Wednesday, 28 November 2012

Wednesday, 28 November 2012

Wednesday, 28 November 2012

Mr Speaker took the Chair at 2 p.m.

Prayers.

Questions for Oral Answer

Questions to Ministers

Sexual Violence Prevention—Funding

1. METIRIA TUREI (Co-Leader—Green) to the Minister for Social Development: When she said in her response to the 2010 Taskforce for Action on Sexual Violence, that it was important to “consider future funding options to ensure the sector has greater certainty”, did she intend for that to mean funding may be cut?

Hon PAULA BENNETT (Minister for Social Development): No, what I meant was exactly what I said, and that was: “establish what sexual violence services the Government is already purchasing, what the current and long-term demands are, and consider future funding options to ensure the sector has greater certainty around funding.”

Metiria Turei: If her intention was to retain adequate services, will she restore support to the eight sexual violence prevention services that have told us that they have lost funding; if she will not restore that funding, why not?

Hon PAULA BENNETT: I would need to see details on it. My understanding is that many of them have not, as such, lost funding, but the Community Response Fund is no longer operating, and many did not see that as what it was, which was time limited. Instead, they saw it as ongoing.

Metiria Turei: How can the Minister provide any certainty to the sector when her Government has broken its promises made over the task force report, including the axing of the Community Response Fund; the alternative trials process being canned; the specialist court victims’ advisers nearly half of whom have never been appointed; and the stocktake of Government spending on sexual violence prevention services, which has never been publicly released?

Hon PAULA BENNETT: I do not agree with all of the member’s assertions. In fact, the member’s party itself got a copy of that stocktake when it asked for it. It has been made available to Te Ohaaki a Hine—National Network for Ending Sexual Violence Together as well. It has gone to that network, so it is there. Also, the Community Response Fund is always what it has been, so we have not misled anyone or services on that. It was time-limited funding, which we did extend further because we saw the need. But “time-limited” is exactly that.

Metiria Turei: How has the Government met its promise to continue to provide effective services to support those affected by sexual violence when Auckland’s helpline may now have to cut its 24-hour phone support service because it does not have enough funding to continue?

Hon PAULA BENNETT: I am aware that a number of agencies have been working with the Auckland helpline. Actually, we do see that service as important, but we are also in realities where times are tough and ongoing funding is difficult to find. The service is needing to have a look at how it cuts its cloth to match its funding, but I know that agencies combined have put more in this year to try to meet some of those shortfalls.

Metiria Turei: How does the axing of millions of dollars in funding, including the Community Response Fund, provide greater certainty to the survivors of sexual abuse and the services when agencies in Whangarei, in Nelson, and in Hāwera are saying that they may have to shut up shop because they do not have enough funding to continue?

Hon PAULA BENNETT: The member keeps asserting that we are cutting the Community Response Fund. We are not. We, in fact, put millions and millions of dollars more in at very difficult times. Certainly, that should be acknowledged as our trying to actually come up with and carry over that in difficult times for funding initiatives.

Sue Moroney: Given the police have recently confirmed that 2,235 family violence investigations have been undertaken in just the last 20 months where at least one sexual assault offence occurred, why has she cut her ministry’s funding of the Campaign for Action on Family Violence by 58 percent since 2009?

Hon PAULA BENNETT: Because we are far more interested in putting money into services. For example, we have increased money to family violence prevention services by $4 million over the last 4 years. That is not the time-limited funding. There was $40 million going in in 2008; there is now $44 million. In fact, we have had another increase in the last 12 months.

Metiria Turei: What does the Minister have to say to the survivors of sexual violence and their families in the Manawatū, whose crisis phone line was diverted last year to Hāwera, and who now do not know whether there is anywhere left for that crisis phone to be diverted to because of funding cuts to the Hāwera service?

Hon PAULA BENNETT: What I am aware of is that there are at least nine different helplines across New Zealand that respond with sexual violence prevention services. I think they are important, and they certainly have the respect of this Government. What we do need to look at is what is the most efficient way to use them and to run them. For example, Child, Youth and Family does not run a 24/7 service in every region. We run it nationally and then it can be extended out and we can make sure that we see it regionally during the day. I do think we need to look at those services that are running, at how we can get them more efficient and actually meet the needs of people as they need them.

Metiria Turei: Can the Minister understand that after all the broken promises in relation to the task force report and the funding cuts and losses, the families of the survivors of sexual violence and the sector that supports those families now have no certainty about the continuation of those services; if so, will she commit to ensuring that these vital services remain open for those communities?

Hon PAULA BENNETT: I do not agree with the member’s assertions. What I will say is, yes, we are committed to continuing to work with them, talk with them, and find solutions.

Screen Production Industry—Revenue, Job Creation, and Economic Outcomes

Hon TAU HENARE (National): My question is to the Minister of Finance: what contribution is the screen industry making—

Hon Trevor Mallard: He’s back in the tent. He’s back in the tent.

Hon TAU HENARE: We will start again, shall we? [Interruption]

Mr SPEAKER: Order! The Hon Tau Henare. [Interruption]

Hon TAU HENARE: It is a hard job being Speaker.

Mr SPEAKER: Order!

2. Hon TAU HENARE (National) to the Minister of Finance: What contribution is the screen industry making to the New Zealand economy?

Hon STEVEN JOYCE (Acting Minister of Finance): Mr Speaker, may I be the first to wish you a happy “Hobbit Day”, and say that New Zealand has a vibrant screen industry, which directly supports more than 2,700 businesses, over 95 percent of which are involved in production and post-production work. The Statistics New Zealand 2010-11 screen industry survey reported that revenue from the screen industry increased to almost $3 billion in 2011. Feature film revenue for New Zealand has been trending up since the screen industry survey was first released in 2008. In 2011 feature film revenue increased by 15 percent to more than $700 million, and international revenue also grew by 17 percent, to more than $440 million, with almost $390 million coming from North America.

Hon Tau Henare: How are the Hobbit films supporting New Zealand jobs and the wider community?

Hon STEVEN JOYCE: The Hobbit films have led to around 3,000 jobs to date, with about $1.5 million per week being paid to the crew. There has also been a significant flow-on effect: 93,000 hotel beds have been occupied, 1,800 rental cars and 1,650 other vehicles used, just over $9 million spent with local suppliers for set construction, and just under $1.5 million spent with local food suppliers. Further, the media exposure for New Zealand tourism from the films and from today’s world premiere will be felt for years to come. The Government realised the benefits that would come from making these films in this country, and is proud to have actively supported the Hobbit films from the very beginning.

Hon Tau Henare: What reports has he seen opposing development of the New Zealand screen industry?

Hon STEVEN JOYCE: I have seen a number of comments, which included firstly opposing and then pledging to repeal the legislation passed to enable the filming of The Hobbit, even if it meant losing the films offshore. I have seen other comments that label the passing of that legislation as “staggering”, “a day of shame”, and also “a disgrace”. I note with interest, though, that these people, who are loosely described by the media as “Hobbit-haters”, have clearly changed their tune, with a number of their rank now attending the red carpet world premiere of The Hobbit in Wellington this afternoon. These same people will no doubt attend the opening of the Auckland International Convention Centre when it happens, will no doubt attend the opening of the Denniston mine when it happens—

Mr SPEAKER: Order! I think the question has been answered.

Hon Trevor Mallard: Was the large-screen film grant extended by this Government; if so, did he consult with the Prime Minister, who previously had called it a waste of money?

Hon STEVEN JOYCE: I understand it was extended, yes.

Hon Tau Henare: What reports has he seen about other potential productions we might see in New Zealand?

Hon STEVEN JOYCE: Word has reached me of a drama that is currently playing out, which might be suited to the big screen or perhaps go straight to DVD. In this particular performance—it is a very similar movie—the “Fellowship” is led by a tall, thinning, grey wizard, who surrounds himself with a loyal legion of—

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

Mr SPEAKER: Order! [Interruption] Order! A point of order has been called, and it must be treated with respect.

Rt Hon Winston Peters: The question specifically asked for what other reports. The Minister began by saying: “Word has reached me …”. That is not a report. He is being frivolous with this House at a very busy time in our—

Mr SPEAKER: Order! The member needs to forgive me but I seem to recollect the member himself in the past treating verbal reports as reports.

Chris Hipkins: I seek leave to table a DVD copy of a film called The Hollow Men, showing that it has already made it to the big screen! [Interruption]

Mr SPEAKER: Order! [Interruption] Order! I am on my feet. The member may be pleased that I do not seek the leave of the House, because he may not be able to table it, and the Standing Orders require documents to be tabled.

Hon STEVEN JOYCE: In this particular performance, the “Fellowship” is led by a tall, thinning, grey wizard, who surrounds himself with a loyal legion of halflings sworn to protect him against a slimy, bearded creature hiding and plotting in the darkness, consumed by jealousy, and relentlessly in pursuit of his “precious”. Their journey is made more difficult by the presence of a number of goblins still loyal to their former leader, an all-powerful, all-seeing, all-knowing eye watching from a distance—roughly, between here and New York. We are due to hear more about the conclusion of this particular story in February of next year, but I understand that it might be a little bit of a flop, because, rather than giant eagles, the “Fellowship” have decided to put their faith in an elderly mallard.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. We all like a good joke, but, frankly, if—[Interruption]—no, no, no—that is—

Mr SPEAKER: Order! I apologise to the member. Points of order must be heard in silence.

Rt Hon Winston Peters: We all like a good joke, and that member is special at it, but I want to say that if that is a precedent for the way we can answer—with that length of time and with that obvious lack of reference—

Mr SPEAKER: Order! I am not sure what the member’s point of order is.

Rt Hon Winston Peters: I am getting to it right now.

Mr SPEAKER: Huh!

Rt Hon Winston Peters: Well, you heard him out for about half an—

Mr SPEAKER: No, order! The member will resume his seat. I think the House can occasionally stand a little humour without getting too upset over it.

Visitor Visas—China Southern Airlines Frequent Flyer Scheme and Promotion of Tourism

3. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: What advice has he received about a new agreement between the New Zealand Government and China Southern Airlines in respect of visa processing?

Rt Hon JOHN KEY (Prime Minister): I have received advice that this agreement will streamline and facilitate travel by high-value, low-risk Chinese visitors. Visitors from China are growing by 30 to 40 percent a year, with 215,000 forecast in 2012 alone. We need to tap into the opportunities presented by our fastest-growing visitor market, and this includes making border processing easier for some of our most valuable visitors.

Rt Hon Winston Peters: Why is the Government lowering entry requirements for Chinese nationals when the Chinese Government requires New Zealanders wanting a visa to China to provide evidence of income and a letter from their future employer in China, none of which is required in the arrangement that he has just agreed to?

Rt Hon JOHN KEY: That is because the proposal that is in place for China Southern Airlines and will be in place for other airlines like Air New Zealand as well is fundamentally suited to the New Zealand conditions. It is consistent with the Approved Destination Status scheme, which we already have in operation. In principle, the only real difference that is required is that the person does not have to deliver a note from their employer or show their wealth, and that is because they will have travelled 40,000 kilometres with China Southern Airlines, and on that basis one can assume that they are a reasonably high net worth individual.

Rt Hon Winston Peters: Why did the Government decide to relax visa applications for China Southern Airlines’ frequent flyers, some of whom can fly out and return with China Southern Airlines for $400, when China Southern Airlines accounts for less than 15 percent of visitor arrivals from China?

Rt Hon JOHN KEY: For a couple of reasons. Firstly, the member is right that they account for less than 15 percent, but what he is not right about, or may not know, is that the significant growth that has been happening in recent times from China can be attributed to China Southern Airlines’ presence. Secondly, the member may or may not know that 70 million Chinese visitors are expected to travel abroad this year, that that number is expected to grow to 100 million within a couple of years, and that New Zealand is looking to have about 425,000 Chinese visitors come to New Zealand by 2018. So why would a country that has tourism as one of the important parts of its economy not want to attract these sorts of visitors from China?

Rt Hon Winston Peters: How could Skycity Casino, China Southern Airlines, and Auckland Airport all be boasting before June 2012 of special fast-track visa procedures, when he allowed his Minister of Immigration to claim in this House that the Government department that he is a head of was not involved at that time? How did that happen?

Rt Hon JOHN KEY: You would have to put the direct part of that question to others who are involved. All I can say is that in the early or mid part of 2012, as a result of a trip to China, there was a request made by China Southern Airlines. Work began on that work by the Ministry of Business, Innovation and Employment. About 4 September it noted to my office that there was a programme under development, and I was formally advised that it had gone live some time just after 1 November. I am hugely supportive of what is going on. It is consistent with the programme that is in Australia.

Michael Woodhouse: What else is the Government doing to attract Chinese visitors to New Zealand?

Rt Hon JOHN KEY: We are being very innovative when it comes to China. Tourism New Zealand has been working with Chinese superstar Yao Chen as a brand ambassador for New Zealand. She is actually going to be on the red carpet with David Shearer this afternoon at the Hobbit premiere. She was married in Queenstown last week. [Interruption] No, she will not be physically with him in that sense. This was the highest-trending topic for days in Chinese social media. We know that Chinese people are very interested in New Zealand, and we need to translate that interest into even higher visitor numbers. That will provide jobs for New Zealanders, and I think it is something that should be supported.

Rt Hon Winston Peters: Why on earth, when you have got other airlines such as Air New Zealand bringing far more Chinese people to New Zealand, along with other airlines that are not from southern China, would this special deal be arranged with China Southern Airlines, when it, at that point in time, and contrary to what he just said, brought so few Chinese in percentage terms to this country?

Rt Hon JOHN KEY: Let us run through the facts, because I deal in the facts. Just dealing with the facts, most of the growth has been occurring with China Southern Airlines. It is not a deal unique to China Southern Airlines; it is consistent with the approved destination status that is already in place. And, by the way, it is consistent with a similar scheme that has been in place with Australia, and, by the way, the sky did not cave in over there either.

Better Public Services Targets—Effect of Housing Conditions on Rheumatic Fever

4. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Does he stand by his statement on rheumatic fever that “Tackling this disease is something I am personally championing. It’s so important to achieve results in this area, that I’ve made it one of our top 10 results areas”?

Rt Hon JOHN KEY (Prime Minister): Yes, that is why I am taking on rheumatic fever as part of my Better Public Services challenge to support vulnerable children and that is why the National Government with the Māori Party is spending $24 million targeting at-risk children in eight of our most vulnerable areas. Can I say that one of the shocking statistics I have is that this Third World disease had an increase in the rates of youngsters who were subject to rheumatic fever in the period of time under the past Labour Government.

David Shearer: Does he stand by his statement that rheumatic fever is often put down to inadequate housing; if so, what has he done to ensure that rental accommodation is warm and dry?

Rt Hon JOHN KEY: Yes, and I am surprised that the member has the shame of asking that question. It certainly applies that if you have warmer, drier homes, it is less likely a child will get rheumatic fever. In fact, a child who lives in a cold, overcrowded home is likely to get rheumatic fever at 20 to 37 times the usual rate. So let us have a think about the insulation under a National Government, because in the last 4 years this Government has insulated 188,500 homes. Let us compare it with the previous Labour Government, which insulated 4,000.

Mr SPEAKER: Order! It would be now be quite helpful were the Prime Minister to actually answer the question, because the question asked what had been done to improve the conditions of rental properties.

Rt Hon JOHN KEY: I am sorry. I should have started with that point. I am pleased to say that under this Government by the end of 2013 every Housing New Zealand Corporation State home will be insulated—something that Labour Government failed to do.

David Shearer: Is he aware that only 5 percent of rental property owners—5 percent—have taken up the Warm Up New Zealand scheme, and what is he going to do about that?

Rt Hon JOHN KEY: I do not have all of those details, but what I can say is that there are plenty of low-income New Zealanders who own their home who have had their homes insulated—plenty of low-income homes—so the test is not just rental. And, by the way, if the member wants to make it even more expensive and even worse for those people, well, put a capital gains tax on and they will have their rents going up as well.

David Shearer: Why will he not require all landlords to provide rental housing that is warm and dry, to ensure that New Zealand children are no longer vulnerable to Third World diseases such as rheumatic fever?

Rt Hon JOHN KEY: The Government is interested in trying to encourage those who are landlords to insulate their homes. That is why we have put $360 million into an insulation programme. That is why we are insulating every State house under our watch. This question is coming from a party that had 9 years and plenty of surpluses, and did nothing.

David Shearer: I raise a point of order, Mr Speaker. That was a pretty straight question about what he would do about landlords providing warm and dry housing.

Hon Gerry Brownlee: What’s the point? There’s no point of order in that.

Mr SPEAKER: The Leader of the House should know better than to interject—[Interruption]—and he compounds the problem when I am on my feet. The member asking the question did ask a straight question: what was being done with respect specifically to rental accommodation? OK, that does include, obviously, State houses as well. I think this is a topic where there is some passion around the issues, but the House has to be reasonable about it. The Prime Minister gave some answer. Admittedly, it went on, I think, longer than necessary, and it attacked the questioner more than was necessary, but I think the member has further supplementary questions to pursue the issue further.

David Shearer: What specifically will he do to ensure that landlords are able to provide warm and dry housing so that we will not have the incidence of rheumatic fever that we are seeing in New Zealand at the moment?

Rt Hon JOHN KEY: Two things. Firstly, the Warm Up New Zealand: Heat Smart campaign is being more heavily redefined to low-income New Zealanders, particularly those who are renting. Secondly, every State house under our watch will be insulated by 2013. Thirdly, although it is not directly to do with landlords, this is a Government that is out there running significant programmes right across New Zealand schools to the point where at the moment there are 23,000 children covered by the 139 schools. I say that these are all the things that this National Government has done in the tightest of economic times, and that previous Government did zero.

David Shearer: Will he take action to ensure that the 95 percent of private rentals that do not provide warm and dry housing actually do that?

Rt Hon JOHN KEY: Firstly, the member cannot make the statement that 95 percent are not insulated.

Hon Members: Yes, he can.

Rt Hon JOHN KEY: Well, how would you know whether they are insulated or not? Secondly, what the Government is doing is a proper programme of dealing with the issue in schools, it is doing a proper programme in terms of insulation, and it is actually doing something about it. This is the Leader of the Opposition, who has got amnesia about the failure of that Government. It spent lots of money on its own advertising campaigns and not a hell of a lot on vulnerable kids.

Gareth Hughes: I raise a point of order, Mr Speaker. I seek leave of the House to introduce the Green Party’s Energy Efficiency and Conservation (Warm Healthy Rentals Warrant of Fitness) Amendment Bill for its first reading on the next members’ day.

Mr SPEAKER: Leave is sought for that course of action to be followed. Is there any objection? There is objection.

Better Public Services Targets—Infant Immunisation Rates

5. Dr CAM CALDER (National) to the Minister of Health: What progress is the Government making on the national health targets?

Hon TONY RYALL (Minister of Health): The latest national health target results show that the Government is well on track to achieve its Better Public Services immunisation target. The latest results show that 87 percent of our 8-month-olds are now fully immunised. This exceeds the step target that 85 percent of 8-month-olds will be vaccinated on time by July 2013. Children are most vulnerable to infectious diseases between 3 and 18 months of age. Our new target will ensure these babies are immunised on time and better protected from childhood diseases like whooping cough. That is why this Government has introduced at-birth enrolment in general practice and Well Child services.

Dr Cam Calder: How has the progress made with immunisations been achieved?

Hon TONY RYALL: This is a great achievement, which is the result of a lot of hard work and commitment by general practice clinics, Well Child providers, community outreach staff, midwives, district health boards, and the National Immunisation Register team. General practices and immunisation teams in the Capital and Coast District Health Board region here in Wellington and the Southern District Health Board region were outstanding performers this quarter, with an incredible 93 percent of all kids under 8 months old fully immunised. I would like to thank these front-line teams across the country for their commitment and support, which has seen New Zealand go from one of the lowest immunisation rates in the developed world to one of the best over the past few years.

Schools, Canterbury—Criteria for Proposed Closures and Mergers and Size of Schools

6. CATHERINE DELAHUNTY (Green) to the Minister of Education: What evidence, if any, has she received that creating bigger, super schools in Christchurch will benefit students and their communities?

Hon HEKIA PARATA (Minister of Education): Tēnā hoki koe e te Kaiwhakawā. Tēnā tātou e te Whare. Tēnā koe e te kaipatapatai. I am not proposing bigger super-schools in Christchurch. What I am proposing are fit for purpose 21st century educational environments focused on better outcomes for all of our children. This will include some small schools and some big schools, and will retain diversity and choice in the system.

Catherine Delahunty: Why do the Ministry of Education criteria for assessing schools in the Christchurch renewal project show that schools with 150 students or fewer get a black mark against their name?

Hon HEKIA PARATA: The evidence is very clear that there are 9,500 fewer students in the Christchurch education network, so we have to look at what spaces are vacant across classrooms. The size of the schools and the utility of the schools have been a consideration, and in all the schools we have considered there has been underutilisation.

Catherine Delahunty: I seek leave to table the Belfast learning community cluster document, which shows schools of 150 pupils or fewer in the negative column.

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

Hon Member: Where did it come from?

Mr SPEAKER: Oh, I beg your pardon, members. I have not made it clear to the members where the document came from. The source of the document?

Catherine Delahunty: It was a document that was sent to schools by the Ministry of Education called Catalyst for Change—Proposal.

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

Catherine Delahunty: What is wrong with smaller schools like Ōuruhia that have robust rolls, population growth in their area, great Education Review Office reports, and no quake damage? Why are they on her blacklist simply because they are small?

Hon HEKIA PARATA: It is not about the size of the school. It is about the quality of the teaching that occurs in the school. The Ōuruhia school has a proposal in front of it that has not yet been decided upon.

Nicky Wagner: Where can members of the public get information about this Government’s education renewal plan?

Hon HEKIA PARATA: I am in a consultation process with schools. All the material information about education renewal in Greater Christchurch is publicly available on the www.shapingeducation.minedu.govt.nz website. There are no secret agendas.

Dr Megan Woods: Why did the Minister wait until Friday, 23 November to finally release the alternative options for schools and clusters that her officials had presented her with?

Hon HEKIA PARATA: All of the information material to the proposals before schools was made available to them on 13 October. The information that I released on Friday was additional background information.

Catherine Delahunty: Will she remove this 150 pupil minimum category from the negative column on the basis—here it is—that there is no evidence that small schools are bad and that communities do not want their schools super-sized?

Hon HEKIA PARATA: I will just repeat that it is not the size of a school; it is the quality of teaching and learning that occurs there.

Catherine Delahunty: I raise a point of order, Mr Speaker. My question was straightforward. Will she—

Mr SPEAKER: The member’s question, indeed, did not ask that. The question asked whether the Minister would remove the schools of fewer than 150 pupils from what was described as a negative column in some ministry publication. That was what the question was.

Hon HEKIA PARATA: No. That document is in the public domain together with the wider context that allows full and intelligent consideration of the total proposal.

Catherine Delahunty: Mr Speaker—

Mr SPEAKER: Order! Is this a point of order?

Catherine Delahunty: I raise a point of order, Mr Speaker. I did not ask whether it was in the public domain—

Mr SPEAKER: No, order! [Interruption] Order! The Minister has absolutely answered the question now. The member asked whether the Minister would remove those schools from what was described as a negative list, and the Minister has said no.

White Paper for Vulnerable Children—Children’s Teams and Community Initiatives and Consultation

7. MIKE SABIN (National—Northland) to the Minister for Social Development: How is the Government supporting communities to make a difference for New Zealand’s most vulnerable children?

Hon PAULA BENNETT (Minister for Social Development): The Government’s White Paper for Vulnerable Children addresses how all New Zealanders can play their part to better protect our most vulnerable children from abuse and neglect. Quite frankly, the focus and resources that are going on to maltreated children are unprecedented in New Zealand.

Mike Sabin: How will the children’s team pilot in Whangarei make changes to the way professionals work with one another?

Hon PAULA BENNETT: It will look different from the one that we have announced in Rotorua, and I think that that is significant. So where the Government works towards the common assessment framework, where it looks at the compliance that we put round it and how we put the right resources in, it is actually not a franchise that we are putting out there. It looks different in different communities, and they are actually—

Rt Hon Winston Peters: Oh, it’s a franchise now?

Hon PAULA BENNETT: Well, it is not one. Use your ears, because I deal in the facts, and the fact is that it will be quite different—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. That Minister is so close to you that she cannot offend you by telling you to use your ears. That is not acceptable here.

Mr SPEAKER: The member is correct that she should not ask the Speaker to use his ears.

Hon PAULA BENNETT: Thank you, Mr Speaker; I am sorry about that. What we are doing in Whangarei is you will see a common assessment framework. However, what you will not see is it looking exactly the same as other children’s teams that have been set up. What we have got to acknowledge is the strength that is on the ground, the way we can get agencies working together, and the resources and the attention that are going on to those children who are most at risk of abuse and neglect.

Mike Sabin: How are local leaders responding to the Government’s white paper proposals?

Hon PAULA BENNETT: The Government has held more than 30 public meetings now over the last 6 weeks, since we put out the white paper, and I myself have headed about 10 of them. So we literally have got thousands of New Zealanders who are coming out to hear this work and to see what is happening, and to question how they can play a part in that. Yesterday I met with iwi and community leaders in Kaikohe, and to say that they were rather forward in what their opinions were on what we could be doing would be an understatement. But the bottom line is that it is the attention that is going on those children, and then recognising that, actually, the biggest change will come from the ground up.

Jacinda Ardern: Can the Minister assure the House that no community organisations that work to support vulnerable children have had their funding cut under her watch?

Hon PAULA BENNETT: Oh, absolutely not. We are going to put money where it matters most. We are going to hold people to account where they have been misusing money. We are going to take them to task when we know that it can be done better. So, unlike the previous Government, which liked to close its eyes, pretend everything was OK, and just throw more funding at it, we are going to hold them to account and make sure the funding is getting to the kids who need it most.

New Zealand Air Force—2010 Anzac Day Helicopter Accident Report

8. IAIN LEES-GALLOWAY (Labour—Palmerston North) to the Minister of Defence: Has he read all the Defence Force reports regarding the accident involving a RNZAF Iroquois on ANZAC Day 2010; if so, what action has he taken?

Hon Dr JONATHAN COLEMAN (Minister of Defence): I have read the report of the court of inquiry, the accident analysis report, and update reports. I have made it clear to the Air Force that I expect all the recommendations of the court of inquiry to be implemented. I have ordered an independent inquiry into Air Force progress in implementing those recommendations. As the Minister of State Services, I have ordered a further inquiry into how civilian agencies dealt with their responsibilities for investigating the crash and whether this process is fit for purpose.

Iain Lees-Galloway: Does the accident analysis report indicate that the decision not to pre-position aircraft on the day before Anzac Day was made to avoid accommodation costs of around $600?

Hon Dr JONATHAN COLEMAN: The accident analysis report informs the court of inquiry, and the court of inquiry is very clear about what the causes of the crash were. Budgetary considerations were not listed as a cause of the Anzac Day crash.

Iain Lees-Galloway: I raise a point of order, Mr Speaker. My question was about the content of the accident analysis report, not the court of inquiry report. I would appreciate it if the Minister could answer regarding the content of that report, not another report.

Mr SPEAKER: Indeed, the member did ask about that.

Hon Dr JONATHAN COLEMAN: What the report says is that the decision not to pre-position an aircraft was not a cause of the accident, regardless of what factors might have informed that decision not to pre-position the aircraft. There were things like whether it could be completed within the available crewing rosters. There was also the factor that the Air Force was in discussion with Wellington airport and could not fly down there after dark.

Hon David Parker: Did the report say that? What did the report say?

Hon Dr JONATHAN COLEMAN: So the report was very clear that that budgetary factor was not a cause of the crash.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. The question was whether he has read the accident analysis report, and, if so, does it indicate that the decision not to pre-position aircraft on the day before Anzac Day was made to avoid accommodation costs of around $600. I listened very carefully to that answer, and I could not tell whether it was a yes or a no.

Mr SPEAKER: The interesting point that has been raised in this point of order is the question did not ask whether the decision not to position an aircraft the night before or the day before caused the accident; the question asked whether the decision was made to avoid a certain cost. In answering, the Minister referred to the elements of the report that describe causes of the accident, but did not actually cover the specific point the member’s question focused on. And it was a very straightforward question. I would ask the Minister to answer that question.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. I am not going to take time off my colleague, who is answering perfectly adequately, but I would ask you to have a look at the Hansard of the answer that he gave, because it would be my contention that he did answer that question by making it very clear that in the decision to not pre-position there were no factors other than those he mentioned in his answer.

Hon Trevor Mallard: Point of order, Mr Speaker.

Mr SPEAKER: I do not think the House needs to take more time on this. I will certainly check in case I am wrong here. If I am wrong, no harm is done. If I am wrong, the Minister can simply point out where I have been wrong—in his further answer—when I have asked him to answer that particular issue raised in the question because the question was a very straight question. If I am wrong, the Minister is most at liberty to point out that I am wrong—I have got no problem with that—and that will save a lot of time.

Hon Dr JONATHAN COLEMAN: Well, there are two parts to the question. To the first part, yes.

Iain Lees-Galloway: Does the accident analysis report indicate that a decision was made not to pre-position the aircraft in order to avoid accommodation costs of around $600?

Hon Dr JONATHAN COLEMAN: The report indicates there were a number of considerations and factors taken into account. That was one of a number, the key point being that it was not a cause of the crash. I urge the member to focus on the cause of the crash, rather than try to cause a cheap beat-up out of this.

Rt Hon Winston Peters: Is it not a fact that the Air Force internal accident analysis says as follows: “the need to minimise accommodation costs incurred by 3 Squadron due to pressure on the accommodation budget was recognised and contributed to the … decision [not to fly the day before].”, and, further, it found there were no instructor manuals or guides, because of resourcing issues; if that is a fact, when are he and the Prime Minister going to apologise to those three families for their inhuman cost-cutting exercise in the Air Force?

Hon Dr JONATHAN COLEMAN: Well, we deal in facts, and what I can say is that the person in charge of the inquiry—

Rt Hon Winston Peters: Why don’t you resign?

Hon Dr JONATHAN COLEMAN: This is a direct quote and it is from the court of inquiry. It says: “When considering the report, I could not help thinking that the genesis of this accident goes back some 10 years when changes to RNZAF command and control”—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I gave him two direct quotes from the report and I asked him to confirm whether they were in fact from the report. Why does he not answer the question?

Mr SPEAKER: The member’s question went a little beyond that. The Minister is, in my view, answering the question in a way he is entitled to.

Hon Dr JONATHAN COLEMAN: In answer to the member’s question, the quote from the person in charge of the inquiry is that “When considering the report, I could not help thinking that the genesis of this accident goes back some 10 years when changes to RNZAF command and control were made in an attempt to make our operations more efficient and cost effective.” So it was under that Labour Party Government’s watch.

Mr SPEAKER: Order!

Iain Lees-Galloway: Is he aware that the operational order for Anzac Day fly-pasts ordered that No. 3 Squadron pre-position aircraft on the day before Anzac Day in order to mitigate both noise abatement regulations and the risk of poor weather, and does he know why this order was not followed?

Hon Dr JONATHAN COLEMAN: Well, the member cannot have it both ways. He is trying to make out—

Mr SPEAKER: Order! The question was a reasonable question. There is no expectation that the Minister would necessarily know the answer to it, because it is, clearly, an operational issue who gives orders. But it does not allow that kind of answer. It was a reasonable question, but the Minister may not, in fact, have that information.

Hon Dr JONATHAN COLEMAN: The fact is that the pre-positioning or lack of in regard to those aircraft was not a cause of the accident, and the court of inquiry is very clear about that.

