zealanders.

Dr DAVID CLARK: Sorry—New Zealanders are leaving. I was saying Australians are leaving! It has not quite got to that. They are leaving New Zealand too, because this Government is bereft of ideas. One thousand people, we know, left Dunedin, my hometown, last year. They permanently left Dunedin for Australia because they saw greater opportunities there. I am assured it had nothing to do with the local National member of Parliament. It is because the opportunities were better abroad in general under the National Government’s term in office.

It is also true that this Government is failing because, perhaps, it has not addressed the Inland Revenue Department system, which is failing. John Key has pointed out that it is not working and that it needs to be upgraded, because the Government is being held to ransom, effectively, through having a computing system that is out of date and not able to adopt the big changes that would be needed to get our economy back on track. It is perhaps symptomatic of a Government that really is giving up, it appears, and that is not good enough. We think this Government is letting people down, and that is what we are hearing out on the street. People are telling me, those people who did support John Key—and I find that a little challenging—that they supported John Key because they were promised a brighter future, but now they are disappointed because it is not being delivered. In Dunedin we are seeing jobs being cut left, right, and centre. We are seeing our economy slow down, and these people are disappointed. That is the word on their lips. They are disappointed with what this Government has not offered them—has not offered them. And that is why they are leaving New Zealand at a rate of 1,000 people a week for Australia.

We will come, I am sure, to more about the software development. It is not touched on in this part of the bill, so I will leave that conversation for the next part of the bill, but suffice to say that the kind of change that we see in section 151B around the keeping of records is symptomatic of a Government bereft of ideas and bereft of direction. It is now reduced to adding the words “and” and “or tax file number, as applicable”. That is not real change. That is not going to improve our economy.

Hon DAVID PARKER (Labour): I want to refer to clause 137 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill, which changes the way in which the Inland Revenue Department gathers more tax in respect of late payments. Currently, when someone does not pay an account on time and the person to whom the money is owed adds a late-payment charge, that charge does not incur GST, because it is in the nature of an interest payment. It is effectively a late-payment fee, which is a little bit like interest. So the predominant view within the accounting community has been that it is not a taxable good or service; it is a financial service that is zero-rated for GST purposes. Clause 137 changes that. It says that, for the first time, the Inland Revenue Department is going to be pinging the late-payment fee, and saying “Oh, that’s a GST-able activity.” This is going to be causing all sorts of complexity for people in business. All of a sudden, those—

Paul Goldsmith: Not as much as GST off the fruit and vegetables.

Hon DAVID PARKER: Not as much as GST off fresh fruit and vegetables? Well, actually, I think you might be wrong there, because I think the incidence and the irregularity of this will be far more pervasive than GST off fresh fruit and vegetables, which would have affected supermarkets in the main. But, in any event, let us return to the point here. If that was wrong, two wrongs do not make a right. Mr Goldsmith saying that would introduce further complexity into the tax code is rubbish. We are increasing complexity and compliance costs here.

You know, if you have, let us say, a $100 account, and there is a 2 percent fee for paying it late, that is $2. Do you know that every one of those people who collects that extra $2 is now going to have to adjust their future tax returns and include GST on the $2 financial penalty that they are charging someone who pays their account late? Every person who pays the $2 late-payment fee, in theory, if they are GST-registered—and some of the people in the gallery will understand this point, even if the National Party people on the other side do not—is going to be able to claim a GST input credit in respect of that $2 payment. What a nonsense! This is not a good or service; this is a charge being made for late payment, which is tantamount to an interest payment. In fact, the department often calls it that.

What did we hear in submissions? We had the accounting fraternity coming along and saying that this was wrong in principle. The accountants came along and said “What’s this Government up to? This looks like a tax grab.” It is not grounded in the principle that underlies the tax Act—the Goods and Services Tax Act—which is that financial services are not GST-able. So the Government is ignoring that basic prohibition on charging GST on financial services, and saying that in respect of the late-payment fee that you are effectively charged in lieu of interest for paying an account late—they call it a penalty fee, but it is essentially an interest charge—it is now GST-able. Where is the principle, Minister Guy? Stand up and defend that principle. Stand up and explain why it is wrong or why it is right. The accountants said it breaches the principle that underlies the Goods and Services Tax Act. Why is it that we are proceeding with clause 137 of this bill, which not only breaches that principle but is going to increase the compliance costs of businesses? They will have to be accounting for that little penalty as a GST-able supply, and if they are paying it, they are going to have to have a separate transaction that claims back the GST in a way that they cannot do for interest.

Dr David Clark: What about early-payment discounts? Do they apply to them?

Hon DAVID PARKER: Well, that is interesting. Early-payment discounts—I am not sure, Mr Clark. I do not know the answer to that, but I think we should get the Minister to address that question as well.

New section 5(25), inserted by clause 137, which sits in Part 4 of the bill, states: “For the purposes of this Act, an amount charged”—I am reading out the relevant provisions—“for the late payment of an account is treated as being consideration for a supply of services in the course or furtherance of a taxable activity, whether the amount is described as a fee, penalty, or other charge.” So it might be interest, it might be called interest, it might in fact be a late-payment charge that is tantamount to interest, and both the supplier and the purchaser may agree that that is the reality of the transaction, but this legislation says that, no, black is white. It says that it might be that in reality, but it is going to deem it to be otherwise—deem it to be otherwise. There is no principle that lies behind this particular clause in the bill. I want the Minister in the chair to stand up and explain why it is that the accountants are wrong and the Government thinks it is right. Why is it that what is essentially an interest charge, which should not attract GST, is being deemed to be a supply of goods or services, when in actual fact it is a late-payment penalty tantamount to interest? If it is a late-payment penalty tantamount to interest, it should be either zero rated or, one way or the other, outside the GST consequences of this provision.

If we look at some of the other provisions in respect of Part 4, there are some other areas that I would like clarification on in respect of the zero rating of goods. There is a new section 11(8D), inserted by clause 139B, that states: “For the purposes of the zero-rating of land rules,—(a) a supply that is an assignment or surrender of an interest in land, is a supply chargeable with tax at 0%:”, but it is not if “the supply is made periodically;”. We also had submissions about this, about what this is going to do in terms of the effect on the cost of rent-to-buy options. This is going to drive up the cost of low-cost housing in examples where people are getting an option to buy under which, if they exercise it, they can credit towards some of their purchase price, under their purchase contract, some of the payments that they have made as a tenant in the meantime.

We had property developers saying that this change in provision here is going to increase the cost of housing, because irrespective of whether the option is exercised, the developers are going to have to pay GST on the transaction before it is exercised. The purchasers may never exercise this option, but because they have the potential to credit some of their rental payments towards the purchase price, if the option is exercised, the developers are being deemed to be making a supply before the option is exercised. These submitters came along and pointed out that this is going to considerably increase the cost of their subdivisions. From memory, the developer who was giving us this advice was from the Minister in the chair’s electorate, Ōtaki, so he might be interested in this. They were saying that this was going to increase their effective cost, despite the fact that the option might not be exercised. The effect of this is that because they have to return GST at the start, they have the carrying cost of that GST payment that is returned to the Government, they then have to reflect that cost on to the person who may exercise the option, or may not, under the rent-to-buy scheme, that increases the effective cost to the developer, and therefore that cost is passed on to the low-income purchaser, which is therefore increasing the cost of housing in New Zealand.

