Tuesday, 19 February 2013

Tuesday, 19 February 2013

Tuesday, 19 February 2013

Mr Speaker took the Chair at 2 p.m.

Prayers.

Resignations

Dr The Rt Hon Lockwood Smith, New Zealand National

Dr The Rt Hon Alexander Lockwood Smith

Mr SPEAKER: I wish to advise the House that I have received a letter from, resigning his seat in the House with effect at midnight on Thursday, 14 February 2013.

List Member Vacancy

List Member Vacancy

Mr SPEAKER: I have been advised by the Electoral Commissioner that pursuant to section 137 of the Electoral Act 1993, Aaron Wayne Gilmore has been declared to be elected a member of the House of Representatives in place of Dr The Rt Hon Alexander Lockwood Smith. I understand that Aaron Gilmore is present and wishes to take the oath. Would he please come forward to the chair on my right.

Members Sworn

Members Sworn

Mr Speaker administered the Oath of Allegiance to Aaron Gilmore, who then took his seat in the House.

Speaker’s Rulings

Tabling of Documents—Material Already Available to Members

Mr SPEAKER: Honourable members, following points of order raised last week, I have given further thought to the tabling of documents by leave. The primary purpose of the procedure for seeking leave to table a document is to inform the proceedings of the House by making available to members documents that would not otherwise be available. Speakers’ rulings make it clear that members should not seek leave to table documents that are already available as part of the House’s proceedings available on the Parliament website; legislation, Government media releases, and other reports available on Government websites; recent media articles from the major daily newspapers and national weeklies or their websites, and from the major radio or television broadcasters or their websites. The intention is that documents that are not readily available to members that may be of significance, or may be useful for members’ information, should be able to be tabled where the House gives its consent.

The challenge for the Speaker is what constitutes readily available in the context of the internet. Although today most documents are on the internet, the sheer volume of material means that they cannot always be said to be readily available. It seems not unreasonable that I should allow leave to be sought to table historic documents and media releases and reports from credible overseas publications or organisations. The websites on which they may be found will be much less familiar to members, and it is less likely that there will be reference to them in the New Zealand media or on websites that members commonly access. It is important that documents that members seek leave to table genuinely inform the proceedings of the House.

I remind members that seeking leave to table a document is not an opportunity for members to make statements to the House. Leave should not be sought to table members’ own views from websites, tweets, or blogs.

Questions for Oral Answer

Questions to Ministers

Schools, Canterbury—Consultation Process and Interim Decisions on Proposed Closures and Mergers

1. METIRIA TUREI (Co-Leader—Green) to the Minister of Education: In relation to the proposed school closures in Christchurch, does she agree with Manning Intermediate head Richard Chambers that “The Minister promised us that we would have two years no matter what. It was a guarantee she made to our community repeatedly, it was unequivocal”?

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. No; I repeatedly made it clear that it was a proposal that we were inviting feedback on. I would also refer Mr Chambers to the letter he received from me yesterday, which gave two options for the Manning community to comment on: one was closing in 2014; one was closing in 2015.

Metiria Turei: Is the Minister saying that this principal and his colleagues are lying?

Hon HEKIA PARATA: No.

Metiria Turei: How does the Minister expect to regain the confidence of the 60 percent of New Zealanders who believe she is too incompetent to be Minister of Education when she is reneging on promises—[Interruption]

Mr SPEAKER: Order!

Metiria Turei: —when she reneges on promises that she made to Christchurch families?

Hon HEKIA PARATA: I have already answered in my primary answer that I did not make that promise.

Metiria Turei: During the consultation process, did any of the schools currently threatened with closure ask to be shut a year early to give their community certainty?

Hon HEKIA PARATA: In a number of the submissions schools asked for certainty as soon as possible. In a number of the submissions schools pointed out that they did not want a very long time frame because parents would choose to enrol their kids at other schools and teachers would seek jobs in other schools.

Metiria Turei: Which schools asked her to close them a year earlier than originally planned because of certainty?

Hon HEKIA PARATA: As I made clear, no school asked to be closed a specific time earlier, but we have, for instance, from the submission from North New Brighton School: “There is already evidence of staff bleeding from our wider sector. If the merge process continues for 4 years, and high-quality staff continue to bleed, there is a huge risk of a significant negative impact.” Of course, another speaker, whom I can quote from, yesterday said: “Truly these people needed to have a decision because, at the end of the day, it may not be the decision that people wanted, but it is a decision none the less, and it is something that we can work from.” That was from the Hon Lianne Dalziel.

Metiria Turei: Does the Minister think that the children and the parents and the principal of Phillipstown School were in tears yesterday because they were happy to have been given certainty that she will close their school a year earlier than she promised them?

Hon HEKIA PARATA: I understand that this can be very upsetting for communities and that a number of communities are unsettled by the interim decisions I announced yesterday, and we will be supporting them throughout this process. But we have to remember what it is that we are dealing with across Greater Christchurch, and we are working with each and every school on how we can help to get the best possible education system for the kids of Christchurch.

Metiria Turei: Did the Minister receive any advice or instruction from senior Ministers in Cabinet to hurry and get the closures out of the way before the 2014 election?

Hon HEKIA PARATA: No.

Metiria Turei: Why will the Minister refuse to say sorry to the people of Christchurch, the families of Christchurch, for the bungled announcements she made in September, the reneging on promises to keep schools open until 2015, and the fact that 19 schools will close? Why will she not say sorry?

Hon HEKIA PARATA: I went to visit 35 of the schools directly and personally to acknowledge the September issues, and since then I have worked very closely with each and every one of them.

Hon Lianne Dalziel: Will she give an assurance that merging schools that want to delay the merger for another year will be allowed to do so?

Hon HEKIA PARATA: We have a further 6 weeks of consultation, during which time I will listen, and continue to listen, and work with schools.

Hon Lianne Dalziel: Does she accept that the time frame does not leave sufficient time for discussions and planning to take place; if not, why did she write to Central New Brighton School saying that that is why the proposed merger would not take place until 2016?

Hon HEKIA PARATA: No, because this process of consultation has been going for the past 5 months, so I do think that the time frame available for schools to make their submissions has been a very appropriate one in the circumstances.

Hon Lianne Dalziel: I raise a point of order, Mr Speaker. The question that I asked her was whether the time frame for the merger—

Mr SPEAKER: No. No, there were two parts to your question. The first part was whether the time frame was sufficient. The Minister addressed that, to my mind, quite satisfactorily.

Hon Lianne Dalziel: Will the surrounding schools be ready for the sudden influx of students next year resulting from her decision to bring forward the closure and merger dates; if so, why is the Government shelling out $2.7 million for temporary, relocatable classrooms in Christchurch?

Hon HEKIA PARATA: These are interim decisions that I announced yesterday, and under the law—under the Education Act—I am required not to predetermine the outcome of that consultation.

Rt Hon John Key: Has the Minister seen reports that the current, National-led Government has closed only 49 schools—on average, 12 a year—when the previous Labour Government closed 281 schools, or an average of 31 a year; and if there was a change of Government where the Greens are involved, do you think it is possible that it would ever close any school? [Interruption]

Mr SPEAKER: Order!

Hon HEKIA PARATA: The Prime Minister is quite correct.

Hon Lianne Dalziel: I seek leave to table an extract from a letter from the office of the Hon Hekia Parata dated 7 December 2012 to a member of the Parklands community. It states—

Mr SPEAKER: Order! Is it a letter that is freely available to members through any other source?

Hon Lianne Dalziel: No.

Hon Gerry Brownlee: Yes, it is.

Mr SPEAKER: The easiest way to resolve it is to put leave to the House. Is there any objection to that letter being tabled?

Hon Lianne Dalziel: Hang on, I have not explained what the letter—

Mr SPEAKER: You have explained quite sufficiently what it is. You have explained quite sufficiently what it is. It is not an opportunity for the member to make a statement.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I do not think the member has even said whom the letter is from. How can you—

Mr SPEAKER: Order!

Hon Trevor Mallard: How can you say—

Mr SPEAKER: Order! The letter was, from my understanding, a letter from the Hon Hekia Parata. That was stated in the very early part of the member—

Hon Trevor Mallard: About what?

Mr SPEAKER: Sorry?

Hon Trevor Mallard: About what?

Mr SPEAKER: It was then about the closure of schools in Christchurch. [Interruption] Order! I will invite the member to briefly describe the content of what she wants to seek to table, and if we determine it is not something that is freely available to members, I will put leave to the House.

Hon Lianne Dalziel: The letter states that as this proposed merger is not planned to take place until 2016—[Interruption]

Mr SPEAKER: Order! It would help if we could find out what the letter is about so we can tidy this matter up.

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

Mr SPEAKER: If the member wants the opportunity to table the letter, it would be helpful if the member was able to describe the letter.

Hon Trevor Mallard: And, Mr Speaker, that might be helped if you enforced the rules of the House, which require silence during points of order.

Mr SPEAKER: That is a perfectly acceptable point of order raised by the Hon Trevor Mallard. Would the member succinctly describe what she is attempting to table.

Hon Lianne Dalziel: The letter states that as the proposed merger is not planned to take place until 2016, if it were to go ahead there would be time for discussions to be had, for planning to take place, and for the merged school to gain the support—

Mr SPEAKER: Order!

Hon Bill English: I raise a point of order, Mr Speaker.

Mr SPEAKER: We now clearly know what the letter is. There is a further point of order. It would be helpful if we could tidy the matter up. I call the Hon Bill English.

Hon Bill English: If you just put the leave, I think that will probably work best, Mr Speaker. But the member abused the tolerance of the House. The House is always happy to have people table letters, but having been asked several times to state whom it was from and whom to, she did not do that, and insisted on reading it out. The member therefore runs the risk that the House will object to leave when it is abused in that way.

Mr SPEAKER: And I suggest to the House that that is the easiest way of tidying this matter up. Leave has been sought. Any member can object. Is there any objection to that letter being tabled? There is.

Economy—Manufacturing Sector Performance, Exchange Rate, and Current Account Deficit

2. MAGGIE BARRY (National—North Shore) to the Minister of Finance: What reports has he received on the New Zealand economy?

Hon BILL ENGLISH (Minister of Finance): The BNZ - BusinessNZ Performance of Manufacturing Index, or PMI, for January 2013 reported a value of 55.2. Values above 50 indicate increasing manufacturing activity. This is the highest reading since May 2012, and is starting to show a trend of increasing manufacturing activity. The report also noted that the Australian equivalent index is at 40.2, indicating a sharp contraction. That is the largest gap between the New Zealand and Australian economies in manufacturing in 11 years, and in fact the biggest problem for New Zealand manufacturing this year is likely to be the sluggish Australian economy.

Maggie Barry: What effect is the New Zealand dollar having on manufacturers, exporters, and households?

Hon BILL ENGLISH: There is no doubt that both the exchange rate and the related state of overseas markets, which is reflected in lower relative exchange rates for them, have been a headwind for exporters. However, over half of New Zealand’s more sophisticated manufacturing exports go to Australia, where the exchange rate has been favourable and, in fact, remains below the average of recent years. Of course, on the other hand, the greater purchasing power of our dollar has lowered the cost of manufacturing imports, in particular imported fuel and plant and machinery. I would note that manufacturing export volumes are not, in fact, in crisis; they are up 4 percent over the last year.

Maggie Barry: In view of the recent highs of the New Zealand exchange rate, what steps is the Government taking to help the economy become more competitive?

Hon BILL ENGLISH: Over recent years we have taken many steps to improve the competitiveness of the economy, and all of them were opposed by the Opposition parties. Just to list some of them, there was the 90-day trial period for new employees, removal of 170 unnecessary and excessive regulations, reduction in tax on every manufacturing business and on every worker in those businesses in New Zealand, and substantial investment in infrastructure to help make manufacturers more competitive.

Maggie Barry: What alternative measures has the Minister of Finance seen for managing the exchange rate, and what would be the effects of such measures?

Hon BILL ENGLISH: I would not be able to outline the effects of any measures, because I have not seen any sensible or feasible alternative measures proposed. What I can say, though, is that there have been some proposals to change the way the Reserve Bank target is expressed, and I just want to read to the House what is in the policy targets agreement.

Hon Annette King: This is just a political statement that’s nothing to do with their policy.

Hon BILL ENGLISH: The member should listen because she might learn something: “In pursuit of its … stability objective, the Bank shall implement monetary policy in a sustainable, consistent and transparent manner,”—and listen to this—“have regard to the efficiency and soundness of the financial system, and seek to avoid unnecessary instability in output, interest rates and the exchange rate.” Section 4(b) was written by Dr Michael Cullen of the last Labour Government, and it was regarded as satisfactory, wide-ranging, and new thinking at the time, and we have stuck to it.

Hon David Parker: Has he seen the report of the IMF forecasting that New Zealand will have the worst current account deficit in the developed world this year, worse even than in Greece; if so, is he ready to admit that after 4 years he has failed in his goal of rebalancing the economy toward exports and jobs?

Hon BILL ENGLISH: No, I have not seen that report. Any report on the current account deficit should take account of its recent history, which is that in 2006, 2007, and 2008 it was at a record level in 30 years, at minus 8 percent, and today it is half what it was under the last 3 years of the last Labour Government. As I have pointed out, manufacturing activity and exports are increasing, not decreasing.

Education, Minister—Confidence

3. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Does he have confidence in all his Ministers?

Rt Hon JOHN KEY (Prime Minister): Yes.

David Shearer: Given that he previously admitted that the data used to overhaul Christchurch schools was inaccurate, has the Minister of Education assured him that the data is now 100 percent accurate; if so, what value does he place on her assurance?

Rt Hon JOHN KEY: I think the member is paraphrasing me, but I think what is true in the process is that there was some disagreement between the ministry’s data and the school’s data. As that process was carried out over the course of the last 4 or 5 months, there was agreement on the data, and for the most part, actually, in favour of the ministry’s. So, yes, I am confident now that the decisions announced by the Minister yesterday were based on the best data we have available.

David Shearer: Why are schools such as Manning Intermediate School closing, when their rolls are predicted to increase, and will this make him focus on re-evaluating that data?

Rt Hon JOHN KEY: I cannot give you answers on specific schools. You would be better to put those questions down to the Minister directly—but they are actually in a number of press releases that she has announced. All I can say in terms of the decisions and recommendations the Minister made is that she put into consideration a number of factors, and they included demographics of where people are going to live, damage to the buildings, damage to the land, and where the likelihood was for the best schools. I will say this: in the course of the proposals now subject to consultation, there, in effect, are 13 schools that will be closed in the Christchurch area; over a slightly longer period of time, there are 15 schools that will either be new or be rebuilt.

David Shearer: In light of that answer, given that intermediate schools will be closing in 10 months’ time, is he seriously suggesting that children are better off in prefabricated buildings rather than the schools that they are already in?

Rt Hon JOHN KEY: What I think is true is that parents wanted certainty. What is also true is that once the decision is made—and we have got to go through a consultation process, with submissions that close on 28 March, from memory—then I think at that point, if a decision is made to close a school, it is actually highly likely that parents will start moving pupils away from those schools. So I think it does make sense to start transitioning to the new environment.

David Shearer: I raise a point of order, Mr Speaker. That was really a question about whether he believed that children were better off in prefab buildings rather than the schools that they are already in at the moment.

Mr SPEAKER: I think the member needs to acknowledge that the primary question he put down was a very broad question to the Prime Minister. Now he is getting into some quite specific aspects of an education announcement that should be more correctly directed to the Minister of Education. I think the Prime Minister adequately answered your question.

David Shearer: Given that on 4 September last year the Prime Minister personally said that he would read through all of the submissions from parents and schools regarding school closures, does he believe now that the prefab buildings that they will be transitioned to are a better alternative than staying where they are?

Rt Hon JOHN KEY: In some cases, yes. I mean, the damage is significant. I am not at all sure all kids who will be leaving a school that is being closed in the next 10-month period will be going to prefabs, but I think what is true is you have to take a medium-term view here. Over the medium-term, this is a Government that will be spending $1 billion in Christchurch building 15 new schools or rebuilding. In reality, he is a member of a political party that knows what it is like to close schools, because he has got the gold medallist sitting behind him, who closed 281. [Interruption]

Mr SPEAKER: Order! That is certainly not a helpful comment from Mr Mallard.

David Shearer: Does he not concede that closing schools in Christchurch following a natural disaster, where kids require and rely on stability and security from their schools, is manifestly different from closing schools under the Labour Government?

Rt Hon JOHN KEY: This is the logic that the Leader of the Opposition is wanting New Zealanders to believe: that on the back of a catastrophic earthquake in Christchurch that has dramatically changed the demographic patterns of where Cantabrians live, where there is huge damage to the schools involved and where the land is substantially damaged, nothing should happen. If that is his thinking and his definition of leadership, he will remain the Leader of the Opposition until David Cunliffe finally gets the other 20 votes—

Mr SPEAKER: Order!

David Shearer: Can he have confidence in his Minister who proposed increasing class sizes, who unlawfully closed Salisbury School, who approved the disastrous Novopay roll-out, and who has bungled in the last 5 months the Christchurch schools process?

Rt Hon JOHN KEY: Well, they are the views of the Leader of the Opposition. They are not my views. In fact, to paraphrase the political commentary on TV last night, I think she acquitted herself very well in Christchurch yesterday. By the way, from what I could see, today in the House it was like 100-nil to Hekia Parata, zero to Metiria Turei. You—

Mr SPEAKER: Order!

Schools, Canterbury—Consultation Process and Interim Decisions on Proposed Closures and Mergers

4. Dr CAM CALDER (National) to the Minister of Education: In the context of the Government’s Christchurch schools announcement, what is the process going forward?

Hon HEKIA PARATA (Minister of Education): Following a 10-week consultation period with—[Interruption]

Mr SPEAKER: Order! I at least want to hear the answer.

Hon HEKIA PARATA: Following a 10-week consultation period with 31 schools, yesterday I announced interim decisions that those schools now have until 28 March to make final submissions. This is in the context of our Government building 15 new schools in Christchurch over the next 10 years, which I also announced yesterday.

Dr Cam Calder: What factors has the Government taken into account during this process?

Hon HEKIA PARATA: The Ministry of Education looked at factors including earthquake damage, roll size, population movement and future growth, building issues, school locations, and what opportunities there are to create better, more modern schools. I am very aware that parents want certainty so that they can make decisions for their children, so another factor included providing that certainty while recognising that some communities will be disappointed.

Dr Cam Calder: What proportion of the school network across Greater Christchurch do these proposals affect?

Hon HEKIA PARATA: There are 215 schools, of which these proposals now relate to 19. Of the almost 72,000 students, these proposals affect about 3,800 students, or just over 5 percent. But I am very aware that this is still upsetting for those families and schools, and I can assure them that they will be well supported.

Building and Construction Industry—Security of Payments to Contractors

5. Hon CLAYTON COSGROVE (Labour) to the Minister for Building and Construction: Does he believe that the contracting system currently used in the construction industry works appropriately and fairly in circumstances of insolvency; if so, why?

Hon MAURICE WILLIAMSON (Minister for Building and Construction): Yes, because the Government engaged in significant consultation 2 years ago with the construction sector, including subcontractors, and concluded that a regime for security of payments would add extra costs up front to the building work and the cost of doing business, and that parties to a contract are currently free to negotiate the use of security payment measures using products that are already on the market. But having said that, the Government is still not ruling anything in or out. It is considering any changes being proposed, but they must be based on good evidence.

Hon Clayton Cosgrove: Given that answer, what specific changes, if any, is the Government proposing to the contracting system in the construction industry to ensure that subcontractors are paid the money they are owed for work they have done?

Hon MAURICE WILLIAMSON: Well, I think a little bit of history would be worthwhile here. There was a Wages Protection and Contractors’ Liens Act in place. The Labour Government in 1987 got rid of that. Then, in 2001, when the fourth-biggest construction company in New Zealand, a company called Hartner Construction, went into receivership and subbies did not get paid, the Labour Government said it did not believe there were measures the Government needed to take to ensure—remember, the fourth-biggest construction company, as was Mainzeal Property and Construction; a very good mirror to that. So what I am saying to that member—because I have heard Labour even referring to New South Wales; there is only a proposal in New South Wales at present, and the New South Wales Government has not yet decided whether it will proceed on it—is that we will not rule anything in and we will not rule anything out. It would have to be based on evidence before the Government would change things.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. Well, the 1987 decision was wrong.

Mr SPEAKER: What is the point of order?

Hon Clayton Cosgrove: The point of order is this. I asked a specific question around changes. He said there were proposed changes. I asked what changes were being considered. We did get a detailed history lesson, but we did not get any specificity to the answer. I asked what were the proposed—

Mr SPEAKER: Because at this stage the Minister on two occasions has said—[Interruption] Sorry?

Hon Clayton Cosgrove: Isn’t that for the Minister to clarify?

Mr SPEAKER: No. You raised with me a point of order about whether the question has been satisfactorily answered, and the question was about what specific changes the Government is considering. The Minister categorically said it would not rule anything in and it would not rule anything out at this stage. I think he has adequately answered your question.

Hon Clayton Cosgrove: Does the Minister agree with Phil McConchie, co-owner of scaffolding and propping business Camelspace, which had $1 million of gear on the twin tower Hobson Gardens site, and who estimates losses of $300,000, when he predicted on 13 February that a big group of subcontractors could fail in the next month, causing widespread damage to the building sector; and, if he does agree that that is a distinct possibility, given the Mainzeal collapse, does he not think he ought to be proactively pursuing options to futureproof contracting arrangements for subbies, ensuring that they do get paid money they have earned?

Hon MAURICE WILLIAMSON: No, I do not accept some of those claims that were quoted by the member. What I can tell that member is that in 2009 the Hon Lianne Dalziel and Brendon Burns came to me as Minister and said they were concerned about this issue. So I put out a very extensive—here it is—consultation document, which was circulated throughout the entire industry, with submissions from the Construction Industry Council, from subcontractors federations, and so on. The total and unanimous conclusion of all that work was that there are methods in the system right now, where you can get the protection if you wish it, and that going to a mandatory system would not work. So I say to the honourable member: “I’ll show you mine—you show me yours.”

Hon Clayton Cosgrove: Supplementary question, Mr Speaker. [Interruption] Hold on, help is on the way.

Mr SPEAKER: Order!

Hon Clayton Cosgrove: Given his personal expertise in the subcontracting industry, in that he is currently a director of the subcontracting firm Holyoake Industries, has he sought any advice from his former boss and former Prime Minister Dame Jenny Shipley, a former director of Mainzeal Property and Construction, on the reasons behind the Mainzeal collapse and its impacts on the subcontracting industry; if not, why not? [Interruption] And the nasty thing is some contractors—

Mr SPEAKER: Order!

Hon MAURICE WILLIAMSON: First, can I clarify that Holyoake Industries is neither a contractor nor a subcontractor in the building and construction sector—

Hon Clayton Cosgrove: Well, you’d know.

Hon MAURICE WILLIAMSON: Yes, I would know. Secondly, no, I have had no discussions on this matter with the Rt Hon Jenny Shipley.

Rt Hon Winston Peters: Why is someone who so blindly supported the removal of sound building materials, practices, and regulations, leading to tens of thousands of leaky homes and buildings, the Minister for Building and Construction today?

Hon MAURICE WILLIAMSON: Well, I presume you mean me because I am the Minister for Building and Construction today. I would like to know what changes to building materials regulations I supported. I assume the member is talking about the decision by Standards New Zealand, an independent body, in 1995 to allow non-treated timber in the building of housing, and I say to that member, did he expect somebody who was not involved in the portfolio then to now tell an independent organisation like Standards New Zealand that it is not to do that? Because if that is what he is suggesting, I would not have done it.

Christchurch, Recovery—Progress in Central Business District and Recycling of Demolition Material

6. NICKY WAGNER (National—Christchurch Central) to the Minister for Canterbury Earthquake Recovery: What progress is being made on making the Christchurch city centre safe for rebuilding?

Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery): To date, 941 buildings have been either demolished or made safe. This has been achieved with a very good safety record, with a very low incidence of workplace injury and no deaths. Last Friday I officially renamed the cordoned-off area the Christchurch Central Business District Rebuild Zone, in recognition of the fact that there are now more workers engaged in construction than deconstruction—[Interruption] I can understand the excitement of the Labour members. Even though it has been 2 years of them telling us we are doing it all wrong, they have now finally realised what a great job we have done.

Nicky Wagner: What progress will be made towards fully opening the city centre to the public?

Hon GERRY BROWNLEE: There are still 48 full demolitions to be carried out in the central business district, and 32 partial demolitions. There may be other buildings that will be demolished, but the Canterbury Earthquake Recovery Authority believes that it has completed over 90 percent of the demolition project. Most of the larger buildings will be down by the middle of this year. As the New Zealand Defence Force will soon withdraw from the cordon, after 2 years of outstanding service, we would expect the cordon will be removed by the middle of this year.

Nicky Wagner: What efforts have been made to deal with the rubble and waste created by that demolition in the city?

Hon GERRY BROWNLEE: The demolition of such a tremendous number of buildings has, naturally, generated a great deal of rubble. Recycling efforts have been extraordinary, with recovery rates as high as 96 percent for some buildings, like the former Crowne Plaza Hotel. Overall, about 90 percent of materials from the central business district have been recycled. In addition, heavy rubble has been used to reclaim an area of Lyttelton Harbour, to allow for the reconstruction and expansion of the port. Some thousands of tonnes was also used in the construction of the Christchurch Southern Motorway. It has been a very successful project from that point of view.

Afghanistan—Deployment of Military Personnel After April 2013

7. IAIN LEES-GALLOWAY (Labour—Palmerston North) to the Prime Minister: Does he stand by all his statements on withdrawing troops from Afghanistan?

Rt Hon JOHN KEY (Prime Minister): Yes.

Iain Lees-Galloway: When he told New Zealanders that our troops would be out of Afghanistan by 2014, was he already planning to break that promise?

Rt Hon JOHN KEY: Well, that will probably prove to be correct. What we announced yesterday was a continuation of what we have seen, which is the provisional reconstruction team will be disbanded—it will be out by April-May of this year—the SAS has gone home; and we have agreed that there will be 27 New Zealand Defence Force staff who are there for a further year, that is, to about the middle of 2014. We will assess that situation at that point then. But I think it makes sense to have those people in behind the wire rolls, supporting a smooth transition to the Afghan Government.

Iain Lees-Galloway: When was he asked to deploy New Zealand troops on the new mission that he announced yesterday, and who made that request?

Rt Hon JOHN KEY: I would not say it is a new deployment, because some of those people are already in similar types of roles. There are eight people, for instance, New Zealand Defence Force staff, who are in “Sandhurst in the sand” training officers, so it is not necessarily new. In fact, the logistics and intelligence role played by the three SAS people, again, is already happening at the moment, but the basis of their mandate is changing. I cannot tell you the exact date when there were discussions between the Minister of Defence and his counterparts and the Minister of Foreign Affairs and his counterparts, but that would have happened some time over the last 12 months. The Minister of Defence is away at an International Security Assistance Force NATO meeting at the moment. Those things are under discussion all the time.

Iain Lees-Galloway: Can he confirm to the House whether or not the United States Government requested troops to be deployed in Kabul following the withdrawal of the provisional reconstruction team in Bamian?

Rt Hon JOHN KEY: No, and I would not say troops are being deployed in Kabul. What I would say is that there are 27 people who are working in a different variety of operational roles. Some will be in Kabul, but they are largely—well, they are all behind the wire and they are largely in staff officer, intelligence, or training-type roles.

Science and Research Funding—National Science Challenges Initiative

8. TIM MACINDOE (National—Hamilton West) to the Minister of Science and Innovation: How is the Government focussing New Zealand’s science funding investment, and encouraging Kiwis to get involved in science?

Hon STEVEN JOYCE (Minister of Science and Innovation): The Government has set up New Zealand’s National Science Challenges to address the biggest long-term strategic science issues that New Zealand faces. Yesterday the peak panel of eminent scientists, led by the Prime Minister’s Chief Science Advisor, Sir Peter Gluckman, met for the first time to start sifting all the ideas and proposals received from the science community and the public into 10 or 12 challenges to recommend to Cabinet for approval. The National Science Challenges will receive $60 million of dedicated funding, and will also help focus our overall investment of mission-led science funding on solving these key challenges.

Tim Macindoe: How much input has been received from the public and from the science community?

Hon STEVEN JOYCE: There has been very, very significant input, which is very heartening, from both the public and the science community. For example, the engagement process has resulted in around 2,500 Facebook comments, 138 unique submissions from the public, and 223 submissions from the science community. There are eight sample challenges on the challenges website, which attracted just under 5,000 votes, the most popular of which were on the subject of fighting disease and New Zealand’s biodiversity, followed by projects around the productivity of our land and the quality of our fresh water.

Skycity, Convention Centre—Expressions of Interest Process

9. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes.