Iain Lees-Galloway: Point of order.

Mr SPEAKER: I think I can assist. [Interruption] Order! The question simply asked whether the Minister could tell the House who gave—

Hon Trevor Mallard: No, “Is he aware …”.

Mr SPEAKER: —is he aware of—the order, the alleged order, I must stress, for the aircraft to be pre-positioned the day before. That is all that the question is asking. The Minister may or may not know, but it would not be unreasonable for the Minister—unless it is not in the public interest—to actually answer it.

Hon Dr JONATHAN COLEMAN: I do not agree with the assertion that he is putting to the House, and I would have to check that fact, because, you know, I am not too certain that he has got his facts correct.

Iain Lees-Galloway: Is he aware that the accident analysis report also indicates that training manuals for the use of night-vision equipment and night flying were not current at the time of the accident because resources had not been allocated to keeping those materials up to date, and does he think that contributed to the accident?

Hon Dr JONATHAN COLEMAN: I refer that member to the court of inquiry report, which is informed by the accident analysis report, which lists quite clearly the causes of the accident. Basically, they were around culture, a lack of adherence to the rules, and lack of oversight. It is very clear.

Iain Lees-Galloway: I raise a point of order, Mr Speaker. My questions—all of them—have been about the accident analysis report—

Mr SPEAKER: Order! I am on my feet. I have assisted the member with answers where he has got good grounds, but he may recollect that the last part of that question asked the Minister whether he thought those matters contributed to the accident. The Minister in his answer covered that issue very clearly.

Iain Lees-Galloway: When will the Minister take responsibility for the fact that it is his Government’s policy to cut costs and cut corners that has put pressure on Defence Force personnel, compromised the safety of those personnel, and contributed to the accident that occurred on Anzac Day 2010?

Hon Dr JONATHAN COLEMAN: Well, I would just refer the member to this fact: Labour’s spending on pilot training—the Labour Government’s spending—was cut from $66 million in 1999 to $45 million in 2008. There you go. [Interruption]

Mr SPEAKER: Order! Order!

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

Mr SPEAKER: Order! Both sides, both National and Labour, will comply with the rules of this House. When a point of order is called, they will cease that kind of interjection.

Rt Hon Winston Peters: The Minister was asked to account for actions, or inactions, during his time, or his Government’s time. He cannot rise to his feet and begin with a diatribe about the former Government.

Mr SPEAKER: The question contained a lot of statement of the member’s views as to what had happened. The Minister is absolutely at liberty, when asked that kind of question, to express his views in return. On the straightforward questions asked previously, I made sure the Minister answered them. On questions like that last one, the Minister has got some licence in his answer. The Hon Dr Jonathan Coleman is welcome to give further answer.

Hon Dr JONATHAN COLEMAN: Sure. Look, I would just refer to my previous quote from that report. The person in charge of the court of inquiry says that “When considering the report, I could not help thinking that the genesis of this accident goes back some 10 years”—when Labour was in charge—“when changes to RNZAF command and control were made in an attempt to make our operations more efficient and cost effective.” So those changes happened on your Government’s watch. I am afraid that is the truth.

Oil and Gas Extraction—Interim Report on Hydraulic Fracturing

9. Hon Dr NICK SMITH (National—Nelson) to the Minister of Energy and Resources: What is the Government’s response to the Parliamentary Commissioner for the Environment’s recently released interim report on fracking?

Hon PHIL HEATLEY (Minister of Energy and Resources): Yesterday the Minister for the Environment and I welcomed the commissioner’s interim report on her investigation into fracking. The report finds that the environmental risks associated with fracking can be effectively managed, provided that best operational practices are implemented and enforced through regulation. We also welcome the objective, not subjective, view that the evidence she has considered to date has revealed no basis to call for a nationwide moratorium on fracking.

Hon Dr Nick Smith: What reports has the Minister seen on responses to the report by the Parliamentary Commissioner for the Environment on fracking?

Hon PHIL HEATLEY: I have heard one report on Radio New Zealand National when a member of this House questioned whether the commissioner succumbed to pressure from the oil industry, saying “We don’t know what kind of pressure she was under by the oil industry or Government MPs.” It is disturbing that the commissioner’s independence and integrity have been called into question by Gareth Hughes. I have consistently said that I have been looking forward to the outcome of the inquiry, and that it will set out fact from fiction.

Hon Dr Nick Smith: What has the Minister to say to people who run a nationwide campaign against fracking, saying that it must be banned, who demand an independent inquiry and welcome it when it is announced, but then bag its evidence-based conclusions when it does not meet their doctrinaire views?

Mr SPEAKER: Order! I would have thought that the experienced former Minister would know that questions should involve some element of ministerial responsibility. Certainly, in this day and age, opinions can be sought, but it just seemed to me that the question asked what the Minister would say to people for whom the Minister has no responsibility whatsoever. I am prepared to allow the member to reframe his question to bring it somewhat more within the Standing Orders.

Hon Dr Nick Smith: Does the Minister think an intelligent debate about using New Zealand’s energy resources, for which he has responsibility, is helped by people who demand bans and demand an inquiry but, when they get an inquiry, bag its conclusions?

Hon PHIL HEATLEY: I say that it is best to deal in the facts. New Zealand’s policy must be based on evidence. If we allow fear to stop every new opportunity, our country will go backwards, both economically and environmentally. We certainly will not get new jobs or a growing economy if we oppose marine farming, exploration, Skycity, irrigation, and even The Hobbit.

Health Targets—Progress and Effect on Elective Surgery

10. Hon MARYAN STREET (Labour) to the Minister of Health: Is he satisfied that his health targets are working for those that need them the most?

Hon TONY RYALL (Minister of Health): Yes, and we can, and will, continue to do better. Patients, especially those most in need, benefit from 35,000 more elective operations a year under our Government. The proportion of patients being seen in emergency departments within 6 hours has lifted, from 61 percent to 92 percent in some district health boards. All cancer patients ready for radiation and chemotherapy now have that commencing within 4 weeks. In 2007 the immunisation rate for 2-year-olds was 67 percent; it is now 93 percent. Ninety-four percent of patients who smoke are given advice to quit, not to mention the huge increase in cigarette taxes. In relation to heart and diabetes checks, a new, more challenging target has just commenced for these checks, and 52 percent of the eligible population have had their cardiovascular risk assessments done.

Hon Maryan Street: Is there, in his view, any risk that numbers of elective procedures will overtake need, and that district health boards might be inclined to do two simple operations in order to fill monthly targets in preference to one more complex operation that might see them undershoot their targets?

Hon TONY RYALL: The district health boards have been working very hard, and for the last few years they have achieved over target. The advice that I have received is that the complexity of the operations performed, as a whole, is relatively unchanged.

Hon Maryan Street: What does he say, then, to the parents of a little boy with a congenital eye problem that could be corrected by surgery whose scheduled surgery was cancelled because two cataract operations needed to be done that afternoon in order to meet target numbers?

Hon TONY RYALL: The target applies to a 12-month period. I would be very happy to look into that case for the member if she actually brought it to my attention.

Hon Maryan Street: Has he spoken to specialists who have made decisions such as these for reasons of achieving the Minister’s targets and who have described the whole process to me as demoralising; if so, what has he said to them?

Hon TONY RYALL: No. I have met a lot of surgeons and nurses who are rapt that 35,000 extra people a year are getting the elective operations they need. They remember when that party opposite cut over 30,000 people off waiting lists just to dress the books up.

Hon Maryan Street: What does he say, then, to the solo mother of three children, one of whom needs a first specialist assessment to determine whether or not surgery is required to correct her 4-year-old’s emerging speech defect, who has received a letter saying that Isobel does not qualify for a first specialist assessment because she is not urgent enough—although how that is determined without a first specialist assessment is hard to know—and is this what he means by better, sooner, and more convenient health-care?

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. I would ask you to reflect on why that question is allowable but the question from the Hon Dr Nick Smith earlier was not allowable.

Mr SPEAKER: Well, it is an interesting point that the member raises. I think it is reasonable where the question specifically relates to issues of health care for which the Minister is responsible. Ultimately, the Minister has responsibility for the overall effectiveness of the health system. Therefore, I think that is rather different from asking a Minister for opinions, or for his view, or what he would say to other people for whom he has no responsibility. This Minister does have responsibility for how the health system treats New Zealanders, and I think that is not unreasonable.

Hon Gerry Brownlee: But it’s totally hypothetical.

Mr SPEAKER: Well, hypothetical questions are allowed to be asked.

Hon TONY RYALL: What I would say is a number of things. That member is invited to bring that case to me to have a look at. What I would say is this. Under our Government we are doing thousands and thousands and thousands of more first specialist assessments than were ever done under the previous Labour Government. What I have to tell that member is when that Government culled 35,000 people off waiting lists without any treatment or review, many of those thousands included children.

Student Achievement—Pasifika Education Plan 2013-2017

11. NIKKI KAYE (National—Auckland Central) to the Minister of Education: What is the Government doing to raise educational achievement for Pasifika students?

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. Last week I launched the Pasifika Education Plan 2013-2017, which reflected considerable involvement by Pacific communities committed to their children getting a better education, and I thank them for that. The plan builds on the increase in Pasifika participation at all levels of education, including a 7 percent increase in National Certificate of Educational Achievement (NCEA) level 2 in the past 4 years. Although that is very positive growth we need to treble it in the next 5 years so that 85 percent of Pasifika 18-year-olds are achieving NCEA level 2 by 2017. We plan to do that by continuing to work with parents, families, aiga, with Pacific communities and churches, and with schools like Sylvia Park School and those in the Manaiakalani cluster at Pt England School, which put every child at the centre of their learning programme.

Le’aufa’amulia Asenati Lole-Taylor: What about Ōtara, Manurewa, Ōtāhuhu?

Hon HEKIA PARATA: All schools. My unrelenting focus is on ensuring that communities are empowered with good data around participation at early childhood education, primary, and secondary.

Nikki Kaye: How ambitious are the Government’s targets?

Hon HEKIA PARATA: Very ambitious. By 2030 a quarter of Auckland’s job entrants will be Pasifika New Zealanders. Successful Pasifika people are making, and will make, a significant contribution to our economy and society. Education is the key to realising this potential. It is essential that our targets be ambitious. They are that in 2016, 85 percent of Pasifika children starting school will have participated in quality early learning and 85 percent are achieving NCEA level 2 in 2017. These are not targets that the Government alone can produce. We must all work together.

Teachers and Support Staff, Payroll—Implementation of Novopay System

12. CHRIS HIPKINS (Labour—Rimutaka) to the Associate Minister of Education: What is the difference between a trial and a test when it comes to ICT systems in light of his answer to a supplementary question on Oral Question No 10 yesterday?

Hon CRAIG FOSS (Associate Minister of Education): In relation to the Novopay information and communications technology payroll system, the difference is that a trial would have involved actual users inputting their data into a live system. A test would include a range of simulation activities, such as running a virtual pay. The Ministry of Education and the Novopay board decided to undertake substantial testing, and not a trial.

Chris Hipkins: Were the results of the pre-implementation testing considered prior to the decision to go live with the new system; if not, why not?

Hon CRAIG FOSS: Yes, they were.

Mr SPEAKER: I say to members that I take it that their colleague is asking serious questions, and therefore we should not have loud, raucous interjections, because we cannot hear answers if we do.

Chris Hipkins: What was the point of the pre-implementation testing of the Novopay system, given that those tests revealed a multitude of problems, including 757 individuals being paid incorrectly, 1,321 staff leave records being calculated incorrectly, 3,159 staff service accumulation records being calculated incorrectly, and other problems, and yet the implementation went ahead anyway?

Hon CRAIG FOSS: Most of that question he should address to the Novopay board and the ministry, but I fully acknowledge that the first two pay rounds were not at all satisfactory and quite regrettable for those who were responsible for it.

Chris Hipkins: I raise a point of order, Mr Speaker. I actually addressed my question to him. He is the Minister. I know there was quite a bit to it, but it was a relatively straightforward question.

Mr SPEAKER: I guess, though, the Minister in answering can claim that it is an operational matter. That is his right to claim that. People can make their—[Interruption] Order! The member should not interject. [Interruption] Order! The member should not interject like that. I am making no judgment over the quality of an answer. I am just accepting that that is an answer.

Chris Hipkins: Why did he sign off on the implementation of the Novopay payroll system, given that the pre-implementation testing revealed a string of errors, such as those I listed in my previous question?

Hon CRAIG FOSS: I followed the recommendation of the expert panel, the Ministry of Education, and the Novopay board, which recommended to me, after considering all such matters, that Novopay go live.

Chris Hipkins: Why did the actual implementation process differ from the original plan to roll out Novopay only in the South Island first, and then in the North Island several months later?

Hon CRAIG FOSS: I am glad the member asked that, because there have been many changes to the implementation of Novopay. The first change was in 2005 when the Labour Government contracted—

Mr SPEAKER: Order! The question asked very simply why the decision was made to roll out the Novopay system nationwide instead of first in the South Island. The member is certainly welcome to add context information once he has answered the question, but he should answer the question first.

Hon CRAIG FOSS: Because that was the recommendation of the ministry and the Novopay board. There have been many changes to the original plans of Novopay, which was first contracted by the Labour Government in 2005, which contract was rescinded by the Labour Government in 2007, and was re-contracted by the Labour Government in 2005 by the current senior education spokesman for Labour. There have been many changes to the implementation of Novopay over the last 5 or 6 years.

Chris Hipkins: I raise a point of order, Mr Speaker. It was a relatively simple question, which asked why the implementation process was different from that contained in the document—

Mr SPEAKER: Order! But the Minister has answered that. He said it was because he was advised to do it, and that is an answer. Members can judge the quality of the answer as they choose, but that is an answer. He was advised to allow that change.

General Debate

General Debate

Rt Hon WINSTON PETERS (Leader—NZ First): I move, That the House take note of miscellaneous business. The backroom deal with China Southern Airlines should set alarm bells ringing loud and clear. We used to have an enviable record of probity and transparency. That counts for nothing with this Government. Cutting a deal is what counts—any sort of deal—and, if possible, cutting a deal away from public scrutiny. [Interruption] I tell you, Mr Banks, that that issue will be dealt with with speed and with honesty and integrity, not like the way he is being handled in this House—OK? Cutting a deal away from public scrutiny, giving special visa privileges to gold and silver card frequent flyers on China Southern Airlines would be laughable if it did not have such serious implications.

The covert deal with China Southern Airlines is a major wake-up call, and it stinks, like most of the things this Government is currently doing. What is going on behind closed doors? People around the world are asking. Is New Zealand that desperate? A banana republic? Is everything for sale in New Zealand? And it leaves all other airlines, including Air New Zealand, outraged and bewildered that China Southern Airlines should get such special treatment.

Did money change hands to sweeten the deal with China Southern Airlines? Enter Skycity Entertainment Group. Big money is involved, and big money has a way of greasing the wheels of the Key National Government. Enter Neil Morrison, who wrote in his annual report: “Finally, the opening of China Southern Airlines services between”—

Hon Member: Who wrote that?

Rt Hon WINSTON PETERS: I am able to write my own speeches, not like the moron over there. He wrote that the opening of China Southern Airlines services between—[Interruption]

Mr SPEAKER: Order! I think the House is getting a little disorderly here. Members must be careful not to insult each other. That is not acceptable. But I accept the level of interjection was getting unacceptably high, and I do apologise to the Rt Hon Winston Peters for having interrupted, but I think things were getting a bit out of hand there.

Rt Hon WINSTON PETERS: Neil Morrison was boasting about a special arrangement. Let us pause for a moment. He says: “our successful partnership with Auckland International Airport to offer airside clearance”—what does that mean? Since when did we have an airport company get to set the rules around processing visitor arrivals? There is the Minister of Immigration. He thinks it is a joke. He is laughing about it. That is the preserve of the New Zealand Government. Oh, did he look embarrassing last week? He looked hopeless on his feet. He could not answer any questions. He even had the Prime Minister allowing him to get away with the statement that he did not know.

The Prime Minister, in a written answer to me this week, said he had no knowledge. That is what the Prime Minister said. This is what the Prime Minister answered to a question of mine: “To the best of my knowledge, no such discussions have taken place.” That is what John Key said in a written answer this week. In the House today he gainsaid that, he recanted, he admitted it. In short, this Prime Minister cannot tell the truth for 5 minutes—for 5 minutes. Today he said he did know. That Minister said last week he did not. Remember that? The Prime Minister last week, in a written answer, said he did not.

The fact is that what you have got here is a sordid deal with a Chinese airline and the casino in Auckland with the pokie machines—500 extra machines—and they think they are going to get back in 2014. They have got to be joking.

Jacqui Dean: What does Grey Power think of that?

Rt Hon WINSTON PETERS: What Grey Power thinks of all this is that they flock to my meetings, unlike that member’s. That member cannot fill a telephone booth. When we go to a hall, you cannot get into it. It means a thing called political market demand. It means the law of supply and demand. We supply the message, they demand it, and they turn up. That is what it means.

I want to close by just saying this. This issue has got a long way to go, but the day when we start doing special deals with any country that will not allow us the same privileges in that country means we are guilty of cronyism and sordid toadyism.

Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery): That was a ramble from one of the central figures in the so-called, media-proposed “Coalition of the Losers”. There was a time when Winston Peters would have come into this House and delivered a speech totally off the cuff, and not have had to stand there somewhat sadly protesting that he had written the speech himself and then nominating himself as a moron. I think that was an appalling speech, and it totally misunderstands the modern nature of the New Zealand economy and the opportunities that we need to take in order to deliver to the friends that he has in Grey Power. So here is a man who is telling us about people flocking to his meetings, Grey Power members flocking to his meetings, all held in telephone boxes, seven or eight people crammed in there, setting a Guinness Book of Records new status as they listen to Winston Peters. Well, what he does not tell them is that in the 9 years that he supported a Labour Government, they got very little increase in their incomes. In just 4 years—just 4 years—under National, the married rate for superannuation has gone up by $200 a fortnight, $100 a week, $5,000 a year. That is what Grey Power members really understand about the current Government. So smarten up the message, and the member might have a chance of being that central figure, but it will still be a “Coalition of the Losers”.

Today is a great day of celebration here in Wellington and throughout the country, as we are going to witness the premiere of The Hobbit, directed by Peter Jackson. What a great occasion it is, where the whole world is going to look in on New Zealand and see the work not only of the creative genius Peter Jackson but also of the 3,000 New Zealanders who worked on that production, who are involved in the creative industry, and who would not have had that work had Labour been the Government. Let us make no bones about it. If you go back to 2010, when the movie was being proposed, Mr Simon Whipp, an Australian unionist, came to town riding roughshod over everybody, getting the unions in the United States to back him—and they backed off him in the end because they thought he was so extreme—telling them that unless that was a unionised picture, those contractors who have worked on it, hard-working creatives who do struggle from time to time to get work and wanted the long tenure that these three films have been able to provide them, would not have jobs unless they joined his Australian union.

And who backed him? Who backed him? The Labour Party—the Labour Party backed him. Did Labour members care whether or not this film would be made? No, they did not. But I want to know whether, if the premiere today had been held in Edinburgh, or if the premiere today had been held in London, would Grant Robertson have gone? Would David Shearer have gone? Would Annette King have gone? Oh, she is nodding. Of course she would! Any Eastern bloc country with a big red flag would be a place where that woman would be happy. Can I say that I think it is great that they have finally seen the light, that they will attend that premiere tonight, and that they will celebrate along with the many creators who are responsible for producing that great work. But it does smack of a party so bereft of ideas that when something its proposes goes wrong, it suddenly grabs a flag and gets in front of a parade that is going the other way. That is David Shearer, and he is no better than any of the other Davids. I want to give the House a bit of a prediction this afternoon: once Labour members get to the realisation that they cannot get a real leader from the three Davids, they are bound to go for a Clayton. That is my prediction—the leader you get when you have not got a leader.

The central figure in this whole sad, sorry saga was the unions. If we look at the Labour Party conference held in the last couple of weeks, that party has now formally—or even more formally—cosied up and handed over its whole political agenda to the union movement. It is a sad day for this country when a political party that should be free and open to new ideas locks itself up so much with an ideology that is about yesterday’s world, about having shop floor rules for every job that goes, and ends up in a position where it cannot offer a reasonable economic policy. Nor can it count.

Hon ANNETTE KING (Labour—Rongotai): That speech reminded me of something that John Key said this week. He said that the National Government’s “100% Pure” marketing plan was not unlike the marketing plan of McDonald’s. Well, I think it is probably true, because the thing they have in common is that they are both run by clowns.

I think I would like to remind the National Party members that they actually opposed the big-film production funding that we in Government put in when they were in Opposition, which led to the Lord of the Rings films. They were opposed to it then, but I noted that they did turn up on the red carpet—not that we said a word about it. We thought that was their position—fair enough. But, of course, they are making meat of it today, the fact that I am proud to go to The Hobbit because it is made in my electorate. The workers are in my electorate, they are proud of their work, and they are not making politics of it. But this Government has done everything it can to ingratiate itself into every part of The Hobbit, to get every bit of a vote out of it that it can, which I find quite disgusting.

But I tell you what: we have got the National Party members rattled. They are in a hyper, uber-political spin. They are turning out the press releases. They are hitting the airwaves. Look at them! Look at them! They are huffing and they are puffing. Do you know why? It is because Labour has hit a real chord with Kiwis because we are going to build 100,000 affordable houses over the next 10 years. We are going to build 100,000 houses over the next 10 years, building them up in our first term so that we are building 10,000 extra houses a year. Can we do it? Yes, we can. How many houses were we building in 2004 in this country? Well, those members do not know. They make statements about it and they have not got a clue. In this country we were building 32,000 houses a year in 2004. How many are we building now? Fifteen thousand. So add 10,000 to 15,000 and you get 25,000 houses a year, and you are still short of what we were building in 2004.

We are going to build them where there is a housing problem. We are going to build them in Auckland, in Wellington, in Tauranga, and in the Bay of Plenty. We are going to build them in Christchurch, in Queenstown, and in Nelson. They are going to be affordable houses. They are going to be houses that the first home owner can buy—not the 200 square metre houses, but houses around 100 or 140 square metres. They will be on smaller lots of land. There will be mixed development. Some will be affordable, some will be higher prices, some will be social housing—much like the plan that we had for Hobsonville. It was for 3,000 houses: 500 were to be State houses, 500 were to be affordable, and the rest were to be a mixture.

You know, we are not building those affordable houses today. Only 5 percent of houses that are being built are affordable houses. We know that people can buy houses at around $300,000 to $350,000 right now and that can be done. We got those figures from the Department of Building and Housing. We are going to build them, not the Housing New Zealand Corporation but the private sector. We are going to take Bill English’s advice when he said this year that Government land holdings are the key to affordable housing in Auckland—“government land represents the biggest opportunities to [build affordable housing].”, said Bill English. Well, we are going to use Government land. We are going to use council land. We are going to use greenfields, brownfields, and private holdings. We are going to develop mixed communities and there will be blind tenure in those communities. You will not know whether people own their own home or they are renting their home or it is social housing.

You see, it has got the Nats in a spin because their response to affordable housing was pathetic—absolutely pathetic. There were words, more words, a few reports, another inquiry, a little tinkering with the Resource Management Act, more words, some blame-shifting, and more hot air. Then they tried to throw a bucket over our proposal. They said it cannot be done, it is impossible, we are dreaming, we are out of touch. Hang on—what have they just announced at Hobsonville? They suddenly can build affordable houses at Hobsonville—600 of them, 65 metres square, subsidised by the other people at Hobsonville.

Hon NATHAN GUY (Minister of Immigration): What we heard then was Annette King trying to promote Labour’s wonky, shonky housing policy. I think it was a policy pitch that came out of Labour’s conference. What we did not hear this afternoon from Annette King was talk about the internal machinations at the Labour Party conference. What we did not hear from Annette King was how she and Trevor Mallard had to get on the phone on Saturday afternoon and call in all the favours that they possibly could in their caucus to get a vote for David Shearer.

What happened at Labour’s conference was that its wide-ranging constitutional review actually ended up in the power of the unions. Now the unions will be able to elect who the Labour Party leader is. Why would you want to have the unions being able to elect the Labour Party leader, and why would you have the caucus being diluted in the way that it currently is? This is a shambolic proposal that came through on the floor of the conference. I cannot believe that Labour members allowed this to happen.

Now, of course, we have David Cunliffe, who got a little bit crazy on the evening of the Saturday night, because he could not believe that the proposal went through in its current form, so he could not turn up in front of the TV cameras and say that he was supportive of the current leader. David Cunliffe found within the space of about 24 hours that he was standing in a bit of liquefaction. He thought that he had the numbers secured to roll David Shearer. But when Annette King, Phil Goff, and Trevor Mallard got on the phone and called in a few favours, and actually pressured people in their caucus—put on a lot of pressure—[Interruption] Yes, indeed, it was threatening. I heard from one of my contacts over there that Trevor Mallard was threatening on the phone: “You need to back Shearer, or else!”, with all the power that Trevor Mallard supposedly has in their wonky, shonky caucus. I cannot believe that this deal was allowed to get through.

Of course, what we have with David Shearer now is we have him sitting on the right side of the caucus, and that is the problem with the party membership and the union affiliates who want to drag Mr Shearer across to the left. What we have heard recently is that Mr Shearer’s problem is that he came out actually endorsing the welfare reforms that Paula Bennett is proposing. He talked about a sickness beneficiary on the roof painting his house, and he said it was not fair. He said he had little tolerance for people who do not pull their weight. This is the right side of Mr Shearer. Of course, he got hammered in the left-wing blogs for those comments.

The other classic comment—wait for this—is this: “We need every teacher in our classroom to be a good one. The vast majority are. But the truth is some are not. … we can’t afford to have bad teachers in our classrooms.” This came from Mr Shearer, the leader of the Labour Party—well, the current leader, maybe until February. He finished off by saying: “As a parent, I want to put badly run schools on notice.” Well, Mr Shearer should be over this side of the House, supporting national standards.

We are all waiting for the big jackpot in February. It will not be anywhere near Waitangi Day; I do not even know whether it will be near Valentine’s Day. But you wait—you wait for the phone call from the middle part of January onwards. I do not mean you, Mr Speaker; I mean the Labour caucus. You can bet your bottom dollar that from about mid-January onwards the cellphones will start ringing. You know it will be one of the Davids, trying to work the numbers before the February vote.

Right now, though, importantly, in Wellington is the showcase of The Hobbit. I think it is an outrage that Labour members voted against our proposals to ensure that the contractors were able to stay as contractors and not employees. They rallied against that. They still rally against it. They want to reverse that if they get the opportunity, and let us hope they do not get the opportunity to do that. If Labour had been on this side of the House, the likelihood is we would not have got The Hobbit. It would have gone offshore, the $3 billion would have gone from our economy, and we know and the New Zealand public know that Labour members are truly the hobbit haters.

METIRIA TUREI (Co-Leader—Green): This National Government has failed. It has failed on jobs, failed on asset sales, and failed at looking after our environment and our rivers. The National Government has failed our children and failed New Zealand families. In the lead-up to the Christmas break, many New Zealand families are struggling to find the light at the end of a long and dark financial tunnel. Families are preparing for the Christmas break, bracing themselves for the costs of Christmas Day and the traditional Christmas camping holiday. But these usual preparations will be so much more difficult for so many more families this year because of the National Government’s failures.

National’s failed economic management has again been highlighted with the most recent linked employer-employee data report, which confirmed yet again that tens of thousands of jobs have been lost under its watch. John Key has been cherry-picking the numbers for quite a few weeks now, finding the numbers that suit him best for the story he has made up in his head. But the facts from the Government’s own reports show that the number of people looking for work has increased in the 4 years of his Government. Thousands of jobs have been lost. Unemployment is up. John Key’s deliberate ignorance of these facts means that the families who are suffering from his economic failure are invisible to him and to his Government.

Perhaps this deliberate neglect by John Key of these families is because the Government is far too busy attacking the people who are slogging their guts out to keep New Zealand clean and beautiful. It is far too busy attacking the people who are working to protect our environment in order to protect our economic future. If we want to create decent sustainable jobs for those thousands of families who clearly need them, we must invest in making the “100% Pure” brand a reality. No one expects it to be absolutely perfect, but they do expect that we will make progress. In fact, we are going backwards.

Let us not attack those who rightfully point out that the Government is putting New Zealanders’ jobs and New Zealanders’ incomes at risk by undermining the brand and allowing our environment to be polluted. We have to take these warnings from our own people seriously, and it certainly is true that the international markets are.

Let us not forget that even in this country families with very little money can still take great pleasure in the Christmas camping holiday at their local river, but only if it is not polluted and only if it is safe for their kids to swim in without getting sick. Sadly, that is too rarely the case now in New Zealand. We protect our rivers not only because of the economy, but because clean rivers are the birthright of our children.

New Zealanders will fight for the birthright of their kids. That is why over 300,000 New Zealanders have signed the Keep Our Assets petition for a referendum on asset sales. John Key’s pet project, the Government’s asset sales plan for the year, has been a complete disaster for him and his Government. It is deeply unpopular with the New Zealand public. We are very hopeful for a referendum next year so that every adult New Zealander can have their say on this crucial issue. Our grandparents built these assets for the long term, and expected that they would continue in the ownership of their children and grandchildren as part of their birthright.

The Green Party will continue to work for the rights of children to a family with a decent income and decent housing, to an environment that is clean and safe for them to play in, and to an economy that truly invests in their future. Kia ora.

Hon AMY ADAMS (Minister for the Environment): This week over the course of the news cycle and through Parliament we have seen clear examples of how the Opposition in this country has become increasingly delusional and dysfunctional. The speaker who has just resumed her seat, Metiria Turei, is an excellent example of that. There seems to be a belief that if you are a minor party in this Parliament, you can come down here, you can appear in the media, say anything you want, and if you say it often enough, that must make it true. Well, let me tell the speaker who has just resumed her seat that the reality is that after 4 years in office this Government has turned this country round. Instead of facing a Crown debt of somewhere near 50 percent in 2020, as Cullen’s legacy left us, we are now in track for a mere 18.5 percent. The reality is that over the last 2 years this Government has created 54,000 new jobs, we have a growth rate that is the envy of the Western World, unemployment benefit numbers are down and continue to fall, and health and education outcomes are as good as they have ever been. So I would say to the previous member who has resumed her seat, Metiria Turei, that saying it alone does not make it true—

Dr David Clark: Worst economic record in 50 years, though.

Hon AMY ADAMS: —and you can continue to have your head in a delusional and dysfunctional space, Mr Clark, but that is the reality.

The truth is—if we are dealing in facts; as it seems to be the phrase of the week, let us deal in some facts—MMP Government gives us a system where minor parties who have never had to deliver on a single thing can stand in this House and promise everything to the country and pretend there are no consequences of their actions. That is simply a fallacy. The real world tells us that all our decisions have consequences. The truth of the matter is that more red tape, higher costs, and more bureaucracy means fewer jobs, less Government spending, less opportunity for Kiwi families to get ahead, and reductions in health funding, law and order funding, and education funding, and even fewer academics having the privilege of commenting on it all.

In this Government we take our responsibility seriously, and we know that everything we do has consequences. It is incumbent on us to balance the decisions we make with the outcomes of those decisions and to be mindful always of the impacts the decisions we make have on the jobs of real New Zealanders, who are out there every day working hard to feed their families. We take that seriously, and we are not going to trifle with the jobs of New Zealanders.