It is another unprincipled amendment, as I understand it, according to the submission that we had to the Finance and Expenditure Committee, that I would like the Minister to explain. The more important one of them in terms of the number of people affected is this penalty payment now being deemed to be a GST-able supply rather than an interest penalty. I would like to hear from the Minister as to what justification there is for departing from the underlying philosophy of the original Goods and Services Tax Act, which is that financial services are zero rated—do not attract GST.

Hon CLAYTON COSGROVE (Labour): I want to pick up where my colleague David Parker left off—

Maggie Barry: God, it’s like Clayton’s greatest hits—he’s always on his feet.

Hon CLAYTON COSGROVE: —sorry, was there a funny noise over there—and that is in respect of the—

Dr Rajen Prasad: Chattering classes.

Hon CLAYTON COSGROVE: Yes, the chattering classes. Sorry, it was that gracious member Maggie Barry, I forgot—the gracious member. What I would like to ask the Minister in the chair, the Hon Nathan Guy, is this. I could not find—it may exist—in the regulatory impact statement or in the report back any quantification of the saving in compliance costs in both the parts and clauses that we have already processed, and in Part 4, particularly clause 137, which I think was the clause that Mr Parker was referring to. Under Mr Parker’s argument—I believe he is correct—actually, against accounting principle and advice the late payment, even a minor late payment, by a small to medium sized enterprise or business will incur GST. So on that basis that is going to be a compliance cost for small business.

I would like to ask the Minister—he might like to interrupt me and take a call—where in the legislation or the regulatory impact statement there is a quantification of the compliance costs that will be saved from having this piece of legislation. Is there an estimate? We are told—

Hon David Parker: The fiscal cost to small business.

Hon CLAYTON COSGROVE: And what is the fiscal cost of clause 137 and other clauses to small business?

It may be, and I would also like an answer to this, that the Minister for Small Business, the Hon John Banks, has provided a report, a Cabinet paper, or whatever to this Minister on the issue of compliance costs, because, of course, the Minister for Small Business has the Small Business Advisory Group or task force—whatever it was called; we set it up when we were in Government—and part of that group’s mandate is to recommend to the Hon John Banks, the Minister for Small Business, where savings can be made and compliance costs reduced. Given that we now have a proposition before us in clause 137 that against accounting principles, against private sector accounting advice, and against advice that said that late payment of penalties should be zero-rated, we now have a GST impost on that. So can the Minister tell us, one, how much this bill will save small to medium sized enterprises; two, can he quantify it; and, three, what is the negative fiscal impact on small to medium sized enterprises of clause 137?

Would Minister Guy like to proffer an answer? I will let him finish his glass of water. No. Silence—silence. So either the Minister does not know—and hey, nobody knows everything, except Maggie Barry—or the Minister could take some advice. He could turn to his right and ask his officials.

In the regulatory impact statements, and there are a number of them—a whole host of them—there does not appear to be any attempt to quantify what the nature is of the saving in compliance costs that this legislation will render unto small to medium sized enterprises or business as a whole.

Hon David Parker: It increases them.

Hon CLAYTON COSGROVE: My colleague makes the point. Of course, that we now know, and we have received no argument to the contrary from the chief whip, who, in his own lifetime, and in this Chamber in the last hour, is the resident expert on this legislation. So if the Minister does not know, could Maggie Barry, John Hayes, or the chief whip tell us how much increase in compliance costs clause 137 will have on small—

Michael Woodhouse: None.

Hon CLAYTON COSGROVE: None? None. Oh, none, he says. Well, if that is the case, could the Minister, with his officials, concur? Is there any evidence? Or is this another one of the chief whip’s attempts? He attempted about half an hour ago to wax eloquent, and was wrong, on the nature of this bill in Part 3. So now we are going to rely on, and every small to medium sized enterprise in the country is going to hang on, the word of the chief Government whip that there will be no increase in compliance costs for your small business or your medium sized businesses—none.

Dr David Clark: He’s pitching to be Minister for Small Business.

Hon CLAYTON COSGROVE: Maybe he is pitching to be Minister for Small Business, that is true. Mr Woodhouse might well be. There could well be—I do not know, I cannot see into the future—a vacancy opening up in that portfolio real quick. It will be real quick, I suspect. So all we have got tonight is Mr Woodhouse, the chief Government whip, who is not the Minister and who does not have access to the advice. Every small to medium sized enterprise in the land can rest easy, because Mr Woodhouse has said that there is no increase in compliance costs from either clause 137 or this legislation. So I invite colleagues, especially those from Dunedin, to write that quote of Mr Woodhouse’s down, etch that into the memory, because that will come back to haunt him.

Michael Woodhouse: I look forward to the haunting.

Hon CLAYTON COSGROVE: He looks forward to it, he says. Well, so do we, because we have had no report from the Minister for Small Business—if there is one that exists.

I know Mr Banks is a tad preoccupied with other matters and, in fairness, may not have been able to sign off said report from the Small Business Advisory Group. He may not have remembered to sign it off. He may not have remembered to ask. He may not have remembered that he does have a Small Business Advisory Group. He may have signed it—[Interruption] Well, indeed. He may have signed off the advice from the Small Business Advisory Group, and it could well be wrong. Therefore, the Minister in the chair may have refused to have read it in case, maybe, it was wrong, but he will take Mr Banks’ word for it that all is well in small to medium sized enterprise land. So every small to medium sized enterprise in New Zealand will hang on the word of the chief Government whip that this legislation and clause 137 will in no way increase their compliance costs.

Hon David Parker: That must be wrong.

Hon CLAYTON COSGROVE: And that must be wrong. But I know that they will all be sleeping easy in their beds tonight, and as they awake tomorrow morning and proceed to the computer, the ledger, or the journal to do their tax, they will know that this change—against accounting advice, against accounting principle—will in no way impinge on their fiscal position or on the hours they spend doing their tax return. It will in no way complicate their entrepreneurial lives one iota.

Well, all I would like from the Minister in the chair—and I see it is now the Minister of Commerce, Mr Foss, who is probably far more qualified than the last two invisible folks we have had as Ministers in the chair, Amy Adams and Nathan Guy—is that maybe he could turn to his officials and actually ask, and verify or quantify for us, the compliance impact of this clause. We will try again, shall we? Would the Minister like to answer the question? No. The silence is deafening. The silence is deafening.

So we are paying these guys a quarter of a million bucks to sit in a chair so that he can do the crossword or sudoku, or whatever it is. A quarter of a million dollars to sit there, and throughout this taxation debate, which has gone on since about 5.30, I do not believe that there has been one call, apart from the initial call from Peter Dunne, from any Minister to answer any of the questions on this legislation. There have been a lot of interjections—a lot of interjections—and a bit of banter, and a bit of fun from the other side, but not one answer to any question.