David Shearer: In light of his statement that he is not losing any sleep over the Deputy Auditor-General’s report, can he confirm that he personally attended the dinner with Skycity on 4 November 2009, and that he personally instructed officials to stop their normal work on the tender process; if so, are the officials responsible for his personal actions or is he?

Rt Hon JOHN KEY: I do not think the member is actually representing the report accurately. I certainly went to dinner on 4 November, but let me go through the Office of the Auditor-General report, which says: “The main question underlying this inquiry was whether the Government’s decisions to negotiate with SkyCity had been influenced by inappropriate considerations,”—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It was a very specific question. It did not ask for general lines in the Office of the Auditor-General report. It was a detailed question, and the Prime Minister showed no intention of getting close to it.

Hon Gerry Brownlee: I think it is interesting to note that the primary question asked the Prime Minister whether he stood by all his statements. To then go on and ask him about when he attended a dinner or did not seems to be wildly away from statements he has made. The fact is that the material facts of that matter are in the report.

Mr SPEAKER: My difficulty with the answer, frankly, is that I could not hear it because of the noise that was coming from the Labour benches. I am going to ask the Leader of the Opposition to re-ask the question. The Prime Minister is quite within order to say whether it is specific enough. He does not have that information. The member may ask the question again, but I would like to have the ability to hear the answer in some degree of silence within the House.

David Shearer: In light of his statement that he is not losing any sleep over the Deputy Auditor-General’s report, can he confirm that he personally attended the dinner with Skycity on 4 November 2009, and that he personally instructed officials to stop their normal work on the tender process; if so, are the officials responsible for his personal actions or is he?

Rt Hon JOHN KEY: Yes, I attended the dinner, and, no, I did not ask them to stop any tendering process. As I said before I was interrupted, the main underlying question of the report was “whether the Government’s decision to negotiate with SkyCity had been influenced by inappropriate considerations, such as connections between political and business leaders.”

David Shearer: I raise a point of order, Mr Speaker. He answered the question. We do not need a long, rambling explanation.

Mr SPEAKER: I think the Prime Minister has very satisfactorily answered the question. If the member does not want any further answer to that question, that is OK.

David Shearer: Can he explain the Deputy Auditor-General’s comments that “The meetings and discussion between the Government representatives and SkyCity were materially different in quantity and kind from those between the Government and the other parties …”?

Rt Hon JOHN KEY: Again, the report needs to be read in context. What the Deputy Auditor-General makes quite clear in her report is that there was nothing inappropriate—in fact, it was quite normal that the Government and Skycity and others would have discussions. The nature of those discussions was always going to be different, because of different proposals that were there. The Deputy Auditor-General actually supports that because she says it is an unusual process. And, as I said, she herself says: “We have seen no evidence to suggest that the final decision to negotiate with SkyCity was influenced by any inappropriate considerations.”, which is total vindication. We did nothing wrong.

David Shearer: In light of this last answer, can the Prime Minister explain the Deputy Auditor-General’s comment that “We do not consider that the evaluation process was transparent or even-handed.”?

Rt Hon JOHN KEY: The Deputy Auditor-General makes it quite clear in the report that she has some procedural issues, but no substantive issues whatsoever. She says there was no different conclusion that would be drawn, and goes on to say: “We have seen no evidence to suggest that the final decision to negotiate with SkyCity was influenced by any inappropriate considerations.” She also says at length in the report that this was not a normal procurement and that, in fact, the Government would always be looking for innovative and creative ways of doing things.

David Shearer: Why did Skycity send designs for a 5,000-seat centre directly to the Prime Minister’s office after a 4 November 2009 dinner meeting between the Prime Minister and Skycity?

Rt Hon JOHN KEY: People send proposals all the time to our office. And the Deputy Auditor-General says in her report that it is absolutely, totally appropriate that Government Ministers and organisations would have discussions. What then follows is an expressions of interest process, and that process followed.

David Shearer: Do these meetings that he held with Skycity, as the Deputy Auditor-General’s report alleges, represent an unfair advantage to Skycity, or not?

Rt Hon JOHN KEY: The Deputy Auditor-General notes there was no substantial advantage. What she says is there are some procedural issues around an unusual and bespoke different way of procurement. She also says that is quite normal in the environment we are in, and fundamentally there were no substantive issues. I also note, and I should say, that the other participants who put in bids said themselves that they were not worried, not concerned. Then she goes on to say that there were substantial advantages that supported the Skycity deal.

Voluntary Sector—Funding Round for Support for Volunteering Fund

10. ALFRED NGARO (National) to the Minister for the Community and Voluntary Sector: What recent announcements has she made regarding government support for volunteering?

Hon JO GOODHEW (Minister for the Community and Voluntary Sector): I recently announced that the new funding round for the Support for Volunteering Fund is now open. The Support for Volunteering Fund provides over $500,000 each year to projects and organisations that promote and support volunteering in New Zealand and build volunteering capacity and capabilities. The fund is split between funding for Volunteering New Zealand, regional volunteer centres, and community projects.

Alfred Ngaro: What is the focus for the current funding round?

Hon JO GOODHEW: The focus for the current funding round is Māori, Pacific, and ethnic community projects. We are particularly looking to fund projects promoting information sharing, networking, and development of resources that support volunteering in these communities, projects responding to specific cultural values and needs, and projects encouraging, recognising, and promoting volunteers as community leaders. Community advisers in Department of Internal Affairs offices across the country are available to help with applications, and I encourage interested groups to get in touch with them.

Hawke’s Bay Regional Council—Debt Forecasts and Freshwater Management Projects

11. EUGENIE SAGE (Green) to the Minister of Local Government: Does he have any concerns about the Hawke’s Bay Regional Council’s forecast of 530 percent increase in its debt by 2021/22?

Hon CHRIS TREMAIN (Minister of Local Government): No, I have received no complaints from ratepayers about the council’s long-term planning. As the member will be aware, the debt level of any council needs to be assessed against the whole of the council’s balance sheet, including the assets being funded from the debt and the impact the debt has on that council’s ratepayers. In the case of the Hawke’s Bay Regional Council, while projected debt increases by $80 million over the period to 2021, equity increases by $154 million—that is $154 million. That is good economics in my book.

Eugenie Sage: How does the largest percentage change in a council’s forecast debt in New Zealand, to help that council spend $107 million on new dam and irrigation projects, fit with Government policy that councils should focus on core services and rein in their debt?

Hon CHRIS TREMAIN: That fits very closely with the Government’s policy. Meeting the needs of the community through good quality infrastructure is a key part of the council’s role. In addition, this initiative brings huge jobs growth for the province of Hawke’s Bay—26,000 hectares of additional irrigable land and $250 million to $300 million in additional exports. At the time that the Greens are looking for increased wages, they are against every initiative in this House that we bring to actually grow wages and job growth.

Eugenie Sage: Is not the Hawke’s Bay Regional Council’s role as an independent environmental manager severely compromised by its spending so much on damming rivers, and seconding its chief executive and seven key staff to work on dam and irrigation projects, such as the Ruataniwha Water Storage scheme?

Hon CHRIS TREMAIN: No. The Greens forget that this scheme actually is very good for the environment. The Tukituki River stands to gain significantly from increased water flow as a result of shifting the take from the aquifer to the dam. That is good for the environment. It also means that we have excellent export growth—another $250 million to $350 million. Once again the Greens are against any good idea that promotes job growth.

Eugenie Sage: Is it a conflict of interest for a regional council to both develop the Resource Management Act policies and rules for land and water management, such as the Tukituki plan change, and to spend $107 million on proposed dam and irrigation schemes that are subject to those policies and rules?

Hon CHRIS TREMAIN: The regional council has consulted widely with the community, including with its long-term plan. At the same time, it has taken account of the huge environmental gains from this project, particularly the Tukituki River increased flow, which the Greens have actually been against, as well. You cannot have your cake and eat it too.

Hon Annette King: Does the Minister support a proposal to amalgamate Napier and Hastings district councils with the regional council; if so, why?

Hon CHRIS TREMAIN: My colours, as the local MP, have been firmly stapled to the mast. I have been in favour of a reorganisation of that area. Now, as the Minister of Local Government, I will be taking a back seat from that campaign and making sure that the Local Government Commission plays an independent role in this process.

Health, Associate Minister—Confidence

12. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: Does he still have confidence in the Associate Minister of Health; if so, why?

Rt Hon JOHN KEY (Prime Minister): I have confidence in all three Associate Ministers of Health because they are working hard for a brighter future for all New Zealanders.

Rt Hon Winston Peters: In respect of Mrs Tariana Turia, how can he have confidence in this Associate Minister of Health, given that she has paid $7.6 million in public money to traditional Māori healers over the last 4 years without being able to provide a shred of evidence that the treatment works?

Rt Hon JOHN KEY: I do not believe that to be correct in so much as the contracts are regularly monitored by the Ministry of Health, most providers provide reports against those contracts every 6 months, the contracted providers are also audited by the ministry through a mix of desk-based audits and visits, and, if we look at the number of people who have received those services over that period of time, in broad terms it adds up to a touch over 50,000 individuals.

Mr SPEAKER: The right honourable Prime Minister, supplementary question. Sorry, the Rt Hon Winston Peters, supplementary question.

Rt Hon Winston Peters: I always thought you were a soothsayer. How can the Prime Minister support a policy that sees the taxpayer forking out $130 per client contact for something that the practitioners say may be no more than a service such as, to use their words, “as simple as a smile”?

Rt Hon JOHN KEY: I think what the member is referring to is rongoā services, which are used by clients for a number of different reasons but are in line with Māori culture. They can include everything from therapy right through to massage. In fact, that is not unique to Māori. We also provide significant funding for chaplaincy services, and I assume the member is not telling New Zealanders that he thinks that when someone is potentially on their deathbed in a hospital, they should not receive the support that they might receive from a chaplain, in their final days.

Rt Hon Winston Peters: Given that the chaplaincy service has nothing to do with it whatsoever, is rongoā Māori receiving millions while every other alternative provider has been shut out of this process, or is Mrs Turia’s excuse for rongoā Māori not being held to the same scientific standards as other medical procedures because, to use her words, “It is more of a spiritual thing …”, not just plain, unadulterated, racial discrimination?

Rt Hon JOHN KEY: So it is important that we understand what the member is talking about. He is talking about the expenditure of $1.9 million out of a budget per year, out of an annual expenditure, of about $14.5 billion. We are talking about, in 2010-11, 19,378 people around the country receiving support that may have been mental and spiritual in nature, very akin to chaplaincy services. So the member gets into the House—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I think I have given him a long enough time to answer my question, which was: are these two examples of alternative providers being shut out, and that it is a spiritual thing as an explanation, not just plain, unadulterated racial discrimination? That is the question I am asking him. He might not like to answer it but he has got to address that question.

Rt Hon JOHN KEY: I am quite happy to answer it. These are services paid for by the Government that have, as part of them, that they are spiritual services—that is quite correct. They provide support for people in need. Anyone can access it if they choose to. And, by the way, the member is not on his feet talking about chaplain services, because he knows that would offend his base, but he is quite happy to attack the spiritual—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Again, I have asked him the question as to why it is not racial discrimination. He is putting up the chaplaincy services as a rather weak point, because we financed $500,000 last time I was a Minister.

Mr SPEAKER: Order! The Prime Minister has answered that. He said it was not racial discrimination in his opinion. It was delivering it to New Zealanders in need. Have you further supplementary questions?

Rt Hon Winston Peters: No, that’s it.

Questions to Members

Marriage (Definition of Marriage) Amendment Bill—Submissions Received

Mr SPEAKER: We move now to questions to members, in the name of Le’aufa’amulia Asenati Lole-Taylor.

Le’aufa’amulia ASENATI LOLE-TAYLOR (NZ First): Thank you, Mr Speaker. I shall give that effort for the pronunciation of my name, say, five out of 10, but I am sure by next time it will be 9¾.

Mr SPEAKER: Ask the question, please.

1. Le’aufa’amulia ASENATI LOLE-TAYLOR (NZ First) to the Chairperson of the Government Administration Committee: How many submissions have been received on the Marriage (Definition of Marriage) Amendment Bill?

Hon RUTH DYSON (Chairperson of the Government Administration Committee): The committee has received 18,635 form submissions and 2,898 unique submissions, totalling 21,533 submissions altogether. In addition to those, six were returned because of inappropriate comment.

Le’aufa’amulia Asenati Lole-Taylor: Has she received any reports regarding submissions from any of the 200 people denied the opportunity to make oral submissions?

Hon RUTH DYSON: Yes.

Urgent Debates Declined

Schools, Canterbury—Interim Decisions on Proposed Closures and Mergers

Afghanistan—Deployment of Military Personnel Beyond April 2013

Mr SPEAKER: I have received a letter from Chris Hipkins seeking to debate under Standing Order 386 the Government’s decision on the closure and merger of schools in Christchurch, Selwyn, and Waimakariri. The Government’s announcement of interim decisions for schools affected by the Government’s education renewal plans is a particular case of recent occurrence involving ministerial responsibility. The test for whether a particular case requires the immediate attention of the House is a high one. The business of the House should not be set aside just because an announcement has been made, even though it may be important. The purpose of an urgent debate is to hold the Government accountable for its decisions. Given that an urgent debate has already been held on this matter and final decisions are not expected to be made for some months, I do not consider that it would be justified in setting aside the business of the House again today. The application is therefore declined.

I have also received a letter from Iain Lees-Galloway seeking to debate the Government’s decision to commit to new deployments of New Zealand personnel to Afghanistan. The decision on New Zealand’s contribution to Afghanistan beyond the April withdrawal of the provincial reconstruction team is a particular case of recent occurrence involving ministerial responsibility. However, the decision is part of an ongoing international deployment not scheduled to end until December 2014. The financial review debate provides an opportunity to debate such operational decisions. The application is, therefore, also declined.

Bills

Privacy (Information Sharing) Bill

In Committee

Part 1 Amendments to Privacy Act 1993

The CHAIRPERSON (H V Ross Robertson): The debate on Part 1 is on clauses 3 to 10 and the schedule.

Hon TREVOR MALLARD (Labour—Hutt South): This is a very, very important bill and I regret the fact that the Minister in charge of the bill has not seen fit—has not seen fit—to take the chair in this particular debate. She is a Minister—

Tim Macindoe: I raise a point of order, Mr Chairperson. This senior member knows better than to draw attention to the absence of a member from the Chamber.

Hon TREVOR MALLARD: Speaking to the point of order—

The CHAIRPERSON (H V Ross Robertson): No, the member did not draw attention to the absence of a member. He did not say the member was not here.

Hon TREVOR MALLARD: I regret the fact that the silly Opposition whip just drew attention to something that we are not allowed to draw attention to. [Interruption] Well, no he is not. He might be the Government whip. He might be the Government whip, but he will be the Opposition whip pretty soon. He will be the Opposition whip pretty soon.

The reason I regret that the Minister in charge of the bill is not in the chair is that she is the House’s expert at breaching people’s privacy. She is the Minister who has a lot of expertise at breaching privacy all over the place. Her record is appallingly bad, and no one knows that better than Nick Smith, who is currently sitting in the chair. It was as a result of her breaches of privacy that he had a spell on the reserves bench. It was as a result of Judith Collins’ breaches of privacy that he had a spell on that reserves bench.

Labour does believe in an effective and efficient public sector. We do need to share information properly, but we have also got to make sure that we trust the people who are sharing that information. At the moment I see no indication whatsoever that the people of New Zealand trust Paula Bennett, who breaches beneficiaries’ privacy deliberately and repeatedly. They do not trust Steven Joyce, they do not trust the Prime Minister, Hekia Parata breaches people’s privacy all of the time, but Judith Collins is probably the worst of the lot.

It is fair to say that this bill takes a very piecemeal approach to this issue. It may not stand the claims that have been made about the need for it. In particular, there is no sign whatsoever that it will do much to enhance the protection of vulnerable children. That is one of the very first questions that should be asked when people are considering this sort of legislation: as doctors are meant to do, first do no harm. And there is no evidence yet that this bill does no harm.

The Government has a habit of doing very low-quality cherry-picking in this sort of area. It is an area that does need comprehensive reforms. One needs only to look at the Official Information Act and the Government’s response to the reports on the Official Information Act and its prioritisation of issues here to indicate to the House, to everyone, that it places a very low priority on the privacy of individuals’ information. The Government cites the current fiscal environment as a reason not to do wholesale and proper reform, but it cherry-picks, it picks the bits that it wants. It actually picks the bits that will lead to less sharing of information and not more, and that is just not good enough.

The Government is, in particular, trying to hide a lot of information around how badly the economy is doing. What we need to do is to have a comprehensive piece of legislation. In March last year it was revealed that ACC had sent the private information of 6,748 people to Bronwyn Pullar. That is but one incident.

Hon RUTH DYSON (Labour—Port Hills): I was enjoying that contribution from the Hon Trevor Mallard so much that I was actually hoping that he would take a second call. I am very disappointed that he did not take the opportunity to have a second call in this debate. I share his concern that the Minister whose name is attached to this bill is not able to answer the questions in the Committee. Frankly, the Minister who is in the chair would have done a far better job. This bill, the Privacy (Information Sharing) Bill, is the sort of bill that a Government produces when it is in lots of bother, and actually over the last 12 months it has been in lots of bother, most recently with its disgraceful treatment of Canterbury schools, of our communities, and of our principals and teachers. And, of course, today we see the shonky deal between John Key and the Skycity convention centre exposed by the Deputy Auditor-General’s report. The reason I say this is the sort of bill that the Government would quickly put together to try to take the heat off other more troublesome aspects is that it is only a tiny little part of the job.

We know that this area actually requires a comprehensive approach rather than just cherry-picking the little bits that are easy. It is nowhere more obvious than the difficulty that the Government has been in—in fact, over the last 4 years, not just over the last year—in terms of privacy breaches. There are no examples that make it more obvious than if you introduce legislation to enable information sharing; you need to do it in a comprehensive and systematic way. The Law Society made a submission on this bill, as did others, that said that this was a very shallow approach and that it would have been far better to do that sort of comprehensive approach.

We have actually had the Law Commission look into this very area, and it said that this needed a comprehensive, systematic approach to the issue of information sharing. It is a huge responsibility of Government. It is actually a massive responsibility of individual Ministers. The Hon Dr Nick Smith will know that a lot of information comes over the desk of a Minister, and as Ministers you have to take it very seriously never to use that, never to breach the privilege that you have as part of the responsibility of being a Minister. That is why this issue is so important. People write to Ministers, and Government departments and agencies give Ministers advice that exposes personal details about people, on the understanding that that information will never ever be shared inappropriately.

Tragically, we have seen that privilege of ministerial responsibility breached. It was breached by Paula Bennett in a way that I thought was disgraceful. It has never ever been seen in our country before. Two women on the domestic purposes benefit criticised Paula Bennett, John Key, and the Government because the Minister’s decision was to scrap the training incentive allowance. That Minister herself had the advantage of going to university as a sole mother because of the training incentive allowance. I think it is a fantastic thing that we give particularly women who have the responsibility of bringing up a child additional State support so that they can have a better life and future for themselves and their children. The training incentive allowance was taken off for university courses from domestic purposes beneficiaries. So these two women on the DPB criticised the Minister for that decision. They said they wanted to go to university, get a degree, and therefore have a better future for themselves and their families. What did the Minister do? She said: “Look, we were desperately short of money. We’d just given a whole lot of tax cuts to wealthy people, so we had to claw back the money from somewhere, and who better to get it off than women on the DPB?”. I can imagine her saying that. Instead of engaging as a responsible Minister in a rational debate, the Minister gave to the media—not behind closed doors, but openly—personal, private details about those women. And the media published it. I think that is a disgrace. It is an absolute breach of the responsibility that goes with the privilege of being a Minister—a privilege that very few people in our country have—and being entrusted with such personal details.

I guess I have some anxiety about this legislation, because it has been introduced as a method of making access to services and support from Government departments and agencies more efficient and more effective, and who could argue with that? Anyone in this House would stand up and say they want the most efficient, most effective public services—of course, every single member believes in that. But this legislation to allow more sharing of information that may contain private, personal details of individuals is being brought to this House in an environment where it is, frankly, impossible to trust Ministers of the Crown with that information. So it is very hard for us to have confidence that rigour has been applied to this legislation within a frame of knowing that that privacy should be respected.

Of course, we have had some pretty horrific examples of where existing provisions in relation to privacy have not enabled individuals to have that respect maintained. We have had thousands of people being sent the wrong ACC files. I am sure the Minister in the chair, the Minister of Conservation, is well aware of that. There is nothing more frustrating as a Minister than to read on the front page of the paper that your department has sent a whole lot of files to the wrong person. But ACC has done it over and over again. It does not seem to learn anything from it.

In Canterbury I have had examples of the Earthquake Commission doing exactly the same thing. I had a constituent who came to me and said: “I’ve made a complaint to EQC. I’ve asked for my file. I’ve asked for my scope of works. I’ve asked for the assessment of my house, and haven’t got it, so I’ve complained.” I said: “Well, I’m happy to help you get that information if I can, but your complaint will go along a separate path. I won’t be doing anything in that regard.” So I asked what had happened to this man’s file, and I was advised it had been sent out that very day—an extraordinary coincidence, of course. What I found out, though, was that it was not his file that was sent to him; it was someone else’s file. So he rang me and he said: “Well, I’ve just got somebody else’s file. Should I take it down the road and give it to them—they have clearly asked for it—or should I sent it back?”. I told him I thought he should put it in an envelope and send it back because he did not know whether that man actually wanted it. I then rang the Earthquake Commission and said it had sent him the wrong information and that I wanted him to get his own file promptly. This is not sharing between departments; this is the incompetence of one agency. The commission replied in writing that it had sent him a file—it turned out it was the wrong one—it had closed his request, and that if he wanted his own file, he would have to start all over again and make another request. That is absolute nonsense. That is the sort of incompetence that is driven by the lack of concern, compassion, and attention to detail that Ministers in the current Cabinet are demonstrating.

And, of course, the biggest blunder of all—and it involves large numbers of breaches of privacy—is Novopay. I bet Steven Joyce wishes he had never heard that word. Craig Foss, I am sure, is delighted to have the responsibility for Novopay handed over to the “Minister for Everything”, the Hon Steven Joyce. We know that many teachers and support staff around the country have had the private details of other teachers and support staff sent to them in error.

So what we are seeing in the current system, regardless of this legislation, are breaches of privacy, either through incompetence or deliberate malice, as was the case in the example I used earlier of the Hon Paula Bennett deliberately disclosing private information. So as we go through the remaining parts of this legislation—I think there are three parts in all—I hope that the Committee can be given more confidence than I currently have that this bill, if passed, will not make the current situation worse. This has to be done as a means of ensuring that people get better service, that Government departments and agencies are able to share information appropriately for the betterment of the client—the New Zealand citizen—and that at all times their personal privacy will be respected.

CLARE CURRAN (Labour—Dunedin South): I would like to take a call in the Committee stage of this Privacy (Information Sharing) Bill, and reinforce some of the comments that have been made by previous speakers on this side of the Chamber around the fact that this bill is being produced in a context of the most extraordinary privacy breaches that this country has seen, perhaps ever. The way that this legislation is proposing to address issues of privacy and information sharing can only very kindly be described as piecemeal—piecemeal. In fact, to be honest, this bill is actually a pathetic and very shallow piece of legislation when considered in the context of those dreadful privacy breaches, which, no doubt, will continue to be listed one by one by members on this side of the Chamber, because the fact is that this Government is not doing anything to address these issues. If you are going to make information sharing more possible, which is what this bill purports to do, then you have to ensure that there are commensurate protections for people’s privacy, and that they are put in place alongside that. Unfortunately, this bill does not go anywhere near doing that.

When you look at what the Law Commission said when it released its report on that 4-year review of privacy, it had over 100 recommendations for change. There were over 100 of those recommendations, and when you look at what has actually been incorporated in this piece of legislation, it is pathetic. It is tiny, and it does not go anywhere near doing what the intent was of the Privacy Commissioner—and after a very long and extensive piece of work. I think it is actually embarrassing for this House to be considering this bill in the light of that. I just want to mention what some of them are, because it goes very much to the purpose of this bill. But unfortunately the stated purpose of this bill is not really borne out by the reality of what is in it.

The privacy complaints process would have been streamlined if this Government had taken account of some of those recommendations. Essentially, it would have given the Privacy Commissioner more powers to ensure that there were binding decisions on complaints when a person had asked for information about him or herself and had been refused. Groups of people would be able to bring representative complaints, which are similar to class actions. Even being given the opportunity to discuss that at a select committee would have been a really useful thing to do, especially in the light of some of these privacy breaches that have occurred in recent times.

Take, for example, the 7,000 people whose documents were available from the Ministry of Social Development networks through the Work and Income self-service kiosks. They were just a fraction of those that were available, but the blogger Keith Ng was able to download those 7,000 documents to make the point that it was possible to do that. Those people need to be able to bring some sort of complaint around that. Are they able to under this proposed legislation? Bringing a privacy case to the Human Rights Review Tribunal, which would have been simpler—a more direct route—was another recommendation of the Privacy Commissioner. Two new powers were being proposed, which were the ability to issue a compliance notice where a Government agency or business was acting in breach of the Privacy Act, and also the ability to require an audit of a Government agency or business where there was a good reason. I will tell you what: there have been some very good reasons for an audit of Government agencies or businesses, particularly when you look at all of those privacy breaches.

There is a member’s bill in my name, which will be brought to this House in coming weeks, around setting up a special commission of inquiry into all of those privacy breaches, because we should not be dealing with this issue on a piecemeal basis, on an agency-specific basis. We should be looking at what the underlying reasons are behind these privacy breaches. What is it that is drawing us—

DENIS O’ROURKE (NZ First): New Zealand First supports the Privacy (Information Sharing) Bill as amended, with changes recommended by the Justice and Electoral Committee. There are, of course, many positive reasons for better information-sharing amongst our public services to make sure that the information is used to the best effect, and to improve the operation of the Public Service. So that has to be acknowledged at the beginning.

There are, of course, many potential breaches of privacy that may occur, whether this bill proceeds or not. It is those breaches of privacy that we must seek to avoid. Although New Zealand First does have some concerns about the protection of personal privacy, we consider that these have been sufficiently addressed in the bill, through two means. Firstly, section 96N in new Part 9A requires the giving of notice to anyone against whom adverse action is to be taken as a result of information sharing under the bill. The individual may then take action to dispute any information used and may show cause why no such action should be taken because the information is inaccurate. Agencies should, however, understand very well that they will be on notice to listen to what those who make use of this right have to say about the accuracy of information and, where appropriate, to correct it.

Secondly, the new provisions for information-sharing agreements under new Part 9A are important. Agreements must specify safeguards for the protection of personal information, and they must provide for complaints to a Government department. Again, agencies should understand that they will be on notice to ensure that realistic and comprehensive compliance with these requirements will be essential. I note that section 96K(2) says that only the information necessary for an agency’s proper purposes is to be shared, and no more. The agreement must not unreasonably impinge on the privacy of an individual, and agreements will need to be scrutinised by the commissioner to ensure compliance with all these important caveats.

New Zealand First therefore supports the bill on the basis of the proper balance between the need for a robust information-sharing regime and the need for protection of personal privacy. In these matters we will be relying heavily on the diligence of the Privacy Commissioner: firstly, the commissioner’s oversight of the content of agreements and how they will operate; secondly, the commissioner’s reporting functions; and, thirdly, the commissioner’s consultation responsibilities. The Government must ensure that the commissioner has adequate resources so that the commissioner is able to carry out those functions properly, and we will certainly be taking notice as to whether that is the case.

I note that the Labour Party will also support the bill but seeks more implementation of Law Commission recommendations, especially empowering the Privacy Commissioner with more investigation and enforcement powers. But with or without those provisions, this bill is a significant improvement on the status quo.

I note also that the Greens will not support the bill without powers for the commissioner to issue compliance notices and to require an audit of agencies’ practices. I doubt the need for these measures, and I do not think they would have avoided most of the worst privacy breaches we have seen in recent times.

I think the bill as it is would be adequate to protect personal privacy, for all the reasons I have canvassed. But, as I have said, the commissioner’s functions are vital to the good operation of the new information-sharing regime, and agencies must always remember that they must take the specified actions to protect personal privacy and not just pursue their own interests. That is why I think new section 96L is so important. Firstly, it requires consultation by participating agencies with the Privacy Commissioner and with any person or organisation representing a class of persons affected and anyone else the agencies think should be consulted. But I think there is a glaring omission, and that is the Children’s Commissioner not being specified.

ALFRED NGARO (National): Kia orana, Mr Chair. I want to echo the sentiments of my colleague Mr O’Rourke, who is on the Justice and Electoral Committee, especially when he spoke about the concerns around breaches to privacy. We know that any breach of privacy not only is invasive for a client but also can often leave them vulnerable. So with that concern in mind, it has been really important in our select committee to ensure that in the conversations and in listening to submissions we had a balance around the safeguards, so that there was a balance of privacy as well as of flexibility. We know that, importantly, information sharing enables agencies to work together to examine and to understand the customer’s needs as a whole.