That is as true in the environment space as it is in any space. We take our environmental responsibilities incredibly seriously. I will stand here today and back our record on what we have actually done in the environment space against the record of any other party in this House, and I am absolutely confident we will come out on top. This is a Government that acts on the environment, that does not just talk about it. This is a Government that puts water reform at the front of our programme and that, for the first time in New Zealand’s history, is taking the reform of our water management system seriously. But what we have, unfortunately, is an Opposition that would rather score politically motivated points—scaremongering and destroying our international reputation if it scores it a couple of points domestically. I think that is reprehensible. I think it is cowardly, and I think it is absolutely disloyal to the country that it claims to represent.

We have seen Green Party members this year travelling around their country, through their self-confessed vandal advocate Jolyon White and ramping up hysteria about the practice of hydraulic fracturing. They run around telling people that it will cause earthquakes, it will pollute their water supply, and it will poison their children. They demanded an inquiry—they demanded an inquiry—and we agreed: let us have a look at the practice. Let us see what the truth is. The Parliamentary Commissioner for the Environment carried out the inquiry. The difference is the Parliamentary Commissioner for the Environment bases her opinions on facts, on substance, on science, and on objectivity—a few criteria that, frankly, the Green Party could learn a little bit about. The Parliamentary Commissioner for the Environment considered the practice. She considered it in some depth over some period of time, and she found no basis—no basis—to call an end to the practice. Were the Greens satisfied? Of course not. There is no win for them in that—let us carry on the scaremongering, and let us just attack the inquiry, attack the commissioner, and demean it all on the simple basis that in the Greens’ world, on “Planet Green”, if you do not agree, you must be wrong, and the system must be broken. If it does not come out with the outcome that we have been preaching from our privileged basis, it must be wrong. So I would say to the Green Party: stop attacking your country, stop being careless with the jobs of real New Zealanders, pay attention to the facts, and grow up.

Hon DAVID PARKER (Labour): The last speaker, Amy Adams, claimed credit for New Zealand’s debt position. This Government has borrowed more money than any other prior Government in New Zealand’s history. I am not blaming it for all of that—I am not blaming it for all of that. It has had the Christchurch earthquake and it has had the global financial crisis. It has been appropriate that after more than a decade of surpluses, New Zealand ran a deficit during that period. But the deficit, it has to be said, was made worse by National’s income tax cuts, 40 percent of which went to the top 10 percent of income earners. It also has to be said that the criticisms of Dr Cullen’s management of the books are arrant nonsense. Under his stewardship, New Zealand reduced gross Government debt from 40 percent of GDP to 18 percent of GDP, and net debt went to zero.

Hon Anne Tolley: Got your figures right this time?

Hon DAVID PARKER: Have I got my figures right? Yes, I have on this occasion, and I do apologise for my error yesterday, when I did get them wrong, which I acknowledge. This Government has failed in a number of ways. It was going to stem the tide of people going to Australia; 180,000 have left. It was going to make unemployment better, and that is why it had the Job Summit; it has since got worse—the worst in 13 years. It was going to proceed with asset sales—always a flawed policy—but it hasn’t worked even in its flawed form. It is on the wrong side of tax policy. We need significant tax policy. It is on the wrong side of changes to monetary policy. It is on the wrong side of savings policy, and now it is on the wrong side of housing policy.

New Zealand is not building enough affordable houses. The power of the State needs to be used to remedy this problem. Homeownership rates in Auckland, as Annette King said, have dropped to under 60 percent. Homeownership rates for people who are younger than 40 are now under 50 percent. We are going to have rising rates of elderly poverty in New Zealand unless we get on top of this problem. The Productivity Commission said that we are not building enough low-cost, affordable housing—smaller houses that the market is not causing to be built—and not just in Auckland. The commission said that we have got extreme housing unaffordability also in Wellington, in Tauranga - Bay of Plenty, and in Christchurch. In addition, there are some smaller localities like the Queenstown Lakes District and Nelson, where we have got a similar problem. The answer to that is to use the power of the State to build these things in bulk. We are not saying they are going to be shoddy houses. They will be quality houses. They can be built for around $300,000 on average across the country, and for the Government to deny that—again, it is on the wrong side of that debate. There will be a combination of apartments, terraced houses, and stand-alone houses, and, overall, they will be able to be built for a cost of around $300,000 on average throughout the country. In Auckland it might be slightly more, but it will not be a lot more. We know this is possible; the Government denies that it is.

The second part of this, of course, is that we need to free up land. So how do you do that? The Government says that you actually truncate fair processes under the Resource Management Act. We actually say make them work—a national policy statement under the Resource Management Act to make it easier to consent affordable land projects. The Environmental Defence Society and planning lawyers have all come out and have said that this is the way to go. We know it works. We did something similar in respect of a national policy statement to help the consenting of renewables. Indeed, it works even before the document has statutory effect, because local government and developers see what is coming and they see where the opportunities lie.

The National Government’s criticisms of this have been pathetic. Who does it get out of the blocks first? Well, it is always the person who misleads. It is actually Mr Joyce. Mr Joyce got up and said on National Radio that the $1.5 billion—which is what the total capital cost is at the maximum; none of it on the operating account—was a subsidy of $15,000 a house for 100,000 houses, or whatever it was. He did not get it. That was the opposite of what was said in the papers. The next attack that was made on it was that the land cost is ridiculously underestimated by the Labour Party, which, again, is untrue. The next criticism was made that this number of houses can not be built, when that number of houses—more than that—was being built less than a decade ago and, indeed, back in the 1970s, in times when more affordable housing was being built. These sorts of houses were being built to market.

Then National said the Labour Party was proposing to have low interest loans. That is not correct. The Labour Party is using the power of the State. All costs will be passed on to those who are purchasing these properties, including interest as a small margin over the Crown’s costs of funds. These houses will be affordable.

Hon MAURICE WILLIAMSON (Minister for Building and Construction): Yesterday at question time this House witnessed the full Shakespearean theatrics. It started as a comedy, it moved through to the area of a farce, and it finally ended in a tragedy for the previous speaker, David Parker. Let me explain.

The first part was the comedy, where one of our Ministers was answering a question and David Cunliffe had the gall to call out, from the back of the House: “He can’t do his numbers.” Based on what had happened to Mr Cunliffe at the Labour Party conference at the weekend, there is only one person in this House who should never make the claim to someone else that you cannot do your numbers.

But wait, there is more, and it gets so deliciously more. On the front bench one of the other Davids—and believe me, there are lots of them—is this almost savant-like, almost sort of phenomenal brain those members have now to be their finance spokesman, and I understand that. That is what he should be. He has got this genius tag to him. He is their finance spokesman, and you would expect the finance person to be really good at numbers—you would.

I am not asking him to do Fourier transforms on convoluted series functions, or use Laplace transforms to solve differential equations. They are quite hard. I did them at university. But what I would like to know is that a finance spokesman could multiply two numbers together. OK, so I want the House to follow me with this, because this is what Mr Parker told the House yesterday. He said to my colleague Phil Heatley: “I would hope that the Minister had checked his arithmetic before coming down to this House, because by my reckoning”—so it means he had obviously checked it, and he had calculated it—“if you were to build one house every hour, every day for 10 years, it would come to 613,000 houses, and Labour is only advocating 100,000.”

I was really embarrassed by this, because I had told my caucus that morning that 100,000 houses in 10 years worked out to be just on one house an hour. I went: “Oh boy, am I embarrassed. I’ve done my numbers wrong.”, so I grabbed the calculator. No, I had not. So I will take the House through it. I will take Mr Parker through this really complicated calculation.

Michael Woodhouse: Go slowly.

Hon MAURICE WILLIAMSON: I will take it slowly, and I will draw big pictures as we do it. How many hours are there in a day? It is easy.

Michael Woodhouse: 24.

Hon MAURICE WILLIAMSON: 24 hours. How many days are there in a year? There are 365. I will not do the leap year one, as the leap year is too hard. So now let us multiply those together: 24 times 365 comes to 8,760. And do you know what? The next bit is really easy. We now want to do it for 10 years. Most kids, even at primary school, can multiply by 10. Mr Parker, you just add a zero on the end. So the 8,760 becomes—oh, my God—87,600. But he said it was 613,000. That is the man who is the head of the brains trust of the Labour Party, who had done his calculations, who tore my colleague Phil Heatley to shreds for not having checked his mathematics. He was not wrong. He was not slightly wrong. He was not even sort of off course by about 50 percent or 35 percent or 75 percent. He was 700 percent wrong—700 percent. So God knows what a Labour Budget is going to look like, if he ever presents it.

You know, he is sort of a Stephen Hawking - like character over there. He sits there looking like: “I really know my numbers, when I am just frightened.”, and that is why I say it has turned from a farce to a tragedy. Labour is bereft of a leader, it is bereft of any sort of direction, and now it is bereft of the one anchor it had left, the person who could get up and use some numbers and who we thought would at least have some credibility. Now whenever David Parker—this is the tragedy of it; I feel sorry for him—gets up in the future and quotes any numbers, the immediate response will be: “Are you sure you checked your arithmetic? Are you sure you have?”, because if you can get that wrong—and there are kids in the gallery today who could multiply 24 by 365 and come up with the answer. They are primary schoolkids—primary schoolkids—and he would not even have to force national standards on to them, and yet that member got up in this House and questioned the veracity of a member because he had used the numbers I had done that morning. He has wiped himself off the planet for credibility, when it comes to numeracy. Leave him—

JAN LOGIE (Green): I would like to speak today about New Zealand’s profoundly disturbing levels of domestic violence, sexual violence, and child abuse, all of which are symptoms of a very deep societal problem in this country. Violence against women and children is at a crisis level in this country at the moment. Deaths from domestic violence have increased by more than 50 percent since 2008. One in three women is likely to experience domestic violence in her lifetime, and right now well over 15 percent of women in this country are in a violent relationship. The police and Women’s Refuge are responding to domestic violence call outs every 6 minutes in this country. Up to one in three girls, one in seven boys, and, possibly, one in three people with disabilities are likely to experience sexual abuse in their lifetimes. We need to stop covering up, get to work, and start cleaning this up. This is a problem that has never been properly addressed in this country. Sexual abuse support services, in particular, have never been adequately funded.

So what is this Government doing to improve the situation? Well, in Auckland today we saw a flash mob out to demand funding for the Auckland sexual abuse helpline, which has lost over $100,000 in funding. Auckland is likely to lose its only 24-hour helpline. This Government has cut funding to sexual abuse support services, resulting in a third of them having to reduce staff and services. This Government has more than halved the money going to ACC through specialist claims. This Government has reduced the number of counsellors prepared to work for ACC by around half.

This Government has produced a White Paper for Vulnerable Children that does not once mention domestic violence or sexual abuse. This Government has shelved the Law Commission work on alternative pre-trial and trial processes, which offered the only hope of increasing from 1 percent the conviction rate for sexual abuse in this country. Instead of delivering on the promised 18 specialist court advisers, this Government has delivered on only 10, and not even one of these court advisers is based in the South Island. This Government has changed the Solicitor-General’s guidelines for prosecution, which have increased the evidential threshold for crimes to be prosecuted, and which means that in cases where it is a situation of “he says, she says”—typically, in domestic violence and sexual abuse cases—the prosecutor is less likely to go forward with the case.

This Government has reduced funding to women’s refuges. It has reduced access to legal aid. It is now changing the Family Court processes, which will severely disadvantage women in undisclosed violent relationships—which are many. This Government is currently looking at altering the child support formula to make it easier for ex-partners not to pay child support and to reduce how much they need to pay. This Government has increased work testing for the DPB and refused to inform women of the exemption available for women leaving violent relationships. This Government—

Mr SPEAKER: Order! I hesitate to interrupt the member, because I wanted to hear—the member may resume her seat for the moment—how technical this speech got, because it is clearly being read. We have made it very clear in the past that we do not read 5-minute speeches, unless they are particularly technical. Just criticising another political party is hardly technical, and so I would ask the member, by all means use her speech notes to refer to, but please do not just read a speech to this House criticising another political party in the House. That is not in the spirit of the general debate. I apologise for interrupting—

JAN LOGIE: I raise a point of order, Mr Speaker. Actually, each one of those points that I am reading is a distinct point—

Mr SPEAKER: Order! [Interruption] Order! The member will now resume her seat. She will not argue with me. The Speaker is the sole adjudicator on these matters—whether members can read speeches. Forgive me, but just criticising another party is not the kind of technical thing envisaged for when members should be able to read a speech. She is most welcome to refer to notes, but just standing there reading a speech will send all members to sleep.

JAN LOGIE: Well, I am sorry if it offends the Speaker that the amount of harm this Government is doing requires reading through a list because the list is so long. I will continue—

Maggie Barry: Use your memory.

JAN LOGIE: —not reading—on some of the things that this Government has done. It has allowed the family violence task force not to report for over a year. It has taken, in effect, to turning the unit within the Ministry of Social Development into a secretariat. That unit has not released any of its research or one piece of research over the last year, and it has refused to release information under the Official Information Act.

This Government has changed the criteria for the Housing New Zealand Corporation, which means that victims of domestic violence are no longer able to access Housing New Zealand Corporation housing. It has changed its policy, and that means that when ex-partners are damaging the houses of the women who have tenure, those women are held accountable for the cost of the damage done.

This Government has introduced the Crimes Amendment Act (No 3), which, in effect, is punishing women for not being able to protect their children against the violence of their partners. This Government is deeply patriarchal and has been attacking and rescinding women’s rights ad nauseam. I believe that sexual abuse can destroy lives and that everyone needs the right help. It is the Government’s job to ensure that is possible, and it is not delivering.

Hon Dr NICK SMITH (National—Nelson): I confess to feeling a bit like a mosquito in a nudist colony, such is the exposure of all of the three Opposition parties that we have seen over the last fortnight. You see, Labour has had its worst conference in a generation. You have got a party at war with its own caucus. You have got the David versus David leadership crisis, and you have got the other David muffing his numbers over Labour’s most important policy announcement this year. Then you have got the hobbit hatred hypocrisy. Having damned the deals that enabled The Hobbit to be made in New Zealand, having demonised Warner Bros and Peter Jackson, Labour now wants to—Grant Robertson wants to get down there and hog the red carpet, like he has been a hobbit lover all the way along.

Actually, The Hobbit is the perfect end to National’s year. It is about jobs. It is about our creative industries. It is about giving the New Zealand brand the freshness that our visitor industry needs when it so much needs a boost. It is about highlighting how John Key and his Ministers are prepared to make bold punts to give New Zealand an edge and to give New Zealanders a job.

But it is not just Labour that has had a nightmare run over the last fortnight. The Greens’ big play of the year has been the “Don’t frack with New Zealand” campaign. They demanded an independent inquiry. They got it but then disagreed with the conclusions and have bagged it. A fig leaf cannot hide the extent to which the Parliamentary Commissioner for the Environment found that the Greens had gone wrong. You see, the Greens demanded a moratorium, saying that New Zealanders’ health, safety, and environment were all being put at risk by a negligent Government. The environment commissioner said that a moratorium cannot be justified on the evidence. The Greens have gone on and said that fracking cannot be done safely—that is what Mr Hughes has said—and must be banned throughout New Zealand. The Parliamentary Commissioner for the Environment has concluded that the risks from fracking are manageable if they are done to the proper standards, which is the exact position that this Government has taken and that the very well-respected Royal Society of London in the UK has taken.

If the Greens had any class or any sense, they would have accepted the report of the independent Parliamentary Commissioner for the Environment. Instead, they have stooped so low and become so desperate that they are now telling us that the Parliamentary Commissioner for the Environment has been heavied by the oil industry.

Maggie Barry: Disgraceful.

Hon Dr NICK SMITH: Disgraceful. How desperate can they get? It is just like it was over genetic modification a decade ago. The Greens ran a scare campaign exaggerating the risks. They demanded an inquiry, but when the evidence before the royal commission of inquiry came to a different conclusion, they would not budge.

The Greens have seriously damaged themselves over the fracking issue. They have shown that, far from being an evidence-based environmental party, they are doctrinaire, they are anti-science, and they are an anti-progress, protest party that will cynically exploit people’s fears of new technologies for political gain.

But it is not just Labour and the Greens. New Zealand First’s end to this year is no better. This is a party that prides itself on championing the cause of older New Zealanders, but it is ending the year consumed in allegations from family that one of its MPs ripped off his elderly mother for tens of thousands of dollars to support his gambling habit. Mr Peters and his colleagues are always the first to demand inquiries, answers, and openness. Imagine the furore if this was a Government MP who was not prepared to front for the answers and answer the questions. Imagine the furore if a Government MP was hiding away.

New Zealand First, the Greens, and the Labour Party are in a mess, but they have done New Zealand a great favour over the last fortnight, showing that they cannot govern themselves let alone ever govern this country.

RAYMOND HUO (Labour): The Kiwi dream of homeownership is dying, and the hope for resuscitation by this National-ACT Government looks very bleak. I must congratulate Annette King and David Parker, who both in their constructive contributions addressed the issues, not politics. KiwiBuild, following on from KiwiSaver and Kiwibank, together with other Labour policy initiatives, will play a very positive role in helping make our future brighter for all New Zealanders.

One flow-on issue will be building law reform. It is fitting for me, as Labour’s spokesperson on building and construction, to emphasise that in order to avoid a repeat of the leaky building crisis, to restore confidence in the building sector, and to lift the game, we must have concise and competent building legislation. Ever since the Building Act 1991 we have had a huge problem with leaky buildings. As emphasised many times, we are talking about the issue not to apportion blame but to make sure we all have learnt the valuable lessons from the past. Has the Minister for Building and Construction, the Hon Maurice Williamson, who delivered a thunderous speech just now, learnt his valuable lessons? No, if the two building bills he introduced are anything to go by; they are nothing more than gimmicks.

The Building Amendment Bill (No 4), which is listed on the Order Paper and waiting for its second reading, is the second of two bills to implement the Building Act review policy decisions. The Building Act review, initiated by the last Labour Government, has won cross-party support. The review found weaknesses in consumer protection and a need to better allocate responsibility and accountability among building consenting authorities, building practitioners, and consumers. But the answer from that Minister for Building and Construction was to fail almost the entire sector and the relevant parties, which will now be exposed financially, to some extent.

The Building Amendment Bill (No 3), now the Building Amendment Act 2012, shifted responsibility and accountability away from building consent authorities and on to consumers and builders. The code compliance certificate is no longer what it used to be. Mr Williamson has said that changing the code compliance certificate to the consent completion certificate will help change building consenting authorities’ position as the last man standing in those cases. However, in their submissions, two of the largest city councils in this country—Christchurch and Wellington—have strongly rejected the rationale, simply because without introducing a mandatory warranty and looking at the liability models, they argued, there is no way to help the city councils through the situation and avoid a repeat of the leaky building crisis. Worse still, homeowners will have fewer remedies, if any, if they are left in the lurch by unscrupulous shell companies.

Let us look at some other issues, such as insurance premiums, which are a huge problem in the Wellington region. The Dominion Post reported earlier that some businesses have faced insurance premium increases of up to 200 percent.

Dr David Clark: 200 percent?

RAYMOND HUO: 200 percent. Earthquake-prone buildings, product warranties, consumer protections—the list can go on and on. But for the Minister, all important matters were referred to the Law Commission, less important matters are looked after and taken care of by his officials, and further, less important matters will not concern him at all. So adopting his National-ACT Government’s hands-free, hands-off approach, the Minister is hands-off, and New Zealanders are suffering.

NICKY WAGNER (National—Christchurch Central): The celebration today of The Hobbit is a celebration of talent, it is a celebration of creativity, and it is a celebration of all of the fun and excitement of the film industry in Wellington and New Zealand. All the eyes of the world are on us today, and we should enjoy it. But it is also a celebration of the tough stuff, the stuff that needs to go on behind any glamorous result: the long hours of hard work, the training and honing of skills, the persistence, and the absolute commitment to tenacity in hard times. It is the ability to be flexible and pragmatic, and to identify, snap up, and make the most of every opportunity.

It is thanks to the drive of Peter Jackson and his team that The Lord of the Rings and The Hobbit can be made. It is thanks to the thousands of actors, film-makers, technicians, and artisans that Middle Earth and Hobbiton have been brought to life. And it is thanks to the pragmatic flexibility of the Prime Minister and the National Government that the films are being made here in New Zealand. It was a close call—too close. As a country—a small country—at the bottom of the world, we cannot afford to let these opportunities go by.

Everybody loves a success, and everybody wants to climb on the celebration bandwagon today. Even the Labour Party’s naysayers will be out there on the red carpet, and, actually, I do not blame them. The Hobbit has brought thousands of jobs to New Zealand. It has attracted young, skilled people here, and it will continue to bring visitors and investment to our beautiful country for years to come. But one success is not enough. We need to build on these successes. If our country is going to go forward, if we are going to have jobs for our young people, and if all New Zealanders are going to have a decent standard of living and quality of life, we need to be actively promoting every possible opportunity in our country.

Success comes in many forms, but it always starts with a yes—yes to giving stuff a go, yes to being flexible, yes to change, yes to believing in people, and yes to getting on with it. And that is the problem we have in our Parliament right now. The Opposition talks about jobs and how much New Zealand needs them, but every time an opportunity like The Hobbit comes up, it says no—no to mining, no to oil and gas exploration, no to more farming, no to better management of our assets, no to overseas investments, no to probation for jobs, no to youth wages, no to new marine legislation, and no to a reorganisation of local government. No, no, no. It says no to change, no to new ways of working and thinking, no to innovation, and no to a better, brighter future.

Well, National is absolutely committed to doing the tough, hard background slog so that organisations, businesses, and people can be successful. We are committed to being creative and flexible, to finding ways to encourage industry to create more jobs, just like The Hobbit, and to supporting young people to engage in upskilling so that they can make the most of every opportunity. So today let us celebrate the success of The Hobbit, let us celebrate the fact that we have taken an opportunity, and let us celebrate the National Government’s commitment to support the success of all New Zealanders right now and into the future.

The debate having concluded, the motion lapsed.

Bills

Advanced Technology Institute Bill

In Committee

Debate resumed from 27 November.

Part 1 Preliminary provisions (continued)

TRACEY MARTIN (NZ First): Kia ora, Mr Chair. Thank you very much. As I was saying last night, I was just picking up on Callaghan Innovation, as the institute is now called, and picking up on a comment by Dr Megan Woods earlier in the evening around, perhaps, a lack of direction or a lack of information out in the general public and in corporate industry bodies, universities, and research institutes around the purpose—the purpose as we understand it—of the new institute. I am going to verbalise my understanding, created at the Education and Science Committee, of what I thought we had general consensus on, to make sure that it is placed in Hansard so that if and when this comes back as a problem around the lack of understanding of the purpose, there is a touch place for those organisations and others to go to.

My understanding, from the select committee meetings we had, is that 80 percent of the institute’s job will be to create relationships. It will be to bring together—recognising that there are a lot of people currently working together, and working well—players inside this innovation and research space with business, to bring things to a commercial outcome. Eighty percent of the institute’s job is to be around this relationship-building, making sure that all the players inside this space know about each other and are linked to each other; 20 percent is the ability of the institution to directly participate in or fund research itself.

That bit is a little sticky, because I think the Advanced Technology Institute Bill is agnostic. The bill is agnostic on whether it will actually provide in-house research or whether it will fund external research. Phil O’Reilly, I think it was, said to us in his submission that he felt that it was important that the institute has some skin in the game. That skin in the game is going to be this 20 percent research capacity. We could not get 100 percent commitment, as I mentioned, from anybody as to how much that 20 percent is going to be.

What we do know out of the Estimates of Appropriations 2013 is that there is, on page 235, the appropriation for capital expenditure to support the establishment of the Advanced Technology Institute of just under $12 million. We know that, but we have not had any figures fleshed out as of yet as to how much money will be available within this 20 percent research development potential. We could not get a very strong commitment that this would not be contestable funding—that the Advanced Technology Institute would not move into the currently contestable funding area. Particularly on the Opposition benches, we very much wanted to have that commitment.

Most of the submitters were very strong in their submissions about the fact that there is not enough contestable funding, and that to have another organisation fighting for the same dollar would not be useful. So it was our understanding that this 20 percent is hopefully going to be additional research money inside the Advanced Technology Institute that it could use to fund things. An example of what it might fund was asked of me by the Auckland University. That 20 percent purpose component could be used to support PhD or postdoctoral students going into small or medium sized businesses and working with them to do the research to be able to take their product from that place to a much more commercialised place so as to build them into medium to large sized businesses and therefore benefit the rest of New Zealand. There is a danger with that. There is a danger that the Advanced Technology Institute will then create winners or losers, but I really do not see how you can get away from that. At some stage a decision has to be made about what one is going to back, so there is always going to be that danger.

The other thing that is a concern around the fact that we were not able to get some tight finance that was going to be committed to the purpose of the Advanced Technology Institute, or Callaghan Innovation, is the fact that it actually cost a million dollars in external consultants to establish the Advanced Technology Institute—a million dollars in external consultants to establish it. So it would have been nice to think that with the $12 million under the Budget and the million dollars in external consultants spent to the end of the financial year we might be able to get some financial time lines and some finance around those numbers. Thank you.

Dr DAVID CLARK (Labour—Dunedin North): I will take a brief call on this part of the Advanced Technology Institute Bill, as I intend to say more in the debate on Part 2 when we get there, merely to say that Labour, of course, will be supporting this bill, but with significant reservations. I think it is important to put that on record. It ties into the fact that the purpose clause of the bill is so unclear. It is not really there tackling the big issues that need to be tackled. The Government, it seems, is afraid to articulate those big goals, lest it fail. This has some broad parallels elsewhere with other things that are going on in the Government’s agenda. So we do not see in the purpose clause a clear expression that this legislation is intended to increase jobs, is intended to increase skills, or is intended to grow the economy in the high-value manufacturing sector. I intend to say more on this aspect in the debate on Part 2 of the bill, so I will leave my contribution there, so that when we come to a fuller discussion of clauses 10 through 14, we can take up that debate and say where those clauses, which refer back to the purpose, fall short.

This Government really needs to put its money where its mouth is. We have seen very little investment in this area, and we see lots of weasel words in the purpose clause that are not backed up later in the bill. So we see a Government that is not prepared to tackle the big issues with economic development, and is not prepared to engage in joined-up thinking. So although these are nervous first steps and we will be supporting it, we think the Government could be doing much more to advance economic development in New Zealand.

The question was put that the amendments set out on Supplementary Order Paper 151 in the name of the Hon Steven Joyce to Part 1 be agreed to.

Amendments agreed to.

A party vote was called for on the question, That Part 1 as amended be agreed to.

Ayes 105

New Zealand National 59; New Zealand Labour 34; New Zealand First 8; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 15

Green Party 14; Mana 1.

Part 1 as amended agreed to.

Part 2 Advanced Technology Institute

The CHAIRPERSON (H V Ross Robertson): This is a debate on clauses 6 to 20 and the schedule. I call the Hon Steven Joyce.

Hon STEVEN JOYCE (Minister of Science and Innovation): Mr Chair—

Chris Hipkins: He didn’t call.

Hon STEVEN JOYCE: I just did. [Interruption] Quietly.

Hon Trevor Mallard: Getting up and hanging the tummy over the desk isn’t good enough.

Hon STEVEN JOYCE: Ah, I hear the quacking of a duck.

I am very pleased to take a call on this bill, the Advanced Technology Institute Bill, and I would like to make a couple of comments at this point if I could. One is that I want to thank the Education and Science Committee for its sterling work in relation to this bill. It has dealt with it very promptly, which is great, because I think this is a crucially important initiative for New Zealand, and getting it under way as quickly as possible is something that we as a House should be proud to do. Therefore, for those who have been supportive, I appreciate that support.

The main purpose of the bill, of course, is to establish this new Crown entity, and this is the meat of the bill in terms of the clauses that take us through the structure of the Crown entity and what it does. I suppose more formally what it does is a very simple thing, which is to help get New Zealand’s best ideas out of the lab and into the market place more quickly, and to get New Zealand firms and New Zealand science and innovation working much more closely together than has been achieved in this country to date.

I would say that we have some marvellous examples of innovation in this country, and it is a privilege for me to get the opportunity to see so many of those wonderful examples of innovation around the country. There are plenty of companies that are doing very well, but there are plenty of companies that would do better if they had a better understanding of how they could work with what is a very complicated innovation sector, which this country has built up over many, many years, and had that opportunity to work more easily with it. That is the role of Callaghan Innovation—a high-tech HQ to support our innovative businesses, primarily in the manufacturing and services sectors, and particularly the high-value manufacturing services.

I must say that I am a bit confused as to why the Greens are opposing the bill. It seems strange. They talk about high-value manufacturing. They talk about cleantech. Then here we have this magnificent initiative, which is reasonably broadly supported around the Parliament, yet suddenly they have pulled out, yet again, and said: “Oh no, that is not for us.” So one has to wonder. It is a little bit like The Hobbit. We know that The Hobbit is a weightless export, and one has to wonder why they opposed that, as well.

There have been a couple of questions raised in the debate on a previous part about the management of appropriations and how the appropriations will be set. The reality is, of course, that the appropriations are set by the executive once the bill is passed and, of course, are reviewed by this House at the select committee in the opportunities that are presented by the financial reviews. So that is the opportunity that comes in that regard.

But there is some interest—and I acknowledge the member from New Zealand First Tracey Martin—in terms of exactly where Callaghan Innovation lands in terms of the “make or buy” argument. That is going to be very carefully, and it is being very carefully, worked through, and everybody is very cognisant of the issues. On the one hand you have research organisations slightly nervous about how it might impinge upon their particular area of expertise, and then on the other hand you also have people who, I think quite rightly, point out that it has to do significant things itself in order to have skin in the game in terms of its involvement in the research and science sector. So it is going to be a reasonably fine line to draw, and I suspect that it will evolve over a series of years, rather than being a case of on day one, here is the final, for ever allocation of what this organisation does itself and what it purchases—or, more important, how it directs firms and other providers. But it is definitely the purpose of the exercise not to unnecessarily duplicate what already occurs. I think that is a very important aspect of it.

I see it as, for example, somebody whose company comes in and says: “Look, we really do need some specialist with applied mathematics expertise.” I would see Callaghan Innovation very quickly directing that person and wanting to see them build that relationship wherever that person works in the innovation system in New Zealand. That can help that business and it will be successful.

It has, of course, evolved across a range of industries in that high-value space: the food and beverage manufacturing area, agricultural technologies, digital technologies, health technologies, therapeutics, and also the high-value wood products. It is going to have to have very good relationships. Take high-value wood, for example, with Scion, as well. These are the important things that Callaghan Innovation will be doing.

I also want to acknowledge, before I stop, the family of Sir Paul Callaghan for their support for the use of his name. We take that very seriously, and there is a lot of discussion going on about how best to embody Sir Paul’s approach to science and innovation in the organisation. That is very much front and centre.

GRANT ROBERTSON (Deputy Leader—Labour): It is a pleasure to take my first call on this Advanced Technology Institute Bill, which establishes, as we have just heard from the Minister of Science and Innovation, Callaghan Innovation. The sad thing about Part 2 of this bill particularly is that it mirrors the Minister who has just sat down in the chair, the Minister of Science and Innovation: it promises a lot and delivers very little. Although on this side of the Chamber we are encouraged by the idea of a more strategic approach to the way that we develop research, science, and technology, especially in the manufacturing area, this part of the bill indicates to me that the Government’s thinking is somewhat muddled and confused as to exactly what it is expecting Callaghan Innovation to do. Therefore, I think it is a very bad start for what should be a leading part of the way research and science develop in New Zealand.

