Thursday, 21 February 2013
Volume 687
Sitting date: 21 February 2013
Thursday, 21 February 2013
Thursday, 21 February 2013
Mr Speaker took the Chair at 2 p.m.
Prayers.
Business Statement
Business Statement
Hon CHRISTOPHER FINLAYSON (Attorney-General) on behalf of the Leader of the House: When the House resumes on Tuesday, 26 February the Government will look to progress the Child Support Amendment Bill, the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill, the Patents Bill, and the Corrections Amendment Bill.
Hon TREVOR MALLARD (Labour—Hutt South): Can I ask the acting Leader of the House when it is the Government’s intention to introduce the legislation that is necessary for the Skycity convention centre?
Hon CHRISTOPHER FINLAYSON (Attorney-General): I would not have a clue. He can send a text to the Leader of the House and get an answer.
Points of Order
Equal Pay Amendment Bill—Leave for Introduction and First Reading
CATHERINE DELAHUNTY (Green): I raise a point of order, Mr Speaker. On Equal Pay Day I seek leave for a member’s bill, the Equal Pay Amendment Bill, to be introduced forthwith and for it to be set down for first reading as members’ order of the day No. 1 on the next members’ day.
Mr SPEAKER: Leave is sought to table a member’s bill. Is there any objection? There is.
Questions for Oral Answer
Questions to Ministers
Skycity, Convention Centre—Expressions of Interest Process
1. GRANT ROBERTSON (Deputy Leader—Labour) to the Prime Minister: Does he agree that the Prime Minister certainly moved to the extent of saying that he himself offered regulatory relief, if so, were other bidders to build a convention centre in Auckland offered regulatory relief?
Hon STEVEN JOYCE (Minister for Economic Development) on behalf of the Prime Minister: What the Prime Minister stated quite clearly in the answer to question No. 2 yesterday was that “regulatory relief has not been offered to Skycity. That may be part of the negotiations that they want, but, actually, all bidders were told that we were looking for creative solutions and it was a cash-strapped Government. Every bid was different. In fact, in the case of every bid, with the exception of Skycity, they were asking the Government for $300 million - odd to build it.”
Grant Robertson: I raise a point of order, Mr Speaker. The Minister’s answer just now equates, essentially, to a no to the first part of my substantive question. That is actually a quote given by you as Speaker yesterday interpreting the answer of the Prime Minister to be that he had “certainly moved to the extent of saying that he himself offered regulatory relief.” We now have a problem because Mr Joyce, answering on behalf of the Prime Minister, has come to the House today and effectively said no. So now we have the issue of your interpretation versus what the Prime Minister has actually said.
Mr SPEAKER: I thank the member for raising the point. The member cannot bring the Speaker into the debate. I am ruling that the question has been adequately addressed—maybe not to the satisfaction of the member. The member has further supplementary questions that he can utilise to try to obtain the answer he wants.
Grant Robertson: I raise a point of order, Mr Speaker. The issue we have is that in effect it is not me who has brought the Speaker into the debate; it is the Speaker who has brought the Speaker into the debate by giving an interpretation that today has been contradicted by Mr Joyce answering on behalf of the Prime Minister. It leaves the Opposition in a very difficult position in terms of being able to hold the Prime Minister to account when an interpretation is given by the Speaker and then it is contradicted by the Minister.
Mr SPEAKER: I accept that the point being raised by the member is genuine, but I refer him to Speaker’s ruling 17/3(3) where it is clearly stated that it is out of order “to bring the Speaker’s name and opinions into a debate.” The member has further supplementary questions—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think there are two points that I would like to make. First, I would like to indicate to you that I contemplated writing a privilege letter yesterday based on your interpretation of Hekia Parata’s answer, which, if she had given it, would have been a clear breach of privilege. What I am trying to do is to highlight the danger of this situation occurring. I think the other point that must be made is that the Speaker’s ruling to which you have referred refers to debate. This is not a debate; this is question time.
Mr SPEAKER: With respect to the member, this is a House of debate and clearly when we have question time there are issues of debate within question time. So I do not accept that part of the member’s point of order.
Hon Trevor Mallard: I would like to continue that, because dozens of Speakers before you have ruled that there are rules for debate and there are rules for question time, and they differentiate. You do not bring the Speaker into debate. We were not; we were quoting him at question time, and that is something that is quite different and quite proper. Your opinion, like anyone else’s, can be quoted.
Mr SPEAKER: I took careful advice on this issue from the Clerk prior to the beginning of question time and I have concluded that the issue of bringing the Speaker into the debate applies equally to question time.
Hon David Parker: I raise a point of order, Mr Speaker. I think the difficulty arises where the Speaker interprets the answer, because members on both sides are then left not able to refer to what is then put in Hansard by the Speaker in any way other than to pretend a fiction. We have here the Prime Minister saying that the interpretation that the Speaker put on the Prime Minister’s comments yesterday was wrong. I think that leads to the view that I think has been put by Mr Brownlee previously, as well as by Opposition members, that this is where we get to when the Speaker interprets the answer that is given by a Minister rather than requiring the Minister to answer for him or herself.
Rt Hon Winston Peters: I do not think that New Zealand First would oppose the proposition that you can interpret the Minister or the Minister’s answer, providing that that is the answer that binds the Minister as well. If the Minister wants to be excused from that, they must get up and immediately rebut it; otherwise it stands in their name, and it means we can have a meaningful question time.
Mr SPEAKER: I accept the points raised are genuine. I accept the difficulty with this particular issue is my attempt to interpret an answer yesterday. The difficulty I am faced with is that on numerous occasions yesterday members who had asked a question then felt that question had not been adequately addressed. In future what I will do is not attempt to reinterpret the answer, but will rule simply whether the question has been addressed to my satisfaction, and, therefore, I do not think that members can expect me to continue to justify the decisions that are made. The situation we have here today is that we are now relitigating rulings that I made yesterday, which will lead only to disorder. So I am concluding this matter. I am inviting the member to ask supplementary questions if he wishes to, otherwise we will move to question No. 2.
Grant Robertson: Is the Deputy Auditor-General’s finding correct, that his “Chief of Staff asked SkyCity for details of the regulatory relief it would seek in return.” for fully funding the convention centre.?
Hon STEVEN JOYCE: The chief of staff made it very clear that the Government had no money for the centre and that Skycity needed to think outside the box and come up with something, which might not work—but he did not specifically offer regulatory relief, which I think is the point the member is suggesting.
Grant Robertson: I raise a point of order, Mr Speaker. It was a very specific question.
Mr SPEAKER: I missed the detail of the question. I invite the member to ask the question again.
Grant Robertson: Is the Deputy Auditor-General’s finding correct that his “Chief of Staff asked SkyCity for details of the regulatory relief it would seek in return.” for fully funding the convention centre?
Hon STEVEN JOYCE: I am not sure that that is a finding of the Deputy Auditor-General. Paragraph 3.25 suggests that Skycity told the Deputy Auditor-General certain things about a particular meeting, but to suggest that that is a conclusion of the Deputy Auditor-General is, I think, stretching the description of the paragraph.
Grant Robertson: Is it correct that what is written in paragraph 3.25 of the Deputy Auditor-General’s report is true, that the chief of staff of the Prime Minister asked Skycity “for details of the regulatory relief it would seek in return.” for fully funding the convention centre?
Hon STEVEN JOYCE: I have no—what would be the word—suggestion that what Skycity told the Deputy Auditor-General was not what it interpreted the conversation to mean, but the Prime Minister’s chief of staff made it very clear that the Government had no money for the centre and they needed to think outside the box and come up with something that might work. It is quite reasonable for two people to take different meanings from a conversation.
Grant Robertson: I raise a point of order, Mr Speaker. The Prime Minister is responsible in this House for the actions of his staff—in this case, the chief of staff whom he has. It is a very simple question as to whether or not the statements contained in the Deputy Auditor-General’s report at paragraph 3.25 are, as the Minister has suggested, correct.
Mr SPEAKER: Would the member ask the question again.
Grant Robertson: Is the statement in the Deputy Auditor-General’s report correct when it says that “the Chief of Staff asked SkyCity for details of the regulatory relief it would seek in return.” for fully funding the convention centre.?
Hon STEVEN JOYCE: My answer remains the same. It is clear that paragraph 3.25 in the report is Skycity’s recollection of the meeting. The chief of staff’s recollection of the meeting is as I have repeated—what I said earlier. He made it very clear that the Government had no money for the centre and that they needed to think outside the box and come up with something that might work. If Skycity interpreted it in that manner, well, then it is obviously for it to report its own views to the Deputy Auditor-General.
Grant Robertson: Does he believe, then, that the Deputy Auditor-General believed Skycity’s account rather than his chief of staff’s account?
Hon STEVEN JOYCE: On behalf of the Deputy Auditor-General—
Hon Members: Ha, ha!
Hon STEVEN JOYCE: That is what he seems to be suggesting, that somehow I am answering questions on behalf of the Deputy Auditor-General. Quite fundamentally, I am not. I am answering on behalf of the Prime Minister. But the reality is that the Deputy Auditor-General reported an item in the report in terms of Skycity’s interpretation of a conversation. Whether the Deputy Auditor-General believes it or not, I have no idea.
Grant Robertson: Given that only one bidder was told that regulatory relief was a convention centre payment option and that that information came via the Prime Minister and his office, what responsibility does he take for the Deputy Auditor-General’s finding: “we do not consider that the evaluation process was transparent or even-handed.”?
Hon STEVEN JOYCE: The member seems to be leaping on from failing to get to the answer that he was seeking. But the key point is that this period of the process was prior to the evaluations and the expressions of interest. Actually, what the Deputy Auditor-General said in relation to this part of the process, and I quote from paragraph 3.32 of the report, is that “We have no concern that the Government took steps to find out whether SkyCity’s development plans might be relevant to the discussions about an international convention centre. Nor is it unusual for a company like SkyCity to approach government officials and Ministers to explore whether there might be government interest in, and support for, its development ideas. Government and private business interests are free to talk to each other. It was sensible for both parties to explore whether they had a common interest.”
Grant Robertson: Would the Prime Minister care to point his attention to the next paragraph of the report, paragraph 3.33, where the Deputy Auditor-General discusses her “concerns about the apparent readiness of officials to support those discussions developing into more substantive negotiations without preparing to give advice on the Government’s procedural obligations and options.”; what responsibility does the Prime Minister take for officials going down that path, given they went there only after he stopped the tender process in August 2009?
Hon STEVEN JOYCE: Well, Mr Robertson and I can quote paragraphs of the report to each other all afternoon. I would perhaps conclude by quoting paragraph 3.44, which, to be helpful to the member, is actually at the conclusion of this chapter. That says: “the matter became moot because SkyCity did not produce a proposal at this time. Instead, the Minister”—which I presume is the Minister for Economic Development—“directed officials to proceed to an EOI process as part of a broader discussion of economic development possibilities.”
Grant Robertson: Why did he ignore the warnings from Treasury about “the probity of the bidding process” contained in a briefing note given to him on 12 November 2009?
Hon STEVEN JOYCE: He addressed the note yesterday. I would only go and repeat what was said yesterday that in relation to that note, my understanding is that that was in relation to if matters were to proceed to a public-private partnership, which, of course, is noted in paragraph 3.43 of her report. In case the member does not remember, it did not go to a public-private partnership, so that also becomes moot.
Grant Robertson: Is the Prime Minister telling the House that he takes no responsibility whatsoever for the fact that a process around the convention centre, to quote the Deputy Auditor-General, failed to meet basic standards of “transparency and fairness.”, and is he taking absolutely no responsibility for that?
Hon STEVEN JOYCE: Having failed to make his points the member likes to make a sweeping generalisation at the end. The reality is that the Deputy Auditor-General said there were no substantive issues in relation to the process and nothing that would change the outcome of the process, and raised some procedural issues in regards to the expressions of interest. The member just does not want to hear it.
Grant Robertson: How does the Prime Minister reconcile his statement in the House yesterday that “Television New Zealand entered a commercial agreement with Skycity to sell land that it owned” with the statement from the Television New Zealand (TVNZ) board chair, Wayne Walden, to the Commerce Committee today that there was no such commercial arrangement?
Hon STEVEN JOYCE: I am not quite sure how that fits into the frame of question No. 1, but, nevertheless, the Prime Minister was answering yesterday accusations of a “cosy deal” brokered by the Prime Minister between TVNZ and Skycity. Fundamentally, it is obvious that that did not occur.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I would like to refer you to your ruling you made earlier in question time as to the difference between debates and question time, where you indicated there was not a difference, and refer you to Speaker’s ruling 168/1 from 2011, Dr Smith: “The rules for question time are very clear. It is not a time when we have debates. We have questions asked,”.
Mr SPEAKER: I thank the member for his contribution. I will consider that. But he is now relitigating an earlier ruling of mine where I said to bring the Speaker into a question was bringing the Speaker into debate and that would lead to disorder.
Rt Hon Winston Peters: On the issue of regulatory or other relief, why did the PM say yesterday: “Its architects designed such a thing, realised they needed more land, worked out who owned the land, and approached Television New Zealand.”, when TVNZ has claimed overnight that that statement is false?
Hon STEVEN JOYCE: The Prime Minister accepts the TVNZ assurance accordingly. But I think the point is—and perhaps the member misses it—that that actually goes to underline the fact that there was absolutely no conspiracy about a TVNZ land purchase and sale, because, fundamentally, it obviously has not occurred.
Rt Hon Winston Peters: The question really concerns the Prime Minister: why did he say it yesterday, and when was the Government going to advise TVNZ of the regulatory relief it was prepared to offer Skycity, given that the deal would include TVNZ land?
Hon STEVEN JOYCE: The member is pirouetting. Yesterday there was some terrible conspiracy; today there is—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. It was a straightforward question. I think Winston Peters might be nimble on his feet, but he is not doing ballet in the House. You, Mr Speaker, should make sure that Ministers answer questions in a straightforward manner.
Mr SPEAKER: I thank the member for his assistance. It would be helpful if the honourable Minister, on behalf of the Prime Minister, would give a clear answer to the question. Would the member Winston Peters please repeat the question?
Rt Hon Winston Peters: I will put the question again. When was the Government going to advise TVNZ of the regulatory relief it was prepared to offer Skycity, given that the deal would include giving away or transacting TVNZ land?
Hon STEVEN JOYCE: No deal has been concluded, so that matter does not arise. It has been raised publicly that some land might be needed. If a deal was done, that would be progressed at the time.
Rt Hon Winston Peters: Is it not a fact that on 6 September 2010, the Minister for Economic Development received an aide-mèmoire from Skycity asking the Government to “contribute” land owned by TVNZ as part of this deal; and, furthermore, that the ministry undertook extensive work to determine the valuation of the property and to clear up any Treaty of Waitangi claims on the property?
Hon STEVEN JOYCE: One of the criticisms of the officials from the Deputy Auditor-General’s office was of places where they did not do preparatory work. I am assuming the member is now being critical of them doing preparatory work in regards to a matter in relation to any land that might be required if a deal went ahead. But the reality is that no deal has been agreed, and, until such time, any arrangements in regard to some land are moot.
Rt Hon Winston Peters: On the subject of preparatory work, why does the Prime Minister consider himself so unaccountable to the New Zealand public and taxpayers as to attend official meetings as the Prime Minister and at the taxpayers’ expense when no records are kept at all of those meetings?
Hon STEVEN JOYCE: The Prime Minister meets and discusses things with people all over the country, informally and formally, at many different times. Generally, records are kept of formal meetings, but that does not mean there can be any expectations that any time the Prime Minister talks to somebody, that somehow there will be formal minutes.
Rt Hon Winston Peters: Did the Prime Minister go to the meeting in respect of the Auckland convention centre involving Skycity with the deliberate intention that no record be kept, because any record would demonstrate just how sleazy these deals are?
Hon STEVEN JOYCE: I would just say I reject completely the premise in that member’s suggestion.
Dr Russel Norman: Does the Prime Minister accept the conclusion of the Deputy Auditor-General’s report that “we do not consider that the evaluation process was transparent or even-handed.”?
Hon STEVEN JOYCE: This is a fair way from the start of the question, which was about what the Prime Minister offered or did not offer in regard to the very early meetings in this process. But, in terms of the expressions of interest process, the Deputy Auditor-General has made it clear that she feels that the—
Dr David Clark: Look us in the eye. Come on!
Hon STEVEN JOYCE: What a clown.
Mr SPEAKER: Order! If the members want to hear the answer, they should allow some silence for Mr Joyce to answer the question.
Hon STEVEN JOYCE: The Deputy Auditor-General made it absolutely clear—[Interruption] Mr Norman is over here, in case you have not noticed—that she felt that the officials should have closed off the expressions of interest process earlier. The officials accept that criticism, and the Minister for Economic Development is working with the officials on further guidance in that regard. But she also makes it clear there are no substantive concerns about the conclusions reached through this process. There were some procedural issues. The Government accepts the procedural issues, but they were not substantive and would not have changed the outcome of the process.
Dr Russel Norman: I raise a point of order, Mr Speaker. I seek your guidance as to whether you think my very simple question as to whether the Minister accepts the conclusions has been answered or not. It did not appear to me that it had been.
Mr SPEAKER: I think the Minister addressed the question very substantially. In fact, he took too long to do so.
Household Incomes and Savings—Growth and Parity with Australia
2. DAVID BENNETT (National—Hamilton East) to the Minister of Finance: What reports has he received on rising household incomes?
Hon BILL ENGLISH (Minister of Finance): Westpac has released a report on household income growth since 2008 showing that disposable household incomes adjusted for inflation have risen by $5.7 billion. This is a product of lower household interest payments of $3.3 billion—that is, they are paying less in interest—reduced income taxes of $6.3 billion; and welfare payments that increased by $2.7 billion, mainly due to an additional 70,000 people now being eligible for national superannuation compared with 2008. Offsetting these increases were reduced interest received on savings by those who have put savings in the bank—despite higher savings rates—and reduced profits for companies. Both of these things reflect difficult economic conditions over the past 4 years.
David Bennett: How has household saving changed recently and what reports has he received on household wealth?
Hon BILL ENGLISH: I think, as we are familiar with, official measures show a significant improvement in the last 3 years, from dissaving of 7.1 percent of household income in 2007 to just positive household savings more recently. Alongside that, though, there is a maybe confusing report from the Reserve Bank, which has recently highlighted that in measuring household wealth its statistics exclude some important items. For instance, when it measures household wealth it does not include equity in farms. It does not include equity in shares in some businesses and commercial properties and forests, nor does it include some types of foreign assets held by New Zealanders. It estimates that when these items are included, household net wealth is in fact $167 billion higher than it thought, or around 25 percent—that is, the Reserve Bank’s revision of the numbers indicates households may be 25 percent wealthier than they thought.
David Bennett: What steps is the Government taking to increase savings and investment, and how will this improve New Zealand’s competitiveness and productivity?
Dr David Clark: KiwiSaver flip-flops.
Hon BILL ENGLISH: There is plenty to do—and I am pleased the member mentioned KiwiSaver, because, probably, the next most significant step is that on 1 April the minimum contributions rate to KiwiSaver will rise from 2 percent for employers and employees to 3 percent for employers and employees. We would hope that this may have some impact on national savings rates.