I was honoured to be at the consultations and engagements for the Green Paper for Vulnerable Children. What constantly came out through a number of the providers that were there was the importance of the barrier through which information was not readily shared. Although we have talked about the breaches of information, we do not often talk about the benefits that information sharing has. In fact, I want to echo some of those benefits in regards to this bill, the Privacy (Information Sharing) Bill.

On the other side there was some scaremongering, and David Clark was hearing people on the other side who were talking about the breaches, but can I echo the words of some of the submitters. The New Zealand Medical Association, Age Concern, the Privacy Commissioner, and the Nova Institute were clearly supportive of the current safeguards that the bill contains. This is straight from the horse’s mouth—from the people who actually work with the real people, not just the people in ivory towers. The Privacy Commissioner noted that the safeguards were mutually supporting and that none of them should be reduced.

We also consider that the protections in this bill strike a workable balance. The protections are not too onerous for agencies that wish to have information-sharing agreements and ensure strong, practical privacy safeguards so that people can be certain that the Government is acting as a trustworthy steward of their information—and stewardship is an important part of that.

I again want to echo the words from the Office of the Privacy Commissioner, which noted in its submission—so just listen to this, Mr Prasad—“The framework in the Bill provides a package of safeguards, which are practical, and mutually supporting. The bill currently represents a fine balance between providing the flexibility agencies are requesting, and ensuring that privacy considerations are given due weight.” These are submitters that work in the industry. These are agencies that deal with information and the sharing of information and want to strike that balance. Clearly, they are indicating that we have struck the right balance.

In order to do that, there are other safeguards. In regards to drawing up information-sharing agreements, agencies must consult with the Privacy Commissioner. The commissioner may provide a report to the relevant Minister on any related privacy issues before agreements are approved. The Minister must take the report into account before agreements are finalised. We have seen many situations where the benefits of sharing information have made a difference to the lives of a number of our children, our families, and clients who are in need. We support this bill. The bill has had huge support from agencies. We have heard them in the select committee meetings. There is a lot of scaremongering that is going on. There is a lot of talk about ACC breaches and so forth, and all we hear about are the things that have gone wrong rather than the things that have gone right. And many things have gone right.

So we do support the submissions that have come through. There have been many of them. There are a few of us who were actually there. Many of those on the other side who have spoken so far actually were not there to hear these submissions. So, you know, it is understandable that they do not have that sense of confidence that was given to us by the submitters as we heard them at our Justice and Electoral Committee hearings.

Finally, I want again to echo the sentiments and the support of New Zealand First in this regard. As we have seen, it does strike a balance. Obviously we will be ensuring that there is a safeguard. We will be monitoring this, as we do with all our legislation, to ensure there are safeguards—to ensure that there will not be breaches but, instead, benefits to the very clients, the children, the families, the people of our community whom we see in Aotearoa. Thank you.

ANDREW LITTLE (Labour): It is a pleasure to speak once again on this very important piece of legislation, the Privacy (Information Sharing) Bill, and to remind the Committee once again that a citizen’s right to privacy is absolutely fundamental. In the type of liberal democracy that we have in this country, we cherish the ability of citizens to go about their tasks, duties, responsibilities, and their interactions with the Government, in such a way that their interests and their privacy are protected, and that they can have some confidence that it is going to be protected. None of that is to denounce the worthy objectives of this piece of legislation, which is why the Labour Party supports it. Nothing is to detract from the benefits that can be gained from a rigorous and proper information-sharing arrangement between agencies, noting, however, that the bill covers not just public agencies but private agencies, as well.

But let us understand though too that it is not just a question of achieving a balance. Members opposite talk about this balance. There are some rights that are absolute, and there are some interests that, if they are not absolute, border on it. The right of citizens to preserve information about themselves, either through not being compelled to disclose it, or, having disclosed that information, to have it protected and preserved from the prying eyes of the general public, is pretty fundamental. So we look at this bill through that sort of lens and we never take it for granted when the State says it will be good and proper in all it does with citizens’ rights and responsibilities—do not take that at face value. It is the role of this House and every member in it to ensure that legislation that passes through here that impinges upon, or has the potential to impinge upon or bear upon, citizens’ rights is given the utmost scrutiny. I accept the assurances of the last speaker, Alfred Ngaro, that the Justice and Electoral Committee did a thorough job, but now at this point the rest of the House gets a chance to have a look. It is important that those who were not on the select committee and actively involved in it get to scrutinise the work that was done and see what is brought back here.

The starting point must be that the personal information of every citizen must be protected to the greatest extent possible. And we know why. Look what happens when there are breaches of privacy—the public reaction is phenomenal. It is always emphasised and it is always emphatic, because people are fearful when their information is disclosed, whether to the public at large or to other citizens, in an improper way. We saw that with ACC. The Minister in the chair, the Minister of Conservation, knows that absolutely, and I accept that he respects the agencies like ACC, which are agencies gathering some of the most sensitive information that could possibly be gathered from citizens—not just in the conventional sensitive claims unit sense, but any medical information that is disclosed to a State agency is always going to be ultra-sensitive.

When information about individuals is disclosed, then that is a matter of considerable public concern and outcry, as we have seen—indeed, in respect of not just ACC but also the Inland Revenue Department. Indeed, in the educational sector we have had information disclosed through the hapless Novopay system. You can see it, actually, in the experience of the former Minister responsible for Novopay, Craig Foss, who, when he took up that responsibility, began discharging his responsibilities—nervous about it—by chewing his nails. Well, things have got so bad since, even since he has discharged that responsibility, that he is now down to chewing his right arm—that is how bad it is. That is how concerned National members are about the breaches of privacy entailed by Novopay. The previous Minister has stopped chewing his nails; he is now chewing his entire right arm. That is how bad it is. It is for that reason that we should be very concerned when we look at a bill that is about giving State agencies the power to share information.

I accept that by and large the regime that is set out in this bill for information sharing is a good one. It requires the agencies to be clear and explicit about the purposes of the information sharing, what it is going to be used for, and its oversight by the Privacy Commissioner. Anybody whose information has been shared, where that leads to adverse consequences, is to be notified and may have an opportunity to correct any misinformation that is involved. That is all good stuff, but there is at least one arbitrary power in this that concerns me, and that is the ability of the lead agency in any information-sharing agreement—

Hon Dr NICK SMITH (Minister of Conservation): Can I compliment Mr Little on his thoughtful contribution and other members who have contributed to this debate on the Privacy (Information Sharing) Amendment Bill, and make a few remarks in terms of the context of this legislation. The first is that I would draw members’ attention to the annual report of the Privacy Commissioner that is tabled in this Parliament and would look at the track of statistics over privacy breaches in recent years.

Some of the Opposition members have attempted to present the argument that there has been this sudden big burst of privacy breaches. In fact, the annual report of the Privacy Commissioner for agencies such as the likes of the Department of Corrections, the Inland Revenue Department, and even ACC—the number of breaches has actually been reasonably consistent over the last 10 years, albeit there is a very honest acceptance by the Government that new information systems, whether they be those of Work and Income, or the Inland Revenue Department, or other agencies, do pose an extra challenge for Government agencies to do their job effectively and efficiently around the protection of privacy. I do want to—

Clare Curran: Table it.

Hon Dr NICK SMITH: Well, it is tabled. It is required by law, actually, Clare Curran, for the Privacy Commissioner to table the report every year, and I would draw Clare Curran’s attention to the actual numbers in that report. For instance, some people would say that there have been—

Clare Curran: Thousands of breaches—thousands of breaches.

Hon Dr NICK SMITH: She alleges a thousand breaches. No, that is not what the Privacy Commissioner’s report says. In fact, actually, the number of privacy breaches in an area like ACC was not that different last year from what it had been for the previous 10 years.

The second remark is that this Government takes a very practical approach. How many New Zealanders do you know who get really frustrated that when they change address, they write off to one agency and say that their address has changed, and then they get a bit of paper from another six agencies, and they say: “Hang on a moment. I’ve told the Government once where my new address is. Do I really have to fill out 10 different forms to tell them?” Sometimes, if we let the Clare Currans of the world run Government, that is exactly what they would do, because they do not take a fair-minded and practical view of these issues.

Members opposite have also put questions about the experience of Paula Bennett, and I have to respond in this regard. As a Minister the public is done a disservice when someone puts their personal circumstances into the public arena and wants to argue a matter of whether it is fair and does not put all that information there. I have been in that situation often as a Minister. The moment—and you will have members of the Opposition crying from the benches that this is grossly unfair—the Minister puts any information into the arena that provides some balance, there are cries of “foul”, and that this is a privacy breach. Well, what about the right of the public to know the full story? That is equally valid in these debates and I think that is very important.

It is interesting to note that with this bill, at the select committee, every one of the submitters supported it. Is that not an endorsement of the sensible approach that the Government is taking about information sharing and in respect of the protection of privacy?

The last remark is that I want to commend this bill for taking a practical view around questions—for instance, in the area of mental health—in respect of privacy information, because there are examples that the coroners’ reports have drawn attention to this Parliament of cases where people have inadvertently made decisions about the protection of privacy of information that have actually resulted in people being put at risk and people being hurt inappropriately. It is proper that this bill changes that legal threshold and makes it plain that while there is a proper respect for privacy, that needs to be balanced with other public interests and public goods such as the protection of safety, and that we do not want the Privacy Act getting in the way of ensuring people get the proper health care and that people are protected from risk to their safety as a consequence of inappropriate ways in which the Privacy Act can be interpreted and administered.

This is a good bill and a balanced bill. It builds on the work of the Privacy Commissioner. It also builds on the work of the Law Commission and provides us with the sort of sensible law that this Government favours, law that protects people’s privacy but also allows information sharing and also allows the public safety to be properly protected. It is the sort of law that this Parliament should support.

Dr DAVID CLARK (Labour—Dunedin North): Thank you for this opportunity to speak to this bill, the Privacy (Information Sharing) Bill. I think Dr Smith’s contribution was useful and typical of the wide-ranging conversation that we are having in respect of the issues and principles underlying this legislation, and it was appropriate for the Committee stage. I want to dig a little deeper into the Government’s attitude towards privacy and context, which was an issue that Dr Smith raised. I want to use the concrete example of the Inland Revenue Department privacy breaches from last year to explore that theme a little, and I also want to be clear that I do not think that the Government’s response is adequate. I think this bill takes some steps in the right direction, but they are meek. We need a more holistic approach, a wider approach, not one that is so piecemeal. The Inland Revenue Department privacy breaches last year involved 6,300 people, and these were the ones that were revealed in October. There were 32 separate breaches that affected that many people. There is something going wrong in the system when that happens. Regardless of whether it has been happening for a while, it is a problem that needs to be addressed. What we do not see is a Government that is taking seriously that problem of addressing these privacy breaches.

If we look at the breaches at ACC, the breaches at Work and Income, and the breaches at the Inland Revenue Department, and we add them up, we see that 16,000 Kiwis have had their private details released to other people in just those examples. That is four out of every 1,000 New Zealanders. If you extrapolate that across, and you say that this can continue as it is, you pretty quickly—well, in 10 years—get to a case where 4 percent of New Zealanders have had their private details released, and that starts to undermine the whole system. When we talk about the Inland Revenue Department, we are talking about people’s most sensitive personal information—all of their financial records and all of their banking details can be in there. There are details about their history that nobody would want released. We need trust if we are to run Government effectively in this country.

What is more, of those 6,300 people whose privacy was breached by the Inland Revenue Department last year, we know that 5,700 of those people were never contacted. Those people do not even know that their private information has been released. I think this is a tragedy. This is a shambles. This is a Government that is not facing up to this privacy issue properly. We have a computer system in the Inland Revenue Department that we know is 20 years old. We know that it predates Facebook by 10 years, we know that it predates Google, and we know that it pretty much predates the internet as we know it today. That system is still expected to handle all our most sensitive information. It is no wonder that things are going wrong. Mr Dunne has been the revenue Minister for 7 years, and has failed to lay out a proper plan to address this problem.

The Inland Revenue Department is struggling in many other respects. We know that there is roughly $7 billion of tax outstanding. There are a million tax returns unprocessed. We have got a department that is not performing and that is under pressure, and we have got a Government that is mouthing platitudes about privacy but is actually not taking the concrete steps to address it. It is spending money, we are told, on consultants. Capgemini, I think, has pocketed about $20 million so far in consultants’ fees. But the Government has not yet laid out a cogent plan as to how it is going to update that computer system, which is a critical part in taking these privacy issues seriously. We cannot wait 10 years. We cannot wait another 10 years for all the private details of New Zealand citizens to be released in order to address this problem. We need the Government to step up and show that it is determined to actually address this problem, and to put its money where its mouth is. It is one thing for Bill English to say $700 million from the asset sales—

Hon Ruth Dyson: How much?

Dr DAVID CLARK: $700 million, he said, will be going towards repairing the computer system. John Key estimated it would be a billion dollars, and the Inland Revenue Department and Peter Dunne have used the $1.5 billion figure. They are all over the show—they are all over the show. Ministers have been looking at this for 2 years, and they have not yet begun to outline a plan for New Zealanders as to how they are going to take their private details seriously. That is just not good enough.

We have also got another issue, in that the consultancy they are using, Capgemini, has an absolutely appalling reputation for tax avoidance internationally. The UK Government—we have seen in the last week—has said it will not employ the likes of Capgemini.

DENIS O’ROURKE (NZ First): In my first speech to this debate on Part 1 of the Privacy (Information Sharing) Bill, I said I thought there was a glaring omission, and that is in proposed new section 96L, which requires consultation by participating agencies with the Privacy Commissioner, any person or organisation representing a class of persons affected, and anyone else the agencies think should be consulted. But the Children’s Commissioner has not been specified. Although it comes under the second of those three categories I mentioned—relating to any person or organisation representing a class of persons affected—I believe that the Children’s Commissioner should be specifically included in the section. I note that the Children’s Commissioner did make a submission, and said this: “I would also expect that my Office would be party to any consultation process under s96L regarding information sharing agreements that affect the rights and interests of children …” Why, then, has that not been done? It seems to me to be not only a harmless addition but one that may be of some considerable value.

I have therefore prepared Supplementary Order Paper 172, which would insert the Children’s Commissioner as a mandatory consultee. I would ask that all parties in the Committee consider that. I do so because I think the interests of children is a significant issue that must be very well provided for, because, of course, they cannot be expected to look after their own interests, and they need special treatment in this way. Minister Collins has told me by letter that she considers that where the interests of children are relevant, new section 96L already provides for participating agencies to consult “any person or organisation that the agencies consider represents the interests of the classes of individuals whose personal information will be shared under the proposed agreement;”. For that reason, she said that National would be unlikely to support my Supplementary Order Paper.

But I think her reasoning is flawed. The part of new section 96L that I read out refers to “any person or organisation that the agencies consider represents …” a class of persons. The point is that this effectively means that the agencies will decide whether there is a need to consult the Children’s Commissioner. Most agencies are not equipped to make that assessment and are not likely to consult, when it is, in fact, advisable to do so. My Supplementary Order Paper makes it mandatory for the Children’s Commissioner to be consulted, and the Children’s Commissioner can then decide whether a response is needed. That seems to me to be the way it should be—that the Children’s Commissioner decides whether in fact consultation is worthwhile, not some agency that may well not really know what it is doing.

I do not think that would be a very great imposition on agencies. After all, all they need to do in the first instance is to write a letter to the Children’s Commissioner to ask whether consultation would be appropriate in a particular case. The commissioner can then decide, and not the agency or agencies concerned. So I do not see any reason why the Supplementary Order Paper should not be adopted. It is not only harmless; it is likely to be of considerable value. The Government should think again about that small but important issue. So I call on the Government to adopt Supplementary Order Paper 172 for those reasons.

I would say that I have heard speeches from Opposition members today saying that they do regard the functions of the commissioner and the protection of personal privacy to be important. If that is true, they will have no hesitation in supporting this Supplementary Order Paper. If they do not support it, then I will no longer consider that their assertions about the protection of personal privacy, especially in that very important area of the protection of children’s privacy, are things that they really, in fact, hold dear. So this will be the test. This will be the test of whether in fact they are interested in those issues, or whether they just want to drive this bill through because they are more interested in public agencies being allowed to do what they like.

SCOTT SIMPSON (National—Coromandel): I move, That the question be now put.

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

Ayes 72

New Zealand National 59; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 49

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

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 177 in the name of the Hon Judith Collins to Part 1 be agreed to.

Amendments agreed to.

The question was put that the amendment set out on Supplementary Order Paper 172 in the name of Denis O’Rourke to clause 8 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 7; Mana 1; Independent: Horan.

Noes 64

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

Amendment not agreed to.

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

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 15

Green Party 14; Mana 1.

Part 1 as amended agreed to.

Part 2 Amendment to Tax Administration Act 1994

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

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 15

Green Party 14; Mana 1.

Part 2 agreed to.

New Part 3 Amendments to Births, Deaths, Marriages, and Relationships Registration Act 1995

The question was put that the amendment set out on Supplementary Order Paper 177 in the name of the Hon Judith Collins to add new Part 3 be agreed to.

A party vote was called for on the question, That new Part 3 be agreed to.

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 15

Green Party 14; Mana 1.

New Part 3 agreed to.

Schedule

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

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 15

Green Party 14; Mana 1.

Schedule agreed to.

Clauses 1 and 2

Dr DAVID CLARK (Labour—Dunedin North): I rise to raise concern with the title of the Privacy (Information Sharing) Bill, which I think has an unfortunate acronym. But that perhaps reveals the inconsistency in the Government’s handling of privacy matters, which I raised in my earlier speech. If we were taking privacy information-sharing seriously, as the bill’s title might suggest on the face of it, rather than reading it as an acronym, we would probably suggest a more comprehensive approach to the legislation and the Law Commission’s recommendations, rather than one that takes bits and pieces, that cherry-picks, and that does not really take seriously the privacy of the citizens of New Zealand across the Government.

We have Skycity deals, the Inland Revenue Department tendering process, and other things that do not seem to suggest that this Government really does take privacy issues seriously. It does when it suits—it does when it suits. We have had some tough language, but as I was saying in my earlier Committee stage speech we have not yet seen a credible plan to fix the Inland Revenue Department’s computer system, which is ancient and is no longer able to handle privacy matters in the way a modern system might.

We have seen, in the case of ACC and Work and Income, some things that we in the Opposition do not think are proper. And we think that if this Government were taking privacy seriously it would do things differently. We also think the Government would be transparent and less private when it came to tendering arrangements—for example, around the Inland Revenue Department rebuild. I have raised some concerns about that in terms of the way in which those tendering documents ruled out New Zealand tendering parties simply by virtue of the way in which those tendering documents were written.

We see a Government determined to preserve transparency where it suits, and when there is a political gain to be made—such as when members of the public have their private details released for political purposes—but not being transparent when it comes to tendering Government contracts in a full and transparent way.

It is perhaps ironic that the title of this bill, the Privacy (Information Sharing) Bill, suggests an unfortunate acronym. It does suggest that the Government is taking the mickey, and I think the public can themselves form a judgment on this. Thank you.

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

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 15

Green Party 14; Mana 1.

Clause 1 agreed to.

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

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 15

Green Party 14; Mana 1.

Clause 2 agreed to.

Hon Dr NICK SMITH (Minister of Conservation) on behalf of the Minister of Justice: I move, That the Committee divide the bill into the Privacy Amendment Bill, the Tax Administration Amendment Bill, and the Births, Deaths, Marriages, and Relationships Registration Amendment Bill, pursuant to Supplementary Order Paper 173.

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

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 15

Green Party 14; Mana 1.

Motion agreed to.

Bill to be reported with amendment presently.

Bills

International Finance Agreements Amendment Bill

In Committee

Clause 1 Title

The CHAIRPERSON (Eric Roy): I would just point out that there are no parts. This will be a clause by clause debate, and the debate will be held specifically to the clause.

Hon DAVID PARKER (Labour): My understanding is that the title debate—is this clause 1, the title debate?

The CHAIRPERSON (Eric Roy): Correct.

Hon DAVID PARKER: Thank you, Mr Chairman. This is our opportunity to make some more general comments, which I will come back to also.

This International Finance Agreements Amendment Bill comes about because there have been changes in the relative economic weight of different nations in the world. The International Monetary Fund bails out countries when they get into difficulty, but because of those changed economic circumstances of some countries that have grown more rapidly than New Zealand in recent times—the likes of China—they can be brought into the international fold and can contribute in a way that they were not able to in yesteryear, and accordingly the percentage that New Zealand contributes to the International Monetary Fund decreases as a percentage of that greater pool. At the same time, the amount that is being drawn in respect of each percent is increasing, because the International Monetary Fund has needed to draw upon more funds than it did previously. So the overall effect for New Zealand is that while the percentage of the total pool that we contribute to goes down, because the overall pool is larger, the overall effect is actually not that much for New Zealand, in that the total amount that we contribute to that larger pool is not greatly affected.

This points to a number of things. Firstly, it shows that relative to growth rates in the rest of the world, New Zealand has not done as well as the average has been in the rest of the world, including developing countries in recent decades. In my opinion, that is largely because our settings have not allowed our export economy to prosper. Indeed, I think that the Minister of Finance was on record at the time he came to power as saying that this was one of New Zealand’s problems: that the economy was too weighted towards consumption in New Zealand and not enough towards either savings or the export of our goods to the rest of the world, which enabled us to pay for our imports and interest. Of course, when a country does not cover the cost of its imports and interest from its exports, it suffers a current account deficit, which means that effectively we are drawing down on the balance sheet of New Zealand, except to the extent that that current account deficit relates to capital expenditure, which improves the net wealth of our country. For decades our current account deficit has not been related purely to capital improvements in New Zealand. It has been a diminution in our balance sheet, and that is effectively one of the reasons why our relative share of the world contribution to the IMF is going down.

The Labour Opposition is voting in favour of this bill, but there is one area where we would prefer it was differently structured, and that relates to the ability to change schedules in the future by Order in Council. The effect of these measures can have a significant fiscal effect on New Zealand, because the amount that can be required pursuant to the international agreement under which the IMF operates—changes to the percentages—can change the amount that New Zealand taxpayers are either liable to guarantee or liable to pony up with in real money. In the Labour Party, we would have said that those changes are better made by way of a parliamentary change to this framework, so that we bring parliamentary attention to this change in the amount that New Zealand has to contribute to the IMF. It does not happen very often that these percentages change, and we do not think that that should be able to be done by Order in Council.

I know that the countervailing argument, which is well covered in the report back from the Finance and Expenditure Committee, is that under the agreement we are effectively bound as an international citizen to go along with changes that are proposed once a certain percentage of the countries that belong to the IMF agree to the changes, because you will never get absolute unanimity amongst all countries in the IMF that the IMF percentages or total amount should change. We agree that that is an appropriate process for the IMF because it is unrealistic to expect unanimity, and we also agree that as a general rule New Zealand should go along with those international agreements, because we benefit from a world that is made better by international cooperation through the likes of the International Monetary Fund.

But that to us is a different question as to whether those changes should come back to Parliament and that we have the opportunity to discuss them. If, for example, New Zealand was suffering the consequences of bullying behaviour in respect of the large economies as a consequence of manipulating their exchange rates, to the detriment of our exchange rates, and this was a serious and long-term problem, there may come a point at which Governments in New Zealand, or Opposition parties, or this Parliament want to express their displeasure at some of those international behaviours by actually taking the chance when we have something like an IMF amendment to the rules to actually say: “Well, if you want us to go along with these international treaties, there has to be a bit of fairness coming the other way.”, in respect of issues that affect the New Zealand economy in an unfair way.

So for those reasons and also because these things are pretty rare, we think that these sorts of amendments ought to be by way of Parliament amending the primary legislation, rather than leaving it to the Government by Order in Council to change the provisions that apply to our contribution through the International Finance Agreements Act 1961, which, as I understand it, has been changed in this way only every decade or so since it was originally enacted. I do not think that is too onerous for this Parliament. I do not think it is so regular as to fall within the formulaic sort of action that should be by way of regulation, rather than parliamentary enactment.

Just on one point, there is an amendment that Brendan Horan has been proposing. Thank you for that amendment on Supplementary Order Paper 175, Mr Horan. We did consider it and you might find it somewhat inconsistent that I argue against the regulation-making power and then not support Mr Horan’s amendment, which is to put some limit on the date on which the relevant section can come into effect, which currently is open-ended and comes into effect when the Order in Council is passed. Although we oppose this being done by regulation, we recognise that if it is to be done by regulation, it is difficult in practice to have an end date to the date on which that regulation will take effect because the Government through no fault of its own does not know when it is that a sufficient number of member countries in the IMF will have ratified the changes in order for them to come into effect. So although we would prefer this to not be done by regulation, if it is to be done by regulation, then it is impractical, in our view, to have a date such as was proposed in good faith by Mr Horan, because it really depends on the actions of other countries to ratify the changes that are being proposed. It would apply once ratified by 85 percent of the countries by value, which effectively means the United States—I think it is the standout country that has to ratify—and we really cannot control when the US does or does not ratify. If that date is delayed because of events that we cannot currently predict, we would still want New Zealand to be able to give effect to the changes that have been agreed at the IMF because we think they are wise and necessary. Thank you.

Hon CLAYTON COSGROVE (Labour): I will just follow up on some of the comments that my colleague David Parker made. I note that there is a bit of a trend in this Parliament—and I will not digress on to other legislation, apart from a passing mention—where this Government tends to kick critical decisions, as the saying goes, “to kick the can down the road to others”. I agree with my colleague David Parker that although we support the International Finance Agreements Amendment Bill, these are critical decisions that should be dealt with by Parliament, not by simply allowing a delegation to the executive by regulation.

It is interesting that the executive wants to empower itself through regulation to take this decision, yet a week ago we dealt with covered bonds legislation where the Government felt that it was appropriate to kick that can down the road to the Governor of the Reserve Bank, and to allow the Governor of the Reserve Bank to deal with issues in respect of an increase or decrease in the proposed 10 percent covered bond limit. So in that case there was another critical decision the Government was happy to take out of the hands not only of this Parliament but also of the executive—the decision makers, or Cabinet as the executive. Now we find that in respect of this legislation the Government wants to take it out of the hands of Parliament and wants to have it done by the executive, again not allowing parliamentary scrutiny through this Chamber.

We think this is a trend that is not appropriate. Normally, decisions are wrapped up, as in the case of covered bonds, with the need to provide flexibility. Given that that issue would be dealt with infrequently, and a decision-making body such as Cabinet could make decisions at any time, that argument does not stack up. Equally, given the fact that this happens, as my colleague said, very infrequently—in fact, the last time was many years ago, or every 10 years, I think my parliamentary colleague said—I would have thought that there would not be a strong motivation to take that ratification out of the hands of Parliament and to simply do it by regulation.

As I understand it, from my memory as a Minister, regulation is for when things are required quite frequently and also quite rapidly, are of a pretty benign and generic nature, and implement legislation—

Hon David Parker: These proposed changes were agreed in 2008, so there’s no rush.

Hon CLAYTON COSGROVE: As my colleague has just pointed out in my ear, these proposals were agreed to in 2008, and it has taken almost 4 years for this Government to bring this legislation to Parliament to ratify it, so that proves there is not a great rush. You know, the horse is not bolting out of the paddock. There is not a great urgency on this, especially when, I think, equivalent legislation was passed in Australia in 2009 and 2010. It sort of shows the priorities in the management of legislation through the House. So you cannot make an argument that suddenly we need to do this by regulation because we have to do it rapidly.

I will make a couple of other points. We support this legislation. There are those in this Chamber who believe that we should be almost isolationist in our international obligations. I, for one, and the Labour Party disagree with that. We have obligations through the IMF. The IMF has proved, I think, to be relatively effective, with some deficiencies, but we sign up to that collective international responsibility as a global player—one that is not insignificant but one that is not a major global dominator given our size—and we should meet our obligations and our responsibilities and be part of a global village.

I do not subscribe to some sort of ancient theory that we should put a bubble over New Zealand—whether it be for trade, whether it be for foreign affairs, or whether it be for international economic policy—and say to hell with the rest of the world. We have obligations and we have responsibilities. Goodness gracious, the way this Government is going, it may be that we require the assistance of the IMF, as we almost did, I think, 6 days after Muldoon lost the 1984 election. Someone in Treasury said that had we not been English speaking, and given the fact that we had lost $600 million through Muldoon not devaluing, the IMF would have come in and taken over to assist us. So it may be that given the economy that this crowd over the aisle is running, we may indeed need the IMF to help us out.