The first point I want to make in that regard actually picks up something that Tracey Martin just said. I did not serve on the Education and Science Committee for this bill, so it was interesting to hear from Tracey Martin the comment about 80 percent of the work being about relationships. I think that is very important because one of the things that this bill, in my view, fails to do, in this part particularly, is understand that research is actually undertaken by people. Research is actually done by people, and those people in New Zealand particularly—

Dr Megan Woods: Scientists.

GRANT ROBERTSON: Yes, scientists. Those people in particular tend to emerge out of tertiary education and move into research and development. It is that connection that I believe is crucially missing from the functions that are listed in clause 13 of this bill. I know that Government members of the Committee have previously said that it is mentioned, it is referenced—it is there by talking about research, science, and technology providers. But actually that is not good enough. In a bill like this, which is establishing an important part of our research framework, we need to be much more specific. We actually need to be absolutely clear that we want this institute to work closely with tertiary education providers. We could clearly and specifically say that in clause 13. Supplementary Order Paper 154 in Megan Woods’ name goes towards that.

In New Zealand the development of innovation comes about often by the association of tertiary institutions, the private sector, and other research providers, including Crown research institutes—Government research providers. Indeed, one of Sir Paul Callaghan’s great legacies to New Zealand was the development of the MacDiarmid Institute, which was exactly that: a collaboration between several tertiary institutions, Crown research institutes, and private sector players. That then spun off Magritek. Magritek continues to this day to do exactly the thing that submitters who came and talked on this bill asked for, which is to work as a pipeline—it is not really a pipeline, actually; it is a virtuous circle of people moving through tertiary institutions, Crown research institutions, and private sector research and development organisations.

My submission is that this bill is lacking—in clause 13 in particular; in the functions—in being able to say it is clearly a function of Callaghan Innovation to be part of that virtuous loop of people who are moving through research and science in New Zealand. There is nothing in the functions that makes that absolutely clear to me. If we want to leverage more out of our tertiary institutions in terms of the value of research, which I think we should do, then we need to be explicit about how that happens. The university researchers in New Zealand can be very pleased. There was a study done in 2010 that said that $802 million worth of research is being developed in tertiary institutions in New Zealand. That is terrific. Let us leverage off that and use things like Callaghan Innovation to be the chance that takes that into the billions of dollars.

Before I became a member of Parliament, my job immediately before coming in here was working for a university in New Zealand to do exactly that work, to develop research proposals in a university setting that could be developed in the private sector, with a Government agency, or with a Crown research institute. It was hard work because there were a lot of barriers in the way of actually making sure that our tertiary institutions, our Crown research institutes, and private sector providers can work together. They want to, but there are barriers in the way. This has the opportunity to be the institution that breaks those barriers down, but I just do not think at the moment that in the functions in clause 13, or indeed in other parts of the bill in terms of the stakeholder advisory group—the way that is put together—we are doing enough to say this is a collaboration. We are a small country. We are a country that needs to make the absolute best of what is a small but highly talented pool of researchers. That is not happening sufficiently clearly to me under this bill.

We are proposing in Supplementary Order Paper 154 a number of amendments that attempt to make clear that there is a role in terms of drawing tertiary education together with this kind of proposal. I would urge the Government to support those, because our researchers do need to be able to have all the incentives in the right place to work together.

There are other Crown research institutes outside of this where we need to keep working on this. The National Institute of Water and Atmospheric Research Ltd has good collaboration with a number of our universities, but could do more. It is the same with the Institute of Environmental Science and Research Ltd. It should be clearer and it should be more established that that is one of the roles.

I have a genuine question for the Minister around one of the functions, and I know he alluded in part to this before—

Michael Woodhouse: Are the other ones not genuine?

GRANT ROBERTSON: No, I have not asked a question yet, Todd—keep up. This is about clause 13(1)(f) around allocating and administering research, science, and technology funding. My question—

Hon Trevor Mallard: The Minister’s texting from the chair.

GRANT ROBERTSON: He is probably just trying to get an answer to my question, so that is all right. What I am trying to uncover here is the extent of the allocation and administering of funding, because it will provide a muddled mandate for this institute if it is involved heavily in the allocation and administering of research, science, and technology funding. I can see that causing problems as it works as both a provider and a funder in a sector where money is so contestable. This is a question for the Minister in the chair to explain the extent of the allocation and administering of research, science, and technology funding that will be done. Of course, the Minister may just choose to be texting to see whether the rest of his costume is finished for his moment on the Hobbit red carpet, or he could choose to pay attention to the debate. It is really up to him. Clearly he is preferring the former at the moment, which may well reflect his commitment to research, science, and technology generally.

The other point that I just wanted to make in this particular call is again around the question of whether we have the relationships right in this bill. I am looking here at clause 10, “Stakeholder advisory group”, and again in Megan Woods’ Supplementary Order Paper 154 there are some amendments that I think the Government should take seriously. The first of those relates to clause 10(1), which says: “The Minister may establish a stakeholder advisory group …”. Of course the Minister needs to establish an advisory group on this. It is vitally important to build those relationships that Tracey Martin was talking about earlier, so that word should be changed to “must”. It must happen because otherwise we run the risk that Callaghan Innovation may lose some of the relationships that it should have.

The other part of this is the question of who should be on this advisory group. There are comments about it being broadly representative. Well, again that is not good enough for a piece of legislation that is establishing an important part of our research, science, and technology infrastructure. There needs to be a much more direct understanding that this Parliament wants the advisory group. It wants Callaghan Innovation generally to be linked in with the rest of the sector. We need to be clear that we want tertiary education involved, and to be clear that we want the scientists, the employees, to be involved in the advisory group. These are fairly basic parts, I would have thought, of establishing something as significant as this.

Again, this bill flatters to deceive. It has got good general ideas. It is going in the right direction, but what we see here is a lack of commitment to the people who do this work and to the relationships that are important in ensuring that science and innovation flourish in New Zealand.

There are a number of amendments to Part 2 that I believe the Government should take up so that we actually know that the body that is being established here is properly connected into the tertiary education sector, and takes real note of the fact that research does not just happen; it happens as a result of scientists who are trained in our tertiary institutions. We want to create a virtuous circle of people moving through tertiary education, into research, out to the private sector, and back in again so that we know that New Zealand is getting the best out of this kind of science funding.

NIKKI KAYE (National—Auckland Central): I am very pleased to speak on the Advanced Technology Institute Bill. As has already been acknowledged by the Minister of Science and Innovation, obviously we acknowledge the late Sir Paul Callaghan and the fact that we are calling it Callaghan Innovation. Can I make just a couple of points. Firstly, I want to say it is pleasing that many parties across this House support this bill, and it is disappointing that the Green Party are not supporting the bill. But I want to say that through the Education and Science Committee there was some constructive engagement, and I know that it was under tight time frames, but we did a range of things to rectify that.

I just want to address three or four points that Grant Robertson has made. The first point that Mr Robertson made with regard to Part 2 was around research, science, and technology providers. I want to point Mr Robertson to a couple of key clauses in the bill. One is around the interpretation clause. In my view, and we express this in the commentary, it clearly does cover the tertiary sector. We did not feel we needed to be more prescriptive. It is not only set out in the interpretation clause but also covered off in our commentary. So any questions that this does not cover the tertiary sector, in my view, clearly do not look at the key clauses in the bill that address this.

The second point that Mr Robertson made was that there needs to be greater collaboration. Do you know what? We actually agreed with that during the select committee process. One of the key changes that we made, as a result of some very powerful submissions from organisations like Kiwinet, was that we inserted an additional reference in clause 14 to be clear that we understand the point, which the Minister has made as well, that it is really important that we are not unnecessarily replicating the good work that is happening out there in the sector, and that is right across business and also the research organisations. So a key part of the four significant changes that we made at the select committee was to recognise and put a duty on Callaghan Innovation that there was going to be collaboration.

The other key point that I want to address, which has not been discussed yet but is, in my view, part of this discussion about the objectives and the purpose of Callaghan Innovation, is to say, as Mr Robertson mentioned, that there is a transfer of people and there is a supporting aspect in terms of bringing key people together, as part of our innovation sector. But there is also an overall discussion that the select committee had about the question of what was originally in the bill, “net benefit for New Zealand”, which we ended up, I think, reverting back to “benefit of New Zealand”. I want to touch on that just briefly, because we had what was quite a long discussion. I think it is important in the context of the other objectives, because there were a lot of questions that were raised around the research capability. We were very clear again, as the Minister has mentioned, that the establishment board has quite a lot of work to do, and I think he has said to Tracey Martin today that it is important to make sure that that line falls in the right place. But there was this discussion about net benefit, and we actually decided to remove that term “net” from the clause because in our view we believed that the benefit test encapsulated a wide range of benefits for New Zealand, but also it aligns the Advanced Technology Institute with other entities such as Crown research institutes.

The other point that Mr Robertson made was around the funding issue. I think that in clauses 12, 13, and 14 the fact is actually very clearly set out that there is a wide discretion there in terms of Callaghan Innovation, which gives the ability via the establishment board to have that flexibility, because, as I have said previously in debates, technology is changing rapidly and relationships will change in the future—we know that from the inquiry into digital literacy that we have had before our Education and Science Committee. But I just want to touch on that issue of funding, because I do believe that our Government has a very good record in terms of the issue of science funding. In Budget 2012 we delivered $250 million of new operating funding, and I think towards the Advanced Technology Institute, Callaghan Innovation, there is $166 million. It reflects our belief that I think we are now spending $1.24 billion, which is a 17 percent increase. That is incredibly important in very difficult fiscal times. I think that is important, when we discuss that issue of the allocation of funding, because that was something that did come to our select committee. That is why we decided to issue a very lengthy commentary on issues that were not necessarily legislative but were around operational issues. I would refer anyone who is listening to the clause that we added around internal research capability and research funding, where we actually outlined the issues that came to the select committee. In my view we did not have to do that, but we did that because we wanted to send a message that the select committee understood the issues out there around funding.

So in my view the issues that Mr Robertson has raised were all very thoroughly canvassed during the select committee. Research, science, and technology providers clearly include the tertiary sector. The issue of collaboration was strengthened in the bill. In terms of the issue of the overall benefit to New Zealand, again the purpose must be taken into account in terms of the overall benefit to New Zealand, but also on the issue that Tracey Martin has raised we went to extreme lengths during the select committee process to canvass these issues at least in the commentary. I think this is going to be a very important bill for New Zealand.

DAVID CLENDON (Green): Kia ora. I am very pleased to take a call on this bill, the Advanced Technology Institute Bill, not least of all because the Minister of Science and Innovation has inquired as to why the Greens might see fit to oppose this legislation. I am very pleased to list some of the reasons why we are doing so, recalling of course that we initially supported this piece of legislation at its first reading because we entirely agree with the underpinning logic of establishing some sort of high-order entity that can link business and the community of research to make that series of connections that will deliver us the high-value exports and the positive improvements. We know that our economy can no longer rely on selling more logs and milk powder over the wharf. That is the past; that is not the future. However, the nature, both the process and, more important, the final structure, of the legislation is something that we simply cannot support. I will work through the bill and highlight some of the reasons for that.

We have mentioned the process. The bill was tabled and had its first reading 2 or 3 days later. Within 6 weeks we had the report back from the Education and Science Committee, and at no point have we been given clear information as to the need for that urgency. I would love to hear from the Minister why this had to be done in such extraordinary haste, because it did reduce the quality of the submissions—and we know this because the submitters told us so. It reduced the number of submissions. It penalised the officials, who did a very good job under very difficult conditions to come back in time with high-quality work, which they are accustomed and committed to providing the committees with. All in all it was a very unsatisfactory process and, not unusually, it has delivered an unsatisfactory piece of legislation.

The Advanced Technology Institute will be a Crown entity—a Crown agent. It will have very little autonomy, and clearly that is carefully designed as such. We know that the Minister will appoint the board. They will be people selected by the Minister. Clearly this organisation will very much be at the beck and call of the Minister, and that is not particularly helpful, given that its prime cause is to build lasting relationships with business. We have all heard the line about the guy who walks into a business and says: “I’m from the Government. I’m here to help you.” An organisation that is clearly so closely managed and at the Minister’s beck and call is not one that is immediately going to win the hearts and minds of business people, clearly.

Equally, there is the appointment of the chief executive of the ministry as a special adviser to the board. It is wonderful language. Clause 9(2) says that the task of the chief executive officer in that context will be “to assist the board to align its strategies and activities with government policy.” In a rough translation—call me cynical, if you will—I see that as saying that this is the fellow or the person who will give the board its marching orders. It will be told very clearly what it ought to be doing at any given time, what its approach should be, and, indeed, where it ought to be directing its funding. That is a key issue I will come to later.

The name of this organisation is to be Callaghan Innovation. We did not oppose that, clearly, although we have considerable misgivings about it, not least of all because this is exactly the sort of approach embedded in this bill that the late Sir Paul Callaghan actually warned us against. Sir Paul said that picking winners is not a strategy that has worked well for us in the past. The way this organisation is set up, it is clearly intended to do that—to pick winners, to fund them, and to support them. Sir Paul said: “We will be good at what we’re good at.” He said that the next big thing in the future will take us by surprise in the same way that things like LanzaTech took us to some extent by surprise. He said that we need to target niche markets. The wonderful line that he came up with, which we have all used and believe in, is that we want to make New Zealand a place where talent wants to live.

The way this organisation is set up is contrary to the advice that was left to us by Sir Paul. In clause 12 of the bill, the main objective talks about support and innovation for commercialisation, linking the extraordinary science and research talent we have here with the innovative capability and capacity of business to turn good ideas into earners for the country. We certainly need and want those, and there is a considerable proposition there. What this bill rather overlooks, though, is that neither sector, neither the business nor the research sector, has been sitting idly on its hands waiting for something or somebody to come along to create a bridge between the two.

There are a whole host of very, very successful enterprises, organisations, such as, UniServices, WaikatoLink, Lincoln Ventures, and the various economic development agencies around the country that have invested considerably, and they have developed very successful and positive relationships with business and with development bodies. It is rather interesting to ask the question of what will become of these relationships. It is a very obvious question to ask. How will the Advanced Technology Institute interact with these existing sets of relationships and organisations. The Education and Science Committee quite sensibly and obviously asked the question. The answer we got back is, and I quote from the Ministry of Business, Innovation and Employment: “No decision has been made about how ATI will interact, though it is recognised this is an important aspect of how ATI carries out its function.”

This is one of the themes that run through this legislation. We have been asked to sign off on something and to support a bill not knowing a great deal of the content of how this organisation will work. There is a great deal we simply do not know. There are simply too many unanswered key questions for us to offer support to this legislation. In a little bit more time, maybe we would have been persuaded. Maybe the work could have been done. We understand there will be a report back to Cabinet at the end of this month, by which time in all likelihood this bill will be done and dusted—rather too late, really, for us to be informed when we are making decisions, which, after all, is our task in this House.

Clause 13(1)(c) allows for a degree of reciprocity between business and the research sector—the tertiary and other research organisations. That is a change we effected in the select committee, and I think it is a good one. The original drafting anticipated a one-way flow from the research sector into business, and, clearly, that is not how the world works and it is not how we want it to work. So that clause does allow for a degree of reciprocity and acknowledges that the work, the research, the ideas, and the innovation can cut across a two-way path. That is a useful improvement we did manage to make to the bill.

I guess the major clause that is the deal-breaker for the Greens is 13(1)(f), which simply says that the Advanced Technology Institute will “allocate and administer RS&T funding:”—full stop. Again, the very obvious question that was asked by the select committee was: what funding? Which of the various funding streams will be handed over to the Advanced Technology Institute to administer and to allocate? Will there be new money? Frankly, we think in the present financial environment that is unlikely, and legitimately so, you might say. Again, the answer to the select committee from the Ministry of Business, Innovation and Employment was, I quote: “No decisions have been made regarding which funding the ATI will administer because MBIE is currently reviewing the schemes. A Cabinet report back is due by 30 November this year.”

Once again, we have been asked to take this on trust, and this is one of the issues that are of major concern to the various research organisations, the Crown research institutes, and the universities. We know this because we have talked to them personally and individually. They are seriously worried about what this means for their future, frankly—for their ability to continue with existing research work, to pick up new contracts, and to go into the future. Why has this not been made more clear before the legislation is passed? It seems an extraordinarily wide and open-ended provision, and the concern is clearly that most, if not all, of the contestable funding will be channelled through this new Advanced Technology Institute—through Callaghan Innovation—and that will be a completely undesirable sort of set-up. It is not, again reflecting on Sir Paul’s caution that backing winners has not worked for us.

We need a considerably more diverse range of funding streams and decision-making points than a single entity handing out most or all of the contestable funding would allow for us. It is something that came through in a fairly subdued way, I have to confess, in the submissions, but certainly individual academics, researchers, and scientists have been rather more pointed one-to-one in the information they have given to us informally. Clearly, they realise that they do not want to rock the boat. They understand that the relationship they have with the Minister is an important one, and there is a degree of concern that making too much noise about this bill might have undesirable consequences into the future. Again, it is very unfortunate that that lack of trust is coming through to us from very well-respected and successful academics and scientists.

TRACEY MARTIN (NZ First): Kia ora. I would like to pick up on just a couple of comments from my Green colleague David Clendon. First of all, the Education and Science Committee worked really well together—or up to this point it has; we have the Education Amendment Bill, it could change from here. It works very well together and it was a process where we did discuss, particularly at the front of the bill, trying to get as clear a picture as we could under the restraints that we had. So under the time constraints, I take on board the comments by David Clendon that we are asked to take these things on trust. I believe that there is a very fine line between governance and management, and that this bill is one of those situations where there is a level of trust one is going to have to take.

Remember that New Zealand First was the only party to vote against this bill, the Advanced Technology Institute Bill, at first reading. Then we listened to the submitters and we listened to those people who came to us, and although there may not have been many—and that may be a reflection of the tight time frame, which, again, we protested against, as we would prefer to see the process take its course—they were very clear that they needed an institution like this. Because that is part of what New Zealand First believes is its job—which is to listen to the people with the expertise inside the industry, actually out there doing the job—we have changed our position. We have placed on record and, again, voiced this in the select committee process to make it as clear as possible in the commentary on the bill our understanding of the level of trust that is being placed in the Minister and in the Government going forward about what they have said this bill is intended to do.

I do, however, want to address a couple of things, particularly while we have the Minister in the chair, the Minister of Science and Innovation, because he is a particularly busy Minister and it is not often that I can get to speak to him directly. First of all, I want to recognise that there are two things that are not addressed in this bill. The first is that there is still a gap. There is still a gap in regard to research funding for aquaculture. That is the other thing that I think I need to pick up on from David Clendon’s comments—

Colin King: Is that agriculture or aquaculture?

TRACEY MARTIN: Aquaculture. I never got the impression that this was the only research funding institute that was going to exist. It is not my understanding that this is the only entity that is going to exist. My understanding is—

Colin King: PGP!

TRACEY MARTIN: Yes, Mr King. My understanding is that there are selected areas that it is going to be in. But aquaculture is not there, so to have the research to take it from one research point to a commercialisation or a farming point in aquaculture is not addressed, and I would welcome any opportunity that the Minister may give me outside of the House to assist me to find where the funding may come from.

The other thing is that there has been no compensation situation addressed to the ratepayers of Auckland for the absorption of The FoodBowl. The FoodBowl was in part paid for by the city of Manukau prior to its absorption into Auckland City. And considering that yesterday there was an intense conversation from the Government around the rates of rates, I would have thought that compensation there might be appropriate.

I have Supplementary Order Paper 149, a Supplementary Order Paper with regard to a single word, “identify”, being inserted into clause 14(1)(b), and that word came from the Kiwinet submission. I take on board that the officers advising us said that they felt that it was not necessary to insert that word, because they believed it was appropriate to assume that if the Advanced Technology Institute, Callaghan Innovation, was engaging, it would have identified—and I think we all know what “assume” does when you and I deal with it. I do not believe it is appropriate to assume that just because Callaghan Innovation will be engaging with some people inside the research area, or inside business, they will know of all, and without the word “identify”, without making it a specific requirement of the institute to identify who is doing what, I believe there is a door open there for them to—either unintentionally or intentionally, and give themselves a way out—compete. So I am asking for the Government benches to support my Supplementary Order Paper. It is about a single word. I believe it adds value to the bill or I would not have put it in there. I also just want to make a statement that New Zealand First will be supporting Supplementary Order Paper 154. We see more good—

Dr MEGAN WOODS (Labour—Wigram): It is my pleasure to take a call at this stage of this Advanced Technology Institute Bill. I want to talk specifically to my Supplementary Order Paper 154 and the range of amendments to this bill that we are putting up, and to urge the Government and the Minister in the chair, the Minister of Science and Innovation, to listen to some of the reasons why we have put these amendments forward, and the improvements that we genuinely believe that these amendments could make to Callaghan Innovation and what it can achieve. I think it is fair to say that the piece of empowering legislation that we have before us, in terms of its ability to establish Callaghan Innovation, is pretty much motherhood and apple pie. I think there is no aim in there that any member of this Committee disagrees with. Certainly, it is absolutely central to Labour’s vision for New Zealand, and that is why we are really concerned at the opportunity lost that is contained within this legislation. We have $166 million going into a new institute and we do not have enough of the framework established to ensure that it is going to achieve what the objectives set out it does. We have put forward amendments that we think will strengthen its ability to bring about those transformations and to ensure that the success we all want will take place.

So we were very much aware of a problem, in terms of the submissions that we heard at the Education and Science Committee. Although we have heard from Government members of the committee opposite about how all but one submitter came before the committee and were in favour of the institute—and it is fair to say that—the other thing that we have to have an honest discussion about is that even those submissions we heard that were in favour of the establishment and the general purpose of the institute suggested changes, because they did not think what the Government had put up in the initial framework in the initial establishment legislation was going to achieve what it needed to. They pointed us as committee members to a number of flaws that they had serious reservations about. In many ways the amendments that we have put forward have picked up on those reservations and those fears that were put forward to us at the select committee.

Our amendments really fall under four broad headings. The first of these is around the purpose of the Advanced Technology Institute. The chair of the Education and Science Committee, Nikki Kaye, has talked about how there was a lot of debate in our committee about whether we were going to have a benefit to New Zealand or a net benefit to New Zealand. For Labour members of that committee the most important bit to us, and what we put up as an amendment, is that the benefit to New Zealand should be a key objective—not an operating principle, but an objective of the enabling legislation—because this is incredibly permissive legislation. For us the symbolism of making it an absolute mainstay that this is about the benefit to New Zealand, and not just having that listed as one of many operating principles, is something that we take seriously—although I can see from the face the Minister is making at me from the chair that he thinks that that is not the case.

One of the things that we have also put up a number of amendments around is the ability of this organisation to collaborate within the existing science system that we have in New Zealand. We had submitter after submitter, whether they be from universities or they be from other research organisations, come before our committee and say: “Look, this is a really good idea. We think there are some really positive things and we would like to see it happen, but frankly we have got some concerns around how it is we are all going to work together, how it is that we can all work together to provide the best for us from a research perspective, how we can be producing the academically best research we can in New Zealand, and how it is that we can provide the best research and development to industry.” We listened to those concerns and we put up a number of amendments around those.

My colleague Grant Robertson has talked about the need for the link—and the very explicit link—with the tertiary education system. But I think there was, by many Government members on the committee, a false dichotomy drawn between fundamental research and applied research. One does not exist without the other, and this is something that Labour members were very much aware of. We know that someone does not move in and out of basic research on a daily basis in the way that Government members think that people move out of poverty on a daily basis. Actually, what we have is a strong interconnection that needs to be acknowledged. For this reason we have put up an amendment to clause 15 that asks that Industrial Research Ltd retain its existing governance structure, even while it is a subsidiary of the Advanced Technology Institute, or Callaghan Innovation, because what we want to see is that research focus remain within Industrial Research Ltd. There is some very good research that is carried out, and some very good research that needs to be continued to be carried out, within that organisation.

But perhaps the largest concern that was voiced to us on that committee about the potential for collaborations and for the partners to all be working together in a way they have to if we are going to succeed at this—and David Clendon has spoken of the problem that many people had with this—was the fudging between funder and provider. This is something that, I think, is going to be a deal-breaker for the success of this institute. I hope that it is not. I hope that we are wrong. But we are asking that this institute be given every fighting chance, because, if it is going to succeed, it needs to collaborate with the other research providers that are there. It needs to work very closely with our universities, with our Crown research institutes, and with our other research providers. But I can tell you that every research provider is going to be looking at this organisation with a great deal of suspicion, not only because the organisation is the new entrant in providing research, or the new kid on the block, but also because the organisation is going to be dishing out the money. This is something that we think is really a do or die for the organisation, and we would like to see that cleared up.

We also think that the stakeholder advisory group is incredibly important. We think that this group is one of the fundamental success blocks to the institute succeeding. We think that there needs to be a range of voices within the stakeholder advisory group. We have asked that we do have tertiary institutions having a place secured within that group. We have asked that the industry have some autonomy to appoint someone to that group. We know that in order for this to succeed the industry does need to have a say, and we have to acknowledge that this is not the only part of our economy that will achieve economic transformation, and those views do need to be there. This is the 21st century and we need to think about what the world post the global financial crisis looks like. We need to look at actually empowering everybody involved in this. It is a nonsense that we would not want the scientists and the people who work in innovation to have a voice within that advisory group. These are the people with real skin in the game. These are the people who know what is happening on an everyday basis, so we have asked for employee representation.

Something else that we are asking for is that we have a diversity of geographical representation on this advisory group as well. We need to have the various areas of New Zealand where the economic development opportunities exist represented and their views heard. I am sure there are many members opposite, some of whom are members of the select committee—Colin King—who represent rural electorates and do not want to see this captured just by urban manufacturing. That is an important voice, but we also have to ensure that we have a range of regional economic development views heard within this, as well.

Labour has put forward a range of amendments around who is going to be feeding into what is happening in the Advanced Technology Institute. We have talked about the way in which it needs to collaborate and be part of an interconnected infrastructure of science, innovation, economic development, and commercialisation in New Zealand. We really hope that this can succeed, but what we see in the legislation that this Government is putting before us makes us fearful that it will not. We want to see that change. We want to see it strengthened. For Labour’s vision, for David Shearer’s vision, of a smart, green economy to occur, we know we have to have this level of science and innovation within our economy.

We are supporting this legislation. It was actually a line call with us, because we can see so many holes in it. We are hoping it will work, but we are urging Government members to vote in favour of our amendments, because we believe that they actually give the institute more of a chance of success. It is a shame that, although we had a very short period for consultation, we did not have more time to discuss this. David Clendon talked about the fact that if we actually had more time to work through some of these issues, the Greens may have been able to come to supporting this legislation. It is a shame that such an important initiative in New Zealand’s economic future has been rushed through in such haste. As David talked about, we really did not have an adequate answer given to us at the select committee about the need for this very undue and unseemly haste, it has to be said. So I urge—

Dr DAVID CLARK (Labour—Dunedin North): I rise following Dr Megan Woods’ excellent speech to confirm some of the same points, because I think she has drawn attention to the rushed process. I will say a little more about that, but firstly I really want to remind us why we are here and what this legislation, the Advanced Technology Institute Bill, is about.

This bill before us would establish a new Crown agent, the Advanced Technology Institute—now being referred to as Callaghan Innovation; an excellent amendment—to support science and technology - based innovation and its commercialisation by business. We are told the Advanced Technology Institute would act as an intermediary, connecting businesses in certain industries with researchers, and promoting the commercial application of research discoveries.

These are lofty goals, and Labour supports this kind of economic development that would achieve these goals, but we are a little bit sceptical about some of the ways in which this Government is going about making this change. We know that this bill alone will not be successful in transforming New Zealand to a high-value manufacturing economy. Transformation requires bigger issues to be addressed. We need macro-prudential tools to address exchange rate issues. We need to get away from the simple interest rate - based policy that has governed the Reserve Bank in its decision making, and look at wider things like jobs and the economy.

We need things like a capital gains tax, pro-growth tax policy, and research and development policies. We need these pro-growth policies that will make sure that our economy grows and transforms and that the investment signal is toward the productive sector, because we have seen a decline in manufacturing under this Government. We have seen jobs lost again in Dunedin in recent days, and that points, again, to this declining economy, which this Government seems happy to oversee.

We need proper savings policies that make sure there is capital to invest in businesses for economic development. We need procurement policies that recognise the benefit of training New Zealanders, rather than spending taxpayer money on employing people overseas to build up skills in the manufacturing sector, as we have perhaps seen in the Hillside situation, again in Dunedin. We need to recognise that these kinds of policies would go a long way further than this bill toward addressing the dearth of support for economic development and for manufacturing in New Zealand.

This Government seems content to oversee the worst unemployment record in 13 years. We have growing unemployment. Actually, we have a Government with the worst economic record overall of any Government in the last 50 years, and it is little wonder when we see rushed processes. It is like with the asset sales legislation. We saw that rushed through Parliament because the Government did not want to hear from the submitters. It did not want to hear that its policy was not supported by New Zealanders because it would cost us $100 million a year, Treasury tells us.

Here we have another example, with the Advanced Technology Institute Bill, of a select committee process that was truncated to just 6 weeks, placing an unreasonable deadline on submitters. Many chose, as we know, not to submit as a consequence. It is not unusual for a select committee’s process to take 4 to 6 months. That is what is allowed for that process, and it would not have hurt the Government to actually listen to those affected.

Let us think about who might have contributed, and who might have submitted further to the Education and Science Committee. We might have seen more submissions from industry, we might have seen more submissions from the scientific community, from those with an interest in economic development, and more from the general public. Then we might have had more time for reflection on those submissions, for the members of the select committee to help shape this policy, so that it had a wider economic development impact, rather than the narrow economic impact it is likely to have as a consequence of the rushed process. Of course, Opposition members on the select committee did signal their dissatisfaction with the truncated time frame, but an extension in time was voted down by the Government members on that select committee. I think that is to be their shame.

One industry submission in particular raised an issue about really fundamental concerns about the probable success of the Advanced Technology Institute. The real shame is that the points that were raised in that submission were not able to be fully examined in the time frame, and neither were the points raised by those who put in supporting submissions. Their refining recommendations were not able to be considered by the select committee because of the time frame.

A clear statement of purpose should have been included in the Advanced Technology Institute’s main objective, set out in clause 12 of the legislation. It could have said something like “The Advanced Technology Institute is established to achieve a stronger and larger export-focused manufacturing sector, which provides well-paid and skilled jobs.” We could have been really clear in this legislation that that was the aim of the legislation, and that we were trying to get to a position where we had skilled and well-paid jobs in the New Zealand economy. It speaks to the lack of ambition of the current Government that it did not have a clear statement of purpose in the legislation.

So the economic development goals expressed in clause 12 are inadequate, and we need to realise that as they are expressed they are not an end in themselves. We need to be focused on the bigger prize, on those things that real economic development policies could achieve—joined-up thinking—and that could include a dropping unemployment rate, rather than one that is rising. This Government could do that, and, potentially, if it had that ambition and if it wanted to, state clearly in the purpose of the bill why it is doing this, rather than finding weasel words and taking a tepid approach that sees very little new money, and what new money is in there is a very small contribution.

There are other points that have not been picked up in the debate, which I think is a shame. The Government has chosen not to address the fact that there is no explicit subclause to ensure there is not unnecessary duplication and competition within existing research provision by the Advanced Technology Institute. Dr Megan Woods raised that earlier in her speech, but we have heard nothing from the Government on that.

We have heard nothing about a way through the conflicts presented by the funder/provider roles. That is another point that my colleague Dr Megan Woods raised that has not been addressed. Submitters did raise these concerns about the conflict, and we have seen nothing from the Government in response.