Although, colleagues, I did make a breakthrough. Peter Dunne was in the chair, and I asked him whether I could ask a question of the officials. The officials gave me a very diligent answer. I am gratified for that. But the officials, I wager, are not sitting there on a quarter-of-a-million-buck salary with a warrant, with a ministerial office, and with a BMW to boot.

So the question is, if the Minister is not prepared to answer any questions, what is he here for? Could we give him a night off? Could he take an early shower? Maybe it would be a bit more productive. There have been serious issues raised throughout this legislation. Maybe he could go and have a wee lie-down and a wee kip, and a nice little tot of whisky, and that would be far more productive than sitting here, pretending to be sort of a granite statue. Or maybe he could just stand up and say “I am not prepared to answer any questions.”, or “We didn’t answer any on Parts 1, 2, 3, or 4, and we will not answer any on Part 5, so give up.” We will not give up, but that would tell the New Zealand people exactly what they are paying him a quarter of a million bucks for: to do his crossword, have a look at tomorrow’s menu or the breakfast menu, or whatever it is, or work out the diet—

Dr Rajen Prasad: Shopping list.

Hon CLAYTON COSGROVE: —or work out the shopping list.

This is actually serious stuff—serious stuff. I have been a small-business person. A very limited small business it was, and reasonably successful, but pretty limited. I had the luxury and the resources to put all the receipts into a briefcase, hand it to the accountant, and say: “Can you untangle spaghetti junction and make sure I comply with my obligations?”. The truth is that for most small to medium sized enterprises it is the other half—either the husband or the wife—who sits there at night under dim light, doing the Government’s work for it, working out the GST, the provisional tax, and all these things. I would have thought that we could do something in this legislation to give them back a couple of minutes of their life—maybe an hour—because if you put a dollar rate on that, a dollar value on how many hours they spend behind the desk as opposed to in the workshop or behind the counter growing the business, that is actually a real cost to a small business. They cannot charge out their hourly rate to do the Government’s work for it. They have just got to do it. They have just got to eat it, and take it. So I would have thought that at the very least, they require some sort of basic assurance or explanation.

Mr Goldsmith has written a few books on this sort of thing, I suspect. He might be able to give us some assurance. Somebody from the Finance and Expenditure Committee—Mr Hayes, I am sure, who is a resident expert on many things, might be able to give us an assurance in respect of compliance costs and fiscal impact. Maggie Barry? No. We will move on. So they are the questions before the Minister.

Dr DAVID CLARK (Labour—Dunedin North): I rise to continue this debate on the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill, because it is shaping into quite an interesting debate. I personally find it to be quite shocking that the Minister in the chair, the Minister of Commerce, has not taken a call yet on this matter. It is consistent, again, with the issue of the paper boy tax. I want to draw a parallel here, because there is a pattern emerging in this legislation. I have said many favourable things about this legislation. I have said that there is little to disagree with. I have been appalled at the level of tinkering as opposed to real change, but I have said, on many occasions through this debate, that it is hard to oppose the Government on much of this, because a lot of it is common sense.

Well, here we have another example, as my colleagues have pointed out, of additional compliance costs on business. It seems that this Government truly does not like small business. This Government increases red tape on small business. The report we had in respect of the paper boy tax—the legislation that was more comprehensively dealt with earlier—made the point that there was expected to be increased compliance costs for many businesses. We are talking here about people who have cleaning jobs in schools for a few hours a week and do not earn much money. Businesses are now expected to keep their tax affairs close at hand, and monitor them, and likewise in this we are talking about the registration requirement for GST and penalty payment in respect of late payments.

Here there is a clear parallel. There is increased compliance costs on business. The interesting point is not just the increased compliance costs that National seems to be putting on business. National is also, at the same time, reducing compliance costs in some other, parallel areas. So it is actually increasing the grey economy. It looks like National is trying to increase compliance on some businesses—it is not clear which or why—and there is a cost in that, but it is also encouraging people to avoid paying tax.

In the case of the paper boy tax, we saw that those who had home lawnmowing jobs, babysitting, or other similar jobs where there was not a record of their payment on an electronic system were exempt from the same tax that those who were on a system were expected to pay. So we have a growing grey economy and an encouragement for people not to be registered with the tax system. Likewise here, what the accountants said at the Finance and Expenditure Committee—and I recall that Mr Parker raised the issue of what happens with an early payment discount—in their advice, as I recall it, was that, in fact, GST will not be charged in respect of an early payment discount.

So here you have an early payment discount not being charged for GST, but then you have late-payment penalties being charged for GST. What do you think businesses are going to do? They are going to shift their model, to avoid this unnecessary—as they will see it—additional burden of compliance that the Government is putting on through this legislation that we are passing through the Committee right now. Some will get trapped by it, and some will have additional compliance costs. This is just a higgledy-piggledy mess in terms of this particular clause in the bill. It has not been well-thought-through. We have got early payment discounts, on the one hand, for businesses that change their paperwork, so, basically, the Government is encouraging businesses to shuffle their paper. Then we have late payments attracting a GST penalty and extra compliance costs.

We can see the parallel with the paper boy tax, where there was a stingy tax grab from those who are on systems where the tax is carefully measured out, and encouragement for people to have businesses where they are private contractors, working in the grey economy, and are therefore rewarded for that behaviour in future. It all adds to a pattern, obviously, of a Government that does not like business.

The other point that I mentioned earlier on in respect of clause 151B, “Keeping of records”, was the kind of tinkering approach. There is a similar one in clause 150. This is the level of interest in this legislation. We see that it is a broadening provision, so it is hard to oppose in this respect. I move on from the appalling encouragement of the grey economy in the previous clause, but clause 150(1) says: “In section 55(1)(a)(iii), ‘multi-rate PIE’ is replaced by ‘multi-rate PIE or a look-through company’.” Again, that is a worthy change, probably, and I would suspect that we are broadening the tax base a little bit. We are blocking the odd loophole here and there, but that is effectively unpicked by the changes in clause 137, where we have actually got a new loophole being created at the time. We are creating a loophole clause, and why would you do that?

Hon Clayton Cosgrove: It’s a “John Banks clause”

Dr DAVID CLARK: My colleague calls out that it is a “John Banks clause”, and he may have a point. We actually see illustrations very clearly before us of why the law needs to be tightened. Indeed, in respect of local campaigning and local elections, the donations law definitely needs to be tightened up. I do not think there is much doubt about that. If we needed an illustration of that, we have had one today that is playing out slowly and painfully as the Prime Minister tries to excuse one of his Ministers from his so-called high ethical standards by way—I will come back to the point—of excusing that Minister for having not read a report. You can see that what has been happening there is an encouragement of loophole behaviour, an encouragement to look at a particular piece of law and look for the ways out. That is not a healthy way to have a democracy running.

What we need if we want our economy really to get back on track is big, proper change that will actually be a gear change for our economy. We have had this tinkering approach from the Government for the 4 years that it has been here. We have seen recently that the median wage has dropped 3 percent. The median wage has dropped 3 percent. This is ridiculous. We have seen the minimum wage dropping in real terms, we see costs going up, and we see people falling between the cracks. This is not a Government that is making big change; it is tinkering around with GST in this part. It is blocking a few loopholes, but at the same time it is creating new loopholes.