As evidence of that, it is noteworthy to point out that our contribution to the IMF has been sort of static or decreasing over many years—over the last 4 years—and that is a reflection of the state of our economy, given that it has been contracting to the point where, as we know, our current account deficit is second to Greece’s. Mr English has the silver medal and is about to take the gold medal, because his own department—Treasury—the Reserve Bank, and the IMF, funnily enough, predict that we will be No. 1 sometime this year in terms of the worst current account deficit on this God’s Earth, in the developed world. That will be an interesting achievement. At least Mr English will be able to point to one achievement: the worst economic record in the developed world, according to the IMF, in terms of the current account deficit. We will not go into unemployment, $380 million per week in borrowing at its peak, or any of that stuff. We will just leave it at the economic Olympics. Mr English will be able to mount the dais and collect the gold medal for the worst current account deficit in the developed global community.

It may well be—I hope it never comes to it—that we require, as I say, the IMF’s assistance to help us out, given the economic mismanagement of this crowd. We will support this legislation. It is appropriate that we do continue to meet our international economic obligations. But I agree with Mr Parker when he says that given the lack of urgency this Government has put on this legislation—4 years of dragging the chain to have it ratified—there is no excuse for future changes in these articles not to be ratified by the New Zealand Parliament, and for the proposal that is on the table now, which is that the executive will just flick them through, through regulation, without due parliamentary scrutiny. After all, we may well be called upon as a guarantor or to provide real money. That is a taxpayer obligation and taxpayers’ money, and the taxpayers’ representatives through this parliamentary Chamber have an obligation and a right to scrutinise those decisions prior to ratification.

PAUL GOLDSMITH (National): It is my pleasure to speak on the International Finance Agreements Amendment Bill, and to follow the former Minister. I was pleased to hear that Labour continues to support this bill. This bill allows for the Government to meet its obligations as a member of the world’s financial institutions, including the IMF. This Government believes that it is important to be an active participant in the international system, whether it is being a member of international organisations such as the UN, regional groups such as the Pacific Island forums, or economic organisations such as the IMF.

New Zealand is a small, isolated economy in the middle of the Pacific, all on our own. We do not have the heft, the numbers, and the size to boss the rest of the world around. We benefit enormously from effective international agreements and organisations, as a global trading nation. We have the most to lose if those understandings begin to unravel.

Of course it has been very concerning over the last few months and years when we have had a lot of concern about currency manipulation by various countries or the way that has been going. That is a very topical issue today, and has been over the past few months. I am pleased that Labour is basically maintaining an orthodox stance when it comes to the IMF and our role there.

I am a little bit more concerned about where Labour is heading on some of the monetary policy side of things. I still do not quite understand what the leader—Mr Shearer, I think his name is—Mr Shearer was talking about when he was going on about the change in monetary policy and about how he was going to change monetary policy, which is what he said in this conference last year, to target the exchange rates. I am not quite sure what he means by that. Does that mean that we are going to move away entirely from focusing on long-run price stability, which just about every economist in the world signs up to as the thing that reserve banks can do? Or is he going to somehow shift the goalposts entirely and undermine the independence of the Reserve Bank and start to put political pressure on the Reserve Bank? If that is the direction that Labour is going, I am concerned on that score, but on this bill that we are talking about today at least we are maintaining a measure of bipartisanship and a measure of general economic orthodoxy.

Just in one or two little details, this bill here changes the articles of agreement in relation to the integral parts of the overall package, as has been heard, reflecting the changing relative economic weight in the global economy, and that is no great source for depression. It is a source of optimism and excitement that over the past decade we have had this magnificent flowering, particularly, of the Chinese and Indian economies—rebalancing that. I am pleased that the IMF is responding to that, and this bill gives the Government the flexibility to be part of a system that effectively recognises the shifts in the global economy. On that basis, I commend this bill to the Committee. Thank you.

ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on the International Finance Agreements Amendment Bill. Likewise, New Zealand First will be supporting this bill, but we, similarly, do have some concerns about the aspect that this bill will go straight through to the Executive Council for future approvals, rather than coming back to Parliament. That is somewhat concerning and we would like to see that changed, because we feel that the people of New Zealand deserve to see any international agreements of this nature at least brought back to the people’s House for confirmation, rather than it being done behind closed doors in the Executive Council.

However, having said that, New Zealand First does appreciate the fact that we have to play our part with the International Monetary Fund, and changing the International Finance Agreements Act 1961 to provide for us to become a member of the Multilateral Investment Guarantee Agency, which this bill is putting forward, does make sure that we are part of the club, that we are part of the worldwide global team, that is overseeing the international monetary situation.

In this bill it is noticeable that it has taken quite a number of years to get to this point. The IMF governors first considered this back in 2008 and 2010. We are now in 2013, so it has taken a considerable amount of time to get to this point. As we have heard from other speakers, it does require the ratification of 85 percent of the members for this to go forward, and we do certainly hope that that is forthcoming in the relatively near future amongst all the member countries so that this can be enacted.

In terms of this, we realise that this also has a big impact on developing countries and helping to balance the world scene in terms of assistance from the IMF through developing countries. New Zealand, of course, wants to play its part as a developed country and as part of the OECD in terms of what that assistance and that support provided through the IMF means for the development of the global economy. New Zealand has always been an international player and abides by its international obligations.

These are uncertain times globally, and many of our major markets and many of our major allies and trading partners are going through difficult times. There are problems financially and politically in areas like Europe, the United States, parts of Asia, and other areas where we trade, so it is even more important that a body such as the IMF is able to step in and assist in the different economies where stability is required, where the world economy does depend on there being a level playing field and an ability for all countries to participate in a reasonable manner for the betterment of their individual countries and their peoples.

It is interesting to note, however, that the National Government is supporting this bill and putting this bill forward while, on the other hand, dismissing other recommendations of the IMF. It would seem that it would like to hunt with the hare and go with the hounds, as they say, in terms of the IMF also suggesting to New Zealand that the New Zealand dollar is overvalued by some 10 to 15 percent. I think, Mr Chairperson, you were in the Chair last time when you picked me up on the same point and said that I was getting off the point of the bill. My point last time when I spoke on this bill was the same, which was to say that while New Zealand is participating with the IMF, it should be a two-way street. We should also listen to some of the advice from the IMF in respect of the New Zealand dollar being overvalued, and perhaps next time the IMF does visit New Zealand—and it does regularly send its representatives here—we would hope the Reserve Bank, Treasury, and the Minister of Finance would take heed of some of its suggestions—

The CHAIRPERSON (Eric Roy): Come back to the bill.

ANDREW WILLIAMS: —in that area. Getting back to the bill, as—

The CHAIRPERSON (Eric Roy): Please do.

ANDREW WILLIAMS: —I said, we hope that the New Zealand Government, in putting this bill through, when it finally does come on board, will also recognise the fact that the Parliament of this country is the ultimate determiner of legislation. It is the representative place of the people of New Zealand. We certainly hope that we do not see in future years any back-door arrangements going through in respect of this legislation and in relation to New Zealand’s commitments to the IMF that we could not put hand on heart in this Chamber and say that this was in the interests of New Zealand. We must always put New Zealand first—[Bell rung] As we—

The CHAIRPERSON (Eric Roy): Order! The member has got to call for another call.

Dr DAVID CLARK (Labour—Dunedin North): Thank you for the opportunity to speak to this bill, and to speak about the international nature of the International Finance Agreements Amendment Bill, in particular, which is where I want to put my attention. Indeed, in the earlier stages of this bill I raised the issue of international reputation and the way in which Māui’s dolphins were not being protected by New Zealand. This Government was the only one in the world that did not propose greater protections for the Māui’s dolphin.

It is difficult to discuss this widely here, obviously, Mr Chair—and I do not intend to because that would be far too wide ranging and you would draw me back into the substance of the bill—but suffice it to say that international reputation matters, and that is one of the reasons why this legislation is very important.

This legislation was debated earlier by Mr Goldsmith, who confessed to being a little confused. His contribution attempted to debate some of the Labour positions on monetary policy, and I am happy to set the record straight but perhaps a little further into my speech, because to start with I actually want to outline some of the important things that Labour supports in this bill.

Economic stability is really the aim of the IMF. It is an important organisation and it is important that New Zealand contributes to that aim for the good of the whole world, for the good of world trade, and for the betterment of all of the citizens of the world. If Parliament did nothing or if it disagreed with the proposed changes to the articles, the changes would, nevertheless, come into force for New Zealand, with effect from the date that they entered into force for all IMF members. The result would be a confusing gap, essentially, between New Zealand legislation and our Treaty obligations.

We want to line up here deliberately, in order to say that we support this legislation. Labour is a responsible internationalist party that believes we should honour the international obligations and agreements that we have entered into. What we do oppose, though, are the changes that allow future updates to the articles to be made by regulation. We think that subverting the normal parliamentary process is a tragedy. We think that this is the kind of thing that ought to come before this Parliament, so that we can debate the merits of changing articles like this in the future. We should not delegate this down to Orders in Council.

Andrew Little: We have to maintain scrutiny.

Dr DAVID CLARK: We need proper scrutiny, as my colleague Andrew Little says from behind, and he is right. Mr Andrew Little is right—absolutely right. We need proper parliamentary scrutiny on these important measures. So although we have no difficulty with the actual substance of this particular change, we do feel uncomfortable with the change to process that allows that regulation-making power essentially to go into the hands of the executive, in a power grab that bypasses the sovereignty of this Parliament and hides things in the background.

Hon David Parker: Unlike this process.

Dr DAVID CLARK: This process that we are going through now is a transparent process. We are all debating it. We are debating the merits, and that is precisely what we lose when we do away with this process.

I guess the Government is embarrassed when it hears scrutiny being poured over many things, and I could go into Skycity deals, which are talked of today, and the report that has come out that suggests that indeed there was a lack of transparency and some unusual process. But we will hear more of that, I am sure, in the media. Or I could go into the way in which the Government opposed asset sale changes in select committee—the way in which it tried to shut down debate because the scrutiny was uncomfortable.

But parliamentary scrutiny is very, very important. It is a basic part of our job here as members of Parliament to make sure that laws are made well and are debated properly, and are made with full information. How can anyone, I ask, oppose that? Why is the Government opposing this scrutiny in future? It does not feel right to me.

I want to ask also why this bill has taken so long to appear in Parliament. Australia passed equivalent legislation in September 2009 and November 2010. This is another example of a Government incapable of managing the parliamentary agenda, and perhaps—

Hon Trevor Mallard: Incapable.

Dr DAVID CLARK: Incapable—incapable, Mr Mallard corrects me. And perhaps this is why we see the Government wishing to push this away from Parliament in future so it has less to manage. I do not think that is a legitimate reason for pushing this out of scrutiny, out of the eyes of the scrutiny of this Parliament.

One begins to wonder whether this is important to the Government, because it is concerned that we may need IMF intervention here. Look, when we see the books we do not think seriously that this is the case, but you do start to wonder—you might not wonder, Mr Chair, but I certainly do—as to whether things are worse behind the scenes than we are really seeing.

What we see clearly, though, is that under the last Labour Government we had 25 percent growth in real GDP. That was a great performance. Under this Government real wages have dropped, and that is concerning. So what is going on when the IMF is projecting for New Zealand the worst current account deficit in the developed world this year? What is going on there with New Zealand? I have a real concern that this Government, behind the scenes, is saying that we need to line up and we need to tick all the boxes with the IMF because one day soon we might need them.

If what we saw from Mr Goldsmith—the confusion around economic policy—is anything to go by, that need might come sooner rather than later, since he is understood to be one of the promising economic minds. He said in his contribution that he did not understand the need for macro-prudential powers to be given to the Reserve Bank so that it might look at issues other than simply inflation when it goes about its business.

To that I could add a range of other things that could be done, were the Government a little more focused on the economy. You know, we need pro-growth tax reform, we need a capital gains tax to neutralise the investment signal, we need research and development tax credits, we need greater KiwiSaver, universal KiwiSaver, so that we have actually got savings to invest in business, and we need procurement policies that are pro - New Zealand rather than in favour of multinationals that are avoiding tax in New Zealand.

We know that the purposes of the IMF in supplying its loans are to help member countries tackle balance of payments problems. Well, we wonder. If that is its first objective, maybe that is why the Government is cosying up to it. New Zealand certainly has a balance of payments problem that this Government has not even started to address. The IMF loans are meant to help member countries stabilise their economies. Well, we have seen an economy that is not performing here in New Zealand; in fact, this Government has the worst economic record of any Government in New Zealand in the last 50 years. That is amazing. It is not good; it is outrageous. So stabilising economies is something the IMF does. The IMF loans are also meant to help restore sustainable economic growth.

All of these things are things that this Government is failing on, so perhaps the real reason that this Government is cosying up to the IMF—that is, agreeing to pass things outside the normal parliamentary process for future changes—is that it is wanting to get cosy with the IMF in case one day Paul Goldsmith becomes the finance Minister.

Andrew Little: Oh, it’ll never happen.

Dr DAVID CLARK: Members behind me say it will never happen. We thought this Government promised a brighter future, and we have seen 17,000 jobs go last year in the manufacturing sector. So we are seeing promises on the one hand and, on the other, a Government that is failing to address the balance of payments problems, failing to stabilise the economy, and failing to restore sustainable economic growth—those very objectives that the IMF loans are meant to help member countries tackle.

Brendan Horan: Mr Speaker—

The CHAIRPERSON (Eric Roy): Just before the member speaks, I note that the member has an amendment to clause 2. We are in debate on clause 1, which permits a slightly wider scope than just the title—some more general comments. The member, of course, is entitled to a call. I am trying to assist him. If you want to make some substantial comments about your Supplementary Order Paper, debate on clause 2 is the place to make them. I call Brendan Horan.

Hon Trevor Mallard: Take two calls. Take one now and one later.

The CHAIRPERSON (Eric Roy): Yes, you are quite entitled to take—

Brendan Horan: I will take the clause 2 call, Mr Chairperson.

The CHAIRPERSON (Eric Roy): Sorry?

Brendan Horan: I will take the clause 2 call.

The CHAIRPERSON (Eric Roy): Away you go. You can take a call now if you wish.

Brendan Horan: No, I will take the call later.

The CHAIRPERSON (Eric Roy): I was not trying to close the member down; I was just trying to assist.

Brendan Horan: Well, Mr Chair, I will take the call.

The CHAIRPERSON (Eric Roy): Brendan Horan, I have given you the call.

BRENDAN HORAN (Independent): We might pull a little bit of that amendment in, but only a little.

I rise to speak to the International Finance Agreements Amendment Bill, and I may just mention a little bit about Supplementary Order Paper 175 standing in my name. As this bill has been written by the Government, the commencement date is entirely open. The bill would come into force on a date set by an Order in Council. That sounds good enough, but will it still be relevant in 10 or 20 years? This is not a hypothetical problem. The Parliamentary Counsel Office annually publishes—

The CHAIRPERSON (Eric Roy): Order! The member has started straight on to clause 2, and this debate is for more general comments. So I suggest he does that or takes another call at the—

BRENDAN HORAN: I will take another call later. Thank you.

ANDREW LITTLE (Labour): I just want to take the opportunity to talk on this International Finance Agreements Amendment Bill because it is an important piece of legislation and it is one of the expressions of our role and our place as an international player, as a member of the international community, and, indeed, in the operations of the international finance community. That places us in a very important position. We have had a long and august history in the operations of the IMF, including former Ministers of Finance and, indeed, a Prime Minister playing an active role at the very senior levels of it. But it is important with the international institutions of which we are a part that we maintain our currency and that our laws reflect the commitments and the obligations that we enter into when we are part of that international community.

This legislation brings us up to speed. But as colleagues of mine have also raised and questioned, the issue is why now. Why so long after these changes were agreed to by the IMF are we only now getting round to passing the legislation that enables us to support the practical changes? It does raise a very serious question about the efficacy of the management of the legislation and the way this Government addresses these important issues. We should never devalue or deride the international organisations that we are a part of and in which we play an important part. So it is reasonable to expect that when the Government of the day is making commitments or entering into commitments on our behalf that we will update and upgrade the rules that we have to participate in those organisations, that it does so with some sort of political and parliamentary alacrity. But that is not what we have seen on this occasion.

The other issue is the issue about the extent to which this Parliament, as with any Parliament of any member organisation of the IMF, gets to play the role of scrutinising what happens in those institutions in the name of the citizens—in this case, of New Zealand. So to the extent that it is suggested that future changes to the rules of the IMF might be agreed to, or ratified, or done by Order in Council by the Government, the executive, that is something that I think every member of the House discharging their responsibilities as a member of this House would be deeply uncomfortable with. When it comes to playing our role in international fora, although we must be responsible and although we must discharge our obligations, it is not a reason to then take away the proper scrutiny of this House, in discharging its role and its responsibilities towards the citizens of New Zealand, to ensure that the commitments that we enter into are ones that we ought properly to put our names to, that fit our view and our version of democracy and democratic principles, and that are consistent with what we think ought to be contributed to a stable international finance system.

With those notes I simply underscore those two issues: the one of our playing our role, and, secondly, ensuring that this House continues to play its role of providing scrutiny when the Government of the day acts with its representative international hat on in the name of all citizens and in the name of this House, and that this House continues to provide effective scrutiny for it. So, notwithstanding our support of the bill, it is important to draw attention to those important points.

Hon TREVOR MALLARD (Labour—Hutt South): Labour is supporting this bill, the International Finance Agreements Amendment Bill, although, Mr Chairman, as you will have heard, there is a discussion to go on as to whether the particular part that deals with the matter of regulation is to be supported or not. This bill amends the International Finance Agreements Act of 1961, and it does allow the Government to meet its obligations as a member of various financial institutions, including both the International Monetary Fund and the International Bank for Reconstruction and Development.

The amendment bill provides for New Zealand to recognise the changes to the articles of agreement of the International Monetary Fund, which were agreed to by the IMF governors in 2008 and 2010. I think that in 2008—and I am subject to correction here—one of the governors was the Hon Dr—now Sir—Michael Cullen, and I think that the Hon Bill English has continued that role. New Zealand has quite properly played an active role in the IMF and, unlike a number of the other international financial organisations where Associate Ministers have been delegated to do the representation, New Zealand Ministers of Finance have seen the IMF as a very important organisation and one that has senior representation at the governor level. I think, in fact, that in the history of the previous Government there was only one occasion when the Minister of Finance himself was not able to make it.

The 2008 and 2010 agreements doubled IMF quotas and shifted voting power towards the dynamic, emerging market in developing countries, and effectively did a shift from countries that were overrepresented to those that were under-represented. It was not a massive shift; it was about a 6 percent shift in the balance of power. What results from that is a more representative IMF executive board with advanced European countries reducing their representation in a way that I think it is fair to say is an indication of changes that have occurred certainly from a period well before the IMF and the relative power of Europe and the rest of the world in financial matters. The 2008 and 2010 agreements are separate from the discussions on the G20-backed, US$430 billion, IMF firewall, which has been proposed in recent months. So this is something that predates that sort of arrangement. This legislation will increase New Zealand’s quota commitment to the IMF. However, members of the new arrangements-to-borrow programme, including New Zealand, have agreed that they will take a corresponding decrease in their commitment to that programme. Overall, this means that our commitment to the IMF remains relatively constant, moving only from 1,518 million of the drawing rights to 1,592 million. So it is a change from approximately NZ$2.9 billion to NZ$3 billion.

One of the issues that we have with this bill is the regulation-making power so that, in future, updates can be made by regulation. This power simplifies the process, but in doing so takes away from the Parliament something that has been a traditional right, and that is, where there is potential expenditure, the right of parliamentary control, in this case not through a Budget process but through a treaty-making process. What we want to make sure is that as the IMF goes through its quota formula it is also scheduled to complete the 15th general review of quotas by 2013. These changes are not expected to be accompanied by any changes to the articles of agreement. Governance reviews, which do imply changes to the articles of agreement, are usually completed every 8 years, although we have seen with the 2008 and 2010 changes that on occasion this sort of legislation is called for on a more frequent basis. And, of course, there is no secret to the fact that the global financial crisis contributed to the need for the pretty rapid reaction—or very rapid reaction for the IMF—in 2010, well in advance of the expected 2016 review.

Since the International Finance Agreements Act 1961 came into force in that year, when Keith Holyoake would have been the Prime Minister of New Zealand, it has been amended seven times—in 1966, 1968, 1975, 1976, 1992, 1998, and 2007. Of the seven amendment Acts, four amended the articles of the IMF—those in 1968, 1976, 1992, and 1998—and the three other amendment Acts gave effect to New Zealand’s membership in other financial institutions. It is important to note that once the requisite majority of members have accepted any amendments to the articles, these changes are applied to us whether or not we have passed our legislation. So we are in a relatively unusual situation where there is the possibility of our having an obligation that has not been recognised in New Zealand law. Members on this side of the Committee think that it is important, if we can, to as far as possible align New Zealand law with the obligations that are put on us.

There are additional reasons here, because leading up to the 2008 reforms and then again for the 2010 reforms—and the 2008 reforms are already in effect—we supported both those sets of reforms. Therefore, unless there is a very good reason for the Parliament not doing it, I think it is appropriate for Parliament to ensure that the reforms that we have supported internationally are then reflected in New Zealand law. It is a matter, I think, of keeping our word and honouring our international obligations. Of course there are a lot of countries around that do not do that. In fact, probably the lead country with international obligations in this area, the United States, is the country that is one of the worst at fulfilling its obligations in other areas—the United Nations, for example. But New Zealand is a country where I think there is a—probably multipartisan but certainly—bipartisan approach that where you give your word to an international organisation, or where you are a member of an international organisation and there are obligations, you meet them. Of course, if Parliament did nothing, or if it disagreed with these changes, then the changes would nevertheless come into force for New Zealand with effect from the date that they come into force for all IMF members.

The point that a number of members have made and we will get to—I just want to do an overview of it—is that we are very, very concerned about the suggestion that future updates will be done by regulation. There is a matter of balance in this.

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

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

Ayes 64

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

Noes 57

New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan.

Motion agreed to.

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

Ayes 105

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1.

Noes 16

Green Party 14; Mana 1; Independent: Horan.

Clause 1 agreed to.

Clause 2 Commencement

BRENDAN HORAN (Independent): I rise to speak to the International Finance Agreements Amendment Bill and to Supplementary Order Paper 175, standing in my name. As the bill has been written by the Government, the commencement date is entirely open. The bill would come into force on a date set by an Order in Council. That sounds good enough, but the bill lacks the default specified commencement date that is now the usual drafting practice. That means that the bill, when enacted, could wait 10 years or 20 years or even longer before coming into force. Will it still be relevant then?

It is not a hypothetical problem. The Parliamentary Counsel Office annually publishes a list of Acts not yet in force that do not have a specified default commencement date. On the latest list there are 38 such Acts that, in whole or in part, are not in force. The oldest is the Summary Proceedings Amendment Act 1976. So Parliament passed a law 37 years ago, and part of that law is still in limbo. Is that acceptable?

This International Finance Agreements Amendment Bill should not be another of those blank cheque bills. When Parliament passes legislation, the resulting Acts should be brought into force within a reasonable and definite period of time. The Order in Council process allows the Government of the day some flexibility to ensure that the implementation can be conducted to deliver a good public policy process, but surely that flexibility must be backstopped by a default specified commencement date.

I am aware that there are issues around treaty-making powers of Government, the desire to avoid a vote in Parliament, and recent developments since 1996 to provide some opportunities for scrutiny by our Parliament’s select committees. The principal Act is unusual in that it enshrines in New Zealand legislation the nuts and bolts structure of an overseas body—in this case the International Monetary Fund—but that is an argument for another day. Today I am focusing on the issue at hand, and that is if Parliament passes a law—considering the time it takes for Parliament to pass that law, and the work and energy that have gone into it by many groups and parliamentarians—then surely the Government is obliged to reasonably bring it into force.

It is not necessarily an academic debate. Amongst the 38 Acts not brought into force are two domestic violence Acts and two Acts regarding Family Courts. This is a real issue because too many children in New Zealand are children who do not choose to be victims of neglect. These children do not choose to be absent of a loving home. These children do not choose to be victims of violence. This Government continues to leave the legislative solution in limbo, not being brought into force. Ministers are not allocating public funding and are not taking policy decisions.

I draw the House’s attention to the Ministry of Justice’s Care of Children Amendment Act 2008. If we look at the departmental comment around sections 5 to 8, 10 to 13, and 18 to 21 it reads as such: “Relates to agreements between parents and guardians, duty of lawyers and courts with regard to reconciliation and conciliation, disputes between guardians that lead to mediation or counselling, the mediation and counselling process, and appeals to the High Court and Court of Appeal. Will come into force on a date to be appointed by an Order in Council. Needs operational policy development and additional funding to bring it into force.” If we go to the Family Courts Amendment Act 2008, the departmental comment on it is: “Relates to the appointment and powers of Senior Family Court Registrars, and amendments to s 8 inserting ‘mediator’ after ‘counsellor’. Will come into force on a date to be appointed by an Order in Council. Needs operational policy development and additional funding to bring it into force.” One more that I draw the House’s attention to is the Family Proceedings Amendment Act 2008, which “Relates to the counselling and mediation process and rules under the Act,”—and at the end there—“Needs operational policy development and additional funding to bring it into force.”

The National Government is taking advantage of this blank cheque written by previous Parliaments in the form of an open-ended commencement date. I take into account the comments from the Hon David Parker. However, we cannot have open-ended start dates for any Act. Therefore, I commend this amendment to the House.

Dr DAVID CLARK (Labour—Dunedin North): I rise to speak to clause 2 of the International Finance Agreements Amendment Bill in respect of the commencement, and I also want to speak to Brendan Horan’s Supplementary Order Paper 175, which tries to tackle the challenge that is presented with an international organisation making decisions about when things come into force, and tries to align New Zealand’s decision making with that.

I wish to speak in favour of the current arrangement in the legislation, on the strength that it permits the Government to bring legislation into line as the process naturally runs its course. I think Mr Horan raises a valid point, so I am not suggesting that he is not raising a point worthy of debate, because I think it is worthy of debate. But I think, on balance, it is important to give the Government that flexibility. Our real beef is with removing from the legislation the further consideration of important issues, and those are updates to the articles that will in future be made by regulation.

I would be very interested to hear the Government take a call on why it is not interested in having proper parliamentary scrutiny over those articles. I am sure the Minister in the chair, the Minister for the Environment, will leap to her feet shortly and engage passionately in this debate, because I have seen her following the issues closely and nodding as the points have been made by the Opposition, so I think she is considering those issues, and I do look forward to her response. It is a serious issue that has been raised, and parliamentary scrutiny is something that we should not let go of lightly.

What we are talking about here is legislation that relates to approximately NZ$1.8 billion. This is legislation that we are debating in the House and we are giving it the proper parliamentary scrutiny, but I think it pays to remind ourselves that this is actually a considerable sum of money and a considerable investment that New Zealand makes in its relationship with the IMF. We should not forget and we should not trivialise this, because we largely agree on the principle of supporting the IMF, and we certainly, as Labour and National parties, have agreed by and large that the IMF should exist in order to promote economic growth that is sustainable. I took the Government to task in my earlier address about whether it is really meeting those obligations; whether it really is addressing the balance of payments problem that we have as a country. The IMF projects it to be the worst in the developed world in the current year. This Government as yet has shown no leadership on addressing that problem, so those concerns remain.

When we are talking about NZ$1.8 billion, I think it is worth asking when this should come into effect. What is the proper process for this legislation to come into effect? It seems to me that the provision in this part of the legislation is, in fact, adequate. The subclause that says the Act comes into force after the date on which it receives the Royal assent, “except as provided in subsection (2)”, is an attempt to ensure that those things that need to come in immediately can come into play. The second subclause, which comes into force at a date appointed by the Governor-General by Order in Council, is an attempt to deal with those things that do not need to come into effect immediately but can come into effect later, as and when needed, to line up with the international decision-making process.

On the surface this seems like a very sensible commencement clause, notwithstanding the issues that Mr Horan raised. So Labour will be supporting this clause, as indeed it is supporting the whole bill, because it does support the purposes of the IMF around economic stability, around meeting that balance of trade issue, and around making sure that there is sustainable economic growth in countries—something New Zealand unfortunately is not modelling at present, but which we believe would be of value to all countries. All growing countries can provide the necessary services to their citizens that make them able to maximise their potential.

So Labour will be supporting this bill. We question the Government’s record on some of these issues, but we support the intent of this legislation, which is to meet our international obligations on this matter.

Hon DAVID PARKER (Labour): I just want to reiterate why it is that we will not be supporting Brendan Horan’s proposed amendment set out on Supplementary Order Paper 175 to clause 2, which changes the open-ended nature of clause 2(2). The main provisions, the substantive provisions, of this bill, the International Finance Agreements Amendment Bill, are contained in clauses 5 and 6, which refer to amendments to the existing schedule 1 of the International Finance Agreements Act, and that schedule sets out New Zealand’s current obligations vis-à-vis the IMF. This bill changes those provisions in the way that is set out in schedule 1 to this amendment bill and schedule 2 to this amendment bill. Schedule 1 of this amendment bill gives effect to the 2008 reforms to the IMF, which were agreed then but which have yet to be implemented in New Zealand law, even though we have agreed to them at the international forum. The date on which the 2008 reforms can and should come into effect is when this legislation is given effect through receiving the Royal assent, and that is what the effect is of clause 2(1). It says that the Act will come into force on the day on which it receives the Royal assent, except to the extent provided in subclause (2), and that subclause (2) then takes out of that general proposition the provisions in clause 6 so that clause 6 does not come into effect on the date when the legislation receives the Royal assent but, rather, comes into effect on such later date as is given effect by Order in Council.