We in the Labour Party would like to see a stronger industry representation on the stakeholder advisory group. We think there need to be strong links between the Advanced Technology Institute and the education sector. We recognise that on its own this bill cannot successfully transform the economy. The Government seems blind to this; it is carrying on. We are watching the manufacturing sector decline, a decline since 2008 of 9.5 percent in the elaborately transformed manufacturing sector.

When we divide out the primary sector from the actual manufacturing sector that the public have in their minds, we see a nearly 10 percent drop under this Government in the manufacturing sector. That is a disgrace. This is a Government that seems content to oversee the demise in our economy, and it is a shame. We will be supporting this bill, but as a tepid first step towards a proper economic development policy. Thank you.

The question was put that the amendments set out on Supplementary Order Paper 151 in the name of the Hon Steven Joyce to Part 2 be agreed to.

Amendments agreed to.

The question was put that the amendments set out on Supplementary Order Paper 154 in the name of Dr Megan Woods to clause 10 be agreed to.

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

Ayes 57

New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendments not agreed to.

The question was put that the amendment set out on Supplementary Order Paper 161 in the name of David Clendon to clause 10 be agreed to.

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

Ayes 57

New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendment not agreed to.

The question was put that the amendment set out on Supplementary Order Paper 154 in the name of Dr Megan Woods to clause 12 be agreed to.

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

Ayes 57

New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendment not agreed to.

The question was put that the amendments set out on Supplementary Order Paper 154 in the name of Dr Megan Woods to clause 13 be agreed to.

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

Ayes 57

New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendments not agreed to.

The question was put that the amendment set out on Supplementary Order Paper 161 in the name of David Clendon to clause 13(1)(d) be agreed to.

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

Ayes 57

New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendment not agreed to.

The CHAIRPERSON (Lindsay Tisch): We have a further amendment set out on Supplementary Order Paper 161 in the name of David Clendon to clause 13(1)(f). This is out of order as it is inconsistent with an earlier decision of the Committee.

The question was put that the amendment set out on Supplementary Order Paper 149 in the name of Tracey Martin to clause 14 be agreed to.

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

Ayes 57

New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendment not agreed to.

The question was put that the amendments set out on Supplementary Order Paper 154 in the name of Dr Megan Woods to clause 14 be agreed to.

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

Ayes 57

New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendments not agreed to.

The CHAIRPERSON (Lindsay Tisch): We have Dr Megan Woods’ amendment to clause 15 as set out on Supplementary Order Paper 154. This is out of order as it is inconsistent with an earlier decision of the Committee.

A party vote was called for on the question, That Part 2 as amended be agreed to.

Ayes 105

New Zealand National 59; New Zealand Labour 34; New Zealand First 8; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 15

Green Party 14; Mana 1.

Part 2 as amended agreed to.

Schedule

The question was put that the amendments set out on Supplementary Order Paper 151 in the name of the Hon Steven Joyce to the schedule be agreed to.

Amendments agreed to.

Schedule as amended agreed to.

Clauses 1 and 2

Hon MARYAN STREET (Labour): I rise to speak on these two initial clauses in this legislation. One we have just amended with the approval of the Minister of Science and Innovation’s amendments, so that the “Advanced Technology Institute Act 2012” will now be called the Callaghan Innovation Act 2012. I just want to reflect on that for a moment, because the late Sir Paul Callaghan was a man who was an extraordinary contributor to New Zealand. I remember listening to him at a Labour Party conference when he came and addressed us a year or two ago, and he was truly one of those very few people in the world who is charismatic. “Charismatic” is not a word that I apply to many people, at all. It is rather overused these days, because there are very few people in the world who can hold one’s attention the way Sir Paul did, and talk in terms that made him a superlative communicator of complex and inspiring facts and ideas about how human beings relate to science and how science relates to the development of human beings. So it is entirely appropriate that this advanced technology institute be called Callaghan Innovation. I have no problem with that, at all. It is a fitting tribute to the man and his legacy.

But I do have a bit of a problem with the fact that this institute, which has a lot of promise, has been bedevilled at the outset by a shambolic process. It is my fervent hope, and it is why the Labour Party is supporting this legislation, that Callaghan Innovation can actually realise some of the dreams that have been expressed in a few of the speeches on this establishing legislation. In other words, this idea—originally, the Advanced Technology Institute; now Callaghan Innovation—was announced, as I understand it, if I remember correctly, in the Budget. In fact, it was meant to have been in place by 1 November this year, if I remember correctly. But what we have is a bill that was referred to the Education and Science Committee on 13 September, with submissions closing on 1 October. If there was ever going to be a visionary plan about the development of New Zealand and the application of science to those wonderful primary production industries, as well as our secondary manufacturing industries, that could set our economy alight, this was going to be a significant part of it. But it seems to me that we have had nothing like a plan.

In fact, the kinds of amendments that my colleague Dr Megan Woods put forward would have improved the function and purpose of Callaghan Innovation, had the Government been prepared to seek a little improvement and a bit of logic, and had a bit of coordination been applied to the sector through this bill. So I am disappointed that this bill has gone through a shambolic process, with 2 weeks for submissions to be presented. Of course, that gave rise to minimal submissions and to submissions that were rushed and did not reflect—as I understand from my colleagues, because I do not sit on this committee—the full complexity and the vision and the potential of the science and innovation sector. There are issues around Callaghan Innovation and the bill that we are about to pass, and its ability to realise the potential for the improvement of the New Zealand economy and, in fact, some substantial futureproofing of the New Zealand economy.

So the commencement date is now 1 February 2013. It should have been 1 November. There should have been some months for this process to be undertaken with due respect and some seriousness around the purpose and the structure, and, more important, the relationships between Callaghan Innovation, the education sector, various aspects of industry, and the workforce that is going to be required to implement some of the ideals of Callaghan Innovation. But what we have is a bill that is rushed, that is inadequate, and that could have been improved with the amendments from other members of Parliament in this Committee—most particularly, Dr Megan Woods, but certainly David Clendon and Tracey Martin, as well. But we have now what we have, because we have just voted down any other amendments apart from the Minister’s. This bill comes into force on 1 February 2013, instead of 1 November 2012. That is as it is.

It is my very clear hope that Callaghan Innovation can rise above the shambolic and undirected process that has surrounded this bill and can, in fact, do what it is meant to do in relation to other agencies we have—and those relationships will have to be tested and hammered out a wee bit because of the lack of thought and time that has gone into this bill—and that it is able to work cooperatively with Crown research institutes and other existing scientific and innovation organisations to provide some kind of knitted together, some kind of directed, and some kind of purposeful future for science and development in New Zealand. We have clever scientists in this country, we have clever industrialists, we have clever workers, and it is only going to be by the combination of all of those three that we are ever going to get the sort of lift in our economy that everybody in this House aspires to. A little bit more thought, a little bit more time, a bit more vision that was more detailed in its application would have assisted here. However, I wish Callaghan Innovation, under this bill, which comes into effect on 1 February 2013, every success for the benefit of New Zealand. Thank you.

DAVID CLENDON (Green): I am pleased to take a final call on the Advanced Technology Institute Bill, which is an unfortunate bill, as we said earlier. It could have been much improved by the amendments that were offered. Sadly, that opportunity has been refused.

The title change of the bill to the Callaghan Innovation Bill—we certainly supported the Minister of Science and Innovation’s amendment to that, because we think it is appropriate that there should be a legacy to an extraordinary man. But we have a genuine concern—and this is not to make a political point, frankly. The responsibility now lies with this Government to make sure that this organisation is something actually worthy of the man. With 20/20 hindsight we can look back and see that it was an unfortunate decision some years ago to attach the name of one of our greatest war heroes, Charles Upham, double VC recipient, to a naval vessel that was intended to be a service vessel for the navy and do good work but, sadly, proved entirely unfit for purpose and ended up carting oranges around the world, if I recall correctly. It would be most unfortunate if this organisation also turns out to be a lemon, and there is a real danger of that, given the way it has been structured and the extraordinarily hasty process of its establishment. Indeed, the responsibility rests squarely on this Government to make sure that this organisation is worthy of the name that is being attached to it.

The innovation part—it is rather an odd name, actually: Callaghan Innovation. It almost cries out for another word, like “institute” or “centre” or something. In itself—“I work for Callaghan Innovation.”—it is a peculiar choice. I do wonder at the decision behind that, but so be it. Innovation actually is the role of the business sector and of the research centres, the universities, and the Crown research institutes. We always pictured that this would not necessarily be a centre for innovation as such. The role of this organisation, as such an organisation, ought to be a networking role of joining dots, linking talent with demand, linking supply and demand, joining and facilitating discussions, and building relationships between the scientific and research capacity we have and the business sector, where the skill is to turn the good idea into dollars for the country—the weightless exports, the high-tech manufacturing, the stuff that we really do need into the future for economic, social, and environmental benefits.

So it is a peculiar choice of name. It does reflect, I think, a bit of the muddled thinking of this Government as it has gone in such great haste to develop this organisation. The commencement date is 1 February, a very few months away. Sadly, the fact that this bill is now passing into law—or presumably will this week or certainly next week, with the third reading, whenever that is scheduled—means a very unhappy Christmas, I suspect, for many of the people currently employed by Industrial Research Ltd, the status of which will be amended. Clearly, as we know from the Cabinet paper, the long-term intention is to disestablish Industrial Research Ltd.

Once again, we have a major centre of scientific and technical expertise, and the people in that organisation now feel that their future is under threat. Many of them have no idea where they will end up. They do not know whether they want to be part of this new group. They do not know whether there will be a role for them—similarly with the New Zealand Transport Agency and, indeed, the Ministry of Business, Innovation and Employment. There will be people thinking “OK, what does this mean for me and my future?”.

This is a time when we should be making science and technology an extremely attractive career path for young New Zealanders and not-so-young New Zealanders. The fact that this is being done so quickly, with so little clarity around the transitional arrangements, will mean for those individuals and those people collectively that we are actually undermining that. It is very difficult, in fact. I am a great believer in science. I have a science degree. It is very difficult—really, honestly—to say to a young New Zealander “You should make your future in science.” You have to qualify that by saying “Don’t expect a smooth run. It will be a rocky ride, the way things are here.” But, nevertheless, that seems to be the way they are going.

So we do think that if the process had been allowed to be worked through in a more appropriate way, and if the commencement date was extended out, there would be no particular disadvantage. Work is being done. Very positive, productive work is already happening with the various organisations I mentioned earlier, like UniServices, the WaikatoLink, and the Economic Development Agencies of New Zealand group, which are doing extraordinarily good work in terms of linking up the demand and supply, and linking up the ideas and the people who can turn ideas into money. There is no need for such haste, and it is a great shame for those people who will be left, sadly, over the Christmas break. Kia ora.

Hon DAVID PARKER (Labour): Can I pay my respects to Sir Paul Callaghan as well, and congratulate his family on his being honoured in this way—having this institute named after him. I do agree with the last speaker, David Clendon, that the new name—Callaghan Innovation—does seem to hang and might be better with another word at the end of it.

The point that I would like to develop a little in this debate on the title is one that David Clendon and other speakers spoke to earlier, which is this mix of the new Callaghan Innovation institute—I will add the word—being both a funder and a provider, and the difficulty that that poses. I do not propose to speak for a long time. I will, though, record some comments that were made by submitters to the Education and Science Committee. One is from Professor John Raine, who is the pro vice-chancellor of innovation and enterprise at the Auckland University of Technology and who has been chair of the Powering Innovation review, which, as I understand it, is a review that has been conducted on behalf of the Government. He said that he was not comfortable with contestable funding being, effectively, allocated by this new body, and said: “I have real concerns about putting contestable funding streams from the TechNZ funding programme into ATI. In the Powering Innovation report recommended changes that would really drive collaborative behaviour in the R&D and innovation eco-system [were put forward].” Then he says in respect of the model: “I think the model that would get best buy-in from the other R&D organizations”—which are going to have to be cooperating—“would be to place a relative minimum of core funding in the organisation but working with a big pool of industry-linked project funding held at MBIE which ATI can access through partnered projects with other R&D institutions plus industry partners.”

That tension, if it is not properly resolved—and it is not resolved through this legislation—could effectively cause this model to fail. Unless this tension is properly resolved, you will not get cooperation between this new institute and the other research, science, and technology providers, both in other publicly funded institutions and in industry. I think it is sad that because the submission period was so short there were virtually no submissions from other private sector research and development organisations—organisations like Scott Technology, a company based in my city that provides those services to the private sector. If those organisations thought that through this legislation there would be less money available for them to advance these projects—which I am sure they do very effectively, both cost-effectively and also innovatively—and if they thought that they were going to be competing with a Crown-funded organisation that not only has a leg-up in respect of its own activities but could control what funding went to others, they would be concerned.

This was amplified also by a submission that came from Lincoln Ventures Ltd, which is an organisation that sits outside Lincoln University but is related to it. The submission said: “ATI should not compete with existing RS&T providers, but should facilitate their interaction with business … ATI should not then preferentially grant itself or its HVM clients RS&T funding which would allow them to out compete existing RS&T providers. If incentives are to be deployed”—I continue to quote from the submission—“to encourage investment in R & D by HVM companies, these incentives should also be available to existing RS&T providers, at no more of a compliance cost than that which will be determined in house and be available for ATI researchers.” Otherwise, we risk creating, I think, confusion, and we will go backwards—actually, not so much create confusion but will just be setting up structures that are less efficient—

Dr MEGAN WOODS (Labour—Wigram): I want to take just a short call on this bill, the Advanced Technology Institute Bill, and speak to the title. I think this is a nice way to round up this legislation, and, like previous speakers, and like my colleague David Parker, I want to acknowledge Sir Paul Callaghan and his family and the way in which he is being memorialised, with the naming of this institute after him. I think it is incredibly important, and I think there is no one in this Chamber who does not acknowledge the contribution that Sir Paul has made to thinking in this country, both as a scientist and as someone who has thought very deeply about the role and the place of science and research in the New Zealand economy.

One of the things I want to reflect on is Sir Paul’s relationship with the Royal Society of New Zealand. Of course, Sir Paul was at one time the president of the academy council of the Royal Society of New Zealand. He was a scientist of some note, not just an economic thinker, who published over 240 articles in peer review journals. We cannot underestimate the brilliance of this man in his own field of academic discipline. In 2001 he was made a Fellow of the Royal Society of London, and in 2005 he was awarded the Royal Society of New Zealand’s Rutherford Medal, a very high honour to be awarded from the Royal Society of New Zealand. Then, of course, in 2008 he was awarded a James Cook Fellowship, one of the highest honours to be awarded by the Royal Society of New Zealand.

Therefore, it was with great sadness for me personally to read the Royal Society of New Zealand’s submission on this legislation, and I want to enter in the Hansard just one paragraph from that submission, where it says: “The ongoing uncertainty surrounding the ATI, removal of a research focus, and the implication of large scale staff relocation, all risk putting the personnel situation of the new institute in jeopardy. This level of upheaval puts at risk important research skill and capability, if expertise is unable to transition it will be lost overseas.” To me this is really sad, because one of the things I know that Sir Paul Callaghan knew was that one of our greatest resources in this country, and one of our greatest potentials, is the minds of our people, our personnel capability, and our ability to come up with innovative and brilliant concepts that we can use to form the basis of our economy. And here we have an organisation that Sir Paul was so linked to throughout his life—and it acknowledged his brilliance as a scientist in this country—submitting about its fear that the establishment of the Advanced Technology Institute in its current form would actually lead to a loss of that skill. That is something that we on this side of the House think is a real opportunity lost.

We have argued all the way though that to truly honour Sir Paul Callaghan and the work he has contributed to this country, we need to have this link through to the real research and to real science, and to not have this organisation, Callaghan Innovation, be just a front end for commercialisation. It has to be about research. It has to be about science. We cannot separate the two. They are so inextricably linked, and that is something Sir Paul Callaghan thought. I think that man’s life stands as a testament to the way in which someone who engages in fundamental science can also be at the cutting edge of thinking about commercialisation and how it is that we integrate fundamental science, research, and academic excellence into our economy in New Zealand.

We are pleased Sir Paul is being honoured, but on this side of the Chamber we want to make sure that the organisation, the institute, that is established lives up to the name it is having put on its masthead. It is a big name to live up to, and we have to get all these things right. We all need to honour that man, and the greatest way for us to honour him is to make sure we have research excellence at the core of our thinking around innovation. Thank you.

The question was put that the amendment set out on Supplementary Order Paper 151 in the name of the Hon Steven Joyce to clause 1 be agreed to.

Amendment agreed to.

Clause 1 as amended agreed to.

Clause 2 agreed to.

Bill reported with amendment.

Report adopted.

Bills

Financial Reporting Bill

First Reading

Hon CRAIG FOSS (Minister of Commerce): I move, That the Financial Reporting Bill be now read a first time. I nominate the Commerce Committee to consider the bill. The bill rationalises financial reporting obligations across the statute book in three ways. First, it makes all reporting obligations consistent with the goal of financial reporting. That goal is to provide information to external users who have a need for an entity’s financial statements but are unable to demand them. Second, it standardises the interface between the Financial Reporting Act and other Acts. It does so by placing core definitions and provisions that will have broad application to reporting entities in what will become the new Financial Reporting Act, and by placing all substantive reporting obligations in other industry, sector, or entity-specific Acts. Third, it makes the language of financial reporting in different Acts broadly consistent. This change is needed to replace old-fashioned concepts and Acts that were passed prior to 1993. It is also needed to recognise the fact that some existing provisions are no longer needed, because those issues are now fully addressed in accounting standards issued by the External Reporting Board, or XRB as it is also known.

The Financial Reporting Bill will replace the Financial Reporting Act 1993. It includes two major changes for specific classes of entities. The first is to remove the requirements for medium and small companies to prepare annual reports, including financial statements. Those changes appear in Subpart 3 of Part 4 of the bill. The main purpose of a company’s annual report is to provide accountability by senior management to shareholders. But the great majority of New Zealand companies are small to medium sized enterprises, and the managers of the companies are also shareholders. So they already have access to the company’s financial information without waiting for the annual report.

The Institute of Chartered Accountants of New Zealand agrees that this reform is needed. It describes the current requirements as “expensive and time-consuming”, and the reforms as “a welcome reduction in red tape for many businesses”. The changes to small to medium sized enterprises mean that the Inland Revenue Department will need to beef up its company tax filing requirements. I understand that separate empowering legislation will be introduced by the Minister of Revenue at a later date. The net effect will be reduced compliance for many companies.

The bill also adds a power for the External Reporting Board to issue accounting standards for registered charities. These changes appear in Subpart 2 of Part 4 of the bill. Registered charities are required to attach financial statements to the annual returns they file under the Charities Act. However, the absence of accounting standards has led to reporting by some charities that is inconsistent with generally accepted accounting practice, or GAAP as it is often called. Clear rules are required to improve charity reporting and increase comparability between charities. The External Reporting Board has stated that it is planning to introduce simple format reporting for 95 percent of charities. This change will benefit the many preparers who are volunteers with limited accounting or bookkeeping skills, because it will reduce uncertainty about what is expected of them.

A further change will be to remove the inconsistencies in the way that financial reporting is currently provided for in different Acts for different classes of reporting entity. There are three different approaches at present. Most reporting obligations for issuers are to be found in the Financial Reporting Act 1993. The reporting obligations for companies also appear in the Financial Reporting Act, but the auditing-related provisions appear in the Companies Act. The obligations for all other reporting entities are largely found in other Acts. The consistent approach in the bill is to place standard definitions and provisions in the new Financial Reporting Act.

Those provisions appear in Parts 1 and 3 of the bill. For example, Part 3 includes a standard provision for auditor qualifications that will apply to most statutory audits other than audits of financial statements prepared by issuers and public entities. This provision will replace numerous existing provisions in other Acts.

Subparts 1 and 2 of Part 2 relate to the External Reporting Board and its statutory functions, powers, and responsibilities. Those provisions are similar to the current provisions in Part 3 of the 1933 Act as amended by the Financial Reporting Amendment Act 2011. There are some changes that will make the External Reporting Board’s functions fully consistent with the contemporary domestic and international accounting standards environment. For example, clause 11(c) includes a new power for the External Reporting Board to issue authoritative notices. This change will, amongst other things, allow the External Reporting Board to issue New Zealand equivalents of conceptual frameworks published by the International Accounting Standards Board and the International Public Sector Accounting Standards Board.

Part 4 and schedules 1 and 2 propose amendments to more than 80 other Acts. The most significant changes appear in Part 4 of the bill. Schedule 1 includes other amendments, and the consequential amendments appear in schedule 2. Most of the provisions in Part 4 and the two schedules state whether entities or classes of entities are required to prepare financial statements in accordance with generally accepted accounting practice, and, if so, whether the auditing and publication of financial statements are also required.

Many of those amendments relate to Acts that require financial statements to be prepared, but include no explicit requirement to prepare them in accordance with the accounting standards issued by the External Reporting Board. This is a particular issue with Acts that pre-date the Financial Reporting Act 1993. The bill proposes amendments to those Acts by making it clear that the financial statements must comply with generally accepted accounting practice. Part 4 and the two schedules include provisions stating that audits must be carried out in accordance with audit and assurance standards issued by the External Reporting Board.

Finally, I wish to draw the House’s attention to Supplementary Order Paper 93, which was tabled on 31 July 2012, the same day as the Financial Reporting Bill was introduced. This Supplementary Order Paper relates to financial reporting by issuers, banks, insurers, and other financial market participants covered by the Financial Markets Conduct Bill. These changes are included in the Supplementary Order Paper rather than in the Financial Reporting Bill itself, because it would have been inappropriate to introduce the Financial Reporting Bill in a form that anticipated that this House will pass the Financial Markets Conduct Bill. Tabling the Supplementary Order Paper on the day that the Financial Reporting Bill was introduced provides the select committee with the opportunity to consider the financial reporting system for financial market participants as a whole.

At present there are substantive reporting obligations for financial market participants that are in several Acts. Supplementary Order Paper 93 proposes that the reporting obligation for all financial markets conduct reporting entities would ultimately be consolidated in the Financial Markets Conduct Act. This change will bring conventions of financial reporting obligations by financial markets conduct reporting entities within the Financial Market Conduct Bill liability regime.

To conclude, the bill and the Supplementary Order Paper are a once-in-a-generation opportunity to update financial reporting law and to make the reporting system fully consistent with the goals of financial reporting. The bill includes very important compliance and cost-reducing changes for medium and small sized companies. It also includes changes that will improve the quality of financial reporting by registered charities.

I would also like to acknowledge the collaborative nature and the cross-party support I believe that this bill carries with it, and I fully acknowledge that collaborative spirit for this and other bills. I commend this bill to the House.

Hon DAVID PARKER (Labour): Can I thank the Minister of Commerce for his contribution. The Labour Party will be supporting the Financial Reporting Bill, which is good legislation. This sort of housekeeping or administrative legislation generally goes through with cross-party support, and it ought not to be seen as being insignificant legislation because it is not contentious. It is actually very important legislation, despite not being contentious.

I want to mention a couple of aspects. Can I congratulate the Government on proper process in respect of Supplementary Order Paper 93, which has lain on the Table for so long. Really, once this goes out and is advertised, submitters will have an appropriate period to become properly aware of these complex issues, and to submit upon them in a way that is appropriate. I want to make those congratulations to the Government because I am also, at times, critical when that does not happen. This is an occasion when it is being done properly and the Government ought to be congratulated on it, because through this we get good legislation and we actually make our country run better than is otherwise the case.

I am also pleased with these changes that are being made to make less prescriptive the accounting requirements for smaller companies. I think that for too long in New Zealand we have driven compliance costs—and we often hear accountants opining on the radio that the biggest problem in economic performance is compliance costs, when the difficulty of complying with their standards has actually been one of the biggest drivers of costs for small businesses, which have to comply with accounting standards that are more technical and complex than is necessary, having regard to the nature of their business, the size of their business, and the ownership structure of their business. So I am pleased that we are removing the necessity to meet all of the accounting standards that apply to larger corporates in respect of smaller entities. In place of those we are going to have practical guidelines produced as to what are necessary accounts for taxation purposes. None the less, you know, there needs to be proper accounting, so that we can properly assess whether people are paying their tax. But those requirements do not need to be as expensive and complex as the financial reporting standards would be in respect of larger entities. I think that that is a very important change, and it is one that I wholeheartedly support—in fact, I have personally called for that for a while.

In respect of the obligation to have financial reporting for issuers, whether they are issuers of debt or equity instruments, I think we have to take care around this that we do not over-regulate this space also. I have said this previously, and we will be looking at this legislation to make sure that we are going in the right direction in respect of this. For example, if you are an issuer or have been an issuer, for how long does this obligation last? Should it last for ever? I do not think it should last for ever.

Michael Woodhouse: Well, for as long as the securities have been issued.

Hon DAVID PARKER: What was that?

Michael Woodhouse: For as long as the securities are issued.

Hon DAVID PARKER: Well, the securities last for ever. If it is an equity security—

Michael Woodhouse: No, they could buy them back.

Hon DAVID PARKER: No, if the equity security is issued, and it is for ever out there, I do not think this company should necessarily have to have, legislatively, a higher audit and accounting framework than the shareholders might themselves want. So I do not see why after a period of years it cannot revert to being just an ordinary company that faces lower compliance costs. So, no, I do not agree that that should carry on for ever. Issuer audits are expensive, meeting accounting standards as technical as they have become is expensive, and I do not think that in all cases where you have an issuer raising money from the public they should have to go through those compliance hoops for ever. So that is something that I want to look at in the Commerce Committee, or have the Labour members on the select committee look at.

I also want to check on the quorum rules that are going to apply for opting out of some of these arrangements. If a charity requires a certain percentage of votes in order to avoid the more complex requirements, is that a quorum of those who attend a properly called meeting, or is it a percentage of all the members of the charity? If it is the latter, it will be an impossible quorum requirement to meet. We have got these problems in respect of the management of Māori land at the moment, and we ought not to be extending those impossible-to-meet quorum requirements to other areas. I think that that is another area that the select committee should be checking.

Noting those matters that we need to check on as to detail, I think this is good legislation. I think it is timely to remove some of the complexity that we have through having different accounting rules apply to different entities, not because they are different in principle but because the legislation under which they operate was passed in different years. I think it is necessary to tidy that up. As I have already said, I think it is also desirable that we remove compliance costs for entities that do not have to take the more complex route. I also think it is timely to review the processes that are going to apply to other entities that are not covered by this legislation but are covered by the Supplementary Order Paper that the Minister referred to.

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

Hon DAVID PARKER: I was commenting earlier on the care that we need to take that we do not over-regulate entities that have raised capital from the public. I want to just develop that a little bit in the little time I have left. There is a public interest in companies being able to raise capital at the lowest possible cost so that small businesses, New Zealand - owned businesses, can expand and become bigger businesses, New Zealand - owned, raising money from the New Zealand public. We want to maximise the pool of people whom they can raise money from so that they have the ability to expand to their potential and do so in a way that makes them less reliant on overseas sources of capital rather than New Zealand - owned savings.

I am a person who thinks that as a consequence it should be possible for a medium-sized New Zealand company to raise capital from the public through a public offering. If the cost of that becomes too high because of regulatory hurdles that we put around the process itself through securities laws, increased directors duties, or increased burdens upon auditors who face additional risks in the prospectus, that is one source of cost that makes it more difficult for those entities to raise money. But another source of cost is if after the date of raising capital and issuing ordinary shares to the public we have ongoing extra compliance costs for those entities. That too represents a cost barrier that gets in the way in the development of the New Zealand economy, particularly in respect of these new businesses that we need to grow into larger entities.

I have a concern that we are now saying in this legislation, if I have this correct, that once a company is a public issuer it must for ever have the more expensive route of compliance in terms of compliance with international reporting standards and ongoing issuer audit requirements. I am not convinced that that is necessary. I think we should look at this at the select committee. Obviously for a period of years after you have been a public issuer there ought to be an audit to hold people to account for their promises in their prospectus and just to make sure that they are, having taken money from the public, accountable to the public. But if after a period of years the members of the company decide by an appropriate margin that they no longer want to have that more expensive compliance route, why would we in this Parliament stop them going back to a cheaper route?

Michael Woodhouse: We already do that.

Hon DAVID PARKER: What was that?

Michael Woodhouse: Can’t the Companies Act already enable them to do that?

Hon DAVID PARKER: No, I do not think it does. This is a good point. This is something that needs to be checked at the select committee, because we ought not to be loading unnecessary compliance costs.

As I said, there are good aspects of this bill that reduce compliance costs on smaller businesses by having an easier alternative accounting route. That is to be applauded, but I want to have a look at this issue there.

The overall reason that we have decent financial reporting standards in New Zealand is that we need to keep transparent our processes, we need to maintain our tax base, and we need to have confidence in capital markets. All of these are important reasons why it is appropriate that we have guidance through legislation as to the conduct of commercial affairs, so that we maintain a healthy and prosperous corporate and non-corporate sector, which is obviously important. All business entities need to be appropriately conducting their affairs in a way that makes the economy strong.

MICHAEL WOODHOUSE (National): I am very pleased to take this call in support of the Financial Reporting Bill—somewhat unusually, ahead of my colleague Jonathan Young, who is the chairman of the Commerce Committee, where this bill will be referred if it is successful. That is really a function of the fact that when we saw that this could come up before dinner, as it did, and then saw the order of speeches, the committee itself had other business. So as chief whip, of course, one seeks the interest of colleagues for speaking on this bill. I must say there was a clambering towards the door, metaphorically, to speak on this bill, so it fell to me to take this call.

Kris Faafoi: And you got left out.

MICHAEL WOODHOUSE: Although it has to be said—what was that?

Kris Faafoi: You got left out.

MICHAEL WOODHOUSE: I did. Yes. As a certain blogger says, “the stature and personality of a parking meter …”. Clearly, he has never met me, so that is all right.

Hon Clayton Cosgrove: Simon Bridges—ask him about clamping.

MICHAEL WOODHOUSE: About?

Hon Simon Bridges: This is hoo-ha.

MICHAEL WOODHOUSE: It is. Back to this important piece of legislation. In fact, it is OK that it fell to me, as one of only two members of the National Party caucus who are actually chartered accountants. In fact, we may be the only two in the House now. We have lost a few since the 49th Parliament. It is one of those things—I remember being told that one does not need to know Latin to be a gentleman; one just has to have forgotten it. Indeed, it is a bit like that for chartered accounting. One does not need to know all the financial reporting standards; one just needs to have forgotten them.

Hon Clayton Cosgrove: That’s the John Banks principle.

MICHAEL WOODHOUSE: No cabbage boats in financial reporting standards, I assure the House. Actually, 1993 was my last year at the University of Otago, studying accounting. That was the year that the Financial Reporting Act that this bill replaces was actually passed. It was a big year for law, because that was when the Income Tax Act was also replaced, with the 1993 Act. So I was in the unusual situation of having learnt all of this stuff under one set of legislation, and then having to reword it. But, truth be told, actually I was not a very good accountant. I loved the client contact and the management and cost accounting stuff, but was not very good on the financial reporting stuff, probably because I did not really have the patience and that attention to detail that went—at least in those days—with the preparation of financial reports. Of course, in those days clients would come in, particularly the small business clients, literally with shoeboxes of bank statements and cheque books.

Hon Clayton Cosgrove: I was one.

MICHAEL WOODHOUSE: That is right. In they came, and away we would go, beavering away, coding. Now they come in, hopefully most of them with USB sticks. Stick it in, turn the handle, and out comes a set of financial reports. But that 1993 Act was, I think, the first time that we introduced the idea of an exempt company, something that was different and that could, therefore, report differentially from generally accepted accounting practice (GAAP). That whole differential reporting framework came in at that time, except many of the companies that qualified for differential reporting did not actually use them.