Hon David Parker: Does the Minister of Finance agree that the same Westpac report that he quoted says “this analysis does not extend to how these incomes were spent”, and so the figures he quoted do not adjust for the increase in GST and other taxes, which largely offset the 2010 income tax cuts, except, of course, for the highest earners?
Hon BILL ENGLISH: I do agree that the report says that, but the member is drawing the wrong conclusion. In fact, what the figures show is that wage and salary earners and those in the welfare system have had their income supported by the Government, and their incomes have increased. Those who were depending on income from savings and from business have tended to have their incomes dropping. Generally, that would mean incomes at the higher end dropping and incomes at the lower end rising, or at least rising faster.
Hon David Parker: Is he aware that the latest statistics out from Australia today on income comparisons, which allow income comparisons between New Zealand and Australia to be updated, show that the income gap on a purchase price parity basis has grown from $121 in December 2008 to $179.94 per week, or a difference of $887 earned in New Zealand compared with the Australian—you know, on a purchase price parity basis—earning $1,067 a week?
Hon BILL ENGLISH: I cannot comment on that particular measure, but we would expect that since from 2008 up until fairly recently, Australian incomes have grown more, because their economy grew significantly faster there for a couple of years than the New Zealand economy. However, to pick up another one of the member’s favourite measures, in recent times the New Zealand dollar has risen against the Australian dollar, illustrating the fact that we have reasonably good growth prospects and there is quite a lot of questioning about Australia’s growth prospects. So it could be that over the next 5 years our incomes grow faster than theirs.
David Bennett: What other policies has he seen for saving and investment?
Hon BILL ENGLISH: I have seen put forward a number of other policies that the Government has disagreed with: capital gains tax on every business and farm, imposing large costs through a much more expensive emissions trading scheme, and printing money, which, actually, is a tax on savers and wage earners. We do not agree with those policies proposed by the Opposition parties.
Skycity, Convention Centre—Expressions of Interest Process
3. Hon DAVID PARKER (Labour) to the Minister for Economic Development: Was a document summarising the process involving SkyCity and the proposed convention centre, as referred to at paragraphs 3.17 and 3.18 of the report from the Deputy Auditor General, sent by MED or the Ministry of Tourism via email to DPMC on 12 November 2009, and did that email record Treasury advice that advice should be sought from the Office of the Auditor General to determine the probity of that process?
Hon STEVEN JOYCE (Minister for Economic Development): As the Deputy Auditor-General records in her report, an email dated 12 November 2009 was sent from one official at the Ministry of Economic Development to another one at the Department of the Prime Minister and Cabinet. The email included reference to a suggestion that should the Government choose to progress a public-private partnership to build a convention centre, then seeking advice from the Office of the Auditor-General in that regard was recommended. As the process the Government entered into was quite different from a public-private partnership, I am advised there was no need for Office of the Auditor-General advice regarding a public-private partnership.
Hon David Parker: Will the Minister forthwith release the document emailed to the Department of the Prime Minister and Cabinet on 12 November that recorded that Treasury advice to get advice from the Auditor-General as to probity?
Hon STEVEN JOYCE: I am not aware at this time whether it has already been released or not. I will certainly look into that for the member.
Hon David Parker: I raise a point of order, Mr Speaker. That was not my question. My question is: will he release it forthwith? It is a different question.
Mr SPEAKER: And I do not want to get into the issue of relitigating the question and the answer. The easiest way is for the Minister to repeat his answer, I think. Would the Minister please—does the Minister want the question again?
Hon STEVEN JOYCE: As I said to the member, I am not aware of the status of that document, whether it has been previously released or not. I will check for the member, and see what I can do in that regard.
Hon David Parker: I raise a point of order, Mr Speaker. That again does not answer my question. My question was not whether it has been released, or whatever is the status of the document. My question is: will he release it?
Mr SPEAKER: And the Minister has satisfactorily addressed the question. Does the member have further supplementary questions?
Hon David Parker: I raise a point of order, Mr Speaker. I still do not know whether the Minister is going to release it or not, so how can he have properly addressed that question?
Mr SPEAKER: He said he would look into it. Does the member have further supplementary questions?
Hon David Parker: Had any of the staff at the Ministry of Economic Development or the Ministry of Tourism expressed concerns about the probity of the process, or had discussions with Treasury about the probity of the process, before that part of the document was sent on 12 November; if not, why was that document prepared?
Hon STEVEN JOYCE: On behalf of myself, because I am the Minister, although I was not the Minister at the time, the reality is that that memo was sent. Whether there were any discussions between officials prior to that, I have no idea at this time.
Hon David Parker: Given that the Minister has today conceded that the Deputy Auditor-General was right that the document was sent by the Ministry of Economic Development, and the Deputy Auditor-General’s finding in section 3.31 of the report that in its private briefing—that is, the private briefing from the Department of the Prime Minister and Cabinet to the Prime Minister by way of a briefing note on 3 December—it referred to Treasury’s comments, does he believe that the 12 November email that was sent by his ministry was received by the Department of the Prime Minister and Cabinet?
Hon STEVEN JOYCE: I said in my answer to the primary question that an email was sent from one official at the Ministry of Economic Development to another official at the Department of the Prime Minister and Cabinet on 12 November 2009. I also said that it was in reference to a public-private partnership, should one be used to build a convention centre, and it recommended that if that was the case, it be discussed with the Office of the Auditor-General. Of course, it became absolutely moot, because a public-private partnership was not proceeded with.
Hon David Parker: If the Minister is saying that the email was sent by the Ministry of Economic Development and was received by the Department of the Prime Minister and Cabinet, why did the Prime Minister deny yesterday that it was received by the department?
Hon STEVEN JOYCE: I am not aware exactly what the Prime Minister said yesterday. What he did say, I understand, was that he had not seen it. This is my recollection of it, but the member could direct a question to the Prime Minister in that regard. However, again, I would point out that even the Auditor-General says that this matter became moot, because it did not have a proposal at this time. If the matter were to proceed to a public-private partnership, that would be a concern, but it did not have a public-private partnership, so the whole thing is just a wild goose chase.
Passports—Validity Period
4. Hon TARIANA TURIA (Co-Leader—Māori Party) to the Minister of Internal Affairs: Will he agree to follow the lead of many of our major trading partners including Canada, Australia, the United States, the United Kingdom and China, and introduce a ten-year passport option, and if not, why not?
Hon CHRIS TREMAIN (Minister of Internal Affairs): I am willing to consider changes, but I am not convinced that a 10-year passport is necessary. A better option may be to enable New Zealanders to get 5 full years of use out of their current passports. Moving to 10 years would require a large increase in the passport fees at a time when we have just reduced fees by almost 20 percent. The 5-year period also enables us to update security and technology features on the passport and on SmartGate much more quickly, to reduce counterfeiting, and to gain visa-free access to more countries.
Hon Tariana Turia: Does he agree that given that Māori and Pasifika families are larger, on average, and that they travel either to Pacific nations or to Australia, where increasingly their families are living, they carry a heavier financial burden if passports need to be renewed twice as often, and what does he intend to do about this inequity?
Hon CHRIS TREMAIN: Yes, I do agree that Māori and Pasifika families are larger, on average, but moving to a 10-year passport would create an estimated $200 million shortfall in the passports account. This would need to be made up by higher fees, which would be carried by users, and Māori and Pasifika families would fall into that category. We have already reduced the cost of a passport by close to 20 percent. I think all customers, including Māori and Pasifika families, are currently getting good value for money. And, importantly, because children’s passports are subsidised by nearly 50 percent, large families actually benefit over other passport users.
Hon Tariana Turia: So is the Minister saying that the reason for the reduction from a 10-year passport to a 5-year one was to enable the Government to accrue revenue?
Hon CHRIS TREMAIN: No, I do not say that, but I have a quote from someone else who said that “A shorter validity period will help New Zealand keep ahead of fraudsters by retaining a leading edge in technology.” That was said by George Hawkins in 2005.
Rt Hon Winston Peters: I seek leave to table a list of the First World countries with 10-year passport times and the Third World countries, like New Zealand, with 5-year passport times.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. It can be so tabled.
Document, by leave, laid on the Table of the House.
Prescription Co-payments, Increase—Impact and Expected Revenue
5. Hon MARYAN STREET (Labour) to the Minister of Health: What reports has he received about the estimated revenue to be generated or savings to be made from the increase in prescription charges from $3 to $5 an item?
Hon TONY RYALL (Minister of Health): Including articles, letters, ministry reports, and suchlike, as well as other documents, then I have received a number of reports—too many to list. The $2 per item increase, or maximum increase of $40 a year per family, is the first increase in 20 years, and it has helped fund cost pressures in new initiatives in health this year of $20 million.
Hon Maryan Street: Given the Commerce Commission’s strongly held view that the compulsory levying in the community Pharmacy Services Agreement of $5 per prescription item was the same as price fixing and breached section 27 of the Commerce Act, what estimates has he received for savings or revenue if pharmacists choose not to charge the $5 amount?
Hon TONY RYALL: The information that I have received is that this should not have a significant impact on any of the estimates of the revenue.
Hon Maryan Street: Has he seen the reports of Joe Tiller of the Linwood Community Pharmacy in Christchurch refusing to charge $5 an item and being inundated with customers as a result; does this indicate anything to him about the affordability of medicines for people?
Hon TONY RYALL: Yes, I have seen those reports.
Hon Maryan Street: Has he seen reports of pharmacists already with shelves full of prescriptions waiting to be picked up, and how does he think this trend will impact on revenue or savings from the prescription charge increase?
Hon TONY RYALL: Yes, I have seen the picture the member is holding before in the House. I would say to members of the public that if they do have concerns about their ability to meet prescription charges, they should discuss them with their general practitioner or their pharmacist, or seek support from Work and Income New Zealand. The additional revenue raised from this prescription charge is being used in the health services to fund the expansion of cancer treatment services and additional support for others in the public health service.
Hon Maryan Street: Has he seen reports of correspondence he has received regarding the prescription charge increase, released under the Official Information Act to Pharmacy Today, in which at least one pharmacist has said these changes will seriously compromise patients’ safety; if so, what has he done to mitigate such risks?
Hon TONY RYALL: I think the feedback in various reports is different. What I can tell that member is that the Government has made it quite clear. This is the first increase for 20 years. The increase is essentially an inflation adjustment. The additional money is going into providing more cancer treatment services and cheaper doctors’ visits for under-sixes. But those who do have difficulty meeting prescription charges should talk to their doctor, their pharmacist, or Work and Income, which is able to assist.
Hon Maryan Street: I seek leave to table a letter from the Commerce Commission to a lawyer acting on behalf of the district health boards, advising that it is their strongly held view that the compulsory levy clause is in breach of the Commerce Act.
Mr SPEAKER: Leave is sought to table the letter from the Commerce Commission. Is there any objection? There appears to be none. It can be tabled.
Document, by leave, laid on the Table of the House.
Hon Maryan Street: I seek leave to table the resulting letter from the district health boards to all pharmacies, saying they no longer have to comply with the clause that they have been compelled to agree—
Mr SPEAKER: Leave is sought to table a letter from the district health boards. Is there any objection to that course of action? There appears to be none. It shall be tabled.
Document, by leave, laid on the Table of the House.
Hon Maryan Street: I seek leave to table the February edition of Pharmacy Today, with the headline—
Mr SPEAKER: No. [Interruption] No. Order! That is something that is available to members. It is supplied to most members in the House.
Hon Maryan Street: I raise a point of order, Mr Speaker. I was very careful to listen to your explanation on Tuesday as to which items might be presented to the House. This is a subscription-only magazine. It comes out monthly. It is not—
Mr SPEAKER: The easiest way—
Hon Maryan Street: —a daily newspaper.
Mr SPEAKER: I accept the point. The easiest way to resolve the matter is to put the leave. Is there any objection to Pharmacy Today being tabled in the House? Yes, there is. There is objection.
Welfare Fraud—Deterrents to Relationship Fraud
6. Peseta SAM LOTU-IIGA (National—Maungakiekie) to the Associate Minister for Social Development: Why do the welfare fraud reforms he announced yesterday focus so heavily on relationship fraud?
Hon CHESTER BORROWS (Associate Minister for Social Development): Relationship fraud, such as claiming a domestic purposes benefit while being in a marriage or de facto relationship, is one of the most common types of fraud, and last year over $20 million of entitlements was taken illegally from hard-working taxpayers in this country. Because domestic relationship fraud is difficult to detect, it can go on for some time before it is detected. It is interesting to note that last year, of the 61 people who were charged with receiving entitlements in excess of $100,000, 41 of those were people in relationship fraud, largely women with not a lot of equity available to meet those and carrying the full weight of criminal responsibility. We think that having the other party in a relationship in respect of that getting away scot-free is unjust, unfair, and immoral.
Peseta Sam Lotu-Iiga: What is the Government doing to address relationship welfare fraud?
Hon CHESTER BORROWS: Yesterday I announced provisions that would mean that the non-beneficiary party in a relationship fraud situation would be criminally responsible and responsible for the debt if they knew, or should have known, that fraud was being committed. It is unthinkable to me that someone could live for some time in a long-term relationship, in a marriage-type relationship, with a crime being committed in the home that they are living in while they are there and be able to get away with it scot-free. What I am pleased to note is that from the emails and the responses I have had today from good, decent, and hard-working Labour Party voters, they love it.
Jacinda Ardern: Given that all fraud should be pursued, has he suggested to the Minister of Revenue that he apply his new welfare provisions to tax fraud, including a new offence for spouses who ought to have known they were benefiting from fraud; if not, why not?
Hon CHESTER BORROWS: I have been having discussions with the hard-working Minister of Revenue, the Hon Peter Dunne. It is important to note a couple of things from the quite proper question that has been put. For instance, in respect of tax evasion, that is a fraud that is frequently committed away from the home by one member of a household. In respect of the criminal justice—[Interruption]
Mr SPEAKER: Order! Do the members want to hear the answer or not?
Hon CHESTER BORROWS: —system, as that member will know, the threshold of proof is beyond reasonable doubt. The next point to realise is this: relationship benefit fraud does not exist except for two people in a relationship, and the Government does not believe one person should get away from that scot-free.
Peseta Sam Lotu-Iiga: How does he respond to concerns that the changes may disadvantage women in an abusive relationship?
Hon CHESTER BORROWS: This is a very important point, and it is a point that has been raised over the last 24 hours by a number of people. The fact is that the law recognises that a woman living in an abusive relationship is not living in a relationship in respect of a marriage. What that means is this: for the purposes of the Social Security Act a woman living in an abusive relationship, or any person living in an abusive relationship, is not, by definition, living in a relationship in the nature of marriage, and so cannot be prosecuted—cannot be prosecuted—for benefit fraud.
Skycity, Convention Centre—Expressions of Interest Process
Dr RUSSEL NORMAN (Co-Leader—Green): Thank you, Mr Speaker—[Interruption]
Mr SPEAKER: Order! The member has a right to have his question heard.
7. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister for Economic Development: Did the Minister for Economic Development sight the request for Expressions of Interest for Growing New Zealand’s share of the International Business Events Market and Strengthening the National Network of Convention Centres document before it was issued on 19 May 2010; and was it shown to other Ministers?
Hon STEVEN JOYCE (Minister for Economic Development): A draft expressions of interest document was seen by the Minister for Economic Development prior to publication. I am advised that there is no record of the draft document being provided to other Ministers.
Dr Russel Norman: Why, then, did the economic development Minister allow the expressions of interest document to go public without the inclusion of the key criterion, which was that the Government would not fund any capital costs for the convention centre?
Hon STEVEN JOYCE: That actually is discussed at some length, as the member may or may not be aware, in the Deputy Auditor-General’s report. In fact, the Deputy Auditor-General says that “[they] are not suggesting that the EOI document should have specified a budget or any particular figure, or provided information that would have prevented the competitive process from managing price effectively.” She goes on to make some suggestions in terms of what could have been said instead of what was said, but in no way was it suggested that the Government should say that there was no money for the centre.
Dr Russel Norman: I raise a point of order, Mr Speaker. I was asking why the Minister took the view that the expressions of interest document went public without the key criterion in it. The Minister told us about what the Deputy Auditor-General thought. That is fine, but I am interested in what the Minister thinks.
Mr SPEAKER: I think that is a fair point.
Hon STEVEN JOYCE: I think it is safe to say to the member that the Government took a similar view. It was not sure who would come up with what. The Government said that it would welcome creative ideas and suggestions as to how the construction and operation of an international-standard convention centre could be funded. As I said, the Deputy Auditor-General, while saying that it could perhaps have been a little more explicit in a couple of areas, was not suggesting that the expressions of interest document suggest that there would be no funding.
Dr Russel Norman: Why did Ministers tell Skycity, and Skycity alone, in October 2009 and again in March 2010 that a mandatory criterion for a successful convention centre bid was that the Government would not have to provide funding for any capital costs, yet the expressions of interest document issued by his department 6 months later did not include this critical piece of information?
Hon STEVEN JOYCE: In fact, I do not think the member is right in his use of words and the way they are phrased. The reality was that the Government considered its position and decided that the best approach was to put out an expressions of interest document, call for creative and innovative ways of funding a convention centre, and be prepared to accept and look at any proposals. But it also made very clear—and, in fact, Mr Brownlee, I understand, made clear at the time—to prospective bidders that the Government was very cash-strapped and did not have much money, so obviously not putting a huge amount of money on the table was very important from the Government’s perspective.
Dr Russel Norman: Does he accept that it was a fundamentally non-transparent and non - even-handed process, as the Deputy Auditor-General found, because one of the bidders, Skycity, was aware that it was a fundamental criterion that there should be no capital funding from the Government, but the other bidders were not aware that that was a fundamental criterion of a successful bid?
Hon STEVEN JOYCE: The member is creating a straw man at least twice in that particular question, by suggesting something that I have not seen the Deputy Auditor-General to have said and suggesting the Government said something that I have also not seen that the Government said, and then asking whether that was a major problem. The reality is that the premise and the way that the member describes the process are incorrect.
Dr Russel Norman: Well then, is the Deputy Auditor-General creating a straw person when she said “one potential submitter”—that is, Skycity—“had a clearer understanding of the actual position on a critical issue … than … other potential submitters.”, and that critical issue was the issue of whether the Government was going to provide any funding for capital costs?
Hon STEVEN JOYCE: I would be appreciative of the member referring to where that is said in the report. What I can say to the member in relation to the expressions of interest process is that the Deputy Auditor-General said that the consequences of the flaws in the expressions of interest document were relatively minor. Again, she felt there should have been more planning done in terms of the process, but, actually, the suggestion she made in terms of the expressions of interest document in relation to cost were actually not hugely different from what the Government did in the initial phase.
Dr Russel Norman: I raise a point of order, Mr Speaker. In light of the Minister’s request that I point to where that comes from, I seek to table one paragraph from the report, which is 4.61, where the Deputy Auditor-General says—
Mr SPEAKER: Order! The report is publicly available. It has been studied by many members.
Dr Russel Norman: When will the Minister read paragraph 4.61 of the Deputy Auditor-General’s report, where the Deputy Auditor-General says “the result was that one potential submitter had a clearer understanding of the actual position on a critical issue—that the Government did not want to fund any capital costs—than any other potential submitters.”—that is, that it was a fundamentally unbalanced, uneven, and non-transparent process?