We could be spending our time here better by looking at things like pro-growth tax policy, which would really encourage our economy to get ahead and encourage money to flow towards businesses—rather than towards the activities of compliance, as we see in Part 4 of the legislation—and towards actually getting on with smart investment decisions that would gear up our economy and help it to succeed in conditions that, up until now, have been better than for most people. The Labour Government left many years of surpluses. Our trading partners—

Hon Clayton Cosgrove: Nine years.

Dr DAVID CLARK: Nine years of surpluses, Mr Cosgrove reminds me—9 years of surpluses under the Labour Government. The economies of our trading partners China and Australia, our main trading partners, have been going well, yet in New Zealand our economy is going backwards. It is because the big changes are not being contemplated in legislation like this.

I have talked before, in respect of a previous part of this bill, about the excuses that might be made for change not happening in respect of the Inland Revenue Department computer system, which is struggling and limping along. It is able to deal with small changes that close the odd loophole here and there, and, as we are seeing now, open the odd loophole. It closes one with one hand, and opens one with the other. But we are not seeing the really big changes, and that is because the Inland Revenue Department computer system, we are told, is not up to it. Those big changes that are needed in the New Zealand economy cannot actually be made because we do not have a computer system capable of dealing with really big changes.

That is why the Prime Minister, on Valentine’s Day this year, made his Valentine’s Day promise to address the Inland Revenue Department computer problems. He said that we should not be held hostage, in terms of Government policy, by an outdated computer system. But we have not yet seen the evidence that anything has been done about that. We have not seen a policy announcement or a timetable as to when that computer system will be upgraded, or when it will be able to make the really big changes that we need as a country to have a modern economy that can get ahead.

We know that Australia and our other trading partners have, for example, a capital gains tax, which would push money towards the productive sector to support our export industries. We need export-led growth as a country. But we have in National opposite a party of “cannot”, a party that says “no, that’s too hard.”, a party that refuses to make the big changes necessary, and a party that is merely closing one loophole with one hand and opening another with the other hand.

JOHN HAYES (National—Wairarapa): I move, That the question be now put.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): I have come into the House to listen to this debate. I guess taxation, for the National Party, has always been really important. The National Party has focused a lot on it in its campaigning, saying that lower taxes are nirvana and higher taxes are outrageous and will cripple the economy. How, then, can National bring into this House a bill that increases taxation by 50 percent? This bill, the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill, increases the KiwiSaver default contribution by 50 percent—from 2 percent to 3 percent. Is that a 50 percent increase? Yes. Is that going to cripple the economy? Well, on the basis of arguments we have heard in this House for years from the National Party, any increase in taxation will cripple the economy. That is what it says. That is why—[Interruption] Part 2. That is why—[Interruption] Part 4. Part 4. That is why—

The CHAIRPERSON (Lindsay Tisch): Order! We are actually on Part 4. Some of the things you have been talking about are in Part 5. [Interruption] I am giving the member the opportunity. Part 4.

Hon DAMIEN O’CONNOR: Thank you very much. It is about GST, and I appreciate the Chairman’s guidance on that. I will stick to the issue around GST and the one of late-payment fees.

I guess the issue is that this is the party—the great party of National—that wants to slash all taxes because that is going to provide a way forward. So what we have—

Dr David Clark: It’s a tax grab.

Hon DAMIEN O’CONNOR: It is a tax grab all right. So we are now going to have GST on late-payment fees. Do we pay GST on fines? When I get a parking fine, do I pay GST on that?

Hon Clayton Cosgrove: Or a speeding fine.

Hon DAMIEN O’CONNOR: A speeding fine, no. I have had the odd one of those. But the question is, do we pay GST on fines? That is not a late-payment fee; it is a late parking fee.

John Hayes: It’s a service.

Hon DAMIEN O’CONNOR: It is a service. Oh, you see—GST. The question is that if we are going to place GST on late-payment fees, which most people would see as a penalty or a fine—

Hon Clayton Cosgrove: Against accounting advice.

Hon DAMIEN O’CONNOR: That is right—against accounting advice, against all the advice to the Government. If we are going to start charging GST there, then will the Government have in this House a piece of legislation to put GST on parking fines, or on fines imposed by any part of the court system? I am guessing that that would open the way for some interesting constitutional issues. The Government could be honest and say that it is just increasing the fine, but what part of that fine would then come back into the GST pot? If the accounting advice on this change to the legislation is that it should not occur, then I am guessing that maybe the Government is not going to move on fines. But we want, and I think most New Zealanders expect, some kind of consistency in legislation.

Hon Clayton Cosgrove: That’d be too much to ask from this mob.

Hon DAMIEN O’CONNOR: Well, it might be. On one hand, the Government has championed the lowering of taxation on its mates. That is if you own $100,000. If you earn high incomes, we have to cut—and, of course the GST argument, the GST that this Government through this change is now going to impose on late payment fees, that extra GST is just like the increase in the GST charge it put across the whole economy. It put it across the whole economy, but did not mention it, though. I guess the question that we must ask of the Minister is, if this is going through against good accounting advice, what else has the Government got in store for people? The one thing that it has consistently done is made it easier for people at the top, who spend a lower portion of their income on GST-liable goods, and made it harder at the bottom for the average New Zealander, who spends the vast majority of all their income on GST-liable goods. They do not have much opportunity to move into the financial sector or to spend their money offshore, because most of them are struggling to survive.

This is, in my view, just another odd proposal by the Government. I am advised by my colleagues that it has been advised against by the accountancy industry, and the Government is determined to push through with this in the same ridiculous, idiotic way that it is pushing ahead with its asset sales. The consistency of that is that we have good advice that these are both bad things to do. We have professional advice—

Hon Clayton Cosgrove: History proves you right.

Hon DAMIEN O’CONNOR: History absolutely proves us right. Clearly, there are no students of history over there. In spite of that advice that GST on late-payment fees is not good accounting practice and selling State assets is not good economic practice, why is it that this National Government, partnered by the ACT Party, partnered by National’s mate John Banks, is determined to push ahead with stupid things where the advice it has received from professional people is that it should not happen? Well, I guess people will make their own conclusions, hopefully, in 2 years’ time. I am happy to take—

Dr David Clark: Hopefully sooner.

Hon DAMIEN O’CONNOR: Sooner? There is the opportunity and those members should be very aware of that. That is right.

Hon Clayton Cosgrove: “Banksie” will be out to grass.

Hon DAMIEN O’CONNOR: Sure, he will be. What kind of animal eats grass? No, we cannot say that.

This is just one component of this bill here that clearly exposes—and I will have the opportunity later on to talk about the increase in taxation at a rate of 50 percent—that the imposition of GST on late-payment fees does raise the possibility that we will have GST imposed next on parking fines, on speeding fines, or on any kind of penalty that can be imposed on anyone. The question must be around the fee that the National Government imposed on people in the courts. What was that fee? The $50 fee, is it, or something—it has got a standard fee on everyone going through.