There were a couple of reasons for this. One was that although the GAAP standards were adjusted, the income tax obligations were not. Therefore, it was necessary, nevertheless, to produce a full set of accounts just for tax purposes. That was often a bit of a nuisance to small businesses that actually did not care too much about GAAP or what the accounting or accrual income was. They were interested in how much money they had in the bank and how much tax they had to pay. That is really what small businesses do—they work on cash flow. They want to make sure that cash flow is positive. It probably was not as effective as it could have been. I think things have moved on now, particularly with the tax requirements. I also note from the regulatory impact statement and the Minister of Commerce’s speech that there is actually a body of work that needs to go on to make tax compliance simpler for small businesses. The effect of this bill is certainly going to be greater when that work is done.

I want to touch on Mr Parker’s quite extraordinary comments in his first reading speech about issuers. I think I heard him say that companies that issue debt or equity to, well, strangers on an arm’s-length basis rather than closely-held companies should possibly have a time limit against which they are required to report the full set of reports in accordance with GAAP and International Financial Reporting Standards. I find that fascinating and quite extraordinary in a sense. Here we have this Government, having spent 3 years improving financial markets reporting and authorities, and particularly with the issuing of prospectuses, and this notion that somehow, after the passage of time, it would be OK to let the leash out a bit in terms of financial reporting standards.

There are a couple of problems with that. Firstly, companies like Blue Chip or Lombard Finance and Investments would fall into the category of an organisation issuing a security—in their case debt, although it was never very easy to work out whether it was debt or equity—and somehow over time then having a lower financial reporting standard than they did at the start of the issuing of the security. I find that quite extraordinary. But it also does not account for the mobility of security and the fact that people can trade debt and equity. Therefore, the recipients of the issue of debt or equity could be new to the organisation. In order to assess the value of that security, they are going to need to rely not on the initial prospectus but on the financial reports that are required to be produced from time to time. I think Mr Parker did mention the issue of a closely held company. I think the Companies Act actually does allow for that at the moment, but that is something the select committee could look at. I hope it does not get chased down a rabbit hole with this, because actually this is not the purpose of the bill.

The financial reporting regime is OK for those larger organisations, those issuers. The benefit in that case clearly exceeds the costs of producing the financial reports, and I would expect that the people who buy into these securities would have little time or truck with the relaxing of the financial reporting standards. That is not what this bill is about. However, that is enough from this lapsed chartered accountant. I shall leave it to my much more informed colleagues on the Commerce Committee to comment.

Hon CLAYTON COSGROVE (Labour): The last speaker, Michael Woodhouse, made a point that I thought was a very, very valid one. He said, I think, that in his days as a chartered accountant he had a lot of small-business people who came in with the shoebox, the briefcase, or whatever with the monthly receipts and handed them to the accountant and said: “Please sort it out.” I am guilty as charged. When I was a small-business person I was blessed with a very good accounting friend whom I would take the shoebox to, with all the receipts, and he was a very, very good accountant. He would sort it out and make sure that I acted legally—acted legally, which is important—and paid my tax and met all my particular obligations. He gave me good advice in respect of what I was required to do.

This bill, the Financial Reporting Bill, we will support to the select committee, as my colleague David Parker has said, because this bill, I think, in its essence—the theme of this bill could be described as having the balance between good regulation and not excessive regulation. We need to ensure we have good regulation. I am wondering tonight whether the Minister for Small Business, the Hon John Banks—and I use the word “honourable” advisedly—this bill is about reducing, essentially, compliance costs as well. We know that the mission of the small business Minister, his mission in life, his mandate, and his portfolio, of course, is to reduce compliance costs.

Hon John Banks: That’s right.

Hon CLAYTON COSGROVE: Who said that?

Hon John Banks: The Minister.

Hon CLAYTON COSGROVE: Oh, the Associate Minister said that, and that is true. The difficulty is that we are still waiting. This is relevant because my colleague David Clark—

Hon John Banks: Who?

Hon CLAYTON COSGROVE: This is relevant to this legislation. He is the person who has a memory and does not have amnesia, Mr Banks. He can remember his own name, unlike the member. Mr Woodhouse mentioned an interesting theme. He mentioned cabbage boats in his speech. I know that I have to comply with the Standing Orders, so I know that I cannot move outside the bill unless the previous speaker has drawn other themes in—oh, yes.

But anyway, the issue is this. This is a good piece of legislation on the face of it. We want to ensure, of course, that there is an appropriate level of regulation, but not excessive. I am the Opposition spokesperson on small business, and as a former Minister for Small Business, what we all seek is to reduce compliance costs on the commercial sector. If you can reduce compliance costs you become more efficient and more competitive. So I wait with interest—unless the four headless horsemen have got to the Minister for Small Business before me, the sort of walking dead—as to whether Mr Banks will get up and take a call and give his view on this legislation. I think this is a fair attempt, colleagues—a fair attempt. This is a weighty piece of legislation. This is important legislation, because what it will encourage is giving access in a more simplified and transparent form to financial information to the ordinary punter. I wait with interest. This is a real and genuine attempt, I think—we do not know whether it is a valid attempt—to reduce some compliance costs of business. Unlike “Lazarus” over there—the resurrection has happened—whose only achievement in the Parliament is to introduce a piece of legislation that expunges 31 Acts that do not exist. That is the contribution—

Hon John Banks: Ha, ha!

Hon CLAYTON COSGROVE: He is laughing. It is a nervous laugh. It is the sort of nervous laugh you get when you are handed a bag of dough and you pass it on to your campaign manager, and you pretend you do not know who gave it to you and what was in it. It is a nervous sort of little laugh. It is the sort of nervous laugh you have when the courts call you on 12 December to answer a few questions that you would not answer to journalists and you would not answer in the Parliament. And he is on—[Interruption] Mr Deputy Speaker, I think you should call the zambuks. I think the Minister for Small Business is having a difficulty.

Mr DEPUTY SPEAKER: Come back to the debate.

Hon CLAYTON COSGROVE: Well, he is on his cellphone. You are the Speaker.

Mr DEPUTY SPEAKER: That is right, and I have requested that the member speak to the first reading.

Hon CLAYTON COSGROVE: Oh, absolutely, and I am. “The main purpose of the Bill”—and I will read it in case we need reminding—“is to improve the financial reporting system by making all general-purpose financial reporting consistent with the primary objective of the financial reporting system. That objective is to provide information to external users who have a need for an entity’s financial statements but are unable to demand them.” That is also reducing compliance costs, and it is germane to ask the Minister for Small Business, wherever he may be, under whatever desk or piece of carpet—maybe he is under the lambskin over there—whether he will contribute to this debate because this is very, very important.

The heart of this piece of legislation, as a colleague of mine suggested to me before I stood up, is a balance, as I have said, between good regulation and excessive regulation. Good regulation is transparent. The entities that have to use that legislation know what it means and they know how to comply with it. Actually, if we had had good regulation perhaps around, say, the “Local Government (Donation) Act”—there is a good example—then a certain person in this Chamber would have known exactly what the regulation meant.

Hon David Parker: It was clear.

Hon CLAYTON COSGROVE: It was clear. I am not a lawyer. My colleague David Parker is a learned lawyer, and he said that that regulation was clear. I suppose what it sets as an example, and Mr Banks could talk to this in great detail, is that if legislation and regulation is presented in a form where it is user-friendly, then there is a higher chance of compliance—a higher chance of compliance. But that also means, of course, that that requires a bit of intelligence on behalf of the user. In the case of the Minister for Small Business, we know that is a wee bit of a dicey concept.

This is important legislation. I am interested also in asking the Minister as to where that puts us in line with Australia—where that puts us in line with Australia—because one would not, as Mr Parker said, want to overly burden small capital - raising companies, as they are attempting to grow, with excessive regulation. We know that across the Ditch there is a scheme of arrangement that I think may be slightly better than ours in terms of allowing companies to flourish and grow. Of course, in Australia they have a massive capital fund because they have compulsory superannuation. The place is awash with capital, and companies can grow and prosper because they have access to that.

But the question I would raise, and what we would like to look at in the select committee, is where does this put us in line with our Australian competitors? We need to be on a parallel basis to them. We may want to have a higher standard than them. But we do not want to be put in a position, our particular companies, where we have greater regulation, excessive regulation, attempting by its objective to do good things, but effectively hog-tying our companies and penalising our companies and advantaging, by definition, those in Australia. They are our closest trading partners, and whether it be the law or banking or commercial enterprise, Governments of all shades have attempted to ensure that regulation is consistent, where possible, or to transition that regulation, where possible, so that we are consistent with Australia, to make it easier for our companies to do business.

I welcome this legislation. I think we are going to have to put it under significant scrutiny. I would wager that it is a good attempt, a fair attempt, to try to do some good work in the commercial sector to reduce compliance costs. I have to say, in concluding, that this is a weighty piece of legislation, as opposed to the bunkum and the despicable attempt by Mr Banks to bring in legislation that effectively was piffle. Even his coalition colleagues over there—oh, he is back—knew when he stood up and pronounced that his legislation was groundbreaking, that small businesses would throw petals at Mr Banks as he walked down the streets of Auckland, celebrating what a wonderful gentleman he was and what wonderful things he had done for small business, until they realised that all—

Hon John Banks: Great mayor.

Hon CLAYTON COSGROVE: “Great mayor.”, he says. Yes, a mayor who trebled the debt in 3 years—what a cracker he was, “Mr Spendthrift”! That was until those small businesses realised, of course, that all he did was repeal 31 Acts that did not exist. But I say to Mr Banks that I welcome his call on this bill, we all welcome his call on this bill, and we also welcome the date of 12 December, not because the House is going to rise but because our wonderful judiciary in its own inquisitorial fashion will ask some very penetrating questions of the member of Parliament.

Hon John Banks: It’s all BS.

Hon CLAYTON COSGROVE: It is all BS? Well, we will see what happens there. I have got a feeling that the four judicial headless horsemen may be after Mr Banks. They may just get him, and we may have a vacancy in this Parliament.

Dr RUSSEL NORMAN (Co-Leader—Green): I rise on behalf of the Green Party to speak to the first reading of the Financial Reporting Bill. The Green Party will be supporting this bill’s referral to the Commerce Committee.

What I like about this bill is that it has an element of proportionality. I think that around financial reporting an element and a sense of proportionality is important. That means that this bill essentially is going to be relaxing some company reporting requirements, which we think is the right thing to do in certain circumstances. So non-large, non-issuing companies will no longer have to prepare general purpose financial reports, as they are currently required to do under the Companies Act. We think that that is a sensible move, but we do think that we want to have a closer look at this bill in the select committee before we commit to supporting it through the rest of its stages, because we do need to look at the other side of the equation to make sure that there is sufficient regulatory oversight around financial reporting.

I mean, one of the lessons that came out of the global financial crisis was the need to make sure that there was sufficient regulatory oversight of companies, and particularly finance companies, in New Zealand. So the general trend, if you like, in financial reporting has been towards tightening the rules around financial reporting for companies, and particularly financial companies and deposit takers. This bill goes against that trend in the sense that there will be a number of companies now that are non-large, non-issuing companies that actually will have a weakening of their financial reporting requirements. However, we think that that does make sense and is a proportionate response. Legislation and regulation need to be smart, they need to be proportionate to the risks involved, and they need to be proportionate to the size of the company and the economic significance of the company. We think that the way in which this bill attempts to do that makes a great deal of sense.

I also agree with the comments of I think it was Michael Woodhouse earlier that it needs to be tied to some changes around the Income Tax Act. The Institute of Chartered Accountants has done some really good work in terms of looking at how we can simplify income tax for small and micro businesses in order to make it easier for them. I think that if we have some of these changes tied to some of the changes around the Income Tax Act to reduce compliance pressure, particularly on small and micro businesses, then together they actually make quite a positive outcome. We are yet to see where the Government will go with the Institute of Chartered Accountants’ proposals. The Green Party adopted those proposals at the last election, they were part of our election platform, and we think they go alongside the kinds of changes that are being proposed in the Financial Reporting Bill.

But perhaps the dissonant note, if I may kind of hit one in talking about this—and it is slightly outside the scope of the bill probably—is that I do think that in other jurisdictions we have also seen the rise of what we might call environmental reporting—that is, reporting against a set of environmental indicators. The UK has produced a voluntary set of reporting indicators. They are reporting guidelines for UK business. The Department for Environment, Food and Rural Affairs in the United Kingdom has produced this set of voluntary guidelines in an attempt to provide some consistency in reporting against environmental key performance indicators. It would be great to see in New Zealand that we have made some steps in this direction. The Greens are not suggesting that it be made compulsory at this point, so it would not be going into a piece of legislation, but even having some voluntary guidelines to provide consistency around reporting against environmental key performance indicators I think would be a step forward. The United Nations Environment Programme has likewise produced some guidelines for reporting against environmental key performance indicators. I think it would be tremendous to see that level of reporting in financial reporting, where it is appropriate, as well. So in the future it would be great to see that as well.

But in terms of where this bill goes, we think that it is a sensible bill, we will be supporting its referral to a select committee, and we will be very interested to get the submissions at the select committee to see whether we have got the balance right between reducing the requirements for financial reporting for those companies that are non-large, non-issuing companies, but also making sure we have got sufficient financial reporting requirements in place where there is significant risk, and, of course, for deposit takers and issuers of capital instruments. For those reasons we will be supporting its referral to a select committee. Thank you.

JONATHAN YOUNG (National—New Plymouth): I am very pleased to stand in support of the Financial Reporting Bill, sponsored by the Minister of Commerce, Craig Foss. This bill is part of a comprehensive programme of reforms in the financial and business sector that this Government has implemented over the past 4 years. I think the work we are doing is bringing great benefit into business and finance.

In fact, just before I speak on matters of the bill, I want to read a quote from Forbes magazine of 11 November 2012, which says: “New Zealand ranks first on our list of the Best Countries for Business, up from No. 2 last year, thanks to a transparent and stable business climate that encourages entrepreneurship.” I know that one of the issues we are concerned with at the Commerce Committee is that we do have a transparent, stable business climate that does foster entrepreneurship. The magazine goes on to say that “New Zealand is the smallest economy in our top 10 at $162 billion, but it ranks first in four of the 11 metrics we examined, including personal freedom and investor protection, as well as a lack of red tape and corruption.”

What this bill does is actually reduce red tape for our small businesses, in particular. But it does not do that at the cost of transparency. It does not do that at the cost of inefficiency or a lack of appropriate reporting. This bill will come before the Commerce Committee, and I think we are going to work very hard to ensure that the balance is found where it creates not only efficiency but also a release of compliance burden that is unnecessary. I think that small businesses in our country will applaud this move.

Some of the other reforms we have done in the Commerce Committee include the financial advisers regime, the licensing of trustees and statutory supervisors, and setting up the Financial Markets Authority about 18 months ago, the Financial Markets Conduct Bill, and, recently, the Consumer Law Reform Bill—all extensive and complex bills from a very hard-working committee. I am looking forward to the continuing hard work from members on the other side of the House as we transact this business, so that when we bring these bills to the committee we open it up to New Zealanders for their opportunity to comment and influence the process of sound, solid, rational lawmaking in our country that will continue to see us being in the Forbes top contenders. I think that magazine, as a finance magazine, is recognising what we are doing here in this country.

I believe that what we are doing, and what this bill will do, is continuing to build confidence in our economy, which is an absolutely essential thing to do. We have been doing that for the last 4 years and we will continue to do that. We want to cut down on expensive and unnecessary reporting obligations and, in doing so, help build a productive and effective economy—one of National’s main aims for this term in Government. So I am very pleased indeed to stand in support of this bill.

I want to draw a point, because the bill also touches on, for example, registered charities. They are required to attach financial statements to their annual returns as they file under the Charities Act. Sometimes, however, the absence of accounting standards has led to reporting by some charities that is inconsistent with generally accepted accounting practice—or, as our senior whip talked about, the GAAP protocols, as they are often called. So clear rules are required to improve charity reporting, and, I think, as we have those clear rules and as we have accurate and efficient reporting regarding our charities, once again that will build confidence in New Zealanders in the donation dollars that they give.

Just in closing, there are many aspects, I believe, to what is going to be a very good bill. I commend the Minister for bringing it to the House. I believe that we will continue to see a very hard-working Commerce Committee transact the business of that committee. In fact, I often look to my colleague Todd McClay, the chair of the Finance and Expenditure Committee, and I wonder who has the busier committee.

Mark Mitchell: I think we are.

JONATHAN YOUNG: Yeah, I think we are. I think we are, so I am very happy to see this bill proceed and we are going to make great progress. Thank you.

ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on the Financial Reporting Bill. Can I just say that we also commend the Minister of Commerce, the Hon Craig Foss, for bringing this to Parliament. He is the member for Tukituki. And can I just say that I was also there with Lawrence Yule, his successor as the next member for Tukituki, at the local government function this evening. It was very nice to see the current Mayor of Hastings, who will be the next member for Tukituki after Craig Foss. We will get on to the Local Government Act 2002 Amendment Bill later, but the resounding comment from those in attendance was how gutted they were by the bill.

Anyway, we are back on to the Financial Reporting Bill. In this respect can I just say that New Zealand First has said—and this was prior to the election, and we have always said—that we will support good policy and we will oppose bad policy. In this case, we believe that this is good policy. It is good policy because it has some very beneficial effects for New Zealand commerce. It will assist with the financial reporting by our companies in terms of ensuring that there is more efficient reporting by the companies—that is a good thing—and it will also cut compliance costs. We are all, I think, in this Chamber in agreement that if compliance costs can be reduced and cut, it does help our commercial sector and it does help our corporates get on with their business.

Important also is that this bill ensures that smaller companies will not have to provide the same level of complexity of reporting as large companies. That, again, is only fair, because how often do we hear all around New Zealand—and the Hon John Banks there, as the Minister for Small Business—

Hon Clayton Cosgrove: Getting smaller every day.

ANDREW WILLIAMS: They used to be large businesses, but he became Minister, and they became small businesses as a result. It is interesting that small businesses—often owner-operators, husbands and wives, small businesses with limited management—often comment that they spend so much time on compliance costs that they actually cannot get on with doing their business, because they are having to fill out so many forms and do so much to meet the bureaucratic requirements. So, again, this is a good thing—

Hon Clayton Cosgrove: “Banksie” will fix that, though.

ANDREW WILLIAMS: What is that?

Hon Clayton Cosgrove: “Banksie” will fix that.

ANDREW WILLIAMS: Yes, “Banksie” will fix that. I am sure he will. It is a good thing that this bill does help reduce the complexity of reporting for smaller companies.

Another important part of this bill is that it simplifies the obligations for the likes of charities. We have many very worthy and very good charities in New Zealand, which, again, have incredibly complex requirements in terms of their reporting, and this bill does help simplify their obligations. However, what it also does, this bill, is it ensures that there is comparability between charities. Again, that is a good move. We all get phoned at 6 o’clock, 6.30, or 7 o’clock at night and asked to donate to this, that, and every other charity, and often you are not too sure exactly what the charity is—

Hon Clayton Cosgrove: Did you say “donations”?

ANDREW WILLIAMS: Donations—no, no, no, not Dotcom donations, not Skycity donations; these are normal, above board donations. These are donations over the telephone, not in a brown envelope. These are the normal kind. Anyway, this bill will help ensure that New Zealanders can also see the printed reports of charities and can compare those charities in terms of what they are doing and see how they compare, charity with charity. So that is a good thing as well.

However, there are a few pitfalls. New Zealand First will support this through to the select committee stage. We will ensure that this gets the colour of day and that it is fully explored and fleshed out. But, at the same time, these things are tinkering around the edges by the Government. What we want to see is not the Government trying to hide behind smokescreens and mirrors and thinking that it is addressing things just by this tinkering with compliance costs and things like that but this Government doing a lot more in terms of actually generating the economy, actually generating exports, and actually getting our manufacturing sector moving again. We are hearing stories time and time again. Only yesterday we heard that at Carter Holt Harvey—what is it—50 or 80 jobs are to be laid off in Rotorua. A panel plant making wood panels in Rotorua—the heart of woodland New Zealand, Rotorua—is laying off workers because there is not enough domestic demand for its products, the panels, in New Zealand. There is not enough demand for its products, and that is a great shame. It is a great shame that in a place like Rotorua we are laying off good workers at a wood panel plant because this economy is not growing.

It would be growing if we were building more houses—if we were building more houses—if the housing sector was growing, and if we were stimulating the economy with more jobs, more employment, and more opportunities. But it is not happening, so, as a result, this is what we are seeing. Sure, we are seeing in this bill on the one hand the Government trying to reduce compliance costs to companies, trying to tinker around the edges and sort of soften them up—which is good; that is fine—and trying to help them, but what it is trying to help is basically an economy at the moment that is very, very, very flat. We in this House get tired of hearing the Government always saying “Oh well, it could be worse. It could be worse. We could be Greece. We could be Greece or we could be Spain or we could be somewhere else.” It is poor that we always have to be compared with extremely poor-performing economies of southern Europe, when what we should be aspiring to is comparing ourselves with Singapore, Norway, Taiwan, or Korea—economies that are actually doing well. But what this Government tends to do is compare ourselves and think that we are doing well because we just happen to be a couple of notches above Greece, Italy, or Spain. Well, that is not good enough, and tinkering around the edges and just trying to save a few compliance costs is not enough.

New Zealand First hopes that this bill will go through to the select committee, and that it will get fully explored. But in so doing we hope that the submissions that come in from the commerce sector in New Zealand focus not only on the reduction in compliance costs and some of the reduction in financial reporting requirements but also on how that can reflect on growing the commercial sector in New Zealand. For instance, the Hon John Banks has always asked—he has been in business for many, many years—how we can get a lot more companies in New Zealand going. How can we create, as a result of the Financial Reporting Bill—because this should be an easy country to get businesses started; it should be an easy country to get them going—and how can we encourage a lot more companies to get going and get behind them?

This, again, reflects on the Local Government Act 2002 Amendment Bill, which we are going to be speaking on very shortly. The Hon John Banks, who was the Mayor of Auckland, knows, and I know, as the former Mayor of North Shore, how important it is also for the second tier of government in New Zealand to ensure that local companies, local businesses, local manufacturers, local employers of staff, and local people who are providing work, paying their rates, and paying their taxes are helping grow this economy. We have a collective responsibility in this Parliament, all 121 of us, including the Hon John Banks as the former Mayor of Auckland—

Hon Clayton Cosgrove: Hang on! Didn’t he treble the debt in 3 years of Auckland City?

ANDREW WILLIAMS: He did. He did. He did, but do not hold it all against him. John Key was asking him to do it at the time. John Key, as the Leader of the Opposition, asked him in July 2008 to leverage his balance sheet and increase it, so he did that. He did that. He responded to that. Just in closing, what we need to remember is that we have a collective responsibility in this Parliament to grow the commerce and the pie in New Zealand. If the economic pie in New Zealand does not grow collectively, and if we do not create a bigger economic environment in this country, which, in turn, will pay more taxes, then all this tinkering around the compliance costs and reduction in reporting is basically just moving the deckchairs on the Titanic.

TODD McCLAY (National—Rotorua): This legislation, the Financial Reporting Bill, is an extremely important piece of legislation that continues a great job this Government has been doing over the last 4 years. You see, the bill cuts compliance costs faced by many small and medium sized businesses in New Zealand, and in particular these changes will mean that medium-sized businesses gain great advantage to get on and do the things that this Government wants them to do and that the country wants them to do, which is their business. I am a firm believer that Governments should do less, but what they do they should do better. The last Government, over 9 years, could not work that out.

Under Labour, the Government wanted to do more and it wanted businesses to do less. I can say it was unmitigatedly successful in that over the 9 years, because what we found after 9 years of a Labour Government was in fact that the business sector had shrunk—the business sector had shrunk. Labour members come to this House and still talk about how wonderful it was, all the extra money and all the great things they were doing, taxing hard-working New Zealanders and then spending their money on their behalf. But what they will not come here and tell us is how the business sector in New Zealand shrank over that period of time and how devastating that was for everyday New Zealanders, and how much hard, hard work this Government, through our leader, John Key, and the Deputy Prime Minister and Minister of Finance, Bill English, had to do in the early days of what is coming down and will be known in history as one of the most successful Governments that this country has seen in such a long period of time.

Here we are today when all around us in New Zealand New Zealanders are celebrating the day of The Hobbit. To my two colleagues opposite, whom I am very happy to share a select committee—the Finance and Expenditure Committee—with, Clayton Cosgrove and David Clark, I say that this is the day of The Hobbit, not The Two Ronnies. They are the “Two Ronnies” of the Labour Party when it comes to bills like this in this Parliament. This is the day of The Hobbit, when all New Zealanders are rejoicing that one of the best films that will be released anywhere in the world this year has been filmed and has been made in New Zealand. We know that Opposition members—the Labour Party—were not in favour of that. Others have called them Hobbit haters. They did not want the film made here. And do you know what damage would have been done to our country and economy should The Hobbit movie not have been made in this country? Small and medium sized enterprises, so many thousands of them, which have been involved in the manufacturing, the making, and the construction of this movie, would not have had work.

The Opposition probably is unhappy that small and medium sized enterprises have had these jobs, because it did not want the Government to support this wonderful industry for those films to be made here. Why is that important? Small to medium sized enterprises that employ fewer than 20 people make up 97 percent of the enterprises in New Zealand. And shame on the members opposite for not wanting to support so many hard-working New Zealanders. Many of these enterprises are family-built businesses—mums and dads who work hard together. These are enterprises that make up 60 percent of all enterprises. Small to medium sized enterprises make up 40 percent of the economy’s total output by value-added basis, and 31 percent of employees in New Zealand are in small to medium sized enterprises. The members of the party opposite should be supporting small and medium sized enterprises much more than they have. They come here and pay lip service to them.

I mentioned at the beginning of this speech that this bill is a continuation of the work this Government has done over 4 years. I want to touch on a couple of those things that are an integral part of supporting small to medium sized enterprises more, and this bill is a part of that. The new tax rate for small businesses in New Zealand is 28 percent, helping local small firms get on and invest more. ACC rates have been reduced, levies have come down, and half a billion dollars extra a year is now going into the New Zealand economy, helping individual employees and small businesses in New Zealand. Levies on businesses have been reduced by 22 percent. That is a saving of $247 million a year for small and medium sized enterprises in New Zealand. The 90-day trial period for small businesses won 13,000 new jobs, created in small businesses as a result of this, giving hard-working New Zealanders a chance to get into the workforce.

We have amended the Resource Management Act so that consents for medium-sized developments now need to go through in 6 months. That was a commitment we made to the electorate in 2011. We have reformed the personal grievance system—96 percent of all employment mediations are now resolved without being escalated to an Employment Court. Many of those are in small and medium sized enterprises. Unnecessary red tape for small businesses has been reduced, and the Government is on track with these measures to cut compliance costs for businesses and consumers by an additional $200 million a year—across-the-board savings, reductions in compliance costs, and reductions in red tape.

This is a Government that over 4 years has more than proven how committed we are to making it easier for small and medium sized businesses, and shame on the Opposition for going against almost every measure we put in place to help everyday New Zealanders with their companies. Thank you very much.

Dr DAVID CLARK (Labour—Dunedin North): I am glad that that member, Todd McClay—“Mr Benny Hill”, my colleague referred to him as—has taken his seat. It was an embarrassing speech and an unfortunate contribution. He tried to convince us there at the end that this Government had a good record on business issues. He read out a list of supposed achievements. He neglected to mention that this Government has the worst economic record of any Government in the last 50 years.

Hon Lianne Dalziel: How long?

Dr DAVID CLARK: The worst economic record of any Government in the last 50 years—shocking. A thousand people a week are leaving this country for Australia. There is a 50 percent increase in the number of unemployed, a 3 percent drop in the median wage, and the biggest gap between rich and poor that this country has ever seen. That is a shameful, shameful contribution.

Worse than that, the big ideas have been things around taxes on paper boys and cleaners, and these things have actually increased compliance on business and increased the grey tax market. We know that the regulatory impact statement—for example, for National’s paper boy tax policy—said that it had not even consulted businesses. It was expecting businesses to keep records on part-time cleaners in a way they never had before. It increased compliance costs in a miserly move to get a few extra dollars, because it is not making ends meet. The tax take has dropped under this Government because the economy has stalled. The economy has been growing at a rate slower than the growth of population in this country. This Government has an embarrassing, embarrassing record on economic issues and on development of this country.

I want to come back to the bill, the Financial Reporting Bill, although I could not but respond to those terrible allegations made by the member opposite, who made baseless allegations that were irrelevant to the bill but needed to be addressed.

Hon John Banks: What does this member know about small business?

Dr DAVID CLARK: The Minister for Small Business asks what I know about small business. I had the privilege of growing up in a family where my father and mother were both involved in businesses, Mr Banks. I have also acted as a contractor on occasions. But that member there—that member there—knows a lot about brown bags and brown envelopes with money in them that he has taken and the police say was not a legal action, and I do not think that that is appropriate for a Minister for Small Business. I do not think that is in any way appropriate. But I come back to the bill. They keep drawing me away. This is the bill developed by the “Minister of Novopay”. We have got to ask ourselves whether it has been virtually tested, or whether it has been trialled in parallel to other legislation, because, as one wag commented earlier today, the virtual testing of Novopay has led to only virtual pay at the end. It is inadequate legislation.

This bill here we would hope will produce better outcomes, because this is actually useful legislation. This is useful legislation, and we must compliment the Government when on the odd occasion it brings useful legislation to this House. This legislation will not set the world on fire, but it will address some important issues. The general policy statement for this bill tells us that the objective that the Government is trying to address here is to provide information to external users who have a need for an entity’s financial statements but are unable to demand them. We cannot fault that—we cannot fault that as an objective of a financial reporting system.

The three factors, when financial reporting is in the public interest, include public accountability. That is about transparency, at its most basic, where the public have a vested interest. The examples that are cited in the legislation are those where an entity is effectively owned by taxpayers or ratepayers, where it has sought funding through debt or equity instruments offered to the public, where it takes deposits from the public or holds assets in a fiduciary capacity, or where it receives donations and bequests. Mr Banks might take a call shortly to tell us a little more about that particular issue of transparency. We will be interested to hear what he has to say on that matter, as I am sure the courts will in December. So transparency is the first issue where financial reporting is in the public interest. The second issue is where it has economic significance, and this could be understood as size matters, because when large entities fail, it does have an impact on local and regional economies. We can understand why it is important that there are objective financial statements put out in cases where there is a wider public interest. And the final reason given, on principle, is about separation, and it is where owners of a business ought to be able to have decent financial statements that relate to their business, where they are not managing the entity itself. These principles are all sound principles, and the aim of this bill is to give them effect.

The three major outcomes we are told this bill achieves are that it reduces compliance costs where they are unnecessary costs—these are my words, not the bill’s words, you understand, Mr Deputy Speaker—and I want to support that. We need to ensure that compliance costs are dropped, where they are not necessary, not like in the paper boy tax. One of the things that is being added here is that shareholders will make the call with small companies about whether those reporting standards are needing to be met in a verifiable way or not, according to their own need. So that is reducing unnecessary compliance.

In some ways this bill will also increase some compliance costs. We are told that the second thing this bill achieves is to make sure that the law is strengthened, where the current reporting core requirements do not adequately meet users’ needs. We have not heard much from the Government about increasing compliance costs—although that is one thing this bill will achieve in some circumstances—but, actually, in some circumstances that is a good thing, where that compliance is producing an outcome that is of value to the wider public, where it is in the interests of transparency for the public, who have a vested interest, or where it is in the case of an entity that has economic significance in a region or in a location, or where it is about providing accountability to owners that they do not otherwise have. Can you imagine if we had had proper, good regulation around the companies that failed in the global financial crisis? If we actually had had transparent and clear reporting that was in the interests of those stakeholders who had their money invested in such companies, we might never have got to the position as a world that we got to as a result of the global financial crisis.