For the Labour Party, that is appropriate in the circumstances because the clause 6 provisions are the 2010 reforms, and we are not ready to have them brought into effect yet, and so it is appropriate that Parliament authorises them being brought into effect at a later date. This is slightly different from the concern that we have about future changes to these provisions in the governing Act, which set out New Zealand’s obligations to the IMF. We think they should not be able to be changed by statutory regulation. We are happy that the current changes, which are agreed through this legislation, through a proper process, do not come into effect in part until the Government passes an Order in Council pursuant to clause 2(2). Therefore, we will be supporting this clause.

The question was put that the amendment set out on Supplementary Order Paper 175 in the name of Brendan Horan to clause 2 be agreed to.

Amendment not agreed to.

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

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 15

Green Party 14; Mana 1.

Clause 2 agreed to.

Clause 3 Principal Act amended

Hon DAVID PARKER (Labour): The Labour Party will be supporting clause 3 of this bill, which amends the International Finance Agreements Act 1961. We are not, in the Labour Party, selective in the advice that we take from the International Monetary Fund. I think it is appropriate at this point to record that although the current Government is giving effect to the changes that are recommended by the IMF Board of Governors to the amounts to be contributed to the IMF by different countries, it seems to be rejecting advice that it is getting from the IMF on other quarters. The International Monetary Fund has moved on considerably in relation to settings that are important for an open, small economy such as New Zealand’s. It has noted that countries like New Zealand are suffering the vicissitudes of changing practice around the world arising from currency manipulation and changing monetary policy settings in other countries in the world. Indeed, Mr Olivier Blanchard, the chief economist at the International Monetary Fund, is on record as saying that countries that are performing better than New Zealand in respect of their external balance—that is, their balance with the rest of the world—are using more than one instrument to target more than one objective, rather than as New Zealand does, which is to effectively use the official cash rate to control inflationary pressures in the economy to the exclusion of virtually everything else, pursuant to legislation that requires the Reserve Bank to give primacy to the targeting of inflation ahead of other important aspects of economic management like the exchange rate. Rather than the New Zealand regime, other countries are pursuing an alternative path.

Even if the path that originally was taken by New Zealand was necessary to stamp out inflation, which was so entrenched in the 1970s and early 1980s, the primacy that is still given in New Zealand to targeting inflation ahead of other matters of economic management is now causing more harm than good. So, although the theoretical objectives of inflation targeting were right for their day, their time has passed. Even if they were right—if everyone in the world was still pursuing that same course—when other countries in the world, as has been noted by the International Monetary Fund, are pursuing a different course, then the effects on a country like New Zealand are that we suffer the consequences of their policy until and unless we change our own. At the moment, because New Zealand does not change the settings under this Government, and just puts up with what we had previously, we are seeing a narrowing of our export base.

Members will recall that Bill English, and the National Government at the time it was elected, said that the primary objective was to rebalance the economy away from consumption towards savings in export growth.

Dr David Clark: How’re we doing?

Hon DAVID PARKER: Not well, Dr Clark, not well. New Zealand this year is predicted to have the worst current account deficit in the Western World. The National Government jumps up and says “Well, the current account deficit is not as bad as it was for 2 years under the prior Labour Government”—

John Hayes: Stick to the bill.

Hon DAVID PARKER: I beg your pardon?

John Hayes: Stick to the bill.

Hon DAVID PARKER: I am, actually. I am saying that the Government is a bit inconsistent in its acceptance of the help and advice that comes from the International Monetary Fund. The Government says that because the current account deficit has been higher, it has somehow fixed the problem. The problem for the Government is that it has not. The current account deficit is getting worse—

John Hayes: Look at unemployment.

Hon DAVID PARKER: I beg your pardon? Unemployment? Unemployment has got worse as well, actually.

John Hayes: Why’s the exchange rate so high?

Hon DAVID PARKER: The exchange rate is—

John Hayes: The economy’s being managed well.

Hon DAVID PARKER: The exchange rate is so high, in part, Mr Hayes, because New Zealand refuses to react to the change in world practice, where other countries are actively intervening in their economies so as to maintain a competitive exchange rate for the benefit of their exporters. New Zealand is not doing that. As a consequence, we hear them say “Oh, well, look, manufacturing is OK.” Actually, manufacturing is OK in the primary sector—there are still as many litres of milk to be processed and still as many livestock to be processed—but outside of our primary sector our exporters are not thriving. Construction manufacturing is coming again in New Zealand on the back of the Christchurch rebuild, but our rebalance towards exports—

Dr DAVID CLARK (Labour—Dunedin North): I want to build on what my colleague Mr Parker was saying, because I think he makes the valid point that the IMF advice is generally pretty good. What we have here is a Government that picks and chooses which advice it chooses to implement and which it does not. A good example is a capital gains tax. This Government has, I am sure, heard or read from the IMF that it suggests that a capital gains tax is a sensible way forward.

John Hayes: No, it’s not.

Dr DAVID CLARK: New Zealand is one of only three OECD countries that do not currently have a capital gains tax—Mr Hayes knows that—and we know that one of those three, Switzerland, is a tax haven, in effect. Another is Turkey, and then there is little old New Zealand. Those are the three countries in the Western World that do not have a capital gains tax. The unfortunate thing with the absence of a capital gains tax in New Zealand at the moment is that it distorts investment decisions. It is part of the picture as to why our manufacturing sector is losing jobs. The primary sector is fine, because, indeed, the investment bias is towards land and capital assets. We have farmers who are farming for capital gain, which, unfortunately, they can realise only at the end of their careers, and that is an unfortunate incentive.

John Hayes: It’s not a bad time to realise it.

Dr DAVID CLARK: There are lot of farmers whom I have spoken to who say it would be better—it would be better—to be farming on the basis of a competitive environment, where the farmers who farmed best made the best profits, not those who amassed the most capital gain over their lifetimes; rather, those who adopted the farm practices here and now that generated returns and that participated in international strategies that saw New Zealand’s product rise up the value chain. But, instead, we have a lot of farmers who are resigned to the fact that this Government is condemning them to farming for capital gains that they will not realise until they retire, or, if they are old and tired and they die on the job, that they will never see. Their families might get some benefit through the capital gains. So there are a lot of farmers who see that the current situation is not ideal and who would actually welcome a capital gains tax, because they understand the importance of growing our economy and having an economy that rewards those who engage in effective business practices here and now.

Of course, with a more neutral investment signal we will also see people weighing up decisions as to whether they take what is, effectively, a tax break, in investing in residential property, or whether they choose instead to use their expertise in the business sector, to invest in good manufacturing industries and in other good, innovative business ideas. We in the Labour Party want more export jobs.

This National Government seems to have its hands off the wheel when it comes to the economy, and we see the results of that: the worst economic growth record of any Government in the last 50 years. This Government has a shocking—a shocking—record on economic growth, and I contend in the context of this debate that that is precisely because it chooses what advice from the IMF it will put into practice, what it will sign up to, and what it will not sign up to. By cherry-picking according to immediate political considerations, it misses the wider objective of economic growth for the benefit of all of New Zealand’s citizens. A capital gains tax is illustrative of this approach by the Government and the costs on New Zealand. We see real wages dropping in New Zealand. We see manufacturing jobs going. We see unemployment as high as it was in the 1990s, when we last had a National Government, and we see a shocking balance of trade that is projected to be the worst in the developed world next year, all because of decisions—

Hon David Parker: Balance of payments.

Dr DAVID CLARK: Balance of payments, Mr Parker corrects me, and he is right. It is projected to be the worst balance of payments in the Western World. And it is because Mr Hayes and others like him are not comfortable with entertaining the solutions from the IMF that do not suit their current political narrative. At least, I have got to assume that. I have got to assume there is good intention in there somewhere, but it is not immediately obvious why the National Party seems to be against business, seems to be against manufacturing, and seems to be against growing the economy. This Government talks about business, but it seems to do nothing that supports New Zealand businesses, and New Zealand businesses, as we know, are crying out.

A party vote was called for on the question, That clause 3 be agreed to.

Ayes 106

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1; Independent: Horan.

Noes 15

Green Party 14; Mana 1.

Clause 3 agreed to.

Clause 4 New section 10 inserted

Hon DAVID PARKER (Labour): Just before I address clause 4, I have to record my surprise at the Greens voting against this—are the Greens voting against this legislation as a whole?

Eugenie Sage: Yes.

Hon DAVID PARKER: You know, in an international world, where we rely upon international organisations like the IMF to make the world a better place, I am surprised that the Greens are voting against this legislation, the International Finance Agreements Amendment Bill. In fact, I have to say that I regard that as fringe behaviour. I really do. I am surprised that the Greens are not supporting what is a key international institution. Not all of the advice that the IMF has given over the years to developing countries as to how they should conduct their affairs has been correct—I am not saying that. I can see why the Greens would be critical of some of the advice that was given to developing countries, you know, for a Government to move out of all provision, etc., and some of the advice that was given to Russia, for example, as it came out of Communism was terrible advice and led to the rise of oligarchs in a way that would have been avoided had the transition to democracy been better. But to say that the IMF should not be able to change its percentage contributions in respect of these important funds that are increasingly coming from developing countries, like China, which have emerged as economic powerhouses, and not to update the IMF legislation to reflect that change, I think, is wrong and fringe.

Having said that, I shall deal with clause 4. I have an amendment before the Committee to delete this clause, and I want to explain why. The legislation that this bill updates was originally passed in 1961. Since then, there have been a number of amendments to the International Finance Agreements Act when the articles of the IMF have changed, but they are not so onerous as to not have been within the ability of this Parliament to consider and debate on their merits. Since the Act originally came into force in 1961, articles of the IMF have been changed on only four occasions before this. That was in 1968, 1976, 1992, and 1998, plus there is this change. Those changes can have significant long-term effects. I understand that even if the legislation does not come before Parliament, the effect of the Government, which has authority to represent us at IMF meetings, agreeing to a change in quota—or even if it disagreed and the requisite number of members did agree to a change—is that New Zealand is bound to go along with it, unless it pulls out of the IMF. I understand that. But I do not think that means that these changes, when they are coming about, should not be debated by this Parliament. I think one of the reasons that is important is that—for the very reasons that we have heard in this debate—Governments can be selective about the advice that they take from the IMF, and we actually do not get all that many occasions to debate the inconsistency of positions taken and why it is that a Government might be taking this bit of advice but not pursuing a capital gains tax or not pursuing changes to monetary policy, etc. So I think that these sorts of debates are useful and important in Parliament.

That is why we in the Labour Party think that when our arrangements with the IMF are changed in this fashion, they should be debated in Parliament. They are not normally urgent. It is not like we have to disrupt urgent business and go into consideration of the IMF changes; we can put it on the Order Paper and consider it when the Government has a bit of time. That is evidenced by the fact that these changes—sorry, there are two sets of changes here, one of which relates to an agreement in 2008 at the IMF and the other to one in 2010. Here we are 5 years later just putting those into effect in legislation, or getting close to finalising it. It is not like this has to be done in a rush, which disrupts normal parliamentary business. But it should have parliamentary scrutiny and it should, in accordance with due process, come before us.

Clause 4 says that in the future it does not have to come before us. We are going to abandon the practice that we have had since 1961, which is, whenever there is a significant change to our arrangements with the IMF, Parliament gets a chance to debate it. Well, all of a sudden the Government says: “Well, we don’t need to do that in the future. The Government will just give effect to that by way of Order in Council.” So the scrutiny that we have at the select committee and the discussions that we have in this Parliament will not be necessary in the future; the Government will just do it all by Order in Council, and we will not have the opportunity to debate it. I think that is wrong. The Labour Party thinks that is wrong. We do not think that schedules 1, 2, 3 and 7 of the principal Act, schedules 1 and 2 of the International Finance Agreements Amendment Act 1966, or schedule 2 of the amendment Act—none of those schedules—ought to be able to be amended by way of Order in Council.

Just to put that into perspective as to what the financial consequences of these changes can be, currently New Zealand has to pay up 25 percent of its commitment to the IMF in paid-up capital to the IMF, and the IMF uses that for various things. In addition, we can have capital called up from us, up to the total of our quota, and there are other related lending arrangements, where, when the IMF calls on us to make good on our promise to help other countries by lending direct to countries that need a hand for a while, we have to do that within a set period. If that amount changes dramatically, that does have dollar consequences for our country. Indeed, when changes are made to increase the amount in the IMF fund but New Zealand’s total commitment does not go up, that causes us to reflect on the fact that, relative to the size of the world economy, we have not been growing; we have actually been getting a smaller share of the total world economy, rather than a greater one. That in itself is something that should cause us in New Zealand to reflect on whether we have our economic settings right.

For those reasons, the Labour Party is proposing an amendment to this clause. We are actually proposing that this clause not proceed. The provisions of the amendment bill set out in the schedules would still have effect, so we are not frustrating the intent of the legislation. We are just saying that if it needs to be changed again in the future, it should come to Parliament to do that, rather than it being done by statutory regulation.

The CHAIRPERSON (Lindsay Tisch): I call the Hon David—David Cunliffe.

Hon DAVID CUNLIFFE (Labour—New Lynn): It was going to be one David or another.

The CHAIRPERSON (Lindsay Tisch): Three Davids.

Hon DAVID CUNLIFFE: Almost certainly—in triplicate. I rise to support the amendment proposed by my honourable colleague David Parker to remove the right for the executive by Order in Council to pass amendments to our contribution. One has only to go to the total liabilities, which total NZ$1.8 billion, in terms of New Zealand’s liabilities to the IMF to understand that this is a serious matter that requires proper parliamentary scrutiny. There has been a tendency for the Government to dispose of little matters like parliamentary scrutiny—to shuffle things through the Cabinet process—as is proposed in clause 4 of this International Finance Agreements Amendment Bill. This clause is fundamentally unnecessary. It is inappropriate given the size of our liabilities and it is inappropriate given the international importance of the institution that we are talking about, the International Monetary Fund.

In that regard, may I provide some context, which I am sure my colleagues will have noted in their earlier contributions, but, as this is my first opportunity, I wish to raise it now. That is to note that the IMF has fulfilled its role not only as a lender of last resort to developing and distressed economies but also as a contributor of record to international economic debate. What has been remarkable is the way the nature of the IMF’s advice has changed during the last decade in the run-up to, during, and in the wake of the global financial crisis. I can do no better than to point to this book—which has been provided by my colleague David Parker—In the Wake of the Crisis, which is edited by Olivier Blanchard, the chief economist of the IMF. I refer also to two IMF working papers, which I will later seek leave to table—one on growth forecasts and fiscal multipliers and one on the basic mechanisms and appropriate policies for dealing with the global financial crisis.

What is remarkable about these papers is that the IMF has shifted its views. The IMF is now saying that too much austerity prolongs recession and will inhibit the global recovery from the global financial crisis. In other words, its traditional mantra of “Cut costs, run surpluses” has been rescinded. And what it explicitly recognises is that fiscal parameters must be seen in relation to what economists call the output gap. Is there sufficient spending power, sufficient demand in the economy, from mums and dads, from private businesses, and from the Government to keep everybody working and paying taxes and to keep the ball rolling, as it were? What the IMF argues cogently in this paper is that if there is insufficient demand because Governments retrench too quickly, that can become a self-fulfilling prophecy. Governments get less tax revenue, because there is less economic activity, and they then run bigger deficits and fail to make their fiscal targets. They chase their own cuts down a fiscal drainpipe, and that is—

John Hayes: It’s not happening here. It’s not happening here, David.

Hon DAVID CUNLIFFE: The financial genius in the back row is saying that it is not happening here, but, in fact, it is, because the Government’s revenue targets have reduced over the last year and it has had to increase revenue through a new fuel tax, a fuel excise. Even so, the Government is only just, if at all, going to meet its surplus target for 2014-15. And you will notice that both Mr English and Mr Key are backing off their earlier categorical language about that. They are finding out, if you like, the hard way what the IMF has been saying to the world in these papers: do not cut your own throat. The job of a Government is not just to balance its own books; the job of a modern Government is to balance its country’s books, to provide jobs, and to provide turnover to ensure that the economy is healthy, that it can balance its external accounts, and that it has an appropriate monetary policy.

If I might turn to this contribution by the IMF chief economist, he has said: “We have moved from a one-target, one-instrument world to one where there are many targets and many instruments.” Well, why has nobody told the Governor of the New Zealand Reserve Bank? Mr Wheeler’s early comments, much as we respect the independence of his office, I have to say, sound like he is going back to Reaganomics. We need a modern monetary policy, and the IMF is telling us that a multi-policy, multi-target, multi-instrument framework is best practice, not the single focus on inflation with the single tool of the official cash rate.

Finally, in that regard, I would note that history is repeating itself all over again. We have flagging productivity growth, high unemployment, and a runaway property market. And what is the Government’s monetary policy response? One day we will do nothing; another day we might raise the official cash rate. But there is nothing that is sector specific, no use of macro-prudential tools like loan-to-value ratios or reserve asset ratios, nothing that shows that it is learning the lessons published by the IMF, but it is happy to rescind the right of this Parliament to comment on a billion dollars plus in financial liability to the same organisation. How is that right?

Support Mr Parker’s amendment, remove clause 4, maintain the right of this Parliament to oversight on our liabilities to the IMF, give the people of New Zealand the opportunity to hear why we do it in the first place, and make sure that we are a proper global citizen. We are fortunate that the IMF has changed its tune, that it is playing a role in fundamentally shifting the international economic debate from 1980s monetarist orthodoxy—high-class neo-liberalism, if you like—to something that is a little more balanced. That is not to say that the IMF has gone to finishing school with Karl Marx—that ain’t gonna happen—but at least it is more moderate than it was. So, in conclusion, support Mr Parker’s amendment, strike clause 4, maintain oversight of our contributions to the IMF, and take seriously the billion-dollar liability—it is almost as big as the Government has spent on South Canterbury Finance.

Dr DAVID CLARK (Labour—Dunedin North): Thank you for the opportunity to speak on clause 4 of the International Finance Agreements Amendment Bill. I wish to speak, of course, to Mr Parker’s amendment and to take up his position—or his concern, at least—on the Greens’ position on this. I want really to just raise the question and invite a contribution from the Green Party, because this is an important issue. The debate we are having, it seems to me, is about some really big economic issues that are affecting the world. The way in which the IMF provides advice and who takes it is stuff that has been canvassed in the Committee stage, as well as how we as a country respond to that advice. We talked about whether a capital gains tax is useful or not; I did in a previous contribution. Mr Hayes interjected that he thought it was not. And the debate has gone on. The National Party, notably, has not contributed much to this debate either, and I find that concerning.

I am enjoying, I guess, at the same time, the contributions of my colleagues. David Cunliffe and David Parker have both explained why this legislation is important, but also why clause 4 should be taken out of the legislation, because it fails to allow in the future for proper parliamentary scrutiny of changes. David Parker briefly covered those times when the Articles of Agreement of the International Monetary Fund have been amended. I actually have in front of me the schedule of all of the significant changes in the history of the IMF that might fall under that. In 1968 we see that the articles of agreement were repealed. It was not then until 1976 that the articles of agreement were updated again. That is an 8-year gap. Only once in 8 years did our Parliament get to debate the Articles of Agreement of the International Monetary Fund.

Those articles of agreement stayed in place from 1976 to 1992, and it was not then until 1992, I imagine, that this Parliament debated again whether they should be changed, where New Zealand stood on international aid and development aid, how the world’s economy should be encouraged or not in line with IMF advice, where New Zealand stood, what New Zealand’s contribution should be, and whether we were in agreement with the expectations on us for contributions for helping stressed or developing countries to improve their economies, to stabilise them, and to make sure they were growing in a sustainable fashion. And then after 1992 the next time the articles of agreement came up was in 1998. So there was a 6-year gap. That is two terms of Parliament—and for some of these it is longer—where these issues have not been debated. So, once again, from 1998 we are now through to 2013. That is a huge gap. That is a huge period of time that has elapsed when we did not have the opportunity to discuss these articles of agreement and how Parliament should handle them, and now we are proposing to not have this debate at all. It certainly cannot be said that this debate happens too often, so I am concerned that parties in this Parliament are not taking the opportunity, when the last time they had it was in 1998.

We are talking about $1.8 billion of New Zealand funds, and it seems to me that when the National Party contribution to this debate is limited to Mr Hayes’ insights around the capital gains tax, that is not a full debate on the issue—with all due respect to Mr Hayes. And when we do not hear anything from the Greens about international economic issues in a debate that we have not had since 1998—in fact, if I am right, that presumably means the Greens have not contributed to this debate ever—we do not know where they stand on this, other than that they oppose it in general. Perhaps, if they were uncomfortable with the removal of this parliamentary scrutiny, they could have moved an amendment, the same as my colleague Mr Parker has moved, to say that they think these issues should be debated in Parliament, because they are important issues, which affect significant amounts of money, but also because this is a matter of principle.

This is a matter of principle as to whether New Zealand chooses to participate in the economic efforts to underpin the world economy, and whether it chooses to do that in a timely fashion—this legislation, I will remind the Committee, is being rushed through now because it was not looking like being ready in time, and suddenly it has come back on the Order Paper to get it pushed through Parliament—or whether New Zealand is going to drag its heels. Where New Zealand sits in the international community, it seems to me, is an important point to be debating. I hope that the challenge that I have issued will be taken up by members opposite and hopefully also by the Green Party, to outline their positions in respect of this bill, in respect of taxpayers’ money—the $1.8 billion that New Zealand commits to world development—and whether, for the Green Party, it thinks that supporting developed countries out of poverty is a priority or not. Is that the point of principle that is being debated here? The National Party, it seems to me, does generally support these things. We have supported it in a bilateral fashion, but we differ here, of course, on whether these things should be passed by Order in Council or whether they should receive the full parliamentary scrutiny.

So Mr Parker’s amendment would make sure that Parliament did debate these issues when they come up every 13 years, or every 20 years, or every 6 years—I think that is the shortest gap. It would make sure that we do have that debate. I think that it, therefore, is a very important amendment, and I would urge all members of this Committee to support it. I urge those members of the National Party opposite to examine their consciences, to see whether they really believe that parliamentary scrutiny should be applied to this legislation, or whether they are comfortable with a backroom deal being done on economic matters where the world is concerned. I suspect that if members opposite do examine their consciences, they may realise that the way this legislation is worded could be improved by simply adopting Mr Parker’s amendment that we remove clause 4 from the legislation, and simply bring this debate back to the House when it next comes up. That may be in 10 years’ time; it may be in 15 years’ time. Then we will see what spread we have in Parliament and what the different parties represented here think on these issues. As I made the point, the Greens were not here to have a debate the last time these issues were debated. They did not exist as a political party in the parliamentary realm—

Holly Walker: Jeanette and Rod were here.

Dr DAVID CLARK: Elected in what year?

Holly Walker: 1997.

Dr DAVID CLARK: In 1997 the Greens were first represented?

Holly Walker: Jeanette and Rod were both in here.

Dr DAVID CLARK: We shall examine the Hansard to see what the contributions were there and whether the Greens have updated their thinking since then. I think it is an important thing to be debating in this Chamber. This is a huge commitment from New Zealand. It is a matter of principle and it is a large amount of money, so it is worthy of the time of this House, even if we, by and large, agree on the principles, and even if across the House we agree on the principles of engaging in the IMF’s business and the principle of supporting and stabilising the world’s economy.

So with that, I recommend Mr Parker’s amendment to the Committee and urge all members to examine their consciences, to participate in this debate, and to make sure that we have some robust legislation that enables the proper scrutiny of these matters in our House in years to come.

MARK MITCHELL (National—Rodney): I move, That the question be now put.

ANDREW LITTLE (Labour): This typescript amendment lodged by my colleague Mr Parker is a very important one. We do not often debate constitutional principles in this Chamber, and certainly outside of it. We understand, most of us who are here, our role as parliamentarians, which is to pass laws and provide some scrutiny and oversight of the Government of the day when it is putting up laws, and, to some extent, to initiate laws ourselves. But when we are faced with a proposed law such as this, which takes away the scrutiny of Parliament, then we have to tread and approach it extraordinarily cautiously, more so when it is about the international obligations that we enter into. All of the international agreements that we enter into, if they have any force either internationally or locally, must come to this House for ratification. That is standard international law. So it defies explanation when we see in this legislation an agreement that, admittedly, we all already have entered into, but an agreement that, if the Government of the day wishes to amend it or wishes to agree to amend it in the international forum in which it operates, should not come back to this House. There is no explanation, nor could there be, for that course of action. So Mr Parker’s amendment is absolutely crucial when it comes to constitutional principles and the way we operate.

We do not have the checks and balances that many other countries—many other members of the IMF—have. We do not have a second House to keep the executive in check. We do not have court oversight—Supreme Court or Court of Appeal or High Court oversight—of the law-making functions of this Parliament. That is the Westminster way. That is the Westminster system, and, subject to what the current lengthy constitutional review might come up with, it is unlikely that that would change. So the only check and balance that we have on the power of the executive and what it does in the name of all New Zealanders, whether locally or on the international stage, is what happens in this Parliament. It is the ability for parliamentarians of whatever colour, of whatever origin, of whatever part of the country to come together, whether in this House or in the select committees, to provide oversight and scrutiny of what the executive or any member of it has done, or is doing, or has agreed to—in this case, in the very important international forum of the IMF.

When the legislation says that the Government of the day, can by Order in Council, agree to, register, and record amendments to the important documents that make up our membership of the IMF—the fund agreement, the bank agreement, the text of the corporation agreement, and the text of the convention—when you start getting down to that end, where things in any other context and in any other forum would require ratification or validation by this Parliament, then it is time to stop where we are and take a step back. For that reason, Labour is saying that this is a step too far by the executive. When it comes to putting in the hands of the executive the power to make these changes—without the scrutiny and oversight of Parliament, without the ability for this Parliament and members of it to debate it, to come up with alternatives, and to challenge unwise steps—then that is bordering on, if not indeed usurping, the power of this Parliament, and certainly the members in it.

So we say boldly and unequivocally that clause 4, which is amending section 10 of the International Finance Agreements Act 1961, is simply a step too far. It should not proceed at all, and doing that does not compromise the real objective of this bill, which is to allow the changes that have been agreed to so far to proceed and to have the approval of this Committee. But the idea that upon approving recently—when I say recently, I mean in the last 5 years, of course—agreed changes to the IMF statutes and the IMF texts, to say that having agreed on that we should then give carte blanche power to the executive to agree to changes—

JAMI-LEE ROSS (Junior Whip—National): I move, That the question be now put.

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

Ayes 64

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

Noes 57

New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan.

Motion agreed to.

The CHAIRPERSON (Lindsay Tisch): We have a typescript amendment in the name of the Hon David Parker to delete clause 4. This is out of order as a direct negative of the question, and the proper course of action in this case is for the party to vote against clause 4. This is covered by McGee on page 217 and Speakers’ rulings 59/6 and 115/6.

A party vote was called for on the question, That clause 4 be agreed to.

Ayes 64

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

Noes 57

New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan.

Clause 4 agreed to.

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

Clause 5 Schedule 1 amended (implementing 2008 reforms)

Hon DAVID PARKER (Labour): I am pleased to take a call in favour of clause 5. Clause 5 is one of the operative parts of the International Finance Agreements Amendment Bill in that it gives effect to changes to the first schedule of the International Finance Agreements Act 1961. That first schedule is amended in the manner that is set out in schedule 1 of this amendment bill. It is interesting to go back to the 1961 Act and see that what we are dealing with here is, effectively, the constitution of the IMF, the International Monetary Fund.

The IMF, of course, in case we forget, is one of the institutions that was formed as a consequence of the rise in Fascism, the rise in Communism, and World War II that resulted from the economic policies of the world, particularly in the 1920s and the 1930s, when the downward spiral that various countries were in could not be recovered under the economic management of the time and the injustice and deprivation that was suffered by so many peoples around the world led to war. At the end of World War II there was a meeting of the United Nations called the United Nations Monetary and Financial Conference, which was held in July 1944, towards the end of the war. Someone else might be able to tell me whether this is correct—I think it might have been either there or at the subsequent conference at Bretton Woods, in the United States, that not only did the international community agree that it needed to reform some of the matters relating to international monetary policy but also the conference led to the formation of some of the financial institutions that were intended to both pursue reconstruction after the war and rebuild the economies in Europe and Asia that had been particularly decimated by the war, and also to form the International Monetary Fund, with functions that are set out in this first schedule that we are amending.