Dr Rajen Prasad: Victims of crime.

Hon DAMIEN O’CONNOR: Victims of crime, that is right. Will there be a GST component to that payment?

Dr Rajen Prasad: The Minister will tell us.

Hon DAMIEN O’CONNOR: The Minister perhaps will hop up and tell us that. No. There is silence. OK.

The thing that people expect of Parliament, as I have said before, is consistency, and fair and reasonable law.

Hon Clayton Cosgrove: Oh, he’s consistently quiet, the Minister.

Hon DAMIEN O’CONNOR: Consistently quiet. Consistently inconsistent would be the way I would put it. The only thing we do know is that if you are poor and you are paying these things, you are going to pay more under the National Government, and if you are wealthy and you can get out of paying them, you will not. So late-payment fees will generally be imposed upon people who struggle to pay their bills. They struggle to pay their bills for whatever reasons, but mainly because they do not have enough income to cover all their costs, and there are hundreds of thousands of New Zealanders like that. We have got the level of child poverty in this country. What will this additional GST charge do for those people who are already on the breadline or who are, in fact, below it?

In summary, this is just another Tory piece of legislation that makes it harder for people at the bottom and makes it easier for people at the top. Thank you.

MAGGIE BARRY (National—North Shore): I move, That the question be now put.

The CHAIRPERSON (Lindsay Tisch): I will hear from Clayton Cosgrove.

Hon CLAYTON COSGROVE (Labour): Thank you, Mr Chair, and it is great to see you this evening. We have missed you. I would like to turn to another groundbreaking clause within this legislation. It is another huge reform from the National Government, which I believe my colleague David Clark in his opening address referred to. This is what we are down to. We are down to minutiae. The Government is out of ideas—have another drink. It is out of ideas and out of strategies. So this is what we are now down to. If you have a look at clause 151B(1)—

Maggie Barry: He’s recycling.

Hon CLAYTON COSGROVE: Well, if anyone was recycled and close to the old compost in here, it would be that member Maggie Barry over there, but we will not go there. If we look at clause 151B(1), we see that it states: “In section 75(3D), ‘name, address, and registration number’ ”—get this—“is replaced by ‘name, and address, and registration number or tax file number, as applicable’.” I am not an accountant. I think Mr David Bennett is an accountant is he, or somebody? I am not sure.

Maggie Barry: Ebenezer Scrooge.

Hon CLAYTON COSGROVE: Oh, Ebenezer Scrooge. Well, if anybody would know about that, it is the old ginger nut over there.

When you look at clause 151B(2), we see it again: “In section 75(3E), ‘name, address, and registration number’ ”—get this—“is replaced by ‘name, address, and, if the principal is a registered person or expects to be a registered person, the registration number’.” This is ground-breaking! This is minute-of-silence stuff! This is huge tax reform! Again, this is what we are down to now. In fact, it would not even meet the status of tinkering. This is changing a word here and there. It would not even reach the high threshold this Government puts on tinkering with legislation.

I would like to know from the Minister exactly what clause 151B(1) accomplishes. That is, for the Minister’s benefit, on page 89. What does that accomplish in terms of record-keeping? It is a one-word change—one word. This is almost as dynamic as the small business Minister’s Regulatory Reform Bill, which expunged 31 Acts that do not exist. So we have a one-word change in clause 151B(1), and in clause 151B(2) a one-word change as well. There may be a good reason for this. I do not think it was to correct a typographical error. David Clark could help my memory; I am not as bad as Mr Banks, but I do not think there were any reports from the drafters as to why this change was put in place or whether it was a drafting error. But could we get some explanation?

Dr David Clark: We didn’t get any explanation.

Hon CLAYTON COSGROVE: We did not get any explanation, at all. Could we get any sort of explanation as to why there is a one-word change, whether it is germane, what it will do, and either how it will assist the Inland Revenue Department in terms of its collection, registration, and recording-keeping procedures or how it will assist, clarify, make clear or take away ambiguity for those taxpayers, small businesses, and others that are required to keep records? Could we get an answer to that? Maybe the Minister in the chair is drawing a shopping list of the many questions—perhaps, a couple of hundred—that have been put to him and his colleagues throughout this debate, and maybe he is going to, in sort of a turbo-boosted way towards the end of this debate, answer all the questions for us. That would be great, to be charitable, if that is going to occur. I doubt it, because—and Mr Damien O’Connor talked about consistency—the only thing that has been consistent from each Minister who has acted as the Minister in the chair at any time throughout the late stages of today is complete silence.

I will say this. If the Minister of Revenue is in the chair, he does tend to answer, generally speaking, many of the questions that members raise as we move through the Committee stage of legislation. I do not know whether the Chair can assist. I suspect he cannot assist. I am sure he would if he could, if the Standing Orders allowed him to, or maybe he could, you know, keep it between friends, elbow the Minister in the ribs and say “Hey, why don’t you answer a few questions?”. That might be in the unwritten Standing Orders. I know it is not within the written Standing Orders. But it would be good if we could get some answers to these questions.

We have already talked about clause 137 and about the GST rating issue. We have had three or four speakers, I think, on that and still there is no answer to that question, nor to questions on clause 151B(1) or (2). We are going to get on in Part 5 to some other—

PAUL GOLDSMITH (National): I move, That the question be now put.

A party vote was called for on the question that the question be now put.

Hon CLAYTON COSGROVE (Labour): I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Lindsay Tisch): No. No, I am—

Hon CLAYTON COSGROVE: Sure.

The CHAIRPERSON (Lindsay Tisch): Unless it affects the result.

Hon CLAYTON COSGROVE: It may do. It is a question.

The CHAIRPERSON (Lindsay Tisch): Well, we are doing the vote. You can bring your point of order up after I have finished.

Hon CLAYTON COSGROVE: OK, no problem.

A party vote was called for on the question, That the question be now put.

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 8; Māori Party 3; ACT New Zealand 1; United Future 1.

Noes 15

Green Party 14; Mana 1.

Motion agreed to.

Hon CLAYTON COSGROVE (Labour): I raise a point of order, Mr Chairperson. Could you advise me as to the status of proxy votes? I assume the following is correct. Where, generally speaking, a minor party is unavailable—shall we put it that way—to vote, another party would carry its proxy.

The CHAIRPERSON (Lindsay Tisch): Well, I can answer that very quickly. Parties have arrangements between their whips who casts party votes for the respective parties, and that is the end of the matter.

Hon CLAYTON COSGROVE (Labour): I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Lindsay Tisch): I have ruled on that one, so—

Hon CLAYTON COSGROVE: No, no—absolutely.

The CHAIRPERSON (Lindsay Tisch): The Hon Clayton Cosgrove.

Hon CLAYTON COSGROVE: Thank you for your clarification; I appreciate that. Could you also advise in what form that has to take—whether it is a written form—

The CHAIRPERSON (Lindsay Tisch): That is an arrangement between the whips of the parties. It is not a matter that the presiding officer takes account of.

Hon CLAYTON COSGROVE (Labour): I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Lindsay Tisch): The member is trifling with the Chair.