The general point here is, of course, that markets make good servants. Good, efficient markets make good servants. They use capital efficiently and allocate it well in the interests of the wider public and in the interests of economic development and the social good that is derived from that, and poorly regulated servants make bad masters—poorly regulated markets make bad masters. When we do not have effective and efficient regulation, we get either unnecessary costs or markets that are left without the kind of transparency that ensures that the public good is met alongside them.

The third thing we are told this bill achieves is that it will make “several other changes where the current financial reporting settings are inconsistent with the three indicators of financial reporting.” That is the third major outcome of this bill. I think that is probably more of a sundry item than a major achievement of the bill. Those things, though, are all worthwhile. The regulatory impact statement tells us that this bill has not yet been widely consulted upon, and that is consistent with what the Government has done so far, and often to the detriment of legislation introduced to this House. However, my colleague Mr Parker pointed out earlier that there is an intention to have a full and proper select committee process, which will bring appropriate scrutiny. That will improve the bill, and I congratulate the Government on making sure that there is a full and transparent process from here on in around the bill, to make these important changes that will make our regulation as efficient and appropriate as possible.

I will just finish with a brief indication of some of the changes that will be included for a company. They will not be prepared to require small and medium sized enterprise statements in accordance with the financial reporting standards issued by the External Reporting Board. There will be no requirement to prepare parent accounts if group accounts are prepared. An audit will be legally required to follow auditing standards issued by the External Reporting Board. These are all changes that are made that will affect individual companies, and there is a series of them. There is a table that I have seen prepared, which has a large number of changes that are made in this bill that will affect companies directly, that will affect limited partnerships, that will affect reporting entities, industrial and provident societies, building societies, and credit unions. It will be interesting to see what these entities have to say about the new reporting requirements—whether the building societies and credit unions feel they are being overly regulated, or whether this is appropriate as it stands.

I congratulate the Minister of Commerce on introducing this important legislation. I hope it is more successful than the Novopay debacle that he is overseeing, because we need good regulation in this country.

Peseta SAM LOTU-IIGA (National—Maungakiekie): It is a pleasure for me to speak on the first reading of the Financial Reporting Bill. I also want to thank the Minister of Commerce, the Hon Craig Foss, who is bringing this bill to the House. The bill is commendable because it focuses on the issues that matter to New Zealanders. That has been a great focus of this Government—on boosting economic growth, creating jobs, and reducing compliance costs.

I find it quite ironic that the last speaker, Dr David Clark, talked about being born into a family of business people. He did not say what they did or who they were, but he said he was born into a family. That is about the closest that that speaker has got to a business person. With the exception of Clayton Cosgrove, who stood up this evening, I cannot see many Labour members over there who have actually run businesses, who have actually been inside businesses and created jobs. They have been academics, union officials, and parliamentary secretaries. That is not going to cut it with the New Zealand public. They spend most of their lives tearing down businesses, tearing down jobs, and tearing down opportunities for New Zealanders, and their record has been quite clear. They are against mining—they are against mining. They do not want mining—an industry that creates jobs. They have been against the movie industry. And tonight The Hobbit premiere is on, but they are against that too. They are against convention centres as well, I have heard. I will tell you what: if it met the interests of the unions, they would be against the All Blacks.

Hon Members: Oh!

Peseta SAM LOTU-IIGA: That is right—you would be against the All Blacks.

This bill is about maintaining a strong economy that can provide financial security for families, real opportunities for our young people, and safer communities, because that is what a strong economy does. For the past 4 years this Government has been working hard to simplify and improve the integrity of our financial system. How have we done that? We have actually worked across this House, working on financial service providers legislation, working on the financial markets legislation, and working on the Financial Markets Conduct Bill and securities trustees legislation. We have done a lot of work in this area and we continue to do it with this bill.

So this bill is a once-in-a-generation opportunity to update financial reporting law in this country. And what does the bill do? Well, the main purpose of the Financial Reporting Bill is to improve our financial reporting system. That is right. It will do this by making all general purpose financial reporting consistent with the primary objective of that system. Do members opposite know what that system is? Do they know what it stands for? Not one person across the aisle has actually talked about it. Well, the objective is to provide information to external users who have a need for an entity’s financial statements but are unable to demand them. That is right. How does this bill do it? Again, I have not heard one statement from across the aisle here about how this bill will do it.

What does the bill do? It continues the External Reporting Board and defines its functions and powers. That is right. It also provides for the issue of financial reporting standards, and auditing and assurance standards. That is right. Just like in education, and just like in the building industry, we believe in standards.

Thirdly, it provides for auditor qualifications and other standard provisions relating to financial reporting duties under other enactments. So this bill cuts compliance costs. It cuts red tape that is faced by many of New Zealand’s small and medium sized companies. When I talk to the businesses in Maungakiekie—I used to run a business in Maungakiekie—that is what they say to me: “The number one priority, please, is to reduce compliance costs, reduce red tape, and let us get on with business.” That is right. These companies, in particular, will gain the benefit of much more simplified financial statements, which will help build productive and efficient businesses, as well as a productive economy.

So the main purpose of the company’s annual report—and Mr Cosgrove knows this; his colleagues might not know, but he certainly does—is to provide accountability by senior management to shareholders. But it is not just shareholders. They should provide that accountability to creditors, as well as to other stakeholders out there. But the great majority of our New Zealand companies are small and medium sized enterprises, and the managers of those companies are also some of the shareholders, so there is unlikely to be financial reporting accountability in practice. We know that.

So the small to medium enterprise changes in the bill mean that the Inland Revenue Department will need to beef up its company tax filing requirements, and we know that the separate empowering legislation will be introduced by the Hon Peter Dunne later on, at a later date. The bill also includes a new power that allows the External Reporting Board to issue accounting standards for registered charities. We know that it is a $1.2 billion industry. We know the great work that our charities do out there. The effect that this will have is it will benefit many of the preparers of those accounts for these charities who have limited accounting or bookkeeping skills, because it will reduce the uncertainty of what is expected of them.

A Supplementary Order Paper will be released when the bill is introduced, which will transfer financial reporting obligations to issuers, banks, and insurers from the Financial Reporting Act to the Financial Markets Conduct Act. This change will mean that the financial markets conduct enforcement liability regime will now apply.

This is a good and sensible bill. We have clearly laid out the case for that on this side of the House. It will bring down costs. It will streamline compliance to our small and medium sized enterprise sector, which can be only beneficial to our economy. We on this side of the House are 100 percent focused on allowing businesses to get on with the job of creating jobs, and I commend this bill to the House.

Hon LIANNE DALZIEL (Labour—Christchurch East): The regulatory impact statement was written so long ago, it was prepared by the Ministry of Economic Development. The Ministry of Economic Development has not actually been around for a little while. It is now “MoBIE”—the Ministry of Business, Innovation and Employment—which has replaced the Ministry of Economic Development.

When I looked at the fact that the regulatory impact statement was actually prepared by the Ministry of Economic Development, I thought I had better have a look at the timetable for implementation that the regulatory impact statement contained. This bill, the Financial Reporting Bill, was introduced into the House on 31 July this year. Today, of course, is 28 November, and already this bill has failed to meet the targets that were set by this regulatory impact statement. Let me read paragraph 42, the implementation section, which establishes that “A bill will need to be passed by Parliament to give effect to the changes. The aim is to introduce legislation in early 2012 with a view to enactment in late 2012 or early 2013.” So the Government is already way behind the eight ball. Although we have already heard from the former deputy chair of the Commerce Committee, which used to be a very, very good select committee—

Hon Clayton Cosgrove: Not the Minister for Small Business?

Hon LIANNE DALZIEL: —not the Minister for Small Business—what we have actually seen is that those members have failed to meet the very standard that they have set for themselves. I want to talk about this particular piece of legislation because I think financial reporting is very important for a whole range of reasons.

Hon Clayton Cosgrove: It’s usually donations.

Hon LIANNE DALZIEL: Well, yes. I am hearing from my colleague, who is interjecting on me from in front—and I will share this with the House, because I think what he is trying to do is to encourage the Minister for Small Business to take a call on the Financial Reporting Bill.

Hon Member: Associate Minister of Commerce.

Hon LIANNE DALZIEL: The Associate Minister of Commerce should take a call. He is the Minister responsible for regulatory reform. He is responsible for these kinds of areas and the impacts on small businesses.

Peseta Sam Lotu-Iiga: Talk about the bill. Come on!

Hon LIANNE DALZIEL: We have had every single member of the National Party stand in this House and talk about small business, and yet the Minister for Small Business is sitting there and has not yet taken a call. That is the point that my colleague has made more than once. He has suggested to me that I need to reference brown bags, but I am not sure why brown bags have to be mentioned in this particular debate. I do not know that it is relevant to financial reporting, because any finances that come in brown bags do not get reported. So I do not think that it is relevant to the particular issue that we have in front of us on this occasion.

It is very interesting that the National Party is more than happy to sit there and suggest that I am wide of the mark in terms of this particular bill when I have the regulatory impact statement in front of me and am quoting from it, and when every single one of its members has stood up and argued about the impact of this legislation on small business. We have the Minister for Small Business in the House and he should be getting up and speaking on this particular matter—the Associate Minister of Commerce, with his responsibility for regulatory reform. This is a regulatory matter, and the Minister for Regulatory Reform should be standing in the House and reporting on it.

There are three significant constraints in identifying the costs and benefits of the changes proposed in the regulatory impact statement, and I believe that the House should take note of each one of them. The first one that I want to mention is that the External Reporting Board is responsible for deciding which set of standards each class of reporting entity will need to comply with. This is incredibly relevant to how this bill progresses, because I am not persuaded that this bill has got it absolutely right.

Secondly, although there are some very useful statistics about the numbers of entities in some classes or subclasses, there is very limited information for others. I again believe that this is very relevant. As one of my colleagues said, the amount of consultation that the Government has undertaken on this legislation is not of a high standard, and that does need to be addressed by the select committee.

Thirdly, some of the costs and benefits are very difficult to quantify. It is all very well for Government members to stand in this House and say that we need to reduce compliance costs when we all see regulatory failure and the costs that are imposed on the taxpayers of New Zealand. You need only look at the question of the leaky building crisis, which my colleague has been raising on behalf of New Zealanders who have seen themselves in a difficult position. The truth is that costs and benefits—

Raymond Huo: I raise a point of order, Mr Speaker. I apologise to my colleague. The level of the noise from the National members is very unreasonable. It is not a good example for the good kids in the public gallery. I wish the Speaker would caution the National MPs.

Mr DEPUTY SPEAKER: I think the—[Interruption] Order! I think the misbehaviour is about equally shared across the House.

Hon LIANNE DALZIEL: The point that I am making is that some of the costs and benefits are very difficult to quantify, and part of the reason for that is that the Government has not done a very good job of consulting on this particular piece of legislation.

The regulatory impact statement talks about the benefits and the costs of financial reporting. It talks about the need for economic decision-making, and the benefit arising when users rely on general purpose financial reports to decide whether to transact with the reporting entity. So the member who spoke before me, Peseta Sam Lotu-Iiga, does not even know what he is talking about when he says that it is limited to the shareholders and to—

Peseta Sam Lotu-Iiga: I said stakeholders.

Hon LIANNE DALZIEL: —and to the stakeholders. No, he said the shareholders; that was what he was talking about. The point that I am making is that people actually need to know whether they should be transacting with a reporting entity, and that is what financial statements are for. They are used to contribute to decisions about whether to buy, sell, or hold shares, but—all together—whether to transact with an entity or not. The second is to promote accountability by the entity. This benefit arises when users rely on the general purpose financial reports to determine whether the reporting entity has been using or managing the user’s money effectively and efficiently. The report actually—

Mr DEPUTY SPEAKER: Order! [Interruption] Order! I am sorry to interrupt the member. The cross-flow of interjections and comments that are not related to what is being spoken has gotten out of order. I am going to ask members to restrain themselves. The debate has been in pretty good nature, but it has been rowdy. It has been too rowdy, and I just ask for a bit of consideration.

Hon Simon Bridges: I raise a point of order, Mr Speaker. The member seems to be talking to her—

Mr DEPUTY SPEAKER: Order! [Interruption] Order! That is not a point of order, and it is not helpful.

Hon LIANNE DALZIEL: The costs comprise some or all of the following, depending on the extent of the reporting obligations. They talk about preparation, they talk about assurance, they talk about distribution, and they talk about publication. All of these elements of financial reporting are important, and each one of them does have to be taken into account. When one looks at the degree of the cost involved in each one of them, we should be looking to see whether those costs can, in fact, be minimised while the benefits of financial reporting are enhanced. I believe that we can do that. That is what the regulatory impact statement is designed to do. It actually goes through each one of the entity types and works through each one of those specific issues to look at the questions of the issue, the status quo, the proposal, costs and benefits, and other options considered. That is what a regulatory impact analysis does require us to do.

What the regulatory impact statement actually described in the conclusion was that “The main aim of financial reporting is to find an appropriate balance between the benefits of transparency and accountability to users and the compliance costs associated with financial reporting.” What it concluded was that “this balance is achieved most of the time by applying the three indicators of financial reporting. The indicators have been departed from in a minority of cases”. It looks at the main examples, such as “the proportionately high fixed costs of financial reporting for small registered charities;”. These are the issues the Commerce Committee actually has to have a look at. If the select committee is not prepared to look at these, then that is fine, but I actually think this is a serious matter, and if the Government actually did care about these issues it would agree. It would look at “the proportionately high fixed costs of financial reporting for small registered charities; the need to fit financial reporting with the broader regulatory objectives in relation to gaming machine societies and retirement villages; and the proportionately high reporting-related costs arising from the dispersed beneficial ownership of small Māori asset governance entities.” Those are the issues the select committee is going to have to look at. We take it seriously on this side of the House, even though the Government does not.

MARK MITCHELL (National—Rodney): It is a pleasure to take a call on the Financial Reporting Bill. It was a pleasure to be in the House—I am sure my colleagues will agree—to hear Raymond Huo’s maiden speech. I will be rushing back to my office later to watch that again. It was so compelling.

I thought it was a bit unfair of my colleagues to refer to Mr Cosgrove and Mr Clark as the “Two Ronnies”. I have to say that I think “Arkwright and Granville” would be far more accurate. They are both working hard to keep the Labour shop open. I am not sure who “Gladys Emmanuel” would be, but they are both working very hard to keep their shop open.

This bill is a very important bill for small businesses. It has been great to listen in the House tonight to the Greens, New Zealand First, and Labour all commending the Minister of Commerce, Minister Foss, for bringing such a good bill to the House. I am sure that Mana will also join them in congratulating Minister Foss on such a good bill.

I would like to talk about the fact that this bill is just part of a much bigger programme that the National Government is implementing to make sure that compliance costs and savings are put in place for our small businesses. It was a very good point that was made before that small and medium sized businesses make up to 97 percent of enterprises in New Zealand. Family businesses and owner-operator enterprises make up to 60 percent of enterprises.

I would just like to talk about our party—actually, the wider party—and our electorate organisation, and the type of work that they are doing behind the scenes to assist, as well. I would like to talk about a very good remit that was brought to one of our regional conferences recently. It is a member’s bill that I have picked up, which is now in the ballot, and it is an amendment to the Disputes Tribunals Act.

Hon Clayton Cosgrove: Hang on. Wrong bill.

MARK MITCHELL: What it does is it raises the claim amount from $15,000—[Interruption] No, no, this is good, Mr Cosgrove. Listen. It raises the dispute amount from $15,000 to $30,000. What this means is that small and medium sized businesses can now, instead of forfeiting part of their claim, take it to the disputes tribunal. That can save them a lot of money. It prevents them from having to take it to the District Court, which is very costly and out of the reach of a lot of small businesses. I am using that as an example of another very good initiative that is being driven not necessarily by the parliamentary wing but by our members out in the electorates.

What is being driven by Labour Party members? Let us see what sorts of remits they have just had at their conference.

Scott Simpson: Unions.

MARK MITCHELL: Yes, absolutely right. They have just put up a remit that has allowed the Labour Party to be captured by the unions.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. Your predecessor indicated, and we agree, that this is quite a wide-ranging debate, but I fail to see—this is the Financial Reporting Bill—what other parties’ remit books or policies, or small claims courts, or anything have to do with it. None of that is mentioned in this bill of some 150-odd pages. I would just ask you to bring the member back to the bill.

The ASSISTANT SPEAKER (H V Ross Robertson): Although I can appreciate the member’s concern, I could also quote him Speakers’ ruling 46/2. We give a little bit of leeway. But I would ask the member to try to talk to the bill.

MARK MITCHELL: Certainly. Thank you, Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): That would help. Thank you.

MARK MITCHELL: I would like to come back and just point out some other very good measures that this Government has put in place. Levies for businesses are reduced by 22 percent, a saving of $247 million, or $1,120 a year for the average small business with, say, seven employees. That has a big impact and is something that is fairly significant to small businesses, which are often working on tight margins. We have not bowed to political pressure and sunk businesses by putting the minimum wage up to $15 an hour.

I ran a series of four business forums in my electorate of Rodney this year, where I got together small and medium sized business owners. One of the things that they continually told me—and this was coming from small-business owners; this was not coming from politicians; this was not coming from anyone other than the people who are actually running these small businesses—was “Yes, we would like to pay our people more, and we will pay our people more when we can afford it. But we will tell you what will happen if you decide to put the minimum wage at $15 an hour: the people who are now on $15 an hour will want to go to $17, and the ones who are on $17 will want to go to $19.” It will have a flow-on effect, it will put pressure on small businesses, and they will have to start laying people off. That is what the Labour Party is about—wanting to lay people off their jobs.

Good business growth goes with investment in infrastructure. We are investing heavily in the State highway network, and delivering significant productivity gains over time. I would just like to draw to your attention the importance of the Pūhoi to Wellsford motorway. This is going to open up Northland. It is going to create commerce. It is going to create jobs. The Opposition keeps referring to it as the “Holiday Highway”. I invite Phil Twyford—where is Phil Twyford—to come up to Rodney with me. I will put on some meetings with the locals, and we will see what they have to tell him about whether or not it is the “Holiday Highway”. That is a slap in the face for everyone who lives in Rodney and North Auckland.

I would just like to say that this is a very good bill. I look forward to receiving it at the Commerce Committee. I commend it to the House. Thank you.

Hon CLAYTON COSGROVE (Labour): Given that this is the last call, I think, in this debate, I seek leave for an extension of time of approximately 10 minutes—

The ASSISTANT SPEAKER (H V Ross Robertson): No. [Interruption] No.

Bill read a first time.

Bill referred to the Commerce Committee.

Bills

State Sector and Public Finance Reform Bill

First Reading

Hon Dr JONATHAN COLEMAN (Minister of State Services): I move, That the State Sector and Public Finance Reform Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.

Delivering better public services to New Zealanders within tight financial constraints is one of the Government’s top priorities. In March this year the Prime Minister launched the Better Public Services programme, which is designed to create State services that are more innovative, efficient, and focused on delivering on what New Zealanders want and expect. Although there is much that works well in our State sector, we need to perform better in securing the outcomes that matter most to New Zealanders. To achieve this, State services need to be reshaped so that they are fit for purpose, not just for the present but for the next decade or more.

One hundred years ago the Public Service Act 1912 became law. Wednesday, 7 November marked the 100th anniversary of a politically neutral and professional Public Service in New Zealand. A century on we take another step forward and pursue the challenges of tomorrow’s State services. This legislation is a key part in ensuring the State services continue to support a robust economy and reflect our values as a society in the next chapter of this story.

The State Sector and Public Finance Reform Bill is an omnibus bill that strengthens the management of the State sector and public finances in New Zealand. This bill has three parts: amendments to the State Sector Act 1988, amendments to the Public Finance Act 1989, and amendments to the Crown Entities Act 2004. These three Acts are the foundation of New Zealand’s public sector management system. The Government has consulted with political parties across the House on the proposals to amend these Acts. In my view, these are pragmatic, non-ideological changes, and I would expect that all parties will support what we are trying to do, regardless of the pressure that vested interests may try to apply.

The amendments provide a wider range of public sector management tools. These tools support and encourage Government agencies working more closely together and organising themselves around results that make a difference to New Zealand; Government agencies sharing functions and services, purchasing goods and services, and developing systems together in order to leverage the scale and expertise of the State services; greater financial and reporting flexibility to support agencies working together and to provide more meaningful performance information to Parliament; and stronger leadership at the system, sector, and departmental level to achieve the desired change in the performance of the State services.

The proposed changes to the State Sector Act 1988 will strengthen the State Services Commissioner’s role in leading the State services. It will extend chief executives’ responsibilities to consider the collective interest of the Government and make their stewardship role more explicitly focused on the Crown’s medium and long term interests. It will add a new organisational arrangement called a departmental agency to the options available for delivering public services. This is an alternative to creating a stand-alone department or Crown entity. A departmental agency will operate within the policy and funding framework of a host department, but will have operational autonomy under its own chief executive, who is directly responsible to a Minister who may or may not be the same as the host department’s Minister. The bill will also improve the clarity and operation of the legislation by way of technical changes.

New Zealand’s public finance legislation has a strong reputation internationally for being robust and comprehensive. This bill will ensure that this continues to be the case into the future. The proposed changes to the Public Finance Act 1989 will provide more meaningful information to Parliament about what the Government is spending and achieving and will reduce the compliance costs involved in producing that information. This includes shifting the default for tabling strategic information to at least once every 3 years. The changes will improve financial flexibility to facilitate innovation and different ways of working within the executive branch of Government. They will clarify departmental chief executives’ responsibilities for financial management and financial stewardship, and they will specify the governance regime for companies that are currently listed in schedule 4 of the Public Finance Act. The proposed changes to the Public Finance Act do not include amendments to the fiscal responsibility provisions in Part 2 of this Act, which are the subject of a separate bill.

The proposed changes to the Crown Entities Act 2004 will bring Crown entities within the influence of the proposed new leadership arrangements across the State sector, improving their ability to align with Government priorities while retaining Crown entities’ self-governing autonomy. The proposed changes will support coordination and collaboration between Crown entities and other agencies by amending the collective duties of Crown entity boards, so that board members ensure their entity collaborates with other entities where practicable. They will support functional leadership by expanding the scope for the use of whole-of-Government directions. They will simplify, streamline, and improve the planning and reporting provisions by providing greater flexibility to provide more meaningful performance information to Parliament, and by making the default for tabling statements of intent 3-yearly. They will formalise the role of the monitoring department and the ability of the Minister of State Services to request information, and they will improve the clarity and operation of the legislation by way of technical changes.

It is intended that this bill be divided into the following separate bills at the end of the Committee of the whole House stage. Part 1 will become the State Sector Amendment Bill, Part 2 will become the Public Finance Amendment Bill, and Part 3 will become the Crown Entities Amendment Bill.

Delivering better public services—

Hon David Cunliffe: Better doesn’t know any different.

Hon Dr JONATHAN COLEMAN: Do you want to shut up, David, for a second? Thanks. Delivering better public services involves a comprehensive and ongoing programme of work, supporting the effort and commitment of public servants. The State Sector and Public Finance Reform Bill tackles an important component of this programme of work by strengthening the current legislative framework to support better-performing State services. I commend this bill to the House.

CHRIS HIPKINS (Labour—Rimutaka): About the only notable thing about the speech that was just made by Jonathan Coleman is that at least it was on the right bill for a change. But as for everything else, it was possibly the most boring ministerial statement that we have heard in this House for quite some time, coming from the architect of the Mt Albert disaster for the National Party. There is much in this bill, the State Sector and Public Finance Reform Bill, that the Labour Party supports. We do support moves to join up the public sector more, to streamline public services more, and to make the public sector more efficient. There are a lot of elements in this bill that we would be very happy to work with the Government on. However, there are also elements in this bill that mean it is not possible for us to support it at its first reading. I am going to run through those in a moment, but I am also going to make an offer to the Government. If Government members genuinely believe that improving public services requires some cooperation across the Parliament—and I believe that it does—then we are willing to work with them. But they are going to have to give up some of the things they are trying to put forward in this bill in order to get that cross-party support.

There are three main areas of concern. I want to talk first of all about the ability of chief executives to delegate their powers outside of the Public Service. What we have at the moment is that a chief executive can delegate the powers they are given by law to someone else within the Public Service, and this Parliament can hold those people to account for that. Ultimately, every public servant, one way or the other, through the Public Service chain of command, is accountable to Parliament. What this bill will do is allow the chief executive to delegate the statutory powers they hold outside of the Public Service to an entity, a private entity, that is not accountable to Parliament. That is something that we in the Labour Party will simply not support. We have already seen this happen in a particular piece of legislation that related to private prisons, where statutory functions held by corrections staff can now be delegated to the private sector. We did not support that then, and we will not the support the blanket application of that particular principle to the wider Public Service.

The second thing that we are concerned about is the potential reduction in the scrutiny of the Public Service that comes into effect through this bill, through the amalgamation of the estimates and financial review scrutiny processes. I should point out at this point that that is quite a significant change to the way this Parliament operates. Yet the Standing Orders Committee has not been consulted about that. At the moment in this Parliament we have two major financial processes that we engage with through select committees. We have the estimates, where we look at the forward-looking Budgets of the Government, and we hold Ministers to account for the decisions they have made about how taxpayer money should be generated and how it should be spent. And there is a clear accountability of Ministers to their parliamentary colleagues through the select committee process, and, through that, to the public, for the decisions they make about where money should be appropriated and where it should be spent.

The second process that we have is one that is retrospective, and it is holding the Public Service to account for how that money has been spent and for the decisions that agencies have taken on how it is applied and how Government policy is delivered upon. The key accountability there is of the chief executive. The chief executive is responsible for their agency or their department delivering on what the Government has provided them funding to do. So there are two clear accountability processes here, and we as a Parliament deal with them separately, through the estimates process and through the financial review process. This bill combines those two processes together. That is a significant change to the way the Parliament operates, yet the organisations in the Parliament that would normally deal with these sorts of changes—the Standing Orders Committee and so on—have not been consulted about that.

Hon Clayton Cosgrove: You’re joking!

CHRIS HIPKINS: They have not been consulted. This has not gone to the Standing Orders Committee, yet it is a significant change to the way that the Parliament will function, and it effectively halves parliamentary scrutiny of the Public Service. Let us be really clear about this: this bill halves parliamentary scrutiny of the appropriation of public funds and the expenditure of public funds. That is something that we in the Labour Party simply will not support, and we certainly will not support it if the Government has not taken the steps to consult with other parties in Parliament to make sure that such a significant change is broadly supported.

In New Zealand we do not have a written constitution. We do not have a law or a written document that allows other laws to be struck down as unconstitutional. This Parliament has the ultimate power. What we say goes. The laws we pass apply. What that means is that when the rules of this place are changed, they should be changed only with broad, bipartisan—or multipartisan—agreement. That has not been secured for this bill. This is a huge change to the way the Parliament operates, and the National Government expects to pass this through, I think, with a one or two vote majority—or probably only a one vote majority, or maybe a three vote majority, depending on what the Māori Party does in this House. That is simply not good enough. It is halving parliamentary scrutiny of taxpayer financing. That is not good enough, and it is not OK for the Government to pass that with a bare majority. It is simply unacceptable. I will extend to the Government again the offer that we are willing to work with it on the elements of this bill that we think are positive, because there are many elements in the bill that we think are positive. But we will not allow it, and we will not support it, unilaterally overriding the rules of this Parliament and reducing the public scrutiny of its activities in the way that it intends to do.

The final area where the Labour Party has major concerns with this bill is around the changes that relate to collective bargaining by those working in the Public Service. What this bill allows the Government to do is issue by Order in Council directives around the outcomes of collective bargaining before the bargaining has even started. So the Government can effectively say by law what the outcome of collective bargaining is going to be before anyone has sat down at a table to even put a claim on the table. That just cuts against all of the principles that underpin good-faith employment relationships. It means that the Government decides before bargaining has even started what the outcome of it is going to be, and we will not support that either. That is the sort of policy that Rob Muldoon would have implemented. It would have given him the power—and he did have policies and legislation like this—to decree what settlements were going to be, without any reference to any kind of bargaining process. That is effectively what this bill will do, under the current provisions in it, and there is simply no way that we in the Labour Party will support that.

There are provisions in the bill, as I mentioned, that we will support. We do support moves to get Government departments working more closely together, sharing services, and making sure that the public sector offers, I guess, seamless career opportunities for those working within it. For younger people who move into the Public Service, they want to know that they can move around quite seamlessly between different departments and agencies. It is not like the old sort of days that we might be familiar with from TV shows like Gliding On where, once you got a job in a Government department, you were there for life. Younger people moving into the Public Service actually do not want that. What they do want to know is that when they move around within the Public Service, their tenure within the Public Service is going to be recognised. So elements of this bill that move more towards a seamless Public Service, and more towards career progression opportunities within the Public Service, are things that we will certainly support. In fact, we will actually go out there with the Government and champion them. Improving accountabilities of the Public Service, and improving accountabilities of Crown entities—these are elements of this bill that we will support.

But we will not support provisions in this bill that allow the Government effectively to contract out its statutory responsibilities. We will not support the provisions in this bill that allow the Government to decree by law the outcomes of a collective bargaining process before it has even started, and we will certainly not support the elements of this bill that will halve parliamentary scrutiny—and, through that, public scrutiny—of decisions the Government makes around the appropriation and expenditure of taxpayer money. That is simply not democratic, and it sets a very alarming precedent for this Parliament that the operating process of this Parliament can be changed by legislation rather than by a change to the Standing Orders supported by all of the Parliament. It is actually a very dangerous precedent for this Government to establish, and to seek to establish, through this legislation, and I seriously ask it to reconsider that element of this bill. Changes to the way Parliament operates, and changes to the provisions in our Standing Orders, should be made through the parliamentary process and through changes to the Standing Orders, not by legislation that is passed by a bare majority of the people in this Parliament. That is a change to our constitutional arrangements in New Zealand, and the way the Government is going about doing it is simply wrong.

TODD McCLAY (National—Rotorua): A more effective, more efficient, streamlined, more focused, and more professional Public Service is something that the National Party campaigned on in 2008, when we were elected to Government, and it is something that we campaigned on again in 2011, when we were re-elected to Government. I want to say to the Minister of State Services, Jonathan Coleman, that I think this is a very important piece of legislation that continues the job we started in 2008, when we were elected by New Zealanders to bring reform to the public sector and to focus on public finances. So I fully support this legislation, the State Sector and Public Finance Reform Bill, and I want to quote something from the statement put out by Minister Jonathan Coleman when this bill was introduced to Parliament a short time ago. He said: “This is an omnibus bill which amends the State Sector, Public Finance and Crown Entities Acts to provide the legislative grunt to deliver better public services,”.

I say to members opposite from the Labour Party that I accept that we will always have differences in some of these areas. But I would suggest to them that by supporting this legislation going to a select committee they are saying to New Zealanders that they are willing to consider changes. Indeed, by not supporting it going to a select committee, they are saying that they reject all of that legislation. It is interesting—

Chris Hipkins: No.

TODD McCLAY: Well, it is, because you say “We support a few things, but we are not going to vote for it.” and when we finally look back and history decides what your position was on this, we will find that you were against it. The last speaker in this debate, Chris Hipkins, has said that we should talk about it more and we should debate it more. But saying that a party in this House just opposes it outright suggests to the New Zealand public that Labour members do not want change to the public sector and do not think that our public finances need reforming—or, if they do, only on their terms. They are not willing to join us and to talk about it.