It is interesting to see that the purposes of the International Monetary Fund are set out in the first article of this schedule that we are amending. They include: “To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems … To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.”, and “To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.” I am going to emphasise that last matter. One of the purposes of the IMF was and is “to avoid competitive exchange depreciation.” In that regard, it falls on me to again remind the Committee that whilst we are considering amendments to parts of this schedule, we have a Government that is ignoring other lines of advice that are coming out of the IMF that show that existing monetary policy is no longer working for New Zealand’s best interests. We are not avoiding the deleterious effect of competitive devaluation abroad, and it is time for New Zealand to move beyond giving primacy to inflation targeting and to manage other important aspects of management.

Of course, this legislation does not touch on this, because the advice function of the IMF is unaffected by these provisions, except to the extent of the funding of the IMF, which I presume is in terms of its advice function. This is funded from the same pool of money that is provided by Governments, and that money will be invested. I suspect it lives off some of the income that it generates from that money. I am sure that if another member has information to the contrary, they will leap to their feet and say so. When quotas are set as to the funding of the IMF, that funding funds not just some of the loan functions that we have talked about, loans of money to countries that are in trouble; it also funds the IMF itself, which has this advice function that is so important. Although it is never always right, if you like—no one is always right, and the IMF has made some mistakes over the years—it nonetheless has been a force for good in the world and the Labour Party is happy—

Hon TREVOR MALLARD (Labour—Hutt South): The clause we are speaking to at the moment is clause 5 of the International Finance Agreements Amendment Bill, which brings in schedule 1 implementing the 2008 reforms. That is the area that I want to speak to, and, as my colleague David Parker has done, I want to also refer to the International Finance Agreements Act 1961. It is from a period slightly before my experience in Parliament, but I think many of us have—

Hon Ruth Dyson: 1971? You were hardly born, Trevor.

Hon TREVOR MALLARD: 1961.

Hon Ruth Dyson: 1961? You weren’t born.

Hon TREVOR MALLARD: Well, I give that member an assurance I was. I am trying to work out—was it Harry Lake? I am trying to work out who the Minister of Finance was. Was it Lake—John, you will remember—in the Holyoake Government?

Hon John Banks: Lake.

Hon TREVOR MALLARD: Lake, yes. Subsequently Muldoon was a Parliamentary Under-Secretary later on, and then a Minister. But I am assuming Mr Lake was involved in these discussions, although, given some of the history, I would not have been at all surprised if Walter Nash, my predecessor in the Hutt South area—

Hon Lianne Dalziel: Have you been here that long?

Darien Fenton: Predecessor?

Hon TREVOR MALLARD: Well, not my immediate predecessor. There were one or two in between us. But I think it is fair to say—and I think Mr Banks remembers Mr Nash as well—Mr Nash was 86 when he left Parliament, so he was a person of considerable experience. He was someone who was involved in the first Labour ministry, and involved in a lot of international discussions in the—

Hon John Banks: Not 86.

Hon TREVOR MALLARD: Sorry?

Hon John Banks: Which Nash was this, leaving Parliament in 86?

Hon TREVOR MALLARD: Nash was a member of Parliament into the 1960s—into the 1960s—but he was first a member of Parliament in the 1930s. He was 86 years old—86—and was succeeded by Trevor Young, whom the member will know well. I know it is not quite strictly within—

The CHAIRPERSON (Eric Roy): No, it is not. Would you come to the point. I am fascinated, but would you come to the point.

Hon TREVOR MALLARD: That is right. I am sure I can work the fact that they were both temperance members of Parliament into the debate—they were; they both were. I think it is fair to say that Trevor Young was the last of the temperance movement members of Parliament.

Hon Ruth Dyson: John Carter, originally.

Hon TREVOR MALLARD: Sorry?

Hon Ruth Dyson: John Carter, originally.

Hon TREVOR MALLARD: Oh, I do not think John Carter was. I think John Carter may have been a temperance member off and on—normally the morning after.

But, getting back to the IMF and the fact that it was first brought into our legislation in 1961—in fact, it was part of the first schedule to the then, I presume, the International Finance Agreements Bill that subsequently became the Act—there is pretty substantial reform occurring in this schedule and in these changes. The first area of reform that I would like to refer to is that which is part of article 5 of the substantive legislation being amended here. In that article, section 12(h) is repealed and substituted, and it goes to “Pending uses specified under (f) above,”—and I will just get to paragraph (f), which I am just having a little bit of trouble finding. I will come back to that in a subsequent call. But the new paragraph (h) states: “Pending uses specified under (f) [in section 12]”—I will actually be able to find it, as it is not too far away from here as part of the first schedule—“the Fund may use a member’s currency held in the Special Disbursement Account for investment as it may determine, in accordance with rules and regulations adopted by the Fund by a seventy percent majority of the total voting power.” One of the things that I would be interested in hearing from the Minister in the chair, the Hon Michael Woodhouse, is an explanation, which I think is part of this and the next part, of the changes in the voting power as a result of the rebalancing, which I understand is about a 5 percent rebalancing, and whether that affects the position of the United States, which has had almost effectively a veto. With the Asian Development Bank it is sort of like where Japan goes, the Asian Development Bank goes, but with the IMF it is where the United States goes, the IMF goes. I think I would be interested in the Government’s opinion as to whether the rebalancing by about 5 to 6 percent of the balance of the ordinary capital does, in fact, give a change in effective control of the IMF. But, clearly, if we go back to new section 12(h), the income of the investment and interest received has to be put into a special disbursement account.

Then there is a new, additional paragraph (k) that is added to article V. That is a relatively important area, because it has to do with the use of gold and, effectively, the gold standard used by the IMF. It goes to when it “sells gold acquired by it after the date of the second amendment of this Agreement,”—because I think we know that there are two parts to this particular 2008 amendment, or, well, there are more than two parts to this 2008 amendment—“an amount of the proceeds equivalent to the acquisition price of the gold shall be placed in the General Resources Account,”. If there is any excess or profit, it goes into the investment account for use pursuant to article XII in schedule 1 of the International Finance Agreements Act 1961. But, of course, what we are talking about is effectively the constitution of the IMF.

I will move to article XII, which is relatively important, and which goes to the appointment of alternates. There has been, I think, quite a lot of debate within the IMF and some of the other institutions around the use of alternates and whether they have full powers in the absence of the primary executive directors, because they have a number of executive directors in this area. In fact, they are relatively well-paid executive directors. But what this amendment does is put a requirement on each of the executive directors to “appoint an Alternate with full power to act for him …”. I just want to ask the Minister in the chair whether it is just an old-fashioned approach from our current Minister of Finance that he did not accept the possibility that an executive director of the IMF could, in fact, be a woman, and—

Darien Fenton: Ha, ha!

Hon TREVOR MALLARD: Well, you know, one might laugh, but, given the fact that it is Bill English who is involved in this, it just might—you know, he still has recurring nightmares about Jenny Shipley. But the possibility that either an executive or an alternate director of the IMF could be a woman does not appear to be contemplated in this legislative change to the IMF’s constitution.

What it also does for some of the executive directors who are appointed by more than a specified number of members—that is, people who have effectively multi-member constituencies in their position as an executive director—is that it allows them to appoint two alternate directors, so that is getting to be a pretty unusual situation. That person then has to do a designation as to which alternate should act when the person is absent—who should exercise the powers—and what effectively happens as a result of that is an ordering of the positions of the alternate directors.

Also within article XII is really the operative clause as far as the rebalancing of the power of the IMF is concerned. Section 5(a) is repealed and a new section (5)(a) is put in, which indicates that “The total votes of each member shall be equal to the sum of its basic votes and its quota-based votes.” That is a pretty standard arrangement, and it has been like that for some time. But what is happening here is a rebalancing, and section 5(a)(i) states: “The basic votes of each member shall be the number of votes that results from the equal distribution among all the members of 5.502 percent of the aggregate sum of the total voting power of all the members, provided that there shall be no fractional basic votes.”, and if one thinks about it, it gets pretty hard to start exercising part of a vote. Either you have got a vote or you do not have a vote, and having something passed by a fraction of a vote within the IMF is probably not the most logical way. Section 5(a)(ii) states: “The quota-based votes of each member shall be the number of votes that results from the allocation of one vote for each part of its quota equivalent to one hundred thousand special drawing rights.” So what that effectively does is give to the IMF a lot of power—to the people who put in the drawing rights. You know, I suppose it is a bit like the taxation and representation - type story, and that is something where the United States has for a very long period been the primary organisation to fund the IMF. I think, as we know, there is some rebalancing occurring.

Within article XII, section 6(f)(iii) is changed, and that has to do with the use of particular currencies. Again, this is a sensible sort of thing, because it means that there is not the same sort of currency risk to individual currencies. New section 6(f)(iii) states: “The Fund may use a member’s currency held in the Investment Account for investment as it may determine, in accordance with rules and regulations adopted by the Fund by a seventy percent majority of the total voting power.” I think the fact that the 70 percent majority is sitting there was something that—and I am not sure whether my colleague the Hon David Cunliffe was involved in the discussions here, but I am pretty sure it is something that the Hon Dr Michael Cullen was relatively keen on at the time when he was a governor of the IMF, because what that meant was that things could not be sort of tipped over or pushed through by a very small group of countries, given the imbalance of the funding in that area.

Clearly there is a wind-up clause to do with the investment account. I think it is—[Interruption] Well, no, there is a possibility at some stage that the IMF’s role could change. It may choose to focus—I note the scorn on the face of the member for Hamilton East or West. Which one is it?

Hon Member: West.

Hon TREVOR MALLARD: West.

Tim Macindoe: You should remember. You lived there once.

Hon TREVOR MALLARD: No, I just forget which of them comes from where.

Tim Macindoe: Same initials, same electorate.

Hon TREVOR MALLARD: Well, maybe I am just blocking it out. The member is a disgrace! He is an embarrassment to Hamilton West—an embarrassment to Hamilton West!

But going back to the point, it may be that the work that the IMF is meant to do in the advice, especially around currency—

ALFRED NGARO (National): I move, That the question be now put.

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

Ayes 71

New Zealand National 59; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1.

Noes 49

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

Motion agreed to.

A party vote was called for on the question, That clause 5 be agreed to.

Ayes 105

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1.

Noes 15

Green Party 14; Mana 1.

Clause 5 agreed to.

Clause 6 Schedule 1 amended (implementing 2010 reforms)

Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to take a short call on clause 6 of the—

Hon Trevor Mallard: 15 minutes?

Hon DAVID CUNLIFFE: —25 or 30 minutes, a short call—International Finance Agreements Amendment Bill. Labour supports the bill, and in particular it supports this clause, which brings into effect the amendments to the schedule proposed in 2010 by the—

Hon Lianne Dalziel: Which schedule?

Hon DAVID CUNLIFFE: It is schedule 1, the Hon Lianne Dalziel. The important matter here is to first put it in context by rephrasing the role of the IMF. The international financial institutions are structured around the following general roles: the World Bank is tasked primarily with providing development advice and some co-funding to important development projects; the International Monetary Fund is tasked with providing backup financial resources to assist developing and emerging economies, and to help to underpin the stability of the international financial system. Its developed member countries provide special drawing rights as liabilities against each country’s national accounts, and in New Zealand’s case those liabilities add up to something over $1 billion.

Earlier in this debate we had debate over the one clause of this bill that Labour opposes, which was the removal of the right to parliamentary scrutiny, in clause 4. Labour proposed an amendment to that, which was defeated, and the bill has carried that clause. None the less, because the IMF board has already agreed and ratified the changes here, Labour believes it is important that this Parliament play its part by sealing that within New Zealand law by passing this bill and thereby enacting the amendments to the articles of the IMF that are contained in schedule 1 and schedule 2. Schedule 2 of this bill amends schedule 1 of the Act, implementing the 2010 reforms. In particular, I would like to draw the Committee’s attention to article 12, sections 3(b) to (d). It reaffirms: firstly, in (b), that “the Executive Board shall consist of twenty Executive Directors elected by the members, with the Managing Director as chairman.”; and, in (c), that “For the purpose of each regular election of Executive Directors, the Board of Governors, by an eighty-five percent majority of the total voting power, may increase or decrease the number of the Executive Directors …”.

That figure of 85 percent is a very important number because one country, the United States, holds 16 percent of the voting power, and the astute, like Andrew Williams MP, will note that 85 plus 16 is 101. Thus the United States has an effective veto over the enlargement or contraction of the voting board. That has been historically justified in terms of the United States’ pre-eminent role in funding the IMF. It is, of course, based in Washington, DC. It was part of the post-war UN and global institutional reconstruction. But, none the less, others would say that it has conferred upon the United States a very important tool of influence and leverage on the international economy. That is reflected in article 12, sections 3(d) and (c), which in a sense entrench the current United States veto over the composition of the board.

The IMF is going through several very important transitions, and in an earlier contribution in the Committee stage of this debate I noted the shift in thinking that has gone on at the IMF. It has been led by the current and previous managing directors, Christine Lagarde and Dominique Strauss-Kahn, and it has been embodied in particular in the writing of the chief economist of the IMF, the renowned Olivier Blanchard. He has led quite an effort in revisionist economic thinking, which, for example, has contradicted earlier IMF doctrine that running budget surpluses leads you to the best of all possible worlds. Recent work by the IMF has reaffirmed the importance of the Government spending multiplier, and warned Governments around the world that excessive austerity when they are recovering from a global financial crisis might be the worst thing that they could do. That is a pretty important shift for the IMF. There is another shift that is going on that is directly related to schedule 2, and that is a shift in the membership and the relative voting weights, contributions, and potential contributions of members. It really relates to the shift in geopolitical power due to the rise of South Asia and East Asia, the rise of China and India and the nations of South-east Asia. [Bell rung] I am just warming up, Mr Chairman—just warming up. There is another 15 minutes to go.

Tim Macindoe: This is your idea of a short call.

Hon DAVID CUNLIFFE: That is right—that is right. The rise of economic power in East and South Asia has had the impact, some would argue, of restoring the globe to its long-run historical shares of global GDP, where East and South Asia took about a quarter each, Europe took about a quarter, and the so-called New World took about a quarter. Of course, in the early part of this century that has not been the case, and the trends are now being reflected in discussions at the IMF board level about voting rights and membership. In that respect it is very interesting that these articles reaffirm the veto power of the United States over the expansion or contraction of the board, and thereby decision-making rights.

One could argue that there is a little bit of tension between the article that we are passing now, which is entrenching the historical pre-eminence of the United States and its power over the IMF, and the global mega-trend that is seeing the rise of East and South Asia, and potentially—China is already the world’s second-biggest economy—its relevant influence over the global economic institutions. That is a drama that will no doubt play out over the next decade or so as the world enters a very interesting time in the shift of the balance of global strategic power towards the east.

Moving on through section 3, we are repealing and substituting various entitlements of executive directors to cast a vote, whether they should be cast as units or individually, the ability to substitute executive directors for alternates, and the various abilities to appoint or not appoint an executive director.

If we move on to schedule D, we go further into the ability to cast as alternates, and in schedule E, the transitional provisions in respect of the change of executive directors. In short, the 2010 reforms are all about fine-tuning the rights and responsibilities of the executive directors of the board. Whether New Zealand assents in its Parliament or not, those matters will pass into global practice, because they have already been ratified by the IMF. Labour has some mixed feelings about it. We support the bill, we support the clause, but we recognise that the IMF will need to continue to modernise if it is to continue to be relevant to the most important debates in the global economy, and that its internal power structure, the structure of its board, will need to adapt over time to bring the rising powers of Asia more to the centre of global institutional decision-making, because that is in the interests of all of us. We want the rising powers of Asia to feel that they have a good seat at the table. We want them to feel that they are actively participating, that they have skin in the global economic game, rather than standing outside it. That will mean that they have an incentive to play by global trade and macroeconomic rules, and that we will get past the relatively sterile debate about the artificial lowering of Chinese exchange rates and the accumulation of trade surpluses, because a lot of those debates will be held around the table of the economic institutions that matter.

So Labour believes that although we support this bill to ratify and recognise our role as a participant in the IMF, it is important that our region’s executive directors continue to urge the IMF to move in the direction of modernisation. That is part of several important trends that are going on within this institution that are making it more relevant to the modern world. As I said before, the evolution in macroeconomic thinking away from the old Washington consensus, the old neo-liberal orthodoxy, and towards a more multifaceted, broad-based approach to economics that takes on board the impact of behavioural economics, that looks at the global financial crisis and its aftermath, that has a multi-tool, multi-target approach to monetary policy, that rejects extreme austerity in favour of a more balanced fiscal approach—those are all the hallmarks of an institution that is in a very important transition and a world that is in an important transition to a new era of economic management.

The CHAIRPERSON (Eric Roy): The question is—

Hon Trevor Mallard: Mr Chairman—

The CHAIRPERSON (Eric Roy): Are you seeking a call?

Hon Trevor Mallard: I am. That is why I stood up and said “Mr Chairman”.

The CHAIRPERSON (Eric Roy): I did not hear “Mr Chairman”. It must have been very dulcet. I will accept that the member said it, and I will give him the call.

Hon TREVOR MALLARD (Labour—Hutt South): Thank you, Mr Chairman. It is not that I am a polite old gentleman, but I thought Lianne Dalziel was going to take the call before me, but apparently she wants to listen to her learned colleague first.

Hon Ruth Dyson: And if she can’t, she’ll listen to you.

Hon TREVOR MALLARD: Thank you. I think I will be voting with my colleagues opposite at the Government Administration Committee tomorrow to get a decent chair.

Hon Lianne Dalziel: We’ve got the best chair we’ve ever had on that committee.

Hon TREVOR MALLARD: Oh, that is not true. I used to chair it years ago.

I would just like to make a point in relation to the overall approach to the International Finance Agreements Amendment Bill before I drive down into the detail of schedule 2, which, of course, amends schedule 1—not schedule 1 of this bill but schedule 1 of the 1961 legislation, the International Finance Agreements Act. I would just like to ask a question of my Green colleagues. Why are they opposed to making an international financial organisation more transparent and more accountable? I cannot see why having an organisation that is shifting the balance of power away from the domination of the United States and into Asia, and being fairer on countries around the world, is getting opposition from the Green Party. To me it just does not seem logical. If Green members really believe that the IMF should be abolished, then it is relatively easy to draft an amendment to this bill that would take out the entire schedule of the 1961 Act and would thereby take out our membership of the IMF.

Mr Chair, I have been listening carefully—you know, I think members are allowed to say that they have not always been in the Chamber themselves. I have not always been in the Chamber for this debate. I have been here for a reasonable proportion—too much, you might say—but I have been listening to it and I am yet to hear a call from a Green member to explain why they are opposed to the IMF becoming more democratic. As I say, if they are totally opposed to the IMF, then they should move an amendment to the legislation that makes their position clear. It is not hard to do. It could be drafted in 10 seconds to make it work, but it appears that we are having silence on the substance but votes being cast without any sort of reasoning, and I would genuinely like to understand from people I want to work with in the future—

Hon John Banks: They don’t understand.

Hon TREVOR MALLARD: Well, no, people just about always have a reason for doing something, and I would like to try to understand what that reason is. But, I think, for that to occur there has to be a call.

I go back to schedule 2, and with a tiny bit of criticism of my colleague the Hon David Cunliffe. I think he did not focus on the fact that schedule 2 amends schedule 1—and that is schedule 1 of the International Finance Agreements Act 1961. What we see, actually, in looking at it, is a difference in parliamentary drafting style since 1961. In 1961 it was called the First Schedule, and now it is called schedule 1. I would like an assurance from the Minister in the chair, the Minister of Immigration, that notwithstanding that difference in drafting style, we are talking about amendments to the First Schedule, even though we are calling it schedule 1, because the naming is different. Even if there was a debate about it, I do not think it would get to the Supreme Court. I think that most of us know what we are talking about, but to use the wonderful language of Hekia Parata, the Minister of Education, I would like a “belt and braces” approach to this and to get an assurance that our trousers are not going to fall down because we say “schedule 1” and not the “First Schedule”. So we would like to be getting an assurance in the preliminary part of this particular clause in the legislation—and we are referring, of course, to clause 6, which brings in schedule 1, amended in the manner set out in schedule 2.

What happens here is that it sets up the fact that “the Executive Board shall consist of twenty Executive Directors [who are] elected by the members, with the Managing Director as chairman.” There is not a high level of understanding in the Committee, and I am trying to assist the new member for Hamilton West with his understanding in this particular area, because what we do have here are executive directors who represent either a country or a group of countries. But when they vote they have an uneven number of votes. It is not like they are on a board and they all stick their hands up and you count the votes and, you know, the group with the most hands up wins. In this particular case—Darien Fenton will remember this approach—it is a card vote. It is effectively a card vote, and it would probably remind me of a Labour Party conference, where some people stick their—

Hon Lianne Dalziel: In the old days.

Hon TREVOR MALLARD: No, no, we still have cards at the Labour Party conference. If you are representing the Labour electorate committee you have two on there, or each of the MPs gets one. Darien Fenton always had 50 on her card and about 75 more in her pocket when she was exercising the votes. That is the sort of approach that you have on the Executive Board of the IMF, where people do not carry equal votes. It is not democratic in the sense of one man or one woman a vote. Just looking in here, it appears that as far as the executive directors in this particular section, there is the possibility contemplated of there being a woman executive director.

Hon Lianne Dalziel: How many are there currently?

Hon TREVOR MALLARD: I have no idea.

Hon Lianne Dalziel: Have a guess.

Hon TREVOR MALLARD: I have my doubts whether there are any, but I must say that there are some pretty competent people who have gone from the New Zealand Treasury, including women, to work in this area. I think it is fair to say that there are not currently women, in my understanding, at the executive director level.

The executive directors are to be elected every 2 years. I think it is fair to say that there has been over a period of time a degree of dissatisfaction with the performance of some of the executive directors. Some of them have worked very hard, but others have regarded it as a bit of a sinecure. What having the 2-yearly elections, I think, is designed to do is ensure that there is less of sinecure in those arrangements. What it does do is give the board of governors, which, for those people who missed my earlier contribution, is generally a group of the Finance Ministers or Treasurers or their equivalents from—

Hon John Banks: I wonder what the US really thinks about this, Trevor.

Hon TREVOR MALLARD: Sorry?

Hon John Banks: I wonder what the US really think about these changes.

Hon TREVOR MALLARD: I think the US is probably accepting of the changes. If it were not—in reply to the interjection of the Hon John Banks—accepting of the changes, they almost certainly would not be happening. But I think it is also fair to say that the United States has not been in the forefront of the promotion of the modernisation and the shift of power from itself to Asia, as far as this venerable institution is concerned. I think it is fair to say that it has probably, over a period of time, been relatively cautious in the area. As I say, it will lose some of its power.

I think in new section 3(i) we do get to the point that my colleague the member for Christchurch Central has been interjecting about for—

Hon Lianne Dalziel: I used to be the member for Christchurch Central.

Hon TREVOR MALLARD: Oh, Christchurch East.

Hon Lianne Dalziel: I probably will be again, as a result of the boundary changes, but you know, never mind.

Hon TREVOR MALLARD: Well, the member—do they have a member? Oh, Nicky Wagner. Is Nicky Wagner the member for—

The CHAIRPERSON (Eric Roy): Order!

Hon Lianne Dalziel: Yes, but she is going to lose it because of the schools.

The CHAIRPERSON (Eric Roy): Clause 6.

Hon TREVOR MALLARD: OK, the member who is the member for Christchurch East but will probably beat Nicky Wagner interjected.

Hon Lianne Dalziel: No, no. The boundary changes will—

Hon TREVOR MALLARD: No, well, just leave it at “the member for Christchurch East who will probably beat Nicky Wagner”. What is wrong with saying that? Is that accurate? Is that accurate?

Hon Lianne Dalziel: Absolutely.

Hon TREVOR MALLARD: That is accurate. That member interjected and asked: “What about the possibility of a woman being an executive director?”. I think it is fair to say that in new section 3(b) to new section 3(d) of Article XII that is expressed, I think, in gender-neutral terms. But when we get down to new section 3(i)—

Hon Lianne Dalziel: Oh: “his”.

Hon TREVOR MALLARD: That is right. As with the previous section, we do not appear to contemplate the possibility of a woman being an executive director. Or are we saying that if there is a woman executive director they cannot have an alternate? Again, I would be interested in the view of the Minister in the chair, the Minister of Immigration, on this, because it appears to give only male executive directors the power to appoint alternates—whether, in fact, that is the case, or whether there is an overriding clause hidden away somewhere in the legislation. Although, I think it is pretty unusual in 1961 legislation. I do not think it would say in all cases “his” means “her”—and remembering that this is not for interpretation, in the end, by the New Zealand system; it is for interpretation within the IMF. I think there is a definite issue to be sorted out.

I would be interested in the Greens’ position on that. Would Green members like to take a call and tell us whether a woman executive director should have rights equal to the men? I think they should, but if people are opposed to—and maybe that is the reason. Maybe I have stumbled on the reason why the Greens are opposed to this. It is because, hidden away in it, there are some sexist clauses. If that was the reason for voting against it, it would be a not totally unreasonable reason for doing it. But I would just like to hear them say it rather than—

Holly Walker: Carry on. More. More.

Hon TREVOR MALLARD: You are prepared to take a call and tell us? That is very good. I think I have got about another 7 minutes and you can have it.

It is slightly unusual here, because schedule 2, which is amending schedule 1, does go over quite a number of areas and does pretty substantive updating. But, on the basis that the Greens have indicated that they want to clarify their position, I am happy to sit down, and, if necessary, to follow them afterwards.

The CHAIRPERSON (Eric Roy): The question is that the question—

Maggie Barry: Mr Chair.

The CHAIRPERSON (Eric Roy): Maggie Barry.

Hon Trevor Mallard: I raise a point of order, Mr Chairperson. Maggie Barry sat. She was not standing when you called her and therefore you are not entitled to give her the call.

The CHAIRPERSON (Eric Roy): Well, it is my judgment where I give the call. She stood first and called first. I started to put the question. I reverted to the first person who called.

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

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

Ayes 64

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

Noes 56

New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1.

Motion agreed to.

A party vote was called for on the question, That clause 6 be agreed to.

Ayes 105

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1.

Noes 15

Green Party 14; Mana 1.

Clause 6 agreed to.

Clause 7 Repeal of International Finance Agreements Amendment Act 1975

Hon TREVOR MALLARD (Labour—Hutt South): This sort of looks like a relatively minor clause, but clause 7 does in fact repeal the entire International Finance Agreements Amendment Act, which is quite extensive and runs through—I am just looking at this relatively carefully—about 20 pages of statute. So, although this is a tiny couple of lines, it is something that takes out an entire Act, and I want a level of assurance that this is necessary and that the financing and commitment arrangements that are in the 1975 Act have, in fact, been picked up somewhere else in the International Finance Agreements Amendment Bill.

I have had a quick look through this bill. I cannot see the financing commitments that are in article 7 of the schedule of the 1975 legislation that we are currently repealing where the fund can use calls on members “to provide individual commitment in the form, at their option, of … direct financing; or … an individual undertaking for borrowing by the Fund; and calls on all members to provide a collective undertaking for borrowing by the Fund.” I cannot see where that core method of financing methodology is picked up and replicated elsewhere in the bill. Of course, I did not sit on the Finance and Expenditure Committee, and I am not entirely familiar with it. I am pretty sure that members opposite did, and I would be happy for them to explain where in the legislation that we are currently contemplating that, in fact, does occur.

The next question goes to the issue of prepayments, which were previously in section 4 of article 5 of the 1975 legislation. The question I have of the Minister of Finance—and colleagues can continue to ask it—is how prepayments are treated now in the legislation. Are they treated differently? Are they treated the same as they were in the 1975 legislation, and, if there is a change, where are prepayments picked up in this area? I am unable to see it. It might be that there has been a decision not to have prepayments any more. It might be that everyone is so cash-strapped that they pay on the due date and there is not a prepayment arrangement or an allowance for that. But if there is a system change, then I think it is important.

Section 2 of article 5 of the 1975 legislation also goes to the eligibility for loans. A member who requests a loan from the IMF has to make it clear “to the Governing Committee that it: … is encountering serious external financial difficulties;”—that is many countries in the world at the moment—“has made the fullest appropriate use of its reserves and has made its best efforts to obtain capital, on reasonable terms, from other sources; and … has made the fullest use of other multilateral facilities.” That is a pretty important set of conditions. Again, as with the question of prepayments, I ask the Minister, and he can clear it up pretty quickly, to indicate where these 1975 rules are replicated, or whether we are, in fact, transferring to the IMF itself—to the governing board or to the executive board—a set of powers that it does not currently have, and having something that is less regulated.

Again, if that is the case, I would like to know. That could be a very good reason for my colleagues voting against the legislation. I see eyebrows going up and someone else shaking their head, so I cannot quite work out amongst my Green colleagues what the story is and what the reason is for them voting against it.