Hon CLAYTON COSGROVE: No, no—I have one last question.

The CHAIRPERSON (Lindsay Tisch): The Hon Clayton Cosgrove.

Hon CLAYTON COSGROVE: Thank you. Given that is the case, if I could just seek clarification, are you saying that that does not have to be in a written form or a form that is signed between parties?

The CHAIRPERSON (Lindsay Tisch): Like I just said, that is a matter between the whips.

The question was put that the amendments set out on Supplementary Order Paper 98 in the name of the Hon Peter Dunne to Part 4 be agreed to.

Amendments agreed to.

Part 4 as amended agreed to.

Part 5 Amendments to other Acts and regulations

Dr DAVID CLARK (Labour—Dunedin North): I rise to speak to Part 5 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. Indeed, there is much to say about this part in the bill. There is a great deal of—

Maggie Barry: Something new?

Dr DAVID CLARK: —interest in this part of the bill. Ms Barry asked whether there is something new in this part of the bill. I will be interested to see what she contributes to the discussion on this part of the debate. She has been remarkably quiet up until now.

There have been a number of salient points raised, and many questions asked of the Minister in the chair, but we have noted so far that the Minister in the chair has been reluctant to answer any of them—indeed, reluctant—[Interruption] “Apparently deaf”, says my colleague. We seem to have a new Minister sitting in the chair, the Minister of Defence, so we can try our luck with this one and see whether perhaps he might be willing to answer some of the questions that have been raised earlier around the loopholes that are created, the compliance costs on business, and whether there is an estimate available of those compliance costs. I raise these questions now in passing so that the Minister can perhaps turn to his officials and raise this issue with them, if, indeed, he would like to address those concerns that were raised about further compliance costs and National’s growing record of being on the wrong side of small business.

I want to say more right now about the KiwiSaver clause in this bill. Clause 154 in the bill deals with KiwiSaver. This bill raises the employee contribution for KiwiSaver from 2 percent to 3 percent. In itself that is a 50 percent increase, as my colleague Damien O’Connor pointed out earlier. It is a very modest increase. We know that National has been flip-flopping all over the place on KiwiSaver. I guess we can comfort ourselves that at least this flop is in the right direction. It is only 2 years ago that the Government cut the employee contribution from 4 percent to 2 percent. What this legislation does is increase it from 2 percent to 3 percent, back up again—halfway back up. It went from 4 percent down to 2 percent, and now it goes from 2 percent back up to 3 percent. So we will wait for the next instalment from this Government in terms of its KiwiSaver policy. I have made the point before that the National Government has more positions on KiwiSaver than the Kama Sutra. That is clear. The National Government has cut it previously. It was to have been progressively raised, under the plan that the previous Government had, to an 8 percent default rate of gross income by April 2011 for employees, and a 4 percent default rate for employers.

On KiwiSaver the National Government has discontinued the employer tax credit, and that effectively subsidised employers for the costs of providing KiwiSaver. It has capped the employer superannuation contribution tax-exempt at 2 percent, and previously it was to have been 4 percent. You see, the Government is all over the place. It has been reining it in, and now it is just nudging it up. It discontinued the fee subsidy of $40 per annum, so, again, it was reining the system in, and that is entirely inconsistent with what we see in this bill. That was aimed at ensuring that the accounts with low balances were not eroded through taxes.

The KiwiSaver plan that the Labour Government put together was a good one. It was going to grow savings so that we had money in our economy for investments, and so that we addressed the issue of capital depth that holds us back when we compare ourselves with, say, Australia, which has a $1.3 trillion superannuation fund sitting there—money looking for a home, looking for a place to invest profitably. And we wonder why Australia is getting ahead.

National also repealed the Employment Relations Amendment Act that had aimed to ensure that employer contributions be on top of an employee’s pay. Under National’s changes, employees and employers now have the ability, as part of good-faith negotiations, to contract out of this requirement. It is all about pulling the savings system back. Now, in this piece of the legislation, this piece of tinkering sees the employee contribution rate for KiwiSaver, which the National Government took from 4 percent down to 2 percent, go halfway back up to 3 percent. At least this flop, as I said at the outset, is in the right direction, but all this chopping and changing on KiwiSaver by the National Government undermines Kiwis’ confidence, and that, in itself, does nothing—absolutely nothing—to improve our dire national savings situation.

Labour’s policy, which would look at introducing a universal KiwiSaver, would create an enduring solution and lift our savings rate, and raising our savings is desperately needed. My bill to raise the minimum wage, which will come before the House, would ensure that all workers could afford to pay for compulsory superannuation saving. So if we move towards that, we have got to make sure that people are resourced to be able to afford to make those savings, which will then benefit our economy over the longer term.

In this legislation we also have clauses in Part 5 to do with software development. I will turn to Part 5. Here we see clauses to do with KiwiSaver and then, further on in the legislation, in clause 163 we have “Unsuccessful software development” and the treatment thereof and a tax exemption. Some of my colleagues have already been wondering aloud in debates on previous parts of the legislation—but that was not the time to have the debate—about how unsuccessful software development could occur in terms of the Inland Revenue Department, which has a poor track record: $21 million was invested in a project to try to get the first of the reforms done within the Inland Revenue Department, and a portion of that was written off because it was unsuccessful. Now we are told that this $1 billion or $1.5 billion rebuild of the Inland Revenue Department computer system is coming up. We do not have a time frame for it. We have a Prime Minister who says we should not be held to ransom by not having an effective tax collection system. Our current one was built in 1992. But we have had no progress and no confidence that this problem is really being addressed. John Key’s Valentine’s Day promise to look at our software system, at the software for tax collection, the computer system that the Inland Revenue Department has, has not been realised. It is looking more and more like a promise in vain, much like many of the other promises to grow our economy that Mr Key has made as leader.

In and of itself this deduction for unsuccessful software development may encourage some businesses. I am not sure how this would affect, say, Mr Dotcom. He has come into the debate lately. He has had many successful, as I understand it, software developments in his time, but were he to have an unsuccessful one, I am not clear from my reading of the legislation—and perhaps the Minister would like to take a call on this—whether that would apply to him as a resident who is not a naturalised citizen of New Zealand. I invite the Minister to take a call on that in due course. I am sure other speakers will come to the issue of software development, because it is a pertinent theme and one of the slightly larger aspects of the bill in the context of very much a tinkering approach to tax change. I am sure other people will come back to it.