There will be other parties in this debate that I am sure will say—as we heard from the Green Party on the last piece of legislation, which makes important changes to reduce costs on New Zealand small and medium sized enterprises—that they will support it to the select committee stage but will not commit any further than that, because they think the select committee needs to do some work. I implore the Opposition Labour Party to actually vote for this bill—to come to the select committee, have a fair hearing, hear from New Zealanders, bring their thoughts to that committee, and let us see where we can reach agreement. At that stage, if they are still unhappy and they cannot support enough of it, well, then they will be able to come out and say: “At least we gave it a fair shot.” But, as I said earlier, by not supporting this bill going to a select committee, they are actually saying to New Zealanders that they think that change is not needed.

I just want to make one point, touch on one issue in the bill that I think is important, before we move on. Under the last 5 years of the Labour Government the public sector grew by 30 percent. I accept we were in quite different times then. The country’s finances looked very different and there were surpluses, but a 30 percent increase in the public sector without the same increase in productivity in the public sector is not something that should be done even in the best of economic times, let alone the economic times that we as a country are forced—and much of the world is forced—to go through.

I also want to note that since we came to Government the Labour Opposition has opposed every effort on behalf of the National Government to improve quality and efficiency in the Public Service. That does not suggest to me that Labour members do want change. It suggests to me that there is an old doctrine somewhere that says that this is not the type of change they want, and it is not a priority for them. I hope this does not mean that some time in the future when we have a change of Government—the Labour Party and the Green Party together—again we are going to see a ramping up of the size and the cost of government.

For two elections in a row New Zealanders have voted for change. They have voted for things to be streamlined. They have asked for a more effective, a more efficient, and a more focused and professional Public Service. Not so long ago—in fact, it might have been just last week or the beginning of this week—a survey came out that shows New Zealanders’ thoughts on the way that the public sector is working. They are showing some of the greatest confidence at any time in almost every area. I think that is a vote of confidence in what the Government is doing: getting on with the things that are important, and that New Zealanders have voted on.

I want to make one point here before I finish, because I am keen for this bill to get to the Finance and Expenditure Committee. Very much in two parts are we going to change the Public Finance Act to improve financial flexibility to support innovation and different ways of working with Government. The Opposition should be supporting that—improving financial flexibility to support innovation. Then, as to the changes to the Crown Entities Act, this bill will support sector-wide leadership by strengthening and aligning Crown entities. There is a great deal to be done around leadership. We need much more innovation.

I look forward to this debate in the Finance and Expenditure Committee. Again I implore members opposite to support it. Come and have the discussion, and then decide to cast it out afterwards if we cannot reach agreement, but do not just say today that it is all over, it is not worth it. Thank you.

Hon CLAYTON COSGROVE (Labour): This bill, the State Sector and Public Finance Reform Bill, is a serious piece of legislation. I begin by referencing the last couple of sentences of the previous speaker, Todd McClay, where he talked about the need to improve financial flexibility by encouraging innovation. That, of itself, is a worthy principle until you look at the other parts of this bill.

My colleague Chris Hipkins has talked about the truncation and contraction of parliamentary scrutiny. That is about financial flexibility all right. That is about innovation. That is about this Government trying to be innovative with the figures and flexible with the truth, and to contract the right of Parliament and select committees to scrutinise how public funds are spent and the financial performance of departments, and to cut it down.

Chris Hipkins referenced a very interesting point that, normally, these changes—where you change how select committees operate—are made through the Standing Orders Committee. Why are they made through the Standing Orders Committee? Well, I will just reference that eminent book by David McGee, Parliamentary Practice in New Zealand. The reason you have a Standing Orders Committee, unlike a Chamber process where we are partisan and we do divide, is that “The committee”—that is, the Standing Orders Committee—“operates by endeavouring to find a consensus on its proposals rather than these being merely the recommendations of a majority of the committee.” By that, David McGee means that when proposals go to change the Standing Orders, the processes of the Chamber, and, by definition, its select committees, there is buy-in, generally, by the overwhelming majority, if not all the parties, in this Parliament. We buy into it because it is an appropriate thing to do.

I want to take the people of New Zealand who might be listening through a little bit of the parliamentary process, because not many people are au fait with what we do on select committees. There are two opportunities to scrutinise a department and a Minister on how they appropriate and for what purpose they appropriate public funds, and then through a financial review process to examine that department as to how it has utilised those funds and how it has performed and met outcomes and objectives. Normally, a select committee—and members on this side of the House from all parties will know this—gets about an hour in the Budget process, in the appropriations process. It is about an hour because the majority rules. Normally, you get an hour to examine those appropriations when the Minister who is responsible for them is in the chair. You get an hour. That hour is normally made up of—and National Ministers are very professional at it—a good 10 or 15 minutes’ worth of presentation. Judith Collins, I remember, was fond of coming into the Law and Order Committee with guns and drugs—David Clendon will remember this—and all sorts of paraphernalia, including pepper spray. I think she was going to use it on a couple of her colleagues. She would take up half an hour of the process with a sort of sound and light show. So you are left with 45 minutes. Of those 45 minutes the Government takes about a third of that, and the Opposition, whose day it is to actually scrutinise the appropriations, gets about 20 to 30 minutes of the whole process. So for the people of New Zealand who are listening, that is all your Opposition representatives get, because you know damn well that the Government—apart from John Hayes, who has become a specialist on the select committee in asking some very penetrating questions on behalf of the Opposition, the few we feed to him, and he brasses his chairman Todd McClay off a bit—will leave you with about 20 or 30 minutes to hold a Minister, a department, and the Government to account.

Then later in the year, around September or October, a similar process happens, with 1 hour—no Minister, because it is the financial review process—to look at what the Government and the department have done with the dough. Again, there are about 50 minutes—10 minutes of a presentation, then the Government has a crack, and there are about 30 minutes left to actually hold the Government to account. So that gives you about an hour in the whole 12-month financial year. What these guys want to do is combine both those processes. Are they saying there is going to be double time to actually examine the votes and combine them into one process, not using the David McGee principle of going through the Standing Orders Committee, where there is general consensus with a proper process to change the Standing Orders? Oh no, they want to create, to quote Todd McClay, improved financial flexibility and to encourage innovation. Oh yes, this is a huge innovation, because it allows a Government and every Minister, and through the Minister the chief executive and the department, to abrogate their responsibility to front up so that this Parliament, through its select committee process, can examine them, hold their feet to the fire, ask questions that they must answer in front of journalists and the public, and be accountable for the money they spend and appropriate.

In respect of this Government, if you look at, say, State-owned enterprises and the legislation that Tony Ryall championed, we now have State-owned enterprises taken out of public scrutiny. No Official Information Act request is applicable to those State-owned enterprises that are on the block to be sold. There are no parliamentary questions, no select committee process, and no Ombudsman—a complete lack of parliamentary scrutiny, even though, at the very least, the taxpayer may, if they are lucky, end up retaining 51 percent of those State-owned enterprises.

We know also that this Government, when it comes to Official Information Act requests, has broken every protocol. We know there are a record number of complaints before the Ombudsman. You cannot get out of these geniuses even a list of the reports they have received, even the titles. They will not offer those. They will not provide those. The best example is actually Hekia Parata, who, on the options paper for closing schools in Canterbury, simply refused day after day and week after week to release that information, because she said it was not germane to those schools. Well, those schools and those communities believed absolutely that it was germane, because they wanted to know the rationale—or lack of rationale—and logic behind Hekia Parata’s decision to put the axe through them.

This is very, very important legislation, and we oppose it on those grounds. We do not, as the last speaker said as he sort of sprayed across the House, think that if we oppose this, we are against efficiency in the Public Service. Rubbish! The way you get better productivity, better professionalism, and better accountability is through openness, transparency, and scrutiny and through asking the Ministers, the chief executives, and the boards of these entities the tough questions on what they did, what they achieved, why they messed up, and how they executed the public funds that the taxpayer provided to them. You get about 2 hours a year to do it, and a few questions, which they bat around. This crew should stand up and justify why that is, and why it wants to halve that process, combine it, and truncate it so there is less scrutiny.

We are going to have the Minister for Canterbury Earthquake Recovery before a select committee—it is rather an important portfolio for people down my way and for people in New Zealand as a whole—to front up, with the Canterbury Earthquake Recovery Authority, for the financial review. Again, we are going to get 1 hour to put him through his paces, to try to get some questions answered in respect of what is happening and what is not happening down in Christchurch. If this legislation goes through next year, when it receives the Royal assent the following year that process will be truncated and halved. That is not on—

John Hayes: What about question time?

Hon CLAYTON COSGROVE: What about question time?

John Hayes: What about the Official Information Act?

Hon CLAYTON COSGROVE: You see, there you go. Mr Hayes says “What about the Official Information Act?” and “What about question time?”. Well, here is what we have. At the moment, Mr Hayes, we have question time, we have the Official Information Act, and we have the added scrutiny of select committees, which he may not value. Mr Hayes says: “Halve the select committee process. Halve the scrutiny. You guys should be satisfied, as taxpayers. Taxpayers should be satisfied because there is question time and there is the Official Information Act.” Well, the problem with the Official Information Act, of course, as we have said, is that the Ombudsman is buried in Official Information Act complaints because Mr Hayes’ Ministers will not front up with information—will not front up—

Iain Lees-Galloway: Or money.

Hon CLAYTON COSGROVE: —or money—and Hekia Parata and her holding back of the options paper on the schools in Christchurch is an example of that. For Mr Hayes, a few questions each day in Parliament and the odd Official Information Act request, which his Ministers can bat around, delay, and refuse, is enough scrutiny for him. That is enough scrutiny. This is the man, of course, who said of the Retail Deposit Guarantee Scheme, when his Government lost about $500 million on behalf of the taxpayer, “That’s loose change.” These guys have to stand up, and we want to know why they want to truncate our right, on behalf of the people, to scrutinise this Government.

Denise Roche: Mr Speaker—

The ASSISTANT SPEAKER (H V Ross Robertson): I call the honourable member Holly Walker.

Hon Trevor Mallard: We don’t.

The ASSISTANT SPEAKER (H V Ross Robertson): Oh, it is Denise. I am sorry—Denise Roche. I will get it right.

DENISE ROCHE (Green): I rise to oppose this bill, the State Sector and Public Finance Reform Bill. The Green Party will be opposing this bill because although, as my colleagues on this side of the House have already explained, there are some good parts in it, on the whole we see this as part of the National Government’s “Better Public Services With Fewer Resources” agenda, rather than just Better Public Services.

The changes that this bill is promoting stem from the Better Public Services Advisory Group, which reported back in March, and it did report back some very good things, which this bill does take up. Some of the provisions are around the whole-of-Government approach, which should reduce duplication. For example, chief executives of departments will have to think about the wider interests of Government in their work, and Budget appropriations may be based around an overarching purpose, rather than focused on particular departments or silos.

But overall, this bill represents a challenge to the employment rights of public servants, and together with the changes that this Government plans to make to the Employment Relations Act and with the introduction of youth rates, it forms part of an orchestrated attack on all workers.

There is no fundamental change to the model that was put in place in 1988, and there are changes tucked into this bill that will undermine State sector workers’ employment rights and ease the path to privatisation. I think that is one of the serious consequences of this bill: that public-funded services and public money may go to the private sector without greater public benefit.

If you look, for example, at the provisions around technical redundancies, under this measure employees who receive a redundancy notice and are offered an alternative position within the State sector—and the State sector is very wide, spanning from schools to hospitals to the Housing New Zealand Corporation, and every other agency in between—if they get a job in one of those agencies, then they are not entitled to redundancy compensation. The mere offer of a job anywhere would mean they are not entitled to redundancy. This measure is a reaction against a few very high-profile cases where senior executives got really big payouts. But this measure will lead to gaming of the system. It will push people into contracting. It will lead to more of that contracting culture that has become so prevalent in the Public Service, where millions are spent on consultants. Anyway, it also presumes there are jobs to go to. Like many parts of this bill, this provision is using a sledgehammer to crack a nut. A better solution would be to ensure that if an employee is made redundant, the employer makes every effort to find them alternative employment, and, if not, then they are granted redundancy.

The Government also wants to dictate to employers in the State sector, through Orders in Council, about what they can agree to before collective bargaining takes place. This point has already been made by some of the speakers on this side of the House. It gives the Government the right to set pay and condition expectations, and it gives them a legal status that they do not currently have. By issuing the Government’s expectations for pay and employment conditions in the State sector as an Order in Council, the Government will be able to set the bargaining landscape and undermine collective bargaining right across the State sector. In effect, it is a wage freeze, without actually calling it a wage freeze, and it undermines the whole concept of bargaining in good faith.

This bill also gives chief executives of departments the authority to delegate statutory functions to non-government providers. Chief executives will be able to delegate statutory functions and powers between agencies, and even to non-governmental service providers. All that would be required is ministerial approval. This is a groundbreaking piece of legislation. It has never been done before. It removes the very clear boundaries between what is clearly the statutory role of the State and what can be delegated to not-for-profit organisations or non-governmental organisations. Privatisation of these functions will be easier. Privatisation will be easier.

Some jobs in the State sector have special powers that must be used with great care. They might include, for example, the power to search private property or to detain members of the public. Those are some of the statutory powers that could be delegated to the private sector. Is that what we want—private police forces? In the district health board sector, for example, those statutory functions include people working in mental health who have the power to section people.

Non-governmental organisations should be concerned about those fish-hooks, those special powers, because they do not necessarily come with more funding. Community sector providers may have to take on coercive responsibilities that could undermine their relationship and the trust that they currently have in their communities and with their clients. The public should be concerned about the dangers of devolving the powers of the State—for example, enforcement, coercion, and child protection—and what sort of an effect that can have on vulnerable people. How will that impact on our communities?

This bill overall is not a good thing for New Zealand. We are currently seeing a drop in the amount of public services, not better public services. We are talking fewer public services for the citizens of New Zealand. We are currently seeing a reduction in jobs. There have been over 7,000 job losses—over 7,000 job losses—according to the Public Service Association over the last 4 years, and this was despite a promise by this Government that it would simply cap numbers. It has gone well beyond that now. In Napier, for example, over the last 4 years in a radius of 18 kilometres there was a loss of over 200 Public Service jobs. Think—what does that do to a local economy?

The tragedy of Pike River was a terrible thing, but it has unleashed a chorus of voices from across the political spectrum that are saying it is time for a rethink. It definitely is a time for a rethink about our public services. Rosemary McLeod said quite recently in one of her articles that Pike River shows what happens when you tear away at the fabric of our public services. She said it is an ugly indictment of an ugly time, and, like her, I doubt that even now we have learnt our lesson. It is time we did learn that lesson. This bill tells me that the Government has not.

It is time for a rethink. I encourage the Government to go back to the drawing board, to listen to the experts—those people who deliver our public services to us every day and who know better than anyone else how to deliver better public services.

PAUL GOLDSMITH (National): I think it is worth remembering the four main priorities of this Government as we embark on this important debate on this important bill, the State Sector and Public Finance Reform Bill. It is about getting our books in order first and foremost; rebuilding Christchurch; growing and deepening the New Zealand economy, such as through the Business Growth Agenda; and delivering better public services to New Zealanders.

I suppose this bill is primarily focused on that last one—building better public services for New Zealanders—because we have to remember that during the last period of the Labour Government a lot of resources were poured into the public sector. There was a 50 percent increase in spending and a very large increase in the core Public Service over that period as well, but there was precious little to show for it. This Government has taken a very different approach. It has been very focused on the results, not the inputs, and on getting as much quality out of the sector as we can.

The most satisfying thing that I have seen recently is the Kiwis Count survey, which has shown that New Zealanders are increasingly satisfied with the front-line public services they have received over the last few years, notwithstanding the very tight fiscal parameters in which we have worked and the fact that there has not been much new money to put in. But still the results have been better, and New Zealanders are more satisfied with those results, so I think we have got something to build on here.

We established the Better Public Services Advisory Group back in May 2011. A number of recommendations were brought forward as a result of that, such as managing the State agencies to ensure that they function as a system that is focused on results that will have the greatest impact on New Zealanders’ lives rather than operating as individual agencies in pursuit of their own singular objectives. That has been a tradition for a long time, and it is very difficult to change the culture of the Public Service. This is what this legislation is all about, and it is also about clarifying and strengthening leadership and reducing the clutter of decision points.

So this legislation here is an omnibus bill that is drawing together changes to the State Sector Act 1988 that will deal with some of those issues about governance across the whole system, and ensure that the State Sector Act is a modern, flexible, and generally fit for purpose piece of legislation. Also, there are a number of changes to the Public Finance Act 1989, which are about ensuring that we have more meaningful information given to Parliament about what the Government is spending and achieving, and reducing the compliance costs involved in producing that information. It includes shifting the default for tabling strategic information to at least once every 3 years and improving the financial flexibility to facilitate innovation and different ways of working with the executive branch of the Government. So I think there is going to be a lot to discuss and debate at the select committee and I commend this bill to the House. Thank you.

ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on the State Sector and Public Finance Reform Bill. Can I also concur with some of the other members of this House and say how boring it was to hear the Hon Jonathan Coleman deliver his obviously written speech, which was obviously prepared by somebody other than him. It was the equivalent of watching paint dry or watching the grass on the front lawn grow. It certainly was not riveting stuff in terms of reforming the State sector.

In regards to that, can I say firstly that although New Zealand First does appreciate the need to always find greater efficiencies in any part of Government, whether it be central government or local government, we do not, however, support the way the National Government is going about this in terms of these State sector reforms. This large, very wide-ranging, complex omnibus bill purports to provide the legislative basis for better public services and also strengthening the legislative framework. Yes, there are lots and lots of fine words and empty phrases in this bill, but they are just empty phrases. It talks about more collaboration among Government departments, it talks about sharing functions and services, it talks about sharing purchasing goods and services, logistics, more efficient and effective systems, and greater financial and reporting flexibility, and on and on it goes. But much of it is simply talk. Much of it is just lip service. Much of it is, again, window glossing by this National Government to move the deckchairs on the Titanic so that it looks like it is doing something. In actual fact, it is just window glossing over what is a tragic situation. It is a situation like the Mikhail Lermontov about to hit the rocks in the Marlborough Sounds. The Government says that it is all fine, it is all glossy, we are all on the red carpet at Hobbitville down in Wellington today, and everything is roses, but, in actual fact, things are grim. And down in the engine room of the Mikhail Lermontov, and down in the engine room of the Titanic, things are looking pretty grim.

The Government gives the same old buzzwords: “efficiency”, “simplify”, “collaborate”, “logistics”, “flexibility”, “streamline”, and “improved governance”. The rhetoric goes on and on and on, and we hear it from every Minister. We hear it whether it is the education Minister, whether it is the health Minister, whether it is the State services Minister, whether it is the building and construction Minister—they all give the same rhetoric. But, at the end of the day, things in New Zealand are not getting better. These cutbacks will continue across the Public Service from this Government. We will see that, and the fabric of our public sector will continue to fray. The downgrading of our public sector will see the resulting degradation of society in New Zealand.

That same thinking—or should we say lack of thinking—has seen the likes of the Pike River coalmine disaster, where there was a reduction in mines inspectors. It has seen the Rena ship disaster, where, again, our agencies, such as Maritime New Zealand, were not up with the play, did not have the resources, did not have a response vessel available to react to it, and did not have the processes in place to react to it. The same thinking—and the same lack of thinking—has seen leaky homes come from the National Government, a former National Government of the 1990s, carried on through to this National Government, which similarly wants to reduce under the Building Act amendment legislation compliance in terms of building. In so doing we will have leaky homes revisited, part 2, in the next 10 years. What the Government is doing under the Building Act amendment legislation, similarly, is downgrading the standards of building in this country so that as well as all the 1990s and 2000s homes that are currently leaking we will have the 2012-15 homes leaking in 10 years’ time.

Fortunately, most of those members over there will not be in Government by then; they will be well gone. In fact, they will be gone back to the Wairarapa and wherever else they come from. They will be well gone. Some of us who are still of an age that can respond to the situation will have to pick up the pieces, will have to pick up the pieces on behalf of good, working Kiwi people—Kiwi husbands and wives, families, and hard-working Kiwis, who will say once again: “How did the National Government invoke this on New Zealand and wind down the Public Service to a level where incompetent decisions were made?”.

It is interesting when you start reading through this very lengthy bill—it is something like 121 pages—that there are some real hidden pitfalls in it. Although the Government says that it is going to be more efficient and it will cut down the Public Service and then do all this, there are some real fish hooks in this bill. I would challenge some of the National Party people over there to refer to—they have probably never opened it; have you opened the bill, any of you—new section 6, “Functions of Commissioner”, in clause 11. It says: “For the purpose of carrying out the Commissioner’s role,”—this is the State Services Commissioner—“the principal functions of the Commissioner are to” and then new paragraph (j) says “exercise such other functions with respect to the administration and management of the Public Service as the Prime Minister from time to time directs (not being functions conferred by this Act or any other Act on a chief executive other than the Commissioner).”

In other words, one little paragraph hidden right in amongst here gives the Prime Minister absolute ultimate power to turn to the State Services Commissioner and say: “Oi, into my office. Up to the ninth floor. Get up here quick. I want you to do this.” And under new section 6(j) he says: “Forget all the Acts, forget that we have got a Parliament, forget that we have got a democracy, forget that we are part of a Westminster democracy—one of the oldest democracies in the world. Forget that New Zealanders—and we see them around the walls of this Chamber—went off to battle to fight for democracy. Forget that.” Under this bill the Prime Minister says: “Oi, I’ve got ultimate power over you, and I think you should do this.” Not you, Mr Speaker. You would never do that. I know that you would never do that, but John Key, as we all know him, would do that, because he runs a shonky John Key Government, and under a shonky John Key Government, shonky John Key would get the State Services Commissioner up to the ninth floor of the Beehive and he would say: “I’m going to exercise my right to tell you in respect of the administration and management of the Public Service that I think you should do this.”

That is appalling, and this is the sort of legislation that this Government is putting through. This bill is not a solution for anything; rather, it entrenches current problems. This bill will not stop the erosion and undermining of the public sector. This bill creates an illusion of progress and improvement, but the evidence to support it is missing. There is no clear and compelling case that this bill takes us to better and more cost-effective public services. No, we do not want a bloated public sector—certainly, we do not want a bloated public sector—but also we do not want a hollowed-out State services sector where we end up with more Pike Rivers, where we end up with more Rena disasters, where we end up with more leaky homes, and where we end up with the bureaucracy simply not controlling the functions of New Zealand. New Zealand First will not support this bill.

JOHN HAYES (National—Wairarapa): Clearly, that last speech from Andrew Williams was not delivered by anybody who could have been elected to this Chamber by the people of New Zealand—absolutely impossible. I have never in my life heard such a long string of meaningless clichés that meant nothing.

When I think about it, I can understand also why the people down in the South Island got rid of that member who was speaking before, Clayton Cosgrove, and moved him from the electorate category to a list member of Parliament. What he had to say was absolutely meaningless in the context of the job of a member of Parliament, which lasts for much, much longer than 1 hour in a select committee, when Mr Cosgrove or I or another member in the select committee might get some questions to ask. This is a much more comprehensive package of opportunities for members of Parliament to do their job, to read their papers, to ask questions, and to release press statements. There are all sorts of ways of keeping the Government in a position to account, and Clayton Cosgrove and the last speaker, Andrew Williams, were both way off beam.

I would like, for the benefit of these members of Parliament who do not have a sense of history or an understanding of our public sector, to just go back to the end of the Second World War. What we saw happen as a feature of all OECD economies after the Second World War was that the public sectors grew from about 25 percent to about 45 percent of GDP. When they talk and wring their hands across the other side of the House and say “Oh, but all these services are being cut.”, actually, they are paid for by taxpayers, with the money coming out of their pockets. We are now in a situation here in New Zealand where our Public Service consumes about 39 percent of GDP. That money comes from people’s pockets, and it is too much.

We have not tried in any way to decrease the amount of money going out on welfare payments. What our reforms are about is improving the efficiency of the public sector. I see my colleague Mr Ryall sitting in front here, and I would say to him and to this House that the health sector is the standout example of achievement of reforms and higher outcomes, and they are the sorts of reforms that this legislation is endeavouring to provide. After the Labour Government got into the extensive privatisation and selling of State assets during Mr Cosgrove’s watch, we got into a situation where privatisation was an attempt to instil market forces and also drop transaction costs across the Public Service.

This legislation that we have in front of us now is an omnibus bill. It might be 120 pages, but it is amending a range of legislation. Why are we wanting to do it? Because we are wanting to follow the example set by Mr Ryall, and we want to deliver better services to New Zealanders. That was a very clear National Party priority at the last election.

This bill amends the State Sector Act, the Public Finance Act, and the Crown Entities Act. What we are trying to do is to provide legislation in a way that will allow us to give more legislative grunt to deliver better public services. I think that the amendments will create a range of public sector management tools. Yes, they will enable the Prime Minister to give direction to the chair of the State Services Commission, because that will foster an innovative, efficient public sector that will deliver better-identified results for New Zealanders.

If we think about the last 5 years of Government, the public sector increased under the Labour administration by 30 percent—by 30 percent.

Hon David Cunliffe: How much did the economy grow by?

JOHN HAYES: Well, you can speak about this, Mr Cunliffe, but if you think about the expansion of the size of the foreign ministry and embassies created in all sorts of odd places, the numbers increased exponentially. The aid programme increased exponentially. All of this is coming out of individual people’s pockets. Every time we have tried to improve the quality and efficiency of the public sector, the Opposition parties have said: “No, you can’t do it. We want to increase the size of the public sector, we want to increase the cost to Government, and we want to take more money out of people’s pockets.” That is what the Opposition is wanting to do.

So as Mr Williams—I think his name is—said, we are trying to strengthen the role of the State Services Commissioner, and we are trying to give the Prime Minister, for example, direction to do it, because the public sector must follow the Government’s direction—it must follow the Government’s direction.

I believe that this is a very good bill. It is a very sensible bill, and I thoroughly commend it to the House for further consideration.

DARIEN FENTON (Labour): I rise to take a call in the first reading of the State Sector and Public Finance Reform Bill. I believe that my colleagues have laid out our differences with this bill very, very clearly. I do want to emphasise that on this side of the House we have no problem with the idea of building Better Public Services, or whatever slogan the National Party is using at the moment. There is no doubt about it, there are some good things in this bill. It has a mixture of some good things and some deeply worrying measures.

On the one hand, there are the proposed provisions that will enhance whole-of-Government approaches, which should lessen duplication and silo behaviour. We support Government agencies working more closely together. We agree with sharing some functions and services, purchasing goods and services jointly, and developing systems together in order to best leverage the resources of the State. So I want to repeat for the benefit of the National Government that Labour is in agreement with many of the provisions that are in this bill, but we have some fundamental differences. As I said, my colleagues have laid them out very clearly, but I intend to repeat the three major concerns that we have with this bill and the reason we feel that we cannot vote for it tonight.

The first concern that we have is the provision that enables the delegation of the functions or powers of chief executives to someone outside the public sector. This could include a contractor in the private sector, and all that is required is the Minster’s approval—no other test, just the Minister’s approval. We would like to know why this is being proposed. Why would the functions or powers of chief executives be taken outside the public sector, other than to provide an opportunity for the Government to give jobs to its mates or have its mates get more of their mitts on Public Service decision-making and resources?

This change will reduce the opportunity for parliamentary and public scrutiny, and it will facilitate privatisation. The Government can deny it all it likes, but we have seen it in the prison service. I think that is what this is really about, because there is no doubt about it, the change would make it easier to contract out statutory functions. It would fragment services and reduce oversight and public accountability. That is an extraordinary provision. If the agenda is not how I have described it, I look forward to the Government refuting that in the select committee and meeting our concerns.

The second area that I want to outline is the one that my colleagues have discussed at length, which is the restriction on the scrutiny applied to Ministers and departments. I think we have had a very good description tonight from Clayton Cosgrove and Chris Hipkins about the role of parliamentarians in applying scrutiny to Ministers and departments for the money that they spend, the money of taxpayers that they spend, and the decisions that they make. But, instead, we are going to see that scrutiny halved, from what I can tell from the bill. Instead of yearly strategic information, we are going to get it 3-yearly.

What worries me about these provisions is that they are not a move for better transparency or accountability. We are very concerned about the restriction on access that we are already experiencing. Others have mentioned the Official Information Act. We all know that process is fraught. Appealing to the Ombudsman is just really hard. It means an MP’s objections just join a very long queue as an under-resourced office tries to cope with the avoidance tactics of this Government. We need far more openness, not greater restrictions on the provision of information, and we are very concerned about the implications of this on the estimates and the financial review processes. The provisions are far from clear, and I have heard nothing from the Government members that gives me any assurance about that.

There seems to be a trend towards shutting down public debate. For example, the minimum wage consultation was opened up last week. The Acting Minister of Labour was asked questions by me about the process and whether it was changing, and he said it was under Cabinet consideration. That was like a week or two ago. The Council of Trade Unions and Business New Zealand have been advised that they are the only parties that are going to be consulted about the minimum wage review, and there are only three criteria that will apply. They have been given until next week to get their submissions in. The Council of Trade Unions, for example, represents 350,000 workers throughout New Zealand, and it is supposed to get a submission in by next week. It has been given about a week and a half. I think that is outrageous, and I think it is deliberately designed to make sure that consultation and people having a say are curtailed.

I think the most objectionable part of this bill for me is the proposal to establish Government Workforce Policy Orders. These are policies drafted by the State Services Commission that can be made into Government Workforce Policy Orders by an Order in Council on the recommendation of the Minister. These can cover matters such as pay and conditions and they can apply to a single agency or to more than one agency, which could be departments, Crown agents, or autonomous Crown entities. So the parameters of collective bargaining such as pay and conditions will have a level of interference that is in direct contradiction to our labour laws. It effectively lets the Government decree the outcome of bargaining before the process has even begun. I see this as a massive breach of the good-faith provisions of our collective bargaining laws and an assault on our international labour laws and human rights.

Why would the Government do this? I have been puzzling over this. This Government may have been looking to Wisconsin in the United States, and maybe this is New Zealand’s version of Wisconsin’s attack on collective bargaining rights in the public sector. Wisconsin mounted a politically motivated attack on its Public Service workers a couple of years ago, removing from them the right to collectively bargain. The court has just reinstated those rights, saying that the removal violated the workers’ right to free speech, freedom of association, and equal protection.

We know this Government is hell-bent on reducing expenditure in the State sector, come what may, and we have seen the fallout from that with its stuff-ups in IT and its short-sighted cuts in front-line services, but we also know that State sector workers are highly unionised. That means that they are a bit of an obvious target for implementing employment policies aimed at reducing the influence on the overall labour market and aimed at cutting wages.

When you put this change together with the Government’s intentions to change collective bargaining rules for all workers, the picture starts to come together. It goes hand in hand with the Government’s plan to gut collective bargaining, to enable new staff to be employed on less pay and conditions, to enable employers to walk away from collective bargaining, and for multi-employer agreements to be ditched.

We are very concerned about those three provisions, in particular around the collective bargaining in the State sector. Wages are already too low in New Zealand. Take away collective bargaining in the State sector, further weaken unions, then the only thing that workers will have left to fall back on is the good old trickle-down theory. We know that did not work. I would ask why any State sector worker would put up with that. They have been demoralised, overworked, and restructured to death and they are undervalued by this Government. I think that these provisions are atrocious, and that is why we cannot support this bill.

Debate interrupted.

The House adjourned at 10 p.m.