Hon STEVEN JOYCE: If the member reads out something from the report, I am happy to read the rest of that paragraph, particularly one sentence that I think is important. The Deputy Auditor-General then said “We accept that it is unlikely that this … made [any] material difference to the outcome.” This is the problem. The Opposition members, firstly, try to completely rubbish the process and put words in the Deputy Auditor-General’s mouth that are not actually there. The second thing underlying all of this is their absolute distaste for anything that the Government does to increase economic growth in this country.
Dr Russel Norman: Does he accept that the Ministers who had personally spelt out to Skycity that the Government’s bottom line was that it would not stump up any money for capital costs had a fundamental responsibility to ensure that the other bidders for the convention centre were also aware of this bottom line, because the Deputy Auditor-General is very clear that the other bidders were not aware of it?
Hon STEVEN JOYCE: I just reject the characterisation in the member’s question. He constantly does this. He says “This is what the Government said.” when it is actually patently not what the Government said, and then asks whether we regret that or should stop doing that, and tries to get us to actually respond to that. I reject the premise in his question.
Dr Russel Norman: Is it just a coincidence that out of the dozens and dozens of tendering and evaluation processes run by the Ministry of Economic Development, the only one that has been found by the Deputy Auditor-General to be not transparent or even-handed is the process kick-started and personally overseen by John Key?
Hon STEVEN JOYCE: Again, the member is seeking to smear the Prime Minister in that regard—[Interruption] He is, because the Deputy Auditor-General herself said that there was no concerns about the stage of the process where the Prime Minister was involved in having preliminary discussions with Skycity. The criticisms were in relation to the procedural matters of the expressions of interest. Frankly, the member is grasping at straws.
Dr Russel Norman: Is he aware that the definition of crony capitalism is an economy where success in business depends on close relationships between business people and Government officials, and, if we are to avoid falling into that trap, it is critical that the process is properly followed by the Government, and the Auditor-General was very clear that the evaluation process in this case was not balanced, even-handed, or transparent?
Hon STEVEN JOYCE: I accept that the definition of Green capitalism is only something when you can be subsidised by the Government.
Health and Safety, Workplace—Establishment of Stand-alone Agency
8. CHRIS AUCHINVOLE (National) to the Minister of Labour: What progress can he report on the Government’s Pike River Implementation Plan?
Hon SIMON BRIDGES (Minister of Labour): Earlier today I announced the creation of a new Crown agent. This was one of the main recommendations of the Pike River royal commission and was supported by the Independent Taskforce on Workplace Health and Safety. The workplace health and safety functions that currently sit within the Ministry of Business, Innovation and Employment will transfer to the new agency. We plan to introduce legislation to establish the Crown agent in June, with the agency expected to be in place by the end of the year.
Chris Auchinvole: How will the Crown agent fit with the wider health and safety reform programme?
Hon SIMON BRIDGES: The establishment of a Crown agent is a significant part of the Government’s reform programme and shows our strong commitment to addressing New Zealand’s unacceptable health and safety record. It will have a dedicated focus on workplace health and safety, and will enforce relevant regulations.
Andrew Little: Why don’t you say sorry?
Hon SIMON BRIDGES: If the member has got something to say, why does he not ask a question after? Further reform of our health and safety system—
Mr SPEAKER: Order! It shows the difficulty of members interjecting. Would the Minister answer the question.
Hon SIMON BRIDGES: Further reform of our health and safety system will be announced after the Government considers the bulk of the recommendations of the independent health and safety task force, which are due in April. Indeed, these reforms are on top of our Pike River Implementation Plan, which we will carry out this year.
Dairy Industry—Overseas Investment
9. BRENDAN HORAN (Independent) to the Minister for Primary Industries: Does he support new foreign investment in the New Zealand dairy sector?
Hon JO GOODHEW (Associate Minister for Primary Industries) on behalf of the Minister for Primary Industries: Yes. This Government has a goal of increasing exports as a percentage of GDP, from 30 percent to 40 percent by 2025. Increased investment into our primary industries will be crucial for this to happen. This investment will need to come from people overseas, as well as from New Zealanders—
Brendan Horan: I raise a point of order, Mr Speaker. A simple yes or no would have sufficed.
Mr SPEAKER: And I accept it would have, but the Minister is attempting to give more information to the member, and I would have thought the member would be grateful for that. Has the member got a supplementary question?
Brendan Horan: What proportion of foreign ownership does the Minister think is desirable within the New Zealand dairy industry?
Hon JO GOODHEW: I am not going to give you an absolute answer, because I am not briefed on any statements that the Minister has made about aspiration. But what I will say to the member is that currently foreign ownership of farms in New Zealand is at a percentage in the order of 1 percent. However, the outrage we hear seems a little beyond that percentage.
Brendan Horan: Given that response, does the Minister think that it is a good idea that foreigners own over 40 percent of Fonterra’s derivative shares?
Hon JO GOODHEW: Fonterra asked the Government for the ability to raise the external capital, in the form of Trading Among Farmers. The Government passed legislation last year that enabled it. It has its own constitutional limits around how large the Trading Among Farmers fund is, and the fund investors have no voting rights.
Better Public Services Targets—Infant Immunisation Rates and Initiatives
10. Dr JACKIE BLUE (National) to the Minister of Health: What reports has he received on the Government’s Better Public Service target for immunisation?
Hon TONY RYALL (Minister of Health): The latest national health targets will be published next week, and they will show that we finished last year with 89 percent of 8-month-olds in New Zealand completing their first three courses of immunisation on time. This exceeds the national health target for immunisation. We were aiming to have 85 percent of our 8-month-olds completing their first three immunisations by July of this year, so we are 6 months ahead. This is really a testament to the hard work of our front-line immunisation teams, who have taken our country from having one of the lowest immunisation rates in the world to having one of the highest, in the past 4 years.
Dr Jackie Blue: What initiatives have contributed to achieving this national health target?
Hon TONY RYALL: The Government has, for example, introduced automatic enrolment, so when babies are born they are now automatically enrolled in a general practice, and we have also taken several additional steps to assist preventing whooping cough, making the vaccine available to pregnant mothers and also to front-line health workers. That has been free since 2009. What we know is that 70 percent of babies who contract whooping cough in the first few weeks of life catch it from their parents or other close family members, and what we know is that if kids begin their immunisations on time, this significantly increases the likelihood that they will receive all their childhood vaccinations.
Teachers and Support Staff, Payroll—Measures to Address Issues Arising from Problems with Novopay System
11. CHRIS HIPKINS (Labour—Rimutaka) to the Minister responsible for Novopay: What steps, if any, has he taken to ensure that individuals and schools are not financially disadvantaged as a result of the Novopay debacle?
Hon STEVEN JOYCE (Minister responsible for Novopay): Where a school employee has not been paid there are two or three courses of action that could be taken. Firstly, the employee contacts their school administrator who contacts Talent2 for it to be rectified, or the school may make a direct payment to the staff member for which the school is later reimbursed, or the Ministry of Education is able to make a direct payment to any school employee. If any employee is charged any fees in relation to non-payment, the ministry will reimburse that employee. The wider question of course, and a very important question, is whether the work is being done to remediate the situation so these underpayments and non-payments stop occurring. We have instituted, with the help of the ministry and the acting Secretary for Education, a range of measures in that regard.
Chris Hipkins: Will employees who have had KiwiSaver or other superannuation contributions deducted from their salaries but not paid over to their scheme provider be compensated for lost returns that would otherwise have accrued, and if not, why not?
Hon STEVEN JOYCE: My understanding is that yes, they will be made good in those regards.
Chris Hipkins: Has he asked for or received any advice on whether the Government as the employer or Novopay as the overall payroll provider are in breach of their obligations under tax and KiwiSaver legislation as a result of non-payment of an employee’s contributions to their savings providers; if not, why not?
Hon STEVEN JOYCE: I have received some advice from the Inland Revenue Department in regards to the payment of PAYE and so on. I cannot recall exactly what that covered at this point in relation to the matters that the member raises. It is obviously crucially important that those people are looked after, and that things are made good. There is a lot of work going on to make sure that is the case.
Chris Hipkins: What steps is the Minister taking to ensure that KiwiSaver and other savings contributions that have been deducted from people’s salaries but not paid to their savings providers are paid to their savings providers, and when does he expect that to be sorted out?
Hon STEVEN JOYCE: The ministry and Talent2 are working through a process at this time to catch up with the issues that have led to the matters that the member raises. A schedule is provided to the Inland Revenue Department on a monthly basis. That can be updated and corrected. They are working back from the current month. That is the process they are going through. I would state again for those who are affected that it is not satisfactory at all. We are working very hard, and the ministry staff and the Talent2 staff are working hard, on catching up on those issues. But it is taking too much time, and we are continuing to work on it.
Civil Defence Emergency Management System—Response to February 2013 Tsunami Threat
12. KANWALJIT SINGH BAKSHI (National) to the Minister of Civil Defence: What advice has she received regarding the response of the New Zealand Civil Defence Emergency Management system to the 6 February 2013 tsunami threat?
Hon NIKKI KAYE (Minister of Civil Defence): I was very pleased to see firsthand the response from agencies involved in the civil defence emergency management system. I had the opportunity to be at the National Crisis Management Centre on 6 February. I want to thank all the local civil defence agencies for their prudent approach and swift response to the tsunami threat.
Kanwaljit Singh Bakshi: What key message does she believe should be taken away from this response?
Hon NIKKI KAYE: Firstly, it is very important that New Zealanders heed the warnings provided by the New Zealand civil defence emergency management. Secondly, New Zealanders should be aware that local civil defence agencies have the most relevant knowledge of hazards and conditions in specific areas and that this knowledge is used to ensure that all our citizens are kept safe.
Point of Order—Amended Answers
Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. I deliberately left this until the end of question. It is to ask you whether the obligation to correct an answer when the Minister becomes aware that it is incorrect flows to people who are acting for that Minister. It has been widely reported that the Prime Minister has indicated that he misled the House yesterday on the Television New Zealand matter. I wonder whether either the Deputy Prime Minister or the Minister acting for the Prime Minister is going to correct that answer now.
Mr SPEAKER: I am advised that a correction to an answer can only be taken by a personal explanation by leave by that particular Minister or Prime Minister. He is not here today, so his opportunity, if he wishes to do so, would be next question time.
Bills
Privacy Amendment Bill
Tax Administration Amendment Bill
Births, Deaths, Marriages, and Relationships Registration Amendment Bill
Third Readings
Hon CHESTER BORROWS (Acting Minister of Justice): I move, That the Privacy Amendment Bill, the Tax Administration Amendment Bill, and the Births, Deaths, Marriages, and Relationships Registration Amendment Bill be now read a third time. The aims of the Privacy Amendment Bill, the Tax Administration Amendment Bill, and the Births, Deaths, Marriages, and Relationships Bill are to facilitate better public services and improve the way personal information is collected, stored, and used to help people. The bills balance the need for better information-sharing with the need to protect individual privacy.
The Privacy Amendment Bill does two things—
Hon Trevor Mallard: “Pri-vicy” or “pry-vacy”, which?
Hon CHESTER BORROWS: —choose—but basically it is fairly basic. The Privacy Amendment Bill does two things. Firstly, it removes the need for a serious threat to public health or safety, or to the life or health of an individual, to be imminent. The Privacy Act’s information privacy principles will be amended to allow agencies to share information at an earlier stage in these cases.
Secondly, the bill sets out in the Privacy Act a process for drawing up information-sharing agreements that can be approved by Orders in Council. The Orders in Council enable the agreements to be used to share information outside of the Privacy Act’s information privacy principles for specified public purposes. One party to an approved information-sharing agreement must be a Government department. Private sector agencies can also be parties to an agreement, provided they are delivering a public service. Agreements will remove existing barriers to information flow and clarify when information can be shared.
I acknowledge the important contribution made to the bill by submitters, the Law Commission, and the Privacy Commissioner. The bill has the support of the “Pry-vacy” Commissioner and the “Pri-vacy” Commissioner! The commissioner noted in her submission to the Justice and Electoral Committee that the bill is a fine balance between providing flexibility and ensuring that privacy considerations are given due weight. The Justice and Electoral Committee made some excellent suggestions to improve the bill. These were taken up by this House during the Committee of the whole House stage, and the bill emerged from the Committee reordered and easier to navigate. It is also clearer.
Among other things, the bill now requires that the approved information-sharing agreements specify their purpose with due particularity. The bill also clarifies that the costs to be considered by a Minister in a cost-benefit analysis are broader than pure financial costs. Costs must be outweighed by benefits before a Minister can recommend that an information-sharing agreement be approved. The operation of approved information-sharing agreements will be supported by the Ministry of Justice and the Privacy Commissioner. The Ministry of Justice is developing guidance material to assist in drawing up effective and efficient approved information-sharing agreements. The Privacy Commissioner will have an important oversight and advice role in ensuring that approved information-sharing agreements function as intended.
I will mention Supplementary Order Paper 172 from Denis O’Rourke, which proposed that the bill require the Children’s Commissioner to be consulted on every information-sharing agreement. The Government did not support this Supplementary Order Paper. The bill does allow the Children’s Commissioner to be consulted over an information-sharing agreement where the interests of children are relevant. I have instructed my officials to be clear in the guidance material that parties to the agreement should consider whether it is desirable to consult with the Children’s Commissioner.
The Tax Administration Amendment Bill will amend the Tax Administration Act so that the Inland Revenue Department can share information with other Public Service providers more effectively and efficiently.
The Births, Deaths, Marriages, and Relationships Registration Amendment Bill will allow the Department of Internal Affairs to use information-sharing agreements to share births, deaths, marriages, and relationship information. This enables a recommendation of the person A ministerial inquiry to be implemented. Teachers whose history of offending has been hidden by changes to their names will be able to be picked up.
These bills will improve public services and unblock the flow of vital information. At the same time, they will give due weight to individual privacy, and there is a range of protections and safeguards to ensure that the balance is maintained in the use of information. I commend these bills to the House.
CLARE CURRAN (Labour—Dunedin South): I am pleased to take a call on the third reading of the Privacy Amendment Bill. I think it is important to take ourselves back to where this legislation came from, the intent that supposedly lay behind it, and whether or not that intent has been fulfilled.
I would like to draw the House’s attention to the Law Commission’s report on privacy—which was undertaken, I think, from around 2006 or 2007 to 2011—and the enormous issues underlying it, and the need for reform. I would just like to draw attention to some of the benefits and risks that were drawn out in that report, which was ultimately provided to the Minister, specifically around information sharing. It said that “Information sharing has obvious benefits.”, that “Individuals are relieved of the need to supply the same information to several agencies.”, and that “The agencies can work together to see and understand the individual’s problems in their whole context, instead of each agency seeing only through its own narrowly focused lens.”
It also said in that advice: “However the risks of sharing can be considerable and need to be carefully managed. There are significant implications for individual privacy. Sharing, in fact, runs counter to two fundamental principles of the Privacy Act: that personal information should only be collected from the individual concerned, and that information collected for one purpose should not be used for another. Moreover, if information is inaccurate the error will appear in multiple databases, making it more difficult to correct. It may be difficult for individuals to find out exactly where their information is held so that they can take steps to ensure that it is corrected.” And it also said that “Some of the information shared can be particularly sensitive … Failures of security, the use of inaccurate information, and the use of information in ways which are not anticipated by the individual, can lead to loss of trust in government.”
When the Law Commission made its report to the Minister it said: “we are of the view that reform is required … Our aim is to identify a way to facilitate appropriate public sector information sharing within a framework of openness, transparency and accountability, which accords appropriate weight to privacy values.” That report contained 136 recommendations—136 recommendations—and some of them extremely important recommendations. They included giving the Privacy Commissioner a binding power of decision on complaints about people’s rights to access their own information. Anybody who has made a complaint knows that it is very difficult, it takes a long time, and, in the end, the commissioner herself does not have the power of decision. The other thing that it recommended was that people should be notified when their personal information held by an agency was lost or otherwise compromised—for example, through computer hacking—if the breach is sufficiently serious.
There is nothing in this bill today on either of those two seriously important and very current issues. Instead, what we saw was two recommendations of the Law Commission taken up—two. There were 136 recommendations made; two have been taken up. The concern is what will happen to the rest of them. Will they languish? It is so important when discussing this legislation that is before the House today, which is about to be passed, that the question is asked of the Minister: what will happen to the rest of those recommendations? In her first reading speech the Minister of Justice said quite clearly that “the Government will respond in due course.” This legislation was first read in the House some time last year. We are now at the third reading and there has been no report back to the House on how the Minister plans to treat the rest of these recommendations. That is a critically important point.
Another important point to make in this third reading is about the cherry-picking that has been undertaken around these few recommendations that have been brought in this legislation to the House—how the Government has chosen to deal with that Law Commission report. The concern is that it may do the same, and it appears it will do the same, with another report by the Law Commission around the reforms that are required and needed to the Official Information Act. That is another point that I want to make extremely seriously to the House today. Cherry-picking from a serious piece of work undertaken by the Law Commission—to pick out just a few things that suit the Government of the day—is just simply not good enough by a Government that is supposedly serious about openness, transparency, accountability, and building public trust. That is what this piece of legislation before us today on privacy and information sharing is ultimately about. It is about bringing up to date an Act that needed to be brought up to date, the Privacy Act, but also it is about seriously reforming the practices of Government agencies, about how information is shared, and about how the right to privacy of individual citizens is treated in this country. Unfortunately, the opportunity to undertake a seriously important piece of reform has been dropped and lost, and we have to ask what is going to happen in the future. With the Official Information Act reform, we have equal concerns about how that may be dealt with.
These issues are current. They are absolutely current and they are absolutely important. We are seeing thousands of breaches of people’s privacy every day, particularly through electronic means. We are not seeing in this piece of legislation a comprehensive measure—or, really, any kind of measure—to address that, to take it seriously, and to look at the underlying reasons why those data breaches are occurring, and why so many people’s information is being shared in ways that are inappropriate, damaging, and deeply distressing to them. We have heard example after example after example with the Ministry of Social Development, through Work and Income, and the information that was made available through hacking into the kiosks; through ACC; through the Inland Revenue Department; through the Department of Immigration; and through countless other agencies and departments across our land. It is absolutely critical that the people of New Zealand, who currently do not feel assured that their data is secure, can be reassured that this Government takes it seriously. There is before this House a member’s bill that calls for a special inquiry into these breaches. Given the failure of this bill to address this issue, despite the fact that it could have—there was the opportunity to do it—given that lack, and given the ongoing seriousness of this issue, I hope that this House will treat that bill with the seriousness it deserves.
TIM MACINDOE (National—Hamilton West): I am also pleased to take a call in this third reading debate on the bills arising from the Privacy (Information Sharing) Bill. Members will recall that I chaired the Justice and Electoral Committee as we considered submissions and prepared our report on the bill to the House last year. I want to thank the submitters who contributed to this important process. I also want to thank the officials, who provided us with valuable guidance. I want to take this opportunity to wish my successor, Scott Simpson, well as he assumes the role of chair of the Justice and Electoral Committee. I know he will do an excellent job.