There is a further point if we go on to clause 170, if I may. Clause 170 talks about “Certain repairs to fishing boats” and the way in which the law applies to them in respect of the tax treatment. We have clause 170(1): “In section DO 2(1), ‘Part 4 of the Shipping and Seamen Act 1952’ is replaced by ‘Part 10 of the Maritime Transport Act 1994’.” There is some tidying up going on there, but there are other questions that spring to mind. The provisions that apply to the repairs for fishing boats—how broad is that category? Do those provisions also apply to, say, cabbage boats? If someone had come down the river on the last cabbage boat and they needed repairs to their cabbage boat, would these provisions in the law apply to that? Is a cabbage boat a fishing boat in this respect of the law? I think that is a legitimate question that the Minister in the chair might like to address, because I am sure there will be people who might ask that question. They might claim they did not come down the river on the last cabbage boat, but a lot of us suspect that they actually did. They may just not remember it, I guess—that is the point—if their memory is failing about what boat they came down on, about what river they were actually on when they were coming down, and about whether there was a helicopter at the other end to meet them once they had come down the river on a cabbage boat to look at claiming for—

Dr RAJEN PRASAD (Labour): I am sorry to take a call away from my friend Dr Clark, who seemed to be on a roll here, but I want to address my comments to Part 5 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill and in particular to clause 154, just to say that what clause 154(1) and the subsequent subclauses represents, essentially, is the cynicism of the National Party and the National Government when it comes to savings. Really right from the time when it became Government, it has had its nibs into a very successful saving scheme. In a sense, it has wanted to do what it has always done to Labour Governments’ savings schemes, which is to destroy them—

Darien Fenton: Wreck them.

Dr RAJEN PRASAD: —and wreck them. That is all it is: wreckers when it comes to—

Colin King: Just robbing Peter to pay Paul.

Dr RAJEN PRASAD: Well, I say to the member, if the member feels so strongly about any provision in this bill, then the member might like to take a call. No member of the Government tonight has taken any call on the Committee stage of this bill. What is that about? Are they ashamed of the provisions of this bill? Are they ashamed of the provisions about KiwiSaver here? Is there nothing for them to defend? Or do they think that they can sit here and treat this Committee in the arrogant manner, snipe away with the smart little inane comments that they have made all evening, but do nothing to debate the substantive provisions of this bill? At least I hope that when I am sitting on that side, I will defend what the Government is trying to propose. I say the same to the Minister in the chair, the Minister of Defence. None of the members this evening has taken a call to answer any questions. I know the Minister thinks that may never happen, but never say never, Minister, and I think the Minister knows that.

But coming back to clause 154, here is the big flip-flop. Those members have tried to destroy—I think this was socialism by stealth, was it not?

Darien Fenton: No, that was Working for Families.

Dr RAJEN PRASAD: Oh, there was something else. But they are certainly against it. They did not vote for the KiwiSaver scheme and they have tried to destroy it right from the time they have come into Government. So it is a Labour idea, and here they are. They previously destroyed KiwiSaver by reducing it to a half, and now they are slowly clawing it back and trying to reinstate it.

But in the meantime, years have been lost in the savings record. The Government is very, very quick to talk about the importance of saving, and it is very quick to say “Isn’t the country doing well in its savings now?”. Well, it is no thanks to the Government.

John Hayes: Oh, rubbish!

Dr RAJEN PRASAD: These are the policies put into place by the last Labour Government, and that is the benefit that that member’s Government is reaping now. At least the member might be intellectually honest enough to actually say that. He could take a call and say “Ah, we’re all about that, and that’s why we’re making these changes now.” The Government does not really have a savings plan of its own. It is mucking around with Labour’s savings plan, which is working now, so the Government has no choice but to slowly increase that—slowly. It has no ideas of its own.

The cuts to KiwiSaver have been significant. The Government has reduced it and it has retarded the ability of the scheme to contribute significantly to the savings programme of this particular country. These provisions begin to put a little bit back in, but the Government has done so much damage to it. So it should explain why it was against the scheme right from the beginning. Why did it reduce it to half and is now increasing it by a quarter, again? It knows that it was a great scheme. It knows it was working well. It knows its potential to assist the savings record of families and the future ageing population of New Zealand. This is what is going to save this country. That is no thanks to the members opposite and no thanks to the Government of the day. So perhaps they should apologise. They should just say “Sorry, we screwed up. Sorry, we made a mistake.” Now is a good time to acknowledge that this was a good idea, and that the previous settings were just fine.

I cannot remember, but can anybody on this side of the Chamber remember any scheme that this Government has come up with in the last 4 years that actually increases savings or increases the development of this country? Is there any? There certainly have been none. The Government believes that trickle-down will actually do everything. In fact, it will not. But if the members had the courage of those convictions, they would take a call, and yet they all bow their heads and they all snipe away at the comments from this side of the Chamber, because members on this side feel passionately about the tax system and about the savings record of this country. That is why we have taken so many calls and why we are prepared to stay here and debate the points that are being made. But, no, there is nothing from the other side of the Chamber. There is no acknowledgment. There are snide comments about the chattering classes, but no real programme, no real defence—

John Hayes: Not snide comments.

Dr RAJEN PRASAD: Well, I say to Mr Hayes, please take a call. Please explain his Government’s views on this. Please explain to the Committee why these provisions are provisions that National has brought in and why it made the changes in the first place, and why now it is increasing it, and how long it will be before the settings go back up to 4 percent, where the settings were previously.

John Hayes: Oh, bear of little brain!

Dr RAJEN PRASAD: The member has no answer. The member has nothing but a cynical approach to a major bill before the Committee.

John Hayes: Everybody except you understands why.

Dr RAJEN PRASAD: Well, take a call. Take a call and explain.

John Hayes: I don’t need to. We all understand what we’re doing.

Dr RAJEN PRASAD: There is no law that the Government members have come up with that they should not be able to stand up and defend, and defend as often as necessary. But that member takes no opportunity. The member’s colleagues take no opportunities to defend the Government’s particular provisions in this bill.

John Hayes: “We won, you lost.”

Dr RAJEN PRASAD: Well, that is just so simple. That is so simple, and that member forgets. “We won. You lost. Therefore.” What is Mr Hayes saying to the country? That the National Party won, so everything now has got to follow its particular recipe, even if it is going to fail, even if it is unsuccessful? There are these constant shifts that they make with good policy settings, and just to give an impression that this is progress fools nobody, Mr Hayes—nobody. So let us just have some real debate. If there are some real points the members want to make, they should make them, but there is nothing.

What other provisions do in Part 5 is improve that. I think the Finance and Expenditure Committee probably did great work on this particular bill—

John Hayes: It did.

Dr RAJEN PRASAD: That is no thanks to that member. But it did begin to look at provisions around a simple process of stopping contributions, once the 5 years is up. I mean, here is the select committee doing the work of the design of this bill that Government Ministers, etc., should do, but no members on the other side of the Chamber have taken a call to defend the provisions. No member on the other side of the Chamber has got up to actually counter argue the points that this side of the Chamber has put before the Committee in this debate—none.

John Hayes: That should tell the member something. No substance to them.

Dr RAJEN PRASAD: We just had another one from the member. It is something—he mumbles away, and only the two people sitting beside him could hear. It was not important enough that the Committee needs to hear it or the country needs to hear it. Those members have no defence. There is nothing that they want to say. It is almost as if National has come up with it, the select committee has done its work, and therefore we should go from there.