I am sure my colleague the Hon Lianne Dalziel will want to look even more carefully at the 1975 legislation that is being repealed. My understanding is that this was legislation that was put through the House by the Rt Hon Bob Tizard, one of the longer-serving members of Parliament, although not necessarily the longest-serving Minister. In fact, he was a member of Parliament during quite an unfortunate period, from our perspective. He was not quite as unfortunate as Bill Rowling, who, I think, was a member for 24 years, of which he was in Government for only 3 years.

That was not a good time for the Labour Party—[Interruption] I am sorry?

David Bennett: A good Labour Party member.

Hon TREVOR MALLARD: Bill Rowling was a good member of Parliament. In fact, he launched a very good campaign in Hamilton West—a successful campaign—against Mike Minogue, who at that stage was running, I think, at 4 percent for preferred Prime Minister, and he lost. It was one of the indications that personal popularity, especially under a first-past-the-post system, did not guarantee very much at all.

But the point I am making is that this is legislation that appears to have stood the test of time for the last 38 years. What I would ask of the Government is whether the 1975 amendment Act is being replicated elsewhere by this legislation or whether this is just a gross and irresponsible transfer of power within the IMF.

Hon LIANNE DALZIEL (Labour—Christchurch East): My colleague the Hon Trevor Mallard has raised a number of points, but he made a point earlier on about his absence from the Chamber, which, of course, one would not normally refer to. But I wanted to explain why I too had been absent from the Chamber at the commencement of this debate when the House resumed at 7.30 p.m. The reason was that I wanted to see the end of the John Campbell programme that was on television because it related to some matters affecting my electorate and that of the Hon Ruth Dyson, with regard to a financial matter. So I think it is relevant to some extent, because the issues that were being raised actually transgress international financial understandings and, actually, obligations around property ownership—that if a Government is compulsorily acquiring property there is an obligation to pay fair compensation. In this particular instance, we have examples of the owners of land being offered, by the Government—

The CHAIRPERSON (Eric Roy): Order! The member should come back to clause 7.

Hon LIANNE DALZIEL: —a mere 50 percent of their rating valuation. It was a really important issue for both my electorate and Ruth Dyson’s electorate, so I thought it was important to tell the Committee why I was not here on the dot of 7.30 p.m.

The concern that I have got about the repeal of the International Finance Agreements Amendment Act 1975 follows on a lot from what my colleague had to say. I have not heard an explanation from the Minister in the chair, the Minister of Immigration, as to why this particular amendment Act is being repealed, because, of course, the legislation itself actually sets out in legislation the financial support fund of the Organization for Economic Cooperation and Development—the OECD, to which we would refer. When I look at the objectives of the fund, they are: “(a) to encourage and assist members to: (i) avoid unilateral measures which would restrict international trade or other current account transactions, or which would artificially stimulate visible and current invisible exports, and (ii) follow appropriate domestic and international economic policies, including adequate balance-of-payments policies and co-operative policies to promote increased production and conservation of energy; (b) to serve for a limited period, in view of current economic conditions, to supplement, in exceptional cases, other sources of credit to which members encountering serious economic difficulties have had recourse; and (c) to ensure that the risks on loans by the Fund to members are shared equitably among all members, in proportion to their quotas and subject to the limits of their quotas, however the loans are financed.” It states: “All decisions under this Agreement shall be guided by these objectives.”

What is not clear to me is whether this still stands with the repeal of the entire International Finance Agreement Amendment Act, and I think that may have been one of the points that my colleague the Hon Trevor Mallard was traversing in his contribution to this. If it is not the case, then what is the case? I mean how has this been dealt with—in another way? It does seem to me that the two questions are inextricably linked, because if we are to pass the legislation tonight—and, of course, we do actually have to pass this legislation. We do not really have any particular issue with not passing it, because, you know, the reality is that the amendments that we have passed already through this Committee stage do not empower developing countries as much as some have claimed. The 85 percent rule, which we have already addressed, is required now, and all we are doing is updating the relevant legislation. But that does not seem to be clear on the face of it when we come to the repeal of the International Finance Agreements Amendment Act 1975. In fact, the issue seems to be quite unclear, and I think it would assist the Committee if the Minister could, in fact, address that particular issue.

Obviously, because this fund has been an important element of the relationship that we have had with a number of other jurisdictions, with whom we have a relationship in establishing and supporting this fund, I would like to know how the Government has addressed this particular issue in order for us to feel confident that the Minister is able to address all these issues.

Dr KENNEDY GRAHAM (Green): I rise to address the issue of clause 7 of the International Finance Agreements Amendment Bill, which repeals the International Finance Agreements Amendment Act 1975. I do so because I was interested in listening to the comments from the Hon Trevor Mallard about this particular clause, that he could not see where the financing methodology would be in the bill if this clause goes ahead and the 1975 Act is repealed. He mentioned the issue of prepayments, whether people would be treated differently or the same, and whether this was picked up in the current draft legislation. We agree. We often agree with the Hon Trevor Mallard.

His other point was, I think, pertaining to the loans issue, that it needed to be made clear as to whether there would be a set of conditions and whether it would be a transfer of decision making to the board of the IMF. We agree with that too. So there is a lot—a lot—in addressing clause 7 that we would no doubt agree with the Hon Trevor Mallard on. There is a lot that we generally agree with the Hon Trevor Mallard and the Labour Party on, but not on the overall nature of the bill.

I am sorry, Mr Chairman, that I was unable to be here earlier, as well. I was not watching Campbell Live; I was actually discussing this issue and broader issues with the Governor of the Reserve Bank. So I come reinforced with new ammunition on this, in opposing this bill.

Let me explain why we do oppose the bill. Mr Mallard mentioned at one stage that the bill is generally in favour of greater international transparency on economic and financial issues—that is true and we agree with that too—and he could not quite work out, I think he said, the reasons why the Greens will vote against it. Let me explain. It was his own close colleague the Hon Shane Jones who actually did note, or offer his own view, that the debate on this bill is actually a debate over Thatcherism and Reaganomics that has come to influence the IMF—[Interruption] I am quoting—I am quoting. I am quoting a member of the Labour Party. He said that the debate is over Thatcherism and Reaganomics, that it has come to influence the IMF, and that it is essentially revolving around monetarism. I am not sure whether Mr Mallard agrees with that or not, but that is what Mr Jones said. That is the nub of this issue, as we see it, so we do agree with yet another colleague in the Labour Party. The debate is over the nature of the IMF.

Where we diverge—where we diverge—from the Labour Party on this is that having agreed that the debate is about monetarism we would seek to engage the world in reforming the IMF from that theory, in various ways, whereas Labour is disposed to support the bill notwithstanding. We have for some time called for the fundamental democratic reform of the IMF, and this bill essentially invites us to comment on the requirements for the reform of the IMF. Let me give you three examples, Mr Chairman, if I may, and, through you, my colleagues. The first is the stated intent of the reforms: to move towards a more democratic and equal representation model. There is some critique of the reforms that they are not fulfilling that goal in terms of the number of directors who are on the board. The US would hold 16.5 percent of total votes, and the group of 77 would account for 41 percent—120 nations having 41 percent. Secondly, the agreement would also change the voting allocation. There is a 6 percent increase shift in the vote for the dynamic emerging economies like Brazil, Russia, India, and China—2.4 percent of this shift comes from the other developing nations losing their voting share. What kind of reform is that? The question can be attributed not just to the Government members but to the members of the Labour Party as well. Thirdly, where there is inadequate reform of an organisation, a party has a choice to make. You can support the bill while criticising the bill because it does not go far enough and then support it, or you can say that the bill does not go far enough in reforming the organisation and that because of that you will oppose the bill. The Green Party is taking the latter approach.

We will continue to oppose the bill, notwithstanding the report back from the Finance and Expenditure Committee, notwithstanding the debate on the second reading, and notwithstanding anything that has been said in this Committee stage as well. A young, emerging party stands by its principles. Those apprehensive of and facing the imminent onslaught of sclerosis fail to do so.

Clause 7 agreed to.

Schedule 1

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

Ayes 105

New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1.

Noes 15

Green Party 14; Mana 1.

Schedule 1 agreed to.

Schedule 2 agreed to.

Bill to be reported without amendment presently.

Bills

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

In Committee

Part 1 Amendments to preliminary provision

Hon RUTH DYSON (Labour—Port Hills): Thank you very much for the opportunity to speak on the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. I have to say at the start that I cannot recall any legislation that has enraged my electorate as much as this has. It sort of beggars belief, really, that in this day and age we have a Government that wanders into our region and says: “We don’t like what your regional council are doing. They’re not allocating enough water to the irrigators. Some of their performance standards aren’t very good. We’re going to get rid of them, and we’re going to appoint commissioners.” That was bad enough. Thousands and thousands of people who had never before gone on to the streets to protest marched against the removal of Canterbury’s right to vote for a democratically elected regional council. That was bad enough. We, perhaps foolishly, believed the word of the Hon Dr Nick Smith at the time. Some people might laugh and say: “Well, fancy that.”

Hon Trevor Mallard: More fool you.

Hon RUTH DYSON: No, I understand your cynicism, but I am still of the view that when a member of Parliament makes a public statement about something as important as citizens’ right to vote, all of us should be able to believe their word. I do not care what party they are from, I would really like to think that we should be able to trust their word. What Nick Smith said to Canterbury was this: “whatever the circumstances, the next regional council elections in Canterbury will take place no later than [the elections] scheduled for late 2013.” Those are the very words—an exact quote—from the Hon Dr Nick Smith, who, of course, at the time was Minister of Local Government. We believed him. We thought it was bad enough that we were having our vote taken off us for 2 years, but we thought that, well, come 2013 we would get our right to vote back again.

Then we had a new Minister, a Cantabrian, come along. I remember the first time he came to the Local Government and Environment Committee. The Hon Nick Smith was at the select committee as a member during that time. We asked him about the quite tense relationship between local government and the Minister. David Carter, who had been in the job 5 minutes, said to the select committee, which included Nick Smith: “Oh, that was under the previous Minister. Now the relationships are really good.” Talk about embarrassing and whacking your colleague in front of other party representatives at the select committee. I was gobsmacked. Anyway, along rides David Carter, a Canterbury member of Parliament, and he said: “No, blow that. There’s still not enough water allocated to the irrigators, and I am going to keep the loss of vote going for another 3 years.” So now we get this absolute nonsense, an abuse of power, and a disgraceful blemish on the face of our parliamentary law—the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. Actually, it is: “Let’s get the water through to the irrigators so they can put dairy farms all through Canterbury and South Canterbury. When they have done that to our satisfaction, we’ll give Canterbury people the right to vote.” Well, this is going to be the downfall of this Government in our region. People are so angry about it. On top of all of the other things that have upset people in our region, this is the crowning glory.

I want to stress that point, though, that what has upset people more than anything is that they fell for the story that Nick Smith told them. Nick Smith said publicly that we would get our vote back by the end of 2013—that is, this year. Every other region in the whole country will have a right to vote for its regional council. Tragically, half of the people do not even take up that opportunity. I guess that is a democratic right as well—to not vote—but I personally think it is abuse of the democracy that people before us have fought for. But in Canterbury we will not be getting that right back for another 3 years.

The second point I want to mention is another point that has not been debated a lot during the passage of the bill so far, and I think it is one of the most important. We have a form of statutory protection available in New Zealand that is called a water conservation order. We do not have very many. Fish and Game New Zealand is the body that has really promoted and brought into effect water conservation orders. I know that they have been described in the Chamber in the past. They are like the national parks of waterways. Despite the regulatory impact statement recommending that we get our water conservation orders back again, this bill maintains that special protection for our rivers has gone as well. So it is not just our regional council vote; it is also the special protection that is given through water conservation orders. Let me read part of the regulatory impact statement, from paragraph 45 at page 11: “The [water conservation order] processes are set to return to those in the RMA (the special provisions are scheduled to lapse at the expiration of the Act). ECan has advised it does not expect any more amendment applications with respect to the existing Canterbury [water conservation orders] and is not aware of any new applications for [water conservation orders] in the Canterbury region.” This is the critical bit and is in the Government’s own regulatory impact statement on this bill: “On this basis the Ministry for the Environment, the Department of Internal Affairs and the Ministry for Primary Industries consider there is insufficient justification for continuing special provisions for [water conservation orders] in the Canterbury region.” The Government’s own advisers said: “Give back to Canterbury that special protection of water conservation orders.” And what did the Government do? Despite advice from three separate departments, all singing from the same song sheet, the Government just threw it out.

I actually feel quite sorry for the incoming Minister, the Hon Chris Tremain—talk about being handed a hospital pass. I do not imagine that that Minister has any idea at all of the damage that has been done by this legislation in my electorate and in my region. If he did, I think he would have taken it back to his Cabinet colleagues and said: “This is wrong. This is making a liar out of the Hon Dr Nick Smith,”—and most colleagues would not do that—“and it is denying, throwing out, the advice from three key ministries in regards to water conservation orders.”

I want to just conclude my first comments on this legislation by again commending Fish and Game New Zealand, which has done extraordinary work for us. We are very proud of our waterways in Canterbury. We are very concerned about the threat that they are under. We know the degradation that has already been caused by overuse and by inappropriate use. We know that additional take in some of our waterways may actually be fatal to them, and we do not want to see that. We understand the need to support business—of course we do. But some parts of our country cannot sustain heavy irrigation and dairy use, and some of our rivers just cannot have any more water taken from them. So our iconic rivers, the Ahuriri, the Rākaia, and the Rangitata, and we have got, of course, Lake Ellesmere—these are the waterways that are under threat in our region. They are under threat because this Government has chosen to put irrigation ahead of democracy. When the members of the select committee came to Christchurch they laughed at people who said: “You have taken away our right to vote and we want it back.” They said: “Ha, so what? What’s the big deal?”.

Hon Lianne Dalziel: It was only the National members.

Hon RUTH DYSON: It was the National members.

Paul Goldsmith: Who laughed?

Hon RUTH DYSON: Why is that a big deal? Paul Goldsmith, you would be better off, frankly, if I may offer you a little bit of advice, not to draw attention to yourself, because you will be better identified as one of the members who laughed at my—

Hon Lianne Dalziel: He was shocking.

Hon RUTH DYSON: He was shocking. Now that he has brought himself to our attention, he was shocking. The people of Canterbury asked for their right to vote back. The National members said: “Why is taking away your right to vote such a big deal?”. People in other countries have fought and died for the right to vote. We thought we pretty well had it sussed. We thought it was part of our culture, part of our entitlement—a treasure. Actually, in Canterbury I think we regard it more highly than anyone, particularly amongst women, because of the women whom we have had leading the right for women to vote.

Hon ANNETTE KING (Labour—Rongotai): Part 1 of the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill is really the guts of the whole matter, because this is about the right to have a vote in 2013 being taken away from the people of Canterbury. I am really disappointed that the three Ministers of Local Government from the National Government, who were elected to Parliament under a democratic vote, into a democratic Parliament—well, at least on this side—could ignore the wishes of the people of Canterbury in such a cavalier manner.

It all started with Nick Smith. Nick Smith made a solemn promise to the people of Canterbury. He said this: “whatever the circumstances, the next regional council elections in Canterbury will take place no later than those scheduled for late 2013.”—October 2013. He is a man who was in Cabinet, who had to leave Cabinet because of some shonky behaviour, and who is now back in Cabinet, so I suppose we should not be surprised that he broke his word. But he gave his solemn promise to the people of Canterbury, and what is so sad and what makes me angry is that they believed him. They actually believed him and thought: “Yes, this’ll happen. Nick Smith has said it.” Well, he got the rumpty-dumpty and off he went, and in the Government brought—what is his name—David Carter. He was less than memorable—less than memorable, I have to say—in his role—

Hon Chris Tremain: He’s the Speaker.

Hon ANNETTE KING: —as Minister of Local Government. I know he is going to be an extremely good Speaker—when it comes to questions, I do want him to look this way—but when it came to being the Minister of Local Government, did he, a Cantabrian born and bred—the Carter family, I believe, have lived in the Canterbury area for generations—listen to the people of Canterbury? Did he honour the words of Nick Smith, the previous Minister? No, he did not. He did not even blink, and he carried on with this bill.

And then we come to the hapless new Minister of Local Government, a member who already faces all sorts of problems in his own area. I think he is under serious threat from Stuart Nash, who does not want an amalgamation of local authorities in Napier and Hastings. The local member, now the Minister of Local Government, wants a major amalgamation. I suppose he would support an election for them, but why does he not support an election for the people of Canterbury? So I say to the Minister: “You’re a terrible disappointment, Minister, because you had the opportunity—you had the opportunity, Minister”—[Interruption] I keep saying “Minister”, Mr Chairman. I am talking to the Minister.

The CHAIRPERSON (Lindsay Tisch): You said “you”.

Hon ANNETTE KING: Yes, “You, Minister”. You had the opportunity, Minister, to have made a difference. You had the opportunity to say: “Stop this bill. We made promises. We said there would be elections to Environment Canterbury in 2013.”

I think one of the most powerful submissions I heard on the Local Government and Environment Committee, though, was from the Human Rights Commission. In came Mr Rutherford. I have to say, I was not really expecting any great strokes. I thought he would come in with a quiet little submission. After all, he has been appointed by this Government, and it must have some expectations from him. He came in with a very strong submission. He submitted that “In effect the current proposal means the Government would be in breach of its international obligations and its commitment …”, and that it needed to have an election. Here is the Chief Human Rights Commissioner saying that the Government would be in breach and that it was against basic human rights not to have an election.

And now we have got the new member returned to the House today, Mr Aaron Gilmore. I thought I would bring him into the debate, because he knows a lot about a little. He was a member who used to be in Christchurch. Actually, he shifted up to Lyall Bay, Rongotai, thinking there might be a little opening for him there. However, he is now whizzing back to Christchurch. I want to see him get up and speak in support of the people of Canterbury, because he said he wants to represent Canterbury people again. I read that. He said he wants to represent Canterbury people again. I want to see him get up on his hind legs and say to the people that they deserve the opportunity to have a democratic vote in 2013. I want to make this commitment in this House: if we were in Government, there would be a vote in 2013, and when we are in Government in 2014, they will not wait until 2016 for a vote.

John Hayes: You won’t be Government in 2014.

Hon ANNETTE KING: Oh yes we will, Mr Hayes. I will tell you something, Mr John Hayes: you will be roundly beaten in the Wairarapa. There has never been a more unpopular member in the Wairarapa than that member. He is chirping away, but it will not be for long. There will be a reprieve for us, because he will not be here after the next election. We will have an election for Environment Canterbury after we become the Government.

The hidden agenda of this whole debate is all about the Government wanting to delay elections to give the farmers irrigation, which is more important than people and a democratic vote. But also it plans to have a major amalgamation of local authorities in the Canterbury area. That is why the election is being delayed—nothing to do with the competency and ability of people in Canterbury to be able to run Environment Canterbury and to elect good people to the Environment Canterbury council. There is every ability to be able do that. There were very good people on that council, and I would like to acknowledge Eugenie Sage, who was one of those members and a person who worked incredibly hard. But they were all told that they were hopeless, that the council needed to be changed, but that there would be a vote when things came right. Well, things have come right in Canterbury. You cannot go on blaming it on the earthquake for ever. That is what this Government is doing.

This is a very important bill we are debating tonight. It goes to the fundamental issue of the country we live in, and that is democracy—the democratic right of people to choose their elected representatives to make decisions on their behalf—and this Government is riding roughshod over the people of Canterbury. It is not good enough. We will restore their right to vote when we are in Government in the very near future.

EUGENIE SAGE (Green): I would like to thank Annette King for her kind comments. The Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill—this noxious bill—is all about trust. It is about broken promises by the Government to restore democracy in Canterbury in the elections that are due in October of this year. The Government has broken those promises, and it has done that because it does not trust the people of Canterbury to elect a regional council that will be compliant and deliver the water from the aquifers and rivers of Canterbury to the farmers and irrigators. That is why we have this bill. The Official Information Act request that the Royal Forest and Bird Protection Society did in 2010 exposed the Government’s agenda. It wanted commissioners and it wanted changes to the Rākaia water conservation order so that TrustPower could get water from the Rākaia River for irrigation. It wants to promote major irrigation development, and we saw that yesterday with that $1.7 million grant to Central Plains Water, which will result in more pollution of the aquifers and more pollution of Te Waihora, Lake Ellesmere. That is to be followed by another subsidy of $4 million by the Ministry for Primary Industries. It is this massive irrigation water exploitation scheme that the Government has for Canterbury that is behind this noxious bill.

I was in Cathedral Square, along with colleagues like Mojo Mathers, on a very cold and bleak day in June 2010 when thousands of Cantabrians gathered to protest and object to the 2010 principal Act. Thousands of Cantabrians have continued to demonstrate, to walk the streets, and to march to show that they oppose this attack on the fundamentals of our political system: the right to vote. That is at the heart of democracy, and it is something that Part 1 of this bill denies by postponing elections until 2016—and how can we be certain that the Government will even implement that promise—when they should be held this year.

People in Canterbury are angry. They are feeling disempowered. As my colleague the Hon Lianne Dalziel has often talked about, the psychological effects of disempowering people—not allowing them to vote after a natural disaster—make it all the worse in terms of their ability to recover and respond to that disaster. The Government continues to disempower Cantabrians by denying us the right to vote. This legislation builds on the autocratic powers that the Canterbury Earthquake Recovery Authority has to not allow proper community consultation and involvement in critical decisions about the province’s recovery.

The Government has not come clean about why this bill is needed. It continues to give spurious excuses about it being due to the earthquakes, that it would get more efficient and effective governance from commissioners, but we have not seen that efficient and effective governance. We have seen a stream of self-congratulatory press releases from the commissioners, but we have not seen them responding to the views of Cantabrians that people want to vote, except that they did recommend a mixed model of commissioners and elected members, and the Government ignored that. But Cantabrians want the right to vote. They have demonstrated for that right and it is part of that strong tradition of suffrage in the region, going back to Kate Sheppard and the suffragists who ensured that women had the right to vote. We want our right to vote, and the bill denies that.

In another call I will talk more about water conservation orders, because there the Government has disregarded the advice of officials to restore the law in Canterbury as it applies to the rest of New Zealand. I would be very interested for the Minister in the chair, the Minister of Local Government, to take a call and explain why it is necessary to have a different regime for water conservation orders in Canterbury when the advice of the Ministry for Primary Industries, the Ministry for the Environment, and the Environment Canterbury commissioners was that there was no justification for continuing a different regime in Canterbury in regards to water conservation orders to that which applies to the rest of the country. So could the Minister explain, because the regulatory impact statement makes it very clear that there is no justification for that.

NICKY WAGNER (National—Christchurch Central): I rise to talk to this bill, the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. This bill is a sensible, practical response to the situation in Canterbury, and there are no hidden agendas. I just want to look at the two major provisions in this bill. The first is about changing the date that commissioners must be replaced by elected councillors at Environment Canterbury. Originally, the principal Act prescribed 2013 as the date that elections would be held, but this bill specifies that the next election will occur in 2016, at the same time as the local authority election. What is the reason for the change? The change relates to the seven appointed commissioners, who have been acting as Environment Canterbury’s governing body since 2010 and who have been doing a particularly good job. Because of the disruption caused by the earthquake, and because there is still a need to complete the Canterbury Water Management Strategy, they need to remain.

I think we should look at this strategy. This Canterbury Water Management Strategy is community-based, it is collaborative, and it is well supported throughout the province. The zone committees have been set up and they are in the process of reporting back. The next step is to complete that work and give the strategy statutory backing. It is because of the time and the energy and the input of all those people who are involved that it is felt that this should be completed before the commissioners have finished their job, and that the commissioners should, therefore, have the possibility of remaining until 2016.

However, there is also a ministerial review required, and that ministerial review must begin before 1 March 2014. That review covers several things. It covers the governance structure of Environment Canterbury, it covers the membership of Environment Canterbury, and it covers the powers and the functions of Environment Canterbury. It was interesting that there were only three submissions about this review, and all three submissions supported the idea of a review. The inclusion of this clause reflects the intention to transition back to regional governance for Canterbury and back to democracy, and to identify the best long-term governance solution to the Canterbury region.

It was very interesting listening to the submitters. It is true that the majority of submitters were against the extension of the period of time that Environment Canterbury should be managed. But their opposition was based on the disapproval of the lack of democratic elections, and we have heard the debate from the Local Government and Environment Committee as well. This was the opinion of many of the submitters to the original bill. That is what they were concerned about. They feared that they would not get a result if they did not have democratic elections. But it has been very interesting listening to those submitters. Looking back on those times since the commissioners have been there, there was general agreement that the commissioners have actually done a very good job. They have worked well with stakeholders, they were delivering the Canterbury Water Management Strategy, which was community-based and collaborative, and it was also noted that their relationship with tangata whenua—that is, Ngāi Tahu—was particularly improved, and it had always been bumpy with the old Environment Canterbury council.

There is a very tangible example of this relationship and the value of this relationship. What they have been able to do is deliver a collaborative clean-up of Te Waihora—that is, Lake Ellesmere. You may be aware that Lake Ellesmere has been in a bad state for a long time. The clean-up was well overdue, and Environment Canterbury had been unable to negotiate a collaboration. That has happened, the commissioners have got it in place, and that work is being done. So, despite the fears of the submitters on the original bill, the fears have not been recognised. In fact, most submitters accepted that the time that the commissioners had been in had been extremely effective. I believe that the fears of the people for this bill will be the same. So I commend this bill to the Committee.

ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First, and we oppose this bill, the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill, most rigorously.

On the walls of this Chamber we have some famous names, such as Passchendaele, Gallipoli, Egypt, Messines, and other great battles where our young soldiers, servicemen and servicewomen, went off to fight for democracy for this country and to bring freedom from oppression. The Chief Human Rights Commissioner, David Rutherford, came to our Local Government and Environment Committee and indirectly commented that it was a poor reflection on this country that in fact we had fought for democracy but democracy was being taken away from New Zealanders. For the Chief Human Rights Commissioner to liken us to other regimes around the world that have removed democracy from their people was quite astonishing. It was so astonishing that the members from the National Party sitting on that select committee took exception to it and challenged the commissioner over the comments that he had made, but he did not back down. And despite some heated retort from those National Party members, who did not like to be compared to Fiji, who did not like to be compared to regimes in Europe in the First and Second World Wars, they had to stomach those comments from the Chief Human Rights Commissioner.

He stated: “The commission considers that no good reason has been provided for extending the present legislation. The lack of public consultation about content—or the continuing need for the legislation—is an abuse of the democratic process and does not reflect the real needs of Cantabrians … In our view”—that is, the commission’s view—“the present legislation has the potential to further exacerbate the resentment that has arisen in Canterbury as a result …”. He also said: “Our view continues to be that the undemocratic way in which the original legislation was introduced, and its continuance, is simply wrong from a human rights perspective.”

John Hayes: Rubbish.

ANDREW WILLIAMS: Well, that is very good coming from Mr John Hayes from the Wairarapa, who, similarly, will probably turn to the Wairarapa people very shortly and say that he also does not support the Wairarapa having a view on its own democratic representation. Mr Hayes, perhaps at next year’s 2014 election you will be prepared to stand up and say “Do I stand with Wairarapa, or do I stand with my National Party mates and sell them down the river?”. I know, Mr Hayes, where you will be: you will be selling them down the river. But, hopefully—hopefully—the people of the Wairarapa will sell you down the river at the same time.

We sat through the hearings and we listened to 95 oral submissions. Ninety out of 95 oral submissions opposed this bill—90 out of 95. I have sat on all sorts of things in my time in local and central government, but I have never seen such an overwhelming level of opposition to something. The only ones who supported it were the regular mates of the National Party, Federated Farmers, and the other mates of the National Party, the regular stooges, Business New Zealand and that, who go along to support their good old mates, because they know that there is something in it for them if they support the National Party.

It was also amazing that when we read the regulatory impact report on this bill we saw that Dame Margaret Bazley and her commissioners—who, we have heard, have done a good job, and who the Minister of Local Government also said have done a very good job—also recommended that there be a transition back to a democratic process in Canterbury. For Dame Margaret Bazley herself, who is so esteemed within the Public Service, and her commissioners to recommend that we return to democracy in Canterbury, and for that advice to be ignored—and for the ministry’s advice to the Government to be ignored—is a sad indictment on this Government.

But it is not surprising, because it has got a history of doing that in Auckland. The National Party, in its election manifesto prior to the last election, said it would consult with the people of Auckland on the outcomes of the Royal Commission on Auckland Governance. What happened? National got re-elected, and the party manifesto and the party promise to consult with the people of Auckland went out the window. Within 9 days of the royal commission reporting and recommending a restructuring of Auckland along certain lines, this National Government threw it out. It threw it out the window—an 800-page report costing close to $5 million, with international consultants from all over the world bringing best practice to the recommendations for Auckland—and replaced it with a 33 or 34-page report printed on A4 photocopy paper from Rodney Hide, with his plan for Auckland.

The CHAIRPERSON (Lindsay Tisch): Order! We are on this bill.