I also want to acknowledge Labour’s current spokesman on justice, Charles Chauvel, and wish him well as he prepares to leave this House and take up his new position with the United Nations. Mr Chauvel and I were on the Regulations Review Committee in the previous Parliament, when he was chair and I was deputy chair, and, in this Parliament, while I have been chairing the Justice and Electoral Committee he has been Labour’s lead justice spokesman. I consider that despite our political differences he and I have always worked very well together. I therefore genuinely wish him well and I thank him for the assistance he has given me. I seem to follow Mr Chauvel in every debate in which we have both spoken in the current Parliament. So I am a little bit worried about where I will get my cue from from now on. I am obviously going to have to have my wits about me to know when to take a call. Perhaps I will have to ask the new junior Government whip to ensure that I am alert, including stopping me from moving procedural motions in the wrong debate in the House.
As this is a third reading debate, and for the benefit of those who may be listening and have a strong interest in this measure, I would like to reiterate the background and the purpose of the original bill. The Privacy (Information Sharing) Bill aimed to improve rules around the collection, storage, and use of personal information while making sure there are safeguards to protect an individual’s right to privacy. That is a hugely important balance to strike, and in this era, as information technology, communications, gadgets, and all sorts of other things make the sharing of information—frequently through social media and also other, more formal means, an absolutely day-to-day occurrence—we have to ensure we do get it right.
Members will know that one of National’s key priorities is to deliver high-quality, modern public services for all New Zealanders, and this measure is absolutely part and parcel of achieving that goal. It supports better public services by providing a new mechanism to share personal information more effectively and with more certainty.
I am pleased to reassure Ms Curran, who spoke before me, that the remainder of the Law Commission’s recommendations for changes to the Privacy Act are indeed being considered by the Government with a view to updating this important legislation. We need to improve the way personal information is collected, stored, and used to help people. The bills that the Associate Minister has moved and spoken about this afternoon balance the need for better information-sharing with the need to protect individual privacy. The information-sharing aspect of privacy reform was fast tracked ahead of other privacy work because of its potential to help vulnerable people, including children. Of course, one of the Government’s core focuses at the moment is on better protection for vulnerable children in our communities.
Information sharing has major benefits in allowing agencies to see all sides of an individual’s case, rather than just through their narrow lens. By sharing personal information, agencies can work together to examine and understand customer needs as a whole, instead of each agency viewing them through its own lens. It is another important way of stopping that problem of the nine cars all parked up the one driveway. Instead, here we have a far more coordinated approach. The legislation improves the sharing of personal information between agencies. This is a direct response to the Law Commission’s review of the Privacy Act in relation to this all-important area of our law.
The legislation is also expected to save information-handling costs across government, so it is another part of meeting the need for greater efficiency, to ensure that we are spending the taxpayer dollar wisely.
For individuals, information sharing can relieve them of the need to supply the same information to several agencies. It will enable integrated assistance—for example, for a family that requires a complex and integrated response from a range of agencies. This leads to significant service benefits and improved outcomes for individuals, reductions in information-handling costs across Government, and efficiency gains in service delivery. This could benefit programmes such as ServiceLink and Whānau Ora, where iwi and Government service providers could use agreements to give each other a better picture of what services are and are not being provided. Across the public sector, agencies are rethinking the way they deliver services and undertake their business, which includes reviewing the way information is used.
This legislation allows agencies to share personal information at an earlier stage when it is deemed there is a serious threat to public health or safety, or to the life or health of an individual. The Law Commission recommended removing “imminent” from this test, to assist agencies that feel they cannot release information where there is a threat that is real but not immediate. We have done that in this legislation. It has all sorts of admirable qualities. It is an important area of law, and I am very pleased to see it going through to its enactment today.
ANDREW LITTLE (Labour): It is a pleasure to take another call on the bills that come from the Privacy (Information Sharing) Bill, now several pieces of legislation. One might say that in the absence of comprehensive adoption of the Law Commission’s report on privacy and proposed privacy changes, what we have before us now in this third reading debate is a gallimaufry of legislation dealing with the issue.
This legislation does three things of considerable importance. One change is to relax the protections in the existing Privacy Act in relation to privacy principles 10 and 11. Mr Macindoe, the last speaker, alluded to the fact that what was a protection for agencies to release information in the event that there was a “serious and imminent threat to public health or safety” has been watered down to just a “serious threat to public health or safety”. I will come back to the significance of that. Although Labour is supporting this legislation, nevertheless the record should show that there remain some concerns. In the event that a future Privacy Commissioner or a court should come to consider these words, then let the record show that this House has expressed some concerns about the legislation, even as it stands.
The second change is to create and allow for privacy sharing agreements between agencies, and not just public agencies but private ones as well—private agencies that are dealing with public work, if you like, and operating in the public arena. The third significant change that I want to draw the House’s attention to that relates to privacy sharing agreements is that although the privacy sharing agreements are done by Order in Council, and therefore there is a record of them and it is possible to get access to them, they can be amended, without referral back to any of the parties and without going through a public process, simply by Order in Council. That is another point to draw attention to as something that we need to be alert to, because it carries the potential for abuse or for further erosion of the rights to privacy that we have all come to expect under the Privacy Act.
In relation to privacy sharing agreements, the point is—it has been made before and I will make it again—that in this day and age, in the modern State, citizens operating in the modern State must surrender an enormous amount of personal information to the State. We accept that, in order to get the benefits of the State, whether through protection, whether through entitlements and benefits, or for whatever reason. But we do release an enormous amount of information to the State. If there is one thing that people want to have control over, and want to make sure is secure and is protected, it is information about themselves. It goes to their identity; it is about who they are. They want to know to whom it has gone and for what reason. They want to be assured that it is going to be used for the right reasons. They want to have some control over it.
The Privacy Act was a very good way of putting a stake in the ground, because we never had a developed common law of privacy. Even in other legal jurisdictions more mature than ours, their common law privacy rights were developed in fits and starts and lurches, rather than in one coherent stream. We enacted the Privacy Act, which set a stake in the ground. That was very good. It was very important that people could understand that they could exercise control over the information that they surrendered to public and private organisations.
Now we are doing something else. We are, in effect, relaxing those protections. So, naturally, every citizen wishes to proceed cautiously and carefully, as, indeed, I think the House has done by and large with this legislation. But when it comes to information sharing between agencies, particularly State agencies, then we want to be clear that there are good safeguards around that. Those safeguards include that there is to be a deliberative process, that the agreement is, obviously, to be kept in writing—recorded and kept by whichever lead agency is in control—and that people can have access to it. But it still raises the risk that people might give up information about themselves to an agency, in order to get access to its support or services or some sort of entitlement, and that information could find its way, wrongly disclosed, to another agency. Or it might be that a zealous official misinterprets the extent of a privacy sharing agreement and releases information in the mistaken belief that it is covered by the privacy sharing agreement. That means that the oversight of these sorts of processes needs to be very thorough.
If there is one thing that we have learnt in the last year—in 2012, the year of the privacy breach in the New Zealand bureaucracy—it is that our oversight and enforcement need to be up to scratch and up to the mark. I am not 100 percent confident that they are. We can do better. If you have a look at the breaches, I think that most of the breaches of privacy that we saw in 2012 were accidental. They were from public servants who were harried, overworked, stressed for whatever reason, and not exercising due care and diligence, and they allowed information to be wrongly disclosed. In some cases, they were risks of breach of privacy that were known in advance, but no action was taken. That particularly applies in the case of Work and Income. But it highlights the anxiety and the reason why people have anxiety about the information they give to the Government, and therefore why the processes we have for dealing with information, managing personal information, and now disclosing information between agencies in a more streamlined way need to be very clear. The processes around those things—those mechanisms—need to be well understood, clear, and followed absolutely to the letter of the law, and there needs to be good oversight and control of them.
So the Office of the Privacy Commissioner becomes even more important. If there is one thing that we now should rightfully expect to see, it is a beefing up of the Office of the Privacy Commissioner, because my observation is that in response to the privacy breaches that we saw last year, that office struggled to deal with the complaints and to come to grips, in some cases, with the magnitude of the complaints and the seriousness of them. A lot of people were left with a very sour taste in their mouths about the way their privacy complaints had been handled by that office. I do not blame that office—it is in a difficult position—but it needs some assistance and support if it is to come to grips now with overseeing what could be very extensive, very comprehensive, and very important agreements between public agencies. People are entitled to that assurance. They are entitled to know that in this new age, in this electronic age, where information can be disclosed very easily and very quickly, there are proper safeguards around that information, and that they have a place to go that they know will be responsive to their concerns and, if they have complaints, can respond effectively and with alacrity to their complaints and their issues.
So although Labour supports this legislation and we will be voting for it, let us not avoid the reality that there are ongoing concerns and anxieties about the way personal information is managed by the public sector in its engagement with the private sector, and that this legislation, although it has the potential to do many good things and be very helpful and allow streamlining of processes between Government departments, also has the power to magnify and exacerbate the risk of breaches of information. So the safeguards must be absolutely second to none, and the oversight by the Office of the Privacy Commissioner must be the best that it possibly can be.
DAVID CLENDON (Green): Kia ora. The Privacy (Information Sharing) Bill was one that the Green Party would have liked to support. We looked very carefully at the original drafting of the bill. We made another decision after the Justice and Electoral Committee had done its work. As much as we might wish to we cannot support this legislation, for a number of reasons. We recognise that the Government, the State, holds a great deal of information about people, and we do not think for a moment that the regulations, the boundaries, around information sharing are quite right yet. For example, I believe that there are difficulties between the District Court and the Family Court around some information that they may not share, which is not helpful in some specific cases. I think there is a degree of public concern that information about children held by schools or other agencies may not be available to their parents, and at times that is not helpful. So we do see that there is a need to address some of these issues, but, sadly, this bill does not do it.
My colleague Jan Logie in an earlier reading—the second reading, I think—made the point that this is the fourth piece of legislation with significant privacy aspects to it that we have seen through the House in the last 12 months or so. That would indicate to us that what is actually called for is a major overhaul along the lines of the Law Commission’s proposition that we do need to take a step back and restructure the privacy laws. This sort of meddling, these incremental changes around the edges, are not actually serving the purpose. They are not achieving the goals.
We have seen in the last 12 months—as a number of speakers have mentioned—some major failures of privacy. People’s information has been released inappropriately by the Inland Revenue Department, ACC, Work and Income, the Ministry of Justice, Immigration New Zealand—the list goes on. This does not give us any confidence that when we add another layer, when we open more potential for information sharing, it will be protected adequately—that there are sufficient protections in place.
Technology has been mentioned, and, clearly, modern technology enables us to acquire, retain, manage, manipulate, and analyse massive amounts of information—much more than was the case previously. Again, that creates opportunities for things to go wrong, either through malice or simply through human error. Occasionally, of course, the mistakes are purely through human error—people getting it wrong. The previous speaker, Mr Little, alluded to the fact as well that in the Public Service there are some very busy, overworked people, so these errors are more likely to occur.
It is interesting in that context that we are told that the key purpose of this legislation is to facilitate public services in line with this Government’s programme of delivering Better Public Services—with capital letters to tell us how important it is to the Government. The Prime Minister last year said that this delivery of Better Public Services was all about being “innovative, enterprising, driven, and focused on results”. Sadly, those of us who talk to people in the public sector, who understand what actually is going on in the public sector, know that the most innovative people in the Public Service are desperately trying to apply that innovation to try to do more with less. They are trying to do their jobs well, despite cost cutting, despite the removal of resources.
Sadly, some of the most enterprising of our public servants have simply given up the fight and gone off to work in the private sector. They have seen there is no future in amongst the constant cost cutting and the other winding back of the public sector. I think many of them are nearly driven to drink by the constant restructuring of the Public Service, the constant re-amalgamations and splittings, and the shuffling of the deckchairs around the place, none of which is helpful. Focusing on results, sadly, is too often a tick-box mentality. This is not what we want in our public sector. Putting the words “facilitating public service” into a piece of legislation does not make that achievable unless you actually resource that Public Service, unless you give it the means to protect people’s information and to protect people’s privacy, and unless we can retain good people who can make the good value and judgment calls about the sharing of information in the way that is appropriate and that we would like to see achieved.
So one particular issue about this legislation that we have been concerned and continue to be concerned about is the empowering of the executive to create these information-sharing agreements by regulation. This, to us, creates a possibility that you could see agreements formed that are outside, certainly, the spirit of the Privacy Act, if not outside the letter of it. It gives the public less reason rather than more to be confident that the integrity of their information will be retained, that information will be used only appropriately, for the right reasons, and by the right people.
Scrutiny of the agreement—again, we are told that copies of any of these agreements will be available on websites or at the office of the lead agencies. That is, again, not a particularly forceful or innovative way of making information available to people. There are such people as those who do not have access to the internet. Not many people routinely trawl the websites of Government departments or, indeed, attend the offices of major Government agencies. We simply do not see that people will actually be adequately informed or have the opportunity to know which agencies are sharing what information that may affect their lives, their businesses, their families, or whatever it may be. We simply do not think that the protections built into here are adequate or sufficient, given the potential for things to go very wrong and the reasonable expectation people have of a very high level of security for their information when they give it to the Government in good faith.
The Law Commission’s landmark report on privacy laws in New Zealand made two key recommendations, neither of which is addressed in this legislation. The first was that the Privacy Commissioner should be able to issue compliance notices to agencies deemed to be in breach of the Privacy Act. That would seem pretty much a bottom line. I suspect many people would expect the commissioner to have that power now—to require compliance where there are breaches. We would expect the commissioner to have some very real teeth, and the Law Commission encouraged us to put such provisions in place. But, sadly, in this legislation, which was the opportunity to do that, there is no such reference, there is no such mechanism, and we continue to have a well-meaning and very capable commissioner, sadly, lacking teeth and lacking the levers and the capacity to actually demand compliance when breaches occur.
The second power the Law Commission suggested that we should give to the commissioner is the power to require an audit of an agency’s practices and systems for handling private information. It seems not unreasonable that we should have that watchdog body to cast an eye over the practice and the systems that are in place within departments. In the absence of such an audit, in the absence of such oversight, and, as I have said, particularly in the context of a very stressed, under-resourced public sector with very low morale, one would expect that there would be that power given to the commissioner to have oversight to ensure that the best practice was actually being applied. There could be considerable positive benefit in that, as well as insisting that no rules were being broken and that nothing was suboptimal. That would be an opportunity as well for the sharing of best practice. Sadly, there seems to be nothing to encourage or facilitate that.
In essence, then, and in summary, I guess we do see, as I said at the beginning, a need to improve our performance, to put in place adequate regulation and protection of people’s information, while at the same time facilitating the sharing of that information in a way that does genuinely enable various Government departments to do their job, which is to serve the interests of New Zealanders. In this legislation, sadly, the balance is far too much to privilege the State, to give much too much capacity and freedom to use information and to share it. There is far too little protection of people, and far too little reassurance that the privacy and the integrity of that information will be maintained. For those reasons, we will not be supporting this bill. Kia ora.
KANWALJIT SINGH BAKSHI (National): I am pleased to stand for the third readings of the bills divided from the Privacy (Information Sharing) Bill. National has identified what matters to its people, and the Government’s priority is to deliver a high quality, modern Public Service for all New Zealanders. The Privacy (Information Sharing) Bill has now been split into three bills, which amend the Privacy Act 1993, the Tax Administration Act 1994, and the Births, Deaths, Marriages, and Relationships Registration Act 1995, to improve Public Service delivery by facilitating information sharing between the agencies.
It is vitally important to safeguard and protect people’s information and their right to privacy. This legislation ensures that better information-sharing across the agencies and the key service providers will protect the elderly and vulnerable people. The most important point is that a new system has been put in place to share personal information efficiently, and that people’s right to privacy is protected. It is very important that the privacy of people is maintained at all stages.
Before I conclude, I would like to thank all the officials who have worked during the process of this bill, and I commend this legislation to the House.
DENIS O’ROURKE (NZ First): New Zealand First supports these three bills, the Privacy Amendment Bill, the Tax Administration Amendment Bill, and the Births, Deaths, Marriages, and Relationships Registration Amendment Bill, and in doing so recognises that the privacy of information is one of the most important issues of today. Many people are rightfully worried about their information and that it should be used correctly by agencies of the State. Therefore, on their behalf, we need to be diligent to make sure that that is the case. New Zealand First supports the legislation, because we think it goes just far enough for those purposes.
The issue, of course, as expected, is the tension between the need for privacy protection and the need for Government agencies to properly share information where that will improve the efficient operation of the Public Service. So it is the propriety of that that is one of the issues, and the second one, of course, is how privacy of information will be adequately protected.
Although the legislation does not go as far as the Law Commission recommended—and I respect the Green Party’s position that it would not support the legislation unless it went that far—I think that, on balance, this legislation has gone just far enough. The Privacy Commissioner having the power to issue compliance notices and do audits, as the Green Party has suggested—and, I think, as the Labour Party wanted as well—would have been an improvement to the legislation, but even without it it is certainly a big improvement on the current situation. So for those reasons I think it should be supported.
I am glad to see that there are two really important aspects of the legislation that do mitigate very much in favour of the protection of personal information. The first is the requirement on agencies to give notice to people where their information is going to be shared. The individual can take action to dispute information to ensure its accuracy, and provided that agencies listen to what those who make use of this right have to say about the accuracy of information, I think that that is a very important right and should work quite well.
The second provision, of course—and it is the big change introduced by this legislation—is the requirement for information-sharing agreements between agencies. Agreements must, under the legislation, specify safeguards for the protection of personal information, and provide for complaints to a Government department. Also, only the necessary information is to be shared by agencies for proper purposes and no more. Agreements must not unreasonably impinge on the privacy of an individual, and agreements will be scrutinised by the Privacy Commissioner to ensure compliance with these important caveats. I think those are the two really important aspects of the legislation that we can rely upon for the protection of personal privacy, and in doing so, of course, we will be relying heavily upon the effectiveness of the Office of the Privacy Commissioner. New Zealand First therefore supports the legislation on the basis of that proper balance between the need for a robust sharing regime on the one hand, and the protection of personal privacy on the other.
I note that the Privacy Commissioner will have three important roles: firstly, in the oversight of the content of agreements and how they will operate; secondly, the commissioner’s reporting functions to the relevant Minister, who, in certain circumstances, must report to Parliament within 5 days; and, thirdly, the commissioner’s consultation responsibilities in the formation of the information-sharing agreements. However, agencies must always remember that they need to take seriously the specified actions to protect personal privacy, not pursue their own interests, and not rely solely on the Privacy Commissioner for those purposes. That is why I think the requirements for agencies to consult on agreements are so important. Agencies must, of course, consult the Privacy Commissioner, but they must also consult any person or organisation representing the class of persons affected and anyone else the agencies think should be consulted.
The Children’s Commissioner is not specified but may still be consulted under the provisions I have mentioned. The interests of children are a very significant issue. Children must be well provided for because those members of our community cannot be expected to look after their own interests and do need special treatment. It is therefore a disappointment that the Government would not support my proposed amendment on Supplementary Order Paper 172 to add the Children’s Commissioner as a mandatory consultee, because the legislation as it is effectively means that it will be the agencies that will decide whether there is a need to consult the Children’s Commissioner, whereas under my amendment it would have been compulsory to consult the Children’s Commissioner, and the Children’s Commissioner could then have decided whether consultation was needed. So it is a disappointment that that, I think, very sensible amendment, which would have been harmless and would not have imposed greatly on the agencies concerned, was not included in the legislation.