So I think that is contempt. It is contempt of the processes of this House. I may be new to this House. I am only in my second term, but I find that quite contemptuous that Government members would not defend the very provisions that National has come up with and the very ideas that it thinks are important, particularly when it comes to something as important as KiwiSaver. There is universal agreement that here was a programme that was well designed, well-thought-out, and set for the long term. But what does the Government do the moment it comes in? What is the first thing it does? It cuts it. That is what it knows: cut, slash, and burn. It has done it here, as well. In the last Parliament, that is what it did. Now it is having to retrieve some of that, but again there is no apology. I say to Mr Hayes and his colleagues that this is not new. This is what National did to the fourth Labour Government’s scheme—the scheme that the Kirk Government put in. It was a great scheme, and if that had been allowed to stay, can you imagine where New Zealand would be today? But there is no credit to that side of the Chamber for destroying something that was good in 1975 and destroying something again that was good, with the KiwiSaver scheme. So those members should take responsibility—maybe the next member will take a call. Thank you.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): Thank you, Mr Chairman. Indeed, I relish the opportunity to take another call, and on Part 5 of this bill, the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. “Consistently inconsistent” is, I think, the term we used on the previous part. Actually, I do not mind if I am a little consistently inconsistent myself in that I am in two minds when it comes to clauses 154 to 157. That is about the 50 percent increase in tax that is being imposed through this.

I guess, if I can be inconsistent, I suppose, firstly, I would have to praise this. I have to say that this is a good move, because it is increasing the contribution to KiwiSaver. But then I have to be inconsistent and say that, unfortunately, it seems to run counter to everything else we hear from the National Party in this House, which is that tax is the root of all evil, tax is the beginning of the end, and the more we reduce it the more the economy can grow. That is what we hear. It is ideology from idiots. We keep hearing it. I would have to say that one of the classics is Mr Colin King sitting over there, because as a traditional farmer he believes that without truly analysing it.

We need to pay taxes to invest in good things. This 50 percent increase in taxation being imposed by the National Government here is actually a good thing, because it ups the level of contribution to KiwiSaver, a scheme that Mr King and many of his colleagues would have called communism. Mr McKelvie would have said the same thing—KiwiSaver was communism, forcing people to do what they did not want to do with their money. That is what many of the farmers around the place think, because they have listened to the drivel coming out of the National Party for years and years and years.

Farmers understand smart investment when they see it. They also understand the value of KiwiSaver and of investing in our future. If we had not been sucked in, as selfish idiots, back in the 1970s and had not listened to and believed Robert Muldoon in wanting to have our cake and eat it too, we would have a sound superannuation scheme and be a whole lot better off. We would be right up there with the Australians in terms of the level of investment income. But, dare I say it—and I am a farmer, from a farming background, but a Labour Party farming background, thank God, which has given me, hopefully, a little bit more wisdom—the traditional farmers like Mr McKelvie and Mr King there, who got sucked into Robert Muldoon, thought they could have their cake and eat it too, so they voted him in and voted superannuation out. Later, under Michael Cullen and a Labour Government, when we finally got brave enough and got to the point where we could afford to start investing in real superannuation again, the National Party, of course, opposed it time and time again in this House.

Dr David Clark: They’re still in their Muldoon mode.

Hon DAMIEN O’CONNOR: They are, and, of course, they have sold this idea that you can have your cake and eat it too—we can sell off our assets and have this wonderful country going forward. That is ideology, continued ideology, from the National Party. The other one is the mantra that with lower taxes we will all be better off and the economy will grow. Yet it is increasing taxes 50 percent here, which I think is a good thing. So I am a bit inconsistent myself—I accept that.

What Part 5 is also doing is increasing a fee from $50 to $150. Fancy that—a 200 percent increase in a tax, a compliance cost, the thing that the two farmers over there have rallied against and campaigned against and ranted and raved about. Yet here they are, part of the Government, and I bet those two members are going to vote for this piece of legislation, which, in clause 172(1), increases the fee in regulation 9(1)(a) from $50 to $150. Let the country be aware of what is happening under the nose, under the direction, of the National Government.

There is another one. That is right: it does not stop there. There is another regulation that allows for an increase in fee from $30 to $75. That is a 150 percent increase. Can I say that there are literally dozens, if not hundreds, of these little increases right across the National-ACT Government’s oversight and governance of this country. And people wonder why their costs are going up.

I go back to another part of Part 5 and ask a question, and hopefully the Minister in the chair, the Minister of Defence, might get up and answer this. When I first came into Parliament in the 1990s, when National was in Government, I have to say, one of the most common issues raised in my electorate offices was that of child support. It is, unfortunately, one of the challenges in New Zealand society. This Government is moving on that, it says. It is going to force solo mums and solo parents back to work. [Interruption] Thank you, Mr Chair, but it does relate to child support because I am asking questions about what this might mean, the changes here, for those—and I will quote from the amendment to the Child Support Act—“to whom section 33A of the Tax Administration Act 1994 applies”. My guess is that this does alter the taxation regime relating to child support or the liabilities of each or both of the parents. I would appreciate some explanation on it. I know there is a review under way. I do not know what this part relates to. I have asked my colleague, who has not been able to clarify it. Maybe the Minister will.

The point I am making is that it is, rightfully, one of perhaps the most responsible areas of legislation that we should get right, and that is to ensure that every child in this country has the right level of support from either or both parents—enough support to make sure that they get a fair go. I think that is the simplest way.

There are amendments occurring here in this piece of legislation. The vast majority of people who may still be awake, who might have their TVs on and are trying to work out what is going on here, will not know, perhaps, what we are changing here. But can I say if there is a consistency here, it is that if you are a poor solo parent the chances are the National Government has kicked you in the guts once again. Most changes—

Colin King: Tell us about the $8 billion we spend looking after those people.

Hon DAMIEN O’CONNOR: That member will not admit it, but he knows it is true. Most changes that have occurred from this Government have been about kicking solo parents.

Colin King: Get out of the West Coast and into the real world.

Hon DAMIEN O’CONNOR: Oh, they get a bit touchy here because they know it is true. They know it is true. That is right. GST has increased. Here we are, and the beneficiaries, the same solo parents, the parents whom child support applies to, are being told “one strike and you’re out”. Of course, as a criminal you can have three strikes. Funny, that. Three strikes for a criminal; one strike for some poor person who is trying to bring up their child, who has to be on a benefit to try to protect their child. This is outrageous. This is Toryism to the core, and it is about time we got it right.

The Chairperson is rightfully pulling me back into the Child Support Act. I do not know what this change means. It is a technical change written into this piece of legislation, and I am concerned that it might make it harder, and that each and every one of us as MPs, on both sides of the House, might be asked at a clinic on a Friday—we usually have them; I do not know about the National members—what is going on here. I would just like to hear an explanation from the Minister, who I am sure has a handle on what is happening here. He probably believes he is doing the right thing, but if he looks at the National Government’s record, it is not.

In conclusion, I have to say that the changes here to KiwiSaver, in my view, are an increase in taxation. National, when opposing us in the implementation of KiwiSaver, railed and ranted against what we were trying to do. It then cut the contribution, of course, and it is now lifting it again.

House resumed.

The Chairperson reported progress on the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill and no progress on the Airports (Cost Recovery for Processing of International Travellers) Bill and the Legislation Bill.

Report adopted.

The House adjourned at 9.56 p.m.