ANDREW WILLIAMS: What I am saying is that there is a systemic problem here with this National Party, with this Government, in that it does not believe in democracy. It did not believe in democracy in Auckland. It does not believe in democracy in Canterbury. Quite clearly, National is moving to remove democracy from other parts of New Zealand, because it has got its eyes on the Wairarapa, it has got its eyes on Napier and Hastings, it has got its eyes on the Waikato area, it has got its eyes on other parts of New Zealand as well. Quite frankly, National would like to make local government bodies just extensions of the ministries in Wellington. If National could have local government bodies as extensions of the ministries in Wellington, where it could control them from the ministerial level, it would love to do that—it would love to do that. People in local government, including mayors and councillors throughout New Zealand who are National Party—or former National Party—supporters—

The CHAIRPERSON (Lindsay Tisch): Order! No, we are actually on Part 1, and I would actually ask the member to come back to Part 1. These other things may be of interest to some members, but they are not in relation to the bill. We are on Part 1.

ANDREW WILLIAMS: Coming back to Canterbury and the lack of democracy, which is mirrored in this whole situation, it is also because of the need, basically, to control water. Around the world the one thing that people go to war for—countries go to war for, States and regions go to war for—is water. In this case, much of this stems back to the control of water; control by Federated Farmers and farmers of water in Canterbury, against the wishes of the greater population of Canterbury. National knows that to meet the demands of Federated Farmers in Canterbury and to ensure that those water rights are preserved and absolutely guaranteed for its farmer mates, it needs to make sure that there is no return to widespread democracy in Canterbury.

It is disappointing. We certainly would have liked to see a transition back, as Dame Margaret Bazley recommended. Certainly, in the next Government New Zealand First will ensure that that does happen. I liked to hear the fact that the Labour Party has confirmed that it supports it, as well. We can say to the people of Canterbury that help is on its way. To the people of Canterbury: help is on its way. We are not going to allow this to continue, and we are going to continue to honour those who fought for this country, as shown on the walls in this Chamber, so that they did not go to fight for democracy for nothing.

GRANT ROBERTSON (Deputy Leader—Labour): It is interesting that Nicky Wagner said that Part 1 of the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill was really just a technical matter about a date—just a small matter of a date. A small matter of 2013 being the date, like how 31 December 2014 is, I think, when Phillipstown school is due to merge with Woolston School. That is just a date as well—just a date. In fact, I notice in changes to section 4(1) of the Act that what is actually happening here is the replacement of the definition of the 2013 election—the definition of the 2013 election. How Orwellian can you get? The definition of the 2013 election becomes “2016 election”. The Government is actually changing the definition of the 2013 election, and trying to tell us that you can have something in 2016 and it can still be the 2013 election.

In all seriousness, I think it is important for the Committee and those people watching and listening to Parliament tonight to understand the significance of what the Government is proposing to do in this bill. The Government is proposing to cancel an election; to take away—further take away—the rights of our people in a large region of country to vote. Just stop and consider for a moment what that means. What kind of country are we living in when the central government decides that local people in a large region do not have the right to exercise their vote? I found a quote that I think sums this up. This quote is: “Elections are central to democracy but they are not always, on their own, a magic or quick-fix solution,”. That sounds like something that, perhaps, the Minister in the chair, the Minister of Local Government, might say, or one of the other National members, but no, it was Frank Bainimarama talking about Fiji. That is what he said—“Elections are central to democracy but they are not … a magic or quick-fix solution,”. The National Party members, as Andrew Williams said, may not like being compared to Fiji, but I would actually wager that there is a chance of an election in Fiji before there will be an election for Environment Canterbury under this Government. That is how bad things have got. This kind of decision is being made—

John Hayes: You’re exaggerating.

GRANT ROBERTSON: John Hayes says I am exaggerating—John Hayes says I am exaggerating. Do the people of Canterbury have the right today to cast a vote for their regional council, Mr Hayes? Silence from Mr Hayes on the other side of the Chamber—silence now, because the people of Canterbury do not. There is no way I can exaggerate this issue.

John Hayes: Yes, there is.

GRANT ROBERTSON: There is no way, because democracy has been taken away from the people of Canterbury. It is not possible to exaggerate that, Mr Hayes. What that is is a fundamental assault on the democratic values of this country. I actually thought, despite all the differences I might have with National Party members, that they would stand up for democracy; that they would actually believe that this mattered, but they do not.

Hon Annette King: Arrogant.

GRANT ROBERTSON: They are arrogant and they do not care about giving the people of Canterbury a say in who governs their region. John Hayes says it is an exaggeration; it is not, Mr Hayes. They do not have a say in this.

John Hayes: Anything that keeps Kerry Burke out.

GRANT ROBERTSON: See, here we go. It is all about personalities for the National Party. It is all about personalities and trying to take down the right to a democratic process for the people of Canterbury because of some personal score that John Hayes and the National Party want to have.

It is interesting. David Carter, when he was responding to some questions about this when he was the Minister of Local Government, said that the problem with the regional council was that it was “ineffective and dysfunctional”. Well, if that definition or criteria of being “ineffective and dysfunctional” was a problem, the whole National Party would be out today. Mr Hayes would certainly be out, because “ineffective and dysfunctional” describes him to a T. So this Government has fundamentally undermined democracy, but if we look at this provision in Part 1, let us see who else thinks that this is a bad idea, because it is not just us, it is not just the Opposition parties, and it is not just the people of Canterbury, but it is actually the Government’s own officials. The Ministry for the Environment and the Department of Internal Affairs actually told the Government not to do this—not to extend the bill out. They actually said: “Let’s work through a process of having a mix of commissioners and elected people and work their way to a fully democratically elected council.” That was the advice from officials.

Funnily enough, it was also the advice that the Government was getting from the commissioners themselves. The commissioners themselves were saying: “We think we should move to a more democratic model, but this Government wouldn’t have it.” But even within this Government, there were people who wanted it. Nick Smith went on the record and said that we would be seeing democratic elections in Canterbury. So we have got the commissioners, we have got the Ministry for the Environment, we have got the Department of Internal Affairs—

Hon Annette King: The people.

GRANT ROBERTSON: —and the people of Canterbury, but this Government carries on in its arrogant way, saying: “We know best. We know what’s right for the people of Canterbury. We know”—this Government tells us—“that the people of Canterbury will be better served by not having a say.” Well, that fundamentally undermines the principles that this country is built on. That is why David Rutherford and the Human Rights Commission came to the Local Government and Environment Committee and told it—

Hon Lianne Dalziel: What did he say?

GRANT ROBERTSON: —Lianne Dalziel wants to know what he said. It is worth quoting again: “Our view continues to be that the undemocratic way in which the original legislation was introduced, and its continuance, is simply wrong from a human rights perspective.” New Zealand likes to stand up in the world and tell the rest of the world about the importance of human rights. John Hayes, when he used to run the UN division—proudly run the UN division—of the Ministry of Foreign Affairs and Trade, was part of saying that New Zealand would go out in the world and promote human rights, and yet inside New Zealand this Government tarnishes our image by promoting legislation like this, which fundamentally undermines those human rights.

I want to move on briefly to another aspect of this, which is covered under Part 1, and that is the question around water conservation orders. I think it is very important that we get to the heart of what this is about. This is about water and this is about irrigation, and about the fact that that party over there was concerned that the people of Canterbury might have some different ideas about how water would be used. But let us be absolutely clear. As Eugenie Sage has said—and she has a Supplementary Order Paper on this—there is now a process in place for water conservation orders in the Canterbury region that is different from everywhere else in New Zealand, and there is now no justification for carrying that on. We have just seen a decision the other day about the Rākaia River going through under the process covered in this legislation, which meant that no one in the public was able to have a proper say through the Environment Court and the decision was simply rammed through. So now they are in a position where they can apply to have a resource consent to build a canal. There are all sorts of things that come out of that decision, and that decision did not go through the same process that would have been in place for any other water conservation order anywhere else in New Zealand.

That is the problem with this legislation: the Government cannot make the case to extend out this denial of democracy to New Zealanders. It might have thought it could have made the case originally. It might have thought it was possible for it to say at the start, in 2010, that it could do this. But when it shows up here today and says that it wants to carry it on to 2016, that is a fundamental breach of human rights, it is a fundamental breach of democracy—

Hon Clayton Cosgrove: Broken promise.

GRANT ROBERTSON: —and it is a broken promise, and this Government cannot mount a defence for that because it is anti-democratic. But it is also very important when we look at the regulatory impact statement—and my colleague Lianne Dalziel is a well-known exponent of the regulatory impact statement, which is a very important thing to look at.

Hon Lianne Dalziel: Oh no, don’t use my speech!

GRANT ROBERTSON: Ha, ha! I am going to introduce the member’s speech by making brief reference to the regulatory impact statement, because it is important. In the regulatory impact statement, the point is made: “The extension of the Commissioners’ terms would continue to deny Canterbury residents the opportunity to vote for representatives … Also, given the progress made by the Commissioners, there is no apparent reason for continuing this level of intervention, which was used in response to ECan’s previous serious and systemic dysfunction.” So even if the National Government tries to sell us the argument from 2010, what the officials are saying through the regulatory impact statement is that that justification no longer exists. So fundamentally and at its principle, this legislation is wrong, but it is also wrong in practice. It is wrong, because there is now no argument, and we have heard no argument from the National Government, that justifies this.

This is an incredibly sad day for this Parliament, to be here and standing having to debate whether or not a region’s people are allowed to vote for their own representatives. I thought that was fundamental in our democracy; it is quite clear that National does not. We have committed to telling the people of Canterbury that when we are elected to Government next year, they will have the right to vote for their representatives, because that is what is fair and right in this country.

JACQUI DEAN (National—Waitaki): Let us remember why the original legislation was brought to this House. It was brought in because of the failure of Environment Canterbury—the failure of Environment Canterbury—to bring in an operative water plan. So let us hear it in this Chamber for the irrigators. Let us hear it for the water users in Canterbury, who have only benefited from the bill that was brought in, and they will benefit from the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill, as well. Yes, we heard an awful lot of submissions while we were in Christchurch, and we sat in Wellington. A lot of them were pro forma submissions. Although the numbers might sound good, many, many of them were pro forma submissions. I was going through them this evening in my office and they all said virtually the same thing. But there were some submissions that stood out. I am going to use just one or two of those today.

One of them is the Waitaki Irrigators Collective Ltd submission, and I am very unashamedly going to quote from it. That is a collective that represents something like five or six irrigation schemes throughout the Waitaki Valley mostly, which is in the southern area of Environment Canterbury. But the farmers in those irrigation areas have been very badly affected by the non-performance of Environment Canterbury over the 7 or 8 years that I have been a member, up until Nick Smith, as Minister for the Environment, took the brave step of bringing in commissioners to actually get a water plan operative—something that the former Labour Government could not in any way face up to doing. He made the brave step to bring in the commissioners, and I can report from the lower half of Environment Canterbury’s area that the performance has, in fact, increased tenfold. In fact, the number of complaints coming into my office has dwindled down to less, I might suggest, than a trickle. We have a good relationship between the farmer constituents, the Environment Canterbury commissioners, and the Environment Canterbury officers.

So just turning to this submission, I just want to quote a little bit from it, if I may: “Although the [Canterbury Water Management Strategy]”—which, of course, is the strategy initiated by the mayors of the Canterbury region, who, by the way, to a man supported the original bill that brought in the commissioners; to a man or, should I say, to a council, they were the ones that initiated the Canterbury Water Management Strategy—“was established under the elected council structure, it is questionable whether so much could have been achieved over the past two or three years under the elected councillor model, given the severe disruption and difficulties caused by the Canterbury earthquakes to the staff and resources of the Environment Canterbury.” It goes on to say: “The previous structure often meant that those elected to the Council represented particular philosophical positions in relation to water use and management. As issues became difficult to resolve, these positions tended to become entrenched—”. And did we not see that playing out in Environment Canterbury before Nick Smith stepped in and took the brave, brave step of appointing commissioners? Did we not see that? I saw that in my electorate. I saw that with a lack of direction from Environment Canterbury at the time, with its elected representatives and officials, which failed to deliver to all the constituents in the catchment of Environment Canterbury.

It goes on to say—and I accept this as well—“Whilst a return to some form of effective democratic leadership …”—the collective members are the practitioners. They see what goes on. They are not sitting in their list bailiwicks in Christchurch having a view on these things; these are the people who are actually working within the Environment Canterbury boundaries. They say: “Whilst a return to some form of effective democratic leadership of Canterbury should be a medium to long-term goal, [the Waitaki Irrigation Collective] believes that the current situation of having appointed Commissioners leading Environment Canterbury and governing the implementation of the [Canterbury Water Management Strategy] should be maintained for the time being, as per the Bill’s provisions.” And why do they say that? They do not say that because they have been jacked up by the Green Party to come in and have a wail to the select committee; they say that because they represent the irrigators, who are the productive heart of South Canterbury, and they say that because they have experienced the non-performance of Environment Canterbury under the former regime. Eugenie Sage was one of those councillors who was dismissed. They have operated under that former regime. They understand very clearly from practice that the commissioners are doing a good job, and they support their continuation.

MOJO MATHERS (Green): I wish to speak to this bill, the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill, which steals democracy from the people of Canterbury. I was astounded, like many others, when the Government moved to remove democracy in Canterbury back in 2010. I was actually one of those who did not believe the heartfelt assurances of Nick Smith that democracy would be returned in 2013, because I knew there was just too much that the Government wanted to do while it had the commissioners in place. So I was deeply cynical, and so were many others, and I am very sad that my cynicism has been justified.

The theft of democracy is nothing less than insulting to the people of Canterbury, and it has been made worse by the pathetic excuses that have been offered and that I have had to hear tonight. There is a claim that we will lose the commissioners’ valuable, wonderful expertise. This is nonsense. There are lots of options, if we really want to retain their expertise, to keep them on in an advisory capacity. My colleague in Christchurch Nicky Wagner feels that they have done a great job. If the Government really feels that the commissioners have done such a great job, then why is it not moving to accept their primary preferred option for restoring democracy in Christchurch?

The other even more insulting excuse we have heard tonight for continuing the removal of democracy in Canterbury has been the earthquakes. As someone who personally has been deeply and profoundly affected by the earthquakes—I lost my home in the first one, and I came back to my flat and found it ransacked, and a lot of my goods stolen, within a day or two of the earthquake—I find the use of the earthquakes as an excuse to steal our democracy deeply and profoundly insulting. In fact, it is an excuse to steal everything from our democracy—our schools, our homes, and our lands for some of us—and I find that deeply insulting. I know that there are many others who feel exactly the same way.

I would rather have my democracy returned to me and returned to the people of Canterbury than have the goods that were stolen from me 2 days after the earthquake. That is how strongly I feel about it. We know that if we move past all these pathetic excuses this is not about improved water management in the sense of caring for the environment; it is about implementing the Canterbury Water Management Strategy and seeing that fully implemented so that we can see more water and land going to service the needs of irrigators.

I have lived for many years in the country and I, with my former husband, ran a business that worked with farmers. So we actually do know something firsthand about what the impact of drought is on farmers in Canterbury, and I do know that water is valuable and needed. But the Canterbury Water Management Strategy is not about drought-proofing; it is about maximising production on the land. This can have very serious impacts—downstream impacts—on water, on our rivers, and on the structure and fabric of our well-being.

This is why many people are not embracing irrigation with open arms, despite all the so-called economic benefits—because we are the ones who suffer the downstream impacts. We want to have our right to be able to express and engage with the issue of water through our democracy. It is profoundly insulting to be told: “We are going to steal your democracy in order to impose our agenda, and we are going to continue to do that because of the earthquakes.” We are not stupid. We have the right to vote, and it is very, very pleasing that Labour and the Greens will work to restore our vote in Canterbury.

Hon CLAYTON COSGROVE (Labour): I thank the Green member Mojo Mathers for her contribution, heartfelt as it is, and I congratulate her on it. But I heard Jacqui Dean, who is sort of grinning over there, talk about how there was such support for this measure. Well, Nicky Wagner last week made a similar claim. I think Jacqui Dean also alluded to the fact that there was—the woman, of course, who is an expert on water, of course, did not quite get what H2O was when someone wrote to her and asked what H2O meant, but we will not go there. She is an expert on irrigation—she sprayed the people of Canterbury, all right. That is for sure.

I say this. When she talked about local authorities and experts who supported the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill, she neglected to say, of course, firstly, that in the submission process there were 95 submissions. The Minister will know this backwards. There were 95 submissions, and five of those submissions supported the extension. Among the submitters cited by Ms Wagner was Ngāi Tahu, a credible organisation; then we had Local Government New Zealand—very grassroots, I would have thought, in Canterbury—and then we had those erstwhile bastions of non-political behaviour, Federated Farmers. One could argue that Federated Farmers have a real stake in proceedings given their penchant for irrigation, as we know.

But a fact that Ms Dean neglected to provide us with was that the Christchurch City Council—and we all know where Bob Parker’s allegiance lies. We all know he is a creature of this Government, and we all know that Gerry Brownlee regrets every day, as he heads for the 7-Eleven on the way home, actually creating that individual with the power he has. The Christchurch City Council, of course, on 22 September passed a resolution—I think it was unanimous; even Bob voted for it—to oppose this extension. It is true that some of those on the Christchurch City Council, as Ms Dean said, have articulated complaints about Environment Canterbury as it was before the commissioners moved in, but even the Christchurch City Council, in the end, opposed this extension.

I say to colleagues that what this extension is about is something very, very simple. We know in Canterbury that this Government does not want people standing up, whether they be business people—and remember it was business people who literally, but not in my time in Canterbury, crashed the barricades in the earthquake to get information because they were so frustrated at the lack of communication in Ms Wagner’s electorate. This Government does not want an election where people who may be elected to Environment Canterbury prior to the 2014 general election might stand up and become a vehicle to articulate the difficulties, and the hurts, and the opposition to many of the things that this Government is doing in Canterbury, not just around irrigation and those normal, generic Environment Canterbury activities.

The Government does not want a group of people elected who would get up and add to the opposition around schools, for instance. We see the Minister of Education there—that genius—and what she has done to Canterbury schools. An elected group of people might articulate against and oppose some of the Draconian measures that Gerry Brownlee has put in place, as he refuses to listen to people. Government members do not want an agency or a group of people elected who have a mandate and who could oppose their view.

Aaron Gilmore got sworn in today, so I am told. Aaron Gilmore, of course, old “Curly” in the corner, came up beaming like a Cheshire cat, like the young fellow who got the lollypop in the raffle. What we forget about dear old Aaron Gilmore, the genius from Christchurch who knows everything, is, of course, that he was part of the group in the National Government who broke their promise to the people of Canterbury. So I invite him as the newly sworn-in member to get up and tell us why it was that Nick Smith gave a cast-iron guarantee that there would not be an extension. He was part of that Government. I want Aaron Gilmore to explain why, when the Department of Internal Affairs recommended to the Minister a transitional provision—option 1, to transition to democracy—the Government ditched it. He was part of that. I invite him to front up, as he does occasionally on his Facebook page—and, oh, there is a story to tell there, but we will get to that another time. I invite him to front up on his Facebook page and tell the people of Canterbury, newly sworn-in as he is, why he broke that promise. [Bell rung]

John Hayes: Mr Chair—

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

Hon CLAYTON COSGROVE: It is all right, “Sir Les”; I have got the call. Thank you to John Hayes for providing a moment of jocularity within Parliament. We needed that. Your timing was excellent.

I invite Aaron Gilmore to go to the people of Canterbury and articulate that—articulate that. Actually, I ask the Government and I ask the Minister in the chair, the Minister for Courts—and maybe he could ask the Minister in charge of the bill—why it is that this Government does not have faith in the people of Canterbury to elect sound representatives from among their number to represent them and responsibly take part in the management of our province. Why is that? Would the Minister in the chair like to respond? Why is it that the Government does not trust the people of Canterbury to elect sound men and women from amongst their number to represent—[Interruption]; sorry, I am happy to let him go—and to lead the people of Canterbury and help manage our province.

The fact is that it does not. If it did, it would rescind this measure, it would burn this bill, and it would allow an election to take place on schedule as it promised—as Mr Hayes promised, as Jacqui Dean promised as part of the Government, and Nicky Wagner, “Curly”, and the others over there. They were part of a Government that promised the people of Canterbury—a cast-iron promise, as Nick Smith said—that they would be allowed to have an election.

If ever there was a time when we needed to restore democracy, it is now. The truth is we have dysfunction on the Christchurch City Council. We have a Minister responsible for the Earthquake Commission who does a very good impression of a blunderbuss. He is not a conciliator. You will not solve the many conflicts around the world by making Gerry Brownlee an ambassador, I will tell you that. He is not a conciliator. He is not one who can bring people together.

Andrew Williams: Finland.

Hon CLAYTON COSGROVE: No, not even in Finland—no, no, no. You will not see Gerry Brownlee being the diplomat. So you have a Christchurch City Council that has difficulties with the mayor and the chief executive officer, and there is dysfunction there. It is at odds with the Minister for earthquake recovery. If there was ever a time to bring some sanity back and some democracy, and allow Canterbury to elect people to represent it and have some balance, and maybe even allow those elected people to have their own view—and maybe that would oppose the Government; maybe there would be disagreement but the last time I checked, that was a healthy thing in a democracy—the time is now.

But, oh, no; these guys over here in Government want to listen to only those people who will sing their song. They want to listen to only people who will say “Yes, Minister. Yes, Minister.” Well, Hekia Parata has come on the wrong side of that.

John Hayes: No, she hasn’t.

Hon CLAYTON COSGROVE: Oh, no she has not! Well, I just say to “Sir Les” to go down to Christchurch, go to Phillipstown School, talk to Tony Simpson or any of the principals who were told by the Minister at 4 o’clock yesterday that a 30 percent roll increase—[Interruption]

The CHAIRPERSON (Lindsay Tisch): Order!

Hon CLAYTON COSGROVE: I am quite happy to.

The CHAIRPERSON (Lindsay Tisch): We are not on this.

Hon CLAYTON COSGROVE: I am quite happy to—quite happy to.

Hon Hekia Parata: That is so untrue. That is so untrue.

Hon CLAYTON COSGROVE: Well, the Minister of Education calls Tony Simpson a liar—the Minister calls Tony Simpson a liar. Let us get that on the record, because that is what Tony Simpson told me and the other people who were in the room. But the Minister calls Tony Simpson—

The CHAIRPERSON (Lindsay Tisch): Order! I have mentioned to the member to come back to the bill.

Hon CLAYTON COSGROVE: I am more than happy to, Mr Chairperson—more than happy to. So given you have these almost insurmountable—almost insurmountable—problems in Canterbury, surely it is time to unleash a bit of passion down there, and let people have a say. Let people have a say, let people have a vote, and let people elect men and women from amongst them to lead that province and be part of it. That is the bit that the Government does not get. We will have a world-class city and province in Canterbury if people are allowed to be part of that process—part of the rebuild not just of buildings but of their lives, of the social fabric, and of the key institutions like, for instance, Environment Canterbury.

But I find it interesting that the National Party, the sort of free-market, anything goes, live-and-let-live party, the so-called bastion of democracy, as its members would argue, is the one that came to the House today and put forward a bill that disallows people from having a vote and a say. It has made history in its party today with this piece of legislation, because it is barring people from a basic democratic right.

JAMI-LEE ROSS (Junior Whip—National): I move, That the question be now put.

Dr MEGAN WOODS (Labour—Wigram): I am very happy to take a call on the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill and to speak to Part 1 of this bill. In particular, I want to speak to the extension of the date that this bill is putting into place. I want to dwell on some of the comments and the arguments that we have heard from members opposite tonight, because they actually disturb me. They probably disturb me as much as the Law Society was disturbed at the breach of law that this piece of legislation was bringing to the people of Canterbury. I hurried back here tonight to speak on this bill after being at a rally for Christchurch schools where, I can report to members opposite, the Minister, and members from Christchurch, there is far from satisfaction, and this is all embedded.

I want to take people back to 19 September last year, 2012, when the people of Christchurch gathered to show their dissatisfaction with the extension of the rolling over of the Environment Canterbury elections from 2013 to 2016. What did they do? They gathered at the Bridge of Remembrance, and they had a very clear message. They did not want their vote taken away. They did not want their schools taken. In fact, they were asking for democracy all round. This was a very special day when they gathered to ask for this—this, of course, being Women’s Suffrage Day, a day when Christchurch can rightly be proud of its heritage in being a crucible of democracy in this country.

What did we have going on from the Government, the people who, ironically, are elected to represent us? It had the taking away of our votes. For the people of Christchurch this is galling. It is galling that their votes have been taken away. It is galling that their schools are being closed. It is galling they are not being listened to, and it is galling that they are being run roughshod over by this Government. When people gather in Christchurch at these rallies for democracy, which seem to happen at a regular pace, there are chants that go up—and they are reported in The Press—with people saying: “What do we want? Democracy. When do we want it? Now.” This is happening—

Hon Ruth Dyson: Oh no, don’t they say 2016?

Dr MEGAN WOODS: No, they do not say 2016. They say they want it now. Labour is proud that we have given an undertaking that when we are elected in 2014 to be the Government, we will reinstate elections. It shocks me as a member of Parliament that I have to stand here and talk about reinstating elections in this country. It just beggars belief.

What have we heard from Jacqui Dean? Jacqui Dean talked about people coming to the Local Government and Environment Committee who were jacked up by various political parties to come and wail at the select committee. The arrogance shown by this member pretty much sums up why it is that tempers have boiled over at the select committee. This is the way the people of Canterbury, who came to tell the select committee that they did object to their votes being taken away and they did object to their democratic rights being taken away, are now described in this House, the House of Representatives of New Zealanders—as coming to have a wail to the select committee. This is up there with Gerry Brownlee describing the people of Christchurch as carpers and moaners, and telling them that they are just buggerising around on Facebook. This is unacceptable and shows no respect for the people of Canterbury. It shows no respect for the people of Christchurch. This is a Government that shows absolutely no respect for the people of Christchurch.

At one of these rallies for democracy I had the pleasure of meeting two of my constituents, who were objecting to the extension of this date from 2013 to 2016. This was a very special couple of constituents whom I met. In fact, it was a couple in their mid-80s. They live in Riccarton, and this was the first time in their entire lives that they had ever been on a protest. It was the first time in their lives that they had actually sought to, you know, actually make clear to a Government their view that they did not like what was going on, but they were so affronted that their right to vote was being taken away from them by a Government that was elected in this country. The fact that people in their mid-80s are having to take to the street to talk about their—

DAVID CLENDON (Green): I am pleased to take a call on the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill. A lot of the speeches we have heard tonight have come from MPs from Christchurch and from Canterbury, and that is as it should be. They are representing the people most directly affected. Nobody, however, must believe that this is just Christchurch’s problem. This is not just Canterbury’s problem. This is a problem—this bill and this extension of the denial of democracy—for every single New Zealander who believes in living in an open and transparent democracy, where people have a chance to select their representatives, to select the people who will make decisions on their behalf. That is what is being denied to people in Canterbury for another 3 years.

This is actually creating a second class of citizen in New Zealand. We will have first-class New Zealanders who have the right to elect their representatives, and we will continue to have second-class New Zealanders in Canterbury denied the right to elect their representatives at the regional level. In a few months’ time I will have the opportunity to vote for a mayor, for councillors, and for regional councillors. That is a right that Cantabrians deserve as well as anybody else.

Let us look at the chronology here. In April 2010 the Canterbury Regional Council, Environment Canterbury, was deemed to be dysfunctional. Let us just accept for the sake of the argument—which actually I do not and many others do not—that that council was dysfunctional. A Government that had the political will to enable democracy, to facilitate democracy, could, between April 2010 and October 2010, have enabled a legitimate and a democratic election of new regional councillors for Canterbury. It may have required legislation—I am not sure off the top of my head of the requirements in terms of the closure of nominations and all of those things. However, I am convinced that had a Government of the day come to this House, if necessary, to pass special legislation to enable democracy in Canterbury in 2010, that would have happened. It could have elected a new regional council and got on with the business of representing Cantabrians.

We have heard from the Government that the commissioners are doing a splendid job. It is the best thing since sliced bread, apparently. We are hearing that the extension is sensible and practical—the decision to deny democracy on the grounds of being sensible and practical. This is extraordinary from a Government that talks a great deal about choice, supported by the remnants of one of its support parties. “Choice” is a word it uses a great deal. Where is the choice in this decision? This is being imposed on people. Is it not interesting? A former Labour-led Government that occasionally made decisions to do things it believed to be in the best interests of people—from this side, and from this party now in Government, nanny State was its favourite—

The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member, the time has come for me to report progress.

Progress to be reported presently.

House resumed.

The Chairperson reported the Privacy (Information Sharing) Bill with amendment, and that the Committee had divided it into three bills, the International Finance Agreements Amendment Bill without amendment, and progress on the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill.

Report adopted.

The House adjourned at 9.56 p.m.