It is disappointing also that the Government simply does not listen to good ideas and does not consider them properly. On some occasions Ministers have said in this House of me that I did not go and talk to them about bills. Well, what is the point when they simply do not listen? If they are not going to listen, then I am not going to bother to waste my time with them. If Ministers genuinely do want other people in the House to contribute constructively, there is an obligation on them to genuinely listen to what is said and, where appropriate, to take action. The Minister of Justice did not do so in this case and, clearly, should have done so, and I think she stands indicted for simply not listening. Therefore, what we have is a situation where there is a defect in the legislation that could have been completely avoided simply by making the Children’s Commissioner a mandatory consultee. However, that was not done.
Nevertheless, even with all the various defects in the legislation—and I concur with many of those that other speakers have mentioned, and I too would have liked to see some more action in the enforcement area—with all those defects, warts and all, this legislation is still a considerable improvement on the current situation. For those reasons, New Zealand First will support the legislation.
JAMI-LEE ROSS (National—Botany): I wish to speak only very briefly in support of this legislation. My colleagues Tim Macindoe, Kanwaljit Singh Bakshi, and Minister Chester Borrows have outlined clearly why this legislation is important and is good legislation that is worth supporting. It improves rules around the collection, storage, and use of personal information. I think New Zealanders do expect the Government and this House to take personal and privacy issues very seriously. There are some important safeguards in the legislation, especially around the Privacy Commissioner and ensuring that the Privacy Commissioner plays an important part, especially when information-sharing agreements are being drawn up—the Privacy Commissioner must be consulted. The commissioner may provide a report to the relevant Minister on any privacy-related issues, and the Government does have to take account of that.
I want to speak just very briefly to the comments raised by Denis O’Rourke around the Children’s Commissioner. I was listening very carefully to Minister Borrows when he was speaking in the House, and, essentially, the suggestion put forward by Denis O’Rourke was unnecessary. The legislation already requires agencies developing information-sharing agreements to consult any person they consider represents the interests of a class of affected individuals—in this case, children—so the Children’s Commissioner would be required to be consulted if children are a class of individuals who would be affected by the information-sharing agreement. That is the reason why Supplementary Order Paper 172 from New Zealand First was not accepted. It was not a case of the Minister not listening; it was a case of actually the issues already being covered in the legislation.
It is good legislation and the Government supports it.
Hon TREVOR MALLARD (Labour—Hutt South): It has been pretty rare that I have seen legislation supported with less enthusiasm than by the National Party fourth whip as he has just—
Jami-Lee Ross: Can’t you count to three?
Hon TREVOR MALLARD: Well, I can count a bit better than that member can count, and I think that member knows that. I want to support the Privacy Amendment Bill, the Tax Administration Amendment Bill, and the Births, Deaths, Marriages, and Relationships Registration Amendment Bill, but in doing so I want to say that I regret two things. One is that the full opportunity has been taken to be thorough in the legislation bringing together privacy issues, and to do all the things that could be done when we have legislation with such a wide scope as we have now.
Secondly, I make the pretty basic point that the Privacy Commissioner is already overloaded with work. One has only to ask the question about Minister Judith Collins and the report that is being done—for getting on for a year now—by the Privacy Commissioner into leaks of ACC information. It has not yet been reported publicly or to the House. I do not want to go into the detail of that, because it would not be appropriate at the third reading of this legislation, but it is important that the Privacy Commissioner be properly resourced in order for her to do her job properly and to make the reports for which undertakings were made nearly a year ago that they would be made in a relatively short time.
This Government does not have a good record in the privacy area. I think the standout one, the one that has caused a lot of embarrassment and Ministers to come and go, is the sending of private information to Bronwyn Pullar. It is clear that the protocols that sit within some agencies and the software that sits within some agencies are just not good enough. The idea that in this day and age whole, massive files involving 6,748 people are kept on some spreadsheet that can be attached to a document and sent out is just not acceptable. That clearly has to change. In the Pullar case, of course, not only was the private information sent to Ms Pullar, but her name was then leaked to the media, as well as a lot of the information.
It is not often that I agree with Michelle Boag. In fact, Michelle Boag and I have had a history of disagreeing on lots of issues. But I do accept her statement that when you cannot send a communication to a Government Minister without fearing that the privacy of that communication is going to be breached, that is very, very dangerous. I agree with Ms Boag on that particular comment.
Paula Bennett is someone who has a very poor history around privacy. She released details of women who were receiving a benefit, because they had the temerity to criticise her for pulling up the ladder up which she had already climbed—for denying them the training incentive allowance to further their education. What is worse is that Ms Bennett has not ruled out releasing details again.
The point that I am trying to make is that this Government does not have a good record around privacy. What is important in these matters is that there be trust. Trust in individual Ministers is very important, as well as trust in the institutions that they represent within this Parliament.
The Justice and Electoral Committee did a good job on this legislation. The legislation, in fact, does some things that Mr Borrows himself announced yesterday that the Government was going to do. Maybe he was just re-announcing something that had been announced about 3 years ago and brought into legislation. But the question of information sharing between Work and Income and the Inland Revenue Department is very clearly dealt with in this legislation. In fact, it is dealt with in such detail that as well as the general changes that affect all Government departments, there is a specific third reading that we are dealing with now that goes to the Tax Administration Act 1994. The Tax Administration Amendment Bill does the belt and braces—to borrow the expression from Hekia Parata. What it does is indicate to the Commissioner of Inland Revenue that, notwithstanding the normal secrecy provisions, there are procedures available under this legislation for the commissioner from time to time to supply information that would normally be kept secret, in order to facilitate the stopping of fraud. We had a grandiose announcement yesterday on doing this again. I think what we will find is that when Chester Borrows and his team have a careful look at the legislation that we are passing today, they will find that the additional information-sharing legislation vis-à-vis Work and Income and the Inland Revenue Department is totally unnecessary, because as a result of this legislation they will have that power. I say to members opposite “Good on you.” This is necessary. No one likes people who cheat on their benefits.
But what is also important is that we get some decent information-sharing going, for example, around the contents of trusts and the Inland Revenue Department, and also that we get some decent information-sharing going around the location of where people live and the Parliamentary Service, for example, so we do not have a repeat of the very embarrassing situation that we had involving the Minister of Finance and the lack of clarity as to his place of normal residence. So I think it is important that this information-sharing occurs, not only to get people at the bottom of the heap but also—more important—to get some of the individuals who are responsible for the billion dollars a year of estimated tax evasion in New Zealand.
You know, there is a lot of discussion about the $60 million - odd worth of benefit fraud—and that fraud is wrong—but it pales into insignificance when it is put alongside the billion dollars of tax evasion that this Government seems very reluctant to go after. I do not want to go into a lot of details, but anyone who has a look at the Register of Pecuniary and Other Specified Interests of Members of Parliament and the trusts that are involved in that will see why some members opposite are reluctant to have proper information-sharing, because as a result of that proper information-sharing they would, no doubt, be required to pay more tax. They would be required to do that.
So, in summary, this legislation is OK as far as it goes. It is much better as a result of the work of the Justice and Electoral Committee. It is much improved as a result of the work of the select committee. The Government has missed the boat in doing some more. It has cherry-picked out of the Law Commission recommendations in the privacy area, but what we do need to do is to have proper legislation that does help Public Service efficiency much more than this legislation does. Thank you.
MIKE SABIN (National—Northland): I am pleased to take a call and I just acknowledge the comments from the member who has just resumed his seat, Trevor Mallard, and other contributions. It seems to be that this is fairly well supported legislation arising from the Privacy (Information Sharing) Bill, other than some of the comments we hear coming from the “watermelon patch”, which we have come to expect in this place. This legislation is really about—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. To refer to a member or a group of members as a watermelon patch is clearly out of order and I would hope that you ask the member to withdraw and apologise.
The ASSISTANT SPEAKER (Lindsay Tisch): Well, that phrase has been used on many occasions and the Green Party members, to whom it was directed, did not themselves take offence—
Hon Member: We’ve got thick skins.
The ASSISTANT SPEAKER (Lindsay Tisch): They have got thick skins. So I just ask the member to be careful in his approach, but that phrase has been used.
MIKE SABIN: Certainly. I will not be talking about fruit from that part of the House any longer.
Hon Trevor Mallard: Here go the homophobes.
MIKE SABIN: Settle down, Mr Mallard. Settle down, Mr Mallard, you are chewing up my minute. This legislation is really about achieving the appropriate balance in modernising the way in which agencies are dealing with information and sharing information in a pragmatic—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I did treat it lightly, but I think you know that the expression used is a classic homophobic expression and it should not be used with regard to members in this House.
The ASSISTANT SPEAKER (Lindsay Tisch): I will ask the member just to focus on the speech.
MIKE SABIN: Certainly. In the 20 seconds I have remaining to discuss the legislation, can I just say that what this legislation achieves is the sort of synchronisation of information sharing and exchange of information that will provide members of the public with a modern and pragmatic means for them to do business with Government agencies. With the adequate safeguards in place, I see there being no real challenge in this, which is why we have seen the acceptance across the House, albeit grudgingly. But this is good legislation and I am happy to commend it to the House.
The ASSISTANT SPEAKER (Lindsay Tisch): Is this a split call? I understand it is a split call.
Hon MARYAN STREET (Labour): I rise to speak to the third reading of the legislation before us arising from the Privacy (Information Sharing) Bill. I, like my colleagues before me, have said that Labour will support this group of bills largely because, as far as they go, they are fine and we will not object to them.
But there is a problem remaining, and it is the loss of opportunity to do a comprehensive review of the Privacy Act and privacy laws generally, which the Law Commission review recommended. Here we have a short-term, knee-jerk reaction to some contemporary events with which we are all familiar. The privacy breaches that have occurred under this Government’s watch are now legion. They started, perhaps, with ACC. Other colleagues have referred to the situation that Bronwyn Pullar found herself in, with a great deal of information being released into the public domain; the situation with Paula Bennett and the welfare beneficiaries who decided to criticise her and her use of every lever of State to come crashing down on them; the Inland Revenue Department breaches of privacy; the Work and Income breaches of privacy that meant Keith Ng found it easy to access 7,000 cases from Work and Income through a public kiosk; and now we have the blunder upon blunder within the Novopay debacle. Everybody is familiar with that context, and would wish that the Government would do something comprehensive and significant in order to protect citizens’ privacy.
But the other thing that is important is that we have an efficient and effective public sector. Where there needs to be a transference of information between one Crown agency or ministry and another, then that should be able to happen but with proper safeguards in place. I have no objection to the sharing of information between agencies. That can be a protection for the Crown and a protection for the taxpayer. But it has to be done properly and it has to be done in a way that also balances the right to privacy of citizens in this country. My concern, even though we will support this legislation through its final stage, is that the Government has prioritised this item because of the heat around the issue, without being prepared to do the comprehensive piece of work that was necessary and that was recommended out of the Law Commission’s review of privacy law.
In fact, the Government’s habit of cherry-picking bits and pieces, recommendations that suit it, and leaving recommendations that do not suit it, has come into play here again. As the Government did with the Official Information Act, so it is doing with the privacy legislation—just picking out the bits, a few of the recommendations that suit it to enact, and leaving others. With that, I suppose, reticence around something that is insufficient in this legislation, I will support it. Labour will support it, as far as it goes. Thank you.
GARETH HUGHES (Green): Kia ora, Mr Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to speak on the privacy legislation arising from the Privacy (Information Sharing) Bill. It is an important issue and one that it is urgent our Parliament address. It is a good example of how modern technology and the way our country, our Government, and our politics have changed, and it is important we deal with this privacy issue. It is clear that this country, this Government, has a systemic problem when it comes to dealing with privacy. It is a problem that has been growing, year after year, and it is a problem where we do not see the solutions that are going to be effective at protecting Kiwis’ privacy and protecting their interests. It is important we get this right, and that is why the Greens are opposing this piecemeal piece of legislation.
I am going to take just a short call, after our primary speaker, Jan Logie, to explain why we are opposing this legislation. It is important we get it right, and the Green Party fears we are not getting it right with this legislation. In fact, we fear we are going about it in entirely the wrong way. We are putting the cart before the horse. The stated intention of this legislation is to try to undertake to accomplish the goals of the Government’s Better Public Services. The Government is wanting to cut money from public services, and this is why we are seeing this law.
We are not seeing a law to protect our privacy. We are not seeing a law to strengthen our privacy legislation. We are seeing a law where the Government wants to save a bit of money in the Public Service and it needs to make this consequential change. So we are doing it the wrong way. We should be listening to, and heeding, the call of the Law Commission. We had what was considered a landmark report from the Law Commission. It put a great deal of effort into it, because what we know is that respected bodies like the Privacy Commissioner have said we have a problem.
The Privacy Commissioner has described this year as the year of the privacy breach. So it was good that the Law Commission did a great deal of work on it. But it is ridiculous that in passing information-sharing legislation we are not undertaking the recommendations from that Law Commission report. The Law Commission, in its report, wanted to see a strengthened, enhanced, and more powerful role for the Privacy Commissioner.
I acknowledge that in this piece of legislation we have in front of us there is a consultative role for the Privacy Commissioner, but let us strengthen that role. It is a valuable office, an important one, and we should be empowering it. The Law Commission, in its recommendations, recommended that the Privacy Commissioner and the office should be able to issue compliance notices and undertake an audit of an agency’s practices and systems. Those are two very good recommendations.
I heard the member Maryan Street say that what we should be doing is undertaking a review of the Privacy Act in its totality. We agree entirely because it is important we get this right. It is important we take a substantive, comprehensive overview so we can look at that Law Commission report and discuss an enhanced role for the Privacy Commissioner. But here we are passing piecemeal legislation. There are some positive aspects in it. Others we do not agree with, such as the limited role for the Privacy Commissioner in overseeing it.
The Green Party supports having better public services. We support efficiencies where they are not limiting public services. We support information sharing, and that is why we are supporting common-sense initiatives like the Electronic Identity Verification Act and the igovt system, so we can have easier and more effective engagement with Government departments. But this is not the way to go about it.
I think it is symptomatic that when it comes to privacy Kiwis just cannot trust the Government. They just cannot take it seriously. When you look at the list of the privacy breaches we have seen in our country over the term of the 4 years of the National Government, you see confidential police documents going to other businesses. We see a whole range of breaches, from the Inland Revenue Department to the Ministry of Education’s Novopay. We see Ministers like Hekia Parata breaching privacy in letters.
And then we see the Minister with what has to be the most enviable track record of privacy breaches, possibly, in our modern democracy, the Minister for Social Development, Paula Bennett. Here we see a Minister who is flaunting and breaching privacy. It is not that she is not apologising; it is that she says she will do it again if she feels it is within her political interest, and that is absolutely outrageous. That is why Kiwis do not trust this Government on privacy. That is why we cannot take it seriously. That is why we need to go back and review the Privacy Act, and do it right the first time. That is why the Greens are opposing this legislation today.
LOUISE UPSTON (National—Taupō): I stand to take offence on behalf of the thousands of public servants who every day in this country look after the precious information of New Zealanders. I am objecting to the comments of the speaker who has just resumed his seat, Gareth Hughes, for insulting the work that they do on a daily basis. I disagree that there is a systemic failure in the way that the public’s information is managed. Have we had some issues? Absolutely. Have those issues been fronted? Very much so.
I am very pleased that the Labour Opposition members are supporting this legislation. They can see that it is important to get the balance right in terms of enabling the citizens of New Zealand to interact with our Government agencies in an electronic way—in ways that suit them best. It is important that Government agencies are able to be more agile in dealing with constituents but also have the private information protected and are able to look at some of the issues that we have had and make sure that there are protections in place.
So I am proud of the Government making sure that we do have better public services. I take offence on behalf of the thousands of public servants up and down this country who do the best job they can on a daily basis. I am proud to support this legislation.
A party vote was called for on the question, That the Privacy Amendment Bill, the Tax Administration Amendment Bill, and the Births, Deaths, Marriages, and Relationships Registration Amendment Bill be now read a third time.
Ayes 104
New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 2; ACT New Zealand 1; United Future 1.
Noes 15
Green Party 14; Mana 1.
Bills read a third time.
Bills
International Finance Agreements Amendment Bill
Third Reading
Hon AMY ADAMS (Minister for the Environment) on behalf of the Minister of Finance: I move, That the International Finance Agreements Amendment Bill be now read a third time. Following the first reading the bill was examined by the Finance and Expenditure Committee, which recommended that it be passed with no amendments. The bill amends the International Finance Agreements Act 1961. That Act allows the Government of New Zealand to meet its obligations as a member of various financial institutions, including the International Monetary Fund, the World Bank, and the Asian Development Bank. This bill updates the principal Act so that New Zealand legislation takes account of changes the IMF has made to its articles of agreement. These changes were agreed to by the IMF governors in 2008 and 2010.
New Zealand sees clear value in being a contributing member of the IMF. As a small, open economy we benefit heavily from a stable and prosperous global economy. The IMF supports this by providing a global safety net that can mitigate the effects of financial crises and help support trade and economic activity. The financial commitments that we have made to the IMF are effectively premiums to an insurance policy against damage to our economy from an unstable world. Contributing to the IMF and global financial stability is also important for New Zealand’s international reputation. Supporting the IMF and the work it does places New Zealand alongside countries that we often benchmark ourselves with internationally.
The changes to the articles of agreement reflected in this bill are part of a series of governance reforms the IMF has been undertaking over the past few years. The reforms are designed to enhance the IMF’s legitimacy and effectiveness by ensuring that members’ voting shares and representation reflect their relative economic weight in the global economy. In addition, the IMF has linked the reforms that are incorporated in this bill to quota changes to improve the representation of emerging markets at the IMF, taking account of their increased role in the world economy. The governance reforms also facilitate an agreed change in the membership of the IMF’s executive board. Once these new rules come into effect the five largest IMF members will no longer be able to appoint an executive director, meaning that there will now be an all-elected board.
In addition to updating the principal Act to take account of the IMF reforms, this bill also updates New Zealand’s legislation by repealing some now redundant legislation. The bill also creates a regulation-making power in the principal Act so that future updates to the articles can be made by regulation.
This bill will simplify the process by which New Zealand meets its international obligations. Overall, passing this bill will signal New Zealand’s support for reform, additional resourcing, and better legitimacy in an important international financial institution. I commend the bill to the House.
Hon DAVID PARKER (Labour): The Labour Party will be supporting the International Finance Agreements Amendment Bill, as it has done in prior stages. As the Minister has ably described, New Zealand is proud to be part of the International Monetary Fund and to contribute to the World Bank and the Asian Development Bank. All of these institutions and their forerunners were an outcome of international cooperation following World War II, after which the world came together and said that we need to ensure that we do not make the mistakes that led to World War II and to the rise of fascism and communism, where countries that suffered economic collapse did not have a way of getting out of the downward spiral that they found themselves in. So countries of the world decided that they needed to provide international institutions that could help reconstruct some of the countries that had been so damaged by World War II, and also to provide support for countries that get into terrible trouble in peacetime. It was one of the outcomes of international cooperation that has served the world very well overall since then and has seen a decreasing number of wars, a decreasing proportion of the world living in poverty, and the international community being able to come to the aid of economies that are in dire trouble following collapse.
We have seen the IMF over the years bail out countries as disparate as Asian countries, African countries, European countries, and South American countries, including the likes of Argentina. Were it not for the support that other countries are able to provide through the International Monetary Fund, the troubles that we have seen in those countries would have been more likely to result in civil war within those countries and political instability—the rise of more extreme forms of government, including fascism and communism—not just to the detriment of those populations but to the detriment of world peace and to the detriment of world trade, which we benefit from.
Although this piece of legislation is not the most important that will pass through this House this year, it is appropriate to note the importance of these institutions. The Labour Party is a party that believes in an outward-looking interaction with the rest of the world. We think that it is even more important for small countries than for larger countries that we have these multilateral institutions, and it is important that the Labour Party supports them.
I am surprised that at the prior reading of this bill, the Green Party was opposing it. I do not know whether it is continuing to oppose this legislation, but if it is, I think that is unwise. I think that the IMF provides very important support to the world. It is true that some of the advice function of the IMF has, at times, been contentious. The IMF has been dominated by an American view of economics, which has lots to offer but is not always perfect. The IMF gave advice to emerging nations, and included in that were nations that were moving from controlled economies to open economies, such as we saw during the late 1980s and the 1990s in the Soviet Union and the former Soviet bloc.
Some of the advice that was given to emerging nations to move quickly to smaller forms of government and to privatise previously publicly owned institutions was extreme and resulted in outcomes in those countries that were less than perfect. It has seen the rise of oligarchs in Russia, in no small part facilitated because of the regime that was recommended by the International Monetary Fund.
But that is not to say that the International Monetary Fund and its advice are fundamentally flawed. I think, overall, they are a force for good. So I am disturbed to see that our colleagues in the Greens are voting against this bill, which serves to update the arrangements with the International Monetary Fund.
Hon Simon Bridges: What are you thinking, Steffan?
Hon DAVID PARKER: What is that?
Hon Simon Bridges: What’s Steffan thinking?
Hon DAVID PARKER: Oh, sorry. In terms of the legislation itself, the Labour Party is on record as saying that we think these things are sufficiently important that they should attract the attention of Parliament rather than allowing future amendments to the International Monetary Fund articles that control how it operates to be delegated to statutory regulation, and we have opposed that part of the bill. We have lost that debate. We think this legislation is worse for that. We think that having every decade or so an amendment to the articles through Parliament enables us to reflect on the importance of international linkages and advice from the IMF. It enables parties like the Opposition, whoever they may be at the time—currently us—to reflect on parts of the IMF advice that are being ignored. At the moment the IMF is saying to New Zealand that one of the most important things to improve the New Zealand economy is to have a neutral investment signal into the economy through a capital gains tax.
John Hayes: Shane Jones doesn’t believe that.
Hon DAVID PARKER: Shane Jones most certainly does believe that. Having a neutral investment signal into the economy is fundamentally important so that people are investing in our economy based on the profitability of a business rather than a tax bias. Too much money is invested in New Zealand in land-related transactions because there is a tax advantage to doing so. The IMF, the OECD, Treasury in its own way, the Reserve Bank, and just about every economist in New Zealand say that we will have a stronger economy through introducing a capital gains tax, which in the case of the Labour Party proposal would exclude the family home.
It is interesting that the Government believes in the IMF but rejects that important piece of advice. Labour hopes to remedy that in the future, when re-elected, which will act to the benefit of New Zealanders and will result in a fairer tax system, more employment opportunities, a lower current account deficit, and growing wealth in New Zealand.
This is a good piece of legislation. The IMF, as I have said, provides leadership in the world. One of the other areas where it is looking again at what are good settings lies around exchange rate policy. The IMF has moved away from the idea that inflation targeting should be given primacy ahead of other important aspects of economic management like current account deficits and the exchange rate. It is another area where the Labour Party has moved on but the National Government has yet to see the light. I think one day it will, but in the meantime, of course, our non-primary exporters are suffering an exchange rate that would be different if the Reserve Bank had a different mandate.
We have heard the Minister of Finance, Bill English, say that nothing would change if there was a different mandate. It is true that if the mandate of the Reserve Bank was different not everything would change, but it is axiomatic that if the mandate of the Reserve Bank was broader and included a more balanced reference to other important matters of economic management its decisions at different times would be different and we would have a different economic outcome, which, in the view of the Labour Party, would improve the New Zealand economy. It would mean that some of our non-primary export manufacturers who could survive—well, Mr Bennett shakes his head, but the truth is that manufacturing outside of the primary sector is continuing to shrink, including in areas where it has survived for decades.
Some of these companies are world leading and they are increasingly moving their production to countries that have a better exchange rate regime and a better monetary policy regime. They are not companies with high labour input. They are selling high-value products. They are the sorts of exporters you would think should be able to survive in a country like New Zealand if we have the right economic settings, but they are not investing in New Zealand. They are shedding jobs in New Zealand, and they are increasingly outsourcing their production to other countries.
It is not that they are going broke; it is just that they cannot make a living in New Zealand. So they are forced to relocate elsewhere, with the loss of jobs and incomes, and, as a consequence, too many New Zealanders decide that they cannot make a living here and they depart to Australia or elsewhere. Too many of our young people do not have job opportunities here, and we lose the benefit of that economic activity in New Zealand, which we are instead transferring to the rest of the world.
This is a good bill. It provides us with an opportunity to debate matters relating to the advice function of the IMF, and I think on that front the Government is being too selective in the advice it is taking.
JOHN HAYES (National—Wairarapa): I greatly respect the previous speaker, David Parker, but I have to say to him that the thought that you can increase tax and jobs in the same breath is best described as an oxymoron. The point that he makes about jobs disappearing all over the countryside is actually not backed up, and I note an ANZ Bank survey in the last week that points out that in all regions of New Zealand economic growth is strengthening.
The Government believes it is really important to be an active participant in the international system, whether it is being an active member of multilateral organisations such as the United Nations, such as regional organisations like the Pacific Islands Forum, or of an economic organisation such as the IMF. I would agree with the previous speaker that it is astonishing that the Green Party cannot support this very sensible piece of legislation before the House this afternoon.
As a small, open economy we benefit considerably from a stable and prosperous global economy. Our commitments to the IMF are effectively premiums like an insurance policy against damage to our economy from an unstable world. Contributing to the IMF and the global financial stability are both part of our international obligations. The net effect of this bill, the International Finance Agreements Amendment Bill, will be to move New Zealand’s contributions to the IMF from about $2.9 billion to about $3 billion. The financial commitment associated with this quota was agreed at the time of the Budget in 2011, and is in the Budget forecast to be paid out in the 2012-13 financial year.
For the benefit of listeners I would like to make the point that when New Zealand is asked to make a loan to the IMF to help fund its country programmes, these loans, which receive interest and have definite payback periods, are therefore debt-neutral. Under the current quota system China is the 10th largest shareholder of the IMF, despite being the second-largest economy in terms of GDP. A practical effect of the package of quota and governance reforms is that it will lift China’s quota to be the third-largest in the IMF. Korea’s quota share is half that of Australia’s, even though it is about the same size economically. Korea’s quota will double under the reforms to be above that of Australia. There will be four emerging markets—Brazil, China, India, and Russia—amongst the 10 largest shareholders in the IMF. New Zealand’s constituency in the IMF will enable us to take on a second alternate executive director, and New Zealand has a strong case to make for upgrading its current senior adviser’s secondment role to the IMF to this new position.
This is an excellent bill. It has been considered by the Finance and Expenditure Committee without any form of modification, and I commend it to the House. Thank you.
Hon SHANE JONES (Labour): Kia ora.
John Hayes: A man who supports a capital gains tax. Ha, ha!
Hon SHANE JONES: Actually, I must elaborate on what my colleague David Parker was saying. He is actually not talking about excessively increasing taxes. He is talking about distributing in a more even-handed fashion the sources in the economy out of which a Government draws the revenue to meet the current appetites that we are seeing from that side of the House. I mistakenly thought that this would be a Government that actually would put into practice a lot of the rhetoric it spouted earlier, in the time I was in Government as a Minister, but in actual fact it has been tardy, it has been profligate, and it is slowly being caught out. But that is another matter.
I am disappointed, and I really do want to hear from my colleagues in the Green Party as to why they could not possibly support this piece of legislation, the International Finance Agreements Amendment Bill. I recently went to Sri Lanka as a parliamentarian. I encountered there the guy from the IMF. No one should underestimate the work. I cannot account for why they did not send a National parliamentarian, but I was prepared to bear the burden and go over there on our behalf. However, it was a timely reminder of the work that the IMF managers, analysts, etc., do on the ground as they are working in Sri Lanka with a country that has had a dreadful civil war. Also, it depends on the actual capital that the IMF has access to.
What does the IMF actually do? What it does is—generally using very complicated models of multiple regression, etc., and using econometric models—it tries to rebalance and refoot the economy. I do not want to get too dense and technical, because I know on that side of the House there is an audience with limited capacity to follow such narratives, unlike Mr Mallard. For my colleagues in the Green Party, I respect the fact that they are very strong on social development and very strong on equity, and if ever there is a case where we should stand staunch to ensure that the ills of a civil war and ethnic strife do not re-emerge, given that we have got so many Sri Lankans coming to New Zealand in the medical profession, etc., Sri Lanka represents an example of where the IMF is delivering very practical work. So it is beyond cavil that we should support this bill.
My colleague has delivered to the House that we are disappointed that this will not actually come to the legislature but will disappear down into the corridors of the executive—not unlike, I suspect, that story that is untold about the Skycity casino. But, given I have got my own report coming out in a week or two, I shall just taihoa on saying much more about that report until such time as my report comes out. And no doubt I will be, for a very ephemeral moment, in the firing gun, but we will cross that bridge when we get to it—when we get to it. It is highly unlikely that I will get many missiles from members over there, given that I remember what was actually happening when they were bringing me their applications when I was the Minister, but that is in the past.
The bill does not immediately require New Zealand to step up with further capital—no. What it does is it provides an opportunity to reform the way in which participants exercise their influence. Do we actually believe in the role of the IMF? Of course we do. As I said, from the Sri Lankan experience more recently, I have seen personally how the IMF is doing a difficult task. Wherever it goes, the elected Governments are cross with it. But that is a healthy level of tension. We, the donors to such an organisation, have every right to require it, when it moves into these countries where the transparency is not flash and where the economy is in a state of gross imbalance, to ensure that we can rely upon the professionalism of such an organisation that has our support. It is only 18 months until there may very well be a Government comprising some minority parties and us. I have no doubt in my mind that the stance that we take into the future will see New Zealand continuing to support such an institution, so I am actually interested to learn why our friends from the Green Party—whether or not it is because Mr Kennedy Graham got sort of hōhā with Labour, and forgot to elaborate the reasons. These things happen. I have been known to get hōhā with Labour myself, but that is another matter. I have actually had the Greens hōhā with me.
Hon Trevor Mallard: Oh, no!
Hon SHANE JONES: Well, actually, I will say “members of Labour”. Often the kaumātua for Wainuiōmata has taken a dim view of certain things I have said. Enough said—it is lost in translation.
Hon Trevor Mallard: Hang on, hang on. Mid-point of career, not kaumātua.
Hon SHANE JONES: He said the man is not a kaumātua and he will challenge anyone to a bike race, etc. Well, I kind of know what bike races do to sensitive parts of the anatomy, so I will taihoa on that. I will stay with golden oldie—
Hon Trevor Mallard: Oh, harden up. Harden up.
Hon SHANE JONES: I will taihoa on that. I will go to golden oldie rugby.
The other thing that I would like to say is that the IMF has over the years attracted a great deal of negative attention. It has been attacked and in some cases demonised for going into difficult areas. One has only to look at the experience of Latin America, and I am sure the member for Wairarapa could have gone on at length in a flatulent manner and regaled us with tales—regaled us with tales—about how he has played a role in saving those countries from themselves. But the IMF is an institution that a number of New Zealanders have continued to work in. Very, very significantly placed bureaucrats from our own country have gone on and have indeed taken a representative role on the executive board. So we should not quibble, and we should not shirk from ensuring that our overall commitment to the IMF is adequately covered, and, more important, that, as one of the key OECD countries, we show ongoing support.
We know that the Americans, with their 16, 17, or 18 percent voting rights, still have virtually a veto right. But we have also seen the fashions change in that great economy. It is only 10 years ago that so many of its legislators themselves seemed to be locked into a pattern of demonising and stigmatising such international bodies. But for us in New Zealand it comes as part of the obligation to be a good global citizen. We do not have the breadth of defence capacity. We do not have—partly through the errors of the current Government—the depth of capital. We rely on international markets. We rely on international agreements. A small country of 4.5 million people with aspirations to maintain a high-quality OECD lifestyle has no option but to stand as a key participant in such institutions. This particular bill does not commit us to anything that we are not already comfortable with. Indeed, it is just an iteration of what we did several years ago.
But it is a timely reminder, at a time when New Zealand is seeking to secure other internationally recognised positions. Indeed, the Minister of Trade is hoping to follow the footsteps of Mike Moore. Well, I would encourage him to develop physical robustness if he is going to emulate the full deeds of Mike Moore. That shows that if we are seen as being dependable and robust contributors to something such as the IMF, then the credentials that other personalities will wear on our behalf as we seek to secure positions, not for them personally but for our nation State through their person, are clear. That is a very fine thing, and it is a very aspirational goal, which I am sure the majority of parliamentarians are committed to. I am pretty sure that the Green Party itself shares that level of commitment, although it probably has a less charitable view than I do about the virtues of free trade.
I look forward to learning more as to when the proposed multiparty trade agreement drawing close with the United States of America, us, and our Asian neighbours comes to pass, but that is a debate that, no doubt, we will fully resolve after the 2014 election. And by that time we will be over there on the Government benches, and my occasional fellow travellers in the rugby team, etc., will be over here. That is just the ebb and flow of democracy, and a number of those members, I am sure, will go. I am not suggesting that we should be casual about how we regard our roles and our contributions of a fiscal nature to such organisations, but we should be regarded as solid citizens, and that is why this side of the House supports in an unfettered fashion the passage of this bill.
Dr RUSSEL NORMAN (Co-Leader—Green): I rise to speak on the International Finance Agreements Amendment Bill. Essentially, what this bill does is bring New Zealand legislation into line with the Articles of Agreement of the International Monetary Fund. The articles of agreement are essentially the agreement as to who gets how many votes at the IMF. From time to time there are changes in the allocation of votes at the IMF, though the United States always retains a veto, effectively. So this piece of legislation is to bring, essentially, New Zealand legislation into line with those changes in votes in the Articles of Agreement of the International Monetary Fund.
However, it does something else, and it is a “something else” that the Greens disagree with. The something else that it does is that it means that future changes can be done by regulation rather than by legislation. That is the fundamental change in this piece of law. These changes in relative votes in the Articles of Agreement of the International Monetary Fund do not happen very often. We think that it is a good principle to uphold that, wherever possible, Parliament should be the one to change the law, rather than the executive.
This bill, as it is in front of us now, will enable the executive to make secondary law, or regulations. That essentially means that Parliament has derogated its decision making to the executive, in terms of signing up to the changes in the Articles of Agreement of the International Monetary Fund. But those articles do not change very often, so it seems to us that there is no need to derogate responsibility from Parliament to the executive.
This was a position that the Labour Party argued quite strongly, but the Labour Party has decided—which is fair enough—that although it has concerns about this aspect of the bill it will support the bill overall because it supports the broader purpose. It was then with some sadness that I heard the ridiculous attacks from the Labour Party on the Green Party because we take a principled position whereby we understand the bill but we disagree with one section of it and have decided to vote against the bill for that reason.
The Labour Party—and I respect its decision—has said that it disagrees with this particular section of the bill but has decided to support the bill as a whole. I think that is a perfectly rational decision. People of good mind and of similar beliefs can disagree about things. That is just the nature of politics, and so it should be.
In terms of the IMF, I am probably one of those people who have been critical of the International Monetary Fund over many years. Those of you who know your history will know that after the Bretton Woods agreements we had the three major financial institutions that were set up: the International Bank for Reconstruction and Development, or the World Bank; the International Monetary Fund; and the International Trade Organization. Of course, the International Trade Organization never appeared, because it was vetoed by the US Congress, so we were left with two. It was not until 1995, with the establishment of the World Trade Organization, that the third part of the international structure was established.
The thing about the IMF and the World Bank, or the International Bank for Reconstruction and Development, is that, essentially, they became captured by what became known as the Washington Consensus. That was a hard right consensus about a series of policies that should be implemented. Those policies were heavily discredited during the 1997 Asian financial crisis—or rather, just the Asian crisis, I guess—where, particularly, a number of South-east Asian countries got into real trouble. The International Monetary Fund came in and applied the usual Washington Consensus formula, which caused those economies to get into more trouble. Many people who were associated with that—and who have since spoken out against it very directly—have said that the application of the Washington Consensus model in the case of the East Asian crisis in 1997 was a catastrophe for those countries. One of the most famous, of course, is Joseph Stiglitz, who was the chief economist at the World Bank, who then became a dissenter.
What has happened in terms of the evolution of thinking in the IMF, and, of course, at the World Bank in particular, is that there has been a radical move away from the Washington Consensus, which I think is a great thing. For someone like me, who has been highly critical of the International Monetary Fund and what it has done to developing countries over many years, and the terrible poverty and dislocation that the IMF and the World Bank have caused, I, for one, have celebrated the change in direction of the IMF. So now I find myself quoting often from IMF documents, because the IMF has become much more progressive and interesting, particularly on monetary policy.
Those of you who read IMF documents will know that there is, of course, a very famous one at the moment by Michael Kumhof, who is one of the IMF researchers, called The Chicago Plan Revisited, which is all about looking at monetary policy. It offers quite a radical proposal around reforming fractional reserve banking—essentially eliminating fractional reserve banking. It is quite a radical proposal that has come out of some of the researchers of the IMF. It is not actually an IMF paper in the sense that it is fully endorsed by the IMF, but these researchers—and Michael Kumhof in particular—have been going around promoting alternative ways to deal with the current global financial crisis that involve putting a lot more constraints on banks’ ability to print money.
The other thing that comes out of, I think, the IMF that surprises a lot of people is when the IMF says things like most of the money that is generated is generated by the private banks. Most of us, I think—and I was certainly one of these people, until reading IMF papers—always assume that the Government created the money. That is just because I actually did not follow it closely enough, whereas the IMF is very clear that it is the private banks that create most of the money. What the IMF—or, at least, some of the researchers within the IMF—is now saying is that the Government should use its ability to create money, so that there is some publicly created money as well as the privately created money, most of which is created by the private banks.
This, of course, is a pretty radical proposition, and the IMF, in putting forward this proposition, has certainly been shaking the policy debates around monetary policy all over the world, except in New Zealand, of course, where we are kind of locked into some weird backwater where the Government does not want to have a debate around any of this kind of stuff. But if you read the international literature, it is pretty good.
Lord Turner—the head of the United Kingdom Financial Services Authority, the regulator of the banks in the United Kingdom—has been proposing very similar things to the IMF in many respects. He has been talking about using the public creation of money to fund Budget deficits. It is quite a radical proposition. It is very similar to the proposition that was put forward by Milton Friedman, when he talked about helicopter money.
So there is a very lively international debate, which the IMF is in many respects leading, around what we should be doing about monetary policy, and should we leave the entire creation of the money supply in the control of the private banks. The IMF has been leading this debate and I think it is a good debate for us to have, particularly in light of the global financial crisis. What we saw with the global financial crisis was that the private banks created vast quantities of money—or credit; call it what you like—and we are now trying to deal with the hangover from that, if you like. This vast amount of debt in money was created, which we are now trying to get rid of.
So the challenge for all of us is that having seen the private sector do that when it was deregulated and it was allowed to create as much money as it wanted, how do we put the genie back in the bottle for the private sector? Then the question is what the role for publicly created credit is. I think the IMF has been leading the debate around what is the role for publicly created credit. All credit to the IMF that it has led that debate.
The other debate I think the IMF has been very instrumental in has been around green economics. It has kind of been doing it in combination with the OECD and the World Bank and the United Nations, I guess. All the international institutions are very engaged in the green economics debate. What they have been asking is how we make the transition towards sustainability while still maintaining prosperity. That is the kind of global debate we have. We are trying to make this transition to sustainability, which is quite a radical change in our economy, at the same time as we are dealing with essentially a financial crisis, which has become a crisis of the real economy as well because of the impacts of the financial system.
So in the midst of this financially created crisis, we are also trying to deal with the ecological crisis, if you like. So we have got these two parallel problems. The IMF has been leading some of the work on how we can deal with the environmental crisis by trying to build the green economy and make sure that we make the transition to sustainability, but also deal with the crisis in the real economy by making sure we have jobs in sustainable industries and making sure that people have sustainable work. Getting both of those things right is, I think, the great challenge of our epoch. I have certainly appreciated the IMF’s contribution on that, so I look forward to further rational debate on these issues in our Parliament.
DAVID BENNETT (National—Hamilton East): I hope that New Zealanders were listening to that last speech, because that is the radical plan of the Green Party, from somebody who has no idea of economics but has read one book by some extreme person and thinks that he is going to change and be the saviour of world economics. That is completely inappropriate for New Zealand going forward.
The other good thing about what you just heard before is that the Labour Party and the Green Party cannot agree. These are the people who want to work together to form a Government. What did Russel Norman say about the Labour Party? He said that it made ridiculous attacks on the Green Party. Remember that—ridiculous attacks. In Opposition they cannot work together. Imagine what they would do to the livelihoods of New Zealanders. Imagine what they would do to New Zealand’s interest rates. Imagine what they would do to New Zealanders’ jobs. They will kill this country. They will kill this economy. Never trust them—never trust them. That is the thing that should have come out of the debate today.
The Labour Party also talked about some of the issues around what it wants to do around the exchange rate. This is great policy. We have had the Governor of the Reserve Bank come in and tell us that you would be doing last resort economics to have to change this. I ask you this question, and I want New Zealanders out there to think about this: what does Australia do around its exchange rate that is different from us?
Hon Members: Nothing.
DAVID BENNETT: Nothing. What does Australia do that is different from us? Nothing. We have got the saviour of world economics reading one article from somebody who is not even IMF-approved and telling us that we should take a radical approach to economics and put everything in New Zealand at risk. Imagine what this would do to the relationship between us and our biggest trading partner, Australia. If we take a different approach from the Australians—
Aaron Gilmore: Not good.
DAVID BENNETT: That is not good—it is not good. It is going to hurt our banking sector, it is going to hurt interest rates, and it will hurt New Zealanders. New Zealanders should be listening to this debate, hearing the wacky ideas of the Green Party and Labour Party, and understanding that that would put their livelihoods at risk. They should remember that we have their best interests at stake and they should follow that. Thank you.
ANDREW WILLIAMS (NZ First): What a great relief it is to stand on behalf of New Zealand First and not be implicated in any part of that previous debate. Obviously, our financial ideas must have a bit of weight and a bit of substance, so thank you very much, Mr Bennett, for that glowing endorsement of New Zealand First’s financial policies. In that regard, can I speak to the final reading of this International Finance Agreements Amendment Bill, and bring members back to the focus of this bill, which is basically to sort of rearrange the deckchairs on the world global stage with the IMF—the International Monetary Fund—and the World Bank.
Over recent decades, of course, many economies have changed significantly, but in terms of their percentages in the overall IMF scheme of things, the positions of emerging countries, particularly the likes of China, India, Brazil, and others, have not been rebalanced. Changes were adopted by the IMF governors in 2008 and 2010 to readjust things on the economic scales in relation to all those economies, and New Zealand is one of those countries required to rebalance its position. In terms of this, my understanding from reading the bill is that New Zealand’s commitment, or underwriting of the IMF, is something in the order of $1.9 billion or thereabouts, and our contribution to the greater scheme of things of the IMF will be readjusted by the order of $100 million. That is a valuable contribution in terms of our underwriting of what the IMF does to ensure that there is some balance within world economies, and particularly in the developing countries, which need support and some backing from the IMF to ensure that their economies remain relatively stable.
In this regard, it is also interesting that Australia passed legislation a couple of years ago, in about 2010, so we are lagging behind a little bit. It would have been good if we could have put this legislation through Parliament earlier than this, and it is somewhat disappointing that it has taken some time for it to get through. It basically does have the full support of National, Labour, and New Zealand First, and it is somewhat disappointing that the Greens are out on a limb on this one, once again.
In terms of the IMF, it is interesting that the Government fully endorses it and fully supports the IMF and what it does, but, as I have mentioned in this House before, the Government conveniently forgets other recommendations of the IMF, such as the fact that it has commented that the New Zealand dollar is somewhat overvalued and that there should be some adjustment of the New Zealand dollar. So it is all very well for the Government to accept what the IMF does on the one hand when it is convenient to it, but when it is not convenient to the Government, such as recommendations that perhaps the New Zealand dollar should be eased a little bit, that is ignored. In that respect—Mr Speaker, I know you will probably pull me back to the bill that I am talking about; I can see you nodding already and suggesting that in that manner—but can I just say, just as other members have talked about bicycles, kaumātua from Wainuiōmata, and other long bows, can I just suggest, as part of my long bow on this subject, that it is perhaps time that the member’s bill of the Rt Hon Winston Peters in regard to the Reserve Bank of New Zealand Act was pulled from the ballot—as it was last year, but pulled again. It is back in the ballot—
Hon Simon Bridges: Hey, you keep the long bow away from the lemon trees.
ANDREW WILLIAMS: It is back in the ballot, the Hon Simon Bridges, and we hope that the Government this time—because it lost by only 61 votes to 60, which is pretty close—touch-and-go. We were waiting for a couple of Government members to cross the House and come with us, and we could see that they were chomping at the bit to do that. We could see, and a lot of those members could see, because they knew too that after 26 years maybe it is time to review the Reserve Bank. It maybe is, after 26 years. You know, most things get reviewed a little bit more often than that, so the Hon Simon Bridges—I can see you nodding. I can see you nodding in agreement. Come on, I can see you nodding. I am absolutely confident that when that bill is pulled again, there will be sound thought around it, and it will refer back to what the IMF has said in relation to New Zealand’s dollar and New Zealand’s Reserve Bank—that maybe we need to be a little bit more creative in how the Reserve Bank operates, to ensure that our economy works more effectively. Part of that, of course, is for the benefit of exporters and manufacturers and our trading economy, to ensure that New Zealand can play its full role in the world economy in terms of what we are potentially capable of doing. At the moment, the potential of New Zealand is certainly being limited by where the dollar is. Just imagine where New Zealand could be today if we had just a little bit of easing of that and could help those exporters and those manufacturers that, sadly, are finding it pretty grim times at the moment, with where the dollar is.
New Zealand First supports New Zealand’s commitment to international organisations. We strongly believe that we have to be a good global player, that we have to play our part—as we do—in many areas around the world, in many theatres around the world, where we do play our part where things are required of us. We are known as being a good contributor on the world scale, a good contributor to the United Nations. We have contributed even more people to the United Nations this week, which is a good sign, and so we are playing our part there. New Zealand First endorses this bill, and trusts that it will go through expeditiously.
CHRIS AUCHINVOLE (National): I would like to speak very briefly in favour and support of the International Finance Agreements Amendment Bill. This is a bill that will allow the Government to meet its obligations as a member of various financial institutions, including the International Monetary Fund and, indeed, the International Bank for Reconstruction and Development. It is of great interest to me to hear the various views that are being expressed. It is always a pleasure to follow Mr Williams in a debate. But, other than providing support at this stage, I will leave my contribution at that. Thank you.
Dr DAVID CLARK (Labour—Dunedin North): We have had some very brief contributions from National members in this debate, and one hopes that that does not reflect a view that this is not something that should be worthy of a full debate. It certainly suggests that it may be the way they lean, and, certainly, with the changes in the International Finance Agreements Amendment Bill aiming to take similar debates out of Parliament in future and to limit them to the executive, one fears that may be the case. I am sure that that will not be a decision that Mr Auchinvole has led, for he is a member who is very keen to contribute to the debates in an appropriate and full way, but I would be very, very saddened if I heard he had been instructed to keep the debate short on this matter because his—
Hon Trevor Mallard: Well, that’d be a breach of Standing Orders.
Dr DAVID CLARK: —party does not want this matter openly debated in the House too often. As Mr Mallard points out, that would be a breach of the Standing Orders, so we certainly hope that is not the case.
We have covered a wide range of things in this third reading. The Hon Shane Jones managed to get us on to bike riding and we have covered a debate about the IMF with Mr Norman, and we have had some interesting contributions, with Mr Bennett trying to suggest that we needed to take the same approach as Australia in respect of the implementation of macro-prudential tools—something of an own goal, given that its purposes are, indeed, broader than ours, I understand, in its equivalent legislation for the Reserve Bank. It has had a more successful export sector, and so Mr Bennett’s gesture and his advice that we should follow the Australian model and keep ours the same sits in an odd way, because those two things are different—very different.
In earlier readings I have placed on record my thanks to the officials who advised the Finance and Expenditure Committee, because they certainly did do a sterling job. They answered the members’ many questions. Certainly, on the Opposition side of the debate we had some questions that were penetrating and interesting, and they came back with fulsome records about when decisions were taken around the rules and the way in which they had been debated in previous Parliaments. The National members of the committee were less fulsome in their questions, but they allowed us to pursue those questions, and I am grateful to them for that. We certainly did get some excellent advice and a full picture of how decisions around changes at the IMF have worked over the decades.
One of the interesting things about the changes that have been made to New Zealand’s IMF rules is that they have not happened very often. The last time we had a debate about these matters in this Parliament was actually 15 years ago, and I suspect that many members were not here then. Some were—Mr Deputy Speaker, you, I think, would have been contributing to debates fully in that time, and other members sitting in close proximity to me also will have contributed to those debates—but there are other members here who are newer and who will have brought different ideas and new ideas, and I hazard to suggest that some of the older members may have changed their minds, too. So it is good to have this debate. It seems wrong and a shame that much of this debate will now be transferred to the executive, and the executive will in future be able to change the way in which New Zealand relates to the IMF, so we will not have this debate here in the House. We in the Labour Party think that means that it is not subject to full parliamentary scrutiny, and we think that is a loss to New Zealand over time. We are, in a way, limiting future Parliaments’ ability to contribute to decision making around New Zealand’s contribution to, and relationship with, the IMF.
If I can provide the wider context for this bill, over time the shareholding—the quota share—of many IMF members has not kept pace with the members’ relative positions in the world economy, and many fast-growing emerging market countries have substantially become under-represented. For this reason, the IMF has introduced reforms to realign members’ quota share with their relative economic weight in the world and enhance the voting power and representation of low-income countries. This is what this legislation actually achieves here and now, and I want to place on record that the Labour Party thinks that is a good thing. We think it is a good thing that there is representation by those countries and that that representation is updated. We agree with the general thrust of what is happening now, and that is why we will be supporting the legislation, but we are disappointed at the future lack of transparency that the Government is achieving at the same time. That is why in the Committee stage we argued for the removal of clause 4 of the legislation. That argument was defeated in this Chamber, as the Government members decided that they would indeed prefer such decisions to in future be taken in the executive. We as an internationalist party, I guess—the Labour Party—do believe that it is important to honour the international obligations and agreements we have entered into, and we believe in a multi-country approach to issues of world development. That is why the overall picture for us is of something that we want to support.
I wanted also to just comment on a suggestion of a colleague from the Greens that the Labour Party had attacked the Green Party for its particular stance on this bill. I think our main quibble was the way in which the Green Party had not entered the debate, so it was impossible to know what its stance was, given that the last time this debate happened was 15 years ago and the Green Party members in Parliament then were newly defected from another party. We did not really know whether that was its established position or whether there was going to be a future position. It was outlined much more clearly today by Russel Norman. The Green Party indeed agrees with us that decisions should not be taken by the executive, but it feels so strongly about it, we were told, that it is not going to support the international development efforts that this bill promotes. We obviously take a different position to that.
But the point of principle on the issue of transparency is one that we will stick with and we will argue over again in this House, as we have today around the Skycity deal. We certainly heard questions in the House today asked of Mr Joyce that he looked distinctly uncomfortable answering. That is what the Labour Party believes is important. We need to hold this Government to account for decisions that are taken behind closed doors, or in ways in which the normal scrutiny of Parliament might be avoided or seem to be avoided. That is something we want to challenge. We want to make sure that the normal approaches in this Parliament, the normal processes, are adhered to, so that the public of New Zealand can be confident that things are being done transparently, that they are being done properly.
I personally also have raised concerns about the way in which the Inland Revenue Department is letting its contracts in respect of its business transformation project, and the way in which that has been done. I myself have put in some Official Information Act requests and requests for information about the process, which have been turned down in the first instance. I think it is important for the public that we can see that transparent processes are operating in the Inland Revenue Department, when it is letting out a contract that may be worth $1 billion; in terms of Skycity, when we know that that may affect problem gamblers, and also goes to the heart of whether the Prime Minister believes in fair process; and here, where we are talking about our relationship with the IMF and the way Parliament takes decisions around it. That is why we have argued in this legislation for greater transparency. Transparency is an important thing for Parliament. It is important that we have transparent processes. It is important that we have these debates, that we see that we have an up-to-date position in Parliament, and that we make the best decisions on behalf of New Zealanders.
The IMF—it has been briefly touched on in the debate—has many recommendations for us. We have also seen in the debate the irony of the fact that this Government chooses when it will comply and when it will not, and that its arguments—for example, against pro-growth tax policies in the form of a capital gains tax or a research and development tax credit—are looking like pretty thin arguments now. In light of world evidence and in light of all OECD countries having a capital gains tax except for Switzerland—something of a tax haven—Turkey, and New Zealand, we are certainly dragging the chain there. The Labour Party believes it is high time we took that piece of IMF advice to heart, introduced a capital gains tax in New Zealand, and began to actually make sure that the wealthiest New Zealanders are paying their fair share of tax, rather than avoiding paying their fair share.
IAN McKELVIE (National—Rangitīkei): It gives me pleasure to rise to speak to the International Finance Agreements Amendment Bill, and for the life of me I have not been able to find any evidence of the issue of problem gamblers in this bill! This bill allows and enables New Zealand to contribute to the world financial institutions, to continue on a mildly altered pathway, and we are doing our thing as a country. To the people of Rangitīkei this may mean very little. However, Rangitīkei, like the rest of us, relies heavily on the world’s economic stability, and the changes this bill provides will assist that cause for us. So I have great pleasure in supporting this bill and the third reading of this bill as it passes through the House.
Mr DEPUTY SPEAKER: A split call—5 minutes.
Hon TREVOR MALLARD (Labour—Hutt South): It is—absolutely. I have split with my friends from the Greens and I might say that—
David Bennett: Friends?
Hon TREVOR MALLARD: Well, very good friends, Mr Bennett, and like all good friends we have differences occasionally. That is why we are in different parties, as opposed to the National Party, where you have sitting next to each other a bright, intelligent, young man from Tauranga and Aaron Gilmore. Things just could not be more different within the Labour Party. We have a range of views. But it is fair to say that there is a wider range of views, and we have discussions and we have differences, and one of the differences we have with the Greens is whether or not to vote for this International Finance Agreements Amendment Bill.
We absolutely agree on the fact that the National Party taking to Ministers something that should be in Parliament is wrong. I think the difference we have is over the other things about this bill, which are fairly good. Most of the changes that occurred in the 2008 and 2010 revisions are good things and therefore should be supported. They certainly are good, and the Labour Party wants to support them. We have decided to vote for the bill and the Greens have decided to vote against it, and there is not that much in it.
What I want to share with members opposite is that actually it does not make too much difference at all. Whether or not we pass this legislation, our obligations are there. This clarifies on the New Zealand statute book the fact of the reflection of the constitution of the IMF, but, actually, even if we did not pass it, we would still have to have the changes in arrangements anyway.
And other interesting things occur. You know, with some of these organisations when you are in them you are in them for ever. But it is relatively simple to jump out of the IMF if anyone was ever foolish enough to want to. All you do is stop paying your money. You stop paying your money and you are automatically out. It does not happen that way with the UN, as the United States has discovered over many, many years.
So the changes in this bill are generally positive. The fact that it is legislation passing in 2013 is somewhat of an embarrassment. The Australians managed to do the 2008 changes in 2009, and actually managed to get the 2010 changes through in that year. That is possibly an indication that the Australian Government is much more efficient than the New Zealand Government, that there is a priority around making sure that the treaties it is involved in are properly aligned. Or maybe it is just as simple as the fact that it does not rely on Bill English to get busy and to get the priorities there.
The 2010 review is something that was brought forward as a result of the global financial crisis. There is another upcoming review in 2013, and what is happening is that this will mean that there will be three over 5 years instead of one over 8 years. That is a reflection of the changes that are happening in the world, the need to update, and the change in the balance of power. [Bell rung] Can I have an indication? Was that a 1-minute bell? Thank you.
There have been, as members know, quite a few previous amendments to this legislation, which originally came in—sponsored, we think, by Harry Lake—in 1961. There have been a series of amendments since that time. The major part of the amendments here, the principal part as opposed to the emergency part, was, in fact, part of a package that Michael Cullen was involved in negotiating. That is the 2008 set of arrangements. We all know that he clearly works in New Zealand’s interests. I think it is probably fair to say that his knighthood did not quite come for the work that he did in relation to the IMF, but he is a person of integrity who has recommended this. We are therefore very happy to support it.
Dr KENNEDY GRAHAM (Green): I do not intend to take up too much of the time of the House, because the Green Party has, in fact, made its views quite clear. I do appreciate the constructive tone and spirit that my predecessor here, Trevor Mallard, has just offered in his intervention. He was concerned earlier in the course of the debate, during the Committee stage, about Green policy, and he was quite in order to challenge the Green Party to advance its views as to why it is voting against this bill, the International Finance Agreements Amendment Bill. Just to correct his colleague to his left, David Clark, who, with respect—
Hon Trevor Mallard: Well, he’s actually on my right, but—
Dr KENNEDY GRAHAM: Ha, ha! He took it upon himself to suggest that the Green Party had not engaged in debate on the passage of this bill. That is factually incorrect. We have taken every call that we have been allotted—Russel Norman and I have both had two in the first reading and two in the second reading—and also in the Committee stage as well. So we have, indeed—
Hon Member: Very late call in the Committee stage.
Dr KENNEDY GRAHAM: Well, the Green Party chooses not to engage in excessive repetition, unlike a few others. We make our points. We respectfully listen to others. We point out, with courtesy, where we think they are incorrect. We then wind up with a conclusion, and the conclusion is that National and Labour are both wrong in voting for this bill. We have already made the reasons clear—on 8 May last year, in the first reading; on 25 September last year, in the second reading; and on 18 February this year.
Just for those who are still struggling to understand it, Russel Norman did say at the time the reasons we think the democratic reform of the IMF has a long way to go. It still is, in some ways, enshrined in the post - World War II order and does not represent the modern world—something, incidentally, that Shane Jones had pretty much touched on. Dr Norman said we would like the democratic reforms that this bill implements, which are very, very minor, to go much further—much further—so that the IMF represents the world much better. Even if we adjust to represent the economic world, it would be progress, but it certainly does not represent the world populations in any respect whatsoever, so those are very minor reforms. It is because of those minor reforms that we have taken the decision to vote against the bill, both in terms of the limited nature of the changes to the voting power and because of the regulatory provision that Dr Norman spoke about, and so did I, earlier.
In the second reading I offered the political reason, or the political reasoning, by which the Green Party came to decide to oppose the bill. Where there is inadequate reform of an organisation, a political party has a choice. You can support the bill while criticising it because it does not go far enough, and then vote for it, as Labour is doing, or you can take a different approach and say: “The bill does not go far enough in reforming it, and because of that we will oppose it.” We have chosen that latter path.
I think it is good, open season when one party takes a stand on its own and votes against a bill. This is essentially a political Chamber, it is a political process, and there is political criticism. But it is nothing more than political criticism, because the politics can, at times, overwhelm the true economic argumentation. I think there is scope for understanding the arguments both for and against this, and I think there is a certain amount of respect for arguments for and against.
We have listened to both National MPs and Labour MPs advancing their views as to why they are voting for the bill, and we have actually consciously reflected on it, as we have heard that. We have discussed it at some length, and we have found no reason—no convincing reason—in the argumentation put forward to change our view. If we were prepared to agree that there is a sufficient reason, we would change our vote. We have changed our vote in the past, we are quite capable of doing it again, and we would do it today. That is not the case. The argumentation put forward has not been convincing, gentlemen and ladies—it is only gentlemen, I think, in the Chamber at the moment. So, colleagues, with respect, we have listened to you, we have reflected, we are not convinced, we think our position is right, and we are voting against the bill.
TIM MACINDOE (National—Hamilton West): That speech was indeed a very courteous contradiction of Dr Graham’s indication that he would not be using his full time allocation. But, as always, it was delivered in a very thoughtful way, and it is good to have one blonde following another in the House.
I want to just assure Dr Clark that, far from wanting to avoid debate, the brevity of Government speakers’ contributions this afternoon reflects our enthusiasm to see this bill, the International Finance Agreements Amendment Bill, passed into law. As the Minister for the Environment noted when she moved the third reading of this debate earlier this afternoon, the passage of this bill will demonstrate New Zealand’s support for reform of the International Monetary Fund. We have always seen value, as a country, in being a contributing member of the IMF, and the reforms that we are supporting will enhance the organisation’s legitimacy and effectiveness. I have great pleasure in supporting the bill.
A party vote was called for on the question, That the International Finance Agreements Amendment Bill be now read a third time.
Ayes 100
New Zealand National 59; New Zealand Labour 30; New Zealand First 7; Māori Party 2; ACT New Zealand 1; United Future 1.
Noes 15
Green Party 14; Mana 1.
Bill read a third time.
Bills
Reserve Bank of New Zealand (Covered Bonds) Amendment Bill
Second Reading
Debate resumed from 14 February.
ANDREW WILLIAMS (NZ First): I take a call to continue the debate on the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. As we have heard in the previous reading, this is all about providing a bonded system through our banking system to ensure that there is some certainty for international investment in New Zealand through our banking scheme. Covered bonds have been used by our banks for several years. This bill formalises the arrangements. The BNZ, I think, was the first New Zealand bank to start issuing them, but without the formalities of Parliament that is required to confirm the arrangements internationally.
We have a few reservations about this, which we would like discussed at Committee level—the first being that they are talking 10 percent here, in terms of the bond percentage to the banks. Australia has 8 percent and other countries have less. I think Canada’s is as low as 4 or 5 percent. It is questionable whether New Zealand should go as high as 10 percent for covered bonds when our partners across the Tasman are on 8 percent. We will question through the Committee stage whether New Zealand should be more in line with Australia rather than at the higher level, and what impact that would have on our banking system by being at the slightly higher level. We are always trying to be on a level playing field with Australia, and it would seem to be more sensible that we were the same.
Although these covered bonds are necessary, in a way, to provide an element of certainty to our financial institutions and for people investing in our international institutions, it also means that, of course, these covered bonds have a higher ranking in terms of their status over other investors in the bank. We have already had a case of something like 61 financial institutions in this country going belly up in the last few years. It would be somewhat concerning if we were at a level of deposits, up to 10 percent, that had international first preference over our banks and should, heaven forbid, there be a problem with one of our major banks in this country, and they had first call on the funds ahead of good, hard-working, New Zealand local investors. In that respect that is another reason, perhaps, to reconsider the 10 percent level, because we certainly do not want a situation where New Zealand investors are second cab on the rank behind international investors who would dearly love, probably, to have that extra security here in this country, and at the same time come and take advantage of what interest rates are being offered compared with the virtually zero interest rates in parts of Asia, the United States, and elsewhere.
Covered bonds have been around for several hundred years. I think they were first introduced in Sweden in the 17th century or thereabouts. They have been used extensively by various European banks over several hundred years. They are an international mechanism to provide a better security base; a basis for the banking system. We are very fortunate that the Australian and New Zealand banks are held in high regard internationally. Through the whole global financial crisis certainly the Australasian banks have weathered the storm extremely well compared with many of their counterparts in Europe, the United States, and elsewhere. In that regard, therefore, we are even more attractive, perhaps, for international investment as a result. However, having said that, we certainly want to ensure that New Zealand comes out of this on the right side of the ledger, and that we are not just seen as an easy target to put money into for better security than other places in the world that, perhaps, do not have the same level of confidence in their particular banking systems. We are very fortunate that we are living in a good stable democracy where the value of the banking system is highly valued. In this regard this does provide added weight to that banking system.
New Zealand First is always looking for mechanisms by which the banking system is controlled in a better way. We believe it was very remiss that we had 61 institutions in this country going belly up. We believe that an instance such as the South Canterbury Finance situation where $1.6 billion had to be written off by this Government and taken up by this Government, paid for by New Zealand taxpayers, was incorrect. It was particularly disappointing that in the last 6 months of that bank so many more additional funds were invested there because of the Crown Retail Deposit Guarantee Scheme that the Government offered and that that oversight was allowed to continue for 6 months unfettered and unrestrained by the Reserve Bank or Treasury, and not properly monitored by the Minister of Finance to ensure that banks such as the South Canterbury Finance bank did not go belly up.
In that regard we have got something to learn from some of the errors in our banking system. But in this regard this is good legislation that provides another element of certainty to our banking structure. It will encourage sound investment in this country. It does start to question the need for the sale of State assets when we have been told by the Government that that is a way of securing more investment in this country through the sale of State assets. New Zealand First does not believe that is the case. We believe there are many other mechanisms to encourage investment in this country including supporting our manufacturing and our drive to encourage the growth of our economy, not from the sale of assets. New Zealand First will be supporting this bill and we commend it to the House.
DAVID BENNETT (National—Hamilton East): The Reserve Bank of New Zealand (Covered Bonds) Amendment Bill will, I think, get a lot of support throughout the House. It is not really so much about encouraging investment, as the last speaker, Andrew Williams, said, but more around certainty for those that are going into these markets. The covered bonds market is something that is there, and banks use it. We need to provide that certainty. The Reserve Bank is going to do that through this legislation around the rules and regulations. It is good legislation. It is in the best interests of our financial sector. We look forward to it passing through this House.
Dr DAVID CLARK (Labour—Dunedin North): It is a pleasure to follow that contribution from Mr Bennett, which was more fulsome and thoughtful than his usual contributions in this House are.
This particular piece of legislation, the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill, protects big business. What this piece of legislation does is protect big business. Labour will be supporting this bill for the very reason that it does also achieve something else. It preserves New Zealand’s trading environment, it makes it more stable, and it makes our country a little more secure in the tides of international change. So for that reason we will be supporting it, but we do it with reservation because it does also advantage big business over small business. It advances the interests of large international players—
David Bennett: Rubbish! What a load of rubbish!
Dr DAVID CLARK: —over local small-business interests. Mr Bennett says that is rubbish. With respect, I suggest that he has not understood the issue if that is his view, because there is a range of reasons why it advantages big business. The first is because they are the first in the queue to redeem their money when a business goes flop. That is plain and simple—clear. That is what the whole legislation is designed to achieve. It is designed to attract those big businesses so that we have investment in New Zealand, but in return for that it advantages their interests when a business goes flop and says: “You get the first call on the money.” That means small businesses miss out. Inevitably that is what it means, because the big business has gone flop, and then there is a queue of people after that who might receive some payment if they are lucky, if there is enough to go around. With respect, I need to point out to Mr Bennett, who sat on the Finance and Expenditure Committee, that he clearly has not understood the legislation if that is what he thinks.
I also want to speak more widely about how this particular legislation fits with a pattern, because it does fit with a pattern of a National Party that hates small business, it seems. National is constantly disadvantaging small business, and I want to bring several examples to bear on this. The National Party in this term in Government has forwarded a series of legislative pieces that I have observed really do disadvantage small business, such as the one we have just talked about, with the way in which big business is advantaged through these covered bonds. It has stretched it out to 10 percent. I contend—and I think several of my colleagues would agree—that it could be less. It could be 8 percent of the total financial interest that is protected in this way, and we would still get the same result. That is what they do in Australia. In Canada it is as low as 4 percent. So the Government has stretched that envelope to say that big business here is protected more than it is in Australia and over twice as much as it is in Canada. That is the road it has gone down with this covered bonds legislation.
It is also true if we look at recent examples, such as Mainzeal Property and Construction, which we know has just gone belly up. Who are missing out here? It is the individual contractors, the small-business folk, who are missing out, who cannot get their tools back, who cannot get on to earn further money, and who are further down the queue. Labour is proposing solutions to make sure that small businesses, which are the lifeblood of our economy, are looked after, and that the interests of individuals who work hard—those Kiwis who work hard to help New Zealand, to help us get ahead—are looked after. We see National sitting on its hands. We hear those members saying, “Oh well. Oh well, the big businesses are OK. They’ll get out. They’ll pass the contract on to another big business. Big business will be fine.” They seem unconcerned by the flow-on effects from the Mainzeal collapse, and we think that is wrong.
When it comes to the minimum wage, I had a bill earlier this year that would have raised the minimum wage to $15 an hour. That bill would have actually advantaged small and medium businesses over larger enterprises. The chain stores that aim for the bottom price, that give the lowest wages to their staff, and that force wages down would have been forced to bring their wages up to the level that you get at the local fish and chip shop or the local retailer, who say: “I know my one or two staff, and I know how much it costs to raise their families, and I value them as employees, and therefore I am going to pay above the minimum wage.” So they are already paying a bit more. The playing field would have been levelled a little if all of those big, less scrupulous players had been forced to raise their wages to match them. The small-business people would have been advantaged through that minimum wage legislation. Unfortunately, again, National sought to defeat it as soon as it could because it is interested in big business only. It is not really interested in those small contractors, in the individuals, in the workers, and in those entrepreneurs in New Zealand who have not yet amassed a scale that is international.
Another thing that we have observed from this Government is red tape. This Government has introduced red tape, particularly in the taxation area. It has brought in extra costs for businesses, for example, and even for contractors. If people are employing paper boys, for example, now they must report and keep full records about how they pay them. It is the same with after-school cleaners. There is a whole lot of extra red tape. We will see it in the child support legislation, as well. The Government will be expecting business owners to take on some extra reporting tasks. It is the kind of thing this Government does without compensating small-business owners, because it says that they should just absorb the costs or they should move out of the way.
We see it in the amalgamations in the rest home sector. We are seeing it in the district health boards at the moment. Things are being amalgamated in the interests of big business, in the interests of international players. We have seen it in Dunedin. Presbyterian Support has lost an important contract. The biggest local provider with all the local experience has lost out to an Australian-owned provider that has no experience in delivering home support services, and the Government’s fingerprints are all over it. The Government is interested in big business and it does not care about the small providers in New Zealand.
We see it too with our high interest rate. This Government refuses to give the Reserve Bank extra tools to manage New Zealand’s interests in terms of economic growth and employment. It says: “We’re sticking with the 1980s economics. We’re sticking with inflation. That works for big business. There is no problem to see here.” But there is a problem. We see it in the manufacturing sector in a kind of advanced way—not in the primary sector; the primary sector keeps turning out milk products and that is a good thing. But in the secondary manufacturing sector 17,000 jobs were lost last year—17,000 jobs. Those are Kiwi jobs that have been lost because of this Government’s neglect. It refuses to admit that the model is not working. It refuses to acknowledge that unemployment is the highest since National was last in Government. It refuses to admit that real wages have not grown under this Government. It is interested only in protecting its corporate mates.
We see in all of those examples that small-business folk in New Zealand are disadvantaged. Those members over there hate small business—they hate small business. [Interruption] I hear them baying for small business’ blood across the House. They do not want to see small-business people get ahead. They do not want to see entrepreneurs succeed. They are interested only in protecting vested money. That is true, because National is the party of capital. It is the party of protecting vested money. That is that party’s interest. Those members are not in the Labour Party. They are not interested in those who are working to make their way up through the system, those hard-working Kiwis who put their own savings on the line to start small businesses.
Another example is just yesterday in this House we were debating my member’s bill to Mondayise Waitangi Day and Anzac Day. We know that the only survey done of business on that topic saw 50 percent of small-business owners in favour of it, and 37 percent neutral. The reason that small business is either neutral or in favour of my bill—87 percent support the bill or are neutral towards it—is that small-business owners know they want to have time out with their families and friends, as much as anyone else does, and they want to know that their partners and their families can get that time off in a reliable way every year, not just 5 years out of 7. Small-business owners want those holidays, but, again, National is not listening. It gets lobbied by the big-business groups and says: “No, we don’t care about tourism. No, we don’t care about what small-business owners think. We’re going to go our own way. We will listen to the 13 percent who oppose it, maybe, and we might listen to big business, but we are certainly not listening to small business generally and their opinions, because we don’t believe in small business.”
That is what National says. That is what National says in the legislation it passes. That is what it says in the moves that it makes and the things that it is not fixing in our economy. The things in our economy that are disadvantaging small business are advantaging big business, and that is whom it is trying to protect with this covered bonds legislation. That is whom it is trying to protect generally. This shows that the National Party is not interested in hard-working Kiwis who want to get ahead, want to save and are saving, and want to do the best for themselves and their families. This Government is determined to protect the interests of big capital, and that is, overall, bad for New Zealand. It is affecting all of us in a negative way. I would encourage National members to rethink their position on this. They could move an amendment, I am sure, to lower the threshold for covered bonds, to do one small thing for small business.
There are many more things they could do for small business—I have outlined several in this speech—and I am hoping that this Government will prick up its ears, because small business is the lifeblood of New Zealand, and the longer National shows that it detests small business, the worse things become in New Zealand. Our economic growth record, which is the worst in 50 years under this Government, will continue to be poor until this Government learns that small business is important.
CHRIS AUCHINVOLE (National): I commend this Reserve Bank of New Zealand (Covered Bonds) Amendment Bill to the House.
Mr DEPUTY SPEAKER: Is this a split call?
Hon Trevor Mallard: It is a split call, Mr Speaker.
Mr DEPUTY SPEAKER: Right. Five minutes—the Hon Trevor Mallard.
Hon TREVOR MALLARD (Labour—Hutt South): The Labour Party is supporting the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill albeit with some reservations. If you go right to the core of why we are supporting it, it is that they exist anyway. The banks have issued them, and the Reserve Bank appears to have unfettered power to have more than the 10 percent that is in the legislation to approve the banks doing this. What happens when that occurs is that the situation gets even worse than what is in this bill. While my colleague—
Chris Auchinvole: David Clark.
Hon TREVOR MALLARD: —yeah—was talking about small business, what he was not talking about were the mums and dads who have their deposits with the banks. It is pretty awful what this bill does. What it says is that if you are a big overseas corporate lender to the banks, or even a parent company, with one of the tax-dodge arrangements lending to New Zealand banks, then you get priority over the mums and dads, or their grandmothers and grandfathers, who have a few dollars in the bank when and if the bank runs into trouble.
The counterargument is that if you have some stable finance and an ability to draw down what is effectively preferential debt, then that might help with the bank’s stability. That could well be right. So you then get to the question of how far do you go. I am not asking you how far you go, Mr Deputy Speaker; I am saying that the House is faced with a question about how far does one go. Other jurisdictions have made decisions. The Canadians have decided on 4 percent. They have decided that to get a 4 percent draw-down in this area is sufficient, that they can give cover. In that way they are giving better protection to the mum and dad investors.
Dr David Clark: Mr Key said he would go all the way with Skycity.
Hon TREVOR MALLARD: Well, he certainly put the chips on the table with Skycity. I think, actually, politically he might have gambled and lost. I think one of the questions, of course, is whether Skycity will apply for a banking licence as well as a gaming licence; if so, will it have covered bonds, and will Television New Zealand (TVNZ) put any of its money there? I am told that the Prime Minister promised the TVNZ land for $100 worth of pokie chips. Is that correct, members opposite? Is that true? Is that part of the deal? Millions of dollars a year—millions of dollars a year—of promotion money for Skycity has been promised by John Key. Millions of dollars promised, and a TVNZ arrangement, which, I understand—I will not anticipate a matter before the House, but I think some of us are looking forward with some excitement to 2 o’clock next Tuesday, when the Prime Minister comes in here to make his withdrawal and apology for misleading the House, because, of course, it must be that the first item of business next week will be the Prime Minister—
Mr DEPUTY SPEAKER: This is the second reading of a bill.
Hon TREVOR MALLARD: That is right—the broadest possible—
Mr DEPUTY SPEAKER: No, not as broad as that.
Hon TREVOR MALLARD: The broadest—thank you for the reminder. This is the broadest possible debate, and the question of whether the Prime Minister, TVNZ, or Skycity get banking licences and are involved in covered bonds is, I think, well within—well within—the ambit of this debate. But, as one can probably tell, this is legislation that we support, because it is better than not having it, but we regret very much the decision of the Government to favour overseas big money, as opposed to the deposits of mums, dads, grandparents, and small business.
STEFFAN BROWNING (Green): The Green Party is going to be supporting the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill, but, of course, like so many bills, it does not go far enough.
Hon Trevor Mallard: Or it goes too far—one or the other.
STEFFAN BROWNING: That is right; they are generally all over the place. We see that the Reserve Bank is certainly not taking a strong enough stance on currency. Those here who are from a primary production area are certainly very, very aware of what is happening in terms of a currency that is not being managed well enough. It is far too high. It is costing many people whom we know through the sector very, very dearly.
There have been a number of calls from the Green Party for the Reserve Bank to look at the different methodology that it is operating. We believe that it should be re-examined in quite a strong way, so that we can actually do something about these currency issues. We realise that across the House there is a range of opinions on the way currency is managed, but certainly at the moment more New Zealanders are hurting than are gaining. It is almost like the National Party does not recognise the sovereign boundary.
Debate interrupted.
The House adjourned at 6 p.m.